Corporate And Other Laws Archives

Allied Laws

41 Cox and Kings Ltd vs. SAP India Pvt Ltd

[2023] 157 taxmann.com 142 (SC)

Date of Order: 6th December, 2023

Arbitration — The validity of the ‘group companies’ doctrine — non-signatory parties can be bound by an arbitration agreement [Arbitration and Conciliation Act, 1996, 1 S. 2, S. 7].

FACTS

Five judges of the Hon’ble Supreme Court were called upon to determine the validity of the ‘Group of Companies’ doctrine in the jurisprudence of Indian arbitration. The challenge was to figure out whether there can be reconciliation between the group of companies’ doctrine and well-settled legal principles of corporate law and contract law.

HELD

The definition of “parties” under Section 2(1)(h) read with Section 7 of the Arbitration and Conciliation Act, 1996 (ACA) includes both the signatory as well as non-signatory parties. The conduct of the non-signatory parties could be an indicator of their consent to be bound by the arbitration agreement. The requirement of a written arbitration agreement under Section 7 of the ACA does not exclude the possibility of binding non-signatory parties. Under the Arbitration Act, the concept of a “party” is distinct and different from the concept of “persons claiming through or under” a party to the arbitration agreement.

The underlying basis for the application of the group of companies doctrine rests on maintaining the corporate separateness of the group companies while determining the common intention of the parties to bind the non-signatory party to the arbitration agreement. The group of companies doctrine has an independent existence as a principle of law which stems from a harmonious reading of Section 2(1)(h) along with Section 7 of the ACA. Further, to apply the group of companies doctrine, the courts or tribunals, as the case may be, have to consider all the cumulative factors laid down in Oil and Natural Gas Corporation Ltd vs. Discovery Enterprises (2022) 8 SCC 42. Resultantly, the principle of a single economic unit cannot be the sole basis for invoking the group of companies doctrine.

The group of companies doctrine should be retained in the Indian arbitration jurisprudence considering its utility in determining the intention of the parties in the context of complex transactions involving multiple parties and multiple agreements. At the referral stage, the referral court should leave it for the arbitral tribunal to decide whether the non-signatory is bound by the arbitration agreement; and in the course of this judgment, any authoritative determination given by this Court pertaining to the
group of companies doctrine should not be interpretedto exclude the application of other doctrines and principles for binding non-signatories to the arbitration agreement.

42 Vijay vs. UOI & Ors

CA No. 4910 of 2023 (SC)

Date of Order: 29th November, 2023

Secondary Evidence — Admissibility — Agreement for sale — Executed prior to the amendment — Allowed [Indian Stamp Act, 1899, S. 35].

FACTS

The Original Plaintiff and Defendant entered into an agreement to sell a property on 4th February, 1998, and pursuant to that, Plaintiff was allegedly put in possession of the property by the Defendant. When the Defendant denied the existence of such an agreement, Plaintiff filed a suit for specific performance of the contract. In the said suit, Plaintiff moved an application to file a copy of the agreement to sell, among other documents, as secondary evidence. Initially, the said application was allowed but when the Defendant sought a review of the order, the Court held that secondary evidence of an agreement to sell could not be allowed as it was not executed on a proper stamp, thus barred under section 35 of the Indian Stamp Act, 1899 (Stamp Act). Subsequently, the Plaintiff filed a Writ Petition challenging the review order and the Constitutional validity of Section 35 of the Stamp Act. The High Court upheld the validity of the said section and the order of the Review Court.

On Appeal.

HELD

The Explanation deeming certain ‘agreements to sell’ as conveyance (and thus making them liable to be stamped as conveyance) inserted in Article 23 of Schedule I-A contained in the Stamp Act (vide MP Amendment Act, 1990) creates a new obligation for the party and, therefore, cannot be given retrospective application. Thus, it will not affect the agreement(s) executed before such amendments. Hence, the documents in question were not required to be stamped at the relevant period to attract the bar of Section 35 of the Stamp Act. Thus, a copy of a document can be adduced as secondary evidence if other legal requirements are met.

The Appeal was allowed.

43 Manu Gupta vs. Sujata Sharma & Ors

RFA (OS) 13 of 2016 (Del)(HC)

Date of Order: 4th December, 2023

Hindu Undivided Family — Right of a female coparcener to be Karta — Held Yes. [Hindu Succession Act, 1956, S. 6].

FACTS

The Appeal was preferred by the appellant / Manu Gupta (defendant No.1 in the main Suit), against the Judgement whereby the Suit for Declaration for declaring the plaintiff (respondent No.1 herein) as the Karta of Late Shri D.R. Gupta and Sons, HUF, has been allowed.

On an appeal.

HELD

The explicit language of Section 6 of the 2005 Amendment Act makes it abundantly clear that though the reference in the Preamble may be to inheritance, but conferring “same” rights would include all other rights that a coparcener has, which includes a woman’s right to be a Karta. Thus, if a woman can be a coparcener but not a Karta of HUF, would be giving an interpretation that would not only be anomalous but also against the stated Object of the introduction of the Amendment.

The appeal was dismissed.

44 Anumolu Nageswara Rao vs. AVRL Narasimha Rao

AIR 2023 TELANGANA 178 (FB)

Date of Order: 27th June, 2023

Rights of adoptee — Right of a coparcener — In the family of birth — Ceases on adoption — unless partition before adoption. [Hindu Adoption and Maintenance Act, 1956, S. 12].

FACTS

A full bench was constituted to address the question of whether the rights of a coparcener in the joint possession and enjoyment of the property is a clear vesting of title in the coparcener even before partition, and can he be said to be short of rights of a full owner or whether his rights would get crystallized into definite share only on an actual partition, and whether by virtue of the proviso (b) to Section 12 of the Adoption Act, the undivided interest in the property of a coparcener will not, on his adoption, be divested, but will continue to vest in him even after his adoption.

HELD

On adoption by another family, the adoptee becomes a coparcener of the adoptive family and ceases to have any connection with the family of his birth. He / she ceases to perform funeral ceremonies and loses all rights of inheritance as completely as if he / she had never been born. Court held that the child ceases to be a coparcener of the family of his / her birth and forgoes interest in the ancestral property in the family of his birth. Only if a partition has taken place before the adoption and property is allotted to his share or self-acquired, obtained by will, inherited from his natural father or other ancestor or collateral which is not coparcenary property held along with other coparceners and property held by him as sole surviving coparcener, he carries that property with him to the adoptive family with corresponding obligations.

BCAJ Admin

Navigating the “CA (E)Volution”: Balancing Responsibility and Compliance in the Fight Against Money Laundering

“The Expanded Role of Chartered Accountants: Implications, Obligations, and Considerations under the New PMLA Rule in India”

The regulatory landscape in India has undergone a significant change with the new rule incorporating Chartered Accountants (CAs), along with Company Secretaries (CSs) and CMAs, as reporting entities under the Prevention of Money Laundering Act (PMLA). CAs, considered the warriors of the national economy, are expected to take the role of reporting entities as a vital role-upgradation for safeguarding the financial system and countering financial crimes. This expansion of reporting requirements places the role of CAs in the spotlight in combating money laundering and terrorism financing. As trusted professionals and gatekeepers of financial information, CAs now have the responsibility of detecting and reporting suspicious transactions linked to illicit activities or money laundering.

This article examines the concerns and considerations faced by CAs, compares approaches in other countries and provides insights on effective ways for CAs to equip themselves in light of the new rule. While there are already sources available for professionals to understand the notification and rules under the PMLA, this article primarily focuses on examining the specific implications and effects on CAs as reporting entities, providing insights and guidance relevant to their role in combating money laundering and terrorist financing.

BACKGROUND

In the context of combating money laundering and terrorist financing, the Financial Action Task Force (FATF), established by the G-7 countries as a global money-laundering watchdog headquartered in Paris under the OECD Secretariat, assumes great significance. This organisation sets global standards to combat money laundering, terrorist financing and other threats to the international financial system. FATF has developed 40 recommendations on legal, financial regulatory, and international cooperation that serve as a framework for countries to collectively address the challenges of money laundering, terrorist financing, and the financing of proliferation. These recommendations are meant to guide countries in effectively implementing measures within their national systems. The accounting profession plays a vital role in supporting the FATF 40 Recommendations in two key methods. Firstly, the “General Framework” recommendations align with the profession’s mission of promoting transparency and facilitating multilateral cooperation. Secondly, the “Financial System” recommendations emphasise the importance of record-keeping, reporting and promoting transparency, which directly aligns with the core competencies of the accounting profession, such as implementing controls and systems and maintaining audit trails.

One such recommendation is Recommendation 29, which requires the establishment of a Financial Intelligence Unit (FIU) in each country. The FIU serves as a central authority responsible for receiving, analysing and disseminating information related to suspicious transactions and financial intelligence. Reporting entities (RE), such as banks, financial institutions and other relevant businesses, are obligated to submit reports to the FIU in accordance with national laws and regulations.

In India, the FIU is known as FIU-IND and operates under the provisions of the PMLA. FIU-IND serves as the national centre for receiving, analysing and disseminating reports on suspicious transactions, money laundering activities, associated predicate offences and terrorist financing. This includes Suspicious Transaction Reports (STRs), Cash Transaction Reports (CTRs) and reports on cross-border wire transfers. The FIU utilises advanced analytics and intelligence tools to analyse the data received from these reports and shares actionable intelligence with law enforcement agencies.

With the recent rule, CAs have also been included as RE under the PMLA, expanding the concept to include them as well. This brings an important understanding of the differentiation between ‘reporting entities (RE)’ and ‘relevant persons.’ Relevant persons, including practising CAs, CSs and Cost and Works Accountants, become RE when they engage in specified financial transactions, thereby requiring them to comply with the necessary regulatory obligations. As relevant persons, CAs are included in the category of professionals who carry out specified financial transactions on behalf of their clients. These financial transactions fall within the ambit of RE, which means that CAs have reporting obligations under the PMLA. Hence, CAs can be referred to as both relevant persons and RE in the context of the PMLA.

As mentioned earlier, the PMLA encompasses a broad range of entities and individuals involved in designated businesses or professions. To specify the scope of RE, the Ministry of Finance, empowered by the PMLA, has outlined certain financial transactions conducted by relevant persons. These transactions pertain to diverse areas such as property dealings, management of client assets and establishment or administration of companies. The Ministry has further clarified that relevant persons encompass practising individuals or firms who hold certificates of practice under the Chartered Accountants Act, 1949, Company Secretaries Act, 1980 or Cost and Works Accountants Act, 1959. This inclusion aligns with the definition of a “person carrying on designated business or profession” and encompasses these professionals undertaking financial transactions on behalf of their clients. Consequently, these professionals assume the role of RE and are obligated to fulfil the requisite compliance obligations stipulated by the PMLA.

Recommendation 22

The above inclusion by PMLA aligns with Recommendation 22 of the FATF on Designated Non-Financial Businesses and Professions (DNFBPs). Recommendation 22 outlines the customer due diligence and record-keeping requirements that apply to DNFBPs in specific situations. These situations include activities carried out by lawyers, notaries, other independent legal professionals and accountants on behalf of their clients.

Recommendation 22(d): “The CDD and record-keeping requirements set out in Recommendations 10, 11, 12, 15, and 17 apply to designated non-financial businesses and professions (DNFBPs) in the following situations: Lawyers, notaries, other independent legal professionals, and accountants – when they prepare for or carry out transactions for their client concerning the following activities:

buying and selling of real estate;
managing of client money, securities, or other assets;
management of bank, savings, or securities accounts;
organisation of contributions for the creation, operation, or management of companies;
creation, operation or management of legal persons or arrangements, and buying and selling of business entities.”

By including CAs as RE and imposing compliance obligations on them, the PMLA takes reference from and assumes importance with the customer due diligence and record-keeping requirements outlined by the FATF for DNFBPs. While legal professionals like lawyers are excluded from this rule, unlike in other countries, the inclusion of CAs highlights their crucial role as relevant persons engaged in financial transactions, actively contributing to the fight against money laundering and other illicit activities. Consequently, this ensures that valuable information is gathered as part of the reports collected by FIU-IND, enhancing overall efforts to combat financial crimes.

ACCOUNTANTS AS RE IN OTHER COUNTRIES

In several countries, accountants have been included as RE under their respective Anti-Money Laundering (AML) acts or regimes.

The International Federation of Accountants (IFAC) highlights that while national AML regulations may not explicitly assign accountants specific responsibilities, practitioners are still obligated to adhere to the standards and guidelines set by local accounting bodies. Money laundering is generally not as directly impactful on financial statements as other forms of fraud, like misappropriation. Therefore, detecting money laundering through a financial statement audit is unlikely. However, the indirect consequences of money laundering can still affect an entity’s financial statements, which make it an area of concern for external auditors.

This leads us to the important question of the specific obligations imposed on CAs under this new rule.

THE TRANSITION OF OBLIGATIONS

When interpreting the notification, it is crucial to consider the purpose of the PMLA, which is to combat money laundering and terrorist activities. Suppose a transaction involves the client’s use or sourcing of funds and raises suspicions regarding money laundering or terrorism financing. In that case, the professional cannot claim ignorance of the client’s credentials, as due diligence on the client is a requirement. Additionally, if the professional identifies transactions that require reporting to the FIU-IND, they are obligated to report such transactions.

Comprehensively, below are the factors to be considered or that are expected by the CA to be performed.

1. Enhanced Customer Due Diligence (CDD): There is a need to implement robust CDD measures when establishing a business relationship with a client or when conducting occasional transactions above a certain threshold. Further, the professionals need to gather and verify information about the client’s identity, beneficial ownership and the purpose of the transaction.

2. Transaction Monitoring: The professionals ought to enhance their transaction monitoring systems to detect and report any suspicious transactions. They need to develop an understanding of the typical transaction patterns for each client and be alert to any anomalies or red flags.

3. Suspicious Transaction Reporting: If the professional identifies any suspicious transactions during their audit or through their transaction monitoring systems, they have a legal obligation to report these to the FIU-IND in a timely manner. This involves preparing an STR and submitting it as per the prescribed format and timelines.

4. Record Keeping: The professional must maintain detailed records of their clients, transactions and the measures taken to comply with the reporting obligations. These records should be readily accessible for review by regulatory authorities.

5. Compliance Training and Policies: There is a need for practising professionals to provide appropriate training to their staff on AML / CFT compliance, including recognising and reporting suspicious transactions. They should also update their internal policies and procedures to reflect the new reporting requirements and ensure adherence across the organisation.

As a result, CAs, in addition to the traditional roles in financial auditing, now need to be proactive in identifying and reporting suspicious transactions as per the new PMLA rule. This transition requires them to enhance their knowledge, implement new procedures and stay vigilant in their efforts to combat money laundering.

In practical terms, it is beneficial for CAs to consider the following points, drawing inspiration from a money laundering guide for lawyers. These recommendations encompass similar activities and requirements that can be relevant for CA professionals.

FATF Recommendation	Key Consideration	Relevance	Recommended Actions
10	Customer due diligence	Identifying clients and their ownership	– Identify the client and their beneficial owner.
			– Use reliable, independent source documents or information.
			– Request a structure map and details of beneficial ownership for corporate clients.
			– Understand the business relationship and the purpose of the transaction.
			– Conduct ongoing due diligence to align with your knowledge of the client’s profile and source of funds.
			– Refrain from establishing or continuing the business relationship if satisfactory due diligence cannot be carried out. – Consider reporting suspicious transactions.
11	Record-keeping requirements	Maintaining records	– Keep copies or originals of documents obtained during CDD measures.
			– Maintain files and business correspondence for a specified period or as per the recommended period by the PMLA.
			– Include electronic and physical communications and documentation.
			– Ensure records are sufficient to reconstruct individual transactions as potential evidence in suits.
12	Enhanced CDD for politically exposed persons (PEPs)	Dealing with high-risk clients	– Obtain senior partner approval for establishing or continuing a business relationship with PEPs, their families or close associates.
			– Take reasonable steps to determine the source of wealth and funds.
			– Conduct enhanced ongoing monitoring of the business relationship.
15	New technologies	Keeping pace with emerging risks	– Identify, assess and manage risks associated with new products, business practices and technologies used by lawyers.
17	Reliance on third parties and group-wide compliance	Partnering with reliable entities	– Ensure third parties have a good reputation and are regulated, supervised and monitored.
			– Confirm that third parties have measures in place to comply with CDD and record-keeping requirements.
			– Obtain necessary CDD information from third parties and ensure availability of identification data and documentation upon request.
20	Suspicious transaction reporting	Identifying and reporting suspicious activity	– Familiarise yourself with the requirements for reporting suspicious transactions in the relevant jurisdiction.
			– Report suspicions of criminal or terrorist activity to the FIU-IND as per requirements.

These guidelines, based on the specific recommendations, provide suggested actions for CA professionals to follow in order to comply with the new PMLA rules and effectively prevent money laundering activities. Each recommendation highlights the key consideration, its relevance and the suggested actions to be taken by CAs to fulfil their obligations under the new rule.

ETHICAL CONSIDERATIONS AND CONCERNS

As with any new rule, the implementation of the amended PMLA raises several ethical considerations and concerns that the CA professionals need to navigate. One such consideration is the delicate balance between client confidentiality and reporting obligations. Professionals often face the challenge of deciding when and how to disclose information while upholding the privacy and trust of their clients. One may come across a suspicious transaction involving a client but revealing that information could potentially breach the client’s confidentiality. Striking the right balance requires a deep understanding of the legal framework and clear guidelines. Not to mention the significant effort and investment in conducting thorough due diligence on clients, monitoring transactions and maintaining records.

The enhanced requirements and extensive documentation can be time-consuming and resource-intensive, which requires professionals to allocate sufficient resources to meet these obligations while also ensuring the smooth functioning of their practice.

Importantly, the potential for bias and subjective interpretation in identifying suspicious transactions is also a valid concern. Professionals must ensure they approach their work with objectivity and avoid unintended biases. This can be particularly challenging in cases where transactions may appear suspicious based on subjective criteria. For instance, two professionals may have different interpretations of a transaction’s suspicious nature, leading to inconsistent reporting. Clear guidelines, regular training and collaboration with industry peers can help address this concern.

In light of the new obligations, the CA professionals should equip themselves in the following ways and prepare for the coming days:

The inclusion of professionals like CAs under the PMLA is a significant and welcome development in the fight against money laundering. This expansion of their role emphasises the critical responsibility they hold as warriors safeguarding the financial integrity of the nation. Despite the criticisms surrounding the lower contribution of accountants in terms of STRs compared to other contributors in the global scenario, it remains crucial to strike a balance between compliance efforts and conviction rates in India as the regulatory landscape evolves to combat financial crimes. For instance, although all DNFBPs are required to report suspicious activity reports (SARs), there is underreporting from higher-risk sectors such as trust and company service providers, lawyers and accountants in the UK. It is key to achieving the objective of ensuring that heightened compliance measures effectively translate into successful convictions without imposing an excessive burden on professionals.

The upcoming FATF assessment in 2023 will shed light on the effectiveness of the new notification in addressing financial crimes in India. It is imperative for CA professionals to step up their game by staying updated on compliance regulations, embracing technology and fostering a strong ethical framework. This expanded role signifies a crucial step towards curbing money laundering in India, reinforcing the collective effort to preserve the integrity of our financial system and protecting the interests of our nation.

REFERENCES

1. A Lawyer’s Guide to Detecting and Preventing Money Laundering October 2014, A collaborative publication of the International Bar Association, the American Bar Association, and the Council of Bars and Law Societies of Europe.

2. https://www.nortonrosefulbright.com/en-au/knowledge/publications/bae065f5/tranche-2

3. Anti-money laundering, 2nd edition by IFAC.

4. Extending the Reach: CAs, CMAs and CSs brought under the ambit of PMLA reporting entities by Dr (CA) Durgesh Pandey.

5. https://legal.thomsonreuters.com/en/insights/articles/what-is-a-suspicious-activity-report

6. Requiring Lawyers to Submit Suspicious Transaction Reports: Implementation Issues and Current International Trends by George V. Carmona, Chief of Party, ROLE – USAID

7. Guideline: Accountants Complying with the Anti-Money Laundering and Countering Financing of Terrorism Act 2009, March 2018, published by New Zealand Government

8. https://fintrac-canafe.canada.ca/re-ed/accts-eng

9. https://ec.europa.eu/commission/presscorner/detail/en/MEMO_13_64

10. https://alessa.com/blog/compliance-with-bank-secrecy-act-aml-requirements/

11. https://cfatf-gafic.org/index.php/documents/fatf-40r/388-fatf-recommendation-22-dnfbps-customer-due-diligence

12. https://www.cfatf-gafic.org/index.php/documents/fatf-40r/395-fatf-recommendation-29-financial-intelligence-units

13. https://www.rupanjanade.com/post/the-role-of-professionals-under-the-redefined-pmla

BCAJ Admin

Corporate Law Corner : Part A | Company Law

15 Case Law No. 01/December/2023

M/s Antique Exim Private Limited

ROC-Guj/Adj. Order/Sec 138/ 2023/1676 to 80

Office of Registrar of Companies, GUJARAT DADRA & NAGAR HAVELI

Adjudication Order

Date of Order: 4th July, 2023

Adjudication order under section 454 read with Section 450 of the Companies Act, 2013 on the company and its directors for violation of provisions of section 138 read with Rule 13 of the Companies (Accounts) Rules, 2014 with respect to non-appointment of Internal Auditor in the Company.

FACTS

The Ministry of Corporate Affairs (‘MCA’) vide letter no. 3/82/2020/CL-II (DGA CoA), dated 17th March, 2020 had ordered an Inquiry of M/s. AEPL under section 206(4) of the Companies Act, 2013.

During the course of the inquiry and on examination of financial statements for the financial years 2018–19 and 2019–20 of M/s AEPL, the Registrar of Companies (‘RoC’) had found that the turnover of M/s AEPL being a Private Limited Company exceeded R200 Crores. Based on the same, it was required and mandatory for M/s. AEPL to appoint an Internal Auditor under provisions of Section 138 of the Companies Act, 2013. However, the company had failed to appoint an Internal Auditor since the financial years 2014-15. Therefore, M/s. AEPL and Mr. PKB, Mr. SP, its officers in default had violated the provisions of the Act.

The ROC had issued an adjudication notice to M/s. AEPL and Mr. PKB, Mr. SP, its officers in default on 6th December, 2022 under section 454 of the Companies Act, 2013 for violation of Section 138 with a request to remit the penalty as prescribedunder the provisions of the Companies Act, 2013. A hearing was fixed on 21st June, 2023 to give the appellants an opportunity of being heard.

Mr. BV, Practising Company Secretary (‘PCS’), Authorised Representative of M/s. AEPL and its directors, present in the hearing stated that M/s. AEPL had already submitted their reply on two occasions i.e., 7th March, 2022 and20th October, 2022, which were taken on record.

Mr. BV further stated that M/s. AEPL had already constituted an in-house Internal Audit Department commensurate with the size of the company and had not appointed any external professional as an internal auditor of M/s. AEPL. Further, the Director’s Reports of M/s. AEPL for the F.Ys. 2014–15, 2015–16, 2016–17, 2017–18, 2018–19 and 2019–20 had reported on the adequacy of the Internal control system with reference to its Financial Statement. Hence, there was no violation of Section 138 of the Companies Act, 2013 with respect to the appointment of the Internal Auditor by M/s. AEPL. In view of the above representation, M/s. AEPL and Mr. PKB, Mr. SP, and its directors had requested a lenient view on the matter.

HELD

The Adjudication Officer (‘AO’) submitted that the reply received from M/s. AEPL was unsatisfactory since M/s. AEPL was liable to appoint an Internal Auditor from the F.Y. 2014–15. Thereby, M/s. AEPL and its directors were in default and shall be liable for penalty as per the applicable provisions.

After considering the facts and circumstances of the case, the AO imposed a penalty under Section 450 of the Companies Act, 2013 as per the below-mentioned table:

Sr. No.	Name of the Company /Director	Maximum Penalty (₹)	Penalty imposed (₹)
1.	M/s. AEPL	2,00,000	2,00,000
2.	Mr. PKB, Director of M/s. AEPL	50,000	50,000

Sr. No.	Name of the Company /Director	Maximum Penalty (₹)	Penalty imposed (₹)
3.	Mr. SP, Director of M/s. AEPL	50,000	50,000

M/s. AEPL, Mr. PKB and Mr. SP were directed to pay the penalty and comply with this Adjudication order individually within 90 days and failure to do so may result in penal action without further intimation.

BCAJ Admin

IBC: Tax or Creditors – Who Wins?

INTRODUCTION

One of the issues which has gained prominence under the Under the Insolvency & Bankruptcy Code, 2016 (“the Code”) is that in case of a company undergoing a Corporate Insolvency Resolution Process (“CIRP”), do the tax dues have priority over the secured lenders / creditors? In other words, would the direct and indirect tax claims get paid off before the secured creditors?

The general legal principle (prior to the enactment of the Code) in this respect has been laid down by various Supreme Court decisions, such as, Union of India vs. SICOM Ltd, [2009] 233 ELT 433 (SC) which was in the context of priority of Central Excise dues over those of a financial creditor. It held that the rights of the Crown to recover its debt would prevail over the right of a subject. Crown debt meant the debts due to the State which entitled the Crown to claim priority before all other creditors. Such creditors, however, were held to mean only unsecured creditors.

This issue has gained more prominence because of a Supreme Court decision delivered in 2022. The Supreme Court recently had an occasion to revisit its earlier decision and it upheld the earlier decision.The answer to the above question would depend upon the manner in which the tax Statute in question is worded. Let us understand the position in this respect.

WATERFALL MECHANISM AND THE CODE

At the outset, it must be understood that section 53 of the Code provides for a waterfall mechanism for the mode and manner of distribution of the proceeds of the sale of the assets of a Corporate Debtor. It starts with a non-obstante clause which overrides anything to the contrary contained in any law enacted by the Parliament or any State Legislature for the time being in force. The mechanism is as follows:

(a) the insolvency resolution process costs and the liquidation costs paid in full;

(b) the following debts which shall rank equally between and among the following-

(i) workmen’s dues for the period of 24 months preceding the liquidation commencement date; and

(ii) debts owed to a secured creditor in the event such secured creditor has relinquished security;

(c) wages and any unpaid dues owed to employees other than workmen for the period of 12 months preceding the liquidation commencement date;

(d) financial debts owed to unsecured creditors;

(e) the following dues which shall rank equally between:

(i) any amount due to the Central Government and the State Government in respect of the whole or any part of the period of two years preceding the liquidation commencement date;

(ii) debts owed to a secured creditor for any amount unpaid following the enforcement of security interest;

(f) any remaining debts and dues;

(g) preference shareholders, if any; and

(h) equity shareholders or partners, as the case may be.

Thus, as is evident from the above section, secured creditors have a priority in being repaid as compared to unsecured creditors.

Secured creditor is defined to mean a creditor in favour of whom security interest is created. Security interest is defined in an exhaustive manner to mean right, title or interest or a claim to property, created in favour of, or provided for a secured creditor by a transaction which secures payment or performance of an obligation and includes mortgage, charge, hypothecation, assignment and encumbrance or any other agreement or arrangement securing payment or performance of any obligation of any person.

In this respect it should be noted that section 238 of the Code contains a non-obstante clause which states that the provisions of the Code shall have an effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law. The Supreme Court in PCIT vs. Monnet Ispat & Energy Ltd., [2019] 107 taxmann.com 481 (SC) has categorically held that:

“Given Section 238 of the Insolvency and Bankruptcy Code, 2016, it is obvious that the Code will override anything inconsistent contained in any other enactment, including the Income-Tax Act.”

SC’S DECISION IN RAINBOW PAPERS

InState Tax Officer vs. Rainbow Papers Ltd, [2022] 142 taxmann.com 157 (SC),a two-Judge Bench of the Supreme Court was faced with the question whether VAT / CST dues under the Gujarat Value Added Tax Act, 2003 could be treated as dues of a secured creditor? Section 48 of this Act reads as follows:

“48. Tax to be first charge on property— Notwithstanding anything to the contrary contained in any law for the time being in force, any amount payable by a dealer or any other person on account of tax, interest or penalty for which he is liable to pay to the Government shall be a first charge on the property of such dealer, or as the case maybe, such person.”

Based on the above statutory charge in terms of section 48 of the Gujarat VAT Act, the Apex Court concluded that the claim of the Tax Department of the State, squarely fell within the definition of “Security Interest” under the Code and the State became a secured creditor under the Code. Such security interest could be created by the operation of law. The definition of a secured creditor in the IBC did not exclude any Government or Governmental Authority. It held that it was not the case that section 48 of the Act prevailed over section 53 of the Code. Rather, it was the case that the State fell within the purview of “Secured Creditor”. Section 48 of the Act was not contrary to or inconsistent with any provisions of the Code. Under s.53(1)(b)(ii), the debts owed to a secured creditor, which would include the State under the GVAT Act, were to rank equally with other specified debts including debts on account of the workman’s dues for a period of 24 months preceding the liquidation commencement date.

SUBSEQUENT CONTRARY SC VERDICT IN PASCHIMANCHAL

A two-Judge Bench of the Supreme Court in Paschimanchal Vidyut Vitran Nigam Limited vs. Raman Ispat Private Limited, n C.A. No. 7976 of 2019, Order dated 17th July, 2023 observed that the decision in Rainbow Papers (supra) did not notice the ‘waterfall mechanism’ under section 53 of the Code and the provision had not been adverted to or extracted in the judgment. Furthermore, Rainbow Papers (supra) was in the context of a resolution process and not during liquidation. It observed that the dues payable to the government are placed much below those of secured creditors and even unsecured and operational creditors. This design was either not brought to the notice of the court in Rainbow Papers (supra) or was missed altogether. In any event, the judgment had not taken note of the provisions of the IBC which treat the dues payable to secured creditors at a higher footing than dues payable to the Central or State Government.

