Govt approves Cairn-Vedanta deal; but with riders

The Cabinet Committee on Economic Affairs approved the sale with preconditions that Cairn or its successor has to treat royalty payments on Rajasthan oilfields as recoverable from oil sales. Also, Cairn India will have to withdraw the arbitration it has initiated disputing its liability to pay Rs2,500 per tonne oil cess on its 70% share in the fields

New Delhi: More than 10 months after the $9.6 billion-deal was first struck, the Indian government on Thursday gave its approval to Cairn Energy for selling its Indian unit to Vedanta Resources, subject to the new owner agreeing to share royalty and pay oil cess on mainstay Rajasthan oilfields, reports PTI.

The Cabinet Committee on Economic Affairs (CCEA) headed by prime minister Manmohan Singh approved the sale with the preconditions that Cairn or its successor has to treat royalty payments on Rajasthan oilfields as recoverable from oil sales, oil minister S Jaipal Reddy told reporters here.

Also, Cairn India will have to withdraw the arbitration it has initiated disputing its liability to pay Rs2,500 per tonne oil cess on its 70% share in the fields.

Besides, the approval will be subject to ONGC, which has a stake in all the three oil and gas producing properties and five out of seven exploration assets of Cairn India, waiving its pre-emption rights, which Mr Reddy termed as the partner’s no-objection certificate (NOC).

He said the deal would also need the security clearance.

“The CCEA endorsed the recommendation of a Group of Ministers (GoM) headed by finance minister Pranab Mukherjee, which was asked to go into the transaction,” he said.

Asked if the report of the Serious Fraud Investigation Office (SFIO), which had found Vedanta group firm Sesa Goa guilty of misconduct, would in anyway affect the government approval, Mr Reddy said he has communicated the decision taken by the CCEA.

Refusing to say if the SFIO report was discussed, he said “The CCEA records decision not the thoughts.”

Commenting on the development, finance minister Pranab Mukherjee said the government’s decision to clear the Cairn-Vedanta deal will send good signals to foreign investors.

Mr Mukherjee said the Cabinet cleared the recommendations on the deal given by a ministerial panel headed by him and the decision would “create appropriate sentiments in the market”.

Approval has been delayed over royalty payments that ONGC makes on behalf of Cairn India in Rajasthan oilfields.

ONGC owns a 30% stake in Cairn India’s Rajasthan oil field but pays the entire royalty on production under the government’s previous policy of giving discounts to attract investors.

ONGC had, much before the Cairn-Vedanta deal was announced, cited contractual provisions to demand that the royalty to be recovered as a cost from revenue.

The state-owned firm maintained that as a partner it has pre-emption or right of first refusal and the deal should not proceed without its concurrence, Mr Reddy said.

Both Cairn and Vedanta disputed royalty being made cost recoverable as it would dent Cairn India profits. They also opposed the need for partner consent for the transaction.

The GoM held that ONGC’s views were correct and recommended to the Cabinet that the deal be approved if Cairn or its successor agreeing to adding royalty to the project cost and recovered from oil sales besides agreeing to pay its share of Rs2,500 per tonne oil cess.

Sensing the mood, Cairn lowered the price it is demanding from Vedanta to make up for reduced profitability on acceptance of the preconditions. It removed a non-compete provision and related non-compete fee of Rs50 per share.

Vedanta’s total payment at the reduced price of Rs355 per share for a 40% stake in Cairn India will now be $6.02 billion instead of $6.84 billion previously.

The Cairn India stock was trading 4.01% higher at Rs323.20 per share on the Bombay Stock Exchange (BSE) in late morning trade while ONGC rose 1.46% at Rs277.95 apiece on the BSE.


Disclosure of fiduciary information under Sec 8 (1) (e) of the RTI Act: This is the true scope of the exclusion clause

No statutory authority is above the Republic of India. In our democratic setup, the people of India are supreme. The exceptions contained in Section (8) are exceptional pieces of information for which disclosure is not warranted or not desirable for a variety of reasons—but the broad spirit of the RTI Act is full transparency

The RTI Act is one of the rare legislations that empower citizens and bind the bureaucracy. The rest of the laws do exactly the opposite. However, though the purpose of the RTI Act might have been benign, its actual operation continues to be bogged down by the burden of bureaucracy.

At first blush, a PIO (Public Information Officer) hides behind one or the other of the exclusions given under Section (8) of the Act and declines to provide the information under some pretext. The information seeker has the right to file an appeal, but how many people have the time, patience and resources to go for appeals?

