The petition argued that the rapid growth of AIFs and FPIs in India has created serious concerns about transparency.
New Delhi: The Supreme Court of India on Tuesday declined to hear a Public Interest Litigation (PIL) filed by Trinamool Congress (TMC) Member of Parliament (MP) Mahua Moitra.
The plea sought to make India’s financial markets more transparent by requiring public disclosure of the ultimate beneficial owners (UBOs) of investment funds, as well as details of portfolio holdings of Alternative Investment Funds (AIFs) and Foreign Portfolio Investors (FPIs).
A Supreme Court bench, comprising Justices B V Nagarathna and Satish Chandra Sharma, advised the petitioner to approach the relevant authorities with her concerns.
The petitioner was represented by senior advocate Prashant Bhushan, who agreed to this suggestion but requested the court to keep the matter open. However, the bench refused and disposed of the plea, allowing the petitioner to make a formal representation, which would be considered as per the law.
Solicitor General Tushar Mehta appeared on behalf of the Union government during the hearing.
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The petition argued that the rapid growth of AIFs and FPIs in India has created serious concerns about transparency. It highlighted that unlike mutual funds, which are required to follow strict disclosure rules, AIFs and FPIs operate in a more secretive manner.
The plea stated: “Unlike Mutual Funds, which are subject to stringent public disclosure norms, AIFs and FPIs operate under opaque structures, raising risks of market manipulation, money laundering, and tax evasion.”
According to the petition, the Securities and Exchange Board of India (SEBI) is responsible for regulating India’s securities markets. SEBI oversees AIFs and FPIs under the SEBI (Alternative Investment Funds) Regulations, 2012, and SEBI (Foreign Portfolio Investors) Regulations, 2019. Despite these regulations, the petitioner claimed that full public disclosure of UBOs is still lacking.
The petition further argued that this lack of transparency negatively affects honest market participants, especially retail investors, as it violates their right to do business freely and fairly under Article 19(1)(g) of the Constitution of India.
The plea emphasized: “The opacity in AIF and FPI structures allows certain entities to manipulate the market and unfairly benefit at the expense of others, undermining the integrity of the capital markets and affecting the right to carry on business freely.”
It also pointed out that public sector undertakings (PSUs) and state-owned companies, which use taxpayer money, are involved in capital markets. Any market instability caused by foreign entities or undisclosed investors could compromise the financial system’s integrity.
The plea warned: “Any volatility in the capital markets because of foreign forces or such entities would lead to undermining the integrity of the entire financial system. The lack of transparency and oversight in the operation of AIFs threatens the integrity of the financial markets, which can further have a cascading effect on public welfare, investments, and the economy.”
The petitioner claimed that if the UBOs of these funds remain undisclosed, India’s financial system could become vulnerable to foreign interference, illicit money flows, and tax evasion. This could ultimately harm investor confidence and the country’s economic stability.
The plea asserted: “Any non-disclosure of ultimate beneficial owners of these funds leaves India’s capital markets and financial system vulnerable to foreign interference, money laundering, and tax evasion. It is equally detrimental to investor confidence and economic welfare of the nation. Opaque financial structures have the ability to harm national economic interests.”
It concluded by stating that the overall public interest in having transparent financial markets far outweighs the privacy concerns of AIFs and FPIs.
The plea added: “The larger public interest in having transparent financial markets far outweighs the privacy interests of AIFs and FPIs.”
In her response she tweeted:
SC asked me to approach SEBI for public disclosure of AIFs, FPIs- will do so immediately. SEBI will either not respond or refuse. So I will come back to SC again seeking a mandamus.
CASE TITLE: MAHUA MOITRA vs UNION OF INDIA AND ANR.| W.P.(C) No. 239/2025
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