LexVISHAL TIWARI versus UNION OF INDIA & ORS
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* Author [2024] 1 S.C.R. 171 : 2024 INSC 3 Case Details Vishal Tiwari v. Union of India & Ors (Writ Petition (C) No. 162 of 2023) 03 January 2024 [Dr Dhananjaya Y Chandrachud*, CJI, J B Pardiwala and Manoj Misra, JJ.] Issue for Consideration Matter pertains to the Adani-Hindenburg report alleging that the Adani Group manipulated its share price wherein the petitioner is seeking investigation by the Special Investigation Team or by the CBI. Headnotes Constitution of India – Art. 32 - Report by an “activist short seller”, Hindenburg Research about the financial transactions of the Adani group alleging that the Adani group manipulated its share prices and failed to disclose transactions with related parties and other relevant information in violation of the regulations framed by SEBI – Petitioners sought constitution of expert Committee and transfer of investigation from SEBI to Special Investigation Team or by the CBI: Held: Power of this Court to enter the regulatory domain of SEBI in framing delegated legislation is limited – Court must refrain from substituting its own wisdom over the regulatory policies of SEBI – No apparent regulatory failure attributable to SEBI – Procedure followed in arriving at the current shape of the Regulations does not suffer from irregularity or illegality – Further SEBI has completed twenty-two out of the twenty-four investigations into the allegations levelled against the Adani group – SEBI directed to complete the pending investigations expeditiously – SEBI should take its investigations to their logical conclusion in accordance with law – Facts of this case do not warrant a transfer of investigation from SEBI – Court does have the power to transfer an investigation being carried out by the authorized agency to an SIT or CBI in extraordinary circumstances when the competent authority 172 [2024] 1 S.C.R. DIGITAL SUPREME COURT REPORTS portrays a glaring, willful and deliberate inaction in carrying out the investigation – Threshold for the transfer of investigation has not been demonstrated to exist – Reliance placed by the petitioner on the OCCPR report and the letter by the DRI is misconceived – Allegations of conflict of interest against members of the Expert Committee are unsubstantiated and are rejected – Union Government and SEBI to consider the suggestions of the Expert Committee in its report and take further actions to strengthen the regulatory framework, protect investors and ensure the orderly functioning of the securities market – SEBI and the investigative agencies of the Union Government to probe into the loss suffered by Indian investors due to the conduct of Hindenburg Research and other entities in taking short positions involved any infraction of the law and if so, suitable action be taken. [Para 67] Constitution of India – Art. 32 – Investigation conducted by SEBI into the allegations that the Adani group manipulated its share prices and failed to disclose transactions with related parties – SEBI’s regulatory domain – Scope of judicial review: Held: Courts do not and cannot act as appellate authorities examining the correctness, suitability, and appropriateness of a policy, nor are courts advisors to expert regulatory agencies on matters of policy which they are entitled to formulate – Scope of judicial review, when examining a policy framed by a specialized regulator, is to scrutinize whether it violates the fundamental rights of the citizens; is contrary to the provisions of the Constitution; is opposed to a statutory provision; or is manifestly arbitrary – Legality of the policy, and not the wisdom or soundness of the policy, is the subject of judicial review – When technical questions arise particularly in the domain of economic or financial matters and experts in the field have expressed their views and such views are duly considered by the statutory regulator, the resultant policies or subordinate legislative framework ought not to be interfered with – SEBI’s wide powers, coupled with its expertise and robust information gathering mechanism, lend a high level of credibility to its decisions as a regulatory, adjudicatory and prosecuting agency – Court must be mindful of the public interest that guides the functioning of SEBI and refrain from substituting its own wisdom in place of the actions of SEBI. [Paras 17 ] Constitution of India – Art. 32 – Investigation conducted by SEBI into the allegations that
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