SC’S REVIEW PETITION DECISION

The above decision of Rainbow Papers (supra)has created several hurdles for secured creditors of companies undergoing resolution. Many secured lenders are afraid that there would not be anything left for them if the Government also ranks as a secured creditor along with them. Accordingly, many petitioners, strengthened by the above-mentioned verdict inPaschmianchal (supra), filed a Review Petition before the Supreme Court. The judgment in the same was delivered by a two-Judge Bench of the Apex Court in the case of Sanjay Kumar Agarwal vs. State Tax Officer, RP(Civil) No. 1620 /2023 Order dated 31st October, 2023. The Court refused to review the Petitions since it was a co-ordinate bench and even otherwise a well-considered judgment could not fall within the ambit of a Review Petition.

PRINCIPLES OF REVIEW

To refresh, a review petition could be filed before the Supreme Court since the power to review its own judgment has been enshrined on the Court under Article 137 of the Constitution. The Supreme Court in Sanjay Kumar (supra) laid down the following important principles which would govern a review of an earlier decision:

(i) A judgment is open to review inter alia if there is a mistake or an error apparent on the face of the record – Parsion Devi and Others vs. Sumitri Devi and Others, (1997) 8 SCC 715.

(ii) A judgment pronounced by the Court is final, and departure from that principle is justified only when circumstances of a substantial and compelling character make it necessary to do so – Sajjan Singh and Ors. vs. State of Rajasthan and Ors., AIR 1965 SC 845.

(iii) An error which is not self-evident and has to be detected by a process of reasoning, can hardly be said to be an error apparent on the face of record justifying the court to exercise its power of review – Shanti Conductors Private Limited vs. Assam State Electricity Board and Others, (2020) 2 SCC 677.

(iv) In exercise of the jurisdiction under Order 47 Rule 1 CPC, it is not permissible for an erroneous decision to be “reheard and corrected” – Shri Ram Sahu (Dead) Through Legal Representatives and Others vs. Vinod Kumar Rawat and Others, (2021) 13 SCC 1.

(v) A review petition has a limited purpose and cannot be allowed to be “an appeal in disguise” – Parison Devi (supra).

(vi) Under the guise of review, the petitioner cannot be permitted to reagitate and reargue the questions which have already been addressed and decided – Shanti Conductors (supra).

(vii) An error on the face of record must be such an error which, mere looking at the record should strike and it should not require any long-drawn process of reasoning on the points where there may conceivably be two opinions – Arun Dev Upadhyaya vs. Integrated Sales Service Limited & Another, 2023 (8) SCC 11.

(viii) Even the change in law or subsequent decision/ judgment of a co-ordinate or larger Bench by itself cannot be regarded as a ground for review – Beghar Foundation vs. Justice K.S. Puttaswamy (Retired) and Others, (2021) 3 SCC 1.

The above principles governing a review petition have been explained very succinctly and precisely by the Supreme Court. They would be useful in all cases for deciding whether or not a review could be filed.

PRINCIPLES OF JUDICIAL PROPRIETY

The Supreme Court inSanjay Kumar (supra)refused to entertain the review petition on grounds of judicial propriety which demands respect for the order passed by a Bench of coordinate strength. It referred to important cases on this point, such as, Jai Sri Sahu vs. Rajdewan Dubey and Others, AIR 1962 SC 83; Mamleshwar Prasad and Another vs. Kanhaiya Lal (Dead) Through L. Rs, (1975) 2 SCC 232; Sant Lal Gupta and Others vs. Modern Cooperative Group Housing Society Limited and Others, (2010) 13 SCC 336and held as follows:

a) One co-ordinate Bench could not comment upon the discretion exercised or judgment rendered by another co-ordinate Bench of the same strength.

b) If a Bench did not accept as correct the decision on a question of law of another Bench of equal strength, the only proper course to adopt would be to refer the matter to the larger Bench, for authoritative decision, otherwise the law would be thrown into the state of uncertainty by reason of conflicting decisions.

c) Certainty of the law, consistency of rulings and comity of courts all flowered from this principle.

d) The rule of precedent was binding for the reason that there was a desire to secure uniformity and certainty in law. Thus, in judicial administration precedents which enunciated the rules of law formed the foundation of the administration of justice under our system. Therefore, it was always insisted that the decision of a coordinate Bench must be followed.

RAINBOW PAPERS CORRECT ON MERITS

The Supreme Court further held that even on merits, the decision inRainbow Papers (supra)was correct. The plea that the court in the impugned decision had failed to consider the waterfall mechanism as contained in section 53 and failed to consider other provisions of the Code, were factually incorrect. The Court in the impugned judgment had categorically reproduced and referred to section 53 and other provisions of the Code. After considering the Waterfall mechanism as contemplated in section 53 and other provisions of the Code for the purpose of deciding as to whether section 53 IBC would override section 48 of the GVAT Act, it decided in favour of the State Government. Thus, the Court in Sanjay Kumar (supra) dismissed the review petitions.

POSITION BASED ON THE ABOVE VERDICTS

To apply the ratio laid down in Rainbow Papers, one would have to ascertain the exact nature of the wordings in the impugned tax statute. If they are of the type found in section 48 of the GVAT Act, then the Government would be treated as a secured creditor, and would rank pari passu with other secured lenders / creditors. Wordings similar to wordings of section 48 of the GVAT Act are found in the Maharashtra Value Added Tax Act, 2002.

However, what happens when the wordings of the tax statute are not so explicit? In that event, it is submitted that the Government would not be considered as a secured creditor. The decision in Rainbow Papers was based upon specific wordings found in section 48 of the GVAT Act which provided that the tax dues “shall be a first charge on the property” of such dealer. It is not a blanket verdict which holds that for all tax dues, the government is a secured creditor. Prior to the introduction of the Code, this was also the position as laid down by the Supreme Court in Dena Bank vs. Bhikhabhai Prabhudas Parekh & Co., (2000) 5 SCC 694, wherein it held that the Crown’s preferential right to recovery of debts over other creditors was confined to ordinary or unsecured creditors. The common law of England or the principles of equity and good conscience (as applicable to India) did not accord the Crown a preferential right for recovery of its debts over a mortgagee or pledgee of goods or a secured creditor.

A very old decision in M/s. Builders Supply Corporation vs. Union of India, AIR 1965 SC 1061, rendered under the Income-tax Act, 1922 is also relevant. Section 46(2) of that Act enabled the Income Tax Officer to forward to the Collector a certificate specifying the amount of arrears due from an assessee and requiring the Collector, on receipt of such certificate, to proceed to recover from the assessee in question the amount specified as if it were an arrear of land revenue. The Supreme Court held that merely on the basis of this provision it could not be construed that section 46 dealt with or provided for the principal of priority of tax dues. The provision could not be said to convert arrears of tax into arrears of land revenue either; all that it purported to do was to indicate that after receiving the certificate from the Income-tax Officer, the Collector had to proceed to recover the arrears in question as if the said arrears were arrears of land revenue.

Let us examine the position under some important tax statutes:

(a) Income-tax dues– The Income-tax Act, does not contain any such wordings of the nature found under section 48 of the GVAT Act. Hence, it is submitted that the income-tax officer would not be a secured creditor of the corporate debtor. He would rank much lower as per the waterfall mechanism. The decisions in the case of TRO vs. Punjab and Sing Bank, 161 ITR 220 (Del) / Suraj Prasad Gupta vs. Chartered Bank, 83 ITR 494 (All)support the principle that in the absence of any specific statutory provision, income-tax dues cannot defeat the rights of any secured creditor. In fact, section 178(6) of the Income-tax Act, was specifically amended to provide that the provisions pertaining to the liability of a company in liquidation would override all laws other than the provisions of the Code.

The decision of the Delhi ITAT in ACIT vs. ABW Infrastructure Ltd, I.T.A. No. 2861/DEL/2018 (A.Y 2008-09)also states that it is well settled now that the Code has an overriding effect on all Acts including Income Tax Act which has been specifically provided under section 178(6). The Delhi High Court in Tata Steel Ltd vs. DCIT, WP(C) 13188/2018 Order dated 31st October, 2023, has also held that the Code overrides the provisions of the Income-tax Act to the extent that the latter is inconsistent with the provisions of the former. Section 238 of the Code, contains a non-obstante clause which makes this abundantly clear. It concluded that the Code was a special enactment, dealing with aspects concerning insolvency and, therefore, it would prevail over the provisions of the Income-tax Act 1961.

The NCLAT in Om Prakash Agrawal vs. CCIT, [2021] 124 taxmann.com 305 (NCL-AT) held that the priority was different for Government dues under s.53(1)(e) of the Code and under section 178 of the Income-tax Act. Both section 178(6) of the Act and section 53 of the Code start with non-obstante clause, and therefore, the legislature in its wisdom to give effect to the scheme of the Code, amended section 178(6). By virtue of the amendment the whole of section 178 had no application to the liquidation proceedings initiated under the Code. The matter pertained to the recovery of TDS (under section 194-IA) dues from a company in liquidation. The NCLAT held that as per section 194-IA of the Income-tax Act, 1% TDS was recovered on priority to other creditors of the transferor, whereas s.53(1)(e) in its waterfall mechanism provided that the Government dues came 5th in order of priority. Thus, with regard to recovery of the Government dues (including income tax) from a company-in-liquidation under IBC, there was an inconsistency between section 194-IA and section 53(1)(e). Therefore, by virtue of section 238, section 53(1)(e) had an overriding effect on the provisions of section 194-IA. Even otherwise section 53 started with a non-obstante clause, whereas section 194-IA, did not start with a non-obstante clause, and it would necessarily be subject to the overriding effect of the Code.

(b) GST dues – The Central Goods and Services Tax Act contains an express provision to the contrary of the type found in the VAT Acts referred to above. It contains a non-obstante clause which states that any amount payable by a taxable person on account of GST would be a first charge on the property of such person. This provision would apply notwithstanding anything to the contrary in any other law except as otherwise provided in the Insolvency & Bankruptcy Code, 2016. Thus, the GST dues would not override the IBC Code.

CONCLUSION

One feels that the provisions of the Code are explicitly clear in as much as it overrides all other Statutes. In the absence of specific wordings of the type found in the State VAT Acts, it would be very difficult to consider the Revenue Department as a secured creditor along with other secured lenders. In spite of that, there have been several cases where the Revenue Department, relying on the decision in Rainbow Papers, is petitioning to be treated as a secured creditor. This is only increasing the cases of litigation and causing more problemsin the corporate resolution process. Some recent press reports indicate that the Government is considering a Notification which would clarify that the Revenuedoes not ipso facto become a secured creditor in all insolvency cases before the NCLT under the Code. It would depend upon the wordings of the statute in each and every case!

BCAJ Admin

Allied Laws

36 Paramjota vs. Deputy Director of Consolidation & Ors

AIR 2023 ALLAHABAD 222

Date of Order: 8th August, 2023

Adoption — Adoption Deed is sufficient — Rituals are not necessary — Adopted child entitled to property on parent renouncing the world.[Hindu Adoption and Maintenance Act, 1965, S. 11, 15 and 16]

FACTS

Amidst a land dispute, a consolidation officer entered the name of the adopted son (Mahadeo) of one Mr Bholla, who renounced the world for Sanyas, in the revenue records.

This was disputed by the Petitioner; the Consolidation officer rejected the objections filed by the Petitioner.

On filing the Writ Petition.

HELD

CA ceremony is not necessary to prove that Mr Mahadeo is the adopted son of Mr Bhalla, especially since the adoption deed is registered. Subsequentnotarized deed revoking the adoption has no legal consequences. Further, since the father has renounced the world by becoming a Sanyasi, the property would devolve on his adopted son.

The Writ Petition was dismissed.

37 Usha Kumari vs. Santha Kumari

AIR 2023 KERALA 161

Date of Order: 26th June, 2023

Evidence — Submissions in court — Public document — Cannot be treated as secondary evidence. [Indian Evidence Act, 1872, S. 74]

FACTS

There was a dispute among the members of the family. A suit for partition was filed by one of the members. The defendants filed their written statements wherein the disputed gift deeds were annexed. The suit was dismissed for want of prosecution.

On appeal, inter alia, a question arose i.e., whether a written statement in a suit, is a public document falling under section 74 of the Indian Evidence Act?

HELD

Pleadings of the parties to the litigation, once filed in a court, become a part of the public records maintained by the Court and hence fall within the ambit of “public documents”. The same cannot be considered as secondary evidence.

The Appeal is allowed.

38 Akza Rajan vs. Rajan M S

AIR 2023 KERALA 166

Date of Order: 12th April, 2023

Maintenance of Daughters — Father responsible for daughter’s marriage even if they are Christians. [Hindu Adoption and Maintenance Act, 1956, S. 20; Transfer of Property Act, 1882, S. 39]

FACTS

The Petitioner is the daughter of the Respondent. The Respondent-father neglected the Petitioner’s mother and sold her jewellery to buy certain assets. The Respondent was trying to alienate the immovable property and hence Petitioner filed for a temporary injunction. The said injunction was denied by the Family Court.

On a Writ Petition.

HELD

Drawing a reference to the codified Hindu law that the maintenance of an unmarried daughter is a duty of the father, it was held that such a duty is applicable to all fathers irrespective of their religion. The Court secured a reasonable sum for the wedding expense of the Petitioner by way of charge on the immovable property and also held that the injunction could be lifted if the respondent furnished the sum by way of a fixed deposit or other mode.

The Writ Petition is allowed.

39 Rajesh Kumar Sahu vs. Manish Kumar Sahu

AIR 2023 MADHYA PRADESH 862

Date of Order: 26th June, 2023

Succession — Unregistered document “Abhiswikrati Patra” — Cannot be construed as a Will — Any unregistered document transferring title of more than Rs.100 is required to be registered. [Registration Act, 1908, S. 17(2)(v)]

FACTS

The Petitioner/original defendant objected to the admissibility of an unregistered and unstamped document before the Trial Court. The Trial Court rejected the objection and held the document to be a Will.

On a Writ Petition.

HELD

The unregistered and unstamped document is a “Abhiswikrati Patra”. Although the document transfers certain rights to his son, it is mentioned that a Will would be executed separately. Therefore, the said document could not be considered as a Will.

Further, as the document was intended to transfer a right and title of property valued more than Rs.100, such a document is mandatorily required to be registered otherwise it would not be taken on record.

The Writ petition is allowed.

40 G Venkatesh vs. Bridge Federation of India

AIR 2023 MADRAS 296

Date of Order: 7th August, 2023

Overseas Citizen of India Cardholder — Bridge player — Eligible to play in National Championships but cannot represent India internationally — Policy decision by the Central Government- Writ petition is held to be not maintainable. [Citizenship Act, 1955, S. 7A, 7B, Constitution of India, Article, 226]

FACTS

The Writ Petitioner is an Overseas Citizen of India (OCI) who desired to represent the Respondent internationally. He received a letter of rejection stating he would only be eligible to play in national championships and cannot represent the nation.

On a Writ Petition.

HELD

The Respondent is affiliated with the Central Government and is governed by the National Sports Development Code of India, 2011. A policy decision taken by the Central Government to only allow Indians to represent India in international sports cannot be interfered with Courts. Further, the rejection of the Petitioner was on the basis of two Circulars. As the said Circulars were not challenged in the Petition, the Petition becomes non-maintainable.

The Writ Petition is dismissed.

BCAJ Admin

Reporting Under PMLA by Professionals – Deciphering ‘On Behalf Of’

INTRODUCTION

Notifications dated 3rd May, 2023 and 9th May, 2023 issued by the Ministry of Finance have the effect of making relevant persons ‘reporting entities’ as more particularly defined by Section 2(1)(sa)(vi) read with Section 2(1)(wa) of the Prevention of Money Laundering Act, 2002 (PMLA).

The 3rd May, 2023 Notification purports to cover within the definition of ‘reporting entities’ those ‘relevant persons’ who carry out ‘financial transactions’ on behalf of his / her client, in the course of one’s profession in relation to certain activities. If the certain activities listed in the Notification are carried out by the ‘relevant person’, then the professional would find himself/herself as a reporting entity under the PMLA. Explanation 1 in the Notification states that a ‘relevant person’ would include:

• an individual who obtained a certificate of practice under section 6 of the Chartered Accountants Act, 1949 (38 of 1949) and practicing individually or through a firm, in whatever manner it has been constituted;

• an individual who obtained a certificate of practice under section 6 of the Company Secretaries Act, 1980 (56 of 1980) and practicing individually or through a firm, in whatever manner it has been constituted;

• an individual who has obtained a certificate of practice under section 6 of the Cost and Works Accountants Act, 1959 (23 of 1959) and practicing individually or through a firm, in whatever manner it has been constituted.

On the other hand, the 9th May Notification purports to cover within the definition of ‘reporting entities’ those ‘persons’ who carry out certain activities in the course of business on behalf of or for another person as the case may be. This Notification does not seek to restrict the applicability of the Notification to a specific business or profession and therefore, can also act as a trigger for professionals to become reporting entities under the PMLA.

India is a member of the Financial Action Task Force (FATF). The FATF has a set of 40 recommendations that the member countries seek to implement in order to combat the menace of money laundering. Trying to comply with the FATF recommendations on money laundering is one of our country’s international commitments. In fact, the PMLA Act itself is a result of India’s international commitments. The preamble to the Act reads as follows:

“An Act to prevent money-laundering and to provide for confiscation of property derived from, or involved in, money-laundering and for matters connected therewith or incidental thereto.

WHEREAS the Political Declaration and Global Programme of Action, annexed to the resolution S-17/2 was adopted by the General Assembly of the United Nations at its seventeenth special session on the twenty-third day of February, 1990;

AND WHEREAS the Political Declaration adopted by the Special Session of the United Nations General Assembly held on 8th to 10th June, 1998 calls upon the Member States to adopt national money-laundering legislation and programme;

AND WHEREAS it is considered necessary to implement the aforesaid resolution and the Declaration.”

While much has already been discussed regarding these two notifications, there is still uncertainty around the phrase ‘on behalf of’ as used in them. Though perhaps we may have to wait for an authoritative judicial pronouncement on the exact interpretation to be given to this commonly used phrase, today we seek to lay down broad contours of what ‘on behalf of’ could mean with regard to these two notifications.

THE FATF FACTOR

The FATF recommendations also use the phrase ‘on behalf of’ quite often. In fact, the phrase ‘on behalf of’ when used in the Recommendations, seems to signify a fiduciary relationship and is broader than what is given in Indian law. Recommendation 23 (a) reads as follows:

Lawyers, notaries, other independent legal professionals and accountants should be required to report suspicious transactions when, on behalf of or for a client, they engage in a financial transaction in relation to the activities described in paragraph (d) of Recommendation 22. Countries are strongly encouraged to extend the reporting requirement to the rest of the professional activities of accountants, including auditing.

Recommendation 22 (d) in turn reads as follows:

Lawyers, notaries, other independent legal professionals and accountants – when they prepare for or carry out transactions for their client concerning the following activities:

• buying and selling of real estate;

• managing of client money, securities or other assets;

• management of bank, savings or securities accounts;

• organisation of contributions for the creation, operation or management of companies;

• creation, operation or management of legal persons or arrangements, and buying and selling of business entities.

The above two recommendations read together therefore are the genesis of the 3rd May, 2023 Circular. This is in line with the commitment that our country is showing to combat money laundering.

LAYING THE GROUNDWORK – USING ‘FOR ANOTHER PERSON’ TO HELP IN INTERPRETING ‘ON BEHALF OF’

In order to narrow down on the meaning of ‘on behalf of’, it would be perhaps instructive to hazard a guess as to what would constitute ‘for another person’. The 3rd May, 2023 notification does not include ‘for another person’. This language is used in the 9th May, 2023 Notification, the relevant portion of which reads –

“the following activities when carried out in the course of business on behalf of or for another person, as the case may be, as an activity for the purposes of said sub-clause”

Therefore, the Notification itself draws a distinction between ‘on behalf of another person’ and ‘for another person’ by making them alternative to each other through the use of the conjunction ‘or’. The list of activities covered in the 9th May notification is also instructive:

a) “acting as a formation agent of companies and limited liability partnerships;

b) acting as (or arranging for another person to act as) a director or secretary of a company, a partner of a firm or a similar position in relation to other companies and limited liability partnerships;

c) providing a registered office, business address or accommodation, correspondence or administrative address for a company or a limited liability partnership or a trust;

d) acting as (or arranging for another person to act as) a trustee of an express trust or performing the equivalent function for another type of trust; and

e) acting as (or arranging for another person to act as) a nominee shareholder for another person”.

Though the Explanation to the Notification provides for a list of exclusions, the only relevant part for our discussion would perhaps be restricted to Explanation ‘b’ which reads as follows:

“any activity that is carried out by an employee on behalf of his employer in the course of or in relation to his employment;”

The list of activities enumerated from ‘(a) to (e)’ above is telling. These activities do not need to be necessarily carried out in a representative capacity. They may also be carried out in a personal capacity for the benefit of someone else. A hypothesis can thus be drawn that ‘on behalf of another person’ would denote a person acting in a ‘representative capacity’ for another person, but ‘for another person’ would denote a person acting in a personal capacity for another person. Therefore, based on this premise, the 9th May, 2023 notification would make a professional a ‘reporting entity’, whether he carried out those activities in his individual capacity or in a representative capacity.

However, the absence of ‘for another person’ in the 3rd May, 2023 notification is telling. Firstly, the notification restricts itself to ‘financial transactions’, to be carried out specifically ‘on behalf of a client’, ‘in the course of the profession’ and in ‘relation to the following activities’–

1. “buying and selling of any immovable property;

2. managing of client money, securities or other assets;

3. management of bank, savings or securities accounts;

4. organisation of contributions for the creation, operation or management of companies;

5. creation, operation or management of companies, limited liability partnerships or trusts, and buying and selling of business entities.”

It may be of particular interest to note that the transactions covered in ‘1 to 5’ as enumerated above can possibly be conducted both ‘on behalf of a client’ as well as ‘for a client’. As the notification omits using the phrase ‘for the client’, the interpretation of ‘on behalf of a client’ gains a greater relevance. Significantly, distinguishing ‘on behalf of a client’ and ‘for a client’ also gains greater relevance as, while the former would make the professional a ‘reporting entity’, the latter would not.

DECIPHERING THE ENIGMA OF ‘ON BEHALF OF’

While embarking upon a journey to find the meaning of a phrase in law, the Black’s Law Dictionary has often served as a good starting point. The Black’s law dictionary, while defining ‘behalf’, includes the definition of ‘on behalf of’. The definition in the dictionary supports our hypothesis that ‘on behalf of’ would denote representative capacity. The dictionary states as follows:

behalf.[fr. Anglo-Saxon half “unit, side”] (14c) Side, part, advantage, or interest. • The phrase in behalf of traditionally means “in the interest, support, or defense of”; on behalf of means “in the name of, on the part of, as the agent or representative of.”

In fact, the Income-tax Act, 1961, also leads credence to this hypothesis of ‘on behalf of’ being used in a representative capacity. The phrase ‘on behalf of’ is used in the very definition of ‘Authorised Representative in Section 288(2) of the Act. It is reproduced below as follows:

Section 288 (2) For the purposes of this section, “authorised representative” means a person authorised by the assessee in writing to appear on his behalf, being—

(i) a person related to the assessee in any manner, or a person regularly employed by the assessee; or

(ii) any officer of a Scheduled Bank with which the assessee maintains a current account or has other regular dealings; or

(iii) any legal practitioner who is entitled to practise in any civil court in India; or

(iv) an accountant; or

(v) any person who has passed any accountancy examination recognised in this behalf by the Board; or

(vi) any person who has acquired such educational qualifications as the Board may prescribe for this purpose; or

(via) any person who, before the coming into force of this Act in the Union territory of Dadra and Nagar Haveli, Goa†, Daman and Diu, or Pondicherry, attended before an income-tax authority in the said territory on behalf of any assessee otherwise than in the capacity of an employee or relative of that assessee; or

(vii) any other person who, immediately before the commencement of this Act, was an income-tax practitioner within the meaning of clause (iv) of sub-section (2) of section 61 of the Indian Income-tax Act, 1922 (11 of 1922), and was actually practising as such;

[(viii) any other person as may be prescribed.]

Thus, the phrase ‘on behalf of’ in the Income-tax Act, 1961, is clearly in a representative capacity. It may be noted that for a professional to appear before the tax authorities, a ‘vakalatnama’ or a ‘power of attorney’ is required. This allows the person so authorised to appear ‘on behalf of a person’ before various authorities and make pleadings and submissions on their behalf. These pleadings and submissions are binding upon the person so represented. A cursory glance at umpteen Judgements of various courts will show that the Courts observe that Advocates have appeared ‘on behalf of’ a client. This introduces an additional point of distinction between ‘on behalf of’ and ‘for’. We may add this to our original hypothesis – For a transaction or activity to be carried out ‘on behalf of’ another person, there should be authorisation to that effect and the intention to be bound by the action of the person so authorised acting on one’s behalf.

In fact, inspiration can be drawn from the Judgment of the Constitution Bench of the Supreme Court in M. Siddiq (Ram Janmabhumi Temple-5 J.) vs. Suresh Das, (2020) 1 SCC 1. The Judgment, more famously known as the ‘Ayodhya Judgment’ or the ‘Ram Janmabhoomi Temple Judgment’ discussed the right of a ‘Shebait’ and the ‘next friend’ of the idol to institute a suit. The following extracts of the Judgment may prove to be instructive:

“Courts recognise a Hindu idol as the material embodiment of a testator’s pious purpose. Juristic personality can also be conferred on a Swayambhu deity which is a self-manifestation in nature. An idol is a juristic person in which title to the endowed property vests. The idol does not enjoy possession of the property in the same manner as do natural persons. The property vests in the idol only in an ideal sense. The idol must act through some human agency which will manage its properties, arrange for the performance of ceremonies associated with worship and take steps to protect the endowment, inter alia by bringing proceedings on behalf of the idol. The shebait is the human person who discharges this role..

..The dedicated property legally vests in the idol in an ideal sense and not in the shebait. A shebait does not bring an action for the recovery of the property in a personal capacity but on behalf of the idol for the protection of the idol’s dedicated property. Ordinarily, a deed of dedication will not contain a provision for the duties of the shebait. However, an express stipulation or even its absence does not mean that the property of the idol vests in the shebait. Though the property does not legally vest in the shebait, the shebait may have some interest in the usufruct generated from it. Appurtenant to the duties of a shebait, this interest is reflected in the nature of the office of a shebait..

..Ordinarily, the right to sue on behalf of the idol vests in the shebait. This does not however mean that the idol is deprived of its inherent and independent right to sue in its own name in certain situations. The property vests in the idol. A right to sue for the recovery of property is an inherent component of the rights that flow from the ownership of property. The shebait is merely the human actor through which the right to sue is exercised. As the immediate protector of the idols and the exclusive manager of its properties, a suit on behalf of the idol must be brought by the shebait alone. Where there exists a lawfully appointed shebait who is able and willing to take all actions necessary to protect the deity’s interests and to ensure its continued protection and providence, the right of the deity to sue cannot be separated from the right of the shebait to sue on behalf ofthe deity. In such situations, the idol’s right to sue stands merged with the right of the shebait to sue on behalf of the idol..

..A suit by a shebait on behalf of an idol binds the idol.For this reason, the question of who can sue on behalf of an idol is a question of substantive law. Vesting any stranger with the right to institute proceedings on behalf of the idol and bind it would leave the idol and its properties at the mercy of numerous individuals claiming to be “next friend”. Therefore, the interests of the idol are protected by restricting and scrutinising actions brought on behalf of the idol. For this reason, ordinarily, only a lawful shebait can sue on behalf of the idol. When a lawful shebait sues on behalf of the deity, the question whether the deity is a party to the proceedings is merely a matter of procedure. As long as the suit is filed in the capacity of a shebait, it is implicit that such a suit is on behalf of and for the benefit of the idol..”

Therefore, the shebait acts in a representative capacity on behalf of the idol in instituting a suit and by the virtue of being the shebait, has the authorisation by the virtue of appointment and consequently the authority to bind the idol through a suit. In short, as the Supreme Court observed, the shebait can file a suit on behalf of the idol.

In fact, the expression ‘on behalf of’ also finds use in the relationship of ‘agency’. A recent Judgment of the Supreme Court inRajasthan Art Emporium vs. Kuwait Airways & Onr. 2023 SCC OnLine SC 1461,examining Section 237 of the Indian Contract Act considered if the agent had the authority to act ‘on behalf of’ the Principal.

Section 237 of the Contract Act provides that:

“237. Liability of principal inducing belief that agent’s unauthorised acts were authorised – When an agent has, without authority, done acts or incurred obligations to third persons on behalf of his principal, the principal is bound by such acts or obligations if he has by his words or conduct induced such third persons to believe that such acts and obligations were within the scope of the agent’s authority.”

The Court observed that: “There is no gainsaying that onus to show that the act done by an agent was within the scope of his authority or ostensible authority held or exercised by him is on the person claiming against the principal. This, of course, can be shown by practice as well as by a written instrument. Thus, the question for consideration is whether on the evidence obtaining in the instant case, can it be said that Respondent 3 had an express or implied authority to act on behalf of Respondent 1 as their agent? If Respondent 3 had such an authority, then obviously Respondent 1 was bound by the commitment Respondent 3 had made to the appellant.”

This Judgment would also support our hypothesis that in order to act ‘on behalf of’ someone, the person must be authorised, and act in a representative capacity and such act must have the power to bind the person to the act committed.

In State of W.B. vs. O.P. Lodha (1997) 5 SCC 93 where an agent was selling goods both in his individual capacity and in his capacity as an agent, the Supreme Court observed: “In my judgement, the scheme of the Act leaves no room for doubt that an agent who sells goods on behalf of somebody else cannot escape the liability to pay sales tax on the sales made by him for and on behalf of others merely because, he was selling goods on behalf of others.”

