A short survey of what judiciary says about them.
In landmark judgment, Reserve Bank of India v. Jayantilal N. Mistry, AIR 2016 SC 1= (2016) 3 SCC 525, the main issue for consideration before the Supreme Court was whether all the information sought for under the Right to Information Act, 2005 can be denied by the RBI and “other Banks” to the public at large on the ground of economic interest, commercial confidence, fiduciary relationship (of RBI with other Banks), on the one hand, and the public interest, on the other. Rejecting all the three arguments, the Apex Court held that the RBI & other banks, as public authorities under the Act, were bound to disclose the information related to inspection reports and other documents to the applicants.
The argument that disclosure would hurt the economic interests of the country is “baseless, unsubstantiated & totally misconceived”, the Court responded at para 61 of the judgment. There was no commercial confidence & fiduciary relation between RBI & other banks and that the relationship was purely statutory in nature, the Court said at paras 58-60, 62. The Apex Court discussed at length the legislative history of the RTI Act, 2005, its preamble, objectives & briefly it mentioned of structure of its provisions. It quoted the then PM of India’s speech in Parliament on the Act.
The RBI & other banks were, thus, directed to disclose the information to the respondents/citizens in the interests of the general public. It appears from latest developments that the RBI did not disclose the required information of annual inspection reports of banks, along with the list of willful defaulters, which was sought by the applicants under the RTI Act. Non-disclosure from RBI came under its “Disclosure Policy” 30.11.2016 that made certain information exempt from disclosure under the Act. The Apex Court vide its latest order 26-04-2019 took RBI’s non-compliance with its order dated 16-12-2015 passed in Jayantilal N. Mistry ante very seriously. So, the Court directed the RBI to withdraw its “Disclosure Policy” dated 30.11.2016 & divulge the information otherwise face the contempt proceedings.
The Court vide its order dated 26-04-2019 passed in Girish Mittal v. Parvati V. Sundaram , (2019) Supreme (SC) 498 reiterated its earlier opinion that while information under section 8(1) of the Act can be denied to the public to guard national security, sovereignty, national economic interest and relations with foreign States etc, the lower-level economic and financial information like contracts and departmental budgets should not be withheld under this exemption.
The Court observed that RBI had vide its Disclosure Policy dated 30.11.2016 directed various departments not to disclose information that was directed to be given by Jayantilal N. Mistry ante & that “though we could have taken a serious view of the Respondents [RBI & other banks] continuing to violate the directions issued by this Court, we give them a last opportunity to withdraw the disclosure policy… Any further violation shall be viewed seriously by this Court”. (paras 8-10, emphasis added). It is ultimatum given to the RBI by the Apex Court for non-compliance with its order in Jayantilal N. Mistry ante. RBI has said it will disclose the information pursuant to the top court’s hammer, as reported by dailyhunt on 27-04-2019.
Above is the law as on date regarding banking industry in the country. Let us throw some polemic light on the issue of what constitutes a “public authority” under the Act that is duty bound to disclose information to the citizens, in the light of judicial dicta. To start with, right to information emanates from the fundamental right guaranteed to citizens under Article 19(1)(a) of the Constitution of India which does not, however, explicitly grant this right inasmuch as right of privy is also not expressly mentioned in Article 21. Justice K S Puttaswamy (Retd) v. Union of India (2017) 10 SCC 1= 2017 0 Supreme (SC) 772 (Constitutional Bench of 9 Judges).
The theory of ‘implied bar’ does not apply to RTI law which has been enacted to give full scope to this fundamental right. Even the right to privacy fades out in front of this right in larger public interest. The “public authorities” under the Act cannot claim any immunity for disclosure of a so-called third party document/information as larger public interest outweighs private commercial interest under this law. So, RBI was bound to disclose the information about third party information that was deposited with it under the BR Act by the third party (Goa Co-Operative Bank). (Reserve Bank of India v. Shri Rui Ferreira, AIR 2012 Bom 1)
The ultimate object of the RTI law, as gleaned from its preamble & different provisions, is to achieve transparency and accountability with regard to affairs of a “public authority”, the definition of which being inclusive must be given liberal construction in order to advance objective of the Act. A body, institution or an organization, which is not a State within the meaning of Article 12 of the Constitution may still answer the definition of public authority under section 2(h) if the government holds ultimate control over its affairs & finances. (Agriculture Produces Market Committee v. Chief Information Commissioner, 2015 Supreme (Guj) 983); Sanjeev Kumar v. State of Himachal Pradesh, (2014) Supreme (HP) 954). The doctrine of deep and pervasive control based on the decisions rendered by the courts under Article 12 is not relevant for answering the question whether a body is a public authority for the purposes of the RTI Act. It is enough if it is shown that the authority is controlled by the government. (Indian Railway Welfare Organisation v. D M Gautamm, 2010 Supreme (Del) 395)
The “private bodies” directly or indirectly controlled by the government are covered under the Act. (Mulloor Rural Co-Operative Society Ltd v. State Of Kerala, (2012) Supreme (Ker) 311). The word “controlled” used in section 2(h)(d)(i) of the Act has to be understood in the context in which it has been used vis-a-vis a body owned or substantially financed by the government, that is, the control of the body is of such a degree which amounts to substantial control over the management and affairs of the body. (Thalappalam Ser. Coop. Bank Ltd v. State of Kerala, (2013) Supreme (SC) 943).
