New Delhi, Jan 3: The Supreme Court said on Wednesday no apparent regulatory failure can be attributed to SEBI based on the material placed before the court while adjudicating petitions on the Adani-Hindenburg row over allegations of stock price manipulation by the Indian conglomerate.
The apex court said, prima facie, there was “no deliberate inaction or inadequacy” in the investigation by the Securities and Exchange Board of India (SEBI).
A bench headed by Chief Justice D Y Chandrachud dealt with arguments advanced by the petitioners about alleged regulatory failure on the part of SEBI.
“In essence, the petitioners have argued that the amendments to the two regulations amount to regulatory failure on the part of SEBI and have accordingly prayed that SEBI be directed to revoke the amendments to the FPI (Foreign Portfolio Investors) Regulations and LODR (Listing Obligations and Disclosure Requirements) Regulations or make suitable changes,” the bench, also comprising Justices J B Pardiwala and Manoj Misra, said.
The top court noted these arguments and prayers were not present in the initial petitions and they cropped up following a report of the court-appointed expert committee dated May 6, 2023.
“The report stated that in view of the amendments to the regulations, it cannot return a finding of regulatory failure by SEBI. Thereafter, the petitioners have made arguments to belie the finding of the expert committee report,” it said.
The bench said it finds merit in SEBI’s arguments and does not find any reason to interfere with the regulations made by the market regulator in exercise of its delegated legislative powers. The term delegated legislation or secondary legislation refers to laws made by individuals or bodies authorised by the legislature to create detailed regulations under a specific Act of Parliament.
It noted SEBI has traced the evolution of its regulatory framework and explained the reasons for the changes in its regulations.
“The procedure followed in arriving at the current shape of the regulations is not tainted with any illegality. Neither has it been argued that the regulations are unreasonable, capricious, arbitrary, or violative of the Constitution,” the bench said. It said the petitioners have not challenged the vires (legal powers) of the regulations but have contended that there was regulatory failure based on SEBI’s alleged inability to investigate what was attributed to changes in the regulations.
“Such a ground is unknown to this court’s jurisprudence. In effect, this court is being asked to replace the powers given to SEBI by Parliament as a delegate of the legislature with the petitioners’ better judgment,” it said. (PTI)
