Supreme Court Dismisses Mahua Moitra’s Plea for Transparency in SEBI Regulations

The Supreme Court of India has disposed of a public interest litigation filed by Trinamool Congress (TMC) MP Mahua Moitra, which sought directions to the Securities and Exchange Board of India (SEBI) to mandate the public disclosure of beneficial owners and investment portfolios for Alternative Investment Funds (AIFs) and Foreign Portfolio Investors (FPIs). A bench led by Justice B.V. Nagarathna, along with Justices R. Mahadevan and D.K. Upadhyaya, declined the plea, stating that the court cannot issue a mandamus in the absence of an existing legal or regulatory framework.

Court's Observations

• The bench questioned why the matter was not raised in Parliament, suggesting that legislative processes are the appropriate forum for such policy debates.
• The court clarified that it could only direct SEBI to comply if a specific legal mandate were being ignored; it cannot create a new regulatory framework through judicial intervention.

Arguments Presented

Advocate Prashant Bhushan, appearing for Moitra, argued that the lack of transparency in AIF/FPI ownership leads to market manipulation. He pointed to the Adani-Hindenburg case, claiming that the 2018 removal of disclosure requirements weakened the regulatory system, allowing promoters to artificially inflate stock prices. Solicitor General Tushar Mehta, representing the Central Government, cautioned that the requested changes could negatively impact the national economy.

Context

Moitra’s petition aimed to increase market transparency, arguing that small investors are vulnerable when they are unaware of the underlying entities behind stock price movements. The court maintained that it cannot mandate disclosures that are not currently backed by statutory policy.