Central Information Commission
Shri R.J. Uttamchandani & Shri Ashok K. ... vs National Securities Depository ... on 19 June, 2009
CENTRAL INFORMATION COMMISSION
.....
F.No.CIC/AT/A/2008/01024 &
F.No.CIC/AT/C/2009/00098
Dated, the 19th June, 2009.
Appellant / : Shri R.J. Uttamchandani
Complainant Shri Ashok K. Gupta
Respondents : National Securities Depository Limited, Mumbai
These two petitions filed by Shri Ramchand J. Uttamchandani and Shri Ashok K. Gupta relate to the same matter, i.e. the status of the National Securities Depository Ltd (NSDL) as public authority under Section 2(h) of the RTI Act. Hearing in these two petitions was held on 09.06.2009 in the presence of the representatives of all parties.
2. Appellant's / complainant's RTI-applications dated 29.09.2007 and 17.09.2008 were not considered by NSDL for reply on account of its contention that it was not a public authority.
3. The appellants' argument is that the National Securities Depository Ltd cannot claim that it was not a public authority as it performed a public function, was established under the Depositories Act, 1996 and holds information relating to its clients in fiduciary capacity; besides, they also come under the regulatory control of SEBI.
4. It has been submitted on behalf of the respondents that they do not conform to the description of public authority under Section 2(h) of the RTI Act. According to the respondents, they were governed by the Depositories Act-1996, which provided for the Dematerialization Rules to book entry-based transfer of securities in settlement of securities trade. NSDL is a Public Limited Company under the Companies Act, 1956 and performs its functions for the profit of its shareholders. It is not a Company under Section 25 of the Companies Act. The depository participants charge a fee to investors for providing services to the depository participants. It holds no public information but only information related to securities held by investors in dematerialized form, which are all third-party information. NSDL is nothing more than a Registered Capital Market Intermediary such as Mutual Funds, Stock Brokers, Debenture Trustees, etc. AT-19062009-12.doc Page 1 of 5
5. It is their further argument that a public authority to be so called has to conform to the Supreme Court's decisions, in the following cases:-
(i) Rajasthan Electricity Board Vs. Mohan Lal: 1967(3) SCR 377;
(ii) Sukhdev Singh Vs. Bhagatram : 1975(1) SCC 421;
(iii) R.D. Shetty Vs. International Airport Authority of India:
1979(3) SCC 489;
(iv) Ajay Hasia Vs. Khalid Mujib: 1981(1) SCC 722 which lay down the parameters for determination of what was then described as 'other authorities'. NSDL is outside this orbit. NSDL is not substantially financed by the Government nor is it a government company within the meaning of Section 617 and Section 619B of the Companies Act, 1956. It performs no public function nor is it a monopolistic entity. Government has no control over the management of the NSDL. Mere fact that NSDL is regulated by SEBI does not make it a public authority. No parameters of public authority spelt-out in Section 2(h) of the RTI Act apply to it. The shareholding pattern of the NSDL could reveal that it owes its existence only to its shareholders, who are as follows:-
The shareholding pattern of NSDL is provided as under:
Name of Shareholder Category Percentage (%)
Administrator of the Specified Financial Institutions 25.00
Undertaking of the Unit Trust
of India - DRF
The Hong Kong and Shanghai Foreign Banks 3.13
Banking Corporation Limited
Citibank Foreign Banks 3.13
Deutsche Bank Foreign Banks 3.13
Standard Chartered Bank Foreign Banks 3.13
Total holding of Foreign Banks 12.00
HDFC Bank Private Sector Banks 3.13
IDBI Bank Limited Public Sector Banks 30.00
State Bank of India Public Sector Banks 5.00
Oriental Bank of Commerce Public Sector Banks 3.13
Dena Bank Public Sector Banks 1.56
Canara Bank Public Sector Banks 1.25
Union Bank of India Public Sector Banks 2.81
Total holding of Public Sector 43.75
Bank
National Stock Exchange of Body Corporate 15.63
India Limited
TOTAL 100.00
AT-19062009-12.doc
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6. It is the respondents' further submission that neither any State Government nor the Central Government hold any shares in the NSDL.
