The Supreme Court on Thursday dismissed a petition filed by Trinamool Congress (TMC) lawmaker Mahua Moitra questioning the opacity of beneficial owners of portfolio funds having a market capitalisation of over ₹90 lakh crore.
The court said that its order will not come in the way of the Centre or the Securities Exchange Board of India (SEBI) from framing a policy as there is presently no legal or regulatory framework mandating public disclosure of beneficial owners of Alternate Investment Fund (AIF) and Foreign Portfolio Investments (FPI).
A bench headed by justice BV Nagarathna said, “We find that in exercise of our powers under Article 32 of the Constitution, such a prayer cannot be granted as the framework for full public disclosure mandates a legal and regulatory framework. In the absence of this, the court cannot mandate such disclosure. In these circumstances, the prayer sought cannot be granted.”
The petition was argued by advocate Prashant Bhushan who said that absence of any regulatory or legal framework cannot be a ground for not entertaining the petition. He pointed out that in the past, the court has intervened by directing the Election Commission to mandate disclosure by candidates of their criminal antecedents, educational qualifications, assets and liabilities when there was no legal requirement to do so.
The bench, also comprising justices R Mahadevan and DK Upadhyaya said, “That was electoral reforms. It cannot be compared with this case. It is ultimately for the Union of India and SEBI to put a framework in place under which such a public disclosure can be mandated.”
{{/usCountry}}The bench, also comprising justices R Mahadevan and DK Upadhyaya said, “That was electoral reforms. It cannot be compared with this case. It is ultimately for the Union of India and SEBI to put a framework in place under which such a public disclosure can be mandated.”
{{/usCountry}}Solicitor general Tushar Mehta appearing for Centre and SEBI questioned the maintainability of the petitioner who is a MP. He said, “The purpose of this petition is to stop foreign direct investment. This very issue was examined earlier by this court and a finding was given. Such disclosure will be devastating.”
Even the bench asked Bhushan, “We are not on merits but at whose instance we have to consider this matter. She is a member of Parliament. If she wants a discussion on this issue, she has the right to raise it in Parliament. But entertaining a petition under Article 32 has its ramifications.”
The court clarified that it has nothing against the petitioner who, while an MP, has approached this court by filing a petition under Article 32 challenging the remission granted to the Bilkis Bano rape convicts that was entertained along with similar pleas by other civil society members.
Bhushan said that it will be a “dangerous proposition” to lay down that a MP cannot approach the court under Article 32. He said, “To have a debate in Parliament is not very easy. Being a member of Parliament does not disentitle her as she has approached this court as a citizen who is also a MP. She is raising a matter in public interest as she is concerned about the fate of 14 crore innocent investors who have invested in stocks which are manipulated by such opaque entities.”
The bench said, “We are not saying anything in Parliament. But why does she want to lend her name in this matter? None of the investors has come before us.” When Bhushan said she is one of the investors, the bench added, “ That makes it a private interest. A petition under Article 32 is for ordinary persons who cannot access the courts. Such PILs we have always entertained in the past for which we bow down to our predecessors.”
Moitra had earlier sent a representation to SEBI that was replied to on September 19, 2025. According to the petition, the two funds (AIF and FPI) hold significant market share with assets under management (AUM) of AIFs showing an increase of over 300% from ₹1,437 crore (at the end of FY 2013) to ₹13 lakh crore by end of December 2024. Even the asset under custody of registered FPIs is over ₹78.6 lakh crore compared to MFs having over ₹75 lakh crore as on July 31, 2025.
Bhushan pointed out that such funds now account for over ₹100 lakh crore which poses risk of money laundering, tax evasion and market manipulation. SEBI in its response dismissed the concerns raised by Moitra pointing out that the beneficial owners of AFIs/FPIs exceeding a 10% threshold in terms of ownership, control, or economic interest are required to be identified under the Prevention of Money Laundering Act, 2002 (PMLA) and the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005. “These laws uniformly apply to all reporting entities (as defined in PMLA) including those registered and regulated by SEBI,” the response said.
Moitra points out in her petition that despite having SEBI Regulations of 2012 governing AIFs and SEBI Regulations 2019 governing FPIs, there is no disclosure to investors, statement of portfolio, half-yearly or periodic disclosures, or annual reports of these funds disclosed publicly which affects retail investors.
SEBI’s reply said, “While investor confidentiality is preserved in line with global standards, SEBI and other enforcement agencies have visibility into the beneficial ownership and portfolio details of both AIFs and FPIs, in line with the requirements under PMLA.”
The AIF Regulations and FPI Regulations do not mandate public disclosure of entity-wise investments. However, disclosures of investments by every AIF/FPI are in fact made to SEBI/custodians which enable regulation, detailed investigation when circumstances warrant and support policy formulation,” states SEBI.
Moitra’s petition, filed as a public interest litigation (PIL), said that at a time when retail investors in mutual funds (MF) are put to strict scrutiny by SEBI, the retail investors are kept in the dark about beneficiary owners of these two funds.
“Lack of public disclosure poses severe risk to financial stability, market integrity, and economic sovereignty…Increasing foreign investment into Indian market and absence of ultimate beneficiary owners disclosure norms raise concern over possible money laundering (round tripping of funds), tax evasion and market manipulation,” Moitra stated in her petition.
Given the increasing role of AFIs and FPIs in the Indian financial market, the petition underlined that “regulatory transparency is crucial for protecting the interest of market stakeholders, especially retail investors.” This, in turn, would ensure market stability and prevent financial malpractices by circumventing laws,” she added.
As per the petition, SEBI has 1,647 registered AIFs holding assets worth ₹14.17 lakh crore and 11,999 FPIs with assets worth ₹78.66 lakh crore.