Merely because disclosure of information may adversely affect public confidence in defaulting institutions, it cannot be a reason for denial of information under the RTI Act, the CIC ruled. This is 170th 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, directed the Central Public Information Officer (CPIO) of Reserve Bank of India (RBI) to provide complete information about investigation report based on the appellant’s complaint against Thane Bharat Sahakari Bank Ltd. The CPIO had claimed exemption using Sections 8(1)(a) and (e) of the Right to Information (RTI) Act and also cited decision of the full Bench of the Commission in RR Patel vs RBI (CIC/MA/A/2006/00406 and 00150, dated 7 December 2006) case.

While giving the judgement on 4 November 2011, Shailesh Gandhi, the then Central Information Commissioner said, "The RBI is a regulatory authority which is responsible for inter alia monitoring subordinate banks and institutions. Merely because disclosure of such information may adversely affect public confidence in defaulting institutions, it cannot be a reason for denial of information under the RTI Act. If there are certain irregularities in the working and functioning of such banks and institutions, the citizens certainly have a right to know about the same. In view of the same, this Bench is of the considered opinion that even if the information sought was exempted under Section 8(1)(a) or (e) of the RTI Act, as stated by the PIO, Section 8(2) of the RTI Act would mandate disclosure of the information. The Full Bench had also concluded that there was a public interest in disclosure and I concur with its finding."

Thane (Maharashtra) resident Vivek Madhukar Shirvalkar, on 27 November 2010, sought from the PIO information regarding his complaint dated 17 November 2009 to the regional director of RBI, as chairman of Task Force on Co-operative Urban Banks (TAFCUB) (Maharashtra) against Thane Bharat Sahakari Bank Ltd (Ref: CRC Case No 20/ 27 July 2010).Here is the information he sought and the reply provided by the PIO under the RTI Act...

1. Copy of report submitted by officer(s) of RBI on the investigation carried out by them in the matters/ issues stated by the Appellant in his complaint against the Bank.      

PIO's reply- No separate investigation was carried out on the issues raised by the Appellant, as the financial issues were covered in the inspection of the bank conducted under Section 35 of the B.R.Act, 1949 (as applicable to co—operative societies) with reference to its position as on 31 March 2010.The inspection reports contain information held/received by banks in a fiduciary capacity and cannot be disclosed to outsiders, as disclosure of such information may harm the interest of the bank and banking system. Such information is exempt from disclosure under Sections 8(1)(a) and (e) of the RTI Act. The other issues were referred to Registrar of Co—operative Societies, Maharashtra.

2. Copy of reply/explanations submitted by Thane Bharat Sahakari Bank Limited, Thane to RBI on various facts reported by the Appellant in his complaint against the Bank.           

PIO's reply—No reply has been received from the bank till date. A reminder was issued to the bank of 8 December 2010.

3. Copy of letter addressed by RBI to Thane Bharat Sahakari Bank Ltd, Thane stipulating the action taken, if any, against the said bank with respect to various irregularities in its functioning as stated in his complaint against the Bank.               

PIO's reply—Copies of the letters dated 1 February 2010 and 8 December 2010 issued to the bank by the Mumbai Regional Office were provided to the Appellant.

Not satisfied with the PIO's reply, Shirvalkar filed his first appeal.

Based on the contentions of the Appellant, the First Appellate Authority (FAA) made the following observations inter alia:

(i) As regards query 1 of the RTI application, reliance was placed upon the Bench decision of the Commission in RR Patel vs RBI (CIC/MA/A/2006/00406 and 00150 dated 7 December 2006). On this basis, the reply of the PIO was upheld.

(ii) The FAA upheld the reply of the PIO as regards queries 2 and 3 of the RTI application.

Dissatisfied with the FAA's order, Shirvalkar then approached the CIC with his second appeal.

The CIC directed both the parties to appeal before the Bench of Mr Gandhi, via video conferencing on 1 November 2011. However, neither party appeared nor gave any written submissions. Mr Gandhi then reserved his order.

During the next hearing on 4 November 2011, the Bench noted that based on perusal of papers, it appeared that information as per record on queries 2 and 3 of the RTI application, has already been furnished to the appellant and therefore, it was not in dispute before the CIC.

