GS 1

Sealed Cover Jurisprudence

Syllabus: Structure, Organization, and Functioning of the Executive and the Judiciary

Source: TH

In News

• The Chief Justice of India (CJI) rejected the government’s confidential proposals regarding the establishment of a committee to investigate the findings of the Hindenburg report concerning the Adani Group.

What is Sealed Cover Jurisprudence?

• Sealed cover jurisprudence is a practice used by courts to ask for or accept information from government agencies in sealed envelopes.
• This practice is commonly used by the Supreme Court and sometimes lower courts in India.
• The sealed envelopes can only be accessed by judges and are not made public.
• Although there is no specific law that defines the doctrine of sealed cover, the Supreme Court derives its power to use it from the SC Rules 2013 and the Indian Evidence Act 1872.
• The government has produced various documents as sealed covers in recent times, including the Rafale jets’ purchase deal and the Ayodhya title dispute.
• As a result, the doctrine of the sealed cover has gained the status of ‘due procedure’.

Pros

• To avoid harm to the reputation of public servants.
• To protect the identity of rape victims.
• Disclosure can endanger national security and public order.

Cons

• The other parties are unable to defend themselves.
• Against the principles of natural justice and the fundamental right to know.
• Threaten the very credibility of the judicial institution (‘open court’ principle).

Way ahead for the SC’s rulings:

• The government should claim a ‘specific privilege‘ and explain the ‘extenuating circumstances‘ to justify keeping documents confidential from the other party.
• The burden of proof should be on the government to show that sharing the records would harm national security and public order.
• The use of sealed covers should be limited to a ‘small exception‘ of cases to ensure transparency and uphold the principles of natural justice and the fundamental right to know.

GS 2

Avial Influenza

Syllabus: Issues related to Health

Source: TH

In News

Bass Rock, an island off the coast of North Berwick, Scotland, has experienced an unparalleled loss of tens of thousands of birds due to avian influenza (H5N1), commonly known as bird flu.

The most recent significant outbreak of avian influenza in India, which occurred during 2020-2021, affected multiple states and resulted in widespread mortality of wild birds.

Challenges in India

India faces several challenges in dealing with avian influenza, including:

• India is a major wintering ground for many waterfowl that rely on the central Asian Flyway.
• It is the fastest growing egg producer in the world.
• Unlike in Europe, poultry birds in India are not vaccinated against the flu.
• Farms with a diversity of animals or located near wetlands increase the potential for the viruses to generate more virulent strains, such as H5N1/H7N9, which could infect humans.
• There is no active surveillance in the poultry sector.
• There is no efficient mechanism for monitoring wetland and waterfowl habitats at the interface of poultry.

GS 3

Stock Market Regulation in India

Syllabus: Indian economy and related issues

Source: TH

In News

• The Supreme Court recently requested the SEBI and the government to present the current regulatory framework that safeguards investors from share market fluctuations.

Context and Background

• The Hindenburg Research report accused the Adani Group of stock market manipulation and accounting fraud.
• A share or stock market is a component of a free-market economy where various types of stocks, bonds, and securities are traded.
• It allows companies to raise money, investors to participate in the financial achievements of companies, make profits through capital gains, and earn income through dividends.

Four key laws regulate the securities market in India:

• The Companies Act, 2013
  • Governs the incorporation, responsibilities, directors, and dissolution of companies.
• The Securities and Exchange Board of India Act, 1992
  • Empowers SEBI to register intermediaries such as stock brokers, merchant bankers, and portfolio managers.
  • Regulates their activities and imposes penalties including suspending/cancelling their registration.
• The Securities Contracts (Regulation) Act, 1956 (SCRA)
  • Gives SEBI the power to recognise and derecognise stock exchanges.
  • Prescribes rules and bye-laws for their functioning.
  • Regulates trading, clearing and settlement on stock exchanges.
• The Depositories Act, 1996
  • Introduced the concept of dematerialised securities being held in electronic form.
  • Legitimised this practice and enabled SEBI to establish the necessary infrastructure.
  • Registered depositories and depository participants.

Can SEBI take action to control market volatility?

• SEBI does not typically intervene to prevent market volatility.
• Exchanges have circuit filters (upper and lower) in place to limit excessive volatility.
• However, SEBI does have the authority to:
  • Issue directions to stock exchanges, either to halt trading entirely or selectively.
  • Prohibit individuals or entities from buying, selling or dealing in securities, or from raising funds from the market, as deemed necessary.

What are the guidelines for fundraising?

• The Companies Act has delegated the authority to enforce some of its provisions to SEBI, including the regulation of raising capital, corporate governance, resolution of investor grievances, and more.
• SEBI has issued several guidelines related to fundraising, such as:
  • The Issue of Capital and Disclosure Requirement Regulations.
  • The Listing Obligations and Disclosure Requirements Regulations (2015).
  • And other relevant regulations and circulars.

What are the safeguards against fraud?

Fraud undermines regulation and prevents a market from being fair and transparent. To safeguard against fraud, SEBI has taken several measures:

• SEBI notified the Prohibition of Fraudulent and Unfair Trade Practices Regulations (1995) and the Prohibition of Insider Trading Regulations (1992).
• These regulations define different types of fraud, and provide for penalties.
• Violation of these regulations is a presumed violation of the Prevention of Money Laundering Act.
• SEBI has been given the powers of a civil court, and using these powers, SEBI has taken action against several entities, including Satyam, Sahara India, Ketan Parekh and Vijay Mallya.
• Appeals against SEBI orders can be made to the Securities Appellate Tribunal (SAT) and then to the Supreme Court (SC).

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