Central Information Commission
Dr.Mohan K Patil vs Reserve Bank Of India on 29 November, 2011
CENTRAL INFORMATION COMMISSION
Club Building (Near Post Office)
Old JNU Campus, New Delhi - 110067
Tel: +91-11-26161796
Decision No. CIC/SG/A/2011/002069/16018
Appeal No. CIC/SG/A/2011/002069
Relevant facts emerging from the Appeal:
Appellant : Dr. Mohan K. Patil,
A-7/5, Opposite Hanuman Temple,
Government Colony, Bandra (East),
Mumbai - 400051
Respondent : Mr. A. Udgata,
CPIO & Chief General Manager, Reserve Bank of India, Urban Banks Department, Garment House, 1st Floor, Worli, Mumbai - 400018 RTI application filed on : 08/03/2011 PIO replied on : 19/04/2011 First Appeal filed on : 28/04/2011 First Appellate Authority order of : 07/06/2011 Second Appeal received on : 29/06/2011 Information was sought regarding illegal working of Deendayal Nagri Sahakari Bank Limited, Ambajogai, District Beed (M. S.), action initiated and taken by the RBI against that- S.No. Information sought Reply of Public Information Officer (PIO)
1. Copies of complaints received by RBI against Disclosure of information regarding complaints illegal working of the said bank, including received from third parties would harm the violations of the Standing Orders of RBI as well competitive position of a third party. Further, such as the provisions under Section 295 of the information is maintained in a fiduciary capacity Companies Act, 1956. and is exempted from disclosure under Sections 8 (1)(d) and (e) of the RTI Act.
2. Action initiated by RBI against the said bank, (a) A penalty of Rs. 1 lakh was imposed on including all correspondence between RBI and Deendayal Nagri Sahakari Bank Ltd. for violation the said bank officials. of directives on loans to directors/their relatives/concerns in which they are interested.
The bank paid the penalty on 08/10/2010.
(b) As regards correspondence between RBI and the co-operative bank, it is advised that such information is maintained by RBI in fiduciary capacity and hence cannot be given to outsiders.
Moreover disclosure of such information may harm the interest of the bank and banking system.
Page 1 of 6Such information is exempt from disclosure under Sections 8 (1)(a) and (e) of the RTI Act.
3. Finding of the enquiry made by RBI, actions Such information is maintained by the bank in a proposed and taken against the bank and its fiduciary capacity and is obtained by RBI during officials- official notings, decisions and final the course of inspection of the bank and hence orders passed and issued. cannot be given to outsiders. The disclosure of such information would harm the competitive position of a third party. Such information is, therefore, exempt from disclosure under Sections 8 (1)(d) and (e) of the RTI Act.
As regards action taken against the bank, see reply at S. No. 2 (a) above.
4. Confidential letters received by RBI from the See reply at S. No. 2 (a) above.
Executive Director of Vaishnavi Hatcheries Pvt.
Ltd. complaining about the illegal working and pressure policies of the bank and its chairman for misusing the authority of digital signature for sanction of the backdated resignations of the chairman of the bank and few other directors of the companies -- details of action taken by RBI on that.
Grounds for First Appeal:
Information provided by CPIO was unsatisfactory.
Order of the First Appellate Authority (FAA):
The FAA observed that the CPIO had furnished the information available on queries 2 and 4. Further, information sought in queries 1 and 3 was exempt under Sections 8(1)(a), (d) and (e) of the RTI Act.
Grounds for Second Appeal:
Dissatisfied with the FAA's order.
Relevant Facts emerging during Hearing held on 9 November 2011:
The following were present:
Appellant: Absent;
Respondent: Mr. S. C. Mahanta, Legal Officer on behalf of Mr. A. Udgata, CPIO & Chief General Manager via video conference from NIC Studio - Mumbai;
The Respondent stated that he would like to submit written explanations to the Commission in support of his arguments. The Commission directed the Respondent to send his written submission to the Commission via email before 20/11/2011.
The order was reserved at the hearing held on 09/11/2011.
Decision announced on 29 November 2011:Page 2 of 6
The Commission received written submissions from both parties on 18/11/2011, which were taken on record by the Commission. On perusal of papers, it appears that information on query 4 has been provided to the Appellant.
