COURT- Supreme Court of India JURISDICTION- Civil Original Jurisdiction CASE NO- Civil Appeal No. 91 OF 2015 BENCH- M.Y. Eqbal, C. Nagappan APPELLANT- Reserve Bank Of India RESPONDENTS- Jayantilal N. Mistry DECIDED ON- 16 December 2015
INTRODUCTION
The cornerstone of this judgment rests upon the provisions of the Right to Information Act of 2005 which brought with it another layer of liberty as it enabled the people to seek information from various institutions and transparency could prevail. However, the limitations were certainly attached to this notable Act. The case revolves around the aspects of two momentous Acts.
The Reserve Bank of India denied the disclosure of certain information to the respondents on various occasions, on the ground of confidentiality, fiduciary relationship, and economic interests. The various respondents of this case moved to the court regarding their contentions which were then examined by the Central Information Commission (CIC) which directed the RBI to comply with regulations of the Right to Information Act and furnish the information. However the RBI then through various writ petitions approached the courts in each case, and finally, after non-satisfactory decisions, all the appeals were clubbed together and brought to the Supreme Court of India.
Eventually, the decision of the Supreme Court held that the RBI is entitled to furnish information under the RTI Act and negated its ground of not providing adequate information due to confidentiality and other grounds contended down by them.
BACKGROUND
Legal Provisions
The Reserve Bank of India is assigned the role of managing the financial affairs of the government and commercial banks. It also has the responsibility of managing accounts of the Government of India and other State governments. As the sole controller, regulator, and supervisor of the country’s banking system, it is vested with various powers involving public debt, determining volumes of credit, public policy among other functions. Under Section 35 of the Banking Regulation Act, 1949 the RBI can inspect the banks in the country.
Under Section 28 of the Banking Regulation Act, the RBI in the public interest may publish the information obtained by it, in a consolidated form but not otherwise.
Under Section 45E of the Reserve Bank of India Act, 1934, disclosing any information relating to credit banking company is confidential and under Section 45E(3) notwithstanding anything contained in any law no court, tribunal or authority can compel the Reserve Bank of India to give information relating to credit information, etc.
Under Section 8(1) (a), (d), or (e) of the Right to Information Act, Section 8(2) of the RTI Act would mandate the disclosure of the information.
Adequacy in the reasoning of Court
The Courthas provided somewhat adequate reasoning about the rendering of information by the RBI, however, the explanation provided by the court is unsatisfactory as it has ignored the aspect of misuse of the information which will be ascertained to the respondents. This can lead to severe damage concerning the reputation of banks. Concerning fiduciary relationships, the court has explained the exact meaning by touching upon the role of RBI when it comes to their trust with the confidential client. The information obtained by the RBI is unquestionably delicate however the entire formation of the RTI Act 2005 was based on enabling the access of citizens to the data so that transparency can be endured.
FACTS OF THE CASE
The petitioner that is Reserve Bank of India moved to the Supreme Court about various previous writs filed by them in several high Courts about the disclosure of information. Many respondents including Jayantilal Mistry and others who had moved to court demanding information under the RTI Act which were not furnished by the Reserve Bank on the ground of fiduciary relationship, economic interests, and other reasons for confidentiality. The Bank after non-compliance with the decision made by the Central Information Commission now appealed to the Supreme Court which analyzed all the previous cases based on contention raised by both parties.
ARGUMENTS ADVANCED BY THE PETITIONERS
The Petitioner contended that the decisions passed by the CIC were illegal and without jurisdiction. The counsel for the petitioner cited various provisions of different acts to establish their contentions- The Reserve Bank of India Act, 1934; The Banking Regulation Act, 1949 and The Credit Information Companies (Regulation) Act, 2005;
The submissions made by the petitioners were:
Under the Reserve Bank of India Act 1934, the RBI acts as a statutory authority for regulating the money supply of the country. Under Section 28 of the Banking Regulation Act, 1949 the RBI furnishes information in a consolidated form in case of public interest. Under Section 35 of the Banking Regulations Act, 1949, the RBI conducts inspections of various banks. Under its regulating and supervising capacity, it has access to the confidential information gained by the officers during inspections, which RBI may publish this obtained information only in the public interest if necessary and not otherwise. The Bonafide capacity of RBI cannot be questioned due to its position as a safe-guarder of the economic and financial stability of the country.
