The Supreme Court on Friday said the interests of Indian investors need to be protected against market volatility in the backdrop of the Adani stocks rout and sought the views of the Securities and Exchange Board of India (Sebi) and the Centre on strengthening the regulatory framework in the wake of the recent report of short-seller Hindenburg Research accusing the Adani group of massive manipulation of share prices and accounting fraud.
The court also asked the Centre to consider setting up a panel of domain experts headed by a former judge to look into strengthening the regulatory mechanisms.
A bench of Chief Justice D.Y. Chandrachud, Justice P.S. Narasimha and Justice J.B. Pardiwala clarified that while it was not questioning the bona fides of Sebi, yet it wanted an improved mechanism so that such things do not happen in the future.
“The suggestion is to have some committee…so that some inputs can be obtained. Can we contemplate an expert committee that can give inputs for modifying the statutory regulations so that these things don’t happen?” the CJI asked solicitor-general Tushar Mehta appearing for the Centre during the hearing. J
ustice Narasimha suggested that expert committee be constituted by drawing experts from the securities market, international banking sectors that can be headed by a retired judge.
“Ultimately the inputs will have to come from domain experts. We are also not sure. We are just thinking aloud. We can give a vital role to Sebi also. We also need a thing of strengthening Sebi so that it has better provisions to deal with in future,” the bench said.
The bench made the oral observations while dealing with two separate PILs seeking probe into the disclosures made by Hindenburg Research.
One PIL filed sought a probe into the allegations of account fraud made by Hindenberg against Adani.
The second PIL sought prosecution of short-seller Nathan Anderson of Hindenburg Research.
The bench asked Mehta to place a brief note on both factual and legal aspects to take the deliberations further on February 13, the next date of hearing.