The PIO has submitted that under Section 35 of the Banking Regulation Act, 1949 (the "B.R. Act"), inspection/ scrutiny report is treated as confidential. It contains information in fiduciary capacity and only disclosed to the banks for specific purpose of rectifying deficiencies and irregularities pointed out in the inspection report. In case of cooperative banks, the inspection report is also forwarded to the Registrar of Cooperative Societies of the state concerned. Scrutiny/inspection report contains information regarding functioning of the bank intended to maintain privacy and fiduciary relationship between RBI and the bank. Disclosure of such information may cause more harm to the public interest and competitive position of the bank. Inspection documents are privileged documents under Section 34A of the B.R. Act. The B.R. Act is a special law and would prevail over the RTI Act.
Section 22 of the RTI Act expressly provides that the provisions of the RTI Act shall have effect notwithstanding anything inconsistent therewith contained in the Official Secrets Act, 1923, and any other law for the time being in force or in any instrument having effect by virtue of any law other than the RTI Act. Section 22 of the RTI Act, in no uncertain terms, lays down that the RTI Act shall override anything inconsistent contained in any other law. The High Court of Delhi in Union of India v. Central Information Commission & Anr. 2009 (165) DLT 559 has held that-
"Section 22 of the RTI Act gives supremacy to the said Act and stipulates that the provisions of the RTI Act will override, notwithstanding anything to the contrary contained in the Official Secrets Act or any other enactment for the time being in force. This non-obstante clause has to be given full effect to, in compliance with the legislative intent. Wherever there is a conflict between the provisions of the RTI Act and another enactment already in force on the date when the RTI Act was enacted, the provisions of the RTI Act will prevail..."
On a bare perusal of the provisions of the B.R. Act cited by the PIO, they appear to impose restrictions on access to information held by or under the control of RBI. This is prima facie inconsistent with the RTI Act, which mandates disclosure of information unless exempted under Sections 8 and 9 of the RTI Act. Therefore, in accordance with Section 22 of the RTI Act, the provisions of the RTI Act shall override the provisions of the B.R. Act as regards furnishing information. Consequently, whether or not information should be furnished has to be examined in light of Sections 8 and 9 of the RTI Act only.
Query 1:
The Appellant has sought copies of complaints received by RBI against illegal working of Deendayal Nagri Sahakari Bank Limited (the "Bank").
Whether information is exempt under Section 8(1)(d) of the RTI Act.
Section 8(1)(d) of the RTI Act exempts from disclosure- "information including commercial confidence, trade secrets or intellectual property, the disclosure of which would harm the competitive position of a third party, unless the competent authority is satisfied that larger public interest warrants the disclosure of such information;". In order to claim the exemption under Section 8(1)(d) of the RTI Act, the PIO must establish that disclosure of the information sought (which may include commercial or trade secrets, intellectual property or similar information) would result in harming the competitive position of a third party. As per Section 19(5) of the RTI Act, the burden of establishing the applicability of the exemption lies on the PIO.Page 3 of 6
The PIO has argued that disclosure of information regarding complaints received from third parties would harm the competitive position of the third party. This Bench is unable to appreciate how disclosure of complaints made against the Bank would harm the competitive position of the person/entity making these complaints. Moreover, the PIO has not even clarified the nature/identity of the third party. Section 19 (5) of the RTI Act states that 'In any appeal proceedings, the onus to prove that denial of a request was justified shall be on the Central Public Information Officer or State Public Information Officer, as the case may be, who denied the request.' The PIO has not justified this denial claiming exemption under Section 8 (1) (d). Therefore, the denial of information on query 1 on the basis of Section 8(1)(d) of the RTI Act is rejected.