The importance of the ‘on behalf of’ being in the course of business or profession to trigger the reporting obligations.

Therefore, a relationship akin to an agency would see an agent act ‘on behalf of the principal’. A perusal of the list of the activities and finance transactions covered by both the 3rd May as well as the 9th May, 2023 Notifications would seem to suggest that an agency relationship and the relationship of a constituted attorney / power of attorney holder for carrying out the listed activities / transactions would trigger the definition of reporting entity. After all, a constituted attorney also acts in a representative capacity, is specifically authorised and can bind the Donor (the person who grants the power of attorney) by his / her Acts.

For professionals, it is important to note that both Notifications carry an important safeguard. The activity / transactions must be carried out in the course of business / profession. If this safeguard did not exist, then personal transactions / activities of the nature listed in the notifications would also have been covered. After all, it is quite common for a parent / guardian / family member / spouse to act ‘on behalf of’ the minor child / ward / other members of the family or spouse. For example, for a minor to be admitted into a partnership, a parent / guardian needs to enter into the contract on the minor’s behalf.

In CIT vs. Shah Mohandas Sadhuram [1965] 57 ITR 415 (SC) the Supreme Court observed “Before we discuss these questions it is necessary to consider what are the incidents and true nature of “benefits of partnership” and what is a guardian of a minor competent to do on behalf of a minor to secure the full benefits of partnership to a minor. First it is clear from sub-section (2) of section 30 of the Partnership Act that a minor cannot be made liable for losses. Secondly, section 30, sub-section (4), enables a minor to sever his connection with the firm and if he does so, the amount of his share has to be determined by evaluation made, as far as possible, in accordance with the rules contained in section 48, which section visualises capital having been contributed by partners. There is no difficulty in holding that this severance may be effected on behalf of a minor by his guardian. Therefore, sub-section (4) contemplates that capital may have been contributed on behalf of a minor and that a guardian may on behalf of a minor sever his connection with the firm. If the guardian is entitled to sever the minor’s connection with the firm, he must also be held to be entitled to refuse to accept the benefits of partnership or agree to accept the benefits of partnership for a further period on terms which are in accordance with law. Subsection (5) proceeds on the basis that the minor may or may not know that he has been admitted to the benefits of partnership. This sub-section enables him to elect, on attaining majority, either to remain a partner or not to become a partner in the firm. Thus it contemplates that a guardian may have accepted the benefits of a partnershipon behalf ofa minor without his knowledge. If a guardian can accept benefits of partnership on behalf ofa minor, he must have the power to scrutinise the terms on which such benefits are received by the minor. He must also have the power to accept the conditions on which the benefits of partnership are being conferred. It appears to us that the guardian can do all that is necessary to effectuate the conferment and receipt of the benefits of partnership.”

In fact, ‘on behalf of’ is often used between a minor and a guardian. If we look at the Indian Trusts Act, 1882, it uses the phrase ‘on behalf of’, statutorily allows a trust to be created by or on behalf of a minor subject to the law contained in Section 7(b) of the Act. In the Definitions included in the FATF 40 recommendations, the phrase ‘on behalf of’ is also used in the definition of trustee to denote a family member which reads as follows:

Trustee: The terms trust and trustee should be understood as described in and consistent with Article 2 of the Hague Convention on the law applicable to trusts and their recognition. Trustees may be professional (e.g. depending on the jurisdiction, a lawyer or trust company) if they are paid to act as a trustee in the course of their business, or a non-professional who is not in the business of being a trustee (e.g. a person acting on behalf of the family).

Normally, this activity of the Guardian would have triggered the definition of ‘reporting entity’ qua the 9th May, 2023 Notification by acting as a partner of a firm on behalf of the minor or through the other activities / transactions listed in the notifications e.g. buying and selling of immovable property and management of bank, savings of securities account. The same activities can also be carried out for family members as well as major children through an express Power of Attorney etc. Therefore, the transaction / activity needing to be in the course of profession / business in addition to being carried out on behalf of another person or (in the case of the 9th May, 2023 Notification) for another person is an important safeguard to one’s privacy.

CONCLUSION

This discussion, rather than trying to be the last word on the interpretation of the phrase ‘on behalf of’, seeks to be a ‘starting point’. The phrase ‘on behalf of’ is generic and is often used in a broad sense. Whether an activity or a transaction is conducted on behalf ofanother person or not would be greatly influenced by fact. The image would change as one peers through the kaleidoscope of facts. In law, the interpretation given to this phrase will undoubtedly affect both, the professionals as well as the general public with regard to the reporting and compliance requirements imposed by Chapter IV of the PMLA.

If one goes through the FATF recommendations which are available on the website, one would see that the scheme is putting the onus on Lawyers, Notaries, Independent Legal Professionals and Accountants to carry out KYC and report suspicious transactions as a part of the 40 recommendations. Therefore, putting the onus on professionals is not a decision that has been taken by the Government of India in an arbitrary manner or as a ‘vendetta’ but is a part of our international commitments to adhere to global practices. These obligations will be implemented in FATF member countries across the globe at some point in time, if not already implemented. The relationships that have been indicated for the purposes of reporting are mainly fiduciary in nature. Professionals can avoid being reporting entities by not rendering the services that have been listed in the Notifications. Most of these services are generally not a part of professional services rendered and are more ‘personal’ in nature and may be seen as being fiduciary relationships.

It is important to note that the penalty for not complying with Chapter IV of the PMLA is a monetary one under Section 13 and no prosecution is contemplated. The fine may be steep, as a separate fine may be levied (maximum of One lakh), but the fine shall be for each individual infraction and may add up quite quickly. However, a word of caution: Some of these activities may also be in violation of the professional code of ethics and may give rise to disciplinary proceedings against the professional concerned. It would perhaps be better for most professionals to avoid carrying out the activities that are contemplated by the 3rd and 9th May, 2023 Notifications in the course of carrying on their professions.

BCAJ Admin

FEMA FOCUS

(A) Standard Operating Procedure for processing FDI Proposals notified by Department of Industrial Policy and Promotion dated 9^th November, 2020.

(I) Application

The government has notified the Standard Operating Procedure (SOP) to be followed for obtaining approvals for foreign investment in sectors / activities requiring government approval. All applications for approval would need to be filed online through the Foreign Investment Facilitation Portal (FIFP) on www.fifp.gov.in in the specified format and containing documents mentioned in Annexure 1 to the SOP.

Further, once an application is received, the Department of Promotion of Industrial and Internal Trade (DPIIT) will identify the Administrative Ministry / Department (Competent Authority) concerned which will process the case. Detailed guidelines have been provided in respect of timelines to be followed for processing the applications with an outer limit of ten weeks or 12 weeks (for companies requiring security clearance from the Ministry of Home Affairs) from the date of filing of the application. Once the application is approved, an Approval letter as per Annexure 2 to the SOP will be issued to the applicant.

(II) Name of Competent Authority for approving the application

As per the SOP, the Competent Authority (CA) for approving / rejecting foreign investment for different sectors has been specified below:

S. No.	Activity / sector	Administrative Ministry / Department
(i)	Mining	Ministry of Mines
(ii)	Defence
	a) Items requiring Industrial Licence under the Industries (Development & Regulation) Act, 1951 and / or Arms Act, 1959 for which the powers have been delegated by the Ministry of Home Affairs to the DPIIT	Department of Defence Production, Ministry of Defence
	b) Manufacturing of small arms and ammunition covered under the Arms Act, 1959	Ministry of Home Affairs
(iii)	Broadcasting	Ministry of Information & Broadcasting
(iv)	Print Media and Digital Media	Ministry of Information & Broadcasting
(v)	Civil Aviation	Ministry of Civil Aviation
(vi)	Satellites	Department of Space
(vii)	Telecommunication	Department of Telecommunications
(viii)	Private Security Agencies	Ministry of Home Affairs
(ix) (a)	Applications arising out of Press Note 3 of 2020 dated 17^th April, 2020 read with Foreign Exchange Management (Non-Debt Instruments) Amendment Rules, 2020 dated 22^nd April, 2020 as under: (A) investments from an entity of a country which shares land border with India or where the beneficial owner of an investment into India is situated in or is a citizen of any such country; and / or (B) transfer of ownership of any existing or future FDI in an entity in India, directly or indirectly, resulting in the beneficial ownership falling within the restriction / purview of Para 3.1.1(a) of the FDI Policy (i.e., investment from country with which India shares land border)	The Administrative Ministry / Department concerned as identified by the DPIIT
(ix)(b)	Cases pertaining to Government approval route sectors / activities, requiring security clearance as per extant FEMA Regulations, FDI Policy and security guidelines, as amended from time to time	Nodal Administrative Ministries / Departments
(x)	Trading (single, multi-brand and food product retail trading)	Department for Promotion of Industry and Internal Trade
(xi)	FDI proposals by Non-Resident Indians (NRIs) / Export-Oriented Units (EOUs) requiring approval of the Government	Administrative Ministry / Department concerned as identified by the DPIIT
(xii)	Application relating to issue of equity shares under the FDI Policy under the Government route for import of capital goods / machinery / equipment (excluding second-hand machinery)
(xiii)	Applications relating to issue of equity shares for pre-operative / pre-incorporation expenses (including payments of rent, etc.)
(xiv)	Financial services which are not regulated by any Financial Sector Regulator or where only part of the financial services activity is or where there is doubt regarding the regulatory oversight	Department of Economic Affairs
(xv)	Applications for foreign investment into a core investment company or an Indian company engaged only in the activity of investing in the capital of other Indian company/ies	Department of Economic Affairs
(xvi)	Banking (public and private)	Department of Financial services
(xvii)	Pharmaceuticals	Department of Pharmaceuticals

Further, it has been clarified that the administrative Ministry / Department concerned as identified above by the DPIIT would continue to be the Competent Authority for post facto approval for foreign investment.

(III) Detailed flowchart for processing the application

The detailed process laid down in the SOP for processing the application is explained by way of the flow chart as under:

Following proposals will require security clearance from the MHA:

i) Investments in Broadcasting, Telecommunication, Satellites – establishment and operation, Private Security Agencies, Defence, Civil Aviation and Mining & Mineral, separation of titanium-bearing minerals and ores, its value addition and integrated activities;

ii) Applications arising out of Press Note 3 of 2020 dated 17^thApril, 2020 read with Foreign Exchange Management (Non-Debt Instruments) Amendment Rules, 2020 dated 22^ndApril, 2020 as under:

a) investments from an entity of a country which shares land border with India or where the beneficial owner of an investment in India is situated in or is a citizen of any such country. Further, a citizen of Pakistan or an entity incorporated in Pakistan can invest, only under the Government route, in sectors / activities other than defence, space, atomic energy and sectors / activities prohibited for foreign investment; and / or
b) transfer of ownership of any existing or future FDI in an entity in India, directly or indirectly, resulting in the beneficial ownership falling within the restriction / purview of paragraph 3.1.1(a) of the FDI Policy.

** In case application is not digitally signed, then applicant to submit physical copy to CA within seven days of receipt of email from DPIIT. If not submitted, then additional timeline of seven days can be given, failing which application will be treated as closed.

^ If no clarifications are received from the applicant, additional time of seven days should be given. Thereafter, if no additional details are provided, final reminder for submitting application in seven days to be given to the applicant, failing which application should be treated as closed.

(IV) Specific clarifications

Further, the SOP has also clarified the following points:

(a) Where FDI applications are incomplete – CA is not required to obtain concurrence from DPIIT for closure of the application. However, where applicant has submitted all details and CA proposes to reject the application, concurrence from DPIIT is required. The CA for closure of FDI application due to incomplete information / document would be the Secretary of the respective Ministry / Department;

(b) Where the FDI application seeks an amendment to an earlier approval granted by Government / FIPB and concurrence of DPIIT is sought for rejecting such an amendment and ask to file a fresh application – The applicant should not be asked to file a fresh application;

(c) NCLT has not yet approved the scheme of merger / demerger and concurrence of DPIIT is sought for rejecting the application – Approval of NCLT / competent authority as applicable under the Companies Act, 2013 is required before grant of FDI approval. Hence, where such approval is not received, the applicant should be advised to resubmit it upon receipt of requisite approval; and

(d) CA seeks DPIIT’s concurrence for conditions requiring compounding under FEMA / compliance of other laws / orders of courts – No concurrence from DPIIT required in such cases.

(V) Approving authority in DPIIT – The Secretary, DPIIT, is the competent authority for a decision on cases referred by other Ministry / CA seeking concurrence of the DPIIT.

(VI) Database – DPIIT and each CA to maintain a database on proposals received with details like name of investor, investee, date of receipt, company details, amount of foreign investment, date of grant of approval / rejection letter.

(VII) Surrender of approval – CA may accept withdrawal of approval letter from the applicant after receiving declaration clearly explaining reasons for withdrawal / surrender.

(VIII) Compounding of contraventions – Any contravention of FEMA would be subject to compounding as per Foreign Exchange (Compounding Proceedings) Rules, 2000 as amended from time to time.

Thus, the laying down of the detailed SOP in relation to obtaining approval under the Government route along with timelines for respective Ministries / Departments would definitely help in streamlining the process of approvals.

(B) Amendments to FDI Regulations governed by Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 by issuance of Notification dated 8^th December, 2020.

The Government had amended the above regulations in April, 2020 by placing restrictions on investments from countries with which India shares land border and taking such investments under the prior approval route. The Amendment has now clarified that investment made by a multilateral bank or fund of which India is a member shall not be treated as an entity of particular country and, hence, the beneficial ownership condition is not required to be examined in relation to investments from such multilateral bank or fund.

Further, FDI limit in the defence sector has been increased to 74% under the automatic route from the existing limit of 49%. Any FDI above 74% will be under the Government route. Additionally, certain additional conditions have also been specified for FDI in the defence sector both for existing as well as new companies.

(C) Amendments to Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) Regulations, 2019 by issuance of Notification dated 15^th June, 2020.

(I) Schedule II – Investment by Foreign Portfolio Investors (FPI) & Schedule VIII – Investment by person resident outside India in an Investment Vehicle

Schedule II of FEMA (Mode of Payment and Reporting of Non-Debt Instruments) Regulations, 2019 provided for the mode of payment and remittance of sale proceeds in case of investments by FPIs. There was a specific prohibition in Schedule II under which balances held in Special Non-Resident Rupee (SNRR) Accounts could not be utilised for investment in units of Investment Vehicles other than units of domestic mutual funds. The said prohibition has now been deleted by issuance of Notification dated 15^th June, 2020.

Accordingly, with effect from 15^th June, 2020, investment in REITS, InVits apart from domestic mutual funds can be made by FPIs from balances held in SNRR Accounts.

Similarly, amendments have been made in Schedule VIII which provides for the mode of payment in case of investment by a non-resident in an Indian Investment Vehicle. The Amendment now permits FPIs and FVCIs to invest out of their balance held in their SNRR Accounts for trading in units of an Indian Investment Vehicle listed or to be listed (primary issuance) on Indian stock exchanges.

(D) Amendment in Foreign Exchange Management (Export and Import of Currency) Regulations, 2015 – FEMA 6(R) / 2015.

The above Regulation has now been amended to provide that on a specific application, RBI may allow a person to export or import Indian currency notes subject to such terms and conditions as specified by RBI.

(E) Prohibition for opening any Branch office / Liaison office / Project office or any other business place by foreign law firms.

RBI had earlier issued AP DIR Circular No. 23 dated 29^th October, 2015 wherein it was instructed that no fresh permissions / renewal of permissions shall be granted by RBI / AD Bank to any foreign bank for opening their liaison office in India as the matter was pending for disposal with the Supreme Court.

RBI has now issued AP DIR Circular No. 7 dated 23^rd November, 2020 wherein it has directed that foreign lawyers / foreign law firms / companies or any other person resident outside India will not be permitted to establish any branch office / project office / liaison office / any other place of business in India for the purpose of practising legal profession.

(F) Delegation of compounding powers to Regional offices / sub-offices of RBI.

RBI has issued AP DIR Circular No. 06 dated 17^th November, 2020 clarifying that post the Notification of Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 and Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt Instruments) Regulations, 2019 in October, 2019 which superseded the earlier FDI Notification FEMA 20(R) / 2017-RB, compounding powers in relation to the following contraventions have been delegated to the Regional offices of the RBI.

FEM (Non–Debt Instruments) Rules, 2019 dated 17^th October, 2019
Relevant paragraph	Nature of contravention
Rule 2(k) read with Rule 5	Investment made by person resident outside India shall be subject to entry routes, sectoral caps or the investment limits
Rule 21	Price of equity instrument of an Indian company issued to person resident outside India or transferred from person resident in India to person resident outside India or vice versa shall be subject to pricing guidelines
Paragraph 3 (b) of Schedule I (Issue of shares without approval of RBI or Government, wherever required)	The total foreign investment shall not exceed the sectoral or statutory cap
Rule 4 (Receiving investment in India from non-resident or taking on record transfer of shares by investee company)	An Indian entity or an investment vehicle or a venture capital fund or a firm or an association of persons or a proprietary concern may receive investment in India from a person resident outside India or record such investment in its books subject to approval of RBI
Rule 9(4) and Rule 13(3)	Person resident in India may, by way of gift, transfer equity instrument or units of an Indian company to person resident outside India with the prior approval of RBI and subject to certain conditions; NRI or an OCI or an eligible investor under Schedule IV of these rules may, by way of gift, transfer equity instrument or units of an Indian company on a non-repatriation basis with the prior approval of RBI and subject to certain conditions

FEM (Mode of Payment and Reporting of Non-Debt Instruments) Regulations dated 17^th October, 2019
Relevant Paragraph	Nature of contravention
Regulation 3.1(I)(A)	Issuance of equity instrument to person resident outside India within 60 days from the date of receipt of the consideration
Regulation 4(1)	Filling of Form FC-GPR within 30 days from the date of issue of equity instrument
Regulation 4(2)	Filling of Form FLA on or before 15^th July of each year
Regulation 4(3)	Filling of Form FC-TRS within 60 days of transfer of equity instrument or receipt / remittance of funds, whichever is earlier
Regulation 4(6)	Filling of Form LLP(I) within 30 days from the date of receipt of the amount of consideration
Regulation 4(7)	Filling of Form LLP(II) within 60 days from the date of receipt of funds
Regulation 4(11)	Filling of Form DI within 30 days from the date of allotment of equity instrument

BCAJ Admin

Allied Laws

27. Dheeraj Singh vs. Greater Noida Industrial Development Authority & others AIR 2023 Supreme Court 3110

4th July, 2023

Cross Objection — Cross Objections have the same trapping as a Regular Appeal — Not considered by the High Court — Matter remanded to High Court for fresh adjudication. [O. 41, R. 22, Code of Civil Procedure, 1908; S. 14, 17, Land Acquisition Act, 1894].

FACTS

The State of Uttar Pradesh (Respondent) had acquired the land of the Appellants under the provisions of the Land Acquisition Act, 1894 and paid compensation for the same. The Ld. District Judge granted further compensation. Aggrieved by the same, the Respondent filed an appeal in the High Court of Allahabad (High Court). Subsequently, the appellants filed a cross objection in the High Court. The Hon’ble High Court confirmed the order of the Ld. District Judge. It was the contention of the Appellants before the Hon’ble Supreme Court that the Cross Objection filed by them (Appellants) was not considered by the Hon’ble High Court.

HELD

The Hon’ble Supreme Court observed that the Hon’ble High Court failed to consider the Cross Objections filed by the Appellants. The Court further held, relying on Order 41, Rule 22 of the Code for Civil Procedure, 1908, that Cross Objections have all the trappings of a regular appeal. Thus, the matter was remanded to the High Court for fresh adjudication.

28. Manoj Kumar Jain and another vs. UOI AIR 2023 (NOC) 580 (CAL)

9th June, 2023

Look out Circular — Economic Offence — Issuance of Look Out Circular by the bank for non-re-payment of loans — Apprehension that Petitioner would flee the country — Petitioner was not declared a fraudster or economic offender — Constant efforts of settlement of dues — Lookout circular for every borrower incorrect — Lookout Circular quashed. [Art. 226, Constitution of India, O. VI, Rule 17, The Code of Civil Procedure, 1908].

FACTS

The Petitioners were de-boarded from the plane by the Immigration Authority. The Petitioners were informed about the lookout circular issued against them and, thus, the petitioners filed a writ petition challenging the lookout circular. The Petitioner had failed to repay the loan obtained for the expansion of the business. The lookout circular issued by the lender bank was on the apprehension that the petitioner might flee the country and thereby frustrate the whole process of settlement of dues.

HELD

The Hon’ble Calcutta High Court held that lookout circulars have to be issued in only exceptional cases and cannot be issued at the slightest provocation. The Hon’ble High Court also observed that Petitioner made efforts in the process of settlement of loans by actually paying loans to the other banks in the consortium. Further, the lender bank also had securities of the Petitioner and further realised some of the outstanding by realising the property of the Petitioner. The Hon’ble Court also observed that Petitioner was allowed to travel by the CBI court and there was no complaint with respect to Petitioner not complying with conditions. The court held that Petitioner was not declared a fraud or economic offender and his travel to the UK was for his son’s education. Thus, the lookout circular was quashed.

29. V Narayanasamy vs. Vanchikodi AIR 2023 (NOC) 631 (MAD)
19th April, 2023

Condonation of Delay — Delay of 1,835 days — Negligence of earlier Counsel — Not a sufficient ground — Condonation denied. [S. 5, Limitation Act of 1963].

FACTS

The Petitioner / Plaintiff had filed a suit to declare the title of the property of the Petitioner and a relief of permanent injunction before the lower court. However, the complaint was returned by the Registry for rectifying certain defects and a time of one month was given to the petitioner. The Plaintiff, however, failed to comply with the time period of one month. The lower court dismissed the petition on the ground that no prima facie case was made by the plaintiff and there were no sufficient reasons to condone the delay of the plaintiff. The plaintiff, after a delay of 1,835 days, approached the Madras High Court for the same.

HELD

The Hon’ble Madras High Court held that merely stating that earlier counsel was negligent and did not inform the plaintiff regarding the proceedings of the suit, was not a sufficient reason to condone the delay of 1,835 days. Thus, the Hon’ble High Court upheld the order of the lower court. The Petition was dismissed with no costs.

30. Revanasiddappa & Anr vs. Mallikarjun & Ors Civil Appeal No. 2844 of 2022

1st September, 2023

Hindu Undivided Family — Children born of void or voidable marriage — Have a right in their parent’s share in the Hindu Undivided Family. (Hindu Marriage Act, 1955, S. 16, Hindu Succession Act, 1956, S. 2, S. 6).

FACTS

Section 16(1) of the Hindu Marriage Act, 1955 provides that even if a marriage is null and void, any child born out of such marriage who would have been legitimate if the marriage had been valid, shall be considered to be a legitimate child. However, Section 16(3) of the Hindu Marriage Act 1955 states such children are entitled to inherit only their parents’ property and will have no right over the other coparcenary shares. On this background, a question of law arose before the three-judge bench of the Hon’ble Supreme Court, whether children born out of void or voidable marriage will have a right in their parent’s share in the undivided family property, as Section 16 of the Hindu Marriage Act 1955 confers legitimacy to children who are born out of invalid marriages.

HELD

The provisions of the Hindu Succession Act, 1956 have to be harmonised with the mandate in Section 16(3) of the Hindu Marriage Act, 1955 which indicates that a child who is conferred with legitimacy will not be entitled to rights in or to the property of any person other than the parents. Therefore, the children born of such marriages will be entitled to a right to their parent’s share in the Hindu Undivided Family.

(Editor’s Note: Refer to Laws and Business where this decision and the subject have been discussed).

31. Bhagyanathan Nadar vs. Vishwanathan Nadar and others AIR 2023 (NOC) 568 (KER)

13th April, 2023

Settlement deed — Cancellation unilaterally — No legal effect — Not enforceable by law — A gift deed once executed cannot be revoked. (Specific Relief Act, 1963, S. 34; Transfer of Property Act, 1882, S. 5, S. 123).

FACTS

A settlement deed was executed by the owner of a property in favour of the Original plaintiffs. The deed of settlement did not provide for any power to revoke the settlement. A dispute arose between the parties and the settlement deed was cancelled. The donee / Original Plaintiffs, inter alia, challenged the cancellation deed before the lower court. The lower court, considering all the facts, held in favour of the Original plaintiffs.

On appeal, the first appellate court held in favour of the Original Plaintiffs and dismissed the appeal of the Original Defendants.

On the second appeal

HELD

The Hon’ble Kerala High Court held that the settlement deed was valid and binding. After the acceptance of the gift, if the donor wants to revoke the gift by resorting to Section 126 of the Transfer of Property Act, 1882, the donor will have to institute a suit for the same. A gift can be cancelled only if the gift is the one executed in contemplation of section 126 of the Transfer of Property Act, 1882 and not otherwise. There is no such agreement between the donor and donee to suspend or revoke the gift. It also provides that a gift which parties agree shall be revocable wholly or in part on the mere will of the donor, is void wholly or in part as the case may be. So a gift deed once executed cannot be revoked and even if such contingencies as contemplated under Section 126 of Transfer of Properties Act, 1882 are in existence in the deed, a suit has to be filed for cancellation.

Therefore the settlement deed is valid and the second appeal is dismissed.

BCAJ Admin

Corporate Law Corner : Part A | Company Law

14 Case law 01/November 2023

M/s. DEXTER BIOCHEM PRIVATE LIMITED

No. ROC-GJ /ADJ. ORDER/ DEXTER BIOCHEM/ Sec.140/ 2023-24/2632/33

Office of the Registrar of Companies, Gujarat, Dadra & Nagar Haveli

Adjudication order

Date of Order: 15th September, 2023

Adjudication Order against the Auditor of the Company for violation of section 140(2) of the Companies Act, 2013, read with Rule 8 of the Companies (Audit and Auditors) Rules, 2014, for Non-filing of Form ADT-3 with respect to Resignation from the Company.

FACTS

On perusal of documents available on the MCA21 Portal, M/s DBPL (the Company) had appointed M/s. DKN&A as Statutory Auditors of the company for the period from 1st May, 2015 to 31st March, 2020. Further, it was noticed that the company had also appointed M/s. P.U.N & Co. Chartered Accountants as Statutory Auditors of the Company for the period from 1st April, 2017 to 31st March, 2022.

Based on this, the Registrar of Companies, Gujarat, Dadra & Nagar Haveli (“RoC”) had issued a show cause notice to M/s. DBPL and M/s. DKN&A, Chartered Accountant Firm for default under section 140(2) of the Companies Act, 2013 asking clarification whether the company had removed M/s. DKN&A under Section 140(1) of the Companies Act, 2013 or whether M/s. DKN&A had resigned pursuant to Section 140(2) of the Companies Act, 2013.

M/s DBPL, in their letter dated 24th May, 2023 had replied that “they have forwarded the above-referred notice to M/s DKN&A and have requested to file Form ADT-3 for their resignation at the earliest to make the default good”. It was revealed from the reply of M/s. DBPL that M/s. DKN&A, Statutory Auditors had violated the provisions Section 140(2) of the Companies Act, 2013 due to non-filing of the notice of resignation in the prescribed e-form ADT-3, and were thereby liable for penalty under Section 140(3) of Companies Act, 2013.

Adjudication Notice vide No. ROC-GJ/ADJ-Sec. 454 read with Sec.140/Dexter Biochem/2023-24/1447 dated 21st June, 2023 was issued to Mr. KAS, Partner of M/s. DKN&A, as per Section 454 of the Companies Act, 2013 read with Rule 3 for violation of Section 140(2) of the Companies Act, 2013 regarding non-filing of Form ADT-3 and no reply was received from M/s. DKN&A on such notice.

Thereafter, for providing an opportunity of being heard a “written notice” was issued to the mailing address of M/s DKN&A on 4th September, 2023 to hold a physical hearing and to give an opportunity to be heard.

In the hearing, Mr. MD, Practising Company Secretary (“PCS”) being the authorised representative of M/s. DKN&A submitted that due to ill-health conditions, the auditor was not able to file Form ADT-3 for his resignation in a time-bound manner as per the provisions of the Companies Act, 2013. However, the Auditors had filed ADT-3 on 8th June, 2023 under the MCA portal with an additional fee of ₹7,200 with a delay of 1711 days in the filing.

He also submitted that the Auditors were engaged in a small company and the provisions of Section 446B be considered at the time of levying penalties.

Thereafter, the Presenting 0fficer submitted that the additional fees paid for delayed filing as prescribed under the Companies (The Registered offices and Fees) Rules, 2014 is, only a fees paid for filing of form as the cost of facility of delayed filing and thereby can neither be considered as fine nor penalty specified under the Companies Act, 2013. Therefore, payment of additional fees by the auditor does not absolve the default committed and hence M/s. DKN&A is liable to pay a prescribed penalty under Section 140(3) of the Companies Act, 2013.

Relevant provisions of the Companies Act, 2013 as applicable, are as under:

“As per Section 140(2); The auditor who has resigned from the company shall file within a period of thirty days from the date of resignation, a statement in the prescribed form with the company and the Registrar, and in case of companies referred to in sub-section (5) of section 139, the auditor shall also file such statement with the Comptroller and Auditor-General of India, indicating the reasons and other facts as may be relevant with regard to his resignation.

As per Section 140 (3); If the auditor does not comply with the provisions of sub-section (2), he or it shall be liable to a penalty of fifty thousand rupees or an amount equal to the remuneration of the auditor, whichever is less, and in case of continuing failure, with further penalty of five hundred rupees for each day after the first during which such failure continues, subject to a maximum of two lakh rupees.”