Section (8) of the RTI Act enlists some special instances when the authorities are exempted from disclosing information sought for. This includes information that would be prejudicial to national integrity, security or economic interests; would constitute to contempt of court of law; would hamper police investigations; would affect commercial interests like trade secrets; would impede the process of investigation; would affect 'fiduciary' relationships and would harm the person physically.

One of the common exceptions relied upon by the authorities is that the information being sought is with the regulatory agency in "fiduciary relationship" [Sec 8 (1) (e)]. This article explains the meaning of information in fiduciary capacity in Sec. 8 (1) (e) and how, in most cases, the information held by a regulator cannot be said to be information held in a fiduciary capacity.

The plea of fiduciary relationship, advanced by several regulatory bodies has not impressed us. Fiduciary relationship is not to be equated with privacy and confidentiality. It is one where a party stands in a relationship of trust to another party and is generally obliged to protect the interest of the other party.  While entrusting any information under any Act, rule, proceedings etc., that is no agreement between the provider of the information and the regulatory authority that the information provided is to be kept immune from the scrutiny of the public authority. It is to be kept in mind that the RTI Act is premised on disclosure being the norm, and refusal being the exception.


The word "fiduciary" has been defined in Black's Law Dictionary as follows: which reads thus:

    Fiduciary- The term is derived from the Roman Law and means-

As a noun-a person holding the character of a trustee, or a character analogous to that of a trustee, in respect to the trust and confidence involved in it and the scruples of good faith and candor which it requires, or a person having duty created, by his undertaking, to act primarily for another's benefit in matters connected with such undertaking.    

It is evident from the above that a fiduciary is a trustee. In context of information, if the information was reposed with a person for safe-keeping, or a person came to be vested with confidential information, and there is a question of good faith between the information provider or concerned entity, and the person having the information, it can be said that there is a relation of trusteeship.

The Advanced Law Lexicon, 3rd Edition, 2005, defines fiduciary relationship as:

"A relationship in which one person is under a duty to act for the benefit of the other on the matters within the scope of the relationship. Fiduciary relationship usually arises in one of the four situations:

(1) When one person places trust in the faithful integrity of another, who as a result gains superiority or influence over the first,
(2) When one person assumes control and responsibility over another,
(3) When one person has a duty to act or give advice to another on matters falling within the scope of the relationship, or
(4) When there is specific relationship that has traditionally been recognised as involving fiduciary duties, as with a lawyer and a client, or a stockbroker and a customer."{break}

The scope of the exemption in Sub-section 8(1) (e) of the RTI Act was discussed by the Supreme Court in CPIO, Supreme Court of India, New Delhi v. Subhash Chandra Agarwal and another (Writ Petition No. 288/200), decided on 2 September 2009. The Apex court held that the purpose of the exemption is to permit screening and preservation of confidential and sensitive information made available due to a fiduciary relationship.


In Bristol & West Building Society vs. Mothew [1998] Ch 1, the term 'fiduciary', was described as under:

"A fiduciary is someone who has undertaken to act for and on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence."

It is to be therefore noted that a fiduciary relationship is build up when one acts for another's benefit. However, a public authority such as SEBI (the Securities and Exchange Board of India) cannot be acting primarily for benefit connected with such undertaking but for the benefit of the entire public, i.e., in the public interest.

In Woolf vs. Superior Court (2003) 107, the California Court of Appeals defined 'fiduciary relationship' as:

"Any relationship existing between the parties to the transaction where one of the parties is duty bound to act with utmost good faith for the benefit of the other party. Such a relationship ordinarily arises where confidence is reposed by one person in the integrity of another, and in such a relation the party in whom the confidence is reposed, if he voluntarily accepts or assumes to accept the confidence, can take no advantage from his acts relating to the interests of the other party without the latter's knowledge and consent".

The traditional definition of a 'fiduciary' is a person who occupies a position of trust in relation to someone else, therefore requiring him to act for the latter's benefit within the scope of that relationship. In business or law, we generally mean someone who has specific duties, such as those that attend a particular professional role, e.g., financial analyst or trustee. The information must be given by the holder of information when there is a choice as when a litigant goes to a particular lawyer, or a patient goes to a particular doctor.

It is also necessary that the principal character of the relationship is the trust placed by the provider of information in the person to whom the information is given. An equally important characteristic for the relationship to qualify as a fiduciary relationship is that the provider of information gives the information for using it for the benefit of the giver. All relationships usually have an element of trust, but all of them cannot be classified as fiduciary.


Only that information can be considered as "available to a person in his fiduciary relationship", which is available to a person in an explicit relationship of trust (typically that of a lawyer, medical practitioner or financial advisor), where the trustee has been given access to the information on the mutual understanding that it is solely to be used for protecting the interests or promoting the welfare of the person giving the information, and where the withholding (or not proactively making public) of such information is not contrary to the law of the land.