As regards query1 of the RTI application, information was denied by the PIO on the basis of Sections 8(1)(a) and (e) of the RTI Act. This was upheld by the FAA and reliance in this regard was also placed on the Commission's Full Bench decision in RR Patel vs RBI (CIC/MA/A/2006/00406 and 00150, dated 7 December 2006) case.

Section 8(1)(e) of the RTI Act exempts from disclosure "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".

Mr Gandhi said, "This Bench, in a number of decisions, has held that 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. Information provided in discharge of a statutory requirement, or to obtain a job, or to get a license, cannot be considered to have been given in a fiduciary relationship."

"Information provided by banks or institutions subordinate to RBI is done in fulfilment of statutory compliance. This would not create any fiduciary relationship as such between RBI and the subordinate banks or institutions. The criteria defining a fiduciary relationship, as described above, must be satisfied which does not appear to have been done in the present matter. Inspections, audits and investigations are done by RBI officers as part of statutory duty and banks have to undergo this in compliance with statutory requirements. Therefore, the denial of information on query 1 on the basis of Section 8(1)(e) is rejected," he said.

The PIO has denied information on query 1 on the basis of Section 8(1)(a) of the RTI Act and stated in his reply dated 3 January 2011 that disclosure of such information may harm the interest of the bank and banking system. The FAA upheld the reply of the PIO and further placed reliance on a Full Bench decision of the Commission in RR Patel vs RBI (CIC/MA/A/2006/00406 and 00150, dated 7 December 2006) in this regard.

Mr Gandhi said, "In RR Patel's Case, the Full Bench was considering the issue of disclosure of RBI's inspection report of a Co—operative Bank. One of the issues before the Bench was whether the inspection report was exempt from disclosure under Section 8(1)(a) of the RTI Act. The Full Bench relied on a decision of the Punjab & Haryana High Court in RBI vs Central Government Industrial Tribunal (dated 7 May 1958) which had observed that 'In an integrated economy like ours, the job of a regulating authority is quite complex and such an authority has to decide as to what would be the best course of action in the economic interest of the State. It is necessary that such an authority is allowed functional autonomy in decision making and as regards the process adopted for the purpose'."

Based on the above, the Full Bench, in paragraph 16, ruled inter alia that, "In view of this, and in light of the earlier discussion, we have no hesitation in holding that the RBI is entitled to claim exemption from disclosure u/s 8(1)(a) of the Act if it is satisfied that the disclosure of such report would adversely affect the economic interests of the State. The RBI is an expert body appointed to oversee this matter and we may therefore rely on its assessment. The issue is decided accordingly".

"It appears that the Full Bench was of the view that if RBI concluded that disclosure of inspection reports would adversely affect the economic interests of the State, the said information may be denied under Section 8(1)(a) of the RTI Act. There is no observation that the Full Bench had come to this conclusion by itself. Further, the observations of the Punjab & Haryana High Court in RBI vs Central Government Industrial Tribunal (dated 7 May 1958) relied on by the Full Bench were made much before the advent of the RTI Act and cannot therefore, be a guide for deciding on exemptions under the RTI Act," the Bench noted.

Furthermore, the RBI in RR Patel's case claimed that if inspection reports of banks were to be disclosed it would affect the economic interests of the state. The Full Bench decision appears to rely on the submissions of the Deputy Governor of RBI provided vide letter dated 21 November 2006 and were as follows:

"(i) Among the various responsibilities vested with RBI as the country's Central Bank, one of the major responsibilities relate to maintenance of financial stability. While disclosure of information generally would reinforce public trust in institutions, the disclosure of certain information can adversely affect the public interest and compromise financial sector stability.

(ii) The inspection carried out by RBI often brings out weaknesses in the financial institutions, systems and management of the inspected entities. Therefore, disclosure can erode public confidence not only in the inspected entity but in the banking sector as well. This could trigger a ripple effect on the deposits of not only one bank to which the information pertains but others as well due to contagion effect.

(iii) While the RBI had been conceding request for information on actions taken by it on complaints made by members of the public against the functioning of the banks and financial institutions and that they do not have any objection in giving information in respect of such action taken or in giving the substantive information pertaining to such complaints provided such information is innocuous in nature and not likely to adversely impact the system.

(iv) However, disclosure of inspection reports as ordered by the Commission in their decision dated 6 September 2006 would not be in the economic interest of the country and such disclosures would have adverse impact on the financial stability.

