Published on Sat, Dec 01,2012 | 12:08, Updated at Sat, Dec 01 at 12:22Source : Moneycontrol.com | Watch Video :
Can the Right to Information or RTI Act prevail on a regulator to disclose its investigation findings pending prosecution? This month, the Chief Information Commissioner ruled it to be so. Payaswini Upadhyay asks experts if that in fact was the intent of the RTI Act.
2007: Reliance Petroleum merged with Reliance Industries. In 2010 SEBI issued a show cause notice to Reliance Industries alleging insider trading & FUTP violations in connection with RIL trades in shares of Reliance Petroleum pre-dating the merger.(Source: RIL's 2012 SEC Bond filing). Reliance denied the allegations, consent proceedings did not succeed and the matter is currently pending before SEBI.
Now the case is making headlines again; courtesy …a Right to information application by Bangalore based lawyer Arun Agrawal. Agrawal had approached SEBI under the RTI Act to know the names of Reliance entities involved in the alleged insider trades. His request was turned down, first by SEBI and then by the Securities Appellate Tribunal. The matter then went to the Chief Information Commissioner who on November 6th ordered SEBI to disclose this information within 10 days.
Devadatt Kamat
Advocate, Supreme Court
"I think the CIC may not have appreciated the correct legal position on this matter. There was judgment of the Delhi HC which has dealt with a similar matter- it was a full bench decision- in the judges assets case. A bench of 3 judges has very categorically held that draft judgments, draft notes which a judge prepares before giving a judgment are not accessible under the RTI Act. Applying the similar logic, I think unless a final decision is taken by the regulator, the initial reports and initial drafts which the regulator may have prepared, I think it's beyond the purview of the RTI Act."
C A Sundaram
Senior Advocate, Supreme Court
"In every quasi-judicial proceeding, for eg, if a company is being proceeded against for purpose of excise duty claim, somebody else is being proceeded against under the Customs Act, and when that party has the right to tell the department its case- then in every such case, a third party can say give me that information, he can start writing about it- where is the impartiality in what is going on then."
SEBI made similar arguments before the CIC. The regulator said since the quasi-judicial proceedings were in progress, any disclosure would impede the process of investigation. SEBI pointed out that such disclosures were exempt under Section 8(1)(h) of the RTI Act that prohibits disclosure of 'information which would impede the process of investigation or apprehension or prosecution of offenders.'. But CIC disallowed this exemption to SEBI saying that the investigation in the matter is over.
SEBI's second argument was based on the exemption available under Section 8(1)(d) that says there is no obligation to give information that includes commercial confidence if the disclosure could harm the competitive position of a third party unless there is a larger public interest involved. That exemption too was denied by CIC who believed there is a larger public interest involved. Hence the CIC ordered that if SEBI has taken cognizance of any breach of law by an entity, that information should be disclosed in larger public interest as it 'Such disclosure would keep the general public informed and educated about the risks they may confront in making investments in the market. It would also prevent many entities from adopting shortcuts to make profit through unlawful means. The argument that at the end of quasi judicial proceedings, entities may be found innocent cannot be an argument against disclosing information.'
Devadatt Kamat
Advocate, Supreme Court
"What is information? Information is defined under Section 2(j) to mean certain records which have attained culmination. The draft report is not 'information' held by a public authority. So before going into the exemptions, we have to see whether its information held by public authority and draft judgments and reports prepared by quasi-judicial authorities are not information for the purposes of RTI Act."
C A Sundaram
Senior Advocate, Supreme Court
"I cannot see what the purpose of this information is until a conclusion is reached because surely, it cannot be the case that by divulging this information, the press can start discussing it. And the person who has asked for this information - how is he going to use it? Is he going to file a PIL on that information because the matter is being considered by a quasi-judicial authority who is charged with responsibility of arriving at a conclusion. Now any purpose for which this will be used, I do not see how that will further the proceeding before the quasi-judicial authority and I don't see how that'll be in the public interest at that juncture."
A question that is pending before two High Courts now as SEBI has appealed against the CIC's order in the Bombay HC and RIL in the Delhi High Court. And the answer to that question will lay down important principles on the scope of the Right to Information Act.
In Mumbai, Payaswini Upadhyay
Two quick mentions post that story. First a standard disclosure – Reliance Industries is an indirect investor in the company that owns and operates this channel. The second is a question that I want to pose. I get that maybe a regulator should not be asked to disclose details on a pending case but till how long should this information be held secret? Sometimes cases drag on for years; this one has been underway since 2010. At some point maybe it is in public interest for the information to be released even if a final determination of the case hasn't been made?
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