Whether information is exempt under Section 8(1)(e) of the RTI Act. Section 8(1)(e) of the RTI Act exempts from disclosure "information available to a person in his fiduciary relationship, unless the competent authority is satisfied that the larger public interest warrants the disclosure of such information;". The traditional definition of a fiduciary is a person who occupies a position of trust in relation to someone else, therefore requiring him to act for the latter's benefit within the scope of that relationship. In business or law, we generally mean someone who has specific duties, such as those that attend a particular profession or role, e.g. doctor, lawyer, financial analyst or trustee. Another important characteristic of such a relationship is that the information must be given by the holder of information who must have a choice- as when a litigant goes to a particular lawyer, a customer chooses a particular bank, or a patient goes to particular doctor. An equally important characteristic for the relationship to qualify as a fiduciary relationship is that the provider of information gives the information for using it for the benefit of the one who is providing the information. All relationships usually have an element of trust, but all of them cannot be classified as fiduciary. Information provided in discharge of a statutory requirement, or to obtain a job, or to get a license, cannot be considered to have been given in a fiduciary relationship.
The PIO has argued that the information is maintained in a fiduciary capacity. The complaints received from the complainants disclosed their personal confidential information and disclosure to the Appellant would not serve any public purpose except making the personal information public.
In the present matter, it is clear that while third parties may have given information to RBI in confidence or in trust, there does not appear to be any duty cast upon RBI to act in their benefit. RBI being a regulator of the banking sector is the only authority to which complaints may be made by third parties regarding functioning/malpractices of other banks. Hence, there is no element of choice as such. There does not appear to be a creation of any fiduciary relationship between RBI and the third parties, as laid down above. Therefore, the PIO's contention that information in query 1 is exempt under Section 8(1)(e) of the RTI Act is rejected.
Query 2:
The Appellant has sought information on the action initiated by RBI against the Bank, including all correspondence between RBI and the Bank's officials. Partial information viz. action taken against the Bank has already been furnished by RBI. As regards the correspondence between RBI and the Bank's officials, the PIO denied the information on the basis of Sections 8(1)(a) and (e) of the RTI Act.
Whether information is exempt under Section 8(1)(a) of the RTI Act.
The PIO has argued that disclosure of information may harm the interest of the bank and the banking system. Disclosure of such information is also against larger public interest as it may lead to loss of public faith in the Bank followed by sudden withdrawal of deposits which would lead to bank failure. The Bank's failure may have a systematic impact leading to loss of public confidence and a run of deposits adversely affecting other banks resulting in the collapse of the entire banking/financial system.Page 4 of 6
Section 8(1)(a) of the RTI Act exempts "information, disclosure of which would prejudicially affect the sovereignty and integrity of India, the security, strategic, scientific or economic interests of the State, relation with foreign State or lead to incitement of an offence". It is unlikely that disclosure of information sought in query 2 would prejudicially affect the sovereignty and integrity of India, the security, strategic or scientific interests of the State, or relation with foreign State, or lead to incitement of an offence. Hence it must be examined whether the economic interests of the State are likely to be prejudicially affected by disclosure of the information. The information sought is the correspondence exchanged between RBI and the Bank's officials in relation to the action initiated by the former against the Bank.
This Bench is unable to understand how disclosing this information would affect the economic interests of the State. Financial stability of a nation cannot lie solely on public confidence in banks/financial institutions, and certainly not where banks/financial institutions holding public funds are involved in irregularities. The submissions of the Respondent appear to suggest that the banking system and the economic state of this Nation are extremely fragile and therefore, the information should not be disclosed. The Commission does not believe there is any merit in the argument that disclosure of the correspondence about illegal acts of Deendayal Nagri Sahakari Bank Limited,and RBI's correspondence with it can have any impact on the economy of India.
Section 8(2) of the RTI Act states, "Notwithstanding anything in the Official Secrets Act, 1923 nor any of the exemptions permissible in accordance with sub-section (1), a public authority may allow access to information, if public interests in disclosure outweighs the harm to the protected interests". The RBI is a regulatory authority which is responsible for inter alia monitoring subordinate banks and institutions. Needless to state significant amounts of public funds are kept with such banks and institutions. Therefore, it is only logical that the public has a right to know about the functioning and working of such entities including any lapses in regulatory compliances which may be inferred from the correspondence exchanged between RBI and the banks. Merely because disclosure of such information may adversely affect public confidence in defaulting institutions, cannot be a reason for denial of information under the RTI Act. If there are certain irregularities in the working and functioning of such banks and institutions, the citizens certainly have a right to know about the same. The best check on arbitrariness, mistakes and corruption is transparency, which allows thousands of citizens to act as monitors of public interest. A Nation's economic interests lie in the robustness of its Institutions and weeding out of the bad ones. There must be transparency as regards such organisations so that citizens can make an informed choice about them. In view of the same, this Bench is of the considered opinion that even if the information sought in query 2 was exempt under Section 8(1)(a) of the RTI Act,-as claimed by the Respondent,- Section 8(2) of the RTI Act would mandate disclosure of the information sought.
