Central Information Commission
Arun Damodar Sawant vs Securities And Exchange Board Of India ... on 26 September, 2018
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/SEBIH/A/2017/137139-BJ
Mr. Arun Damodar Sawant,
....अपीलकता
/Appellant
VERSUS
बनाम
CPIO,
Securities and Exchange Board of India,
SEBI Bhawan, Plot No. C-4A,
G Block Bandra Kurla Complex, Bandra (E),
Mumbai-400051
... ितवादीगण /Respondent
Date of Hearing : 23.08.2018
Date of Decision : 26.09.2018
Date of RTI application 12.12.2016
CPIO's response 12.01.2017
Date of the First Appeal 07.02.2017
First Appellate Authority's response 10.03.2017
Date of diarised receipt of Appeal by the Commission 31.05.2017
ORDER
FACTS:
The Appellant vide his RTI application sought information on 04 points regarding the action taken/initiated by SEBI with regard to the complaints filed by Mr. Nusli Wadia on insider trading instances, violation of Corporate Governance Norms etc. along with the status and copies of the orders and other issues related thereto.
The CPIO, vide its letter dated 12.01.2017 provided a point-wise response to the Appellant. Dissatisfied with the CPIO's response, the Appellant approached the FAA. The FAA, vide its order dated 10.03.2017 while relying upon the decisions of the Commission in the matter of Shri K. Lal vs. Shri M.K. Bagri dated 12.04.2007 and in the matter of Shri Subhash Chandra Agrawal, Delhi vs. CBSE, New Delhi dated 11.12.2012, & the decision of the Hon'ble High Court of Delhi in the case of Registrar of Companies and other vs. Dharmendra Kumar Garg and another's dated 01.06.2012, upheld the CPIOs response.Page 1 of 5
HEARING:
Facts emerging during the hearing:
The following were present:
Appellant: Mr. Mrigank Prabhakar Appellant's representative, in person; Respondent: Mr. Jeevan Sonparote, CPIO through VC;
The Appellant's representative reiterated the contents of his written submission and stated that no satisfactory response was provided to him, in the matter. Explaining the background of the case, it was further contested that the CPIO/FAA had erred while claiming exemptions u/s 8 (1)
(d) and (e) of the RTI Act, 2005 since the matter was relating to insider trading, violation of Corporate Governance Norms, destruction of Body of Independent Directors etc. therefore, the same should be disclosed in the larger public interest. It was also alleged that the CPIO and FAA had failed in understanding that the desired information was to ensure accountability and transparency and SEBI being a Public Authority was accountable to maintain transparency in its actions.
He further relied upon the decision of the Hon'ble Supreme Court of India in the case of ICAI v. Shaunak H. Satya (2011) 8 SCC 781 wherein it was held that "the information falling under the first category i.e. information which promotes transparency and accountability, the Public Authority owe a duty to disseminate the information widely suo motu to the public so as to make it easily accessible to the public" and also in the case of R.B.I. and Ors. V. Jayantilal N. Mistry and Ors, (2016) 3 SCC 625 to substantiate his claim. Furthermore, he argued that the FAA had erroneously relied upon the judgment of the Hon'ble High Court of Delhi in the case of Registrar of Companies & others vs. Dharmendra Kumar Garg and Another decided on 01.06.2012 and the decisions of the Commission in the case of Shri K. Lal vs. Shri M.K. Bagri dated 12.04.2007 and in the matter of Shri Subhash Chandra Agrawal, Delhi vs. CBSE, New Delhi dated 11.12.2012, as the same decisions were not applicable in his case. It was further argued that the FAA, SEBI had again wrongly relied upon the judgment of SC Agrawal vs. CBSE, New Delhi passed by the Commission as that judgment was clearly distinguishable in facts and in the present case the CPIO had given incorrect information on point (ii) stating that the information sought was available on their official website. However, there was no such information available on SEBIs website as desired by him. In its reply, the Respondent submitted that a suitable reply had already been sent to the Appellant by the CPIO/FAA wherein the exemptions were sought u/s 8(1) (d) and (e) of the RTI Act, 2005 as the requisite information were held in commercial confidence, and fiduciary capacity with them, the disclosure of which could harm the competitive position of the third party. On being queried by the Commission, whether the investigation was still pending, the Respondent expressed his inability to reply as any such statement could have adverse impact on the Price Discovery Mechanism and its possible misuse.
During the hearing, a copy of the written submission was handed over by the Appellants' representative to the Commission, wherein while re-iterating the facts of the case, reply/order of the CPIO/FAA, it was submitted that the CPIO and the FAA had misconstrued the provisions of Section 8 of the Act. It was further submitted that denial of access to information under the said provision had to be substantiated with reasons as to why it was necessitated. He further relied upon the judgments pronounced by the Hon'ble High Court of Delhi, in the case of Bhagat Singh Page 2 of 5 vs. CIC and Ors. rendered in WP (C) No. 3114 of 2007 dated 03.12.2007, para 13 and the Commission's decision in the matter of Mr. K. R. Ramesh vs. Bank of India in Appeal No. CIC/SG/A/2011/003607, in which the Commission had also referred to the abovementioned para, and several other decisions had been referred by him to substantiate his claims. Based on the above submissions and judgments, it was prayed to the Commission to strike down the reply/order of the CPIO/FAA and provide him the desired information as sought in the RTI application.
On perusal of the statements made by both the parties and the written submission handed over by the Appellant's representative, the Commission directed him to forward a copy of its written submission to the Respondent also which was emailed by him.
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 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.
During the hearing, the Commission gathered that the written submissions of both the parties had not been exchanged and therefore adhering to the principles of natural justice, both were directed to exchange its written submissions and put-up any further argument in addition to the submissions made on 23.08.2018 latest by 29.08.2018, as agreed. The email addresses were also exchanged (Email: [email protected]).
The Commission decided that it would await any further correspondence consequent to the discussions held at the hearing on 23.08.2018, latest by 29.08.2018, as agreed. It was decided that if no more averments were received by the appointed date, it shall be presumed that the submissions available on record could be considered by the Commission for pronouncement of its decision.
Subsequently, the Commission was in receipt of a written submission from the Respondent dated 29.08.2018, wherein at the outset it was stated that the SEBI had not denied the information under section 8 (1) (h) as the primary argument of the applicant was that the information could not be denied on the mere grounds of existence of investigation in the matter. 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 Page 3 of 5 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 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."
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 Page 4 of 5 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 DECISION:
Keeping 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.
The Appeal stands disposed accordingly.
Bimal Julka (िबमल जु का)
Information Commissioner (सूचना आयु )
Authenticated true copy
(अ भ मा णत स या पत त)
K.L. Das (के .एल.दास)
Dy. Registrar (उप-पंजीयक)
011-26182598/ [email protected]
दनांक / Date: 26.09.2018
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