Citing transparency issues, the Supreme Court on Friday refused to accept in a sealed cover the names of domain experts suggested by the Union government for setting up a panel to look into strengthening the regulatory mechanisms for the stock market.
On February 10, the SC had suggested setting up such a panel. This recommendation came in the wake of the recent rout in Adani Group shares following a report by Hindenburg Research alleging fraud and manipulations. On February 13, the government had responded that while it did not have any objection to the setting up of such a panel, it wanted to give the names of the domain experts for the committee and the scope of its mandate in a sealed cover in larger interest.
However, on Friday, the SC bench, led by Chief Justice DY Chandrachud, said, “We would rather not accept the sealed cover suggestions. We want to ensure transparency. In case we take your suggestions from sealed cover, it automatically means the other party won’t know.”
“We want full transparency for the protection of investors. We will form a committee. There will be a sense of confidence in the court,” the bench, also comprising Justices PS Narasimha and JB Pardiwala, said.
The apex court also ruled out the possibility of any sitting judge overseeing the functioning of the proposed panel.
“We are closing it for orders,” the bench said after hearing brief submissions by solicitor general Tushar Mehta and PIL petitioners, including lawyers Prashant Bhushan and ML Sharma.
At the outset, the law officer said he had given a note on the names and “remit” (scope) of the committee in a sealed cover. “This has been given with two intentions in mind: One, a holistic view is taken and the truth comes out and second, no unintended message goes out having an impact on the security market, which is an emotion-driven market,” Mehta said. He said he has no issues with regard to any judge supervising the committee.
“Sitting (SC) judges can hear the matter and they cannot be the part of the committee,” the CJI said, adding he has been facing difficulties in setting up benches everyday.
Stressing that statutory bodies like market regulator Sebi are “fully equipped” and are on job, the central government had earlier expressed apprehension that any “unintentional” message to the investors that regulatory bodies in India needed monitoring by a panel may have some adverse impact on the flow of money into the country.
On its part, Sebi, in a note filed in the SC, had indicated that it is not in favour of banning short-selling or sale of borrowed shares, and said that it is investigating allegations made by a tiny short-seller against the Adani Group as well as its share price movements.
Adani Group stocks have taken a beating after the Hindenburg Research made a litany of allegations, including fraudulent transactions and share price manipulation, against the business conglomerate. The Adani Group has dismissed the charges as lies, saying it complies with all laws and disclosure requirements.