Central Information Commission
Shri Raj Mangal Prasad & Shri B.M. Verma vs National Co-Operative Consumers’ ... on 9 September, 2008
CENTRAL INFORMATION COMMISSION
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F. No. CIC/AT/C/2007/00320 &
F. No. CIC/AT/C/2007/00324
Dated, the 09th September, 2008
Appellants : 1. Shri Raj Mangal Prasad
2. Shri B.M. Verma
Respondents : 1. National Co-operative Consumers' Federation of India
Ltd. (NCCF), New Delhi.
2. National Agriculture C-operative Marketing Federation of India Ltd. (NAFED) ;
These two complaints are filed by Shri Raj Mangal Prasad and Shri B.M. Verma against the National Consumer Cooperative Federation (NCCF), New Delhi and the National Agriculture Cooperative Marketing Federation of India Ltd. (NAFED) respectively.
2. Issue for consideration: The point for consideration in these two complaints is whether in terms of Section 2(h) of the Right to Information Act, 2005, the National Agriculture C-operative Marketing Federation of India Ltd. (NAFED) and National Consumer Co-operative Federation (NCCF) qualify to be 'public authorities'.
3. Earlier, hearing in these cases was held in the Commission on 8.1.2008 wherein both appellant and respondents were present. Respondents informed that they had referred the matter to their nodal Ministry viz. Department of Agriculture and Cooperation and a decision was yet to be taken by them as to whether Multi State Cooperative Societies come under the purview of the RTI Act
4. Comments of Respondents:
(i) Comments of NCCF: In their written submission, NCCF stated that by no means the NCCF can be a public authority under section 2(h) of the Right to Information Act, 2005. The NCCF is a Multi State Cooperative Society and is included in Second Schedule of the Multi State Cooperative Societies (MSCS) Act, 2002. There are around 400 Multi State Cooperative Societies functioning in the country. In case these are brought under the purview of RTI Act, it would be in contravention of the Co-operative principles as given in the First Schedule of the MSCS Act, 2002.
NCCF is a business organization. Though in terms of 61 of MSCS Act, 2002, financial assistance is provided by the Government to the Multi State Page 1 of 10 Cooperative Societies, yet NCCF did not receive any financial assistance from the Govt. of India either in the form of share capital contribution or loan or subsidy since 1996. As on 31.3.2007, the total paid up share capital of NCCF was Rs. 13.79 crore, of which the redeemable contribution of GoI was Rs. 10.74 crore. Since the share capital contribution by GoI is redeemable and not assistance granted to them and as such, it does dot bring NCCF in the ambit of Public Authority under the RTI Act. Various High courts in a number of decisions have decided that NCCF is neither an instrumentality nor an agency of the State within the meaning of Article 12 of Constitution of India.
(ii) NAFED: No written submissions were received from NAFED. However, during the hearing the representative of NAFED stated that NAFED was a Multi State Cooperative Society and was included in Second Schedule of the Multi State Cooperative Societies (MSCS) Act, 2002.
(iii) Department of Agriculture and Cooperation: In the matter as to whether NAFED & NCCF were public authorities within the meaning of section 2(h) of RTI Act, 2005, a reference was made to the Department of Personnel & Training, who have informed that they had sought opinion from the Department of Legal Affairs in the matter and their opinion was still awaited.
5. On the requests of the parties, hearing was adjourned. Hearing was held again on 1.4.2008. Both - complainant and respondents were present.
6. A reference was made to the Department of Agriculture and Cooperation, Ministry of Agriculture (administrative Ministry of the above two organizations) through communication dated 24.4.2008. The Department of Agriculture and Cooperation, through their communication dated 7.5.2008 replied as follows:-
(A) NAFED: The NAFED was established in 1958 with the main objective of promoting co-operative marketing and ensuring that farmers get ready market and remunerative prices for their produce. NAFED was earlier registered under the provisions of the Bombay Co-operative Societies Act, 1925 as extended to the U.T. of Delhi. Now, NAFED is deemed to be registered under the provisions of the Multi-State Cooperative Societies Act, 2002. It was also stated as follows:
• The maximum number of Board of Directors can be 21 members, out of which one member is nominated Govt. of India.