HELD

Accordingly, AO after considering the facts and circumstances of the case, imposed the following penalty on M/s. DKN&A:

Name of Auditor’s Firm

Penalty as per Section 140(2) of the Companies Act, 2013

Penalty
for continuing default

Final penalty imposed as per Section 140(2) of the Companies Act, 2013 read with Section 446B of the Companies Act, 2013 (R) ^#

M/s. DKN&A

R50,000 or an amount equal to the Remuneration of Auditors, which is less.

As per the financial statement, no remuneration was given to the Auditor for F.Ys. 2016–17 and 2017–18.

1711 days*250 = R4,27,750

₹ 1,00,000

Further, it was directed to pay the penalty within 90 days of the order.

# Final Penalty was imposed pursuant to the provision of section 446B of the Companies Act, 2013 as M/s. DBPL satisfied the criteria of being a Small Company where M/s. DKN&A were Auditors.

BCAJ Admin

Companies Act — Some Changes Upcoming Soon

The Securities and Exchange Board (SEBI) of India has always been, updating its regulations. It sets up Committees on specific areas to suggest changes, issues such reports, takes feedback, and then appropriately modifies the Regulations. Now, even the Ministry of Corporate Affairs (MCA) is initiating major changes to the Companies Act, 2013 (the Act). Major and frequent changes may be tough for practitioners and companies to keep up with, but at least some of their grievances are addressed and market evils are tackled. The MCA has often been seen to be sleepy in updating the laws, while SEBI has always taken a lead as far as listed companies are concerned. Part of the reason is that the SEBI Act contains just a few substantive provisions like powers to take action by SEBI including levy of penalties, procedure for appeals, etc. But largely it is a very brief enactment since most of the powers for laying down the details are delegated to SEBI. Hence, subject to the procedure for placing the amendments before Parliament, SEBI has been able to act swiftly in changing the law. On the other hand, the Companies Act, 2013, involves hundreds of provisions requiring hardwiring of many details including even the amounts. Many rules have been made to lay down details in several areas. However, there are several provisions in the Act which make substantive requirements. This requires amendments to be approved by Parliament which can be long and tortuous. But now, MCA seems to be becoming active. A good example is the fairly detailed report of the Company Law Committee released in March, 2022. It is also reported in the media to be implemented soon. Further, the term of the Committee is further extended and more aspects are to be covered. We can cover some of the amendments proposed as per the report released as also discuss some proposals said to be in the works as reported by the media with fair, though broad, details even if official confirmation is yet to be released on these. Undoubtedly, the proposals are at the initial stage and may be modified as the discussions progress. But that said, let us consider some important proposals with some angles I could think of.

ISSUE OF FRACTIONAL SHARES

Fractional shares often arise particularly out of corporate actions like mergers, bonus issues, etc. The law presently does not permit companies to make a fresh issue of fractional shares and, in any case, there is not a proper market for that. So companies typically opt for a workaround. All the fractional shares are accumulated and then a trustee sells them in the market and the proceeds are distributed proportionately to the respective shareholders.

However, there is a radical new proposal of permitting issue of fractional shares on an independent basis. The arguments given are primarily two. Some shares are so expensive that buying even one share may require spending more than ₹1,000 and, in one case, even more than ₹1 lakh. Thus, the Committee report says, the purchase of such shares is inaccessible to small investors. The proposal then is that the issue of fractional shares may be permitted, for listed and unlisted companies, with consultation with SEBI for the listed companies. The report cites that 1.42 crore new retail investors have entered into the market just in F.Y. 2021.

However, the Report lacks further details of the proposal on issuing fractional shares and hence several questions arise.

What will be the face value of such shares? Would multiple face-value shares be permitted? Say, if the original face value is ₹10, would fractional shares having face value of ₹1, ₹2, ₹5, etc. be permitted? Or even ₹0.50 or ₹0.10? Assuming there will be flexibility, will not there be a separate quoted price for each of such groups of shares? It would be perhaps naïve, considering history, to assume that the price quoted for a ₹1 share would be one-tenth of the price quoted in the market for the ₹10 face value shares, which may be the predominant category of the share capital.

We have seen (history now) the “odd lot” share market. Since there was a fixed minimum market lot, there was a problem with selling them. If the market lot size was, say, 50, one could not sell on the stock exchange their shareholding of, say, 27 shares. So a parallel market developed where agents would buy such shares at a discount, often heavy, and then accumulate them and sell almost all of them at the market lot. Of course, this issue has been largely resolved because the market now permits the sale/purchase of even 1 share. But the experience should teach us to be wary.

Another example is the issue of Differential Voting Right (DVRs) shares. The only difference between them and the ‘ordinary’ shares was that DVRs had fewer voting rights, depending on the terms of the issue. This concept has flopped miserably with some 3 odd companies only having issued them. The price of such DVRs is quoted at a discount, often as much as 50 per cent of the ‘ordinary’ shares.

So would this also happen to fractional shares? And would history repeat itself at the expense of small investors?

Curiously, the only example really given for this proposal is just one scrip, that is MRF, which is quoted at more than ₹1 lakh per share. But should the rule be made of such an exception?

Also, nothing prevents companies from issuing bonus shares, for example, to make shares available at a lower price.

Perhaps this proposal requires detailed reconsideration or at least clarity of the fine print of the proposals.

SOME OTHER IMPORTANT PROPOSALS

Space would not permit going into even major substantive proposals in detail of this lengthy report. So reference may be quickly made to some important of such proposals. One is for increasing communication through electronic mode.

Then there is a proposal to permit the issue of Restricted Stock Units and also Stock Appreciation Rights. These, though separate topics by themselves, require detailed consideration.

Then there is a move to eliminate the need to file affidavits. It is proposed to replace them with a simple self-declaration. The advantages are at least two. One is that it eliminates the need to buy stamp paper and get them notarised. The other is an approach of placing some element of trust in the concerned persons. Of course, the liability for violation/false declarations would remain the same.

A DIFFERENT REGIME FOR UNLISTED COMPANIES

While presently, we have a separate regime for listed companies regulated by SEBI, there are also some requirements in the Act for listed companies. Typically, the stricter of the two laws apply. But SEBI as an independent body has expertise and wide powers. A parallel regime seems to be the intention to be set up. This is what a detailed report in Business Standard of 25th September, 2023 states. The details of the proposal, which still can be stated to be general and also subject to official announcement, make for an interesting read. Notably, it is reported, that this would be a part of the Company Law Committee report in the upcoming second part.

Firstly, it would be applicable only to “large” companies. Nothing is stated specifically on what would constitute large companies. However, it is a fact that many unlisted companies are larger, at least in terms of valuation than some listed companies.

Here too, a few recent examples, one of which is specifically cited by name in the media report, is stated to be the motivation driving this proposal. The question again then is whether we are making a rule from an exception. Be as it may be, larger companies may require special focus. The other side is that smaller companies, which are in lakhs, may hopefully face a more relaxed regime.

It is stated that the new regime would not be a “light touch” one. Presumably, there will be detailed provisions. In particular, the punitive consequences of violations may be high. One will have to see how the proposal actually turns out to be. It would be of concern if the provisions are as harsh as, say, Section 447 of the Act which provides for very strict punishment under a very widely worded definition of “fraud”. This Section itself requires a close relook. But that does not seem to be the agenda. One hopes that since the intent of the Committee is to make India an easier place to conduct business. While consequences of serious violations ought to be harsh, a too widely drafted definition of what is such a serious violation may end up being intimidating or discouraging companies.

A welcome proposal is about auditors who resign. They would be asked to specifically state whether their resignation is due to fraud or similar serious wrongs observed in the company. The present Act already has certain provisions. But such a specific declaration would be helpful since later, if wrongs are soon found, they also can be confronted. On the other hand, the question would be whether an auditor would be required to ascertain whether there was fraud? The present requirement gives some leeway of judgment to the auditor. But generally, the powers of auditors as well as their legal expertise may not be wide enough for them to collect conclusive evidence and decide whether or not there was fraud. They may then face the Shakespearean dilemma of declaring there was fraud or there is not. Particularly, if they declare there is fraud, they could be subject to a lawsuit from the company/officials. They may end up taking a legal opinion that the information with them may be insufficient to declare that there is a confirmed fraud. And that would defeat the provisions. But in any event, this seems to be in the right direction. Indeed, such a requirement should also be made for independent directors and Key Managerial Personnel.

Finally, the question would be on who would administer this new regime. Presently, we have an independent body like SEBI that is not only well-empowered under the law, but has specialized knowledge of the field. If the new regime would still be under MCA, one wonders how effectively it would be implemented. Perhaps, an independent body for such unlisted companies, with wide powers, could be created.

Interestingly, we already have the Serious Frauds Investigation Office (SFIO) created under the Act itself which has wide powers to collect information, summon persons and investigate and give reports to various regulators under different laws. What more or better would the new regime and its administering body do, would have to be seen.

CONCLUSION

Several other amendments, largely technical or those relating to procedural aspects, are also proposed. For example, enabling more and more use of electronic technology, removing minor ambiguities, etc. These may be particularly important for those involved in day-to-day compliance like the Company Secretaries. Generally, they all seem to be in the right direction.

At the end, while the amendments proposed are several, they do not tackle the larger issue of keeping the principal provisions in the Act itself and do not move towards setting up a specialized independent body for unlisted companies to which extensive powers are delegated. Hopefully, as the media report says, the Committee report, the second part, would be released soon followed by a draft Bill which will give more details and the fine print.

BCAJ Admin

Genuineness of A Will: Supreme Court Lays Down Guidelines

INTRODUCTION

A probate means a copy of the Will certified by the seal of a Court. A probate of a Will establishes the genuineness and finality of a Will and validates all the acts of the executors. It conclusively proves the validity of the Will, and after a probate has been granted no claim can be raised about the genuineness or otherwise of the Will.

The most important question in relation to any Will, irrespective of whether a probate is required, is whether the Will is genuine. If a Will is forged / fraudulent, then it does not transmit the estate of the deceased to the beneficiaries named in the Will. The issue of determining the authenticity of a Will has been one which has been a perennial source of litigation. Several judgments of the Supreme Court have shed light on this issue. The Supreme Court’s decision in the case of Meena Pradhan vs. Kamla Pradhan, CA No. 3351/2014 Order dated 21st September, 2023, has laid down the principles which the Courts should consider in this respect.

TESTS LAID DOWN BY THE SC

In the above-mentioned decision on Meena Pradhan vs. Kamla Pradhan, the Supreme Court laid down 9 important tests to determine the validity of a Will. It held that broadly it has to be proved that (a) the testator signed the Will out of his own free will, (b) at the time of execution he had a sound state of mind, (c) he was aware of the contents thereof and (d) the Will was not executed under any suspicious circumstances. The Navratna Tests of the Apex Court are explained below:

TEST-1: EXECUTED BY TESTATOR

The court has to consider two aspects: firstly, that the Will is executed by the testator, and secondly, that it was the last Will executed by him. The Court held that it is not required to be proved with mathematical accuracy, but the test of satisfaction of the prudent mind has to be applied. A Testator is the person who makes the Will. He is the person whose property is to be disposed of after his death in accordance with the directions specified under the Will. The Indian Succession Act, 1925, governs the making of Wills and lays down who can be an Executor of a Will. The following persons can make a Will:

(a) Any major person who is of sound mind;

(b) An ordinarily insane person can make a Will when he is sane / of sound mind;

(c) A person who is intoxicated or who does not understand what he is doing cannot make a Will in that state, e.g., a Will made by a person who is heavily drunk and not in his senses is not a valid Will;

(d) Deaf / dumb / blind people can make a Will provided they know what they are doing, e.g., a Will made by a blind person in Braille script. An illiterate person can also make a Will but he should be aware of the contents and should affix his / her thumb impression as a mark of acceptance;

(e) A married woman can bequeath any property which she could dispose of during her lifetime.

TEST-2: SIGNING OF THE WILL

The testator must sign / affix his mark to the Will or it shall be signed by some other person in his presence and by his direction and the said signature or affixation shall show that it was intended to give effect to the writing as a Will. The Indian Succession Act, 1925, requires that a testator shall so sign a Will that it appears that he intended to execute it. Thus, it need not necessarily be at the end of the Will, it can also be at the beginning of the Will. The key is that it should appear that he intended to give effect to the Will. There is no requirement that each and every page must be signed or initiated – Ammu Balachandran vs. Mrs O.T. Joseph (Died) AIR 1996 Mad 442 which was followed again in Janaki Devi vs. R Vasanthi (2005) 1 MLJ 357. Nevertheless, it goes without saying that for personal safety, the testator must sign each and every page so that there is no risk of pages being replaced.

TEST-3: ATTESTATION

One of the tests laid down was that it was mandatory to get the Will attested by two or more witnesses, though no particular form of attestation was necessary. Each of the attesting witnesses was required to have seen the testator sign or affix his mark to the Will or has seen some other person sign the Will, in the presence of and by the direction of the testator or has received from the testator a personal acknowledgement of such signatures. Each of the attesting witnesses shall sign the Will in the presence of the testator.

It is trite that the witnesses need not know the contents of the Will. All that they need to see is the testator and each other signing the Will — nothing more and nothing less!

The Indian Succession Act states that any bequest (gift) to a witness of the Will is void. However, the Will is not deemed to be insufficiently attested for this reason alone. Thus, he who certifies the signing of the Will should not be getting a bequest from the testator. However, there is a twist to this section. This section does not apply to a Will made by a Hindu, Sikh, Jain or Buddhist and hence, bequests made under such Wills to attesting witnesses would be valid! Wills by Muslims are governed by Sharia Law. Thus, the prohibition on gifts to witnesses applies only to Wills made by Christians, Parsis, Jews, etc. However, there is no bar for a person to be both an executor of a Will and a witness of the very same Will. In fact, the Indian Succession Act, 1925, expressly provides for the same.

TEST-4: EVIDENCE OF WITNESSES

The Court held that for the purpose of proving the execution of the Will, at least one of the attesting witnesses, who was alive and capable of giving evidence, should be examined. The attesting witness should speak not only about the testator’s signatures but also that each of the witnesses had signed the Will in the presence of the testator.

Section 68 of the Indian Evidence Act, 1872 (‘the Evidence Act’) explains how a document that is required to be attested must be proved to be executed. In the case of a Will, if the attesting witness is alive and capable of giving evidence, then, the Will can be proved only if one of the attesting witnesses is called for proving its execution. Thus, in case of a Will, the witness must be examined in the Court and he must confirm that he indeed attested the execution of that Will.

TEST-5: EVIDENCE OF ONE WITNESS IS SUFFICIENT

The Court declared that if one of the attesting witnesses can prove the execution of the Will, the examination of other attesting witnesses can be dispensed with. Where one attesting witness examined to prove the Will fails to prove its due execution, then the other available attesting witness has to be called to supplement his evidence.

Section 69 of the Evidence Act provides that if no attesting witness can be found, it must be proved that the attestation by at least one of the witnesses is in his own handwriting and that the signature of the person executing the document is in the handwriting of that person. Thus, evidence needs to be produced which can confirm the signature of at least one of the attesting witnesses to the Will as well as that of the Testator of the Will.

The Supreme Court in V. Kalyanaswamy(D) by LRs. vs. L Bakthavatsalam(D) by LRs., Civil Appeal Nos. 1021-1026 / 2013, Order dated 17th July, 2020, has explained that attesting witness not being found refers to a variety of situations – it would cover a case of incapacity on account of any physical illness; a case where the attesting witnesses are dead; the attesting witness could be mentally incapable / insane. Thus, the word “found” is capable of comprehending a situation as one where the attesting witness, though physically available, is incapable of performing the task of proving the attestation and therefore, it becomes a situation where he is not found.

TEST-6: SUSPICION SURROUNDING THE WILL

The Apex Court laid down that whenever there existed any suspicion as to the execution of the Will, it was the responsibility of the propounder to remove all legitimate suspicions before it could be accepted as the testator’s last Will. In such cases, the initial onus on the propounder became heavier.

On being satisfied that a Will is indeed genuine, the Court would grant a probate under its seal. The Supreme Court has held in the cases of Lalitaben Jayantilal Popat vs. Pragnaben J Kataria (2008) 15 SCC 365 and Syed Askari Hadi Ali vs. State (2009) 5 SCC 528, that while granting probate, the Court must not only consider the genuineness of the Will but also the explanation given by the parties to all suspicious circumstances surrounding thereto along with proof in support of the same. The onus of proving the Will is on the propounder (person claiming that the Will is genuine). The propounder has to prove the legality of the execution and genuineness of the said Will by proving the absence of suspicious circumstances and surrounding the said Will and also by proving the testamentary capacity and the signature of the testator. When there are suspicious circumstances, the onus is also on the propounder to explain them to the court’s satisfaction and only when such onus is discharged would the court accept the Will – K. Laxmanan vs. T Padmini (2009) 1 SCC 354. In that case, the testator and one of the attesting witnesses to the Will died before the date of examination of the witnesses. The second attesting witness was also not in good physical condition, in as much as neither was he able to speak nor was he able to move. Consequently, as the execution of the Will could not be proved by leading primary evidence, the Court held that the propounder was required to lead secondary evidence in order to discharge his onus of proving the Will. This view has also been held in Daulat Ram vs. Sodha, (2005) 1 SCC 40.

TEST-7: OVERALL FACTORS TO BE CONSIDERED

The Court held that the test of judicial conscience has evolved for dealing with those cases where the execution of the Will is surrounded by suspicious circumstances. It requires to consider factors such as awareness of the testator as to the content as well as the consequences, nature and effect of the dispositions in the Will; sound, certain and disposing state of mind and memory of the testator at the time of execution; testator executed the Will while acting on his own free will.

The mental capacity of the Testator is possibly the most relevant factor in determining the validity of a Will. For instance, in the case of a person suffering from Alzheimer’s disease / or if he is a schizophrenic, the mental capacity of such a person would be highly debatable.

In this respect, the verdict of the Court in Shivakumar vs. Sharanabasappa, (2021) 11 SCC 277 is very relevant. Here it held that unlike other documents, a Will speaks from the grave of the Testator, and so, when it was propounded, the Testator had already died and could not say whether or not it was his Will. It was this aspect which introduced an element of solemnity in the decision of the question as to whether the document propounded was indeed his last Will. Ordinarily when the evidence adduced in support of the Will was satisfactory and sufficient to prove the sound and disposing state of the Testator’s mind and his signature as required by law, Courts would be justified in making a finding in favor of the propounder. However, it also held that a Will is not approached with doubts but is examined cautiously and with circumspection.

TEST-8: ONUS ON THE PERSON WHO ALLEGES

One who alleges fraud, fabrication, undue influence et cetera has to prove the same. However, even in the absence of such allegations, if there are circumstances giving rise to doubt, then it becomes the duty of the propounder to dispel such suspicious circumstances by giving a cogent and convincing explanation. In the case of Shivakumar (supra), the Court observed that there were three unnatural and unusual features of the Will — different sheets of paper were used; placement of the signatures of the Testator was beyond normal distance from the last typed matter; and in making of three signatures, at least two different pens were used. These, the Court held, made it clear that a deeper probe into the genuineness of the Will was called for to find out whether the document could at all be accepted as the last Will of the Testator.

TEST-9: SUSPICIONS SHOULD BE REAL

The Court explained an important principle — “suspicious circumstances surrounding the Will must be ‘real, germane and valid’ and not merely the fantasy of the doubting mind”. Whether a particular feature qualified as ‘suspicious’ would depend on the facts and circumstances of each case. Any circumstance raising legitimate suspicions would qualify as a suspicious circumstance for example, a shaky signature, a feeble mind, an unfair and unjust disposition of property, the propounder himself taking a leading part in the making of the Will under which he receives a substantial benefit, etc.

For instance, in Pratap Singh vs. State, 157 (2009) DLT 731, the Delhi High Court held that the fact that a person was suffering from a very painful form of terminal cancer of the mouth which prevented him from speaking, and that he succumbed to it within 2 weeks of executing a Will, showed that he may not have prepared the Will. Hence, in cases of terminal illness, it becomes very important to prove how the testator could have prepared the Will. The role of the witnesses in such cases also becomes very important. In Maki Sorabji Commissariat vs. HomiSorabji Commissariat, TS No. 60/2011 Order dated 30th April, 2014, the Bombay High Court was faced withthe issue as to whether the Testator who was suffering from Parkinson’s disease could make a Will. It concluded that merely because he suffered from Parkinson’s disease, it would not indicate or prove that it had affected his sound and disposing mind or capacity to execute a Will. Unless the disease was of such a nature that it would affect the sound and disposing mind of the testator, such disease cannot be a ground to refuse a Probate.

Again, the Court’s verdict in Shivakumar (supra) is quite interesting in this respect. It concluded that while a fishing enquiry of digging out faults and lacuna was not to be resorted to while examining a Will but at the same time, the real and valid suspicions which arose (any abnormal happening or conduct) could not be ignored either. Ignoring or brushing aside all the features noticed in relation to the Will would require taking up an individual feature and ignoring it as being trivial or minor and then proceeding with the belief that it had only been a matter of chance that all the abnormalities somehow chose to conglomerate into the Will. The Apex Court held that such an approach could not be adopted. It emphasized that the examination of a Will had to be on the norms of reality as also normalcy, and the overall effect of all the features and circumstances was required to be examined.

CONCLUSION

Covering all situations and scenarios for examining the genuineness of a Will would require an exhaustive treatise. However, this decision of the Apex Court has done a very good job of collating all the important principles at one place and giving guidance to Courts as to what they should consider when a Will comes up before them! Persons executing Wills should be aware of these nitty-gritties so that their Wills have fail-safe features.

BCAJ Admin

Allied Laws

32 A.S. Rawat vs. Dawa Tashi

AIR 2023 Delhi 252

Date of Order: 13th March, 2023

RTI — Filed by non-citizen — Public Information Officer denied on account of non-citizenship — RTI available to citizens as well as non-citizens. [Ss. 3, 6, 7(1), Right to Information Act, 2005; Article 21, Constitution of India].

FACTS

The Respondent / Right to Information (RTI) Applicant had requested information concerning various aspects such as his employment confirmation letter, children’s education allowance, and all India LTC benefits. In response, the Public Information Officer (PIO) / Petitioner stated that the RTI applicant did not have the right to use the provisions of the RTI Act, 2005, since he was a Tibetan and not a citizen of India. The appeal against this decision was denied. However, in a subsequent appeal to the Central Information Commission (CIC), the CIC ruled that the PIO ought to have provided the requested information to the Applicant. The CIC also found that the PIO’s actions were driven by ill intent and baseless suspicions about the applicant’s citizenship. As a result, the Commission imposed a penalty of ₹25,000 on the PIO.

The PIO filed a Writ Petition before the High Court against the order of the CIC.

HELD

The Hon’ble Delhi High Court held that the RTI is accessible to both Indian citizens as well as non-citizens, and refusing this right to non-citizens would be in conflict with both the Constitution of India and the RTI Act. Thus, the Hon’ble court directed the PIO to comply with the PIL filed by the Respondent. However, the Court quashed the penalty of R25,000 imposed on the PIO, stating that the actions of the PIO were not mala fide or ill-intended.

33 Sree Rengaraaj Steel and Alloys Limited vs. MSTC Limited

AIR 2023 Madras 278

Date of Order: 25th January, 2023

Limitation — Self-serving and unilateral payment made by the creditor — Cannot be constituted as an acknowledgement of debt or cannot extend the time period of calculating limitation period. [S. 3, 19, The Limitation Act, 1963].

FACTS

The Respondent/ Plaintiff filed a suit for recovery of a sum of money from the Appellant. The Appellant and the Respondent had a contract whereby, the Appellant was liable to pay money in exchange for goods along with interest if the Appellant failed to pay within a grace period of 175 days. The Appellant failed to pay within the grace period of 175 days. The Appellant contested that the suit filed by the Plaintiff was after the expiry of the period of limitation, and thus, the suit was liable to be dismissed. The Trial Court, in its finding, held that the last transaction (which took place on 6th July, 1996) was made by the creditor as payment for adjustment of the demurrage deposit and thus, held that the suit was filed within the limitation period.

On Appeal.

HELD

The Hon’ble Madras High Court held that self-serving adjustment of account by the creditor, in the ledger maintained by the Plaintiff cannot be considered as an acknowledgement of debt (as contemplated by section 19 of the Limitation Act, 1963) when it is admitted that no payment as such was received towards the debt or liability as per the ledger account. Thus, the suit filed by the Plaintiff was barred by limitation. The order of the Trial Court was set aside and the original suit was dismissed.

34 Debkanta Chakrabarti vs. State of West Bengal and others

AIR 2023 Calcutta 287

Date of Order: 28th June, 2023

Succession — Membership of Co-operative society — Heritable — Not automatic in the absence of a nominee — Legal heir required to produce probate, letter of administration or succession certificate. [Ss. 70, 92, West Bengal Co-operative Societies Act, 2006].

FACTS

The father of the Appellant was inducted as a shareholder / member of a cooperative society on 16th June, 1975. A deed of lease was executed between them on 20th September, 1990, to grant the leasehold right of the piece of land to the said member. His name was mutated in the government record of rights. He had since been possessing the land, by constructing a residential house and staying therein. The said person died on 18th July, 1997. The Appellant’s claim is that he and his mother, being the son and wife of the deceased person, are the only legal heirs and successors of the deceased. Therefore, the mother of the Appellant made an application to the Society, on 5th November, 1997, for the transfer of the share of her deceased husband in the Society, in the names of herself and the Appellant, so that they may be inducted as members in the Society, in place of the deceased member. However, the Appellant’s mother died on 10th January, 2018. It is the further case of the Appellant that since the death of his father, he has duly remitted all the expenses and charges payable to the Society, in a manner similar to an existing member. Appellant by his letters requested the Society to record his name as a member of the Society, by virtue of his being the only legal heir of the erstwhile member, since deceased. His letters not being acted upon by Society, the Appellant resorted to lodging his grievance to the registrar and assistant registrar of the co-operative societies. In response, the Society replied that the interest of the deceased member, i.e., the father of the present Appellant, shall be disposed of in accordance with the provisions laid down in Section 70 of the West Bengal Co-operative Societies Act, 2006 (Act) and the rules framed thereunder.

Aggrieved by this, the Appellant filed a Writ Petition before the Single bench of the Calcutta High Court, which was dismissed. Appeal was filed before the division bench.

HELD

According to Section 92 of the Act, even a nominee has to follow the procedure mentioned in the Act to be inducted as a member of a housing cooperative society. Shares of a cooperative society are heritable and transferable immovable property, and the Appellant does have a right to inherit the same. However, the Appellant is not named as a nominee by his father, and hence, the automatic transfer of interest does not arise. The Appellant should have produced either probate or letters of administration or succession certificate from a competent court of law, as per Section 70 of the said Act.

The appeal was dismissed.

35 Guruprasad Tah vs. Ashoke Kumar Tah and others

AIR 2023 Calcutta 267

Date of Order: 26th April, 2023

Succession — Will — Genuineness of Will in doubt — First Will was revoked — Second Will in favour of executor — Testator was not well at the time of Second Will — Signatures not proper — Witnesses were persons of the executor — Will was not a product of a free and fair mind.

FACTS

Ashok Kumar Tah (Respondent) filed an application for a grant of probate of a Will dated 4th July, 1983, executed by his father Gourpada Tah in respect of his property. Ashok was named as the executor in the Will. Gourpada, during his lifetime, executed two Wills. The first Will was executed on 3rd June, 1964. The said Will was revoked by the later Will dated 4th July, 1983. Ashok is claiming property under the Will dated 4th July, 1983.

The Trial Court allowed the application for a grant of probate. The trial Court was satisfied with the due execution and attestation of the Will by two attesting witnesses.

On an appeal by Guruprasad Tah (Appellant), the eldest son of the deceased.

HELD

There are several reasons to doubt the genuineness of the Will as it is made in suspicious circumstances. The Will is a second Will which revokes the First Will. At the time of the execution of the Second Will, the testator was physically ill and mentally frail. It was incumbent upon the executor and the attesting witnesses to establish the mental ability and physical fitness of the executor to execute the Will. There is no evidence that, at the registration, the testator was in a position to travel to the office for registration. Further, there is no evidence that the Will was registered at the residence of the testator. One of the attesting witnesses stated that he had not seen the other attesting witness at the registry office. The signature of the testator appears to be shaky and at the right-hand corner of the Will instead of the bottom of each page. Also, there is no endorsement in the Will that the sub registrar had explained the contents of the Will to the testator. It appears that the executor had a prominent role in the execution of the Will, and all the witnesses also appear to be the persons of the executor. Hence, it cannot be said that the Will was a product of the free and fair mind of the testator.

The appeal is allowed, and the probate proceedings fail.

