A three-judge bench comprising Justices B V Nagarathna, R Mahadevan and D K Upadhyaya disposed of a public interest petition filed by Trinamool Congress MP Mahua Moitra, holding that the judiciary could not compel the market regulator to introduce disclosure requirements unsupported by existing legislation or regulations.
The court distinguished between information available to regulatory authorities and information required to be placed in the public domain. It noted that investment details were already submitted to SEBI or designated custodians, enabling regulatory supervision and investigations where necessary.
Examining SEBI’s response, the bench found that neither the AIF Regulations nor the FPI Regulations required public disclosure of investments on an entity-by-entity basis. Consequently, the requested directions would effectively establish obligations beyond the existing regulatory framework.
The judges observed that Article 32 of the Constitution did not empower the court to impose the particular disclosure regime sought by Moitra without an appropriate statutory or regulatory foundation.
The bench clarified that courts could direct authorities to comply with existing legal requirements where violations were established. However, issuing a writ of mandamus to enforce obligations that had not been prescribed presented a fundamentally different question.
The ruling leaves the existing disclosure arrangements unchanged while preserving the authority of the Union government and SEBI to consider additional transparency requirements through appropriate policymaking and regulatory procedures.
Advocate Prashant Bhushan, representing Moitra, argued that the absence of specific legislation should not prevent judicial intervention where market transparency and investor protection were involved.
He contended that opaque ownership structures could facilitate market manipulation by allowing investors operating through multiple entities to influence share prices without their ultimate identities becoming publicly known.
Bhushan maintained that ordinary investors could face disadvantages when substantial investments were routed through structures whose underlying beneficiaries remained undisclosed. These concerns formed part of the petitioner’s case rather than findings established by the court.
The advocate referred to earlier judicial interventions requiring electoral candidates to disclose criminal antecedents, educational qualifications and financial assets. He argued that the judiciary had previously directed transparency measures even without explicit statutory provisions.
The bench distinguished those electoral disclosure cases from the regulatory questions raised by the petition, indicating that the circumstances and legal considerations were not comparable.
During the hearing, Justice Nagarathna questioned why Moitra, as a member of Parliament, had approached the judiciary instead of raising the matter through parliamentary proceedings.
The bench suggested that legislative discussion offered an appropriate avenue for examining whether broader disclosure obligations should be introduced. It nevertheless considered the petition and SEBI’s response before declining the requested relief.
SEBI maintained that confidentiality protections did not prevent regulators and enforcement agencies from accessing relevant ownership and portfolio information. Its submissions indicated that beneficial ownership details were available under applicable regulatory requirements, including provisions connected with anti-money-laundering compliance.
The regulator explained that information supplied by funds and their custodians supported supervision, investigations and policy formulation. Making those records accessible to authorities, however, was distinct from publishing them for unrestricted public examination.
Moitra’s petition sought identification of the natural persons ultimately controlling or benefiting from investments, including those conducted through layered corporate entities, trusts and financial intermediaries.
It argued that limited public visibility over such arrangements created risks involving market manipulation, money laundering, tax evasion and the potential circulation of funds through offshore structures.
Those concerns were presented as grounds for strengthening disclosure obligations. The court did not determine that the alleged practices had occurred or that particular investment funds had violated securities regulations.
The petition also highlighted the scale of investments handled by the affected entities. Figures cited before the court indicated that 1,647 registered AIFs held assets worth approximately Rs 14.17 lakh crore, while 11,999 FPIs accounted for approximately Rs 78.66 lakh crore.
These figures formed part of the petitioner’s submissions and were not independently adjudicated by the bench.
Alternative investment funds typically pool capital for investments under specialised strategies, while foreign portfolio investors channel overseas capital into securities markets. Both operate under separate regulatory frameworks administered by SEBI.
The petition specifically sought disclosure covering intermediaries alongside the investment vehicles themselves, extending the proposed transparency requirements beyond identification of registered funds to the individuals ultimately controlling their investments.
The proceedings also addressed whether the requested information could be obtained through existing supervisory channels, with SEBI maintaining that regulated entities already supplied investment information to the designated authorities.
