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October 2008

Securities Laws : A Tale of Two Amendments — Recent controversial amendments by SEBI

By Narayan Varma
Chartered Accountant
Reading Time 10 mins
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Part A : CIC’s decisions



Very interesting and significant issue before CIC :


The applicant, Shri Arun Agrawal, has sought following
information from CPIO, Ministry of Law and Justice :

“Entire file containing papers along with notings, etc.
relating to the appointment and scope of the brief of special envoy Shri
Virendra Dayal to obtain papers relating to Volcker Report and his report to
the Ministry after meeting the UN officials.”


The application was transferred to the Ministry of External
Affairs and then to the Prime Minister’s Office and then to the Ministry of
Finance, Department of Revenue. Everybody denied having such a file in their
office.

The appellant’s prayer before CIC are :

“It appears reasonable to conclude that the Special Envoy
and the Enforcement Directorate deliberately did not collect the documents for
contract M/09/35, M/10/17 and M/11/25 by which allotments were made to
Reliance Petroleum on payment of illegal surcharge.

It is for this reason that the documents are sought and it
is for this reason that the Government has invoked the provisions of Clause
8(1)(a) of the RTI Act 2005.”


On account of the Volcker Report, Shri Natwar Singh had to
resign as the Foreign Minister. Allegation of Shri Arun Agrawal is as follows :

“Documents from the Volcker report establish that Reliance
was a non-contractual beneficiary for lifting five times more oil than shown
to have been lifted by Congress and Natwar Singh combined. It figures in every
table of the oil for food programme report of the U.N., in which the names of
the Congress and Natwar figure (Annexure A — the five tables in which Indian
entity figures). The contract nos. for Reliance Petroleum in which it figured
as non-contractual beneficiary and paid illegal surcharge were M/09/35,
M/10/17 and M/11/25.

The Government deliberately did not refer the said
contracts in which Reliance Petroleum was the non-contractual beneficiary
(according to the Volcker Report) while referring the non-contractual
beneficiary contract No. M/10/57 of Congress Party and contract No. M/09/54 of
Natwar Singh, to the Pathak Inquiry Authority for reasons well known.”


To determine this issue, CIC decided to examine the Virendra
Dayal Report and find out who holds this report. All the three parties have
denied having such report in their records. It was then gathered that probably
the Directorate of Enforcement (DoE) holds this report. The said DoE informed
that they fall under the 2nd schedule of the RTI Act and hence exempt to
disclose information. DoE further volunteered to say that the matter is under
investigation and therefore exempt u/s.8(1)(h) of the RTI Act.

The question that is now to be determined by CIC is as to
whether an exemption claimed u/s.24(1) in this manner can be acceptable by a
quasi-judicial authority acting under a Statute (i.e., CIC).

Under the circumstances, the Commission decided to call for a
report from the Directorate of Enforcement which has to be submitted within 7
days from the date of receipt of the Order affirming :

(i) whether the information asked for by the applicant,
i.e.,
entire file containing papers along with notings, etc. relating to
the appointment, scope of brief of special envoy, Shri Virendra Dayal, to
obtain papers relating to Volcker Report and his report to the Ministry after
meeting the UN officials is held by them or not ?

(ii) to file their written submissions as to why this
Commission should not order its disclosure under the First Proviso to S. 24(1)
of the Act ?


In (ii) above, if the plea is taken that the information
cannot be disclosed u/s.8(1)(h), the Directorate will submit reasons for the
same as required by the Delhi High Court in cases of this nature in W.P.(C) No.
3114/2007 — Shri Bhagat Singh v. Chief Information Commissioner and Ors.

This decision is made on 15-9-2008. We wait anxiously to find
out what is finally determined in this case — both as to corruption charge on
Reliance Petroleum and the powers of CIC v. the Protection u/s.24(1) of the
RTI Act
.

[Shri Arun Agrawal v. PMO, No. 2nd Adjunct to Appeal
No. CIC/WB/A/2007/00417, dated 15-9-2008]



  •  Multiple RTI applications :


The appellant, Shri Ajay Sharma asked for huge information to
Hindustan Petroleum Corporation Limited through different RTI applications
related to sanctioned strength of employees at different levels and the details
of functioning of canteen.

The information asked for has been denied stating that it is
not in public interest.

Decision :

On perusal of the documents submitted by the parties, it is noted that both the parties have erred. The appellant has unnecessarily submitted multiple applications for seeking information relating to canteen and staffing pattern, which are not confidential. The appellant should have asked for the information through a single application and also submitted only one appeal before the Commission against the decision of the respondent, which could have economised the resources in seeking and providing the information. Likewise, the CPIO could have given a comprehensive response in respect of all the appeals, rather then giving an identical reply in all the cases.

In view of the foregoing, the appellant is advised to prepare a comprehensive list of required information and resubmit to the CPIO, who should provide a pointwise response and thus furnish the information on the basis of available records within 15 working days from the date of receipt of fresh application. If any information is to be denied, the reasons for doing so should clearly be indicated for review, if necessary, by the Commission. The applicant should be free to seek inspection of relevant records and files so as to clearly specify the required information.