By relying on various judgments such as Peerless general finance and investment co ltd v RBI[1], and B. Suryanarayana v the Kolluru Parvathi Co-op Bank Ltd[2]– The petitioner submitted that the courts must not interfere with the decisions of RBI. The petitioner contended that the disclosure of information comes attached with inherent risks of confidentiality which will lead to implications that can affect the overall adequacy of the information due to potential risks that will not preserve the data of clients. The petitioner submitted that they are exempted under Section 8(1)(a)(d)& (e) of the RTI Act, 2005 to provide information.
By citing various judgments, the counsel for RBI submitted that the disclosure would prejudicially affect the economic interest of the state and could call for adverse market reactions that can lead to a financial crisis. The RBI under Sections 27, 34(a), Subsection 5(35), 45(e)(3), has several compelling rights which confirm its contention for non-disclosure.
Lastly, it was contended that under Section 28 of the Banking Regulation Act, 1949, which was amended by the Credit Information Companies Act, it indicates that the Right to Information Act, 2005 cannot override credit information as it is in contradiction to the statutory provisions conferring confidentiality.
ARGUMENTS ADVANCED BY THE RESPONDENTS
The Respondent cited the main aspect of the preamble and conferred that the most valuable aspect is transparency for the healthy functioning of a democracy. Article 19 of the Indian Constitution provides a provision to Right to Information which is a fundamental right. All the Acts including the official secret Act 1923, can be overridden by Section 22 of the RTI Act.
Under the exception sought by the petitioner under sections 8(1)(a), 8(1)(d) and 8(1)(e) of the RTI Act is inapplicable to the facts of the case and if the same is disclosed it will be believed to be in the public interest.
The respondents cited the case of the Central Board of Secondary Education v. Aditya Bandopadhyay[3] to substantiate the actual meaning of the term fiduciary relationship as provided by the court in this case and the response to the perceived meaning by the petitioner. The meaning provided by the Supreme Court emphasized the aspect of trust, guidance, duties, responsibility, and integrity. It placed significance on the need for a person to act in a fiduciary capacity to benefit the others and recognize the scope of their fiduciary duty.
ISSUES RAISED
The power of the Reserve Bank of India ceases it to extend the information desired by the citizens under the Right to Information Act, 2005.
QUESTIONS BEFORE THE COURT
I. If the Right to Information Act, 2005 can override certain specific legislations which contain provisions granting confidentiality to the information obtained by the RBI?
II. If the Reserve Bank of India can deny the disclosure of the information sought under the Right to Information Act, 2005 on the ground of commercial confidence, economic interests, or fiduciary relationship with other banks?
JUDGMENT OF THE COURT
The Supreme Court in detail explained that the deliberations that were initially argued when the bill of the RTI Act was found. The Supreme Court said that the disclosure of certain information concerning the public interest is allowed when it out ways the harm that could be done to the public authorities.
The Supreme Court provided that under the democratic republic provision of the constitution, keeping in mind all the aspects of transparency and its implications, it is expedient to furnish all the required information that is desired by the citizens.
On the ground argued by the Counsel of the bank of “fiduciary relationship” helpful it laid down that he RBI does not place itself in a fiduciary relationship with the Financial institutions (though, in the 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.
RBI is supposed to uphold public interest and not the interest of individual banks. The RBI is 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.
“The baseless and unsubstantiated argument of the RBI that the disclosure would hurt the economic interest of the country is misconceived. In the impugned order, the CIC has given several reasons to state why the disclosure of the information sought by the respondents would hugely serve the public interest, and non-disclosure would be significantly detrimental to the public interest and not in the economic interest of India. RBI’s argument that if sovereign people 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.
Therefore, the RBI is accountable and as such it has to provide information to the information seekers under Section 10(1) of the RTI Act.”[4]
ANALYSIS OF THE JUDGMENT
The decision provided by the Supreme Court carries essence due to the reason provided by it for the orders passed. After the decision, the RBI was under immense pressure to disclose the information in respect of provisions of the RTI Act. The RBI was obliged to provide information on the regular inspection conducted by them and were even asked to comply with providing data on audits of financial institutions and banks.
Even though in some aspects it is necessary to provide information to people, however, it cannot be denied that the risks attached to this can be catastrophic and unbearable. The damages that could be caused and the misinterpretation of information by the public are apparent. The misapplication of decisions in various judgments is transpicuous. The misuse of the information would be at an unpredictable length and the only resort to that would be to alter the current decision.
