SC appoints Expert Committee to probe Hindenburg Report on Adani

Case Details: Vishal Tiwari v. Union of India - [2023] 148 taxmann.com 48 (SC)

Judiciary and Counsel Details

• • Dr Dhananjaya Y Chandrachud, CJI, Pamidighantam Sri Narasimha & J.B. Pardiwala, JJ.

Facts of the Case

In the instant case, the writ petition was lied before the Supreme Court regarding the loss of investor wealth in the securities market over the last few weeks because of a steep decline in the share price of the Adani Group of companies. The decline in share prices was allegedly caused by a report published by Hindenburg Research, which accused the Adani Group of manipulating its share prices, failing to disclose transactions with related parties, and violating securities laws.

The petitions stated that the public money amounting to thousands of crores is at risk because public institutions like the SBI and the LIC are exposed to the Adani Group.

The petitioner sought the following relief:

(a) Issuance of directions to the Union of India and the Union Ministry of Home Affairs to investigate the contents of the report published by Hindenburg Research.

(b) Issuance of the directions to the Union Ministry of Home Affairs to register an FIR against the founder of Hindenburg Research and his associates for short selling and to recover the profits yielded by the short selling to compensate Investors.

(c) Direct any investigative authority to:

• • Investigate the Adani Group companies under the supervision of a sitting.
  • Investigate the role of LIC and SBI in these

Supreme Court Held

In response to the petitions, the Supreme Court noted that there is a need to review existing regulatory mechanisms in the financial sector to ensure that they are strengthened with a view to protect Indian investors from volatility in the market.

Supreme Court further held 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 Supreme Court ordered the constitution of the expert committee comprising of 6 members.

SEBI further requested the chairperson of SEBI to ensure that all required information is to be 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.

Supreme Court further directed the Committee to furnish its report in a sealed cover to this Court within two months.