The word ‘substantial’, not defined in the Act, is not synonymous with ‘dominant’ or ‘majority’. It is closer to ‘material’ or ‘important’ or ‘of considerable value.’ ‘Substantially’ is closer to ‘essentially’, ‘just enough to avoid the de minimis principle’. (Ibid) Even non-government organisation that is substantially, directly or indirectly, financed by the funds of the government will fall within the definition of “public authority”. (Principal, M. D. Sanatan Dharam Girls College, Ambala City v. State Information Commissioner, AIR 2008 P & H 101); CSEPDI v. Tamil Nadu Generation & Distribution Corporation Limited, (2015) Supreme(Mad) 1521)
Even a private college that receives financial grant from the government is covered by the definition of “public authority”. (Committee of Management, Shanti Niketan inter college v. State of UP, (2008) Supreme All 999). Funds and finances come in multiple shapes to the public authorities from the government like equity, grants and concessions. For example, a bailout package of Rs 5,000 crore by the Central Government to the IFCI is substantial financing which answers the description of a public authority under the Act. (IFCI Ltd v. Ravinder Balwani, (2010) Supreme (Del) 570).
Where a company has been created under the rules framed by the State government which holds 49% stake in it, the government has substantial control on it and the company is “public Authority”. (Western Electricity Supply Company of Orissa Ltd v. State of Orissa, (2009) Supreme (Ori) 403). The criterion for determination of meaning of words ‘substantially financed’ is not less than 50% holding, though the company law gives significant rights even to those who own 26% of the shares in a company. (Bangalore International Airport Limited v. Karnataka Information Commission, (2010) Supreme Kar 149).
But where the majority of shares is not held by the government but by private persons and the government has power to ‘nominate’ just one director on the board of the body, it cannot be said that the government exercises any functional control over its affairs. (Agriculture Produce Market Committee v. Chief Information Commissioner, 2015 Supreme (Guj) 983 (a huge catena of case laws has been cited and discussed in this case).
It is not necessary that a public authority should have been created under a statute. It can be creation of Notification of the government. (Sri Kannikaparameshwari Co-operative Bank Ltd v. State of Karnataka, 2008 0 Supreme (Kar) 381). A bank not established under Notification of the State government with not a single director appointed by the government and all directors elected by the private share holders of the bank and the government having no substantial equity in it, cannot be a Public Authority within the meaning of the Act. (Panjabrao Deshmukh Urban Co-operative Bank Ltd v. State Information Commissioner, AIR 2009 Bom 75).
End word:
In view of the J&K Chief Information Commissioner’s order dated 24-04-2012, J&K Bank is a “public authority” within the meaning of section 2(f) of J&K RTI Act, 2009 for the following two main reasons: One, JK Bank was created pursuant to the late Maharaja’s Memorandum of 1939, Maharaja in whom all powers of legislative, executive and judicial nature were vested, ordering for the creation the JK Bank and as that Memorandum/Notification is protected under section 155 of the JK Constitution, it was creation of law. Two, three permanent directors including one as chairman-cum- CEO under the Memorandum of the Bank are directly appointed by the State Government.
The State does not enjoy similar power with other private sector banks. It may not be out of place to mention here that. Justice Y B Nargotra dissenting with majority opinion of two other judges in Firdous Ahmad Tanki v. J&K Bank Ltd, (2006) 2 JKJ 146= (2010) 7 JKJ 488= 2006 0 Sri LJ 1 has observed that as the majority of the share holding in JK Bank is held by the State Government, [presently it is 59% plus; read GK dated 12-01-2017 (Government of J&K today announced an amount of Rs. 532 crore as additional capital infusion in two tranches during next financial year to retain its strategic equity share of 53)] it is “fully competent and powerful enough to elect all the directors” because the minority share holders group is “in no position to influence the election of directors”. Non-government directors are elected by majority vote at the time of AGM if the vacancy has arisen.
However, the operation of that order has been stayed in a writ appeal filed by the JK Bank against it before the Hon’ble High Court of JK in 2012.
The writer is author of Inside the Vault (fiction) and six other books on law, including the two volume book on Law of Contract (Thomson Reuters Publication, 2016). He is an academician, story teller and freelance-columnist. He has contributed hundreds of narratives to multiple media channels.