RTI Judgement Series
RTI Judgement Series: PIO and FAA failed to discharge their duties
The CIC said this was a blatant case where without any reasonable cause, both the PIO and FAA denied information to an elderly person about an affidavit claimed to have been filed by him. This is the 119th in a series of important judgements given by former Central Information Commissioner Shailesh Gandhi that can be used or quoted in an RTI application
 
The Central Information Commission (CIC), while allowing an appeal, issued a show-cause notice to the Public Information Officer (PIO) in the Department of Trade and Taxes (DTT) at the Government of the National Capital Territory of Delhi (GNCTD) for not furnishing information within the prescribed time limit under the Right to Information (RTI) Act.
 
While giving this judgement on 15 October 2009, Shailesh Gandhi, the then Central Information Commissioner, said, “The PIO and First Appellate Authority (FAA) have both failed to discharge their duties under the RTI Act. This is blatantly a case where without any reasonable cause information has been denied to an elderly person about the affidavit claim to have been given by him.”
 
Delhi resident Radhey Shyam Aggarwal, on 15 June 2009, sought information regarding copy of a no objection certificate and affidavit filed by him from the PIO of DTT at the GNCTD. Here is the information he sought from the PIO...
 
Copy of NOC/Affidavit of Radhey Shayam Aggarwal from the file of M/s Aggarwal Traders, TIN No.  in TIN/VAT no.07090325518 applied by Arun Kumar Gupta from Ward No19.
 
The PIO denied the information. He stated, “It is to inform you that as per Section 98 of Delhi Value Added Tax (DVAT) Act such information is prohibited, the same cannot be provided under RTI Act.”
 
Aggarwal, not satisfied with the reply, filed his first appeal. While upholding the PIO’s reply, the FAA in his order said, “I have gone through the reply given by the PIO, and do not find any infirmity in the same.  It is true that the PIO is prohibited under Section 98 of the DVAT Act to divulge the information to a third party.  Rather I would like to add M/s Aggarwal Traders has a fiduciary relationship with the Department of Trade & Taxes.  And as per Section 8 of the RTI Act, 2005, the PIO is not obliged to give any information relating to the said dealer to a third party (in this case the appellant).”
 
Not satisfied with the PIO’s reply and FAA’s order, Aggarwal, then approached the CIC. In his second appeal, he stated, “The PIO’s reply is illegal. The FAA has wrongly upheld the response of the PIO by holding that the PIO is prohibited under Section 98 of the DVAT Act to divulge the information to a third party and that M/s Aggarwal Traders has a fiduciary relationship with the Department of Trade & Taxes.”
 
During the hearing, Mr Gandhi, the then CIC, noted that the PIO without any application of mind has refused to give the information claiming that the VAT action does not permit to give the information. 
 
“In the instant case the appellant, an 80 year old senior citizen, had asked for a copy of an affidavit which he alleges was falsely given in his name to the Department. The PIO refused to give him the information purportedly given by him,” the CIC said.
 
Mr Gandhi said, “The FAA, in what appears to be collusion to deny and harass the citizen, suddenly claimed that the department gets the information in a fiduciary relationship. The department obtains the information in fulfilment of regulatory requirements but the FAA apparently would like to claim other relationships with people who prevent false affidavits.”
 
While allowing the appeal, the CIC directed the PIO to provide the information to Aggarwal before 30 October 2009.
 
Further finding the PIO guilty of not furnishing information within the time specified under sub-section (1) of Section 7 by not replying within 30 days, as per the requirement of the RTI Act, the Commission issued a show-cause notice to him.
 
 
CENTRAL INFORMATION COMMISSION
 
Decision No. CIC/SG/A/2009/002075/5158
Appeal No. CIC/SG/A/2009/002075
 
Appellant                                             : Radhey Shyam Aggarwal
                                                                  Delhi-110006
 
Respondent                                         : NS Bhoria
                                                                  Public Information Officer & VATO
                                                                  Govt. of NCT of Delhi
                                                                  Zone-III Office of Deputy Commissioner
                                                                  Deptt. of Trade and Taxes, Room No. 1201,
                                                                  12th Floor, Vyapar Bhawan,
                                                                  New Delhi-11002. 
 

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COMMENTS

Shanmugam

4 years ago

Sir,
I have filed F A to Office of CIC, and then Second Appeal to CIC of Chennai Tamil Nadu.More than 6 months were passed no responses from them who are the controlling / implementing of RTI Act in Tamil Nadu. So, Kindly confirm for the issue of final orders and the copy of Judgement if released in Appeal No. CIC/SG/A/2009/002075.
My e mail Id: [email protected]

Economy & Nation Exclusive
Allegations of NDTV’s Many Shenanigans

Sanjay Dutt, director of Quantum Securities and a long-term shareholder of NDTV has alleged that chairman Prannoy Roy received irregular promoter funding of Rs375 crore by pledging NDTV shares which, according to him, is against the RBI rules

In August 2011, Moneylife wrote: “NDTV got listed in 2004 and is trading below its listed price after seven years. It has given a negative return of 19% compounded in the past five years and a total shareholder return (TSR) of negative 66% for the same period. Its viewership claims, like those of all TV channels, are impossible to verify. Its credibility is at a nadir (after the recent phone-tapping controversy) and its finances are in a mess. NDTV has rarely made money from operations. For the past few years, its consolidated operations have been making cash losses and it has been running on money made by selling loss-making subsidiaries to strategic investors.”

