A bench of Chief Justice D Y Chandrachud and Justices P S Narasimha and J B Pardiwala said the panel will have former SBI chairman 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 SC allowed Sebi to continue its probe into the Hindenburg report allegations against the Adani Group, but said the market regulator had not expressly referred to an investigation into alleged violation of Securities Contracts (Regulation) Rules 1957 on maintaining a minimum public shareholding in a public limited company.
While setting up an expert committee to probe into alleged regulatory failures in detecting possible breach of laws that led to the crash of Adani Group shares, the SC on Thursday said it was imperative that Indian investors are protected against market volatility of the kind 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.
Somasekhar Sunderasan, named in the SC-constituted panel on Thursday, was recommended for appointment as a Bombay HC judge in February last year, but the Centre had returned it for reconsideration by the collegium alleging that he was a “highly biased opinionated person”. On January 18 this year, the collegium rejected the objections and reiterated the recommendation, saying “Sundaresan has specialised in commercial law and would be an asset to the Bombay HC which has a large volume of cases of commercial and securities laws, among other branches”.
The SC mandated the committee 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, to suggest measures to strengthen investor awareness, 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 to suggest measures to strengthen the statutory and/or regulatory framework, and secure compliance with the existing framework for the protection of investors”.
The bench asked the chairperson of the Securities and Exchange Board of India (Sebi) to ensure that all requisite information is provided to the committee. “All agencies of the Union government, including agencies connected with financial regulations, fiscal agencies and law enforcement agencies, shall cooperate with the committee. The committee is at liberty to seek recourse to external experts in its work,” it said.
The SC said Sebi must complete its probe into allegations against the Adani Group within two months and file a status report. While flagging alleged violations by Adani of provisions for maintenance of minimum public shareholding in a public limited company, the SC said the Sebi probe must look at other charges levelled against the group.
It also directed the market regulator to apprise the Justice Sapre-headed panel of the action that it has taken in furtherance of the SC directions as well as the steps that it has taken in furtherance of its ongoing investigation.
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