The Supreme Court on Friday inquired from the market regulator Securities and Exchange Board of India (SEBI) on what is being contemplated to put in place a ‘robust’ regulatory mechanism to protect the interest of investors from any future the stock market crash as has happened in the case of Adani group in past two weeks.
Asking the SEBI to file a “brief note on legal and factual aspects” of the issue including what is being done to strengthen the securities market regulatory mechanism to ensure that Indian investor are protected from certain volatility witnessed in recent two weeks, a bench of Chief Justice DY Chandrachud, Justice PS Narasimha and Justice JB Pardiwala gave the SEBI time till February 13, to file its response.
Besides the legal and factual matrix, the court said that “The response can contain existing regulatory framework, the relevant causal factors, and the need for putting into place robust mechanism to protect investors. If the union is ready to accept the suggestion, the necessary recommendation of the committee may be made.”
The court also permitted the securities market regulator to communicate with the Finance Ministry on the issue.
The court also indicated that it may constitute a committee of experts dealing with the securities market and international banking. It also said that it may also appoint an amicus curia to assist the court in the matter, while making it clear that it was in a larger issue of protecting investors interest.
It was clear that the court was not going to make the hearing focused just on the loss suffered by the investors in the wake of Adani group’s stock market fiasco but see the issue in a larger context with future in mind.
Noting that India in 2023 was not what it was in 1990s and with change in economic regime and facts, all spectrum of people are investing in stock market and not just the well-off sections as was in the past.
Not being sure of the exact quantum of money that investors lost in Adani centric stock Market turmoil, the court said investors have lost lakhs of crores of rupees and it should be prevented.
The court posted the matter for hearing on February 13, 2023.
The top court was hearing two public interest litigation by advocate petitioners – Manohar Lal Sharma and Vishal Tiwari seeking probe into the Hindenburg Research Report relating to Adani group and steps that are required to prevent it and a putting in a place a mechanism to scrutinize sanction of loans of Rs 500 crore or more to big corporates.
Tiwari in his PIL has said that the Hindenburg Research Report on the Adani Group has “tarnished the image of the country” and has caused loss to the investors who had invested their life time savings in the stock market.
He has sought direction to the Centre to constitute a committee to inquire into the Hindenburg Research Report, and has also sought direction for setting up of a committee to oversee the sanction of loans above Rs 500 crore to big corporates.
The petitioner Tiwari has sought direction to the Centre to set up a committee to probe into the Hindenburg Research Report under the supervision of a retired apex court judge.