Reserve Bank of India v. Jayantilal Mistry
Author: Deepanshi Kalra
CASE COMMENT
RBI vs Jayantilal Mistry
INTRODUCTION
The cornerstone of this judgment rests upon the provisions of the Right to Information Act of 2005 which brought with it another layer of liberty as it enabled the people to seek information from various institutions and transparency could prevail. However, the limitations were certainly attached to this notable Act. The case revolves around the aspects of two momentous Acts.
The Reserve Bank of India denied the disclosure of certain information to the respondents on various occasions, on the ground of confidentiality, fiduciary relationship, and economic interests. The various respondents of this case moved to the court regarding their contentions which were then examined by the Central Information Commission (CIC) which directed the RBI to comply with regulations of the Right to Information Act and furnish the information. However the RBI then through various writ petitions approached the courts in each case, and finally, after non-satisfactory decisions, all the appeals were clubbed together and brought to the Supreme Court of India.
Eventually, the decision of the Supreme Court held that the RBI is entitled to furnish information under the RTI Act and negated its ground of not providing adequate information due to confidentiality and other grounds contended down by them.
BACKGROUND
Legal Provisions
The Reserve Bank of India is assigned the role of managing the financial affairs of the government and commercial banks. It also has the responsibility of managing accounts of the Government of India and other State governments. As the sole controller, regulator, and supervisor of the country’s banking system, it is vested with various powers involving public debt, determining volumes of credit, public policy among other functions. Under Section 35 of the Banking Regulation Act, 1949 the RBI can inspect the banks in the country.
Under Section 28 of the Banking Regulation Act, the RBI in the public interest may publish the information obtained by it, in a consolidated form but not otherwise.
Under Section 45E of the Reserve Bank of India Act, 1934, disclosing any information relating to credit banking company is confidential and under Section 45E(3) notwithstanding anything contained in any law no court, tribunal or authority can compel the Reserve Bank of India to give information relating to credit information, etc.
Under Section 8(1) (a), (d), or (e) of the Right to Information Act, Section 8(2) of the RTI Act would mandate the disclosure of the information.
Adequacy in the reasoning of Court
The Courthas provided somewhat adequate reasoning about the rendering of information by the RBI, however, the explanation provided by the court is unsatisfactory as it has ignored the aspect of misuse of the information which will be ascertained to the respondents. This can lead to severe damage concerning the reputation of banks. Concerning fiduciary relationships, the court has explained the exact meaning by touching upon the role of RBI when it comes to their trust with the confidential client. The information obtained by the RBI is unquestionably delicate however the entire formation of the RTI Act 2005 was based on enabling the access of citizens to the data so that transparency can be endured.
FACTS OF THE CASE
The petitioner that is Reserve Bank of India moved to the Supreme Court about various previous writs filed by them in several high Courts about the disclosure of information. Many respondents including Jayantilal Mistry and others who had moved to court demanding information under the RTI Act which were not furnished by the Reserve Bank on the ground of fiduciary relationship, economic interests, and other reasons for confidentiality. The Bank after non-compliance with the decision made by the Central Information Commission now appealed to the Supreme Court which analyzed all the previous cases based on contention raised by both parties.
ARGUMENTS ADVANCED BY THE PETITIONERS
The Petitioner contended that the decisions passed by the CIC were illegal and without jurisdiction. The counsel for the petitioner cited various provisions of different acts to establish their contentions- The Reserve Bank of India Act, 1934; The Banking Regulation Act, 1949 and The Credit Information Companies (Regulation) Act, 2005;
The submissions made by the petitioners were:
Under the Reserve Bank of India Act 1934, the RBI acts as a statutory authority for regulating the money supply of the country. Under Section 28 of the Banking Regulation Act, 1949 the RBI furnishes information in a consolidated form in case of public interest. Under Section 35 of the Banking Regulations Act, 1949, the RBI conducts inspections of various banks. Under its regulating and supervising capacity, it has access to the confidential information gained by the officers during inspections, which RBI may publish this obtained information only in the public interest if necessary and not otherwise. The Bonafide capacity of RBI cannot be questioned due to its position as a safe-guarder of the economic and financial stability of the country.
