New Delhi: A Chief Justice of India-led three-judge bench Friday took exception to conflict-of-interest allegations against members of the expert committee the Supreme Court had constituted in March to ascertain whether there was a regulatory failure in dealing with the alleged contraventions on the part of the Adani Group.
The bench also disapproved of one of the petitioners’ contentions with market regulator SEBI’s conduct in probing allegations of fraud made against the business conglomerate in the Hindenburg Research report.
Chief Justice of India D.Y. Chandrachud said SEBI cannot be expected to follow what newspapers have reported on Adani’s alleged conduct. “I don’t think you can ask a financial regulator to take something printed in the newspaper. This does not discredit SEBI. Should SEBI now follow journalists,” the CJI wondered.
Advocate Prashant Bhushan, who on behalf of one of the petitioners discredited SEBI’s role, said he pointed to media reports only to establish the regulator’s inability to access documents (against Adani Group) accessed by journalists. “If journalists can get these documents, how can SEBI not get it?” Bhushan said in response to the CJI’s remarks.
CJI Chandrachud also refused to concur with Bhushan’s opinion that US-based short seller Hindenburg Research made “factual revelations” in its research report, saying “the court could not proceed on the assumption that the report was true, as it was a matter for investigation”.
“We don’t have to accept the Hindenburg report as ipso facto factually correct. That is why we asked SEBI to investigate,” the CJI said. With this, the court reserved its verdict on a batch of petitions seeking an examination of allegations made in the Hindenburg Research report.
Bhushan made his submissions on SEBI’s conduct after Solicitor General Tushar Mehta informed the court that the market regulator had completed its probe in 22 of 24 cases that were pointed out following the publication of the Hindenburg Research report. According to him, letters have been sent to foreign market regulators and agencies for more information in the two remaining cases.
With regard to the 22 cases, he submitted, quasi-judicial proceedings would follow as per the existing legal framework.
Mehta also updated the bench about the committee of experts’ report, outlining a raft of measures to tighten the existing regulatory framework. SEBI, he said, had broadly accepted the report, barring a few points.
The court strongly rebutted Bhushan’s claim of conflict of interest on the part of two committee members, one of them being advocate Somasekhar Sundaresan, who the central government Thursday notified as a judge of the Bombay High Court. Government clearance for this name came 10 months after it was reiterated by the Supreme Court Collegium.
The expert committee headed by former Supreme Court judge Justice A.M. Sapre gave a clean chit to SEBI’s probe into allegations of corporate misgovernance and alleged irregularities on the part of the Adani Group.
Arguing against Sundaresan’s nomination in the expert committee, Bhushan claimed he had appeared for the Adani Group as a counsel. However, when asked by the court, he could produce only one court order of 2006 to support his assertion.
At this, the CJI remarked: “Mr Bhushan, it is not as if he was an in-house counsel of the Adani Group or a retainer. Lawyers make appearances in various cases. And you cite an appearance made by him 17 years ago. There has to be some responsibility about the allegations you make.”
On Bhushan’s contention that Sundaresan was present in many SEBI committees, the court quipped: “So? Does that disqualify him? He was on the financial sector law reform committee of the previous government.”
The bench described Bhushan’s allegations as “unfair,” saying this way “people will stop being in committees we appoint”.
The bench was dismissive of Bhushan’s concern over the appointment of another expert committee member, O.P. Bhatt. According to Bhushan, he is the chairman of Greenko which has business ties with the Adani Group.
(Edited by Amrtansh Arora)