Centre told Supreme Court on Monday that it has "no problem" with setting up an expert panel on regulatory mechanism to avoid Adani Group-like market volatility.
On Friday, the apex court had sought the views of the Securities and Exchange Board of India (SEBI) and the Centre as to how to ensure putting a robust mechanism in place since the capital movement now is "seamless" in the country.
"We would not like to undermine the competence of the agencies, including the regulator," Centre said. "We can submit some names in a sealed cover," said Solicitor General Tushar Mehta representing Centre.
Mehta, however, told the SC bench that the “remit” of the proposed committee would be relevant because any “unintentional” message to the investors that regulatory bodies here needed a monitoring by a panel may have some adverse impact on flow of money into the country.
“I have instructions that the SEBI and other agencies are fully equipped, not only regime wise, but otherwise also to take care of the situation. However, responding to the suggestion which fell from the court, the government has no objection to constituting a committee.” “But the remit of the committee would be very relevant because any unintentional message to international investors or domestic investors that the regulatory authorities need a monitoring by the committee may have some adverse impact on the flow of money,” the top law officer said at the outset of the hearing.
He said the Centre may be allowed to suggest names, who are people of “some calibre” and scope of the proposed committee in a sealed cover because it may not be appropriate to discuss these in open court hearings.
The bench then asked the law officer to give the note by Wednesday and listed the two PILs for further hearing on February 17.
Noting that the stock market is not the place where only high value investors invest, the court said on Friday that with the changing financial and tax regime the investments are being made by "the wide spectrum of middle class". It noted that as per some reports the total loss suffered by Indian investors due to the recent Adani stocks rout was in the range of several lakh crores of rupees.
One PIL filed by lawyer Vishal Tiwari sought a direction to the Centre to constitute a committee monitored by a retired apex court judge to inquire into the Hindenburg Research report which has made a slew of allegations against the business conglomerate led by industrialist Gautam Adani.
Another PIL filed by advocate M L Sharma sought prosecution of short-seller Nathan Anderson of the US-based Hindenburg Research and his associates in India and the US for allegedly exploiting innocent investors and the ''artificial crashing'' of the Adani Group's stock value in the market.
SEBI confirmed the existence of the investigation for the first time in its Supreme Court filing.
"SEBI is already enquiring into both, the allegations made in the Hindenburg report as well as the market activity immediately preceding and post the publication of the report," the regulator said in the filing, adding the matter was in early stages of examination.
"SEBI is strongly and adequately empowered to put in place regulatory frameworks for effecting stable operations and development of the securities markets," it added.
Led by billionaire Gautam Adani, Adani Group's seven listed companies have together lost about $120 billion in market value since Hindenburg's critical report, which included allegations of improper use of offshore tax havens and stock manipulation.
The Adani Group has dismissed the charges as lies, saying it complies with all laws and disclosure requirements.