PART A : ORDERS of CIC & the Supreme Court

• Section 8(1)(a) & (e) of RTI Act

CIC, Shailesh Gandhi has made an order of great interest.

The following information was sought: 1. Total amount of money deposited by Indian citizens in nationalised Indian banks during the period 2006 to 2010. Provide information for each year separately;

2. (a) Information till date regarding total amount of loan taken but not repaid by industrialists from Indian nationalised banks and total amount of interest accumulating on such unpaid loans; and

(b) Details of default in loans taken from public sector banks by industrialists. Out of the above list of defaulters, top 100 defaulters, name of the businessman, address, firm name, principal amount, interest amount, date of default and date of availing loan.

(c) Steps being taken for putting information sought in query 2(a) and list of defaulters on the website of the respondent — Public authority.

By letter dated 14-10-2010, the CPIO informed the appellant that query 1 was transferred to DEAP, queries 2(b) and (c) were transferred to DBOD/DBS.

By letter dated 22-10-2010, the CPIO denied information on query 2(b) on the basis that it was held in fiduciary capacity and was exempt from disclosure u/s.8(1)(a) and (e) of the RTI Act.

In the first appeal, the FAA stated inter alia that the CPIO, DEAP had provided certain information vide letter dated 12-10-2010. Further he stated: ‘As regards the contention of the appellant with respect to his query at point 2(b) (which relates to the default in loans taken by industrialists from public sector banks and matters associated with them), I find that the CPIO, DBS has specified that the information received from banks, in this regard is held by the Reserve Bank in fiduciary capacity and as such it cannot be disclosed in terms of clauses (a) and (e) of section 8(1) of the Act. There can be no doubt that the information on defaulters received from banks is held by the Reserve Bank in a fiduciary capacity and confidential in nature. Therefore, the exemption claimed u/s.8(1)(e) is, without doubt, proper in the eyes of law. Whether the exemption provided by clause (a) of section 8(1) would be attracted in given case would depend upon the factual position. In this matter, since section 8(1)(e) is clearly attracted, I do not propose to consider the other exemption which the CPIO, DBS has made use of for withholding the information.’

The order of CIC is very powerful and I consider it as gem, for information analysis of section 8. Hence, instead of my summarising it, I reproduce the Completer Decision announced on 15th November, 2011:

“Based on perusal of papers and submission of parties, it appears that no information has been provided in relation to query 2(c), despite the order of the FAA. As regards query 2(b), the respondent has contended that the information sought was exempt u/s.8(1)(a) & (e) of the RTI Act. The Commission will first consider the claim of exemption u/s.8(1)(a) of the RTI Act made by the PIO. The PIO has claimed exemption u/s.8(1)(a) but not explained how this would apply. The first Appellate Authority has not given any comment on this. No justification was offered at the time of hearing as well. 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;’. It appears that the PIO is claiming that the economic interests of the State would be prejudicially affected. It is impossible to imagine that any of the other interests mentioned in the provision could be affected. This Bench rejects the contention of the PIO that the economic interests of India would be affected by disclosing the names and details of defaulters from public sector banks. If it means that such borrowers would not bank with public sector banks for fear of exposure, it would in fact be in the economic interest of the nation. This Commission does not accept the claim of exemption u/s.8(1)(a) by the PIO. It is also unlikely that the economic well-being of the nation could get affected adversely by disclosing the names and details of defaulters. The Indian economy is dependent on far stronger footings.

The Commission will now examine the claim for exemption u/s.8(1)(e) of the RTI Act.

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”.

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. In business or law, we generally mean someone who has specific duties, such as those that attend a particular profession or role, e.g., doctor, lawyer, financial analyst or trustee. Another important characteristic of such a relationship is that the information must be given by the holder of information who must have a choice — as when a litigant goes to a particular lawyer, a customer chooses a particular bank, or a patient goes to a particular doctor. An equally important characteristic for the relationship to qualify as a fiduciary relationship is that the provider of information gives the information for using it for the benefit of the one who is providing the information. All relationships usually have an element of trust, but all of them cannot be classified as fiduciary. Information provided in discharge of a statutory requirement, or to obtain a job, or to get a licence, cannot be considered to have been given in a fiduciary relationship.

Information provided by banks to RBI is done in furtherance of statutory compliances. In fact, where RBI requires certain information to be furnished to it by banks and such banks have no choice but to furnish this information, it would appear that such requirement of RBI is directory in nature. Moreover, no specific benefit appears to be flowing to the banks from RBI on disclosure of the information sought by the appellant. Consequently, no fiduciary relationship is created between RBI and the banks.

