Supreme Court Tasks Credible Experts With Time-Bound Hindenburg-Adani Probe

Having turned down the Union Government's suggestion that the Hindenburg-Adani row be probed by a panel of experts suggested by the Narendra Modi government, the Supreme Court has now set up an expert panel headed by a retired Supreme Court judge, Justice Abhay Manohar Sapre, comprising experts on public sector banking, corporate and business practices, corporate governance, securities law and financial sector regulations and competition law, besides judges with wide exposure to stock market matters. The panel has been asked to report within two months.

Simultaneously, the Supreme Court has directed SEBI to also continue its probe and submit its report to the Sapre panel within this time frame.

The Supreme Court bench headed by Chief Justice of India DY Chandrachud, and comprising Judges PS Narasimha and JB Pardiwala, has apparently not satisfied the principal opposition party, Congress, which even today harped on its demand for a probe by a Joint Parliamentary Committee, a demand it has voiced on the floor of both Houses of parliament, though it has not resonated with other opposition parties.

The demand was raised first in the pre-Budget Session all-party meeting by Congress leader Mallikarjun Kharge. On that day, the Congress's MVA ally in Maharashtra, the NCP, and its senior partner in Tamil Nadu, DMK—both present in the meeting—preferred to skirt the issue. The Trinamool Congress, whose banker-turned-MP Mahua Moitra was vociferous on the Adani-Hindenburg matter in Lok Sabha, has also been silent on the demand for a JPC.

After the Supreme Court order today, Congress' Bihar ally, JD(U), refused to be drawn in into the JPC demand. Its spokesperson KC Tyagi said parliament usually does not discuss matters which are under judicial scrutiny.

In the past four decades, beginning with Bofors, many JPCs have been set up. The Ketan Parekh and Harshad Mehta JPCs did not produce reports which could fathom all issues involved. The demand for setting up a JPC is a cliché popular among political parties and parliamentarians in India. 

In Britain, whose Westminster model is the beacon of India's parliamentary system, JPCs were discontinued a century ago. The last JPC was set up on what was called the Marconi scandal in the 1920s—commenting on the inefficacy of probes by parliamentary committees, British political theorist and economist Harold Laski had noted that MPs tend to be divided on party lines and had thus advocated that a judicial probe, set up under the Commissions of Enquiry Act (which is a creature of parliament), may be better. UK has adhered to Laski's thought since. A parliamentary probe tends to meander; past JPCs were granted several extensions of tenure. Hopefully, the two-month time frame set by the Supreme Court will be adhered to and the interest of investors and the health of the stock market will be nursed back after the pitfalls are identified.

The composition of the Supreme Court-appointed panel is interesting: it includes a business journalist-turned lawyer, Somasekhar Sundaresan, whose nomination as a High Court judge has been turned down by the government as he is considered a "highly opinionated person" whose social media posts have been critical of government policies. He is an expert of securities law, financial sector regulations and the competition law and is an advisor of the Insolvency and Bankurptcy Board of India.

OP Bhatt, a former State Bank of India chairman, during whose tenure SBI entered the Fortune 500 club, brings expertise on public sector financial institutions, whose exposure to the Adani group has been under scrutiny. He is an independent director on the boards of blue chip companies Hindustan Unilever, TCS and Tata Steel - all with an impeccable record in probity and benchmark corporate governance.

Another eminent banker, K.V. Kamath, former chairman of ICICI Bank, who went on to become the first chairman when BRICS Bank was set up in Shanghai, also brings expertise in banking, finance and corporate governance. He is an independent director of the Reliance Industries and chairman of Jio Financial Services.

Another corporate honcho with an impeccable record has been inducted along with Bhatt and Kamath—Nandan Nilekani, the co-founder and chairman of Infosys Technologies. As the founding chairman of the Unique Identification Authority of India (UIDAI), he gave India Adhaar, which has provided the key to India's economic growth with its intrinsic ability to transfer benefits to the common man. He brings not only expertise in corporate governance but also his knowledge of digital commerce will be an added advantage to the panel.

Retired judge of the Bombay High Court Justice J.P. Devadhar has presided over the Securities' Appellate Tribunal, an autonomous statutory body that hears appeals against the orders passed by SEBI or by an adjudicating officer under the SEBI Act 1992. He has vast experience in judging matters related to the stock exchange.

The presiding judge of the probe, Justice Sapre, was part of the nine-judge bench of the Supreme Court which, in a historic judgement in the Puttaswamy case, upheld citizen's Right to Privacy. A former chief justice of the Guwahati and Manipur High Courts, he was last year entrusted by the Supreme Court to safeguard the interest of investors in real estate firm Unitech, which was mandated to sell its assets to protect the rights of homebuyers. His pro-investor track record adds sheen to the panel.

The Supreme Court has asked the Sapre panel to suggest measures to investigate the Hindenburg-Adani imbroglio and suggest measures to retain the sanctity of and strengthen the statutory framework. By observing that the "constitution of this expert committee doesn't divest SEBI of its duty of investigating the volatility in the market" and setting a two-month deadline for the market regulator's ongoing probe, the Supreme Court has perhaps ensured that instead of a meandering investigation, a focused, time-bound solution to address the matter is found.

Shubhabrata Bhattacharya is a retired editor and a public affairs commentator.

This column was originally published on NDTV.com.

The views expressed here are those of the author, and do not necessarily represent the views of BQ Prime or its editorial team.

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