Whether information is exempt under Section 8(1)(e) of the RTI Act.
The PIO has contended that the correspondence exchanged was maintained by RBI in fiduciary capacity. The definition of "fiduciary" and the characteristics of a fiduciary relationship have already been enumerated above.
In the instant case, while the correspondence exchanged between RBI and the Bank's officials may have been maintained in a confidential manner, there does not appear to be any duty case upon RBI to act in benefit of the Bank. In fact, correspondence exchanged is likely to be in the course of inspection of the Bank carried out by RBI under Section 35 of the B.R. Act. Therefore, there does not appear to be a creation of any fiduciary relationship between RBI and the Bank.
Citizens have a right to know about the working of banking companies including any regulatory lapses. If there are irregularities in the functioning of the Bank which may be reflected in the correspondence exchanged between RBI and the Bank's officials- as sought in query 2, citizens certainly have a right to Page 5 of 6 know about the same. A larger public interest would be served by disclosing this information- under Section 8(2) of the RTI Act. In view of the same, this Bench is of the considered opinion that even if the information sought in query 2 was exempted under Section 8(1)(e) of the RTI Act,-as claimed by the Respondent,- Section 8(2) of the RTI Act would mandate disclosure of the information sought.
Query 3:
The Appellant has asked for the findings of the enquiry made by RBI, actions proposed and taken against the Bank and its officials including official notings, decisions and final orders passed and issued. Partial information on the action taken against the Bank has been provided to the Appellant. The remaining information sought has been denied on the basis of Sections 8(1)(d) and (e) of the RTI Act.
Whether information is exempt under Section 8(1)(e) of the RTI Act.
The PIO has argued that the Bank provided information to RBI on the trust that RBI would not disclose the information. The information was held in a fiduciary capacity.
The definition of "fiduciary" and the characteristics of a fiduciary relationship have already been enumerated above. In the present matter, it is clear that while the Bank may have given information to RBI in confidence or in trust, there does not appear to be any duty case upon RBI to act in benefit of the Bank. In fact, when RBI carries out inspection of the Bank under Section 35 of the Banking Regulation Act, 1949, it does so in a regulatory/monitoring capacity. The information provided to RBI by the Bank is clearly in discharge of statutory obligations. Therefore, there does not appear to be a creation of any fiduciary relationship between RBI and the Bank.
Whether information is exempt under Section 8(1)(d) of the RTI Act.
The PIO has contended that disclosure of information would harm the competitive position of the Bank and adversely affect its economic interest vis-à-vis other banks. Therefore, the information sought was exempt under Section 8(1)(d) of the RTI Act. The Commission finds certain merit in this contention of the PIO.
It is pertinent to mention once again that citizens have a right to know about the functioning of the Bank including any regulatory lapses. If there are irregularities in the functioning of the Bank- as sought in query 3, citizens certainly have a right to know about the same. A larger public interest would be served by disclosing this information- under Section 8(2) of the RTI Act. In view of the same, this Bench is of the considered opinion that despite the information sought in query 3 being exempted under Section 8(1)
(d) of the RTI Act,-as claimed by the Respondent,- Section 8(2) of the RTI Act would mandate disclosure of the information sought. The Nation's interest would be better served through transparency and exposure of illegal acts.
The Appeal is allowed. The PIO is directed to provide the complete information on queries 1, 2 and 3 to the Appellant before 25 December 2011.
Notice of this decision be given free of cost to the parties. Any information in compliance with this Order will be provided free of cost as per Section 7(6) of RTI Act.
Shailesh Gandhi Information Commissioner 29 November 2011 (In any correspondence on this decision, mention the complete decision number.)(BK) Page 6 of 6