The Supreme Court, in a key decision on Thursday, appointed a six-member panel headed by a former SC judge to investigate any regulatory failure in respect to the Adani Group which faced market crash following the Hindenburg Research report.
The issue had generated significant political heat as the opposition parties disrupted the proceedings of parliament asking for a probe. With the apex court taking cognizance of the issue, any adverse finding after the panel report may give fodder to the opposition parties in the election year. The government had opposed setting up of the committee in the Supreme Court. The opposition, particularly the Congress and its leader Rahul Gandhi, has been relentless in raising the issue.
Justice Abhay Manohar Sapre (retired) will head the panel which also includes former SBI chairman O.P. Bhatt, Justice J.P. Devadhar (retired), banker K.V. Kamath, Infosys co-founder Nandan Nilekani and lawyer Somashekhar Sundaresan. The panel has been asked to submit its report in a sealed cover in two months.
A three-judge bench led by Chief Justice D.Y. Chandrachud said that it was important to protect Indian investors against volatility, so it was “appropriate to constitute an expert committee for the assessment of the extant regulatory framework and for making recommendations to strengthen it.”
The expert committee will provide an overall assessment of the situation including the relevant causal factors which led to the volatility in the securities market and suggest measures to strengthen investor awareness. The panel will also “investigate whether there has been regulatory failure in dealing with the alleged contravention of laws pertaining to the securities market in relation to the Adani Group or other companies,” the judgement said.
Apart from the expert panel probe, the apex court asked the market regulator to investigate if there have been lapses in the present case; if there has been a violation of Rule 19A of the Securities Contracts (Regulation) Rules 1957; whether there has been a failure to disclose transactions with related parties and other relevant information which concerns related parties to SEBI; and whether there was any manipulation of stock prices.
The SEBI has also been asked to apprise the expert committee of any action it has taken.
