Several welfare trusts and public authorities claim exemption from the RTI Act on the basis of being independent bodies. In the cases of the Bank of Maharashtra Employees Welfare Trust and LIC Housing Finance, the CICs ruled that they are public authorities and information must be provided
Last year, Pune-based Prakash Ranade filed a Right to Information (RTI) application at the Bank of Maharashtra corporate office seeking information on holiday homes of employees which come under its Bank of Maharashtra Employee Welfare Trust.
Mr Ranade sought a copy of the constitution of the welfare trust; list of the places where the holiday homes of staff members are provided as of April 2011; agreement copies of the holiday home owners/hotels that have an arrangement with the bank for years April 2010 to March 2011 with full terms and conditions; the procedure followed while selection of particular property for holiday homes and their renewals after expiry of agreed terms; names of selection committee members; details of expenses for their visits to renew/fresh lease, etc during the years April 2010 to March 2011 paid by the bank through the welfare fund; and total payment made to each holiday home for the financial year 2010-2011.
The Public Information Officer (PIO) of Bank of Maharashtra denied him information stating that the information is related to the trust which is a separate legal entity.
Mr Ranade then filed first an appeal with the First Appellate Authority (FAA) of the Bank of Maharashtra. The FAA, in its order, agreed with PIO’s reply stating: “the said ‘Welfare Trust’ is a registered trust. It is managed by independent board of trustees which has the entire custody, management and control of the trust fund. I therefore agree with the PIO that the trust is a Separate legal entity and uphold the decision of the PIO.”
Unsatisfied with the answer, Mr Ranade filed second appeal with the Central Information Commissioner Shailesh Gandhi who held a hearing on 13 February 2012 wherein the RTI applicant Mr Ranade and the PIO Ajay Banerjee were present via video conferencing from a studio in Pune. Gaurav Tyagi, Law Officer, Regional Office, Delhi was present in the CIC office, Delhi.
RTI applicant Mr Ranade argued that the Bank of Maharashtra Employee Welfare Trust receives around Rs8-Rs1o crore from Bank of Maharashtra, “the executive director of the bank is the ex-officio head of the trust and other members of the trust are also employees of the bank.” Since the PIO and the law officer did not contest these claims, they were asked by the CIC to give a written submission.
Based on the submission sent by the law officer of Bank of Maharashtra, CIC Shailesh Gandhi ordered that the Bank of Maharashtra Employee Welfare Trust is a public authority and that the bank should immediately appoint a Public Information Officer for the trust. His argument was as follows:
Shailesh Gandhi argued that since public funds of over a crore rupees have been diverted to the trust, citizens have a right to know the use of this money. He stated: “a contribution or grant of Rs50.80 crore given by the bank from its corpus of public funds cannot be considered as insignificant. This would render the trust as being ‘substantially financed’ indirectly by government funds. Citizens have a right to know about the manner, extent and purpose for which public funds are being deployed by the government or its agencies. Having said so, not every financing of an entity in the form of a contribution or grant by the government or its instrumentalities (such as the bank) would qualify as ‘substantial’—but certainly a grant of over Rs1 crore would constitute ‘substantial financing’ rendering such entity a public authority under the RTI Act.”
Shailesh Gandhi argued that: “There are various forms in which the government exercises control over an entity, which is relevant in determining whether the latter is a public authority.” The Commission noted that “the board of trustees of the Bank of Maharashtra Employees Welfare Trust consists of nine officials. The chairman of the trust is MG Sanghvi, who is the executive director of the bank… the officials of the bank constitute the board of trustees… the registered office of the trust is same as the head office of the Bank.”
Although the law officer of the bank argued that the trust is being run by an independent board of trustees, Mr Gandhi argued that, “it is difficult to assume that senior officials of the bank can constitute the entire board of trustees in an independent capacity where the trust itself has been set up for the welfare of the bank’s employees. Moreover, the executive director of the bank, who is a government appointee, is the chairman of the trust. The Commission can only assume that such officials must necessarily be acting on behalf of the bank—when they are required to take executive decisions as members of the board of the trust for the welfare of the bank’s employees. It is also true that significant funding is provided to the trust by the bank.”
