Central Information Commission
Smt. Anju Sharma vs Securities And Exchange Board Of India ... on 6 October, 2020
Author: Neeraj Kumar Gupta
Bench: Neeraj Kumar Gupta
के ीय सूचना आयोग
Central Information Commission
बाबा गंगनाथ माग, मुिनरका
Baba Gangnath Marg, Munirka
नई द ली, New Delhi - 110067
ि तीय अपील सं या/Second Appeal No. CIC/SEBIE/A/2019/101914
Smt. Anju Sharma ... अपीलकता/Appellant
VERSUS
बनाम
CPIO, Securities And Exchange ... ितवादी/Respondent
Board Of India, Mumbai.
Relevant dates emerging from the appeal:
RTI : 28-08-2018 FA : 11-10-2018 SA : 14-01-2019
CPIO : 14-09-2018 FAO : 15-11-2018 Hearing: 28-09-2020
ORDER
1. The appellant filed an application under the Right to Information Act, 2005 (RTI Act) before the Central Public Information Officer (CPIO), Securities And Exchange Board Of India, Mumbai seeking following information:-
1. "Please provide information whether SEBI has completed its investigation in the PSTL matter. If so, on which date?
2. Please provide information whether SEBI has completed its investigation against Mr. Nirmal Kotecha in matter of PSTL?
3. With reference to the above, please provide information whether Ms. Mitial Acharya worked as an Account-Assistant in Mr. Nirmal Kotecha's office, as per SEBI's investigation? Please provide a photocopy of statement made by Ms. Mitial Acharya to SEBI on January 7, 2010 and January 9, 2010.
4. Please provide a photocopy of the letter dated 25th August 2009 by Mr. Nirmal Kotecha to SEBI regarding Mr. Mitial Acharya? Has Mr. Nirmal Kotecha confirmed to SEBI that Ms. Mitial Acharya worked as an accountant-assistant with his firm?
5. Please provide a copy of the tower location of Mr. Nirmal Kotecha and Mr. Amol Kokane on December 19, 2008?Page 1 of 9
6. Please provide a photocopy of the statement provided by Advocate Prakash Shah to SEBI? Please provide the exact date when Advocate Prakash Shah gave his statement to SEBI?"
2. The CPIO responded on 14-09-2018. The appellant filed the first appeal dated 11-10-2018 which was disposed of by the first appellate authority on 15-11- 2018. Thereafter, she filed a second appeal u/Section 19(3) of the RTI Act before the Commission requesting to take appropriate legal action against the CPIO u/Section 20 of the RTI Act, 2005 and also to direct him to provide the sought for information.
Hearing:
3. The appellant, Smt. Anju Sharma was represented by Mr. Mangesh Bhende through audio conferencing. Ms. Shalini Shah, AGM/SEBI participated in the hearing representing the respondent along with their counsel Mr. Ashish Aggarwal, Advocate in person. The written submissions are taken on record.
4. The representative of the appellant contended that SEBI has denied the information in mechanical and arbitrary manner without even citing the relevant section of the Right to Information (RTI) Act, 2005. Even if it may be considered that the denial is on the grounds of 8(1)(h) of the RTI Act, then such denial is bad in law without even showing as to how the information sought can hinder or impede any investigation or quasi/judicial process. Under section 8(2) of the Right to Information Act, a public authority cannot be permitted to withhold any information unless public interest in disclosure outweighs the harm to the protected interest. Here with the completion of investigation and progress to the Trial stage, there is no interest to be protected. Furthermore, with the reply of the Minister of Finance stating that Mr. Jerome Alexander (deceased) had been suspended, there is a strong indication of SEBI officials being involved in the entire scam and hence, it would be wrongful to withhold the said information which may be of great relevance in establishing the guilt of those actually involved in the offence and exonerating the innocent. Thus, the use of the false shield of section 8 and relevant sub sections to deny access to the said information is merely a part of a larger cover up by SEBI. It may also be considered that none of the other exemptions would apply to this and it is a fit case for disclosure on the premise of public interest especially in the interest of justice.
5. The representative of the appellant further argued that the SEBI has completed its investigation in this matter and the matter itself is over 10 years old with the lodging of the Police Complaint in 2009 and filing of charge-sheet/s. However, in SEBI's reply dated 14th September, 2018 in response to the RTI Page 2 of 9 application dated 28th August, 2018, SEBI has denied access to the information sought on the grounds of "investigation is conducted confidentially, as investigations are sensitive in nature". Thus, SEBI has stated that it "will not be able to confirm /deny the existence or otherwise of any examination/investigation in the matter for which information has been sought by you". Hence, any denial of information on grounds of continuing investigation is unwarranted. He contended that the CIC's order dated 26-09-2018 in CIC/SEBIH/A/2017/137139/BJ is not applicable in this case.
6. The Ld. Counsel appearing on behalf of SEBI informed the commission that two proceedings are still pending and therefore, disclosure of any information at this stage before closure all the proceedings would impede the ongoing process of investigation/prosecution. He further contended that SEBI conducts examination and investigations based on the references and alerts received by it and the investigations are conducted confidentially being sensitive in nature. As such, SEBI cannot confirm/deny the existence or non-existence of any examination/investigation in the matter for which information has been sought by the appellant. However, pursuant to investigation, if any regulatory action is taken by SEBI, the same would be available in the public domain on their website www.sebi.gov.in under head: 'Enforcement'.
