New Delhi: Supreme Court on Friday sought responses from the Centre, RBI, market regulator SEBI and CBI on a plea seeking a direction that the offshore portfolio investors, who invest in the Indian stock market through participatory-notes, should not be allowed to withdraw the money till further orders.
A bench of Justices Dipak Misra and C Nagappan issued the notice on the interim application, which was filed by advocate M L Sharma in his pending PIL seeking CBI probe against Indian offshore bank account holders named in the Panama papers.
P-notes are derivative instruments issued by registered foreign portfolio investors to overseas investors to enable them trade in stock market here without getting registered with SEBI. Sharma has referred to a recent proposal of SEBI which increases disclosure requirements for issuance of P-notes and said this would lead to siphoning of monies by investors.
The new rules enable the regulator to check the complete transfer trail of P-notes money on a monthly basis.
"25 lakh crore rupees black money which is floating in the stock market would be siphoned off. FIIs are Indian investors who have invested through P-notes," he said.
Besides seeking an ex-parte stay on release or transfer of P-note amounts till further orders, the plea has sought a direction to the Finance Ministry and others including the CBI to "seize entire black money/participatory notes".
"Issue direction to CBI to seize entire records of participatory notes under their (SEBI and RBI etc) control and to file their report before this court for further action and direction/prosecution," the plea said.
The plea has also referred to a SIT report on black money and said that Foreign Institutional Investors invest through P-notes since they allow them to earn returns on investment in the Indian market without undergoing the significant cost and time implications of directly investing in the India.
"That, in fact, more than Rs 25 lakh crores values of P-notes are in circulation in India in stock/ financial market. It is black money and come under Money Laundering Act. But due to illegal protection by the SEBI, these are running and SEBI did no action till date," it said.
The application also said, "black money is an offence and holder of it is liable to be prosecuted under the PML Act coupled with seizure of the black money but, due to protection by the SEBI, the said blackmoney is in circulation till date."
If disbursal of funds, pertaining to P-notes, is not stayed then a "large amount of black money, about Rs 25 lakhs cores P-notes" will disappear, it said.
Earlier, the court had issued notice to the Centre and others on the PIL seeking CBI inquiry against Indian offshore bank account holders named in the Panama papers. The lawyer, in his PIL, had sought a CBI probe against the Indian offshore account holders and stock market regulators under the supervision of the Supreme Court.
The Panama Papers leaks contain an unprecedented amount of information, including more than 11 million documents covering 2,10,000 companies in 21 offshore jurisdictions. Each transaction spanned different jurisdictions and may involve multiple entities and individuals.
The plea sought direction to CBI to lodge FIR and conduct investigation against the SEBI chairman, his associates, share brokers etc. for alleged offences, including under Prevention of Corruption Act and Prevention of Money Laundering Act.
The petition has alleged that Panama Papers include the names of nearly 500 Indians, including celebrities and industrialists, who have allegedly parked funds in offshore accounts in transactions brokered by the law firm.
