SC sets up committee headed by former SC judge to probe Adani-Hindenburg controversy

The Supreme Court on Thursday set up a committee headed by the top court's retired judge Justice Abhay Manohar Sapre to investigate if 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.

"In order to protect Indian investors against volatility of the kind which has been witnessed in the recent past, we are of the view that it is appropriate to constitute an expert committee for the assessment of the extant regulatory framework and for making recommendations to strengthen it," a bench of Chief Justice of India D Y Chandrachud and Justices P S Narasimha and J B Pardiwala said.

The court nominated O P Bhatt (former SBI chairman), Justice (retired) J P Devadhar, K V Kamath (former ICICI chairman), Nandan Nilekani (co founder Infosys), Somasekhar Sundaresan (securities and regulatory expert) as members of the Committee, which would provide an overall assessment of the situation including the relevant causal factors that led to the volatility in the securities market in the recent past.

Also Read: Hindenburg Research report a calculated attack on India: Adani Group

The committee would give its report in "sealed cover" within two months, the court ordered.

In a tweet, conglomerate's head Gautam Adani said, "The Adani Group welcomes the order of the Hon'ble Supreme Court. It will bring finality in a time bound manner. Truth will prevail."

The court passed its order on a batch of petitions filed by advocates Vishal Tiwari, M L Sharma, Congress leader Jaya Thakur, and one Anamika Jaiswal.

It also allowed the SEBI to continue with probe into the Adani group of companies following the report by US Short seller firm Hindenburg, alleging accounting fraud and "brazen stock manipulation".

"The constitution of the expert committee does not divest SEBI of its powers or responsibilities in continuing with its investigation into the recent volatility in the securities market," the bench said.

Petitioners Sharma and Tiwari alleged conspiracy behind the Hindenburg report while Thakur sought probe into allegations made by the US firm against Adani Enterprises.

Hindenburg Research published its report on January 25, leading massive rout of share prices of the Adani group of companies.

Taking consideration of a written note, the bench said it appeared that SEBI is seized of the investigation into the allegations made against the Adani Group companies."

However, SEBI has not expressly referred to an investigation into the alleged violation of the Securities Contracts (Regulation) Rules 1957 which provide for the maintenance of minimum public shareholding in a public limited company. Similarly, there may be various other allegations that SEBI must include in its investigation, the court said.

It also ordered the SEBI to look into whether there has been a failure to disclose transactions with related parties and other relevant information and whether there was any manipulation of stock prices in contravention of existing laws.in accounting fraud and "brazen stock manipulation".