Supreme Court Allows Mahua Moitra to Amend Petition Seeking Full Disclosure of Beneficial Owners in AIFs, FPIs

The Bench of Justices BV Nagarathna and R Mahadevan closely examined the scope and basis of the petition, raising concerns over its vague nature and suitability under Article 32.

Advocate Prashant Bhushan, appearing for Moitra, argued that with over Rs.1 lakh crore invested through AIFs and FPIs, neither the public nor SEBI has clarity on who ultimately controls these investments. He pointed out that many shell companies are used to obscure ownership, citing examples where funds were labeled under names such as “Global Opportunities Fund” while the real beneficial owner remained undisclosed. He referenced the Adani-Hindenburg case as an illustration of potential regulatory circumvention.

Justice Nagarathna observed that SEBI’s reply to Moitra’s representation was limited and had not involved examination of actual documents.

The Court also noted that a beneficial owner may not always be a natural person but can be a corporate entity, emphasizing that the plea sought public disclosure of information in the absence of any concrete evidence of violations.

When questioned about the purpose of disclosure, Bhushan maintained that without access to this information, violations could not be detected.

Justice Nagarathna countered that Article 32 cannot be used as a mechanism akin to a Right to Information request or a “roving enquiry” to fish out potential infractions.

Solicitor General Tushar Mehta submitted that the petitioner’s approach effectively sought to “fish out” potential violations rather than point to specific wrongdoing.

Justice Mahadevan added that unless SEBI’s reply was formally challenged, the Court could not examine the merits of the case.

Bhushan then agreed to challenge SEBI’s reply and was permitted to amend the petition accordingly.

The Bench directed that the amended petition should clearly specify the legal grounds and evidence, allowing the Court to consider whether such a disclosure order could be granted.

On October 9, the Court had noted that the petitioner could make SEBI’s reply part of the record and clarified that no notice has been issued in the matter yet. Appearing for SEBI, the counsel informed the Court that the Solicitor General (SG) Tushar Mehta would represent the regulator and that the issue had already been adjudicated.

Previously, on September 26, the Court had noted that in April, the Court had disposed of Moitra’s previous petition with a similar prayer, directing her to first approach SEBI with her grievances. During the hearing, Advocate Prashant Bhushan for Moitra submitted that a representation had already been made to SEBI, and the regulator had responded only after the filing of the current petition.