We further pointed out how marquee institutional investors always line up to acquire this loss-making company’s bits and pieces and exit at a loss at regular intervals, only to make way for other big name investors! The latest was DE Shaw which provided an exit to Goldman Sachs in 2011 by acquiring a 14.2% stake. After this, NDTV acquired a significant investor—Abhay Oswal, who owns nearly 15% of its equity but seems to have no presence on NDTV’s board of directors. Mr Oswal happens to be the father-in-law of Navin Jindal, an industrialist and Congress Member of Parliament.

In all these years, no investor has complained, or uttered a word of public criticism, about the losses and operations of this strange company. But, a few weeks ago, Moneylife received an email from Sanjay Dutt, director of Quantum Securities P Ltd, a name familiar to all those who watch the business TV regularly. Mr Dutt said that his firm is a long-term shareholder of NDTV and holds over 1% of its equity capital. He also disclosed that he had worked as a consultant with the group from 2006 to 2008 and has been a personal friend of the current CEO for over 15 years. But, more about that later. Mr Dutt was writing to make some startling allegations about NDTV’s capital structure.

 

He alleges that chairman Prannoy Roy received irregular promoter funding to the tune of a massive Rs375 crore by pledging NDTV shares which, according to him, is against the Reserve Bank of India (RBI) rules. The loan was made to a company called RRPR Holdings Private Limited in October 2008 against the pledge of NDTV shares.








RRPR Holdings has a capital of only Rs1 lakh and is 100% owned by Prannoy and Radhika Roy, says Mr Dutt in a letter to Dr KC Chakrabarty, RBI deputy governor, in April 2013. RRPR Holdings’ only asset and business is the 29% equity holding of NDTV. He further alleges that the loan to RRPR Holdings was made without even a mandatory haircut and, at times, in excess of the company’s market value. Of course, the loan was backed by the personal guarantee of a director.

Mr Dutt has obtained certified information from the Registrar of Companies (ROC) to back his allegation and written a formal complaint to RBI’s department of banking supervision at the end of April, with copies of his findings. All these documents are also available with Moneylife. Mr Dutt further alleges that the pledge of promoter holding has not been made public, as mandated by the listing agreement of stock exchanges.

I wrote to NDTV’s CEO, Vikram Chandra, seeking a response to Mr Dutt’s allegations. Within a couple of hours, I received a 1,600-word response from KVL Narayan Rao, executive vice chairperson of the NDTV group. Curiously, the letter did not answer Mr Dutt’s simple allegation about promoter funding in violation of RBI norms. Mr Rao wanted a couple of days to respond to those. Instead, he wrote about how Quantum Securities, a brokerage firm, was an active trader in NDTV shares. Mr Rao called Sanjay Dutt a ‘stock market manipulator’ who had settled charges with the Securities & Exchange Board of India (SEBI) by paying Rs53.41 lakh under a consent order.

According to Mr Rao, the company had yet to receive a response from Mr Dutt about whether he had indulged in similar trading in NDTV shares. The SEBI order of January 2013, which is on the regulator’s website, shows that Quantum Securities was accused of synchronised and circular trading in GHCL shares and paid Rs33.41 lakh in a consent deal, while Sanjay Dutt and Prenita Dutt, together, paid Rs15 lakh to settle charges against them.

Mr Rao then goes on to tell us that Sanjay Dutt was a consultant with NDTV and that he was paid a hefty Rs2.6 crore for his services over less than two years. This included several foreign trips to structure overseas subsidiaries for its foray into ‘non-news areas’. He was also given some shares in subsidiary companies which he had to forfeit when he left the company in 2008, allegedly because he could not get along with people.

Mr Rao says that Mr Dutt holds a ‘grudge’ against NDTV and has ‘misused’ and ‘distorted’ confidential information obtained as a consultant to level charges against the company in letters to various regulators as well as to NDTV’s board of directors.

In fact, according to him, Sanjay Dutt’s actions do not fall in the realm of ‘shareholder activism’ but are ‘blackmail, extortion and defamation’ which ‘amount to criminal offences under Indian Penal Code’. 


This then raises another question. Why has NDTV not initiated action against Mr Dutt so far? Clearly, neither side is telling us the whole truth. Mr Dutt is clearly not your usual activist investor; but it is also hard to imagine that a mere ‘grudge’ would motivate him to start a war against an extremely powerful media house like NDTV. As a person who has been in the organisation, Mr Dutt is also fully aware of NDTV’s phenomenal reach and connections in the Congress government.

On the other hand, what is holding NDTV back? Why has it not initiated action against Mr Dutt, if it is fully aware of his allegedly ‘defamatory’ letters to multiple regulators? Is it far more convenient for NDTV to simply use its clout to silence the regulators? Have any of them asked NDTV raised these issues about the frequent changes in its equity capital and Mr Dutt’s allegations?

