The Supreme Court has permitted TMC MP Mahua Moitra to amend her plea seeking SEBI’s mandate for full public disclosure of Ultimate Beneficial Owners in Alternative Investment Funds (AIFs) and Foreign Portfolio Investors (FPIs), enhancing market transparency.
Thank you for reading this post, don't forget to subscribe!
NEW DELHI: The Supreme Court of India on Tuesday took up Trinamool Congress (TMC) MP Mahua Moitra’s fresh petition seeking a landmark directive to the Securities and Exchange Board of India (SEBI), to mandate full public disclosure of Ultimate Beneficial Owners (UBOs), Last Natural Persons, and portfolio details of Alternative Investment Funds (AIFs), Foreign Portfolio Investors (FPIs), and their intermediaries.
A Bench comprising Justices BV Nagarathna and R Mahadevan engaged in a rigorous discussion over the scope, maintainability, and intent of the petition, questioning whether it could be entertained under Article 32 of the Constitution.
The Moitra’s Plea
Appearing for Moitra, Advocate Prashant Bhushan argued that India’s capital markets face a dangerous transparency gap. With over ₹1 lakh crore invested through AIFs and FPIs, he noted that neither SEBI nor the public has clarity on who truly controls these funds.
He claimed that opaque investment structures, often hidden behind shell entities and generic fund names like “Global Opportunities Fund”, allow real owners to remain undisclosed. Bhushan referenced the Adani–Hindenburg controversy as an example of how such opacity could be used to circumvent regulatory oversight.
“The public deserves to know who is ultimately controlling the flow of billions into our markets,”
Bhushan argued, asserting that without such visibility, potential violations cannot even be detected.
The Court’s Observations
Justice Nagarathna, however, expressed serious reservations about the nature of the plea. She noted that Moitra’s petition appeared to seek “a roving enquiry” rather than addressing a specific instance of wrongdoing.
“Article 32 cannot be used like a Right to Information (RTI) mechanism,”
Justice Nagarathna remarked, stressing that public disclosure orders must be backed by tangible evidence or statutory violation, not general suspicion.
She further observed that a beneficial owner need not always be a natural person; it could also be a corporate entity, complicating the idea of “public disclosure” without context.
Government and SEBI’s Stand
Solicitor General Tushar Mehta, representing SEBI, argued that the petition was a “fishing expedition” seeking to uncover possible violations rather than address proven breaches.
He maintained that SEBI had already responded to Moitra’s earlier representation and that the matter had been adjudicated previously. SEBI’s counsel reiterated that a detailed reply had been provided addressing all of Moitra’s queries.
The Bench advised Bhushan to formally challenge SEBI’s reply instead of relying on general claims of opacity. Bhushan agreed to amend the petition, incorporating SEBI’s response and specifying clear legal grounds and evidence.
The Court granted time for Moitra to file a short affidavit, directing that the amended petition should clarify the specific reliefs sought. The matter was then adjourned, with legal remedies left open for future consideration.
Background
This is not Moitra’s first legal move in this direction. In April 2024, the Supreme Court had disposed of her earlier plea with similar demands, directing her to first approach SEBI directly. Following this, she made a formal representation, prompting SEBI to issue a response, which she now seeks to contest.
Her petitions consistently argue that AIFs and FPIs, unlike Mutual Funds, operate in regulatory shadows, largely exempt from stringent public disclosure norms under the SEBI (Mutual Fund) Regulations, 1996 and SEBI (Collective Investment Scheme) Regulations, 1999.
According to Moitra, this lack of transparency enables round-tripping, money laundering, front-running, circular trading, and greenwashing, all of which threaten financial stability and market integrity.
“The absence of public disclosure on UBOs and portfolio holdings poses serious threats to financial sovereignty,”
Moitra’s petition states.