The Commission ruled in March 2012 that the Bank of Maharashtra Employees Welfare Trust is a public authority under Section 2(h) of the RTI Act. The Commission directed the chairman of the Bank of Maharashtra Employees Welfare Trust to appoint a Public Information Officer and a First Appellate Authority—as mandated under the RTI Act before 15 April 2012. The order concluded: “The Public Information Officer so appointed shall provide the complete information as per records in relation to the RTI application dated 18 September 2011 to the appellant as per the provisions of the RTI Act.”
Point to note: The Bank of Maharashtra website www.bankofmaharashtra.in has yet not appointed a PIO and AA for the trust going by the fact that it has listed the names and contacts of all other 34 PIOs.
In the case of the LIC Housing Finance, LIC Mutual Fund Asset Management Co and GIC Housing Finance, the CIC received 10 complaint petitions stating that they were denied information from these authorities.
The CIC needed to base their decisions on whether these were public authorities.
The CIC decisions on LICHFL and GIC Housing Finance are similar to the Bank of Maharashtra Employees Welfare Trust case.
As per the document posted in http://www.rtigateway.org.in/Documents/CaseLaw/1.%20Definitions.pdf, “LICHFL was incorporated by LIC of India and both of them share the chairman and managing director. The stake of LIC in the LICHFL is 40.497%. If the share of the LIC is aggregated with other government insurance companies, the total stake in the shareholding of LICHFL comes to 45.918%. As per Article 133(1) of the Articles of Association of LICHFL, LIC has the authority to appoint one of its directors and managing director of LICHFL.
“In view of this, it can be inferred that the control of LIC over LICHFL is explicit and effective. The very fact that the chairman of the LIC is also the chairman of LICHFL further strengthened this inference. The RTI applicant has also submitted that if the shareholding of other banks is added to the total shareholding of the PSU, the total shareholding will exceed 80%. It is an admitted fact that the total shareholding of the PSU is 45% and this is sufficient enough to bring it within the definition of the term ‘substantial finance’.
“We may agree that the LICHFL is not owned by LIC of India as the total shareholding of the LIC does not exceed 50% but there can be no doubt that LIC and other insurance companies and banks taken together have financed LICHFL substantially.”
LIC Mutual Fund: “The LIC of India is a body established, constituted, owned and controlled by central government which is the appropriate government for the LIC of India and the funding by LIC of India and their general control over the functioning of the LIC Mutual Fund can be nothing but an indirect funding and control by the appropriate government. LIC of India is a public authority having been constituted by an Act of Parliament. LIC of India in turn in order to further carry out their public function have formed LIC Mutual Fund approved for formation ‘through subsidiary’ which has to function under LIC’s control. The respondent Mutual Fund is fully financed and administratively controlled by the LIC of India through a board of trustees. The trustees of the board who manage the LIC Mutual Fund are appointed with the approval of LIC of India. LIC of India has the power to change the trustees from time to time. The corpus of the trust amounting to Rs10 lakh was contributed by the LIC. The trust deed provides that a further sum not exceeding Rs.25 crores shall be made available as initial contribution to the trust by the LIC. The LIC has floated the mutual fund to mop up the additional savings from the public in rural and semi-urban areas and it would be receiving considerable amount of insurance business from the mutual fund.
“LIC of India for the above purpose provides to the mutual fund all suitable help and guidance which includes payment of initial corpus of the trust, financial assistance to the trust, renting out premises after housing the mutual fund, provision of initial office equipment and deputation of suitable employees, etc. The chairman of LIC is authorised to take such administrative decisions as may be required periodically so as to ensure the smooth launching of the LIC Mutual Fund and its successful operation.”
GIC Housing Finance: “Now coming to GIC Housing Finance, the Commission’s finding is not any different. The shareholding of six public authorities in GIC Housing Finance is 47.68% and coupled with the control they exercise over the GIC Housing Finance is sufficient to bring them within the ambit of the definition of ‘Public Authority’ as defined in Section 2(h) of the Right to Information Act, 2005.
“In view of the above observations and findings, all the three respondents, LIC Housing Finance, LIC Mutual Fund Asset Management Co and GIC Housing Finance are ‘Public Authorities’ under the RTI Act. All of them are, therefore, obliged to take all necessary steps to carry out their duties and responsibilities assigned by the Act.”
Inside story of the National Stock Exchange’s amazing success, leading to hubris, regulatory capture and algo scam