BCAJ Admin

Vikram Aur Vetal

Cancerous Corruption

Vikram was fond of moving around in the graveyard in the
horrifying night to catch Vetal after day-long practice as chartered accountant.
For Vikram, friendship with Vetal was real education. Vetal being a spirit of
intelligent human frustrated in his lifetime, was still on the earth
posthumously to find answers to innumerable questions lingering in his mind
during his stint as human being. He developed friendship with Vikram. After
playing hide and seek game, Vikram used to catch Vetal in the wee hours of
morning. Then he would put Vetal on his shoulder and tread through the woods of
graveyard. Vetal would laugh weirdly in the silence of the graveyard and
thunder :

“So Vikrambhai, you succeeded to catch me once again, keep
walking, don’t look back, if you speak a word I will vanish. Well, I would tell
you a story of a spiritual guru like Bhagwan Rajneesh, Yogi Mahesh or Satya
Saibaba, well, you are clever enough to get the lead . . . . so our spiritual
guru Baba Ramjay was a very revered person. It was believed, after spending many
years in seclusion somewhere in the high altitudes of Himalaya, Baba established
connection with the almighty. He taught his confused disciples how to live life
in peace and tranquility, how to detach the mind from the mundane world and seek
solace beyond the present life. It was not surprising that he had disciples all
over the world, rich and wealthy. In search of peace of mind they were
squandering their wealth for Baba Ramjay. It seemed that Baba Ramjay’s
philosophy of life was “high living and high thinking”. Over a period he amassed
huge wealth in cash and kind through his charitable trusts or otherwise.
Obviously he was being spied on by the Income-tax Department. I mean he was on
the radar of the Department. A raid was conducted on Baba’s Ashram. On that day
his disciples were celebrating the most auspicious day, Baba’s birthday. It was
believed that he was incarnation of great Buddha. Baba chanted “Om Shanti Shanti
Shanti”. One of the disciples in the close circuit of the Baba announced :

“Ladies and gentlemen, for your kind attention those who wish
to express their gratitude towards our revered Baba Ramjay, we have kept
offertory box”

There was a sudden rush towards the offeratory box. What a
phenomenal impact Baba Ramjay had on the minds of his disciples. They were ready
to sacrifice, though not everything, but something which the government cannot
do through full-fledged tax laws. I think the Finance Minister should learn a
lesson from him how to mobilise funds. Jokes apart, Vikrambhai, Baba was about
to leave the “Dhyan Mandir” (meditation centre). A tall and middle-aged person
full of bureaucratic arrogance barged into the Dhyan Mandir along with his
assistants. Without losing much time he disclosed that he and his assistants
were from the Income-tax Department. He ordered all present not to leave the
place till his further order and asked to hand over cellphones to one of his
assistants. Baba Ramjay sank back in the sandal wood throne. When Baba was
trying to use his cellphone, the alert officer recovered the cell-phone from
Baba. Inwardly Baba was very furious at the audacity of the officer. But Baba
kept chanting “Om Shanti Shanti”. What else he could do ? nothing. The alert
officer was the chief of the raid team. He proceeded further. He showed the
search warrant to Baba Ramjay. Baba pretended to be still in trance of
meditation and said, “My child, I see great future for you, I can read from your
face, believe me, our tryst is pre-planned by the destiny . . . . . Om Shanti
Shanti.”

For a few moments the chief forgot his duty and bowed before
Baba to touch Baba’s feet. But after finishing the ritual the chief regained his
sense of duty as Income-tax Officer the moment he smelled sandalwood aroma of
Baba’s throne studded with precious stones and said mischievously, “Baba I will
meet you at some other time to check how great future I have. Right now I have
to record your statement about your great fortune, I mean your wealth, your
income in the present”

Baba realised that the chief was a hard nut. He was a bit
irritated.

Most of the questions Baba ducked by saying “My team of
Chartered Accountants would explain it, right now I am not aware of it”. It took
two hours to complete the recording of the statement. By that time Baba was a
fully grounded person. Baba realised “reality — not spirituality” would work in
this situation. Baba asked his assistant to arrange refreshments for the search
party. Baba and the chief moved from meditation centre to Baba’s closet.

“Look officer, I have a large number of disciples all over
the world. I have connections with political bigwigs, film stars,
industrialists, leading stockbrokers, etc. They adore me in their drawing rooms.
I don’t wish to waste my time in litigations. Let us now negotiate something
reasonable for you and other members of the search party”. Baba as an ordinary
human being exposed his mind to the officer.

The chief was very shrewd. He did not respond to Baba’s offer
instantly. He was thoughtful for a long time. His silence was killing Baba’s
patience. Eventually the chief broke his silence.

“Look Baba, I have strict instructions from the top, no let
up in the investigations. I am helpless.” said the chief. It was more a threat
than honest disclosure.

Thus the raid proceeded. At the end of the raid the chief and
Baba again went to Baba’s closet.

The chief put all the documents, notings and jottings
incriminating Baba and a couple of his close disciples, which the chief had
secreted from others during the course of search, on the table.

“Om shanti shanti” Baba chanted, staring nervously at the
chief.

“Gurudev, look at all these documents and papers, very damaging, they show your clandestine investments abroad, money laundering, violation of FEMA.”

” know, I know but you would agree that I have not earned any money from doing any “illegal business”, I mean black-marketing, smuggling, gambling or the like, all this money comes from my disciples teaching spirituality, guiding them how to live in peace and tranquility, giving them lessons of Yoga. Most of the donations are being accepted in the name of different trusts. All that money is being spent on philanthropic objects.” Baba made a futile attempt to earn sympathy.

“Gurudev, I am not concerned with your philan-thropic deeds, I know your trusts are doing great service to the society at large. But I can’t ignore all these papers and documents which implicate you individually. You are caught with your pants down.” For a while there was pin-drop silence in the room. Baba was flipping through the documents and papers.

“Why don’t you hand over those papers and documents having my reference as if you did not detect them at all ?” asked Baba staring at the chief.

“Ok, but not without price! What about other papers having names of your confidents, I mean second in command of the your Ashram ?” responded the chief.

“It’s for you to decide. Who am I to direct you?” the chief got pampered by Baba’s unexpected respect.

“Well, all right, I understand, so the deal is struck” said the chief.

Baba scribbled a figure on the paper and said, “Is this enough for you ?”

“It’s all right, but what about others?” queried the chief.

“Oh I just forgot them, how many are they?” asked Baba.

“Seven” said the chief making headcount on his fingers.

Again Baba scribbled a figure per member of the raid team on the paper and stared at the chief for his approval.

The chief hesitated, he asked for more.

“Okay, I increase the amount as you desire. Can you give me guarantee you will not pocket the amount meant for them ?” asked Baba.

“I would call them right now if you suspect my honesty towards my colleagues” retorted the chief.

“Om Shanti Shanti Shanti, I am sorry, I am sorry” said Baba with a smile on his face.

Baba got a “clean” chit. His team of chartered accountants managed to convince the assessing officer that in Baba’s case everything was on “board”, nothing hidden or concealed. However Baba’s three disciples were implicated to the hilt for concealment of income and violations of different provisions of the Income-tax Act, FEMA, Customs, etc.

So Vikrambhai, my questions to you:

First how do you differentiate between Baba Ramjay and the chief ?

Second, what works in any given situation ?

Third, both Baba Ramjay and the chief are dishonest persons. Who would you prefer as a friend ?

If you remain silent knowing the answers to my questions, I will chop your head with your sword.” Vetal roared.

Vikarm began to answer,

“Both Baba Ramjay and the chief are social evils. But Baba is more dangerous than the chief. Forget his philanthropic deeds. The chief is an ordinary corrupt bureaucrat. Whereas Baba is an extraordinary corrupt member of the society, he pretends to be ‘spiritual’ for the society at large on the one hand and amasses huge wealth in the name of spirituality on the other hand. I think an avid spiritual person tends to abandon the mundane world in his pursuit to practise the principles of spirituality. Well, the chief has greed for money, whereas Baba has greed for money and ‘image’ both. Greed for image is more powerful than the greed for money.

Answer to your second question, in any given situation it’s not spirituality, ethics traditions or culture, but ‘survival instinct’ of an individual works. This survival instinct varies from individual to individual.

And lastly, I would prefer the chief as my friend instead of Baba Ramjay, Baba Ramjay is more selfish than the chief. He betrays his close confidents. On the contrary, the chief looks after the interest of his colleagues.”

“Vikrambhai, you broke the silence, I am vanishing” again VetaI’s laugh was echoing in the graveyard.

BCAJ Admin

Vikram Aur Vetal

Cancerous Corruption

Vikram was fond of moving around in the graveyard in the
horrifying night to catch Vetal after daylong practice as chartered accountant.
For Vikram friendship with Vetal was real education. Vetal being the spirit of
an intelligent human being frustrated in its lifetime was still on the earth
posthumously to find answers to innumerable questions lingering in his mind
during his stint as human being. He developed friendship with Vikram. After
playing hide and seek game Vikram used to catch Vetal in the wee hours of
morning. Then he would put Vetal on his shoulder and tread through woods of the
graveyard. Vetal would laugh weirdly in the silence of the graveyard and
thunder :

“So Vikrambhai you succeeded to catch me once again, keep
walking don’t look back, if you speak a word I will vanish. Well I would tell
you a story involving your professional colleague which happened in a metro. To
keep the flow of the story I would name my characters one by one as the story
moves on. Your professional colleague, let’s say Gopal, was a fresh chartered
accountant. He started his practice as soon as he passed his final exam. He had
no ‘Godfather’ in the profession and was on his own. He was very enthusiastic
and honest. He was well-versed with the code of conduct of the ICAI. He was
approached by an old man called Purshottam aged about 60 years.

Purshottam retired as chief engineer from a manufacturing
company. Purshottam had four daughters. Only one daughter got married during his
service tenure. Other three were still pursuing their studies. Obviously
Purshottam was financially not that strong to spend on his daughters’ higher
education and their marriages after retirement down the line. During the fag end
of his service he came into contact with Duryodhan, a high-profile government
officer in charge of ‘safety audits’ prescribed under the Factories Act.
Duryodhan was aware that Purshottam was ‘a chartered engineer’ by qualification.
Vikrambhai you know in our country under Factories Act you are required to
observe number of safety measures. For this purpose the factory owner has to get
the report from a ‘chartered engineer’ as to the implementation of safety
measures by the factory satisfactorily.

You may be aware of Bhopal Gas tragedy of Union Carbide. For
the factory owner it is a big threat to its very existence, a small
non-compliance would lead to suspension of manufacturing activity,
investigations and litigation besides huge business loss, so on and so forth.

So this Duryodhan, a hard core corrupt government officer,
made an offer to Purshottam in connivance with the factory owners, to undertake
‘safety audits’. Purshottom was aware that audit fee for a single ‘safety audit’
runs in lacs. However the offer was not without price. Purhottam would pay out
60% of audit fees to Duryodhan that too in cash. Against the 40% share of
Purshottam there was hardly any expenditure, just windfall profit for Purshottam.
So Purshottam having thought over his future financial requirement, accepted the
lucrative offer made by Duryodhan.

Against this backdrop, Purshottam being an honest and law
abiding person, approached Gopal. Purshottam narrated him the modus operandi of
sharing of audit fees with Duryodhan and asked him whether he would be required
to pay any income tax. The moment Purshottam told him that his professional
receipts were likely to cross Rs. ten lacs, Gopal explained him about
maintenance of books of accounts, record and getting them audited by a chartered
accountant u/s.44AB apart from tax liability.

For a week or so Purshottam was musing over the ‘wake up’
call given by Gopal. He checked his audit fees received as per his bank account;
the amount was staggering well above Rs.10 lacs, near about 27 lacs.

So he met Gopal again. He told him his actual professional
receipts would be around Rs.27 lacs whereas his actual expenses would be just
one lac. It was a challenge to Gopal’s conscience and the ethical values he
cherished. Gopal was in dilemma over whether to advise or not to advise
Purshottam about ‘manufacturing’ fake record of expenses like staff salary in
the absence of staff, office rent in the absence of rented office, driver’s
salary in the absence of driver, travelling expenses, etc. to arrive at some
reasonable taxable income. If he did not advise, probably Purshottam would
approach other chartered accountant. He would lose his first ever ‘Tax Audit’ of
his career. On the other hand if he advises Purshottam to ‘manufacture’ fake
record of expenses which would be audited by him, it was a blatant violation of
law and code of conduct of the ICAI of which he was a proud member. Gopal’s
professional career was at stake. Eventually, evil-mind prevailed over his
conscience. He advised Purshottam to create fake record of expenses for the
purpose of ‘tax audit’. Gopal convinced Purshottam that there was no option but
to create fake record of expenses of a huge amount. Purshottam was repenting on
his decision to accept the offer of Duryodhan just for greed of money. Gopal
also confessed to Purshottam that whatever he was asking him to do was not
ethically correct.

Purshottam arranged record for all those expenses as
suggested by Gopal. Gopal conducted tax audit and submitted tax audit report
with the return of income of Purshottam. Nothing went wrong from income tax
point of view, I mean Purshottam’s case was not selected for scrutiny, since
nothing was illegal prima-facie.

Now Vikrambhai my questions to you : who is being protected
by the act of Gopal and Purshottam ? How do you define the conduct of Gopal and
Purshottam ? And how do you differentiate between Gopal, Purshottam and
Duryodhan character-wise ?

“Vetalbhai, first, Gopal and Purshottam were protecting Duryodhan, the corrupt government officer. Secondly, on the part of Gopal and Purshottam, it was breach of conscience but within the framework of law. That is what happens the world over. Thirdly, I would differentiate Gopal, Purshottam and Duryodhan as “the bad, the worse and the ugly” respectively. Gopal and Purshottam were in need of money whereas Duryodhan was in greed of money”

“Vikrambhai you broke the silence, I am vanishing”. Again Vetal’s laugh was echoing in the grave-yard.

BCAJ Admin

Vikram Aur Vetal

Cancerous Corruption

Vikram was fond of moving around in the graveyard in the
horrifying night to catch Vetal after day-long practice as chartered accountant.
For Vikram friendship with Vetal was real education. Vetal being a spirit of
intelligent human being frustrated in its lifetime was still on the earth
posthumously to find answers to innumerable questions lingering in his mind
during his stint as human being. He developed friendship with Vikram. After
playing hide and seek game Vikram used to catch Vetal in the wee hours of
morning. Then he would put Vetal on his shoulders and tread through woods of the
graveyard. Vetal would laugh weirdly in the silence of graveyard and thunder :

“So Vikrambhai, you succeeded to catch me once again, keep
walking, don’t look back, if you speak a word I will vanish. Well, I would tell
you an episode you may find utopian. Gopal was an Assessing Officer in the
Income-tax Department. Occasionally he would take bribes from taxpayers, most of
the times under pressure from the higher ups. Otherwise he was Mr. Clean in the
Income-tax Department. At times he would revere social values. His helping
nature was known to all. But his demeanour was utter nuisance for those
indulging in rampant corruption particularly for Duryodhan, an assessing officer
having his cabin next to Gopal’s. He was always on the lookout to trap Gopal and
demolish him. So he would spy in Gopal’s activities in and off the office.

On that fateful day it was post-lunch session. Gopal was
desperate to ‘settle’ the assessment of Dhanraj. Dhanraj along with his
consultant was sitting in front of Gopal and whispering something as Gopal was
busy on the phone. In the previous hearings Gopal had detected a number of
irregularities in Dhanraj’s assessment. Finally those irregularities resulted in
additional income. Anticipating those additions, Dhanraj being a ‘seasonsed’
tax-dodger had already been hinting Gopal about his willingness to ‘comply’ with
his demand to hush up the case with reasonable additions. It was two days
before that fateful day that Gopal had agreed to settle the case for fifty
thousand, most reasonable amount of bribe for a hardcore tax-dodger like Dhanraj.

As I told you earlier, Gopal was not a hardcore corrupt
bureaucrat. Gopal finished his call and said,

“So Dhanraj, did you bring the amount ?”

“Yes Sir” replied Dhanraj.

Again the phone rang. Gopal was listening intently to the
caller on the other end. He responded,

“I will try my level best to arrange something. Don’t keep on
postponing the surgery of your son, come down to my office”.

As soon as he finished the call his assistant peeped in and
informed.

“Sir there is a call from bada sab“

While getting out of the chair Gopal said,

“Dhanaraj, I will be back in 10 minutes”

Gopal left the cabin. En route he met Duryodhan who was just
returning back to his cabin. They just greeted each other. As usual Duryodhan
addressed him sarcastically “How are you Dharmaraj ?” Gopal did not respond
verbally, he just chuckled nervously. Driven by suspicion and hatred Duryodhan
intruded in Gopal’s cabin. He saw Dhanraj along with his consultant and
overheard their whispering about how reasonable the ‘amount’ was. Dhanraj being
‘old customer’, Duryodhan greeted him with smile.

“What’s up Dhanraj ?” asked Duryodhan.

“My case is selected for scrutiny Sir” responded Dhanraj.

“Any trouble” queried Duryodhan.

“No trouble Sir, the case will be over today only”said
Dhanraj.

” How much ?” Duryodhan.

“Very reasonable” Dhanraj.

Duryodhan got the required ‘ammunition’ to demolish
‘Dharmaraj’ Gopal, he left the cabin hurriedly. Gopal was still with Bada Sab
nearabout half an hour after Duryodhan’s exit. Dhanraj and his consultant were
anxiously waiting for Gopal’s arrival. There was a knock on the door and an aged
person in his sixties entered the cabin.

“Where is Mr. Gopal ?” he asked with bewildered look at
Dhanraj and his consultant.

“Sir has gone to Bada Sab” Dhanraj replied.

The aged person was about to ask the next question, when
Gopal entered in the cabin and hurriedly sank in the chair. He asked the aged
person to take a seat.

“So Dhanraj, you’ve brought the money ?” asked Gopal.

“Yes Sir” Dhanraj replied.

“Hand over that money to Mr. Sudam (the aged person). Let me
tell you in brief. After two hours from now his son aged about 14 will be
operated for heart ailment, the only hope of Sudam and being retired person he
is not in a position to pay for the operation on his own” explained Gopal. The
moment the envelope containing the money was being handed over by Dhanraj to
Sudam, two persons barged into the cabin.

“Don’t move, stay where you are” ordered one of the two.

“We are from Anti-Corruption Bureau” said one. Gopal realised
that he was caught red handed, but he did not lose his cool. Quickly he
recovered from the shock and requested,

“Sir I am guilty of accepting bribe from Dhanraj, but Sir
please let Mr. Sudam go with the money. I am here to face your interrogation.”

Duryodhan, the protagonist of the raid of ACB, could not
control his excitement and joy. He deliberately came out of his cabin to watch
the ‘demolition drama’. Meanwhile the news of the raid spread like wild fire.

So Vikarmbhai, my question, how do you reckon the acts of
Gopal and Duryodhan ?”

“Vetalbhai, legally speaking Gopal is guilty of accepting bribe, he cannot plead social cause behind the bribe since the Goddess of justice is blind. However socially I still hold Duryodhan guilty of manipulating the law to demolish Gopal who by his conduct invoked Duryodhan’s conscience. He manipulated the law for his own convenience.

Apparently one may appreciate Duryodhan for his alertness to unearth corruption. Vetalbhai, you will agree with me that persons like Gopal are always in minority. Further, a manipulator of law is more dangerous than an occasional offender of law in the society.”

“Vikrambhai, you have broken the silence. I am vanishing” again Vetal’s laugh was echoing in the graveyard.

BCAJ Admin

Right to Information

Part A : Decisions of the Court and CIC

Whether co-operative Societies are public authorities ?

In the judgment delivered on 3-4-2009, the Kerala High Court examined under the writ petitions the applicability of the RTI Act to co-operative Societies registered under the Kerala Co-operative Societies Act (KCS Act).

The Registrar of Co-operative Societies issued Circular No. 23/06, taking the view that all co-operative Societies registered under the KCS Act, hereinafter, for short, the ‘Societies’, are under the administrative control of the Registrar and therefore, public authorities for the purpose of the RTI Act. Directions were hence issued, requiring all Societies to discharge the obligations as public authorities under the RTI Act and to follow the procedure stated therein. The information officers in the co-operative department of the State Government commenced acting on complaints for non-consideration of requests for information made by different persons to Societies. These writ petitions are hence filed, seeking to quash the aforesaid Circular and for the declaration that the RTI Act does not apply to Societies registered under the KCS Act. Certain actions taken by the officers under the KCS Act and orders issued by the State Information Commission touching the issue, in individual cases, are also under challenge.

Societies are not government organisations. S. 2(h)(ii) of the RTI Act uses the term ‘Non-Government Organisations’, one not defined in the Act. S. 2(h)(ii), therefore, refers to something that is not part of the Government; which is very true of a Society, as pointed out even by the petitioners. If a Society is substantially financed, directly or indirectly by funds provided by appropriate Government, it falls within the inclusive definition of ‘public authority’; within the expanse of that definition clause. Therefore, any co-operative Society registered under the KCS Act is a non-government organisation and if it is substantially financed, directly or indirectly by funds provided by appropriate Government, it is a public authority for the purpose of S. 2(h) of the RTI Act.

The Court then notes that the word ‘substantial’ has no fixed meaning. It ought to be understood definitely by connecting the context. The Court then quoted a few judgments of providing its meaning in the context of the code of civil procedure, the Income-tax Act, the Customs Act, etc. and as defined in the dictionary. It then said : “Such a spectrum of substantial wisdom essentially advises that the provision under consideration has to be looked into from the angle of the purpose of the legislation in hand and the object sought to be achieved thereby, that is, with a purposeful approach. What is intended is the protection of the larger public interests as also private interests. The fundamental purpose is to provide transparency, to contain corruption and to prompt accountability. Taken in this context, funds which the Government deal with are public funds, they essentially belong to the sovereign, “We, the People”. The collective national interest of the citizenry is always against pilferage of national wealth. This includes the need to ensure complete protection of public funds. In this view of the matter, wherever funds, including all types of public funding, are provided, the word ‘substantial’ has to be understood in contradistinction to the word ‘trivial’ and where the funding is not trivial to be ignored as pittance, the same would be ‘substantial’ funding because it comes from the public funds. Hence, whatever benefit flows to the Societies in the form of share capital contribution or subsidy, or any other aid including provisions for writing off bad debts, as also exemptions granted to it from different fiscal provisions for fee, duty, tax, etc. amount to substantial finance by funds provided by the appropriate Government, for the purpose of S. 2(h) of the RTI Act”.

Based on the above view and after examining as to whether the provisions of the KCS Act and Rules are relevant to decide whether the definition in clause in S. 2(h) of the RTI Act applies to co-operative Societies, the Court came to the conclusion that it is beyond doubt that the Societies are substantially financed by funds provided by Government.

The Court then rules : “It is held that co-operative Societies registered under the KCS Act are public authorities for the purpose of the RTI Act and are bound to act in conformity with the obligations in Chapter II of that Act.”

As the applicability of RTI Act to the co-operative Societies has arisen in many States and being discussed at many platforms, I reproduce three concluding paras of this judgment which are of common application in all cases :

The question for decision in every other individual case of a Society, in the event of any dispute, would be as to whether it is substantially financed by the State Government, in the light of what is stated above. That may have to be determined with reference to the financing of each Society. That question would arise for decision only when any co-operative Society refuses to act as a public authority. In such event, any citizen whose right to information is legislatively conferred as per S. 3 of the RTI Act would be entitled to trigger the duty of the State Information Commission in terms of clauses (b), (e) and (f) of S. 18(1) of the RTI Act. In that context, the State Information Commission has every jurisdiction to adjudicate and decide on the question as to whether a particular co-operative Society, against which a complaint is made u/s.18(1), is a public authority for the purpose of S. 2(h). The mere fact that the RTI Act does not expressly prescribe any limits as to finance, to determine the scope of the word ‘substantially’ in S. 2(h) does not give rise to any presumption of possible abuse of power. This is because the State Information Commission, as already found, is the authority which can determine that issue on a case-to-case basis. That power is with that high office, the quality of which is statutorily regulated. Declaration of law as made in this judgment would stand to aid as precedent, by law. Advertence to Sections 12, 15, 16, etc. would show that the Legislature has reposed the powers in such a manner that there could be really no room for any presumptive argument as to possible arbitrariness and apprehension of incompetence. Even with reference to the KCS Act, lots of yardsticks would be available. There is no ground for any such apprehension being recognised with any element of legitimacy.

Insofar as the contention that information is sought for by different individuals for no rhyme or reason is concerned, the answer is short but clear, and is found in S. 6(2), which provides that an applicant making request for information shall not be required to give any reason for requesting the information or any other personal details except those that may be necessary for contacting him.

Having found that co-operative Societies are public authorities for the purpose of the RTI Act, another issue surfaces for consideration. In some of the cases in hand, applications for the information were submitted to the statutory authorities under the KCS Act and KCS Rule requiring them to summon information from the Societies. Instead of summoning information by exercising the authority under the KCS Act and KCS Rules, those officers have forwarded those requests to the Societies, requiring them to answer the queries. The definition of information in the RTI Act includes information as is accessible through such statutory authorities. All such information as is accessible through the mechanism of the KCS Act and KCS Rules thus becomes information for the purpose of the RTI Act. Therefore, the provisions under the RTI Act themselves would be sufficient for reaching at such information. Hence, the question whether the authorities under the KCS Act and KCS Rules should have summoned the documents without requiring the Societies to communicate the information, is too technical and should necessarily give way to the primary object of the RTI Act, viz., to provide access to information. Therefore, there is no illegality in any officer vested with powers under the KCS Act and KCA Rules forwarding the request obtained by them to the concerned. Societies with a request or direction to that Society to provide information directly to the person who has sought the information.

[Thalapalam Service Co-operative Bank v. Union of India, WP (C). No. 18175 of 2006 and connected cases decided on 3-4-2009 in the High Court of Kerala at Ernakulam].

Denial of information by the Registrar of Companies:

Mr. Dharmendra Kumar Garg sought certain information from the PlO of ROC of NCT Delhi and Haryana regarding Bloom Financial Services Ltd. The same were denied. Before the Commission, the PlO submitted the following:

1. Once the information is available in the public domain accessible to the citizens, the information is automatically excluded from purview of the RTI Act as held by Hon’ble Information Commissioner Shri A. N. Tiwari in the case of ClC/ AT / A/2007 /00112.

2. S. 610 of the Companies Act, 1956 provides that any person may inspect any document kept by ROC and obtain copy of any document from the ROC concerned on payment of prescribed fee. Therefore, the complainant need not seek information under the RTI Act. This was held by the Hon’ble Information Commissioner Shri M. M. Ansari in the case of ClC/MA/ A/2006/0016.

Following is the order of ClC, Mr. .Shailesh Gandhi:

For the first argument the Respondent relied on the order number ClC/ AT / A/2007 /00112 where it was held by the Hon’ble Commission while interpreting S. 20) of the RTI Act that” …. Unless information is exclusively held and controlled by a public authority, that information cannot be said to be information accessible under the RTI Act. Inferentially it would mean that once a certain information is placed in the public domain accessible to the citizens either freely or on payment of a pre-determined price, that information cannot be said to be ‘held’ or ‘under the control of the public authority’ and thus would cease to be information accessible under the RTI Act …. ” I would respectfully beg to differ from this decision. Even if the information is in public domain, an applicant can still ask a public authority to grant him the information if it is held by it. Even if some information is available at various places, it is the citizen’s choice from where he wishes to access it. The only exemptions from disclosure of information available in the RTI Act are provided u/s.8 and u/s.9. The Commission would like to clarify that S. 2 of the RTI Act is the definitional provision and therefore S. 2(j) is not an exemption clause under the RTI Act. It merely defines the ‘right to information’. So the exemption from disclosing the information cannot be sought u/s.2(j). It is also the basic tenet of the law of statutory interpretation that no Section should be interpreted in such a manner which would violate the basic objective of the statute. The basic objective of the Right to Information Act, 2005 is to provide the information sought by the applicant from a public authority and therefore the Sections of the Act should be interpreted to further the objective of this Act. Also the information sought by the complainant here has not been provided on the internet. The information asked for is very basic information and records related to this particular information are missing. This information is very important for the complainant as he is facing a threat of arrest and needs the information to prove his innocence. Not granting such information clearly leads to violation of the fundamental right of the complainant as provided under Article 21 of the Constitution.

With regards to the second argument of the respondent about information to be sought only u/s.610 of the Companies Act, the respondent has relied on order number ClC/MA/ A/2006/0016 of the Commission where the Hon’ble Commissioner Shri M. M. Ansari upholding FAA’s order stated that “There is already a provision for seeking information u/s.610 of the Companies Act, 1956. The complainant may accordingly approach the ROC as advised by the Appellate Authority to obtain the relevant information.” If the complainant has more than one way of seeking remedy he has the freedom to opt for the way which is more convenient for him. No claim has been made by the PlO of any exemption under the RTI Act to deny the information. If a public authority has a procedure of disclosing certain information which can also be accessed by a citizen using the Right to Information Act, it is the citizen’s prerogative to decide which route he wishes to take. The existence of another method of accessing information cannot be a justification to deny the citizen this freedom to exercise his fundamental right codified under the Right to Information Act. If the Parliament wanted to restrict this right, it would have been stated expressly in the Act. Nobody else has the right to constrain or limit the rights of the Sovereign Citizen.

With the views taken as above, the ClC directed that complete information will be given to the complainant before 25th July 2009. If records are not available for any of the queries, this will be stated categorically.

[Mr. Dharmendra Kumar Garg v. Registrar of Companies & CAPIO, decision No. ClC/SG/C/2009/ 000753/4129 of 14-7-2009].

Part B : The RTI Act

Work practices at an Information Commission:

Yutika Vora and Shibani Ghosh have made out a report on the above subject in July 2009. It is a report written with primary objectives that taken by Mr. Shailesh Gandhi, Central Information Commissioner, New Delhi may be adopted, after making necessary changes, in other Commissions across the country. Mr. Gandhi’s office is continuously striving to improve its work processes. Increasing efficiency entails that more time is available to focus on S. 4 compliance and S. 25 monitoring. The Right to Information is a fundamental right enshrined in the Constitution of India and as statutory bodies entrusted with the responsibility to uphold this right, Commissions must deliver to give this right its full meaning.

I reproduce some extracts from the said report. (Full report is posted on BCAS website www.bcasonline.org)

This report describes the working processes that have been adopted in Mr. Shailesh Gandhi’s office, which have resulted in a high rate of disposal of cases; reduced the time in which communication received by the office are responded to; and monitoring of S. 4 compliance have been initiated. The report also provides examples of documents that have been referred to in the report in the form of Annexure – such as types of responses sent by Mr. Gandhi’s office, his orders, and other documents used by the office during its working.

Mr. Shailesh Gandhi took charge as Central Information Commissioner on 18th September 2008. He brought with him the conviction that for the rule of law to be upheld, the legal system has to function in a timely manner and justice has to be delivered in time. If justice is delayed, then the rule of law becomes a fiction and the citizen is denied his rights in a democracy.