CIC also made a remark that a large amount of information asked for should be put in public domain in compliance of with S. 4(1) of the RTI Act.

[Shri Ajay Sharma v. HPCL, decision No. 3199/ IC(A)/2008, dated 1-9-2008]


Part B : The RTI Act

Attempt is being made that in this part besides reporting on the development and discussions on RTI Act at various forums, some Courts’ decisions be reported. Herewith that beginning:

S. 8(1)(j) :

Issue:

Whether information disclosing the names of the persons including address and amount, who have received more than Rs.1 lac from the Chief Minister Discretionary Fund can be given to the information seeker or it is an information, which stands exempted u/s.8(1)G) of the Act.

Held:

That the information asked for is not an information which is covered u/s.8(1)(j), nor does it stand exempted otherwise.

S.11:

Issue:

When beneficiary of the grant from Chief Minister’s Discretionary Fund is under an obligation to use the money so paid for the very same purpose, for which it has been paid – with the obligation upon the beneficiary to return the unused money in one go, and that too within the prescribed period, for which utilisation certificate has to be furnished by the District Magistrate after necessary verification – can it be said that it is an information which can seek confidentiality within meaning of S. 11 of the Act or can be treated as confidential by the beneficiary, treating it to be a third-party information.

Held: No

[PlO, Chief Minister Office v. SIC, UP and Others, decided on 1-7-2008 by the High Court of Allahabad]

Part C : Other News

• Seam in PM’s and CM’s special relief packages:

RTI application has revealed that a six-time former MP and relatives of a sitting MLA besides several former MLAs are among the well-off people who have helped themselves to the relief measures meant for poor, bereaved families in Yavatmal district, the epicenter of the farmers’ suicides.

The revelations point to large-scale corruption and irregularities in the implementation of the schemes. The schemes were meant to help the near and dear ones of those indebted farmers who were the sole breadwinners of their families and who had ended their lives, or other BPL families living along the State dairy’s milk procurement route. Its purpose was to enable the distressed families to supplement their income as farming had become uneconomical in this mainly unirrigated cotton-growing region.

• Dwindling number of tigers in Maharashtra’s forests:

The Times of India invoked the Right to Information Act to find out how much time the field directors spent on the field and found out that, on an average, they spent just 50 days a year inside forests. This has had a disastrous effect on wildlife management, say former forest officials and environmentalists, and may be one of the reasons that have led to the dwindling number of tigers in Maharashtra’s forests.

•  Medical  Insurance  card:

Allwyn Ribeiro was most irked when he was turned away for the nth time by the Government Hospital at Byculla, Mumbai. The 43-year-old office superintendent for Central Railways had made three earlier trips to the hospital to collect his medical insurance card.

Frustrated,  on the advice of an RTI activist, Ribeiro filed RTI application  and asked the Public Information Officer of the Byculla  hospital  about:  (a) the progress  of his file, and  (b) how many  such applications  they had  processed  in the last six months. He hardly expected his application to prompt such efficacy. “The very next day I received a call from the hospital to say ‘Come, pick up your card’,” says Ribeiro, who now swears by the effectiveness of the RTI Act.

• Four new Central Information Commissioners (CIC) :

Present CIC has five Commissioners including the Chief CIC. In this month (September) 4 more CICs are appointed:

Most interesting and unexpected, is the appointment of Shailesh Gandhi. He can be ranked as one of the most senior and effective RTI activists in the country. Entire RTI-activists’ community is looking forward to great performance by him, especially, in reduction of pendency of appeals in CIC office.

• UTI under RTI ?
The Bombay High Court has stayed the Central Information Commission (CIC)’s Order on the applicability of the Right to Information Act, 2005 on UTI Asset Management Company. UTI Mutual Fund and UTI Trustee Company have filed a writ petition challenging the CIC’s Order.

CIC had ruled that “Even though there is no specific provision in the RTI Act that a body owned, controlled or substantially funded by another public authority is also a public authority, yet from the purpose and object of the RTI Act, it is crystal clear that there should be transparency in the functioning of any institution, in which public money is deployed. The four sponsors are public authorities and when they, in turn, own another entity, such an entity has to be treated as a public authority.

Economic Times reports on RTI :

A very well-written article appeared in The Economic Times on 19-9-2008 written by two journalists. Extract from it :

What could a labourer running from pillar to post for his ration card, a student waiting eagerly for his passport, a housewife struggling without water supply or a senior citizen suffering due to pollution caused by an unauthorised factory near his residence have in common? The Right to Information (RTI) Act – the salvation for these diverse problems.

A notable achievement of the UPA Government along with the Rural Employment Guarantee Scheme, this key to information has empowered the aam aadmi to fight the formidable fortress of secrecy that enabled unscrupulous babus to shirk work and breed corruption. RTI is no magic that can make corruption vanish in a jiffy, but it has put the fear of scrutiny firmly in the minds of Government employees. Gone is the air of confidence that enabled the corrupt in the Government to demand ‘speed money’ openly without any apprehension of being caught. The experience till now suggests that most Government departments attempt to clear pending work when they are questioned and responsibility is fixed.

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