New Delhi l
The Supreme Court on Tuesday declined to hear Trinamool Congress (TMC) MP Mahua Moitra’s Public Interest Litigation (PIL) demanding greater transparency in India’s financial markets, particularly concerning Alternative Investment Funds (AIFs) and Foreign Portfolio Investors (FPIs).
A two-judge bench of Justices BV Nagarathna and Satish Chandra Sharma advised Moitra to directly approach the market regulator SEBI with a detailed representation instead. The bench noted that if such a representation is submitted, SEBI may consider it under the applicable laws.
Moitra Raised Concerns Over Market Opacity
Represented by advocate Prashant Bhushan, Moitra highlighted that while mutual funds are subject to strict disclosure norms, AIFs and FPIs operate with limited transparency. This, she argued, opens the door to market manipulation, money laundering, and tax evasion.
Bhushan told the court,
“SEBI’s regulations currently do not require these two classes (AIFs and FPIs) to disclose details of who is investing and where the money is being allocated.”
The court asked if any formal complaint or representation had been made to SEBI previously, to which Bhushan replied in the negative.
The Solicitor General Tushar Mehta, representing the Centre, was also present during the proceedings.
SC Suggests Administrative Route
Refusing to intervene through judicial means, the Supreme Court reminded the petitioner that regulatory grievances should first be routed through statutory mechanisms.
The bench stated,
“Let the petitioner submit her concerns directly to SEBI. Once such representation is made, SEBI may examine the issue in accordance with law.”
The Broader Concerns in the Petition
The petition flagged the rapid rise of AIFs and FPIs in India’s capital markets, pointing out that their opaque ownership structures threaten market integrity. Unlike mutual funds, AIFs and FPIs are not required to publicly disclose their ultimate beneficial ownership (UBO) or detailed portfolio holdings.
Moitra’s plea said the lack of such disclosures
“violates Article 19(1)(g) of the Constitution by hampering the ability of honest market participants and retail investors to trade freely and fairly.”
She also warned about the risks of round-tripping, front-running, tax evasion, and other forms of manipulation that could arise without stringent disclosure norms.
What’s Next?
With the Supreme Court opting for regulatory redressal over judicial action, the ball is now in SEBI’s court. It remains to be seen whether the market watchdog will tighten norms for AIFs and FPIs and enhance transparency — a demand that many believe is necessary for safeguarding investor trust and maintaining healthy market practices.