The respondent has also argued that information about customers is held by banks in a fiduciary capacity and hence disclosure of the same would violate the fiduciary — trust placed by borrowers of the banks. The Commission finds some merit in this argument. Information of customers is held by banks in a fiduciary capacity. If this information is disclosed to the RBI and subsequently furnished to the citizens under the RTI Act — it may violate the fiduciary relationship existing between the customers and the banks. Therefore, the information sought in query 2(b) is exempt from disclosure u/s.8(1)(e) of the RTI Act. However, if a customer defaults in repayment, should the information about the default also be considered as information held in a fiduciary capacity, is a moot question. The lender is likely to take all measures including filing suits to recover the money due, and these actions would mean publicly disclosing the default amounts. In such circumstances the bank would make these details public, and not feel fettered by the fiduciary nature of the relations.

However, I am not going into delving into this trend of thought and accept that the information about the default by a borrower may be considered to be information held by a bank in a fiduciary capacity. When the Commission comes to the conclusion that the exemptions of section 8(1) of the RTI Act apply, it needs to consider the provision of section 8(2) of the RTI Act which stipulates as follows

Section 8(2) of the RTI Act mandates that even where disclosure of information is protected by the exemptions u/s.8(1) of the RTI Act, if public interest in disclosure outweighs the harm to such protected interests, the information must be disclosed under the RTI Act. There is no requirement for the existence of any public interest to be established when seeking or giving informa-tion. However, if an exemption applies, then it must be considered whether the public interest in disclosure outweighs the harm to the protected interests.

According to P. Ramanatha Aiyar’s, The Law Lexicon (2nd edition; Reprint 2007) at page 1557, ‘public interest’ ‘means those interests which concern the public at large’. Banks and financial institutions in India heavily finance various industries on a routinely basis. However, it is a fact that large sums of such amounts are sometimes not recovered. In some cases, loans availed of are not repaid despite the fact that the industrialist(s) may actually be in a financial position to pay. Where financial assistance is given to industries by banks, in the absence of financial liquidity, it would result in a blockade of large funds creating circumstances that would retard socio-economic growth of the nation.

At this stage the Commission would like to quote Thomas J. of the High Court of New Zealand 1995, ‘The primary foundation for insisting upon open-ness in government rests upon the sovereignty of the people. Under a democracy, parliament is ‘supreme’, in the sense that term is used in the phrase ‘parliamentary supremacy’, but the people remain sovereign. They enjoy the ultimate power which their sovereignty confers. But the people cannot undertake the machinery of government. That task is delegated to their elected representatives……the government can be perceived as the agent or fiduciary of the people, performing the task and exercising the powers of government which have been devolved to it in trust for the people.

I wish the Government and its instrumentalities would remember that all information held by them is owned by citizens, who are sovereign. Further, it is often seen that banks and financial institutions continue to provide loans to industrialists despite their default in repayment of an earlier loan. The Supreme Court of India in U.P. Financial Corporation v. Gem Cap India Pvt. Ltd., AIR 1993 SC 1435 has noted that “Promoting industrialisation at the cost of public funds does not serve the public interest; it merely amounts to transferring public money to private account”. Such practices have led citizens to believe that defaulters can get away and play fraud on public funds. There is no doubt that information regarding top industrialists who have defaulted in repayment of loans must be brought to the citizens’ knowledge; there is certainly a larger public interest that would be served on disclosure of the same. In fact, information about industrialists who are loan defaulters of the country may put pressure on such persons to pay their dues. This would have the impact of alerting citizens about those who are defaulting in payments and could also have some impact in shaming them. RBI had by its Circular DBOD No. BC/CIS/47/20.16.002/94, dated 23rd April 1994 directed all banks to send a report on their defaulters, which it would share with all banks and financial institutions, with the following objectives:

    1. To alert banks and financial institutions (FIs) and to put them on guard against borrowers who have defaulted in their dues to lending institutions.