If information is at all available with a regulatory agency in a fiduciary relationship, there is a reason to withhold the disclosure of the same. However, where information is required by mandate of law to be provided to an authority, it cannot be said that such information is being provided in a fiduciary relationship.

Admittedly, the authorities are not a public library of information, nor are a databank where people deposit information because they love to keep it with them. We have no hesitation to hold that even if there be any agreement—the same cannot be used as a shield to counter a request from any citizen seeking information and the RTI Act would obviously override such an assurance.


It is not necessary in case of RTI applications for a citizen to provide the reason for which the information may be required. If there is information available with an authority covered by the RTI Act, the information available must, on requisition, be made available to a citizen seeking the same. The RTI Act works on the noble principle that statutory authorities seek information and are seized and possessed of information as repositories of public faith. There is no question of hide-and-seek in the functioning of statutory authorities, as what they are—and what powers they enjoy—are for the larger interest of the citizens of India. No statutory authority is above the Republic of India. In the democratic setup in which India functions, the people of India are supreme.

Hence, no statutory authority can pretend to play hide-and-seek with the citizens of the country. The exceptions contained in Section (8) are exceptional pieces of information, for which, disclosure is not warranted or not desirable for a variety of reasons. However, the broad spirit of the RTI Act is full transparency.

It is surprising and unfortunate to find that on being requisitioned, the authorities generally take the ground that the information is being held by them in a fiduciary capacity. A mere cryptic statement that the information is protected under a fiduciary relationship does not do service to the object of the RTI Act at all. As contended above, whatever information the authorities have, it is because they have power to seek the information under the law, rules, and proceedings and not because the information provider provided the information for safe keeping.

(Vinod Kothari is a chartered accountant, trainer and author. He is an expert in such specialised areas of finance as securitisation, asset-based finance, credit derivatives, accounting for derivatives and financial instruments and microfinance. He can be contacted at [email protected]. Visit his financial services website at




5 years ago

Thanks Vinod Sir & Aditi for such a beautiful article... I also share similar views that no statutory authority can be above the Republic of India! All the laws are made by the legislature which comprises of the elected representatives of the people. The legislature derives its legislative powers from the Constitution. The preamble to the Constitution lays down that it is "We the people of India" who has given ourselves this Constitution implying that the ultimate source of the Constitution and all the statutes is we the people of India! Hence legislations like RTI Act cannot be so interpreted that it comes within the trappings of the exceptions provided therein so as to prejudice public interest or the object for which that special law has been made!

GNIIT: As boring as a classroom lecture

This commercial is sure to put you to sleep, just as a lecture would by a very boring econometrics professor

GNIIT is an IT training institute. Given the number of geeks they train, or so I am told, one assumes the institute has been doing pretty well for itself. Being tech-challenged, quite frankly, I had very little idea about GNIIT until I watched their new ad.
And from the advert I can read what their marketing strategy might be, and of course, their real need to advertise the institute. I suspect, quite ironically, the recent innovation and boom in the IT gadgets market has had a negative impact on GNIIT. The very industry the institute feeds on has come to bite it. With instant connectivity possible across the world, and at very low rates, who in their right minds would want to trudge all the way to a study school? Which is why GNIIT has now launched a programme which will ensure you can participate in their course from wherever you are located.

An obvious strategy to hold on to business… many educational institutes have been into correspondence courses for ages, long before the IT sector was born. So that's fine. But since the marketing task is so obvious, it becomes imperative that the communication shines so that the brand gets noticed, talked about and is coveted by the students.
And what has GNIIT done? Well, they have simply translated their obvious strategy into an obvious creative. All that the commercial (titled 'Cloud Campus') features is students sitting by their respective machines and communicating with each other and with their faculty. Of course, they all look very pleased and very happy. And yes, they are located at the usual suspect 'addy' haunts: gardens, lakes, restaurants and of course, the good old classroom. A totally dull ad. Must say even a fresher from a communication school would put out a better ad as part of her project work. The commercial is sure to put you to sleep, just as a lecture would by a very boring econometrics professor.
I assume GNIIT thinks very poorly of its prospective students for it to run such an ordinary ad. What was called for is zippy, surprising, happening creative work to help sneak into the minds of the highly net-savvy youngsters. To fire their imagination, and project GNIIT as an organisation that truly lives, breathes and enjoys the magic of IT.  
Perhaps I should hold an advertising workshop for the GNIIT professors. Online, of course.




5 years ago

You put me to sleep!
Get a life!!!

Go take out your life's frustrations elsewhere!!!

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