The Supreme Court on Thursday refused to direct the Securities and Exchange Board of India (SEBI) to mandate full public disclosure of the people who own and profit from Alternative Investment Funds (AIFs) and Foreign Portfolio Investors (FPIs) operating in the Indian securities market. The bench said such a disclosure order could not be issued without an existing “legal framework of Regulations.”

A three-judge Bench headed by Justice B.V. Nagarathna said the responsibility now sits with the Union government and SEBI. The court said it could issue a mandamus for “full public disclosure” only once that framework is in place. It asked the Centre and the market regulator to consider bringing out suitable transparency Regulations.

The ruling came in a writ petition filed by Member of Parliament Mahua Moitra, represented by advocates Prashant Bhushan and Cheryl D’Souza. Her petition argued that the rapid expansion of AIFs and FPIs had created serious concerns over transparency in financial markets.

The numbers behind the petition

The petition contrasted these funds with mutual funds, which operate under strict public disclosure norms. Under the SEBI Mutual Fund Regulations, 1996 and the SEBI Collective Investment Scheme Regulation 1999, mutual funds face stringent rules. For AIFs and FPIs, the petition said, there were virtually no public disclosure norms at all.

Ms. Moitra’s figures show how fast the sector has grown. The number of AIFs registered with SEBI rose more than 30 times, from 42 in 2013 to 1,528 in 2025. Their average Assets Under Management (AUM) grew by over 835 times, from ₹1,437 crore in 2013 to almost ₹13 lakh crore by the end of 2024.

Mr. Bhushan submitted that the Assets Under Custody (AUC) of registered FPIs was over ₹74 lakh crore in 2025. By comparison, the total AUM of mutual funds in India was only around ₹68 lakh crore in 2025. The gap is the core of the argument. Funds that hold more money than the mutual fund industry, the petition said, operate largely out of public view.

The petition warned that these opaque structures raise risks of market manipulation, money laundering, and tax evasion. Mr. Bhushan said the MP was concerned about the lakhs of innocent investors in the market.

A sharp exchange over who can file

The hearing turned on whether the petition was truly a public interest case. Justice Nagarathna questioned why an MP would want to “lend her name” and file a public interest petition under Article 32 of the Constitution. She said Ms. Moitra could have raised the issue on the floor of the House for discussion.

Mr. Bhushan pushed back hard. He said it would be a “very dangerous proposition” for the court to suggest that an MP could not file an Article 32 petition in public interest. He added that discussions have hardly taken place in the House in the recent past. He also pointed to Ms. Moitra’s expertise as a former investment banker.

“As an MP, she is concerned about the fate of crores of people who are investing in the stock markets. She believes the opacity may lead to manipulation through AIFs and FPIs,” Mr. Bhushan submitted.

Justice Nagarathna responded that if the investor-protection concern was the basis, the petition was hardly in public interest. She also noted that the court had discretion to entertain writ petitions under Article 32. She reminded counsel that the court had earlier allowed Ms. Moitra’s petition against the premature release of 11 convicts in the Bilkis Bano gangrape case.

SEBI says the data already reaches the regulator

Solicitor General Tushar Mehta, appearing for SEBI, offered the regulator’s defence. He said disclosures of investments by AIFs and FPIs were made to the regulator. He added that a detailed investigation was conducted when warranted.

Mr. Mehta also pointed to the Supreme Court’s own January 2024 judgment in the Adani-Hindenburg short-selling case, Vishal Tiwari versus Union of India. That ruling held that courts have only limited powers of judicial review into SEBI’s regulatory domain. For the government side, that precedent is the central shield.

Justice D.K. Upadhyay put the court’s position in plain terms. “SEBI is the regulator. It has been granted certain powers. The situation in the country and in the international economy keeps on evolving,” he said. The message was clear: the judges see the policy fix as the job of the executive and the regulator, not the courtroom.

What the ruling leaves open

The court did not reject the substance of the concern. It rejected the route. By tying any mandamus to a regulatory framework, the bench has put the onus back on the Centre and SEBI. Whether those bodies move to write transparency rules for AIFs and FPIs will decide whether the question of who really owns these funds gets a public answer.

For retail investors, the stakes are direct. The petition’s argument rests on one contrast: the mutual fund industry is open to public scrutiny, while funds holding far larger sums face almost none. Until a framework exists, the people behind those funds remain outside public view, and the court has made clear it will not force that disclosure on its own.