Adani-Hindenburg row: Supreme Court takes exception to allegations against expert panel member appointed judge

‘As a court, how do we treat it (Hindenburg report) as credible? We will have to rely on our investigating agencies to investigate,’ says Bench led by CJI Chandrachud, which reserved its verdict on the matter

Photo for representation. Reuters

Tribune News Service

Satya Prakash

New Delhi, November 24

The Supreme Court on Friday took strong exception to petitioners objecting to elevation of advocate Somasekhar Sundaresan — a member of expert panel appointed by the top court to investigate alleged regulatory failure in the wake of Hindenburg report — as an additional judge of the Bombay High Court, terming it “unfair”.

“Why should we take these unsubstantiated allegations? By that logic, no lawyer who has appeared for an accused should become a High Court judge... It’s a 2006 appearance and you say something in 2023,” a Bench led by CJI DY Chandrachud told advocate Prashant Bhushan who represented one of the petitioners.

Almost two years after Sundaresan’s name was first recommended for judgeship, the Centre on Thursday notified his appointment as an additional judge of the Bombay High Court. Bhushan objected to his appointment, saying Sundareshan was Adani's counsel.

“Mr Bhushan, this is a bit unfair. Because that way people will stop being in committees we appoint… If we wanted to have retired high court judges we would have. But we wanted domain experts... We wanted a more robust analysis… Let's be fair. He was a counsel in 2006. Was he on retainer? Was he an in-house counsel...Someone appeared 17 years ago...There has to be some responsibility about allegations you make,” the CJI said.

A Bench led by CJI DY Chandrachud, which reserved verdict in the matter, also cast doubts over the credibility of the Hindenburg report, saying "We don't have to accept the Hindenburg report as ipso facto factually correct. That is why we asked SEBI to investigate.”

“Because for us to then accept something which is in a report of an entity which is not before us and whose veracity, we have no means of testing, would really be unfair. Therefore, we asked SEBI, 'you go and exercise your powers and test what has not come to light, you treat these as revelations or disclosure of allegations and you now exercise your jurisdiction as an adjudicating body'", the Bench said.

“As a court, how do we treat it as credible? We will have to rely on our investigating agencies to investigate… Therefore, we have to ask our investigative agencies to probe those allegations. You called it a credible investigation, but honestly we can’t make that assumption that it’s either credible or lacking in credibility,” the Bench noted.

The top court’s comments came after petitioners’ counsel Prashant Bhushan said there were many factual revelations in the Hindenburg report. It also rubbished the demands for a probe against SBI and Life Insurance Corporation, saying “Is it a college debate?”

As Bhushan said Sundareshan was also on many SEBI committees, the CJI shot back, “So? That disqualifies him? He was on the financial sector law reform committee of the previous government…”

“In fact he was very critical of SEBI,” Solicitor General Tushar Mehta said, requesting the petitioners to stop such allegations against those selected by the court to be on a panel.

Alleging conflict of interest against members of an Expert Committee set up by the Supreme Court to probe into allegations of accounting fraud and stock price manipulation against the Adani group in the Hindenburg report, a petitioner had in September urged it to constitute a new expert panel to look into the allegations afresh.

The Supreme Court had in its March 2 order also asked SEBI to investigate if there was any manipulation of stock prices in contravention of existing laws and if there was any failure to disclose transactions with related parties and other relevant information concerning related parties to the market regulator.

The SEBI has told the Supreme Court on August 22 that 22 of the 24 investigations into allegations of market manipulation against Adani Group levelled in the Hindenburg report have been finalised while the remaining two were of interim nature. The market regulator said it “shall take appropriate action based on the outcome of the investigations in accordance with law…”

On Friday, Bhushan questioned SEBI’s conduct, saying, "We have come to the conclusion that the SEBI probe is not credible. They say 13 to 14 entries are linked to Adani but they cannot look into it because the FPI guidelines were amended.”

"Mr Bhushan, I do not 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.

"SEBI is a statutory body exclusively entrusted with investigating stock market manipulation. Is it proper for a court without any proper material to say that we don't trust SEBI and we will form our own SIT? This has to be done with much calibration," the CJI told Bhushan.

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