7. The Ld. Counsel submitted that confirming or denying the existence of investigation would itself amount to disclosure of exempted information since SEBI receives alerts, references and inputs from various sources and these may or may not result in further action by SEBI such as examination or investigation. Further, such examination or investigation may or may not disclose the suspected violations or lead to enforcement actions. Therefore, maintaining confidentiality of investigation is important since reports of an investigation can result in unwarranted speculation or concern in the market or affect evidence collection during the investigation and may result in unnecessary harm. Therefore, SEBI, as a matter of policy does not confirm or deny existence of any investigation. This policy is also disclosed by SEBI on the FAQs on 'Investor Grievances-SCORES' which is available on its website. The respondent placed their reliance on earlier decisions of the CIC in CIC/AT/A/2007/00007 dated 10-07-2007 & CIC/SEBIH/A/2017/137139/BJ dated 26-09-2018.
Decision:
8. The respondent has contended that two proceedings are yet not over and disclosure of information before closure of all the proceedings would impede the Page 3 of 9 ongoing process of investigation/prosecution. However, after investigation, if any regulatory action is taken by SEBI, the same would be available in the public domain on their website www.sebi.gov.in under head: 'Enforcement'. SEBI, as a matter of policy does not confirm or deny existence of any investigation and this policy is also disclosed by SEBI on the FAQs on 'Investor Grievances-SCORES' which is available on its website. Any disclosure before conclusion of investigation may result in unwarranted speculation or concern in the market or affect evidence collection during the investigation. Regarding non-disclosure of information u/Section 8(1)(h) of the RTI Act, 2005, the respondent has referred to the CIC's order dated 10-07-2007 in CIC/AT/A/2007/00007 wherein it was observed as under:-
"17. Thus, the term 'investigation' used in Section 8(1)(h), in the context of this Act should be interpreted broadly and liberally. We cannot import into RTI Act the technical definition of 'investigation' one finds in Criminal Law. Here, investigation would mean all actions of law enforcement, disciplinary proceedings, enquiries, adjudications and so on. Logically, no investigation could be said to be complete unless it has reached a point where the final decision on the basis of that investigation is taken. In that sense, an investigation can be an extended investigation. In the case of the Income Tax Department investigation into tax evasion can be said to be over or complete, only after the final adjudication about the tax liability had been made after the matter has gone through all the stages of appeals and revisions as well as a final decision about prosecuting or not prosecuting that person has been taken by an appropriate competent authority. The respondents are, therefore, right in holding that it would be a misnomer to hold that investigation in matters such as this, the moment the Investigating Officer submits his report to the competent authority spells the end of investigation."
9. With regard to non-disclosure of commercially sensitive confidential information, the respondent has relied upon the CIC's decision dated 26-09-2018 in CIC/SEBIH/A/2017/137139/BJ, the relevant portion of which is as follows:-
"The Commission was also in receipt of a written submission from the Respondent dated NIL wherein while re-iterating the reply/order of the CPIO/FAA, submitted that the information/references mentioned in the RTI application was received by SEBI and the same were held Page 4 of 9 by them in a Fiduciary Capacity. Disclosure of information/references obtained could hamper justice to the entities and could cause irreparable damage to the reputation of the entities/individuals involved. Therefore, the same was denied u/s 8(1) (d) & (e) of the RTI Act, 2005.
The Respondent submitted that the information was denied about the status of the action taken by the SEBI since SEBI received the same from various references and sources and information sought wherein the nature of regulatory inputs which were highly confidential in nature. It was further submitted that SEBI as a regulator of the Securities Markets received information and alerts from various agencies including the market participants and stakeholders. These alerts may or may not result in examination/ investigations/ actions/ further action by SEBI and generally as a matter of Public Policy they did not announce to the public any existence of investigation as the consequences could be detrimental to the market as such and especially detrimental to the parties or scripts involved. Furthermore, announcement by SEBI in this respect had the potential to affect the price discovery mechanisms of the stock exchange which was unwarranted and hence SEBI did not disclose any existence or denied existence of any investigation/ Examination of a particular matter. It was felt that the examinations/ investigations were by their very nature sensitive and confidential. Furthermore, all references received by SEBI were looked into which entailed calling for information from intermediaries and also from the third parties which under the provisions of law were duty bound to provide. This invariably included information relating to commercial and business interests and involved strategic information about various entities/ individuals which these entities need to submit to SEBI in terms of law. This information/ references received by SEBI were in the discharge of its regulatory function and in its authority as a regulator of the securities market. This commercially confidential information thus received in fiduciary capacity and was for the sole purpose enshrined in the SEBI Act and could not be revealed. A reference was also made by the Respondent to the decision of the Commission in CIC/YA/A/2016/002327 dated 09.10.2017. With regard to the Page 5 of 9 reference made by the Appellant to the decision of the Hon'ble Supreme Court in RBI vs. Jayantilal N. Mistry dated 16.12.2015, it was stated that the facts and circumstances of the said order were totally different. In support of their claim regarding existence of fiduciary relationship the Respondent referred to the decision of the Hon'ble High Court of Delhi in WP No. 8396/2009, 16907/2006, 4788/2008, 9914/2009, 6085/2008, 7304/2007, 7930/2009 and 3607/2007 dated 30.11.2009.
