Supreme Court Queries Mahua Moitra on Public Disclosure of Foreign Portfolio Investors' Ownership

The Supreme Court recently questioned TMC MP Mahua Moitra regarding her request for public disclosure of the ultimate beneficial owners and portfolios of alternative investment funds (AIFs), foreign portfolio investors (FPIs), and their intermediaries in India. The bench, comprising Justices B V Nagarathna and R Mahadevan, remarked that a petition under Article 32 of the Constitution cannot be used for a roving inquiry.

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Advocate Prashant Bhushan, representing Moitra, was asked to modify the plea to challenge the response from the Securities and Exchange Board of India (SEBI). Initially, Bhushan argued that over Rs 1 lakh crore is invested through AIFs and FPIs without clear information on who controls these investments. He highlighted that shell companies often obscure ownership, using names like Global Opportunities Fund while hiding the real owner.

Disclosure Purpose Questioned by Supreme Court

The court questioned the purpose behind seeking such disclosures. "You are seeking public disclosure. But what is the purpose of that disclosure? What will you do with the disclosure? Is it under Right to Information Act? You can't have an Article 32 petition which is in the nature of a Right to Information," observed the bench. This highlights the court's concern about using constitutional provisions for information requests.

Solicitor General Tushar Mehta alleged that Moitra's intent was to disclose everything to fish out information for filing petitions. On April 1, the Supreme Court had asked Moitra to present a detailed representation to SEBI on this issue. The court had also stated that if authorities did not consider this representation within a reasonable time, Moitra could pursue legal remedies.

SEBI's Role in Regulating Financial Markets

Moitra's Public Interest Litigation (PIL) aimed at enhancing transparency and investor awareness in India's financial markets by mandating public disclosure of beneficial owners and portfolio holdings of AIFs and FPIs. SEBI, responsible for regulating securities markets in India, oversees AIFs and FPIs as part of its mandate. The plea emphasized SEBI's role in ensuring clarity in these financial operations.

The Supreme Court had earlier disposed of Moitra's plea but noted that once a representation is made to SEBI, it should be considered according to law. This decision underscores the importance of following legal procedures for addressing concerns related to financial transparency.

Moitra's plea seeks to bring transparency by revealing who ultimately owns and controls investments made through AIFs and FPIs. The case highlights ongoing debates about financial transparency and regulatory oversight in India's financial markets.

With inputs from PTI