“The RBI as a Watch Dog should have been more dedicated towards disclosing information to the general public under the Right to Information Act,” remarked the SC judges
In a landmark judgement, the Supreme Court on Wednesday said
, the Reserve Bank of India cannot withhold information citing 'fiduciary relations' under the Right to Information (RTI) Act. The apex court also said, the Central Information Commission (CIC) has considered elaborately the information sought for and passed orders which in its opinion do not suffer from any error of law, irrationality or arbitrariness.
Hearing a set of transferred cases, a Division Bench of Justice MY Eqbal and Justice C Nagappan said, "From the past we have also come across financial institutions which have tried to defraud the public. These acts are neither in the best interests of the Country nor in the interests of citizens. To our surprise, the RBI as a Watch Dog should have been more dedicated towards disclosing information to the general public under the Right to Information Act. We also understand that the RBI cannot be put in a fix, by making it accountable to every action taken by it. However, in the instant case the RBI is accountable and as such it has to provide information to the information seekers under Section 10(1) of the RTI Act."
"In the instant case, the RBI does not place itself in a fiduciary relationship with the Financial institutions (though, in word it puts itself to be in that position) because, the reports of the inspections, statements of the bank, information related to the business obtained by the RBI are not under the pretext of confidence or trust. In this case neither the RBI nor the Banks act in the interest of each other. By attaching an additional 'fiduciary' label to the statutory duty, the Regulatory authorities have intentionally or unintentionally created an in terrorem effect," the Bench said.
Coming down heavily on the Reserve Bank the apex court said, RBI is supposed to uphold public interest and not the interest of individual banks. It said, "RBI is clearly not in any fiduciary relationship with any bank. RBI has no legal duty to maximize the benefit of any public sector or private sector bank, and thus there is no relationship of ‘trust’ between them. RBI has a statutory duty to uphold the interest of the public at large, the depositors, the country’s economy and the banking sector. Thus, RBI ought to act with transparency and not hide information that might embarrass individual banks. It is duty bound to comply with the provisions of the RTI Act and disclose the information sought by the respondents herein."
"It had long since come to our attention that the Public Information Officers (PIO) under the guise of one of the exceptions given under Section 8 of RTI Act, have evaded the general public from getting their hands on the rightful information that they are entitled to.”
“And in this case the RBI and the Banks have sidestepped the General public’s demand to give the requisite information on the pretext of 'Fiduciary relationship' and 'Economic Interest'. This attitude of the RBI will only attract more suspicion and disbelief in them. RBI as a regulatory authority should work to make the Banks accountable to their actions," the SC Bench observed.
The Counsel for RBI has argued that the central bank carries out inspections of banks and financial institutions on regular basis and the inspection reports prepared by it contain a wide range of information that is collected in a fiduciary capacity. TR Andhyarujina, the senior counsel for RBI contented that, under the Banking Regulation Act, 1949, the Reserve Bank of India has a right to obtain information from the banks under Section 27. He said, “These information can only be in its discretion published in such consolidated form as RBI deems fit. Likewise under Section 34A production of documents of confidential nature cannot be compelled. Under sub-section (5) of Section 35, the Reserve Bank of India may carry out inspection of any bank but its report can only be disclosed if the Central Government orders the publishing of the report of the Reserve Bank of India when it appears necessary."
Rejecting the contentions of RBI, the Bench said, "The baseless and unsubstantiated argument of the RBI that the disclosure would hurt the economic interest of the country is totally misconceived. In the impugned order, the Central Information Commission (CIC) has given several reasons to state why the disclosure of the information sought by the respondents would hugely serve public interest, and non-disclosure would be significantly detrimental to public interest and not in the economic interest of India. RBI’s argument that if people, who are sovereign, are made aware of the irregularities being committed by the banks then the country’s economic security would be endangered, is not only absurd but is equally misconceived and baseless."
"The exemption contained in Section 8(1)(e) applies to exceptional cases and only with regard to certain pieces of information, for which disclosure is unwarranted or undesirable. If information is available with a regulatory agency not in fiduciary relationship, there is no 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. As in the instant case, the Financial institutions have an obligation to provide all the information to the RBI and such an information shared under an obligation/ duty cannot be considered to come under the purview of being shared in fiduciary relationship. One of the main characteristic of a Fiduciary relationship is 'Trust and Confidence'. Something that RBI and the Banks lack between them," the Divisional Bench said in its order.