• NAFED is the Central nodal agency of Govt. of India to undertake procurement of oilseeds and pulses under Price Support Scheme (PSS) • The losses in the implementation of the Market Intervention Scheme (MIS) are shared by Govt. of India and the State Govt. in the ratio of 50:50 basis and in case of the North Eastern Region States 75:25 basis.Page 2 of 10
• NAFED also undertakes commercial activities on its own without any policy guidelines, approval or monetary assistance from Central Govt. • There is no shareholding of Central Govt. in NAFED nor does the Central Govt. provide any grant to NAFED for its commercial operations. There is no role of Central Govt. in the business programs.
• The limited role of the Central Govt. is providing budgetary support to meet the losses incurred by NAFED on Price Support operations undertaken on behalf of the Govt.
(B) NCCF: The NCCF, a national level consumer origination, was set up in 1965 under the provisions of the Bombay Co-operative Societies Act, 1925 as extended to the U.T. of Delhi. It is now deemed to be registered under the provisions of the Multi-State Cooperative Societies Act, 2002. The main objects of NCCF are to assist, aid and counsel its member institutions as per principles of cooperation and to facilitate their working including providing supply support to consumer cooperatives and other distributive agencies. As on 31.3.2007, there were 136 members of NCCF. The Board of Directors comprises of 17 Directors, out of which 3 Directors are nominated by Govt. of India.
The paid up share capital of NCCF as on 31.3.2007 was Rs. 13.79 corre, out of which the contribution of GoI was Rs. 10.74 crore, which was around 78%. Under the provision of section 123 of MSCS Act, GoI has power for the supersession of the Board of Specified Multi State Co-operative Societies if the society is persistently making default or negligent in the performance of the duties or rules or bye-laws or has committed any act which is pre-judicial to the interest of the Society or its members etc. Where Govt. holds at least 51% share, Central Govt. can prescribe the terms and conditions of service of Chief Executive u/s 51 and cause special audit of such a multi-state cooperative society u/s 77. As equity of Central Govt. in Department of Consumer Affairs, is more than 51%, these provisions are applicable to NCCF. Further, u/s 11, the Central Registrar has certain roles.
7. Apart from the above, it is also crucial to examine the control exercised by the Registrar of Multi-State Cooperative Societies as per the Multi-State Cooperative Societies Act, 2002. A perusal of this Act reveals the following:-
i) Section 61: This Section spells out the aid government can provide to the Co-operative Societies:-
"Notwithstanding anything contained in any law for the time being in force, the Central Government or a State Government, on receipt of request from a multi-State co-operative society and with a view to promoting co-operative movement, may,―
(a) subscribe to the share capital of a multi-State co-operative society;Page 3 of 10
(b) give loans or make advances to a multi-State co-operative society;
(c) guarantee the repayment of a principal and payment of interest on debentures issued by a multi-State co-operative society;
(d) guarantee the repayment of share capital of a multi-State co-operative society and dividends thereon at such rates as may be specified by the Central Government or the State Government;
(e) guarantee the repayment of principal and payment of interest on loans and advances to a multi-State co-operative society; and
(f) give financial assistance in any other form, including subsidies, to any multi-State co-operative society; and
(g) provide aid to any other multi-State co-operative society on such terms and conditions as may be prescribed."
ii) Section 77: This Section provides the powers to the Central Government to direct Special Audit in specific cases. If the Central Government or State Government either by itself or both hold not less than 51% of the paid up share capital or of the shares in such a society, the Government may appoint auditor where the affairs of any such society are not being managed in accordance with self-help and mutual aid and co-operative principles or prudent commercial practices; or with sound business principles or the society is being managed in a manner likely to cause serious injury or damage to the interest of the trade / industrial business to which it pertains; or the financial position of such society is such as to endanger its solvency. The auditor submits a report to the Central Government.