The fundamental premise on the basis of which his office works is that law is time-bound. For the information to be useful it has to ensure that it is made available within a reasonable period of time. One of the biggest strengths of the Right to Information Act, 2005 is that it requires information to be provided within a reasonable timeframe. If cases are not disposed within this timeframe, the spirit of this Act is-severely undermined. The importance of the time element in this Act is apparent when one looks at the penalty provision S. 20 of the Act. In fact, to ensure timely response by the Information commission, the first RTI Bill of 22nd December, 2004 had a provision that the Information Commission would dispose a case within thirty days.

However, this provision was dropped at the last moment without any explanation. Mr. Gandhi’s office believes that a timely response is essential and therefore makes strenuous efforts to ensure that cases are disposed within ninety days.

An Information Commissioner costs the nation about 25 lakh Rupees annually. The average yearly disposal of Information Commissioners across the country is around 600, thus the nation is spending an astounding amount of over Rs.4,100 per case only on the Commissioners. This is of course only a part of the expenditure on each case as it does not include costs to maintain an office, infrastructure, etc. If however a Commissioner could achieve an average disposal rate of 4000 cases per year, the nation would spend Rs.625 per case on the Commissioner.

Mr. Gandhi’s office has achieved an average monthly rate of disposal of 535 during 2009, with disposal of 3212 cases in the first six months of 2009. Mr. Gandhi is not the only Commissioner to have achieved such figure. Ms. Annapurna Dixit, Central Information Commissioner, has achieved an average monthly disposal rate of 345 cases by clearing 2070 cases in the same period. Setting a target of 4000 cases a year, and achieving an average monthly disposal of 330-340 case’, is not an impossible task and Mr. Gandhi and Ms. Dixit have proved it consistently.

Mr. Gandhi’s office receives on an average nearly 1600 ‘daks’ every month and a system is developed that between 4 to 6 assistants, the same are distributed, each person is given 10 to 20 daks. Most of the staff members are trained and encouraged to take up various functions in the work flow. Daks are attended within 24-48 hours. Numbers of templates have been prepared to reply to daks. Once an appeal or complaint is found in order, it is registered on the online registration system at www.rtiadmin.nic.in.

After the Second Appeal is registered, a summary is prepared. The summary is used as a preface to the order given by the Commission. The summary is available to Mr. Gandhi from at least a week before the date of hearing. The summary is also open on his desktop during the hearing and he can at any time refer to the documents which are also in front of him. Reading the summary helps Mr. Gandhi to get a gist of the case before the hearing.

It also serves as a ready reference for someone reading the order subsequently, who does not have access to the file.

Once the summary is prepared for a case, it is scheduled for hearing. Mr. Gandhi fixes 20 cases a day for hearing and notice for hearing is sent generally 25 to 45 days before the date of hearing.

In most of the cases, after hearing both the parties which takes approx 15 minutes, the decision is dictated and directly typed on the computer; the decision gets signed by Mr. Gandhi immediately and delivered on the spot. In less than 5%, the Orders are reserved and delivered on a later date after due consideration to the matter.

A very effective process for deciding a complaint is also worked out. Similar effective process is also worked out to deal with non-compliance of orders delivered by the Commission. The Commission also receives dak which are not Appeals or complaints, etc. The same are dealt with as under:

Queries with regard to RTI Act:

A few dak each week ask queries with regard to implementation of the RTI Act as well as the rights and obligations under the RTI Act. All efforts are made to send an adequate response to such queries as Mr. Gandhi believes that the Commissioner’s responsibilities are not restricted to cases brought before him, but also extend to disseminating awareness and better understanding of the RTI Act.

Communication in relation to S. 4 compliance:

The office sometimes receives communication from citizens that certain information which should have been disclosed suo moto by a public authority by 12th October 2005 and till date has not been disclosed. In such cases, after due consideration to the facts and research, a letter is sent to the head of public authority directing it to ensure that it fulfils its obligations u/s.4.

Communication in relation to monitoring u/s.25 :

U / s.25 of the RTI Act, public authorities have to submit information on the implementation of the RTI Act to the Commission. Mr. Gandhi has asked certain public authorities to submit information to him by the 10th of every month. This information can be sent to the office by email or by post in a form which is standardised.

Mr. Gandhi believes that to ensure a holistic success of the Act, emphasis needs to be laid on the fulfilment of the obligations u/s.4 of RTI Act. For this reason constant efforts are being made to bring to the attention of public authorities their obliga-tions u/ s.4 of the RTI Act.

Disposals in his office in the first six months of 2009 are more than the number received. In six months from January to June 2009, appeals and complaints registered are 1575 and 758, respectively, totalling 2333. Against the above, appeals disposed are 1975 and complaints disposed are 1219, totalling 3194.

The pendency of cases at the end of June 2009 is 618 cases, out of which 56 cases have been pending over 60 days. Mr. Shailesh Gandhi is reaching soon to his goal of all disposals of appeals and complaints within 60 days.

Part C: Other News

• Wajahat Habibullah

Sayed Nazakat in the magazine WEEK of August 16, writes:

There aren’t many bureaucrats like Wajahat Habibullah. As India’s first Chief Information Commissioner (CIC), he defends the right of common people to open information. “When someone learns to use RTI, he almost becomes addicted to it,” says Wajahat, sitting in his office in South Delhi. He explains why it is important to create more awareness about the Right to Information (RTI) : “It will bring democracy to its rightful owners – the people of India.”

The Right to Information Act was passed nearly four years ago, and Wajahat was asked to implement it. Today, it allows citizens to inspect Government records, take copies and question the authorities for a fee of Rs.10. “RTI is a magic wand. For the first time, the common man has an effective tool to fight bribery and bureaucratic apathy,” he says. “it has worked particularly well for routine tasks, such as getting passports and pensions, which previously took months or years.”

RTI has not been popular with bureaucrats who often ignore requests for information. The CIC is pondering granting of appeals which would allow people the right to access the sources of funds of anyone seeking public office.

• How effective is India’s RTI Act:

The news item in the Hindustan Times quoted a prominent Central Information Commissioner Shailesh Gandhi, warning the country that the Government and the judiciary together pose a serious threat to the RTI. Gandhi argued that the Government’s infrastructure — training, resources for implementation of the RTI is woefully inadequate. He also highlighted the role of the Courts in weakening the Act. The judiciary has been granting stays on orders of the Information Commission – which he noted is a very dangerous trend.

• Mockery of the RTI Law by some Courts:

The gap between the judiciary’s traditionally insular self-image and the public’s rising expectations of accountability from all institutions is evident from the rather surprising interpretation made by the Supreme Court and some of the High Courts on the nature of information that would fall under the ambit of the RTI.

Making a mockery of this much-vaunted legislation, these Courts have made out on their administrative side that the only kind of information that can be accessed by citizens under RTI is what is already “in the public domain”.

When it challenged the Central Information Com-mission’s direction on the declaration of assets by Judges, the Se, in its petition before the Delhi HC earlier this year, had claimed that RTI’s definition “shows that the information which is required to be given must be information in the public domain.” Accordingly, it argued the application regarding declarations of assets by Judges was not maintainable inasmuch as the information sought for was neither in the public domain, nor was it required to be given or maintained under any statue or law.”

If the SC’s interpretation of the definition of information were to be valid, none of the public authorities should have been, for instance, disclosing file notings because given the confidential manner in which they are written by bureaucrats and ministers during decision-making, they are clearly not in the public domain. It is the operation of RTI that has brought into the public domain all manner of information that would have otherwise remained behind the official veil of secrecy. The wide-ranging definition of information contained in S. 2(f) of RTI does not bear out the SC’s claim that it is limited to material lying in the public domain. In fact, the SC seems to have imported the expression “in the public domain” into its petition on the basis of the rules framed by the Delhi HC

For, under the rules framed by it in 2006, the Delhi HC assumed the power to withhold “such information that is not in the public domain or does not relate to judicial functions and duties of the Court.”

• Pay-Se-Park in Mumbai :

An advocate, whose two-wheeler was towed away because he did not give in to the demand of a man who was running an illegal pay-Se-park racket, used the RTI Act to learn how BMC contractors exploit the lack of parking space to line their pockets.

Advocate Sushil Dalvi, who works with the I-T Department, says, “Parking in South Mumbai is a horrible experience. Rules provide charge for two-wheelers at Re.l per hour, but I have been charged anything between Rs.S to 40.”

Most people cough up the money as they don’t want their vehicle towed away. But Dalvi’s tolerance ended six months ago. He had parked his scooter near Cafe Noorani at Haji Ali, a spot where several two-wheelers were parked. But, when he returned after lunch, only his two-wheeler had been towed away though there were several parked in the same spot. After probing around a bit, he learnt why.

He had refused to pay a person who claimed to be running a pay-&-park business there. And, he was right in doing so because the business was illegal. The space had not been earmarked for pay-&-park and was, in fact, a no-parking zone. Dalvi got his vehicle after paying a fine.

Immediately after the incident, Dalvi filed an RTI query with the BMC demanding details of pay-Se-park contracts allotted in wards A, B, C, D, E, F (south and north) and G (south).

“When I compared the plans with the actual parking plots, I found out that most accommodate more vehicles than they are authorised to. Also they expand their area of operations by encouraging double parking, parking on both sides of the road and on footpaths. But when I pointed out these illegalities to civic officials, they simply threw up their hands.” said Dalvi.

(Source: Mumbai Mirror of August, 2009)

• Mumbai SSC Board and RTI :

Pune Information Commissioner Vijay Kuvalekar has ruled in the case pertaining to Pune SSC Board that answer sheets were not confidential since they were not covered ul s.8 of ‘he RTI Act.

However, Mumbai SSC Board’s PlO in case of Samir Kanparia, rejected the application to inspect the answer sheets and held that they are confidential as per the provisions of law, and secondly, that no public interest will be served if the student is allowed inspection of answer sheets, hence will not allow him to inspect them. Kanparia also submitted before the Board the order passed by the Central Information Commission, in which it had directed the Institute of Chartered Accountants of India to show answer sheets to a student.

Matter is now pending in appeal before CSIC, Dr. Suresh Joshi.

• Proposed Amendments to RTI Act:

In a bid to strengthen the Right to Information Act, the Government has initiated action on a proposal to review the exemption of security and intelligence organisations from its purview. It is being examined whether some of the organisations could be deleted from the second schedule of the Act. Another proposal under examination of the department is to add some more categories of information to the list given in S. 4(1) of the Act which all public authorities are required to publish suo motu. This will enable greater proactive disclosures by public authorities.

• Performance at the Central Information Commission of 7 Commissioners:

The following is the chart of disposals by CICs in the first seven months of 2009.

BCAJ Admin

ORDERS OF CIC

Right to Information

S. 4(1)(c) :

S. 4(1)(c) reads as under :

Obligation of public authority — “4(1) every public authority
shall —

(C) publish all relevant facts while formulating important
policies or announcing the decisions which affect the public;”

Shri Venkatesh Nayak had filed 2 RTI applications with PIO of
two departments of Government of National Capital Territory of Delhi (GNCTD)
asking for proactive disclosure of contents of the Delhi Police (Amendment)
Bill, 2010 (DP Bill) as required u/s.4(1)(c) of the RTI Act. He received no
reply. Mr. Nayak then filed a complaint u/s.18 of the RTI Act with the
Commission.

Subsequently Mr. Nayak was informed that the DP Bill had been
placed on the website of the Delhi Police, GNCTD and the Ministry of Home
Affairs, Govt. of India and comments from the citizens, media persons, etc. were
invited.

CIC, Shailesh Gandhi in the decision wrote as :

“A plain reading of S. 4(1)(c) of the RTI Act suggests that
every public authority is required to publish or disclose all facts and
circumstances, which are relevant and taken into account while formulating
policies and taking decisions that would affect the public. S. 4(1)(c) of the
RTI Act requires proactive disclosure of proposed laws/policies and amendments
thereto or to existing laws/policies to enable citizens to debate in an
informed manner and provide useful feedback to the government, which may be
taken into account before finalising such laws/policies.

Given that the DP is a significant legislative change, the
relevant public authorities involved in drafting of the said bill had a duty
to proactively disclose its contents u/s.4(1)(c) of the RTI Act. The concerned
public authority, however, acted only after the complainant approached the
Commission and filed a complaint u/s.18(1) of the RTI Act. The public
authority should have disclosed the contents of the DP Bill suo motu and by
omitting to do so, the very purpose of S. 4(1) of the RTI Act stands defeated.
The Commission has further observed that at present, the GNCTD is not fully
complying with S. 4 of the RTI Act and therefore, is of the view that citizens
must be provided with means to debate legislative and policy changes, which
are likely to affect public lives as contemplated by the GNCTD. The citizens
individually are the sovereigns of the democracy and they delegate their
powers in the legislature. The RTI Act has recognised this and S. 4(1)(c) is
meant to ensure that the citizens would be kept informed
about proposals for significant legislative and policy changes.

In view of the aforesaid, the Commission, under the powers
vested in it vide S. 25(3)(g) and S. 25(5) of the RTI Act hereby directs the
Chief Secretary, GNCTD to develop a credible mechanism in all departments for
proactive and timely disclosure of draft legislations/policies and amendments
thereto or to existing laws/policies in the public domain, as required
u/s.4(1)(c) of the RTI Act, during the process of their formulation and before
finalisation.”

[Mr. Venkatesh Nayak v. Chief Secretary, Government of
National Capital Territory of Delhi, Decision No. CIC/SG/C/2010/000345+000400/8440,
decided on
7th July, 2010.]

?
Secret Accounts of Indian citizens in Swiss banks :

Very significant decision of the Full Bench (4 members) of
Information Commission on the subject in National debate since long viz. money
of Indian citizens lying in Swiss banks.

Shri V. R. Chandran had sought the following information from
the PIO of Directorate of Enforcement :

(1) Whether the Ministry of Finance/GOI is aware of the
existence of secret accounts of Indian citizens in Swiss banks amounting to
1456 billion US dollars?

(2) If yes, has any action been taken to find the identity
of the account holders ?

(3) If the list of depositors is available, please provide
a copy of the same, with complete information about the depositors,

(4) Are the transactions legitimate ?

(5) If the deposits are illegal, what action has been
contemplated on them ?

(6) Has the GOI/MOF addressed the Swiss authorities for
repatriating the illegal money ? If
not, why ?

(7) Are there such accounts in any other
countries ?

(8) If all or any of the actions mentioned above have not
been done, please furnish the reason therefor,

(9) If MOF/GOI holds the view that the said media reports
are not to be trusted, what action has been taken or proposed to be taken on
them for false propaganda ?

The CPIO and the first Appellate Authority held that the
Directorate has been exempted u/s.24 read with the Second Schedule of the RTI
Act.

Before the Commission, some of the submissions of the
applicant were :

The Enforcement Directorate cannot dispute that exporting
Indian currency to foreign countries was illegal. It was possible only because
of failure of officers of the Government of India under the Enforcement
Directorate or I.T. Department. Because of non-exercising of the powers and
duties by the above-said officials, Indian citizens who deposited money in
secret accounts got pecuniary advantage to the extent of tax liability of the
said amount. Therefore, non-exercising of the powers by the officers would be
nothing but the abuse of power to cause pecuniary advantage to those persons who
deposited in secret accounts, which is nothing but a criminal misconduct as
defined by u/s.13(1)(d) of the P.C. Act. Further, the corruptive attitude is
glaringly evident that in spite of exposure by the news media the authorities
failed to initiate meaningful action to retrieve the money and even did not
enlighten the taxpaying citizens to know what was happening by furnishing
information under the RTI Act. Therefore, the whole episode involves corruption
and violation of human rights of all citizens, specifically the 30 crore
citizens living in undignified condition in India. As such, the applicant
satisfies the stipulations under the first proviso to S. 24 of the RTI Act, 2005
and hence the applicant is entitled to get information sought for and the
Enforcement Directorate is duty bound to furnish the same along with costs.

The Full Bench took assistance of the Ministry of Finance, Department of Revenue, Department of Banking and Ministry of Law and Justice in the matter. Their comments were invited. The Ministry of Law & Justice and Department of Banking did not give any comments on technical grounds. However, the Department of Revenue in brief stated as under :

The general impression that all accounts of Indian citizens in foreign banks are illegal is not correct.

Indian citizens, who are NRIs, can maintain and operate foreign accounts and there is no requirement to get permission or even inform the tax authorities or RBI in India.

The restriction is only for Indian residents. However, FEMA permits opening of accounts abroad with the knowledge or permission of competent authority. Thus, all foreign accounts of resident Indians are also not illegal.

Movement of funds from India to outside and vice versa are now permitted liberally under the FEMA regime.

The details of bank accounts of individuals are protected from disclosure even under the RTI Act, etc. As far as foreign accounts are concerned, the foreign banks do not come under the jurisdiction of Indian authorities.

In order to get the information from the foreign governments on bank accounts suspected to contain proceeds of crime/tax evasion, the Indian authorities have to indicate the name, a/c. No., crime/tax evasion and the jurisdiction for seeking the information.

Therefore, none of the agencies hold the full details of such accounts. There will be only the details of specific cases, which are under investigation, adjudication, prosecution, etc.

‘The Income Tax Authorities’ and ‘the Directorate of Enforcement’ are 2 agencies under the Department of Revenue, which deal with the illegal money of Indian residents lying abroad.

In order to bring back illegal Indian money lying abroad, the following actions have been initiated/taken :

a) The Income-tax Act, 1961 has been amended through the Finance (No. 2) Act, 2009, and it would enable the Central Govt. to enter into Agreement for the Exchange of Information and Assistance in Collection of Taxes (AEI&ACT) with non-sovereign jurisdictions.

b) In this regard, they have written to the Ministry of External Affairs with respect of 19 prioritised countries/jurisdictions, for taking up the matter with them for entering into such agreements.

c) Since the existing tax treaty with Switzerland does not provide for exchange of bank-related information, etc., the renegotiation of the tax treaty with Switzerland is being undertaken. The first round of negotiations was held on 10-12 Nov., 2009. Once the protocol amending the tax treaty is notified, India would be able to obtain bank-related information in specific cases from Switzerland.

d) MEA has also been approached to renegotiate the remaining tax treaties, which are in force, but do not specifically provide for exchange of bank-related information.

e) India has been actively taking part in building global consensus for taking action against those jurisdictions/countries, who are not transparent or cooperative in exchanging information with other countries.

‘The Directorate of Enforcement’ is listed in the Second Schedule of the RTI Act and therefore, in terms of S. 24 it is an exempted organisation. Assuming but not admitting that information about Indian money lying in foreign bank accounts is available with the Directorate, no disclosure need be made by the Directorate.

[My reaction to above 10 point reply : It appears that the Department of Revenue has diverted its reply to generality of the subject. It has not provided but avoided to give the information sought.]

Besides the above, the Directorate made submissions discussing DTAA with Switzerland, OECD standards on exchange of information as contained in Article 26 of the OECD model tax convention. He further stated that the Government of India has taken steps to collect authentic and accurate information about the black money stashed away. The Directorate of Enforcement also brought to the notice of the Commission writ petition (Civil) No. 176/2009 pending in the Supreme Court on the similar subject matter.

After considering the above submissions of both the parties, the Full Bench gave the following decision in 4 para, 14 to 17 of the order :

14. The issues, which have been raised in this RTI application, are serious and have understand-ably raised public concern. The Enforcement Directorate — the principal agency of the Government to check and undo illegal stashing away of money from the country — has taken a rather technical position about disclosure of the information relating to it. Their position, briefly stated, is that they cannot either confirm or deny the media reports about the likely volume of black money stashed away in foreign banks illegally by Indian nationals. While this position is, doubtless, defensible, it leaves unanswered the perennial question as to what resources the country has lost to the evil of money laundering. We would like this matter to be taken beyond technicalities and to address the larger issue related to transparency in this vital field, about which the citizens of our country are keen for answers.

15. While the Enforcement Directorate may take the position that they have no way of assessing the total volume of illegally held money by Indians in foreign banks, they can surely provide an estimate of the total volume of such money involved in the investigations they are presently conducting. In other words, the Enforcement Directorate can let the country know as to how much is the total sum of such money they are dealing with in their current investigations. This figure can be arrived at through the simple contrivance of aggregating the sums of money in all such investigations currently underway. The Enforcement Directorate need not disclose the nature of such investigations or the parties’ names. Surely, it is within its power to disclose the total amount of monies covered by these investigations.

16. The Enforcement Directorate had strenuously argued before us that they stand exempted from disclosure obligation under the RTI Act by virtue of their inclusion in the Second Schedule, u/s.24 of the RTI Act. We would like to dwell upon this aspect of argument in the context of a proviso built into the S. 24 itself, i.e., that these exemptions are subject to their not being matters of ‘human rights violations’ or ‘allegations of corruption’. In our view, all matters now investigated by the Enforcement Directorate in the matter of stashing away of Indian money in foreign banks, come within the definition of allegations of corruption in S. 24. There is eminent and compelling reason why this exception must be applied in the present case.

17. We direct the Enforcement Directorate to provide the information on Point Nos. (1) and (8) as per the direction in the preceding paragraphs. Point Nos. (2), (3) and (5) have been answered extensively in the foregoing discussions. Point Nos. (4) and (9) are questions which are in the form of seeking views and opinions and cannot be the subject-matter of RTI applications. Point No. (7) has been answered before us by the Department of Revenue.

[Shri V. R. Chandran v. Directorate of Enforcement, Appeal no. CIC/AT/A/2009/000353 decided on 28-9-2010]

PART B : THE RTI ACT 2005

In the last issue of BCAJ, the keynote remarks of Shri Gopalkrishna Gandhi at the CIC’s 5th annual convention held on 13th and 14th September 2010 was covered under this part. Now hereunder is covered the extracts from the speech of Shri Nandan Nilekani at the said convention :

A defining period for the country:

As a developing nation, the RTI Act was a decisive step for India. In most developing countries, citizen interaction with government is a Rubik’s cube of confusing procedure and requirements, and the asymmetry of power citizens face in interacting with governments encourage corruption and reduce the effectiveness of public services. The passing of the Right to Information Act in India was a big step away from this culture. The Act mandated that all citizens shall have the right to information, thus making it both a legal and justifiable right. It is a law that acknowledged that information can be a potent empowering force and critical to improving governance, and the public must have access to it.

A twin vision : bringing greater accountability in governance:

The Aadhaar Project, I believe, intensifies this movement. The RTI Act and the Aadhaar Project have a similar vision at their heart : that the government must be accountable to the people it governs.

While the RTI brings more accountability to governance by enabling better access to information, the UIDAI hopes to do this through the Unique Identification Number — the Aadhaar, it will issue to individuals across India. The number will allow individuals to clearly establish their identity to any agency in the country. This will be critical in combating the anonymity that impedes access for many of the poor to public benefits and services.

By authenticating their identity — either through biometrics or demographics — with the Aadhaar number in real time, individuals will also be able to verify whether they have received a particular service or benefit. This will bring last mile transparency to delivery of public services, and would also enable individuals to hold governments accountable when their wages and benefits are denied to them.

Such confirmation of benefit delivery is a particularly urgent requirement across social welfare schemes, since diversion and non-delivery of benefits has been a challenge across India.

The demand at the grassroots:

The Right to Information movement was driven by the passion of grassroot activists, and concerned citizens. From that local movement for ‘poora kaam, poora daam’ it became the national, visionary legislation we see now. The constitution of the UIDAI has a less romantic back-story, but has nevertheless, evolved into a project with similar transformational potential. There has long been a grassroot need for identity among India’s underprivileged, especially among the poorest and the most marginalised. Whether it is the anonymous migrants working and living in urban slums from Pune to Kanchipuram to Delhi; poor families unable to get BPL cards; or ordinary villagers who cannot open a bank account since they lack documentation, the demand for identity is palpable across the country, and the lack of it is deeply felt among the millions who work in the shadows of our institutions.

Building a bigger window:
accessing more information:

Since the Right to Information Act and the Aadhaar number have similar objectives for India’s residents, it is reasonable to consider that one can strengthen the other.

The vision of the RTI Act is a monumental one. In practice however, the Act has not been employed to the full extent that is possible. The RTI is most used today when a citizen applies for information from a particular public agency. We have been relatively less successful, however, in seeing the provisions of S. 4 enforced. S. 4 of the Act surrounds proactive disclosures — it states that public agencies and departments must release detailed information on operations and service delivery regularly to the public, and computerise records where possible for easier access. It requires public authorities to publish the matter of execution of subsidy programmes, including amounts allocated and the details of beneficiaries. In addition, it states that public authorities must maintain records as far as possible, in a computerised format, and connected by network all over the country to enable easy access for the public. For most public agencies and departments in India, however, computerising and releasing vast amounts of data, which now largely remain on paper, has proven to be a difficult task. Most departments, therefore, simply don’t do it.

The spirit behind S. 4 and proactive disclosure is that individuals should have to resort, as little as possible, to the Act in order to access information on public schemes. The Aadhaar-enabled applications the UIDAI envisions can turbo-charge the enforcement of these S. 4 provisions across our subsidy and welfare schemes, particularly within programmes such as the Public Distribution System and the NREGS. The availability of electronic records within such programmes would be a natural outcome of the applications that the UIDAI would implement in the coming years.

In the PDS, for example, public access to records through the RTI have been largely limited to the stock and sale registers of PDS outlets. The Aadhaar application in PDS would help enable broad-based computerisation of the PDS supply chain, making much of the available information across the various stakeholders electronically available. The Aadhaar application would enable every PDS beneficiary to confirm that they’ve received the grain by verifying their identity through Aadhaar. Such verification would be linked to an online MIS system. This would bring end to end accountability for every bag of grain — information on the movement of food grain that could be tracked online and in real-time, and published.

Petitioning the state:
enabling the underprivileged:

An important vision of the Right to Information Act was that it would bring the power of information to people most deprived of it in the country. However, the RTI application requires paperwork as well as follow-up in case it is rejected at the first level of appeal, which many of the poorest find difficult to do, due to the travel and additional filings that are required. BPL applicants face additional encumbrances — in order to waive the RTI application fees, they must provide documentation to prove that they are below the poverty line, which many of the poor don’t have.

Aadhaar could enable a mobile-based application, through which individuals could file an Aadhaar-linked RTI application through a mobile phone. Money could be debited either through the mobile phone or through an Aadhaar-linked bank account. The Aadhaar number could also be used to verify whether an individual falls into the BPL category. Follow-up of RTI requests and appeals could also be done remotely through mobile, reducing the travel and other practical constraints that the individual has to face. In addition, the status of the Aadhaar-linked RTI application could be tracked on a centralised, online database. Such a database would also enable the public and independent organisations to view the number of RTI applications that are pending, information that has been released, and so on.

Easing up the RTI process through Aadhaar applications would make the Act more accessible to millions across the country, particularly the poor.

The access to information is in itself a message : by enabling this, governments acknowledge that they are answerable to the people that elect them. By easing such information access to include the poor we would strengthen the objectives of the Act, help further reduce the inequalities that now exist between the ‘information rich’ and the ‘information poor’, and give the poor the tools to ensure that they receive better, fairer services.

Transforming India’s state-resident relationship:

What is perhaps the most defining feature of poverty is not just the absence of good housing and sufficient food, but the lack of access the poor have to the resources they need to change their circumstances — resources such as education, health, information and employment.

The RTI and Aadhaar are most fundamentally, about empowering the individual, and enabling such access for the poor. They do this by building a stronger, clearly acknowledged and accountable relationship between the state and the citizen. They give people the opportunity to form a direct relationship with their governments : through which they can request information necessary for them, demand individual recognition, get access to the services they need, and confirm to governments when they received an entitlement, and when they did not.

In the last few years, we have received a clear message in the recent policy efforts and reforms : that the path to development must be an inclusive, pro-poor one. The RTI and Aadhaar are potent, indispensable parts of this effort. Together, they can have a powerful impact on our broader reform movement : one that aims for a developmental agenda that is fairer, more equitable, and acknowledges and enables access for even its weakest citizens.

Part C?: Information On & Around

Political influence rules over merit :

Political interference at the highest level has been a common feature of the selection of staff at the Tamil Nadu Dr. MGR Medical University for three years between November 2006 and 2009, an RTI plea has found out. Documents obtained by TOI indicate the role of the Raj Bhavan and office of the State Health Minister in influencing the selection process in favour of certain applicants, thereby denying meritorious candidates a chance.

Errant taxi drivers of Mumbai :

There has been a rise in the number of errant taxi drivers being punished for rigged meters or inflated readings in Mumbai’s suburbs in the past three years. This was revealed in the official statistics provided by the RTO to civic activist Anil Galgali under the Right to Information Act. The RTO said in its RTI reply that the action was taken by the flying squads based on complaints lodged by commuters. “But why should RTO officials wait for us (commuters) to complain ? Why can’t these flying squads have surprise checks? I am sure they can catch several autos overnight if they go on a surprise round across the suburbs,” Galgali pointed out.

Maximum RTI applications in Maharashtra:

Statistics show that most queries raised under the Right to Information Act pertained to the State Urban Development Department. Of the nearly 4.5 lakh applications, clarity on issues related to the Department, which is considered crucial to the space-starved city. The data was provided by Chief Information Commissioner Suresh Joshi who addressed a press conference on his last day in office on 11-10-2010. According to Joshi, 12,5418 applicants sought information on matters involving the UD Department, followed by 72,393 info seekers who wanted the Revenue Department to answer their questions.

CIC rescued:

Recently, the Supreme Court has rescued CIC the nodal body for smooth implementation of RTI from slipping into administrative chaos. On May 21, the Delhi HC had quashed the CIC (management) Regulations, 2007, framed by the Chief Information Commissioner for smooth functioning of CIC. The HC had also held that the Chief Information Commissioner had no power to constitute benches of CIC. The Bench, after brief arguments, stayed only that part of the HC order which restrained CIC from constituting benches for distribution of work. This means, the Chief Information Commissioner can now allot work to other Information Commissioners, for speedy disposal of RTI appeals.

