SC raps Centre, Sebi on investors safety

New Delhi: The Supreme Court, hearing a batch of pleas on the Adani-Hindenburg dispute, on Friday asked the Union Government and the Sebi to explain what steps they are taking to prevent investors’ loss in future.

A bench, headed by CJI DY Chandrachud, said: “One of the principal reasons which led us to intervene was because of this extreme volatility of the stock market which had caused loss to investors’ wealth.”

“Now, what is Sebi intending to do to protect this kind of volatility due to short selling which leads to a loss of investor value,” asked the bench, also comprising Justices JB Pardiwala and Manoj Misra. It asked if any element of wrongdoing has been found in Sebi’s investigation so far as short-selling is concerned.

In response, Solicitor General Tushar Mehta, appearing for the Sebi, said that in cases involving short-selling, the market regulator is taking legal action in accordance with the law. “Wherever we found short selling, we will take action and we are taking action,” he said.

Mehta added that the government is considering “constructively with open mind” the suggestions made by the court-appointed expert committee.

The Sebi, in an affidavit filed before the apex court, had opposed various suggestions made by former SC judge Justice AM Sapre-headed expert committee, including prescribing timelines for initiation of investigation and proceedings and said that “prescribing specific timelines to complete the investigation may compromise the quality of investigation”.

Further, SG Mehta said that Sebi is not seeking any extension of time and 22 out of 24 investigations have already been finalised.

In relation to the remaining two cases, he said that the reports are interim in nature and the SEBI has sought information from foreign agencies and has no “control on time limit”.

Mehta said that the application seeking contempt action against the SEBI should not be entertained because the market regulator in August had filed an application before the apex court seeking extension of 15 days to conclude the investigation process and thereafter, a fresh status report was filed within a period of ten days.

In relation to another application alleging that the Sebi brought amendments to benefit the Adani group, Mehta said that he made a conscious call to not reply to it.