(iii) Section 78: This Section empowers the Registrar to enquire into the affairs of the Society under certain circumstances and conditions and direct any person in this behalf to hold an enquiry into the constitution, working and financial condition of a Multi-State Co-operative Society. The Registrar has the following powers:-
a. He shall at all reasonable times have free excess to the books, accounts, documents, securities, cash and other properties belonging or in the custody of the society and may summon any person who is in possession or responsible for such items.
b. He can call general meeting of the Society by giving notice of not less than 7 days to consider such matters, as may be directed by him.
c. He may summon any person who is reasonably believed by him to have any knowledge of the affairs of the Society to appear before him and may examine such person on oath.
(iv) Sections 79 & 80: This Section empowers the Registrar to cause inspection of Multi-State Co-operative Society Page 4 of 10
(v) Section 81 & 82: These Sections authorize the Registrar to apportion the cost of such inspection to the Society and recover the cost as a fine imposed.
(vi) Section 83: This Section further invests additional power on the Registrar to enquire into conduct of such person / employee of society who has made any payment contrary to this Act, or bye-laws or has caused any deficiency in assets of the society by breach of trust or willful negligence or has misappropriated or fraudulently retained any money or other property belonging to such society.
(vii) Section 86: This Section empowers the Registrar to wind up the Multi-State Cooperative Society where it is a condition of registration of society that it would consists of at least 50 members and number of the members has been reduced to less than 50 and the society has not commenced working within period of 6th months of the date of its registrations of any such extended period.
(viii) Section 89: This Section empowers the Registrar to appoint a liquidator.
(ix) Section 93: This Section empowers the Registrar to cancel the registration of a Multi-State Cooperative Society.
(x) Section 98: Under this Section, any sum due from the society or from its existing or ex-members to the Central Government or State Government, can be recovered in the same manner, as arrears of land revenues are recovered, as first charge on the assets of such society or members / officers, as the case may be.
(xi) Section 122: This section provides powers to Central Government to give directions in public interest to the specified Multi-State Cooperative Society.
(xii) Section 123: In certain circumstances the central Government can remove the Board and appoint one or more administrators to manage the affairs of the society in which Govt. holds not less than 51% share, upto 6 months, extendable up to one year.
8. From the above, it is comprehensively clear that the Central Government not only has an important role in the functioning of these Multi-State Cooperative Societies through the Registrar under the Multi-State Cooperative Societies Act, it exercised over-all control over the formation, functioning, auditing, winding up and supersession of Multi-State Cooperative Societies such as HUDCO and NCCF.
9. The membership of the NAFED consists of the State level Cooperative Marketing Federations or the Apex Level Cooperative Marketing Association for the Union Territories which are again under the control of the respective State Page 5 of 10 Governments or Governments of Union Territories as per their respective Acts which closely resemble the Multi-State Cooperative Societies Act. Similarly, membership of the NCCF consists of the apex level Consumer Federations of the State/State level Cooperative Organizations dealing with distribution of consumer goods. The control of the Government on these two bodies is, therefore, unmistakable.
10. The composition of the Board of Directors of the NCCF and NAFED also exhibits the control Government exercise over these bodies. Bye-law 21 of the NAFED Bye-Laws provides for constitution of the Board of Directors and sets the number of Directors at a maximum of 21 members. The bye-laws provide that the Board of Directors may take 10 nominees representing State-level General Purpose Cooperative Marketing Federations which are organizations largely controlled by respective State Governments. Besides, the Board also has nominees from Government of India and the NCCF and one Director from the North Eastern States. Other representatives on the Board also indirectly represent the State-level federations. The Board of Directors, therefore, mainly consists of Government nominees barring a few who are co-opted. Similarly, in the NCCF, out of 17 members of the Board of Directors, there are 3 nominees each from NCUI, NCDS and NAFED. There are other 5 members representing State level Federations owned and controlled by respective State Governments. Thus, the Boards of Directors both of the NAFED and the NCCF are largely composed of nominees who are directly or indirectly related to Government.
11. It is also to be noted that both in the case of NCCF and NAFED, Managing Directors are conventionally serving IAS officers who are sent on deputation by the Government, although as per Bye-law 34 of the NCCF, and Bye-law 42 of the NAFED, the Managing Directors are appointed by the respective Board of Directors. The Managing Director act as the Chief Executive Officers of the concerned Federations and exercise administrative control subject to overall control of the Chairman.