BCAJ Admin

Right to Information

Part A: Decisions of the Court and CIC

S. 8(1)(e), (i), (j) and S. 10(1) of the RTI Act :

Ms. J. D. Sahay, CCIT-1, Ahmedabad had applied for empanelment/appointment to the post of member, CBDT in 2006 but was not selected. Aggrieved by non-selection, in 2007 she sought certain information, which could throw light on the reason for her non-selection.

Vide two RTI applications, the appellant had sought copies of various documents including her ACRs of 10 years, minutes of the meeting of Committee of Secretaries (COS) and certain other information concerning the process of empanelment.

Both, her applications and appeals were rejected on the ground that the information sought for is personal and confidential in nature and, therefore, exempted from disclosure u/s.8(1)(j) of the RTI Act and also on the basis that information sought is of secret/ confidential in nature, therefore, exempted from disclosure u/s.8(1)(i) of the RTI Act.

Interestingly, the First Appellate Authority (FAA) further invoked S. 8(1)(e) stating that the information is available with the Department of Revenue in their fiduciary relationship with officers who were under consideration during the selection.

In her appeal before CIC, she made following submissions :

(i) Both CPIO and Appellate Authority erred in denying her the information and the decision was announced without hearing her. Hence grave injustice has been done to her;

(ii) Information has been used against her without disclosing the comments/gradation to her at any time. This is gross injustice done to her;

(iii) The plea regarding secret and confidential nature of information does not hold force because the information relates to the appellant and that she is not seeking information in respect of any other person;

(iv) The procedure and technique followed to determine any cut-off point should be disclosed to the aspirants. The action relating to the determination and application of cut-off points being a critical factor for an aspirant should be put in public domain.

At the hearing before the full Bench of CIC, Ministry of Finance, Department of Revenue in the written submission argued that file dealing with selection of Members, CBDT contains various secret and personal information about the officials considered for selection. This information is exempted from disclosure in view of the provisions contained in S. 8(1)(e), (g), (h), and (j) of the RTI Act. At the time of hearing, the respondents also stated that what are being asked for are not DPC proceedings but proceedings of a Selection Committee consisting of senior Secretaries. All these proceedings are confidential and marked as such. They also submitted that these minutes are not with them but the Cabinet Secretariat.

CIC in its order stated :

The object of RTI Act is also to bring in transparency and accountability in the working of Public Authorities. RTI Act confers a right on the citizen to access information held by a public Authority and every public Authority is obliged to facilitate this right. ACRs do contain an objective assessment of an officer and non-communication of the same has been held to be arbitrary by the Court and as such violative of Article 14 of the Constitution of India.

In regard to the disclosure of Annual Confidential Report, it has been our view that what is contained therein is undoubtedly ‘personal information’ about that employee. Accordingly, in Shri Gopal Kumar v. Maj. Gen. Gautam Dutt, DGW, Army HQ, (Appeal No. CIC/AT/A/2006/00069 dated 13-7-2006), a Division Bench of Commission held that ACRs are protected from disclosure because arguably such disclosure seriously harms interpersonal relationship in a given organisation. Further, the ACR notings represent an interaction based on trust and confidence between the officers involved in initiating, reviewing or accepting the ACRs. These officers could be seriously embarrassed and even compromised if their notings are made public.

As regards the documents concerning DPC, the concerned Public Authority is directed to make available information in terms of request of the appellant but there shall be no obligation to disclose details concerning 3rd parties. The respondent Public Authority may suitably use the severability clause in S. 10(1) of the Right to Information Act.

Note :

Paras 1 and 2 in above order are contradictory to each other. In para 1, as stated, the Supreme Court has held that fairness and transparency in public administration requires that all entries whether poor, fair, average, good or very good in the ACR whether in civil, judicial, police or any other State service except military must be communicated to him within a reasonable period so that he can make a representation for its upgradation. The Apex Court held that in their opinion this is the correct legal position even though there may be no Rule/G.O. requiring communication of the entry, or even if there is a Rule/G.O. prohibiting it, because the principle of non-arbitrariness in State action as envisaged by Article 14 of the Constitution in our opinion requires such communication. Article 14 will override all rules or government orders.

In para 2, inspite of above position, Commission has denied disclosure. It has taken the following view :

There are, thus, reasonable grounds to protect all such information through a proper classification under the Official Secrets Act. This decision of the Commission has been followed in several other decisions also and the Commission has held that the disclosure of ACR is exempt u/s.8(1)(e) of the Right to Information Act, 2005 unless the Competent Authority is satisfied that a larger public interest warrants disclosure of such information.

It is further noted that the Commission may change the hitherto held view if a full Bench of the Commission considering the matter in a couple of appeal/complaint cases decides otherwise. Presently, the matter is still considered as sub-judice by the commission.

[Chief CIT-I, Ahmedabad v. Ministry of Finance, Department of Revenue, New Delhi, Appeal No. CIC/AT/A/2008/00027 & 33; Decided on : 6-2-2009]

(Full Bench Coram : Mr. Wajahat Habibullah, CIC, Prof. M. M. Ansari, IC and Mr. A. N. Tiwari, IC)

Whether co-operative societies are public authorities?

In September 2009 issue of BCAJ, in this column is reported the judgment of the Kerala High Court holding that co-operative societies are public authorities.

Similar issue has come before the H.C. of Bombay (Nagpur Bench) decided on 31-1-2009 in which the Court has held :

It is well settled that general regulations under an Act, like the Companies Act or the Cooperative Societies Act, would not render the activities of a company or a society as subjects to control of the State. Such control in terms of the provisions of the Act are meant to ensure proper functioning of the society and the State or statutory authorities would have nothing to do with its day to day functions.

As pointed out earlier in the present matter we have to find out whether the petitioner-bank is controlled by the government, if ‘yes’ it will be ‘public authority’ and if ‘no’ it will not be ‘public authority’, because none of the other requirement to make an institution a ‘public authority’ are available in the present case. ‘Control’ does not mean regulatory or statutory control. In the case of Ajay Hasia v. Khalid Sehracvardi, reported in AIR 1981 SC 487 three judges’ Bench of the Supreme Court had laid down the law and it was reiterated by the Constitution Bench of the Supreme Court in the case of Pradeep Kumar Biswas v. Indian Institute of Chemical Biology, (2002) 5 SCC 111 and the observations of the Supreme Court in Pradeep Kumar v. Indian Institute were reiterated in the case of S. S. Rana v. Registrar Co-op. Societies. Thus, it is clear that the control must be particular to the body in question and it must be deep and pervasive. If it is – so found then such body is ‘State’ within the meaning of Article 12 of the Constitution of India or a ‘public authority’ within the meaning of S. 2(h) of the Right to Information Act. When the control is merely regulatory; whether under statute or otherwise, it would not serve to make the body a ‘State’ or ‘public authority.’ In view of the full Bench authority of this Court in the case of S.V. Co. op. Bank v. Padubidri, (AIR 1993 Bom. 91) and in view of law laid down by the Supreme Court in several authorities, it is clear that, in absence of existence of deep and pervasive control with reference to the institution, it cannot be called a ‘State’ or ‘public authority’ within the meaning of the Right to Information Act.

In view of the fact and legal position discussed earlier, it must be held that the petitioner Bank is not a ‘public authority’ within the meaning of S. 2(h) of the Right to Information Act.

I find that the State Information Commissioner committed error in allowing the appeals filed by respondent No. 3. Therefore, it is necessary to intervence and set aside the impugned order”.

[Dr. Panjabrao Deshmukh Urban Co-operative Bank Ltd. v. The State Information Commissioner, W.P. No. 5666 of 2007; decided on 31-1-2009]

Author’s comments:

Similar to the decision as above of Bombay High Court, in more than one case, Karnataka High Court has. also decided on similar ground, that co-op. SOCIetiesare not public authority.

What distinguishes decisions of Bombay & Karnataka High Court v. that of Kerala HC is that the former is based on ‘control’ provision while the latter is based on ‘substantially financed’ part of the provision [So2(h)(d)(i) reads: body owned, controlled or substantially financed]. Kerala High Court has taken within its sweep all funds provided by appropriate Government from its own funds or funds which reach societies thru Government or with its concurrence i.e. financed directly or indirectly by appropriate Government.

I am of the opinion that the decision of Kerala High Court is eorrect and needs to be accepted by all. Other day justice D. Chandrachud said: “There must be wider norms for disclosure. Suppression of information must be the exception. He also said that time has come when RTI should not only cover just public bodies but also private bodies. In number of cases, Information Commission has stated: “Under this Act, providing information is the rule and denial is an exception. Any attempt to constrict or deny information to the sovereign citizen of India without the explicit sanction of the law will be going against rule of law”.

Part B : The RTI Act

Continuing from October BCAl, the summary of two reports:

One study by Price water house Coopers (PWC) as appointed by the Department of Personnel and Training (DOPT), titled as ‘Understanding the key issues and constraints in implementing the RTI Act.’ Its final report as Executive Summary is published in June 2009.

Second study by National Campaign for People’s Right to Information (NCPRI) and RTI Assessment Analysis Group (RaaG) in collaboration with number of other social bodies including TISS, Mumbai under the title ‘Safeguarding the Right to Information’ .

DOPT-PWC Report:

Improving convenience in filing requests:

As determined by the survey, most of the applications (more than 70% of the people surveyed) for information are filed at the Government offices, a conducive and facilitative environment at Government offices is a necessary condition to ensure that citizens are able to apply and receive information in a convenient manner.

Key issues:

As per S. 4(1)(b)xv-xvi, S. 6(1) and S. ‘5(3), the Public Authority is expected to proactively provide certain information/facilitate the citizens in accessing the information as per the RTI Act. However, during the study, it was noticed that there was a wide gap in ensuring convenience to the citizens in filing requests for information. There were also anecdotal instances where the citizen was discouraged to file for information requests (e.g., the form for requesting information is only a guideline, but at many places, the information requests were rejected if the applications were not in the prescribed format).

Submission at the PlO office is the most prevalent channel. However, over 26% of the citizens had to pay more than three visits to submit applications and 17% said no sign boards were present to help them with the process.

Lack of an updated list of PIOs, which leads to citizen inconvenience [providing updated list of PIOs as per S. 4(1)(b)(xvi)].

Payment of cash is the most prevalent channel. However, it has the inherent limitation of requiring the applicant to be present physically, whereas as per the Act, there is no such restriction. Most of the payment modes accepted by the Public Authorities have this inherent limitation.

Inadequate help was provided to applicants or the attitude of PIOs was non-friendly [assistance is expected from PIOs as per S. 5(3) and S. 6(1)].

Approximately 89% of the PIOs were not using the provision of inspection of records by citizens, which led to delay in providing information. (As per S. 2(j)(i), ‘inspection of work, documents, records’ is a means to provide information under Right to Information Act).

Over 75% of the information seekers were dissatisfied with the quality of information provided.

Encouraging accessibility to information is one of the major change management issues among Government employees. For a Government servant, there has been a significant shift from the ‘Official Secrets Act’ mindset to the ‘Right to Information Act’ mindset.

Recommendations:

In order to facilitate filing RTI requests / appeals, the following alternative channels should be considered :

Common Service Centers (CSCs) is a scheme of the Government of India under which 1,00,000 CSCs are being created. This means that there would be approximately 1 CSC for every 6 villages. These CSCs are expected to act as front-end/single window outlets for many Government services. These are being operated by private agencies under the Public-Private-Partnership model. It is recommended that these CSCs should be used to collect applications [to act as APIO, as per S. 5(2)] and facilitate Citizens in filing RTI applications.

Department of Posts (GoI) is already a designated APIO under the S. 5(2) for Central Government. It is suggested that the State Governments also accord the status of APIO to post offices and designate staff to assist citizens in drafting and forwarding the applications/appeals.

RTI Call Centers : these have already been implemented in some states or are in the process of being implemented (e.g. in Bihar, Haryana). This is a convenient channel wherein the RTI application is taken by the call centre and payment of fee is included in the telephone bill.

RTI Portal: In this case the information request can be made through the RTI portal. Various State Governments have already started planning the implementation of this recommendation. The RTI portal should contain links to all Ministry /Department websites of the appropriate Government.

The Ministry/Departments should provide a comprehensive list of agencies/offices under its control and a link (or a webpage) which contains all the suo-moto information desired in S. 4(1)(b).

These agencies / offices should be categorised as recommended in ARC report, viz. (i) constitutional body (ii) line agency (iii) statutory body (iv) public sector undertaking (v) body created under executive orders (vi) body owned, controlled or substantially financed and (vii) NGO substantially financed by the Government.

The RTI application is made online by choosing the relevant Public Authority on the website owned by IC/appropriate Government. The information seeker has the option of making the payment of fee through a payment gateway.

Also there are various e-Governance initiatives (such as e-District, e-Municipalities) which are proposed to have an RTI module in the software application being developed for this project. The role of e-District kiosks would be to act as APIOs for the other State Govt. departments.

Further, it is suggested that the appropriate Government amend relevant rules so as to facilitate ease in paying the requisite fees from any part of the country, as per S. 6(1). Some of the recommendations are as follows:

Define certain minimum channels for payment, some of which are convenient to people residing in other parts of the country. At the least, it should have the following channels:

i) Indian Postal Order

ii) Demand Draft

iii) Cash

iv) Court fee stamps

v) Non-judicial stamps

Introduce RTI envelopes, which would have an inbuilt cost of application fee.

Facilitate payment through Electronic Pay-ment Gateway while submitting RTI application on the web.

At this stage, it would be pertinent to mention that some of the above channels may lead to revenue loss for the State Government (for example payment made through Indian Postal Order /RTI envelopes would result in revenue accruing to the Central Government, whereas the revenue should accrue to the State Government in case the RTI application is for a Public Authority under the State Government.

However, it may be noted that this loss would be insignificant and the revenue accruing to the Central Government would be utilised for strengthening the Act through awareness generation, Knowledge Resource Centre, etc.

Raag & NCPRI Report:

Current status and preliminary findings:

(2) Urban survey:

RTI applications have been filed in Public Authorities (PAs) of the Central Government, 10 State Governments and Delhi. However, the current analysis is based on applications received by 305 PIOs in 6 States, the Central Government and Delhi. These applications are addressed to the sample of public authorities as listed and also included district level public authorities. The objective was to assess the ease of accessing information through the use of the RTI Act. The applications filed asked for lists of RTI applicants and appellants that have filed applications in the respective PAs, along with data on the total number of applications and appeals the PA received since 2005. The application also requested details of the nature of responses, and copies of all the applications, the appeals, and orders of the first appellate authority.

To assess the ease of applications, the RAAG team tracked these applications for four months to asses speed of responses, nature of response, process of accessing information based on the response and finally, the first appeal process.

Some interesting findings emerging from the Urban Survey’s RTI filing process are :

Response rates – Nearly three fourths of the applications filed received responses.

However, the responses were somewhat slow in coming. In only a third of the cases where the responses were received, were received within the stipulated time period of 30 days.

Access to information – Of the total responses received, three-fourths furnished information directly or upon receiving payments for photocopying.

About half of the total applications filed received positive responses. However, many difficulties were encountered in payments for photocopying and other fee demanded.

Variations across Centre, State and District PAs:

Overall, the central government responded much more quickly and shared much more information than state governments. The Ministry of Environment and Forests and the Railways stand out for speediest responses on a large number of applications. Nearly %th of the RTIs filed were responded to within 30 days and in over half the cases, information was furnished .

At the state level, Meghalaya stands out as the quickest, the most compliant, and also the politest amongst all the states surveyed, in responding to RTI applications – the largest percentage of responses with all the information requested were received from Meghalaya.

Overall, districts appear to be much slower, and much less efficient in responding to RTI applications than states. Meghalaya and Karnataka stand out for quickest responses at the district level.

PA level analysis suggests that the police department is overall the slowest to respond to RTI applications. The largest number of rejections also came from the police.

Interestingly most of these come from Delhi police. Revenue department and the women and child department come a close second to the police.

The RAAG Team’s practical observations on the RTI filing process:

In filing and appealing this vast diversity of applications, the RAAG team confronted four major challenges, which would certainly act to stymie RTI applications by those with less resources than we had.

Plethora of state rules and payment modes – As we discovered through hard experience, every State has its own set of RTI fee and mode of payment rules. In some States, the application fee is Rs.10 and can be paid by IPO; in others it is Rs.20 and can only be paid by Demand Draft or a court fee stamp issued in that particular state. Many of our applications were thus returned, and we had to pore over the plethora of differing State rules to ensure that we got it right the second time. Similarly, some States require that only treasury challans be used to pay for requested information, which required many trips to Government offices and officials, but without much success.

Poor information on First Appellate Authority – In many states, it proved very difficult, if not impossible, to find the name and address of the First Appellate Authority for the departments in which we filed RTIs. Almost none were listed on the departmental website, and many are not listed on the State RTI or SIC portal either. This was especially true at the district level.

Appealing deemed refusals – While the RTI Act binds the PlO to inform the applicant who the First Appellate Authority is in case of a rejection, the absence of publicly available FAA information becomes especially problematic in deemed refusals. Since, in such cases, the applicant receives no response at all from the PlO, he or she is constrained to appeal to the FAA. Thus, if FAA information is not easily available, it becomes a particular handicap in taking forward an application.

Unfamiliarity with the concept of a PlO – Confirming the rural survey finding that many PIOs do not know they are PIOs, many of our West Bengal district applications came back unopened. The post master’s remark was that the application had been rejected by the District Collectorate, because no such official existed.

Gender bias – Given the dominance of male applicants, PIOs appear to be convinced that anyone who files an RTI application MUST necessarily be male. Although RAAG RTI applications were all filed by women, unfailingly all the responses addressed us as ‘Mr.’ Equally amusing, but a poor reflection on attention to detail in public authorities, is that most responses completely miss-spelt and distorted our names, even though our RTI applications had all been typed to eliminate any such possibility. Bincy thus variously became Binoy, Vinay, Biceny, Binno, Bissy, etc. !

Part C : Other News

RTI query shows how undertrials suffer in jails:

All those who have been locked up while being completely innocent or have served more than half the prison terms as an under trial of the prescribed maximum sentence for their alleged crime are very ordinary people, without influence to raise a stink or money to hire pushy lawyers. To begin with they were all bewildered by the charge being brought against them, and then terrorised by the relentless grind of the wheels of justice, and finally left rotting behind bars with their spirit crushed. There are as many as 14 under trials and five convicts in judicial custody in just one jail of Tihar for the past five years because their appeal is yet to be heard by the Delhi High Court. These facts have come to light thanks to flurry of pointed questions under the Right to Information Act by a public-spirited lawyer, Manish Khanna.

Hawkers in Mumbai :

BMC wards give different answers to a query raised under RTI application like blind men trying to figure out the shape of an elephant. Jagdeep Desai wanted to know from the civic body as to what is the definition of ‘legal hawker’. But the confusing replies he got from different departments illustrate how clueless they are, and how lightly the BMC is treating the menace.

The Superintendent of Licence chose not to answer the query, stating that “the matter is sub-judice”. D/ ward and K/West Ward authorities replied that a hawker s a “person who sells goods kept on his head m ving around the street or road, and a legal hawke is one who has licence u/s.313 of the Mumbai Municipal Corporation Act”. S/Ward requested Desai to collect required information/ documents on payment of necessary charges from respective senior inspector (encroachment) of the ward while B/Ward and E/Ward replied that “the necessary information has already been furnished to you by the Superintendent of Licence”.

Desai is perplexed that while one BMC official did not answer the RTI query citing legal obligations, other replied readily. This is a complete contradiction. It seems that the information is being held back on purpose, because they have an issue with the definition of a legal hawker. Otherwise, all the replies to questions raised in the application should have been the same.

Chief Justice of India under RTI :

In many issues in past under this column, I have covered the huge controversy and litigation which was going on re. applicability of RTI Act to the office of CJI. After two years of stiff resistance, the Supreme Court finally replied to a Right to Information query, saying that its judges were declaring their assets to the Chief Justice of India (CJI).

President of India on RTI :

The 4th Annual RTI Convention hosted by Central Information Commission was inaugurated on 12th October by Smt. Pratibha Oevisingh Patil, the President of India. In her speech she stated:

“There is a fine balance which needs to be maintained between application under the Right to Information to public authorities and also ensuring that public authorities are not flooded with applications, some of them frivolous nature, which could over-whelm their ability to respond in time. She said that institutions were increasingly coming under” greater scrutiny and information was no longer the preserve of a few and there is greater emphasis on transparency of work and accountability”.

Elaborating on the initiatives taken by the government, minister of state for personnel, public grievance and pensions, Prithviraj Chavan said a policy on data sharing and accessibility was under’ active consideration’. He added, “A large amount of Scientific, technical and economic data is generated with public funds. The policy will encourage the data to be prepared in standardised, digital form so that all non-sensitive data can be shared for legitimate use”.

Statistics:

Number of RTI queries filed in Maharashtra

2006 1.4 lakh2007 3.16 lakh
2008 4.16 lakh 2009 2.5 lakh (6 months)

Projection by the end of 2009 around 5 lakh

17-18 lakh queries all across India

RTI’s 4th anniversary function on Monday, 12-10-2009 in Mumbai:

Private bodies should also be brought under the ambit of the Right to Information (RTI) Act, Bombay High Court judge justice Ohananjay Chandrachud said on Monday. “We cannot disempower our-selves, thinking that private bodies do not come under the purview of the Act.”

Celebrating four year of the sunshine act, RTI activists appealed that its scope be widened by including the private sector in the public service under it. “When the act is for fighting corruption, why not have it for the private sector too?” Ashok Rawat, an activist, asked.

“Disinvestment and deregulation have seen the government handing over public services to private hands. Now, private players are just as important as government. The RTI Act is not code to give information, but a constitutional right of a person to know about something. Right to Information is now beyond the scope of disclosure” said Chandrachud.

Introduced in 1766 in Sweden, the RTI Act has been adopted in 85 countries with varied levels of implementation. Activists also complained about the roadblocks public information officer (PIOs) created in their attempt to scuttle information. “The most common argument is that the information asked for does not come under the definition of the Act,” said Narayan Varma, a trustee of PCGT, an NGO working to spread the RTI awareness.

“Unfortunately, bureaucrats themselves train PlO how not to disclose information” said Rawat.

“One needs to understand that access to information is means to an end. This means should be eliminated as disclosure should be voluntary,” said Chandrachud.

“We are sensitising our officers. There is a need to institutionalise experience at the state level, jut as it had been at the Centre by making Shailesh Gandhi the Central Information Commissioner, so that there is a uniform pattern that will speed up the process of deliverance.”

Some NGOs, like Mahiti Adhikar Manch and PCGT, plan to set up a panel to ensure voluntary disclosure of information, which is part of the Act.

BCAJ Admin

ORDERS OF CIC

Right to Information

PART A: ORDERS OF CIC

Section 18 of the RTI Act

A very sad and no doubt unusual and unprecedented case has
come up before CIC Shailesh Gandhi.

The appellant, Mr. Surinder Puri of Delhi, sought certain
information from the Municipal Corporation of Delhi (MCD) regarding one
property, all around which there had been encroachment.

The PIO did not provide the information. First, the AA
directed the PIO to provide the requisite information as available on record.

In the second appeal, Mr. Surinder Puri had stated:

Correct and complete Information not provided within the
stipulated time. The PIO tried to shift the onus for providing the information
on some other public authorities and if the onus for providing this
information lay on them, why this application was not transferred to them.

In the decision dated 29.12.2009, the CIC directed the PIO
to give the appellant the length and breadth of the said plot after obtaining
it from the building department before 12 January 2010.The Commission also
directed the PIO to arrange a joint inspection of the area with MCD House Tax,
Building Department and Engineering Department with a copy of the sanctioned
building plan on 12 January 2010.

On 12.01.2010, the inspection became unruly. The Commission
received a letter dated 28.01.2010 from the Appellant Mr. Puri wherein he
alleged physical assault and brutal manhandling of two office bearers of the
Public Grievance and Welfare Society (PGWS), who were among the other members
who accompanied the Appellant for the joint inspection. In the letter, it has
been stated that the inspection was initiated in the presence of MCD
officials. According to the letter, there were seven police constables of
Sarai Rohilla Police Station who were also present at the inspection site. The
MCD officer is said to have only allowed two of the society members to inspect
the property site. Therefore, only two office bearers of PGWS went in for the
inspection on the Appellant’s behalf. It has been alleged that while the
inspection was on, Municipal Councilor Mr. Satbir Singh, along with his
accomplices (reportedly son and nephew), came with a mob of 30 people and
inflicted a brutal physical assault with an iron rod on one office bearer,
which is said to have caused him a fracture on the nose bone and that the
second office bearer was slapped and bullied. Furthermore, it has been alleged
that when an attempt was made to file a FIR (First Information Report) against
the said attack, the case was only registered after the society lodged a
complaint with the CMM (North).

On the basis of the above letter, the Commission registered
a complaint in accordance with Section 18(1)(f) of the RTI Act.

The Commission writes:

If the allegations made by the Complainant were true, it
meant that persons lawfully exercising their rights under the Right to
Information Act were being unduly harassed and physically assaulted. The
allegations that the assault was carried out in the presence of police and MCD
officials led to suspicion of a probable collusion. The Commission has been
given the powers to initiate an enquiry in a complaint under Section 18(2) of
the RTI Act, when enquiring into a complaint under Section 18(1). Section
18(3) of the RTI Act also confers the powers of a Civil Court on the
Commission when it is inquiring into any matter under Section 18.

Considering the gravity of the matter, the Commission wrote
letters dated 18.02.2010 to the Commissioner of Police (CP) and Commissioner
of the Municipal Corporation of Delhi (MCD), informing them about the matter
and requesting them to inquire into the matter and submit a report to the
Commission before 24.02.2010.

The CP instead of inquiring into the matter and submitting
a report, filed a writ petition in the High Court against the direction of the
Commission. In the writ petition, the CP has challenged the power of the
Commission, stating that the Commission has ‘over reached the powers’
conferred on it under the RTI Act and the letter sent by the Commission to the
CP is bad-in-law. The Commissioner of MCD did not care to reply even despite
telephonic reminders to his office.

The Commission decided to call some of the people present
to understand whether a RTI Applicant was deliberately obstructed from
undertaking inspection, which had been ordered by the Central Information
Commission and whether the assault on the two persons was with the intention
of preventing them from undertaking inspection. It summoned 7 different
officers who were present on 12.01.2010 and the appellant and his
representatives.

During the inquiry, each person deposing before the
Commission was asked to come in one at a time and once they had finished their
account, they were allowed to sit and listen to the deposition of the others.
Each person was asked to narrate the sequence of events on the day of
inspection, starting from the time that they all met at the MCD Office and
then proceed to the inspection site and subsequent events. At the end, the
persons who had deposed were allowed to give their clarifications or
contradict the statements of the others.

The statements of 6 persons who were present were recorded
and two more were called in later, so 8 in all. The CIC made the following
observations on points common to the deposition of all:

as some tension was
anticipated, both parties had requested the Police to be present during the
inspection.

crowd had gathered
before the Inspection could be completed and persons were asking questions
to the representatives of the Appellant.

some level of
altercation took place either at the inspection site or just away from it on
the Main Road. Even the MCD officials have admitted that there was some
pushing around and arguments.

the inspection could
not be completed due to the presence of the crowd. It was completed at a
later point in the absence of the Appellant or his representatives but in
the presence of a larger Police force.

    Mr. Ajay Kumar (one representative of PWGS) had sustained injuries and had been taken to Hospital by the Police.

The Commission made the following Decision:

The Commission finds from the statements that Po-lice personnel were present during the whole epi-sode and were either unable to or unwilling to take any action to intervene and disperse the crowd. This points to a very sorry state of affairs in terms of law and order. Trouble had been anticipated at the site and when it did start, the Police was unable or un-willing to take any action. The incident took place on 12 January, 2010. The Commission requested for a report on the incident before 24.02.2010, which the Police has not submitted. Now it is over ten weeks since the incident occurred, but the police did not give a report but instead deemed it a fit case to op-pose in a writ petition.

Complaint is allowed.

The appellant was prevented from carrying out the inspection to arrive at the facts. MCD officers and police officers were present but could not ensure that the inspection could be carried out.

With regard to the allegations of physical assault, the Commission finds that offences under the Indian Penal Code may have been committed in the pres-ent case against the representatives of the Appel-lant. However, the Commission as a statutory body does not have the powers to investigate allegations against offences under the Indian Penal Code or take action under the Code of Criminal Procedure. When such incidents are brought to the notice of the Com-mission, the Commission can initiate an inquiry at its level under Section 18(2) of the RTI Act and it has to rely on external agencies such as the Police and the MCD to undertake part of the inquiry and assist the Commission. As a statutory body, the Commission can work effectively only if it gets cooperation from other Departments of the Government, especially those which are trained in investigative methods. If statutory bodies such as the Delhi Police and the Municipal Corporation of Delhi decide not to assist the Commission in the performance of its statutory functions, the Commission will find it difficult to dis-charge its duties under the RTI Act.

Neither the Commissioner, MCD, nor the Commis-sioner, Delhi Police, have extended cooperation in the conduct of this inquiry. The Commission expresses the hope that the Police and the MCD will do their duty and help statutory authorities in performing their functions, failing which it would not be possible for citizens to exercise their fundamental right to information to ‘contain corruption and to hold Governments and their instrumentalities accountable to the governed’, which is the objective and promise of the Right to Information Act 2005.

Citizens rightly expect that the Information Commission must ensure their protection when they are using Right to Information to unearth and challenge illegal activities. It is with deep concern that I admit that I am unable to take any further action as my powers under the Act have now been rendered completely ineffective by the non-cooperation of the Police and the MCD. I hope that all statutory agencies will cooperate to ensure that the rule of law prevails.

