SAT Disposes of Appeals by Five Offshore Funds as SEBI Agrees to Share Complete File Note — September 28, 2026

The Securities Appellate Tribunal (SAT) disposed of appeals filed by five foreign portfolio investors (FPIs) after the Securities and Exchange Board of India (SEBI) agreed to share a complete, true copy of the file noting prepared by its adjudicating officer.

The appeals were filed by Albula Investment Fund, Asia Investment Corporation (Mauritius), LTS Investment Fund, Cresta Fund, and APMS Investment Fund. All five Mauritius-based funds had previously come under regulatory focus following allegations raised in the 2023 Hindenburg Research report concerning ownership structures and public float compliance in Adani Group companies.

Crux of the Regulatory Dispute

The litigation before the appellate tribunal centered on the interpretation of Rule 4(3) of the SEBI (Procedure for Holding Inquiry and Imposing Penalties) Rules, 1995. Under this statutory framework, an adjudicating officer is required to examine a noticee's written reply to a show-cause notice and form an independent opinion on whether there are sufficient grounds to proceed with a formal inquiry.

The five FPIs moved SAT challenging SEBI's refusal to disclose the complete opinion and underlying rationale formulated by the adjudicating officer. While SEBI had provided a paraphrased extract of the decision, the appellants argued that withholding the actual file note deprived them of the necessary material to effectively defend themselves against the regulatory charges, constituting a procedural lapse.

SEBI Concession and SAT Order

During the proceedings before SAT, senior counsel representing the capital markets regulator submitted that SEBI was prepared to share an unedited, true copy of the file noting.

"In these appeals, Sebi is prepared to provide a true copy of the file noting made by the officer under regulation 4(3)," the tribunal's order recorded, noting that SEBI's submission was made without prejudice to its legal rights, contentions, and overall position on the issue.

Counsel appearing on behalf of the five foreign investment funds informed the tribunal that the entities were satisfied with SEBI’s undertaking. With the primary prayer of the appellants answered, the SAT bench observed that "nothing further survives in these appeals" and formally disposed of the petitions.

Implications for Indian Markets and Foreign Capital

The closure of the appeals marks an important procedural development for institutional market participants and overseas funds navigating Indian regulatory enforcement.

Key Takeaways for Market Observers:

• Standard of Procedural Fairness: The regulator's willingness to grant access to primary file notes under Rule 4(3) sets a high benchmark for transparency in adjudication proceedings, ensuring noticees receive the exact basis on which an inquiry is sanctioned.
• Institutional Scrutiny: The five funds involved have faced heightened regulatory attention regarding disclosure of ultimate beneficial ownership (UBO) structures and compliance with foreign portfolio holding limits.
• Adjudication Road Ahead: With complete documentation now set to be handed over, formal adjudication proceedings against the offshore funds can proceed on merits without interlocutory delays at the appellate stage.

Tags: SEBI Securities Appellate Tribunal Foreign Portfolio Investors Adani Group Capital Markets