Since Mr Rao says that Sanjay Dutt has written to NDTV’s board of directors, have the independent directors raised these issues? Surely, all of NDTV is not scared of what Narayan Rao calls Mr Dutt’s ‘bouts of uncontrollable rage and anger’?

Incidentally, Mr Dutt studied at the Doon School, is a chartered accountant, like Prannoy Roy, and is an IIM-Ahmedabad alumnus. The Quantum Securities’ website says that he was with the firm since 1994, but does not mention why he gave it up to act as a consultant to NDTV for the two peak years of the most ferocious bull market that India has seen.

An earlier version of the website listed the economist Dr Surjit Bhalla as a third member of the Quantum Securities management team. Dr Bhalla’s Oxus Fund Management was a division of Quantum. Dr Bhalla is on several SEBI and government committees and used to be close to NDTV, but is now independent.

Ironically, Quantum’s website, at one time, had listed among its ‘prominent’ clients Dr Prannoy Roy. Is there more to this unravelling story than meets the eye so
far?

 

Here is the detailed letter we received from Mr Rao, after sending this article for printing...
 



And here is the response from Mr Dutt on Mr Rao's letter...



Sucheta Dalal is the managing editor of Moneylife. She was awarded the Padma Shri in 2006 for her outstanding contribution to journalism. She can be reached at [email protected]

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COMMENTS

Dipu

4 years ago

Same information was already came in Sunday-Gardian few years back

CHANDRASEKHAR SKS

4 years ago

Nice article. But my only issue with this is that you should have masked all the email IDs of the indivuduals. You shouldn't have exposed their personal information. Just saying :-)

REPLY

Sucheta Dalal

In Reply to CHANDRASEKHAR SKS 4 years ago

Yes indeed. Appreciate your feedback. WE will do it right away.

shivkumar

4 years ago

Unfortunately, promoters of most of the public listed companies are interested only in Public funds and not public accountability.

Moreover, chances of well known names misusing the system are higher than an ordinary promoter as they have greater reach amongst the regulators and political leaders.

Jose Koshy

4 years ago

Is it wrong to pledge one's personal holdings and take a Loan ? Not informing the stock exchange will be an issue. Post Oswal buying into NDTV, is Pranoy & Co. still the promoters ? Though the exchange says they hold 61.45 % of the Co.

Debashis Basu

4 years ago

Its a publicly listed company, not private linen

REPLY

nagesh kini

In Reply to Debashis Basu 4 years ago

There is no distinction between "public" and "private" for the companies' statutory auditors.
They are answerable. But will take shelter under "fiduciary relationship". A right case for the Regulators SEBI for the cos and ICAI for the auditors!
Sometimes even the Auditors' also be subjected to Audit?

R Balakrishnan

In Reply to Debashis Basu 4 years ago

Not in that sense... Just wondering how these listed vehicles become a playground for wrong doing and private dirt gets thrown about.If public shareholders still hang in.. why?

R Balakrishnan

4 years ago

Washing private linen in public?? Is there something to choose between the two? Wonder..

Sahara freeze order gets SEBI Rs52 crore in cash, investments
After passing its attachment orders, SEBI informed all the banks, depositories, mutual funds and NBFCs, among others, about the matter and also requested the RBI to direct the chiefs of the banks to transfer the money of Sahara firms to a designated SEBI account
 
Market regulator Securities and Exchange Board of India (SEBI) has been able to get hold of cash and investments totalling about Rs52 crore and details of more than 450 acres of land so far through its attachment orders against Sahara group entities.
 
In the high-profile case involving refund of over Rs24,000 crore to the bondholders of two Sahara companies, SEBI had passed orders for attachment of various properties and freezing of accounts in February after the entities failed to deposit the entire money.
 
The cash totalling over Rs23 crore, received from various banks pursuant to these orders, has been invested in a term deposit for now, while investments worth about Rs28 crore in mutual funds and demat accounts have also been frozen, sources said.
 
After passing its attachment orders, SEBI informed all the banks, depositories, mutual funds and NBFCs, among others, about the matter and also requested the Reserve Bank of India (RBI) to direct the chiefs of the banks to transfer the money of Sahara firms to a designated SEBI account.
 
SEBI had also approached the collectors of as many as 600 districts to request them not to permit the concerned Sahara entities and persons from any sale or transfer of properties attached by the regulator.
 
As a result, the district collectors and revenue officers from various parts of the country have provided SEBI details of more than 450 acres of land belonging to Saharas, sources added.
 
The regulator has already asked the Supreme Court to allow it to appoint an Officer on Special Duty and other officers to deal with the objections and claims relating to the property to be sold and for conducting the sale of the property to garner funds for refunding the investors’ money.
 
The Saharas have so far deposited Rs5,120 crore with SEBI towards the refund and claims that this amount is more than sufficient to meet the outstanding liabilities towards its bondholders as the group has already paid close to Rs20,000 crore directly to the investors.
 

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