    2. To make public the names of the borrowers who have defaulted and against whom suits have been filed by banks/FIs.

Many Revenue Departments publish lists of de-faulters and All India Bank Employees Association has also published list of bank defaulters. It would be relevant to rely on the observations of the Supreme Court of India in its landmark decision in Mardia Chemicals Ltd. v. Union of India, (decided on 8-4-2004). The Supreme Court of India was considering the validity of the SARFAESI Act and recovery of ‘non-performing assets’ by banks and financial institutions in India. While discussing whether a private contract between the borrower and the financing institution/bank can be interfered with, the Court observed:

“…. it may be observed that though the transaction may have a character of a private contract yet the question of great importance behind such transactions as a whole having far-reaching effect on the economy of the country cannot be ignored, purely restricting it to individual transactions more particularly when financing is through banks and financial institutions utilising the money of the people in general, namely, the depositors in the banks and public money at the disposal of the financial institutions. Therefore, wherever public interest to such a large extent is involved and it may become necessary to achieve an object which serves the public purposes, individual rights may have to give way. Public interest has always been considered to be above the private interest. Interest of an individual may, to some extent, be affected but it cannot have the potential of taking over the public interest having an impact in the socio-economic drive of the country.” (Emphasis added)

There are times when experts make mistakes, other times when corruption influences decisions. It is dangerous to put complete faith in the judgment of a few wise people to alert everyone. Democracy requires reducing inequality of opportunity. Asymmetry of information deprives the citizens of an opportunity to take proper decisions. The Commission is aware that information on defaulters is being shared by Reserve Bank with an organisation called CIBIL. In such a situation, it is difficult to understand the reluctance to share this information with citizens using RTI. RBI’s Circular of 1994, — mentioned above, — infact appears to promise to share this information suo moto with the public.

In view of the arguments given above, the Commission is of the considered view that the details of defaulters of public sector banks should be revealed since it would be in larger public interest. Revealing these would serve the object of reining in such defaulters, warning citizens about those who they should stay away from in terms of investments and perhaps shaming such persons/entities. This could lead to safeguarding the economic and moral interests of the nation. The Commission is convinced that the benefits accruing to the economic and moral fibre of the country, far outweigh any damage to the fiduciary relationship of bankers and their customers if the details of the top defaulters are disclosed.

Hence, in view of section 8(2) of the RTI Act, the Commission rules that information on query 2(b) must be provided to the appellant, since there is a larger public interest in disclosure.

The appeal is allowed.
“The PIO shall provide the complete information as per records on queries 2(b) and 2(c) to the appellant before 10th December 2011.

The Commission also directs the Governor, RBI to display this information on its website, in fulfil-ment of its obligations u/s.4(1)(b)(xvii) of the RTI Act.

This direction is being given under the Commission’s powers u/s.19(8)(a)(iii). This should be done before 31st December, 2011 and updated each year”.

[Mr. P. P. Kapoor v. PIO & Chief General Manager, Reserve Bank of India, Mumbai, [Decision No. CIC/SM/A/2011/001376/SG/15684, Appeal No. CIC/ SM/A/2011/001376/SG]

[Note: Full decision is posted on website of BCAS & PCGT]

As reported in The Times of India on 10-12 -2011, this judgment has been stayed by the Delhi High Court.
    
The Delhi High Court on 9-12-2011 stayed the direction of the Central Information Commission (CIC) asking the Reserve Bank of India to provide details of industrialists who have defaulted in re-payment of loan taken from nationalised banks.

A Bench of Justice Vipin Sanghi, in its interim ex parte order, asked the information seeker to respond to petition filed by RBI challenging the CIC order.

The Court listed the next hearing on 27th February, 2012, on RBI’s petition which said the CIC’s directives were in violation of the Right to Information Act.

Counsel T. R. Andhiyaarjuna, appearing for the RBI, contended that the CIC’s order would have a far-reaching impact as this kind of information is confidential and the Information Commissioner has dealt with the matter in a wrong way, without considering all the relevant provisions under the RBI Act.

He also said the order of the CIC was beyond its jurisdiction under the transparency law, as RBI is exempted from providing such info u/s.8(1)(a).

•     Sections 18 and 19 of the RTI Act:

On 12th December, 2011, the Supreme Court of India has delivered judgment, very powerful and detailed, running into 30 pages dealing with the provisions of sections 18 and 19 of the RTI Act.

As decision reported is of many pages, the same is posted on BCAS and PCGT websites. Those interested may view it there. Only one para of it is reproduced hereunder:

“We are of the view that sections 18 and 19 of the Act serve two different purposes and lay down two different procedures and they provide two different remedies. One cannot be a substitute for the other.”

[Chief Information Comm. and Another v. State of Manipur and Another under civil Appeal Nos. 10787-10788 of 2011 (arising out of S.L.P. (c) Nos. 32768-32769/2010)]

Note: Please see part B for DNA’s report on above decision.