(v) It would not be possible to apply section 10(1) of the Act in respect of the Act in respect of the inspection report as portion of such reports when read out of context result in conveying even more misleading messages."

Mr Gandhi noted that the RBI argued that that it did not wish to share the information sought as some of it could "adversely affect the public interest and compromise financial sector stability". RBI was unwilling to share information, which might bring out the 'weaknesses in the financial institutions, systems and management of the inspected entities'. It was further contended that ”disclosure can erode public confidence not only in the inspected entity but in the banking sector as well. This could trigger a ripple effect on the deposits of not only one bank to which the information pertains but others as well due to contagion effect”.

He said, "It appears that the RBI argued that citizens were not mature enough to understand the implications of weaknesses, and RBI was the best judge to decide what citizens should know. Citizens must be given selective information about weaknesses exposed in inspection, to ensure that they have faith in the banking sector. They must see the financial and banking sector only to the extent, which RBI wishes. If the RBI made mistakes, or there was corruption, citizens would suffer. This appears to go against the basic tenets of democracy and transparency."

The CIC cited a clarion call in State of Uttar Pradesh vs Raj Narain (1975) 4 SCC 428, by Justice Mathew that stated...

"In a government of responsibility like ours, where all the agents of the public must be responsible for their conduct, there can be but few secrets. The people of this country have a right to know every public act, everything that is done in a public way by their public functionaries. They are entitled to know the particulars of every public transaction in all its bearing. Their right to know, which is derived from the concept of freedom of speech, though not absolute, is a factor which should make one wary when secrecy is claimed for transactions which can at any rate have no repercussion on public security".

Mr Gandhi said, "The idea that citizens are not mature enough to understand and will panic is repugnant to democracy. The exemptions under Section 8 and 9 of the RTI Act are the constraints put by Parliament and adjudicating bodies have to carefully consider whether the exemptions apply before denying any information under the RTI framework."

"It is pertinent to mention that in RR Patel's case, the Full Bench did not come to any specific conclusion that disclosure of inspection reports would prejudicially affect the economic interests of the State. Instead it left it to RBI to determine whether disclosure of the said information would attract Section 8(1)(a) of the RTI Act. This was primarily on the basis that RBI is an expert body and that any decision taken by it should be relied upon by the Commission. No legal reasoning whatsoever was given by the Bench for concluding the above. There is no evidence or indication that the Commission after taking cognizance of RBI's views had come to the same conclusion."

"If the position of the Full Bench is to be accepted, it would lead to a situation where RBI would have the final say in whether information should be provided to a citizen or not. Extending this logic, all public authorities could be the best judge of what information could be disclosed, since they are likely to be experts in matters connected with their working. In such an event the Information Commission would have no role to play. Parliament evidently expected that the Information Commission would independently decide whether the exemptions are applicable. The Full Bench did not give any independent finding that the disclosure of information would affect the economic interests of the State in its decision. This would completely negate the fundamental right to information guaranteed to the citizens under the RTI Act. In the case being considered by the full bench, it decided to accept the judgment of RBI. It is open to a Commission to defer to a judgment of another body, but this does not establish any principle of law, and would apply only to the specific matter," Mr Gandhi said.

The Bench said, "It is apparent from the scheme of the RTI Act that the Commission is a quasi-judicial body which is responsible for deciding appeals and complaints arising under the RTI Act. While deciding such cases, the Commission would necessarily have to consider whether there were any cogent reasons for denial of information under Sections 8 and 9 of the RTI Act. Since the Full Bench has not recorded any comment which shows that it consciously agreed that Section 8 (1)(a) of the RTI Act was applicable in such matters, it does not establish any legal principle or interpretation which can be considered as a precedent or ratio. Thus the decision is applicable only to the particular matter before it, and does not become a binding precedent."

Mr Gandhi said, the powers of the Commission are limited under the RTI Act and certainly do not confer upon it the power of review. "It is clear from the Full Bench ruling in RR Patel's case that it was reviewing the two decisions of Professor MM Ansari, then Information Commissioner on merits. The Full Bench certainly did not have the power to do so, given the provisions of the RTI Act and the law laid down by the Supreme Court in this regard. In fact, the Supreme Court in the Kapra Mazdoor Ekta Union Case clearly considered and clarified the ruling in the Grindlays' Bank Case (relied upon by the Full Bench). It appears that the Full Bench reviewed the issues based on merits in RR Patel's case in ignorance of the law laid down by the Supreme Court in Kapra Mazdoor Ekta Union Case. In other words, the RR Patel Case is per incuriam and is consequently, not binding on this Bench," he added.

