NEW DELHI: The Supreme Court on Thursday set up a committee headed by the top court's retired judge Justice Abhay Manohar Sapre to assess extant regulatory framework in view of volatility witnessed in stock market after steep fall in share prices of Adani group of companies in the wake of US firm Hindenburg's report.
The court also asked the panel 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.
A bench of Chief Justice of India D Y Chandrachud and Justices P S Narasimha and J B Pardiwala 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 (advocate and securities and regulatory expert) as members of the committee.
"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," the bench said.
The court framed the remit of the committee as follows:
a. To provide an overall assessment of the situation including the relevant causal factors which have led to the volatility in the securities market in the recent past;
b. To suggest measures to strengthen investor awareness;
c. To 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; and
d. To suggest measures to (i) strengthen the statutory and/or regulatory framework; and (ii) secure compliance with the existing framework for the protection of investors.
The court also directed the Chairperson of the Securities and Exchange Board of India to ensure that all requisite information is provided to the committee.
"All agencies of the Union Government including agencies connected with financial regulation, fiscal agencies and law enforcement agencies shall co-operate with the committee," the court ordered.
It also directed the committee to give its report in "sealed cover" within two months.
Adani group's head Gautam Adani tweeted, "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.
The court also directed as a part of its ongoing investigation, SEBI shall also investigate the following aspects of the issues raised in the present batch of petitions:
a. Whether there has been a violation of Rule 19A of the Securities Contracts (Regulation) Rules 1957;
b. Whether there has been a failure to disclose transactions with related parties and other relevant information which concerns related parties to SEBI, in accordance with law; and
c. Whether there was any manipulation of stock prices in contravention of existing laws.