By relying on various judgments such as Peerless general finance and investment co ltd v RBI[1], and B. Suryanarayana v the Kolluru Parvathi Co-op Bank Ltd[2]– The petitioner submitted that the courts must not interfere with the decisions of RBI. The petitioner contended that the disclosure of information comes attached with inherent risks of confidentiality which will lead to implications that can affect the overall adequacy of the information due to potential risks that will not preserve the data of clients. The petitioner submitted that they are exempted under Section 8(1)(a)(d)& (e) of the RTI Act, 2005 to provide information.
By citing various judgments, the counsel for RBI submitted that the disclosure would prejudicially affect the economic interest of the state and could call for adverse market reactions that can lead to a financial crisis. The RBI under Sections 27, 34(a), Subsection 5(35), 45(e)(3), has several compelling rights which confirm its contention for non-disclosure.
Lastly, it was contended that under Section 28 of the Banking Regulation Act, 1949, which was amended by the Credit Information Companies Act, it indicates that the Right to Information Act, 2005 cannot override credit information as it is in contradiction to the statutory provisions conferring confidentiality.
ARGUMENTS ADVANCED BY THE RESPONDENTS
The Respondent cited the main aspect of the preamble and conferred that the most valuable aspect is transparency for the healthy functioning of a democracy. Article 19 of the Indian Constitution provides a provision to Right to Information which is a fundamental right. All the Acts including the official secret Act 1923, can be overridden by Section 22 of the RTI Act.
Under the exception sought by the petitioner under sections 8(1)(a), 8(1)(d) and 8(1)(e) of the RTI Act is inapplicable to the facts of the case and if the same is disclosed it will be believed to be in the public interest.
The respondents cited the case of the Central Board of Secondary Education v. Aditya Bandopadhyay[3] to substantiate the actual meaning of the term fiduciary relationship as provided by the court in this case and the response to the perceived meaning by the petitioner. The meaning provided by the Supreme Court emphasized the aspect of trust, guidance, duties, responsibility, and integrity. It placed significance on the need for a person to act in a fiduciary capacity to benefit the others and recognize the scope of their fiduciary duty.
ISSUES RAISED
The power of the Reserve Bank of India ceases it to extend the information desired by the citizens under the Right to Information Act, 2005.
QUESTIONS BEFORE THE COURT
I. If the Right to Information Act, 2005 can override certain specific legislations which contain provisions granting confidentiality to the information obtained by the RBI?
II. If the Reserve Bank of India can deny the disclosure of the information sought under the Right to Information Act, 2005 on the ground of commercial confidence, economic interests, or fiduciary relationship with other banks?
JUDGMENT OF THE COURT
The Supreme Court in detail explained that the deliberations that were initially argued when the bill of the RTI Act was found. The Supreme Court said that the disclosure of certain information concerning the public interest is allowed when it out ways the harm that could be done to the public authorities.
The Supreme Court provided that under the democratic republic provision of the constitution, keeping in mind all the aspects of transparency and its implications, it is expedient to furnish all the required information that is desired by the citizens.
On the ground argued by the Counsel of the bank of “fiduciary relationship” helpful it laid down that he RBI does not place itself in a fiduciary relationship with the Financial institutions (though, in the 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.
RBI is supposed to uphold public interest and not the interest of individual banks. The RBI is 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.
“The baseless and unsubstantiated argument of the RBI that the disclosure would hurt the economic interest of the country is misconceived. In the impugned order, the CIC has given several reasons to state why the disclosure of the information sought by the respondents would hugely serve the public interest, and non-disclosure would be significantly detrimental to the public interest and not in the economic interest of India. RBI’s argument that if sovereign people 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.
Therefore, the RBI is accountable and as such it has to provide information to the information seekers under Section 10(1) of the RTI Act.”[4]
ANALYSIS OF THE JUDGMENT
The decision provided by the Supreme Court carries essence due to the reason provided by it for the orders passed. After the decision, the RBI was under immense pressure to disclose the information in respect of provisions of the RTI Act. The RBI was obliged to provide information on the regular inspection conducted by them and were even asked to comply with providing data on audits of financial institutions and banks.
Even though in some aspects it is necessary to provide information to people, however, it cannot be denied that the risks attached to this can be catastrophic and unbearable. The damages that could be caused and the misinterpretation of information by the public are apparent. The misapplication of decisions in various judgments is transpicuous. The misuse of the information would be at an unpredictable length and the only resort to that would be to alter the current decision.
[1] 1992 Vol. 2 SCC 343
[2] 1986 AIR (AP) 244
[3] (2011) 8 SCC 497
[4] https://indiankanoon.org/doc/86904342/
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