NEW DELHI: Chief Justice of India D Y Chandrachud on Friday directed Solicitor General Tushar Mehta appearing on behalf of SEBI (Securities and Exchange Board of India" in the Adani case to report on Monday a framework to protect the money of the small Indian investors in the short-selling of the shares of a company dealing with how a more robust mechanism can be put in place.
Heading a 3-judge Bench comprising Justices P S Narasimha and J B Pardiwala, the CJI sought to know improvements in the framework and wondered if a panel of the specialists which also has former judges by holding discussions among the finance ministry, SEBI, etc. to protect the middle class who are also the investors. He also offered to appoint an amicus curie (senior lawyer as a friend of court) to facilitate.
"The response can contain existing regulatory framework, the relevant causal factors, 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. A brief note on legal and factual matrix may be filed by the Solicitor General (SG) by next Monday," the Court ordered.
"It is said total loss by Indian investors is several lakh crores....How do we ensure they are protected.. it is said 10 lakh crores. How do we ensure that this does not happen in future. What role should be envisaged for SEBI in future," the CJI remarked.
The Bench was hearing two separate public interest litigations by advocates Vishal Tewari and Manohar Lal Sharma. Tewari insisted on forming an inquiry panel headed by a retired SC judge while the CJI said the Court's prime concern is on how to protect interests of the Indian investors. Sharma sought an inquiry by SEBI and Home Minitry and registration of First Information Report (FIR) against founder of Hindenburg Research, Nathan Anderson, and his associates in India for its recent report on Adani Group.
The CJI pointed out how lakhs of crores of the investors are lost in 3-4 minutes of short sale. The solicitor general said nothing can be said immediately, but SEBI is equally concerned with the court's worry. He said the trigger point was the report which was outside the territorial jurisdiction of the country.
The bench suggested having an expert committee and also conferring wider powers on SEBI. "You can show us what is the existing structure and how to strengthen the existing regime and can we contemplate having an expert committee which can have experts. Experts can be from securities area, wise guidance of a former judge, international financial law expert etc. We can give a wider role to SEBI also and SEBI can threadbare analyse powers which exist and how it can be improved since capital flow will become more seamless," the bench said.
