The Adani Group and other companies, whose shares experienced a meltdown after the Hindenburg report on January 24, were suspected of violating laws governing the securities market. The Supreme Court established a five-member committee, led by former SC judge A M Sapre, to investigate alleged regulatory failures in detecting and preventing suspected violations.
A bench of Chief Justice D Y Chandrachud and Justices P S Narasimha and J B Pardiwala said the committee will comprise former SBI chairman and independent director of ONGC and several Tata Group companies O P Bhatt, former Bombay HC judge J P Devadhar, veteran banker K V Kamath, Infosys founder and non-executive chairman Nandan Nilekani and commercial law expert Somasekhar Sundaresan.
The Supreme Court permitted Sebi to continue its investigation into the allegations made in the Hindenburg report against the Adani Group, but it raised the concern that the market watchdog had not specifically mentioned an inquiry into an alleged violation of the Securities Contracts (Regulation) Rules of 1957, which mandate the maintenance of a minimum public shareholding in a public limited company.
The SC bench said it had become imperative 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 CJI-led bench said and asked the committee to submit its report to the court “in a sealed cover” within two months.