Adani-Hindenburg row: Supreme Court refuses sealed cover suggestions from government

Adani group

The Supreme Court on February 17 rejected the government’s offer to suggest in a sealed cover the names of members and the scope of a proposed committee to examine stock market regulatory mechanisms after Adani company stocks crashed in the wake of the Hindenburg Research report on the group.

The court said it will now appoint the committee, nominate its members and draw up the scope of its functioning.

The apex court also reserved its orders on public interest litigations (PILs) pertaining to the impact of the Hindenburg report on the Adani Group.

When the hearing began on February 17, solicitor general Tushar Mehta circulated the suggested names for the committee and the scope of its work in a sealed cover. The SG said the government’s objectives were to ensure that the truth comes out and a holistic view of the issue is taken, and to ensure that the market is not affected in this process.

“We would not accept the sealed cover suggestion because we want to maintain transparency,” Chief Justice of India DY Chandrachud said. “Sealed cover means the other side is not seeing it. The impression will be that it will be a government-appointed committee even though SC appointed it.”

On February 10, the Supreme Court bench asked the Securities and Exchange Board of India, the market regulator, to suggest measures that could be taken to protect Indian investors from market volatility of the type that followed the release of the Hindenburg report on January 24.

Regulatory mechanism

The bench asked SEBI to apprise it of the existing regulatory framework for protecting investors and whether it would be necessary to put in place additional measures to strengthen the mechanism.

It also asked whether the government would agree to form a committee to come up with suggestions on the mechanism and who could be members of the panel.

The court subsequently heard and reserved the orders on two PILs filed on the Adani-Hindenburg controversy.

The PIL filed by lawyer Vishal Tiwari stated that the government has not taken any concrete action so far, despite the Hindenburg report perpetrating a massive attack on the economy of the country.

Tiwari’s PIL seeks a committee under a retired Supreme Court judge to look into the Hindenburg report that alleged unfair practices by the conglomerate.

Another PIL filed by ML Sharma demands that short-selling be made an offence and that US short-selling firm Hindenburg Research founder Nathan Anderson and his associates be prosecuted.

It also sought an investigation against Anderson and his associates in the US and in India for allegedly exploiting innocent investors and the “artificial crashing” of the valuation of Adani Group companies in the stock market

A third PIL was filed by Congress leader Dr Jaya Thakur.