In the context of non disclosure of information under Section 8(1)(d) of the RTI Act, 2005, the decision in Naresh Trehan vs Rakesh Kumar Gupta (W.P(C) 85/2010) decided on 24.11.2014, was referred to, wherein it was held as under:
14. "....Such information would clearly disclose the pricing policy of the assessee and public disclosure of this information may clearly jeopardise the bargaining power available to the assessee since the data as to costs would be available to all agencies dealing with the assessee. It is, thus, essential that information relating to business affairs, which is considered to be confidential by an assessee must remain so, unless it is necessary in larger public interest to disclose the same. If the nature of information is such that disclosure of which may have the propensity of harming one's competitive interests, it would not be necessary to specifically show as to how disclosure of such information would, in fact, harm the competitive interest of a third party. In order to test the applicability of Section 8(1)(d) of the Act it is necessary to first and foremost determine the nature of information and if the nature of information is confidential information relating to the affairs of a private entity that is not obliged to be placed in public domain, then it is necessary to consider whether its disclosure can possibly have an adverse effect on third parties."Page 6 of 9
Furthermore, in this context of non disclosure of information under Section 8(1)(e) of the RTI Act, 2005, the decision of the Hon'ble Supreme Court of India in Institute of Chartered Accountants of India Vs. Shaunak H. Satya and Ors) in Civil Appeal NO. 7571 of 2011- dated 02/09/2011 was referred to, wherein it was held that:
"The use of the words "person" shows that the holder of the information in a fiduciary relationship need not only be a 'public authority' as the word 'person' is of much wider import than the word 'public authority'. Therefore the exemption under Section 8(1)(e) is available not only in regard to information that is held by a public authority (in this case the examining body) in a fiduciary capacity, but also to any information that is given or made available by a public authority to anyone else for being held in a fiduciary relationship. In other words, anything given and taken in confidence expecting confidentiality to be maintained will be information available to a person in fiduciary relationship".
Similarly, the Hon'ble High Court of Delhi in the matter of Secretary General, Supreme Court of India v. Subhash Chandra Agrawal LPA No. 501/2009 dated 12.01.2010 had held as under:
"107. In our opinion, the learned single Judge has summed up the position correctly in para 58: "From the above discussion, it may be seen that a fiduciary relationship is one whereby a person places complete confidence in another in regard to a particular transaction or his general affairs or business. The relationship need not be "formally" or "legally"
ordained, or established, like in the case of a written trust; but can be one of moral or personal responsibility, due to the better or superior knowledge or training, or superior status of the fiduciary as compared to the one whose affairs he handles.
...
Page 7 of 9Keeping in view the facts of the case and the submissions made by both the parties and considering the written submission alongwith justification furnished by the Respondent vide its email dated 29.08.2018 and in the light of the aforesaid judgments, no further intervention of the Commission is required in the matter."
10. In light of the factual matrix of the case and the referred case-laws on the subject, this Commission comes to the conclusion that the commercially sensitive information which are received in confidence from various references and sources for the purpose of examination/investigation by the SEBI may or may not result in examination/investigations/actions/further action by SEBI and any disclosure in this regard has the potential to affect the pricing policy and unnecessary speculations in the stock market. Therefore, there is no larger public interest in the matter in disclosing the sought for information. Hence, disclosure of existence or non-existence of any investigation/examination of a particular matter would impede the process of investigation/prosecution as well as it has commercial bearing on the competitive position of third party(s) in the highly competitive capital market(s). As such the sought for information is exempted u/Section 8(1)(d) r/w Section 8(1)(h) of the RTI Act, 2005. In view of the above, this Commission agrees with the contentions put forth by the respondent wherein they have relied on the earlier decisions of the CIC in CIC/AT/A/2007/00007 dated 10-07-2007 & CIC/SEBIH/A/2017/137139/BJ dated 26-09-2018 which squarely cover the legal issues involved in the present case. Hence, no further intervention of the Commission is required in the matter.
11. With the above observations, the appeal is disposed of.
12. Copy of the decision be provided free of cost to the parties.
नीरज कु मार गु ा)
Neeraj Kumar Gupta (नीरज ा
सूचना आयु )
Information Commissioner (सू
दनांक / Date:28-09-2020
Authenticated true copy
(अिभ मािणत स यािपत ित)
S. C. Sharma (एस. सी. शमा),
Dy. Registrar (उप-पंजीयक),
(011-26105682)
Page 8 of 9
Addresses of the parties:
1. The CPIO
Securities And Exchange Board Of India,
Nodal CPIO, RTI Cell, SEBI Bhawan, Plot
No. C4-A, G-Block, Bandra-Kurla Complex,
Bandra (East), Mumbai- 400051.
2. Smt. Anju Sharma
Page 9 of 9