Holding that regulatory opacity cannot be shielded by procedural shortcuts, the Bombay High Court (HC) directed market regulator Securities and Exchange Board of India (SEBI) to re-examine its denial of key queries filed under the Right to Information (RTI) Act by activist Subhash Chandra Agrawal. The queries related to the appointment of public interest directors (PIDs) and inspection reports of stock exchanges.
The HC ruled that SEBI had failed to follow the mandatory procedure under section 11 of the RTI Act, which requires prior consultation with third parties before rejecting requests involving third-party information. As a result, the HC has remanded several of Mr Agrawal’s RTI queries back to SEBI for fresh consideration.
In an order issued on 10 July 2025, the division bench of justice MS Sonak and justice Jitendra Jain directed SEBI to reconsider three crucial RTI queries:
Query 3: The list of individuals selected and rejected for public interest director posts.
Queries 4 and 5: Annual inspection findings of BSE and NSE.
The bench emphasised that SEBI must follow procedures under section 11 (of the RTI Act) by seeking responses from third parties—such as the exchanges and the individuals concerned—before making a disclosure decision. SEBI had denied these queries without issuing the required notices, which the court held to be procedurally incorrect.
“When third-party information is involved, the concerned authority must follow section 11 before denying disclosure,” the court observed, citing precedents from the Supreme Court.
While directing a review of certain queries, the HC upheld SEBI’s denial of query 2, which sought internal documents and file notings related to policy formulation on PID appointments. The court accepted SEBI’s argument that such documents were held in a fiduciary capacity and exempt under section 8(1)(e) of the RTI Act.
Further, the bench agreed with SEBI’s rejection of queries 6 to 9, which were deemed too vague. These included broad requests for 'all records' or unspecified 'related information', which the HC held were not specific enough to warrant disclosure.
During the hearing, SEBI, supported by the BSE, NSE, and MCX, had opposed disclosure on the grounds of confidentiality, commercial sensitivity, and privacy. It argued that revealing the names of rejected PID candidates could cause undue harm, as the selection process was not a competitive exam or open recruitment.
The exchanges also claimed that their inspection reports contained sensitive information that could impact investor confidence or market operations if disclosed.
However, the HC stressed that such exemptions cannot be applied without a proper procedure, especially when public interest is involved.
The HC judgment relied heavily on previous rulings by the Supreme Court in CPIO vs Subhash Chandra Agrawal and RBI vs Jayantilal Mistry, both of which underscored that transparency in regulatory functioning is a legitimate public interest and that fiduciary or economic concerns do not automatically override the right to information.
“Blanket refusals cannot substitute reasoned analysis,” the HC noted, asserting that regulators must weigh competing interests before denying access to information.
Mr Agrawal says, "SEBI has always been known for being non-transparent in responding to RTI applications. It is beyond understanding why and how disclosing information on the appointment of public-interest directors is not in the public interest, while the title 'public interest director' itself suggests that disclosure should be in the larger public interest. Even invoking section 11 should not be necessary because disclosing the information will, while those with better merit than the selected ones are not selected as public interest directors."
"If SEBI is considered justified to remain non-transparent, then it is better that SEBI, along with MII, NSE, BSE, MCX and MCXCL, may be exempted from the RTI Act under section 24 of the RTI Act by putting all these institutions under the 2nd Schedule of the RTI Act," he added.
The Bombay HC’s ruling is a step forward for transparency in India’s financial markets. By ordering SEBI to revisit its decisions and follow due process, the court has sent a clear message that regulatory opacity cannot be shielded by procedural shortcuts. The outcome is likely to influence how other regulators handle RTI requests involving sensitive or third-party data, particularly in sectors impacting public trust.
