Supreme Court Dismisses Mahua Moitras Petition on Investment Transparency

New Delhi, October 29 (Daily Kiran) : The Supreme Court of India has dismissed a petition filed by Trinamool Congress MP Mahua Moitra, which sought to compel the Securities and Exchange Board of India (SEBI) to require alternative investment funds (AIFs) and foreign portfolio investors (FPIs) to publicly disclose the identities of their ultimate beneficial owners and the details of their investment portfolios.

A bench consisting of Justices B.V. Nagarathna, R. Mahadevan, and D.K. Upadhyay stated that there is no existing legal or regulatory framework that mandates such disclosures, making it impossible to grant the relief requested.

However, the court did allow Moitra to raise her concerns with the central government and SEBI. Justice Nagarathna emphasized that without a legal structure in place for the disclosure of ultimate beneficial ownership, the court cannot issue a writ of mandamus under Article 32 of the Constitution to enforce such transparency.

The Supreme Court remarked, “In the absence of such a framework, this court cannot exercise its discretion to issue a writ of mandamus directing the authorities to fully disclose such information.”

During the hearing, Moitra’s lawyer, Prashant Bhushan, argued that significant foreign investments are being funneled into Indian companies through foreign entities, while the identities of the actual investors remain obscure. He expressed concerns that this lack of transparency could lead to violations of SEBI regulations and potential market manipulation by large investors.

Bhushan pointed out that many countries require the disclosure of beneficial ownership information as a standard practice. However, Justice Nagarathna questioned whether the Supreme Court could issue such an order in the absence of a policy mandating these disclosures.

The court noted, “If there is a policy that requires public disclosure and you seek a mandamus to enforce it, that is a different matter. But if no such policy exists, can we issue such an order?”

Solicitor General Tushar Mehta opposed the petition, suggesting that the aim of the petitioner is to prevent foreign investment in the country. Bhushan countered that revealing the identities of ultimate beneficial owners would not harm legitimate investments.

In its ruling, the Supreme Court clarified that details of investments made by AIFs and FPIs are provided to SEBI or custodians, allowing for regulatory oversight. However, it reaffirmed that there is no current legal framework that obligates the public disclosure of unit-wise investments as requested by the petitioner.