12. On a reference from the Commission, the Department of Agriculture & Cooperation, in its communication dated 07.05.2008, informed that the role assigned to NAFED and NCCF was to serve certain public purposes. These are as follows:-
"1.4 Role of the Government 1.4.1. NAFED is the Central nodal agency of the government of India to undertake procurement of oilseeds and pulses under Price Support Scheme (PSS). The objective of the scheme is to provide regular marketing support to the farmers to sustain and improve the production of oilseeds and pulses. The 100% Page 6 of 10 losses incurred by NAFED in the implementation of the Price Support Scheme is borne by the Government of India.
1.4.2. NAFED is also the Central nodal agency of the Government of India to make purchase of horticultural / agricultural commodities (not covered under Price Support Scheme) under Market Intervention Scheme (MIS). Purchases under MIF are made after the Government of India, on the specific request of the concerned State Government approves the proposal as per guidelines of the scheme. The losses in the implementation of the MIS are shared by the Government of India and the state Government concerned in ratio of 50:50 basis. (In case of the North Eastern Region States 75:25) 1.4.3. The business activities of NAFED may be broadly divided into two categories: (1) NAFED functions as a Central agency for carrying out Minimum Support Prince operations under Price Support Scheme & implementing Market Intervention Scheme; and (2) NAFED undertakes commercial activities on its own without any policy guidelines, approval or monetary assistance from the Central Government. The officers of NAFED (including office bearers and members of the Board) discharge their functions within the ambit of its bye laws, policies laid down by its General Body and guidelines of its Board of Directors. In this respect also NAFED discharges its functions as an autonomous body.
1.4.4. There is no shareholding of the Central Government in NAFED nor the Central Government provides any grants for its commercial operations. There is no role of the Central Government in the business programmes of NAFED for marketing of various agricultural and non-agricultural products on commercial considerations and under Public Private Partnership business with its business associates.
1.4.5. While reviewing the working of NAFED, the autonomy and self-governance of NAFED in respect of its all other commercial activities should be kept in view. The limited role of the Central Government is providing budgetary support to NAFED to meet the losses incurred on Price Support operations undertaken on behalf of the Government. A copy each of bye-laws and Annual Report of NAFED for the year 2006-07 are at Annexure-I & II respectively. [sic]"Page 7 of 10
and about NCCF, "2.2 Objective The main object of the NCCF is to assist, aid and counsel its member institutions as per principle of cooperation and to facilitate their working including providing supply support to consumer cooperatives and other distributing agencies for distribution of consumer goods at reasonable and affordable rates and rendering technical guidance and assistance to them for improving their managerial and operational efficiency and generally to act as spokesman of consumers' cooperative movement in India and also to assist organization and promotion of Consumer Cooperative Institutions in areas, where the State Consumer Federations or the Wholesale Stores are not functional."
13. It is important to note that the expression used regarding the role of NAFED is that it was a 'nodal agency' of the central government in matters of administering, procuring of oilseeds and pulses and providing Price Support Schemes (PSS) besides being employed by government for purchase of horticultural and agricultural commodities under the Market Intervention Schemes (MIS). Apart from the activities which the NAFED carries out on its own, it unmistakably acts as a nodal agency for the Central Government to carry out certain objectives aimed at serving public good / purpose.
14. NCCF provides technical guidance to its constituent members to sub-serve the interest of consumer cooperation movement in India. By all means, it is an important public function directed at serving larger public good.
15. Relevant in this respect is the judgement of Punjab & Haryana High Court in the case of DAV College Trust and Management Society & Ors. V/s The Director of Public Institution & Ors. (Civil Writ Petition No.2626 of 2008) wherein it has been laid down that a crucial touchstone for determining whether an organization qualifies to be a public authority is whether it performs a public duty. From that point of view, NAFED and NCCF do qualify to be public authorities.
