THE SUPREME Court Friday said it did not want to accept in a “sealed cover” the Centre’s suggestions on who could be the members of a committee the court had proposed to assess the market regulatory framework and recommend measures, if any, to strengthen it in the wake of the Adani-Hindenburg affair. It refused to accept any suggestions on names from the petitioners as well.
Chief Justice of India DY Chandrachud, who headed a three-judge bench hearing a clutch of petitions on the Hindenburg Research report and its aftermath, told Solicitor General Tushar Mehta, the court wanted to maintain “full transparency”. The court would appoint a committee of its own that will promote a sense of confidence in the process, he said.
On February 10, referring to the contention that Indian investors lost several lakhs of crores in the recent fluctuations (in the stock market), the Court had suggested setting up a committee of experts to suggest a mechanism such that investors are protected and such instances do not happen in the future.
Opening the arguments Friday, the Solicitor General said, “As far as your suggestion that it must be supervised by some former judge etc, we leave it entirely to your lords. Only concern is by its very nature, it may not be advisable to delay the exercise by a long period. So any Honourable judge who can devote time, your lordships may kindly select. For members, these are the suggestions.” He then sought to submit a folder with the names proposed by the government.
But CJI Chandrachud said, “We would rather not accept the sealed cover suggestions from you for this reason; in constituting a committee which we want to do, we want to maintain full transparency. The moment we accept a set of suggestions from you in a sealed cover, it means the other side is not seeing them. Even if we don’t accept your suggestions, they will not know which of your suggestions we have accepted and which we have not. Then there may be an impression that well, this is a government-appointed committee which the Supreme Court has accepted even if we have not accepted your suggestions. So, we want to maintain the fullest transparency in the interest of protecting the investors.”
“If we have to accept suggestions, we should disclose them to the other side so that there is a sense of transparency, confidence in the process of the court. If you are not disclosing it to the other side, then trust us to come out with our own names…,” CJI Chandrachud said.
The court was hearing a batch of petitions filed in the wake of a report by short seller Hindenburg Research which accused the Adani Group of “brazen stock manipulation and accounting fraud scheme”.
With the bench not inclined to accept the suggestions on the names, the Solicitor General did not hand over the folder containing them.
The Supreme Court also said it “can’t start with a presumption of regulatory failure” as Advocate Prashant Bhushan, appearing for a petitioner, read out his prayers and said the Hindenburg report alleged violation of SEBI guidelines that the promoters must not hold more than 75 per cent of their company’s shares and that the market regulator had failed to check despite complaints. “Your prayer presumes guilt,” the CJI said, adding the court “can’t start with a presumption of regulatory failure”.
To Mehta’s submission that he had couched the language on the suggestions relating to the possible remit of the committee to ensure there is no unintended impact on the securities market, the CJI pointed out that even the government had said there was no substantial impact on the market. “According to you also there was no impact… irrespective of the statistical impact, there can’t be any denial of the fact that investors have lost lakhs of crores,” he said.