"Having laid down the above, this Bench examines the contention of the PIO in the present matter that the information is protected by the exemption under Section 8(1)(a) of the RTI Act. Since I do not chose to defer to the RBI's judgment in this matter, I will evaluate whether the PIO's contention of exemption under Section 8 (1) (a) is tenable," Mr Gandhi said.

Section 8 (1) (a) exempts  "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".

The PIO and the FAA claimed that revealing the investigation and audit report of Thane Bharat Sahakari Bank Ltd would 'prejudicially affect the economic interests of the state'. "This Bench is unable to understand how disclosing the investigation and audit report of Thane Bharat Sahakari Bank Ltd would in any miniscule way affect the economic interests of the Indian Nation. Hence, there is no ground for refusing information with regard to query1. Declaring the audit, inspection and investigation reports of all co-operative banks, which have gone into liquidation, cannot do any further harm to such banks. If the banks have gone into liquidation, what more damage can come on them? The PIO perhaps rates the economic state of this nation as being extremely fragile to make such a claim. I therefore, cannot leave such a decision to the wisdom of RBI," Mr Gandhi said.

The CIC then referred to the conclusion and recommendation of the full Bench in paragraph 21, which stated...

"Before parting with this appeal, we would like to record our observations that in a rapidly unfolding economics scenario, there are public institutions, both in the banking and non-banking sector, whose activities have not served public interest. On the contrary, some such institutions may have attempted to defraud the public of their moneys kept with such institutions in trust. RBI being the Central Bank is one of the instrumentalities available to the public which as a regulator can inspect such institutions and initiate remedial measures where necessary. It is important that the general public particularly the shareholders and the depositors of such institutions are kept aware of RBI's appraisal of the functioning of such institutions and taken into confidence about the remedial actions initiated in specific cases. This will serve the public interest. The RBI would therefore be well advised to be proactive in disclosing information to the public in general and the information seekers under the Right to Information Act, in particular. The provisions of Section 10(1) of the RTI Act can therefore be judiciously used when necessary to adhere to this objective".

Mr Gandhi said, "The full Bench, clearly stated that a larger public interest was likely to be served by disclosure of the said information. It suggested that RBI should disclose most of this information in a proactive manner. The Full Bench of the Commission had effectively given a recommendation to RBI to disclose this information under Section 4 of the RTI Act. I agree with the conclusion arrived at by the bench that the disclosure of the appraisal of financial institutions by RBI and remedial measures must be shared with public in a proactive manner."

Section 8 (2) of the RTI Act states, "Notwithstanding anything in the Official Secrets Act, 1923 nor any of the exemptions permissible in accordance with sub-section (1), a public authority may allow access to information, if public interests in disclosure outweighs the harm to the protected interests".

While allowing the appeal, Mr Gandhi said, "Merely because disclosure of such information may adversely affect public confidence in defaulting institutions, cannot be a reason for denial of information under the RTI Act. There must be transparency as regards such organisations so that citizens can make an informed choice about them. In view of the same, this Bench is of the considered opinion that even if the information sought was exempted under Section 8(1)(a) or (e) of the RTI Act, as claimed by the PIO, Section 8(2) of the RTI Act would mandate disclosure of the information."

He then directed the PIO to provide the information as per records to Shirvalkar in relation to query 1 before 30 November 2011. 

CENTRAL INFORMATION COMMISSION

Decision No. CIC/SG/A/2011/002033/15493

https://ciconline.nic.in/cic_decisions/CIC_SG_A_2011_002033_15493_M_70004.pdf

Appeal No. CIC/SG/A/2011/002033

Appellant                                           : Vivek Madhukar Shirvalkar,

                                                            Naupada, Thane (W),

                                                            Maharashtra - 400602

Respondent                                        : Public Information Officer,

                                                            Reserve Bank of India,

                                                            Urban Bank Department,

                                                            Central Office, 1st Floor, Garment House,

                                                            Worli, Mumbai - 400018