The Unit Trust of India's holding of equity shares in NSDL does not make it a government company under Section 619B of the Companies Act. NSDL is not subject to any audit by the Comptroller & Auditor General of India. Government exercise neither direct nor indirect control over the NSDL. They have cited Supreme Court judgement in the Federal Bank Ltd Vs. Sagar Thomas case to fortify their submission that regulatory control over the NSDL by SEBI does not render the former a public authority. In the end, respondents have stated as follows:-
"30. In view of the foregoing submissions, it is submitted that NSDL does not fall within the meaning, definition and purview of Section 2(h) of the RTI Act defining "Public Authority" and is not obliged to furnish information as required by the Complainant. Therefore, the notice issued by the Hon'ble CIC may be discharged in light of the foregoing submissions and the appeal filed by the complainant be rejected.
31. Without prejudice to the foregoing submissions, the Respondent submits that the Complainant / Appellant has approached the Hon'ble CIC with unclean hands and oblique motive. It is submitted that the Complainant has filed Consumer Complaints against the concerned Depository Participant(s) and seeks certain information regarding them from the Respondent / NSDL. It is a matter of record that the information sought for by the Appellant has already been provided to the Appellant. In respect of other information regarding byelaws of NSDL and rules and regulations which have been sought by the Complainant, it is submitted that the said information is freely available to public at large and can be obtained from the website of NSDL. As such, there is no merit in the Complaint / Appeal filed by the Complainant. NSDL has already provided the said information and the source from which it can be obtained to the complainant vide its letter dated February 29, 2008. A copy of the letter dated February 29, 2008 from NSDL to the complainant is annexed hereto and marked as Annexure R-2 [sic].
Without prejudice to the principal contention that NSDL is not a Public Authority and not covered under the RTI Act, it is submitted that the information regarding specific dealing(s) in securities / transactions are held by NSDL in a fiduciary capacity and are exempted from being disclosed, inter alia, under section AT-19062009-12.doc Page 3 of 5 8(e) and section 8(j) of the RTI Act and other applicable provisions. It is submitted that NSDL reserves its right to rely on the provisions of the RTI Act which exempt a Public authority from mandatorily providing information."
Decision:
7. I have carefully reviewed the submissions made in these two appeals by both parties and heard their submissions.
8. Apart from what has been stated by the respondents in defence of their plea, the key to understanding whether an entity is a public authority or not lies in Section 2(h) of the RTI Act. If an entity responds positively to any or more of the elements specified in Section 2(h) of the Act, then it unarguably becomes a public authority.
9. I doubt very much if NSDL can be classified as public authority in terms of what is stated in Section 2(h). Respondents have submitted elaborate arguments about how, given the structure and function of the NSDL, it does not answer the description of a public authority under the RTI Act. It is an entirely commercial entity engaged in business for profit and mere fact that it is required to submit to the regulatory control of SEBI does not alter its status to being a public authority in terms of Section 2(h). The Depositories Act under which the NSDL is registered is more akin to Societies Registration Act where certain types of entities get the authority and the space to function. The Depositories Act is not in the nature of other Acts which actually create such entities. An example of this is the LIC Act which creates the Life Insurance Corporation of India, which then becomes a public authority.
NSDL also doesn't answer the attributes of a public authority listed under Section 2(h) of the RTI Act.
10. In view of the above, I'm unable to endorse the appellants' submission that NSDL was properly a public authority under the RTI Act.
11. I also noticed that appellant has certain complaints vis-à-vis the NSDL, which are being attended to under the grievance-settlement mechanism of NSDL. It is important to clarify here that presence of a grievance is not enough reason for the entire matter to come within the ambit of the RTI Act. NSDL is also on record stating that the grievances of this applicant had been attended to.
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12. It is not the first application of this kind where a person has used the RTI Act in order to receive information held by a private entity that is not a public authority. The general belief is that if one's grievance remains unsettled anywhere, attempt to get it redressed through the RTI Act. It needs to be stated that the RTI Act doesn't provide a single- window-resolution for all manner of grievances vis-à-vis all manner of entities. There are strict limits to whom these petitions can be addressed and what information can be sought. Appellants such as these must be willing to approach the regulatory bodies such as SEBI in this case, to activate the grievance-settlement mechanism under the SEBI law, for resolution of any outstanding grievance or for receipt of information one wishes to have. Seeking through the RTI Act an information which otherwise could be had through the SEBI Act will be a tortuous ⎯ and not legally admissible ⎯ process. An information can be sought under the RTI Act only when it conforms to the standards laid-down under that Act. Presence of a grievance alone is not sufficient condition for activating the RTI Act.
13. In view of the above, it is not possible to allow the present appeal and the complaint. The submission of the respondents is upheld. Appeal closed.
14. Copy of this direction be sent to the parties.
( A.N. TIWARI ) INFORMATION COMMISSIONER AT-19062009-12.doc Page 5 of 5