16. The Madras High Court while holding Tamil Nadu Road Development Co. Ltd. (TNRDCL) as a public authority under Section 2(h)(d)(i) of the Right to Information Act, in its decision dated 05.08.2008 in W.A. No.811 of 2008 has rules that the expression "Public Authority" under Section 2(h)(d)(i) should be construed liberally so that the authorities like the appellant (TNRDC) who are controlled and substantially financed, directly or indirectly by the Government come within the purview of the RTI Act. In this connection it may be mentioned that the Tamil Nadu Road Development Co. Limited which has been held to be a "Public Page 8 of 10 Authority" is a joint venture Company wherein the Tamil Nadu Industries & Development Corporation and IL&FS have equal share-holding.
17. Commission's attention was drawn to the judgement of the Delhi High Court in case NAFED Vs. NPFCMFIEU; LPA No.330 of 1999, where the subject of NAFED being a State in its instrumentality role was discussed, and it was held that NAFED did not comprise a State. It is important to make two observations in this regard. First, the concept of 'public authority' has emerged only through the RTI Act and the matter of NAFED or for that reason any cooperative organization, being a public authority was not before the Delhi High Court when the cited judgement was delivered. Second, the issues debated in the about cited judgement did not have a bearing in the present matter in so far as the issue before this Commission is not whether NAFED and NCCF were State, but whether they were 'public authorities' under Section 2(h) of the RTI Act. The argument has been so advanced by the respondents as if 'State' and 'public authority' are co-extensive terms and what is not a State cannot be a public authority. This surmise is erroneous. Insofar as the RTI Act lays down the parameters under Section 2(h) to decide whether an organization qualifies to be public authority, the question whether such public authority is a State or not is clearly inapplicable. The eligibility of that organization to qualify to be a public authority would be squarely within the meaning of the Section 2(h) of the RTI Act. More appropriate in this regard are the above-referred decisions of the Punjab and Haryana High Court and the Madras High Court about what a public authority is. In view of the above reasoning, I am not in a position to accept the arguments put-forth by the respondents.
18. Section 2(h), among other criteria, states that to be designated as a 'public authority', a body should be "owned, controlled or substantially financed directly or indirectly by funds provided by the appropriate government."
19. From what has been stated above, there is no doubt that both NAFED and NCCF are bodies which are controlled as well as substantially financed, both directly and indirectly by appropriate governments, and therefore come within the definition of 'public authority' under Section 2(h) of the RTI Act.
20. In view of the above, it is not possible to agree with the respondents' (NAFED and NCCF) contention that they do not constitute a 'public authority' under Section 2(h) of the RTI Act. Therefore, it is held that both National Agriculture C-operative Marketing Federation of India Ltd. (NAFED) and National Consumer C-operative Federation (NCCF) are public authorities under Section 2(h) of the Right to Information Act, 2005.
21. Respondents are directed to reply to the RTI applications within 2 weeks of receipt of this order.
Page 9 of 1022. Before parting with this appeal, it is felt necessary to comment on the conspicuous anxiety exhibited by NAFED and NCCF to remain outside the pale of the RTI Act. It did not take much effort to decipher that couched in technical language, the claim of these two organizations to be left out of the jurisdiction of the RTI Act, was principally aimed at escaping the rigours of transparency and accountability, which the RTI Act imposes on public authorities. For organizations unmistakably devoted to public service and making copious use of public funds for their activities and run, either directly or indirectly, by government servants, such anxiety to be out of the RTI Act surely does no good to their public image. NAFED and NCCF will do well to re-assess their stated positions regarding the RTI Act. There is lot to be gained in terms of improving public perception about an organization by adherence to transparency and accountability norms by the simple act of subjecting the organization to the provisions of the RTI Act. An impression that an organization values transparency and accountability does wonders to the organizational image. Apart from this, since these two organizations use public funds for public good, the citizen has a right to know whether or not NAFED and NCCF have discharged their allotted functions with diligence and propriety. Keeping the two organizations outside the purview of RTI Act would amount to denying to the public something which is acknowledgedly its right. I would urge the NAFED and the NCCF managements to coolly reflect on these matters.
23. Copy of this decision be sent to the parties.
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( A. N. TIWARI ) INFORMATION COMMISSIONER Authenticated by -
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( D. C. SINGH ) Assistant Registrar Page 10 of 10