While denying the information sought by respondents, the banks have cited Section 8(1)(a)(d) and (e) of the RTI Act.
“8. Exemption from disclosure of information.—
(1) Notwithstanding anything contained in this Act, there shall be no obligation to give any citizen,—
(a) information, disclosure of which would prejudicially affect the sovereignty and integrity of India, the security, strategic, scientific or economic interests of the State, relation with foreign State or lead to incitement of an offence;
(b) information which has been expressly forbidden to be published by any court of law or tribunal or the disclosure of which may constitute contempt of court;
(c) information, the disclosure of which would cause a breach of privilege of Parliament or the State Legislature;
(d) information including commercial confidence, trade secrets or intellectual property, the disclosure of which
would harm the competitive position of a third party, unless the competent authority is satisfied that larger public interest warrants the disclosure of such information;
(e) information available to a person in his fiduciary relationship, unless the competent authority is satisfied that the larger public interest warrants the disclosure of such information;
The Supreme Court said, section 2(f) of the RTI Act, clearly provides that the inspection reports, and documents fall under the purview of "Information” which is obtained by the public authority (RBI) from a private body.
Section 2(f), reads thus:
“information” means any material in any form, including records, documents, memos, e-mails, opinions, advices, press releases, circulars, orders, logbooks, contracts, reports, papers, samples, models, data material held in any electronic form and information relating to any private body which can be accessed by a public authority under any other law for the time being in force;
The Bench said, from reading of the above section it can be inferred that the Legislature’s intent was to make available to the general public such information which had been obtained by the public authorities from the private body. Had it been the case where only information related to public authorities was to be provided, the Legislature would not have included the word “private body”. As in this case, the RBI is liable to provide information regarding inspection report and other documents to the general public, the Bench said.
The apex court said, "Even if we were to consider that RBI and the Financial Institutions shared a 'Fiduciary Relationship', Section 2(f) would still make the information shared between them to be accessible by the public. The facts reveal that Banks are trying to cover up their underhand actions, they are even more liable to be subjected to public scrutiny."
"We have surmised that many Financial Institutions have resorted to such acts which are neither clean nor transparent. The RBI in association with them has been trying to cover up their acts from public scrutiny. It is the responsibility of the RBI to take rigid action against those Banks which have been practicing disreputable business practices," the Supreme Court said, while upholding the decisions given by CIC.
"...given our anxious consideration to the matter and came to the conclusion that the Central Information Commissioner has passed the impugned orders giving valid reasons and the said orders, therefore, need no interference by this Court," the Bench concluded.
In most of the transferred cases, Shailesh Gandhi, former Central Information Commissioner, while directing the RBI to provide information sought by applicants, has rejected the central bank's contention of 'fiduciary relation' for denying information.
Here is the link to the RTI Judgement Series based on orders passed by Mr Gandhi as Central Information Commissioner.
All India Bank Employees Association (AIBEA) has welcomed the SC decision about asking RBI and banks to provide full information under the RTI Act.
In a statement, Vishwas Utagi, Senior Vice President, AIBEA, said, "It is a landmark judgement in favor of common man. We salute Shailesh Gandhi, former CIC who directed RBI to publish list of wilful loan defaulters. We from AIBEA defied RBI in last 20 years and published the list by holding the press conference and demanded wilful loan default be treated as cognizable offence under Indian Penal Code (IPC) to break banker- borrower nexus. AIBEA has always stood for the right of the depositors in India, to know the end use of their money in banks lending and investments which is greatly defaulted in recent years which is virtually a public loot by top corporates."
Similarly, the Indian National Bank Employees' Federation (INBEF) also welcomed the apex court judgement.
Subhash S Sawant, General Secretary of INBEF, in a statement said, "On behalf of the struggling bank employees throughout the country, we heartily welcome and salute the timely observation of the Supreme Court that the RBI is under the purview of the overarching RTI Act and hence bound to divulge business details of all banks, including the financial regulator's audit reports and list of defaulters."
"No doubt, the historical judgement given by Justice MY Eqbal and Justice C Nagappan if implemented, will fetch relief to the country's economy which is reeling under the menace of huge non-performing assets (NPAs) and may cry a halt to the looting of public funds by some unscrupulous businessmen," he added.
Here are some of the decisions, annouced by Mr Gandhi, while serving as Central Information Commissioner under the RTI Act, and upheld by the Supreme Court...