(Mr. Surinder Puri, Delhi vs. PIO, MCD, Delhi: Decision No. CIC/SG/C/2010/000163/7237 dated 25.03.2010)

   Section 4 of the RTI Act

As stated often in my articles, Section 4 of the RTI Act is the mother of all Sections in the Act. If the obligations on public authorities cast therein are complied with, the need to furnish RTI applications can get considerably reduced. In this case, even the State Bank of India, the largest bank of the country, has not complied with its obligation under this Section.

The Order states:

During the hearing, it was brought to our notice that the State Bank of India as a public authority has not yet published details about the monthly remuneration received by each of its officers and employees, including the system of compensation as provided in its regulations in terms of the mandatory obligations cast on it under Section 4(1)(b)(x) of the RTI Act. If it is true, it is unfortunate; a major public authority like the SBI is expected to be a trendsetter in implementing RTI Act. We direct the CPIO to bring it to the notice of the authorities in the SBI immedi-ately to ensure that such details about each of its officers and employees are immediately put up in the public domain through its website at all lev-els and certainly not later than a month from the receipt of this Order.

The Order also directs the PIO to furnish information on the following points to the applicant, Shri Chetan Kothari, which was denied by the PIO and the AA:

   Monthly salary and wages paid to each employee, by name, in the State Bank of India, Mumbai Zone as at the end of 31st March 2009; [This information should be given in electronic form in a CD as the number of employees might be too large]

   Total number of safe deposit lockers in the Mumbai Zone as on the above date; and

   A categorical statement to the effect that the names of the CPIO and the Appellate Authority have been duly displayed in every branch of the Mumbai Zone.

It may be of interest to the readers that CIC conducts many appeals by video conferences. This one was heard through video conferencing. The Appel-lant was present in the Mumbai studio of the NIC whereas the Respondents were present in the Bandra (Mumbai) studio.

(Shri Chetan Kothari, Mumbai vs. CPIO, State Bank of India, Bandra Kurla Complex, Mumbai: CIC/SM/ A/2009/001479 decided on 01.04.2010)

   Postal Order

In spite of such a mode prescribed in the Rules, the CPIO of UCO Bank refused to accept the application since it was accompanied with a postal order by way of application fee and declined to provide the information. The AA endorsed the decision of the CPIO. CIC Satyananda Mishra in his Order writes:

“We strongly object to the decision of the CPIO sup-ported by the order of the Appellate Authority that the Indian postal order is not an accepted mode of payment of application fee under the RTI Act. The rules framed by the Government of India in this regard are quite clear and it is unfortunate that nearly 3* years after the Indian postal order was introduced as a method of payment, these authorities should be rejecting an application from a citizen by disal-lowing his postal order. During the hearing, the Respondents expressed regrets on behalf of the CPIO and the Appellate Authority but that hardly helps. The rejection of his application and, later; his appeal on the sole ground that he had decided to pay his application fee by postal order has caused avoidable harassment and financial loss to the Appellant. We, therefore, direct the CPIO to explain in writing if he has reasonable cause for his decision to disallow the application of the Appellant. If we do not receive his explanation within 15 working days from the receipt of this order, we will proceed to consider impos-ing the maximum penalty of Rs. 25,000 on him for having denied the information on thoroughly wrong grounds.

The appellant in this appeal had also submitted that the UCO Bank had only one Appellate Authority lo-cated in their corporate office in Kolkata and very few CPIOs in the field making it extremely difficult for information (* Actually it is nearly 4 years) seek-ers to approach these authorities for information. Besides, it appears that the Appellate Authority does not give any opportunity of hearing to the Appellants before deciding the appeals. The Respon-dents admitted that indeed there was only one Appellate Authority for the entire Bank having thou-sands of branches all over India and that the Appellate Authority decided appeals without providing any opportunity of hearing to the Appellants. This is both unfortunate and unacceptable; nearly 5 years into the implementation of the Right to Informa-tion (RTI) Act, a responsible public authority like the UCO Bank must not treat this law with such casual abandon. Section 5 (1) of the Right to Information (RTI) Act clearly mandates every public authority to appoint as many CPIOs in all administrative units or offices under it as may be necessary to provide information to persons requesting for the information under this Act. Similarly, Section 19(1) requires that such officers senior in rank to the CPIOs should be identified as Appellate Authority for receiving and deciding appeals. We expect that the UCO Bank shall, within a month from the receipt of this Order, designate larger number of CPIOs to cater to the information need of the citizens and designate more appellate authorities, preferably, in the Zonal offices, so that Appellants do not have to go all the way to its corporate office for filing appeals. We also direct the Appellate Authority to provide an opportunity of hearing to the Appellants before passing any order on their appeals.

                                 Part B: The RTI ACT

On January 20, 2010, the Ministry of Personnel, Public Grievances and Pensions [Department of Personnel & Training (DoPT)] issued one Office Memorandum (OM) on the subject of maintenance of records in consonance with Section 4 of the RTI Act.

In part A, I have summarised one Order on Section 4 and commented on its importance. In Part 3, the letter of SCIC talks of Section 4. I request all readers to bring this OM of DoPT to the notice of public authorities they are connected with such as PSUs, Nationalised Banks, Government-owned insurance companies and so on. Said OM reads as under:

The Central Information Commission in a case has highlighted that the systematic failure in maintenance of records is resulting in the supply of incomplete and misleading information and that such failure is due to the fact that the public authorities do not adhere to the mandate of Section 4(1)(a)of the RTI Act, which requires every public authority to maintain all its re-cords duly catalogued and indexed in a manner and form which would facilitate the Right to Information. The Commission also pointed out that such a default could qualify for payment of compensation to the complainant. Section 19(8)(b) of the Act gives power to the Commission to require the concerned public authority to compensate the complainant for any loss or other detriment suffered.

   Proper maintenance of records is vital for the success of the Right to Information Act but many public authorities have not paid due attention to the issue despite instructions issued by this Department. The undersigned is directed to request all the Ministries/Departments, etc,. to ensure that requirements of Section 4 of the Act in general and clause (a) of sub-section (1) thereof in particular are met by all the public authorities under them without any further delay.

At this stage, I may also refer to THE PUBLIC RE-CORDS ACT, 1993 (PRA), which regulates the man-agement, administration and preservation of public records of the Central Government, Union Territory Administrations, public sector undertakings, statutory bodies and corporations, commissions and committees constituted by the Central Govern-ment or a Union Territory Administration and mat-ters connected therewith or incidental thereto. The rules (THE PUBLIC RECORDS RULES, 1997) are also enacted under this PR Act.

Under the said Act and Rules also duty is cast on all entities as referred to above (and which are also entities covered under the RTI Act) to regulate etc. of the public records (extensively and in inclusive manner defined) and to furnish an Annual Report to the Director General or head of the Archives in the pre-scribed form.

It may be noted that this Act also provides the regulations for destruction of Public Records. Very often, in response to the request to the PIO to provide some records, the reply is received that the same are destroyed. The applicant then should ask whether compliance is made to the PR Act and the PR Rules. It may be noted that penalty for contraventions is very heavy provided in Section 9 of PR Act as under:

Whoever contravenes any of the provisions of Section 4 or Section 8 shall be punishable with imprisonment for a term which may extend to five years or with fine which may extend to ten thousand rupees or with both.


   Part C: OTHER NEWS

   Important Pronouncements by the Commission:

(Continuing from January 2010)

When Shailesh Gandhi, CIC, was in the BCAS of-fice some months ago addressing RTI activists and journalists, he distributed a compilation of 8 important and profound pronouncements by the Central Information Commission. Herewith 7 & 8 (the last two) thereof:

7. Third Party

It is clearly stated in Section 11 (1) that ‘submission of third party shall be kept in view while taking a decision about disclosure of information’. Section 11 gives a third party an opportunity to voice its objections to disclosing information. The PIO will keep these in mind and denial of information can only be on the basis of exemption under Section 8 (1) of the RTI Act.

The test of public interest is to be applied to give information, only if any of the exemptions of Section 8 apply. Even if any exemption applies, the Act enjoins that if there is a larger public inter-est, the information would still have to be given. There is no requirement in the Act of establishing any public interest for information to be obtained by the sovereign Citizen; nor is there any require-ment to establish larger Public Interest, unless an exemption is held to be valid. Insofar as looking at the credentials of the applicant are concerned, the lawmaker has categorically stated in Section 6 (2), ‘An applicant making a request for information shall not be required to give any reason for requesting the information or any other personal details except those that may be necessary for contacting him.’ Since the law categorically states as above, it is clear that the credentials of the applicant are of no relevance, and are not to be taken into account at all when giving the information. The truth remains the truth and it is not important who accesses it. If there is a larger Public Interest in disclosing a truth, it is not relevant who gets it revealed.

If the third party objects to giving the information, the Public Information Officer must take his objec-tions and see if any of the exemption clauses of Sec-tion 8 (1) apply. If any of the exemption clauses ap-ply, the PIO is then obliged to see if there is a larger Public interest in disclosure. If none of the exemp-tion clauses applies, information has to be given.

8. Assets of Public Servant

The Commission can allow denial of information only based on the exemption listed under Section 8 (1) of the Act.

Under Section 8 (1) (j), information which has been exempted is defined as:
“Information which relates to personal information, the disclosure of which has no relationship to any public activity or interest, or which would cause unwarranted invasion of the privacy of the individual unless the Central Public Information Officer or the State Public Information Officer or the appellate authority, as the cause may be, is satisfied that the larger public interest justifies the disclosure of such information:”

To qualify for this exemption, the information must satisfy the following criteria:

   1. It must be personal information

Words in a law should normally be given the meanings given in common language. In common lan-guage we would ascribe the adjective ‘personal’ to an attribute which applies to an individual and not to an Institution or a Corporate. From this it flows that ‘personal’ cannot be related to Institutions, organisations or corporates. (Hence we could state that section 8(1)(j) cannot be applied when the in-formation concerns institutions, organisations or corporates).

    2. The phrase ‘disclosure of which has no relationship to any public activity or interest’ means that the information must have some relationship to a public activity.

Various Public Authorities in performing their func-tions routinely ask for ‘personal’ information from Citizens, and this is clearly a public activity. When a person applies for a job, or gives information about himself to a Public Authority as an employee, or asks for a permission, license or authorisation, all these are public activities. The information sought in this case by the appellant has certainly been obtained in the pursuit of a public activity.

We can also look at this from another aspect. The State has no right to invade the privacy of an individual. There are some extraordinary situations where the State may be allowed to invade the privacy of a Citizen. In those circumstances, special provisos of the law apply, always with certain safe-guards. Therefore it can be argued that where the State routinely obtains information from Citizens, this information is in relationship to a public activity and will not be an intrusion of privacy.

Therefore we can state that disclosure of information such as assets of a Public Servant, which is routinely collected by the Public Authority and routinely provided by the Public Servants, – cannot be construed as an invasion of the privacy of an individual. There will only be a few exceptions to this rule, which might relate to information which is obtained by a Public Authority while using ex-traordinary powers such as in the case of a raid or phone-tapping. Any other exceptions would have to be specifically justified. Besides, the Supreme Court has clearly ruled that even people who aspire to be public servants by getting elected have to declare their property details. If people who aspire to be public servants must declare their property details, it is only logical that the details of assets of those who are public servants must be considered to be disclosable. Hence the exemption under Section 8(1)(j) cannot be applied in such a case.

   RTI Act amendments:

Very interesting and significant exchange of corre-spondence has taken place between PM and Mrs. Sonia Gandhi: Times of India on April 10, 2010 has made following report:

Against PM wish, Sonia stood ground on ‘no RTI changes’

Congress Chief Sonia Gandhi firmly resisted changes to the RTI Act despite the government wanting to tinker with the transparency legislation, an RTI query reveals.

Amendments to the RTI Act have been in the news for some time with activists protesting against the government’s move to exempt disclosure of Cabinet papers, internal discussions and judiciary. Sonia, in a letter dated November 10 had voiced this concern and said the government should “refrain from accepting or introducing changes in the legis-lation… in my opinion there is no need for changes or amendments”.

The letter, accessed under RTI by activist S C Agar-wal, said, “It will of course take time before the momentum generated by the Act makes for greater transparency and accountability in the structures of the government. But the process has begun and it must be strengthened… It is important, therefore, that we adhere strictly to this original aims and re-frain from accepting or introducing changes in legislation on the way it is implemented that would dilute its purpose. In my opinion, there is no need for changes or amendments. The only exceptions permitted, such as national security, are already well taken care of in the legislation.”

In response, the PM on December 24 stood his ground that certain issues could not be dealt with without changes in the Act. Among the issues cited by the PM were that the CJI had pointed out that the “independence of the higher judiciary needs to be safeguarded in the implementation of the Act. There are some issues relating to disclosure of Cabinet papers and internal discussions”.

The PM assured that while the government was tak-ing steps to improve dissemination of information and training of personnel, “there are some issues that cannot be dealt with, except by amending the Act”. “The Act does not provide for the constitution of benches of the CIC though this is how the busi-ness of commission is being conducted,” the PM had said.

   Editorial in Times of India of India of April 14, 2010

The RTI Spectre

The act is working. Don’t tamper with it

Few of our public institutions foster a culture of transparency and accountability. The Right to In-formation (RTI) Act was enacted in 2005 to change tradition of opacity and make governance a trans-parent process. The Act’s been working reasonably well and has become useful tool for a large cross-section of civil society to examine the workings of government. Since in the process institutional failings get exposed as well, there is resistance to the RTI culture from various quarters including the government.

Many public institutions that come under the ambit of the Act now want its radical edge blunted. Many state information commissions are starved of funds and personnel, which may lead to a collapse of the institution itself. Pleas to amend the Act must be seen in this context and handled with caution. As Congress president Sonia Gandhi wrote in her letter to the prime minister, “It is important that we adhere strictly to its (RTI Act) original aims and re-frain from accepting or introducing changes in the legislation on the way it is implemented that would dilute its purpose.” Sonia’s intervention has come in the wake of a letter written by the Chief Justice of India (CJI) to the Prime Minister. The letter states that information concerning the functioning of the judiciary should be exempted from the scope of the Act to safeguard its independence.

The CJI’s apprehensions about possible misuse of in-formation of “a highly confidential and sensitive nature” are valid. But should, for example, information on in-house inquiry proceedings regarding allegations against sitting judges or appointment of judges in high court be considered sensitive and barred from the public eye? Should not the apex court be in the forefront of an initiative to make the working of public institutions transparent? The push to amend the RTI Act came first from the government itself. Last year, the government proposed amendments to the Act so that “frivolous and vexatious” applications could be discarded and disclosure of file notings exempted. The amendments failed to pass muster with state information commissioners, but they could be revived at any time.

To give teeth to the RTI legislation, the government must beef up infrastructure at the information commissions. More personnel and infrastructure must be created fast at the commissions to avoid a break-down. There are already more than 11,000 cases pending with the Central Information Commission. The situation is worse in many states. The focus must be on a climate of openness, rather than trying to restrict the scope of RTI Act.

   Right to Information – A route to good Governance

The book under above title was published by BCAS Foundation in 2007. Its updated, enlarged and re-vised edition authored and compiled by Narayan Varma was launched by BCAS on 25th March by Shri TN Manoharan, former president of ICAI and the director of Satyam Computer Services Ltd and now Padma Shri.

Same was re-released by Public Concern for Governance Trust (joint publishers of this edition) on 7th April through the hands of Dr. Suresh Joshi, the Chief Information Commissioner, Maharashtra. The function was extensively covered by the Press. Hereunder is what DNA reported on 08.04.2010:

   RTI replies may soon be at your doorstep in 7 days State information commissioner will write to CM for faster disposal of cases

If State information commissioner Suresh Joshi has his way, information sought under the Right to Infor-mation (RTI) Act will be made available to citizens in seven days, and not the stipulated 30 days.

Speaking at the launch of RTI activist Narayan Varma’s book Right to Information – A Route to Good Governance on Wednesday, Joshi said he will be writing to the chief minister and the chief secre-tary asking for a change in the Act to ensure faster dissemination of information.

Joshi said that in only 15% of the total applications, information officers may need more than a week to respond. “There is no reason for all applicants to wait for a month to get a reply,” Joshi said, adding, “I will also ask the chief minister and chief secretary to compliment officers who give information within seven days.”

Talking about the success of the RTI Act, Joshi said corruption has gone down by 20%, “The RTI Act has increased accountability and transparency. Bureau-crats cannot shirk their responsibilities anymore.”

He said the government needs to appoint senior officers as first appellant authorities (FAA). “If there is better work at that level, 50% of our work will re-duce,” he sad.

Talking about Varma’s book, Joshi said it was a one-stop guide for all RTI related queries. The book contains information on prominent cases and judgments given by various commissioners. “The idea is not only to create awareness, but also to help peo-ple understand the Act,” Varma said.

   Information under RTI now in just 15 days

True to his words as reported in above, Dr. Joshi wrote to CM on April 8. Hereunder news item in In-dian Express of 22.04.2010:

CITIZENS now may not have to wait for 30 days to get details under the Right to Information Act. In a bid to make Maharashtra progressive by setting a good trend in RTI, State Information Commissioner Suresh Joshi has requested Chief Minister Ashok Chavan to issue a resolution to make information available in 15 days.

With the State receiving 4.4 lakh applications from citizens – considered higher than in the US and Mexico – and disposal rate of more than 95 percent Joshi said it was about time that Maharashtra moves to giving information earlier than the 30-days limit.

In 2002, before the Central Government accepted the Act, Maharashtra had its own RTI Act, which required providing information within 15 days.

Therefore, there shouldn’t be a problem in going back to the original process. “It is not difficult to give details or documents in 15 days as everything is available in the department itself. Officials can send letters to applicants in seven days time to take the information after paying necessary amount and by the 15th day they can hand over the detail,” Joshi said.

The letter – a copy of which is available with The Indian Express written to Chavan on April 8 – states that a Government Resolution should be issued urging officials to try hard and give information in 15 days. Chavan is expected to reply to the letter in the next few weeks.

Although officials doing so cannot be given monetary incentive, head of departments could be suggested to take this note while considering promotions, the letter states.

“There are Confidential Reports prepared for officers by their seniors and they can mention that due to exemplary services in disposing RTI queries he could be considered for accelerated promotion,” Joshi said. While amendment to this extent in the act will require Center’s approval, Joshi said that Maharashtra can experiment and see if the effort is successful.

“If information could be given in 15 days and all departments follow the rule instead of waiting for 30 days, then the state can set an example and then central government could take the lead and make a similar suggestion for other states,” Joshi said.

While Joshi is happy with the massive use of the RTI by citizens he has expressed dissatisfaction in section 4 of the act which requires voluntary disclosure of information on part of government.

NSE is a Public Authority

High Court of Delhi in a decision dated 15th April, 2010 have held that NATIONAL STOCK EXCHANGE OF INDIA LIMITED is a “public authority” as it is an “authority or institution of self government’ constituted or established by notification or order issued by the appropriate Government. It is also held that the petitioner is controlled by the appropriate Government.

Detailed reporting of this landmark decision will be made in the next month’s article. In Mumbai, we are moving Bombay High Court, where Writ petition is pending, to decide similarly in the matter of BSE.

BCAJ Admin

ORDERS OF CIC

Right to Information

Section 2(f) of the RTI ACT: INFORMATION Section 2(f) which defines the word
‘information’ provides as follows.

In this Act, unless the context otherwise requires.

(f) ‘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;

“According to the Commission, ‘information’ which is
requested u/s.6(1) of the RTI Act refers to only that information which is
available on record. Such information cannot be created. The terms ‘opinions’
and ‘advices’ which are brought within the purview of ‘information’ u/s.2(f) of
the RTI Act are opinions or advices that are already present on record. It does
not mean that if the opinion or advice of the public authority is sought
u/s.6(1) of the RTI Act, the said opinion or advice shall have to be created. It
must be an opinion or advice which is already on record. The creation of
information by the public authority every time such information is sought
u/s.6(1) of the RTI Act shall render governance impossible. However, the
Commission has observed that there are certain practices within a department
that are peculiar to that department. Such practices or understanding within the
department may not be present in a recorded form. Where information sought
u/s.6(1) of the RTI Act pertains to such general practices or understanding,
then the same must be provided to the applicant, even if such practices or
understanding are not specifically on record.”

The Appellant in the case before the Commission had cited one
order of the Supreme Court of India in the matter of Khanapuram Gandaiah v
Administration Officer & Ors. 2010(1) ID 287 (SC). The Supreme Court of India,
while dismissing the petition, interpreted section 2(f) of the RTI Act and
observed that an applicant u/s.6 of the RTI Act can get any information which is
already in existence and accessible to the public authority under law. The
applicant is entitled to get a copy of the opinions, advices, circulars, orders,
etc but he cannot ask for any information as to why such opinions, advices,
circulars, orders, etc have been passed, especially in matters pertaining to
judicial decisions.

Note: I have not covered in this reporting, the facts of the
case as same are not required to bring out the analysis and interpretation
made of the provisions of Section 2(f).

[Dr. Jitendra Nath Gupta vs. PIO & SDM (Civil Lines):
Decision No. CIC/SG/A/ 2010 / 00 2398/ 9878 of 22.10.2010] [2010(2) ID 593 (CIC,
DELHI)]

? Mr. Virajoo Kumar had asked Telecom Regulatory Authority of
India (TRAI) to provide him certain information in respect of Mobile no.
09304549785..

PIO of TRAI replied to inform the applicant that no such
information was being maintained by TRAI.

During the hearing before the Commission, the representative
of TRAI submitted that TRAI can call for such information from the service
provider as it needs for its own purposes by passing an order in writing but the
information requested for by appellant is not wanted by TRAI and therefore, it
is not bound to call for this information from the service provider.

As per the clause 2(f), information also includes
‘information relating to any private body which can be accessed by a public
authority under any other law for the time being in force.’ In other words, if
TRAI has authority under any law to access information from Reliance Company, it
can access that information for onward transmission to the information seeker.
According to Shri. Abraham, u/s.12of the TRAI Act,1997, TRAI has the authority
to call for information from the service provider by passing an order in writing
but this information should be such as is needed by TRAI for its own purpose. In
other words, according to him, TRAI cannot seek information from a private
entity for servicing the RTI Act.

Hereunder I reproduce paras 6 to 9 of the
decision –

6. Clause (a) of section 12(1) is reproduced
below –

‘(a) call upon any service provider at any time to furnish in
writing such information or explanation relating to its affairs as the Authority
may require’

Shri Abraham lays emphasis on the last 05 words of the above
clause viz. ‘as the Authority may require.’ It is his interpretation that this
expression means that TRAI can call for information only when it needs it for
its own purposes and not for the purposes of supplying it to the information
seeker under the provisions of the RTI Act.

7. We are afraid, the construction put on clause (a) by Shri
Abraham is not correct. According to us, the true meaning of the expression ‘as
the Authority may require’ is ‘as the Authority may direct’. In other words,
TRAI can call for such information from a private entity as it needs for its own
purposes as also for the purpose of servicing the RTI Act.

8. The above interpretation also finds support in the
Judgement dated 25.9.2009 of the Delhi High Court in WP (civil) No 765 of 2007 (Poorna
Prajna Public School Vs CIC) wherein High Court favoured wider interpretation of
the word ‘information’. The relevant part of para 16 of the judgement is
extracted below: –

“Further, information which a public authority can access
under any other law from private body is also ‘information’ u/s.2(f). The public
authority should be entitled to ask for the said information under law from the
private body. Details available with a public authority about a private body are
‘information’ and details which can be accessed by the public authority from
private body are also ‘information’ but the law should permit and entitle the
public authority to ask for the said details from a private body”.

DECISION

9. In view of the above, we are of the opinion that the
appellant is legally entitled to seek the information from TRAI u/s 2(f) of the
RTI Act and TRAI is mandated to call for such information from the service
provider (Reliance Company in this case) as mentioned hereinabove and furnish
the same to the appellant. We respectfully disagree with the view taken by other
Single Benches of the Commission.

[Virajoo Kumar vs. TRAI: Decision No. CIC/DS/ C/
2010/00 332 decided on 25.10.2010] [2010(2) ID 661(CIC DELHI)]

PART B: The RTI Act, 2005

In the last issue (Feb 2011) I had reported on the directions issued by the Central Information Commission (CIC) on 09.12.2010 to all the Central Government’s Public Authorities through the Min-istries & Departments of Government of India. It appears that landmark initiative taken by the CIC is not bearing good fruit.

Of the 1,600 public authorities (government departments, apex bodies, autonomous organisations and ministries) listed by the Commission, only 125 have obeyed its direc-tive and appointed transparency officers. The macro picture at the central level is no better with only 34 of 70 odd ministries and apex bodies appointing transparency officers. The ministries of finance, home and culture and the Prime Minister’s Office have done nothing except expressing their intention to appoint a transparency officer.

The Department of Personnel and Training (DoPT), the parent department of the Commission, has taken exception to the directions and said that by giving such directions to departments, CIC has overstepped its brief. In its letter to the authority, DoPT has said that by appointing transparency officers CIC was trying to ‘create another bureaucracy’.

CIC, however, feels that it is only trying to assign another responsibility to the same set of bureaucrats present in the government departments. Speaking to ET, Chief Central Information Commissioner Satyanand Mishra said, ‘We are examining the matter. The Com-mission does not have the powers to withdraw any of its orders. At the same time we don’t need to justify our orders. If any department has an objection it can only take legal recourse. Over the past few years in our deliberations as Information Commissioners, we had found that had the Ministries voluntarily disclosed information many applications would not have been filed. This is why the directive was given.’

Information on & Arround

Gandhigiri for getting information:

Four members of Deshbhakti Andolan distributed roses to employees at the Charity Commissioner’s office in Worli one day in early February.
Deshbhakti Andolan resorted to Gandhigiri after the Charity Commissioner’s Office, in response to a query filed under the Right to Information Act by one of the andolan members, said it had lost pertinent files and papers.
Charity Commissioner on complaint made has assured that the file would be traced and information shall be provided.

Working at the Commissions:

The Public Cause Research Foundation has analysed 79,813 decisions passed by the CICs and SICs across the country. The researchers found that in 59,631 cases, the information was delayed, but only 1,896 officials were punished. The report said had these penalties been imposed, the exchequer would have got nearly Rs. 86 crore during 2009-10. ‘Twenty-six Commissioners across the country did not impose a single penalty in the whole year’

Working at crematoria in Mumbai:

Activist Anil Galgali, who sought information under the Right to Information Act, said those who register the number of deaths in the crematoria were over-worked.
There is a paucity of staff at the crematoria run by the municipal administration. With 36 posts lying vacant in the 46 crematoria run by the BMC, the delay in getting the last rites done has been inconveniencing citizens as well as the staffers.
The civic administration runs 46 crematoria, 7 cemeteries for Christians and 10 for Muslims. Apart from these, there are 125 privately-run ones and 11 powered by electricity.
Galgali said that after the RTI application was filed; the civic body issued a circular directing the authorities to fill the vacant posts.

PART D: RTI & SUCCESS STORIES

Normally, my article contains 3 parts as would be observed above. Since long, I have been wanting to add PART D: containing success stories of RTI. BCAS Foundation & Public Concern for Governance Trust (PCGT) (where at I am a trustee) run 4 RTI Clinics and on an average 50 individuals visit these clinics in a month and are provided RTI guidance and they submit RTI applications and appeals etc. We now intend to arrange feedback on their applications etc. As such very few come back to report the success they get or solutions that they achieve though many have satisfactory results.

Similarly, I believe many CAs make RTI applications etc and have success stories.

It is with the above belief that I intend to add PART D as above to my article. I request all read-ers to send their RTI success stories in brief. We would like to report them here. Please join in this crusade.

Hereunder one success story:

Extracts from Akila Maheshwari’s email of 23 Feb 2011:

Dear Narayan Varmaji:

First of all let me profusely thank you and other members of PCGT and BCAS for guiding my hus-band Dr. Shiban Charagi to fight his case through RTI. He was not only successful to get justice for himself but for others too, when a large Goverment Organisation like B.A.R.C. (Bhabha Atomic Research Centre) under Department of Atomic Energy had to strictly adhere to Supreme Court Judgements of 12th May 2008 by Justice Markandeye Katju.

BARC has started informing officers at all levels about their CR Grading by their Superiors. Also an officer can challenge his CR grading by refusing to put his signature on the intimation of the CR Grading.

My husband (who has the rare privilege of being listed in MARQUIS who is who in the world) was denied PRIS (Performance related incentives scheme) on the basis of poor assessment by his immediate supervisor. My husband has been a UNESCO Scholar. He was a one of the few employees (out of 15300) denied PRIS on poor CR grading. His CR was assessed in a hurry by a biased supervisor. He was also denied facilities for research work and manpower assigned to him removed and he was thereby harrased and humiliated.

My husband filed a letter of grievances to the PMO. This was forwarded to the Secretary DAE. Other reminders followed. But no action took place at ground level.

Later my husband took guidance from BCAS and was successful in getting a sum of over a lakh rupees (pre tax deduction). He was informed of his previous grade in CR. Later his grading was revised. After re-assessment PRIS sanctioned. This is the first such case in the history of the Department of Atomic Energy.

A battle that would have cost lakhs of rupees if taken up legally with CAT etc and would have been time consuming also and few years delay ended within two to three months of filing the RTI petition.

Hail RTI! Hail BCAS & PCGT and all the activists who made RTI a reality! RTI is a new pillar of Indian democracy.

BCAJ Admin

Orders of The Court

Right to Information

Part A: Orders of The Court

Public Authority : S. 2(h)

Only Public Authorities are obliged to provide information to
the citizens under the RTI Act. In January 2010 under the same title, I had
written :

“Many bodies operate primarily as service to the citizens of
India, though some of them may even be commercial or business bodies. When RTI
application is received by them, they take a view that RTI Act does not apply to
them. They contend that they are not ‘Public Authority’ (PA) as defined u/s.2(h)
the Act. Basically, such bodies need to be transparent and accountable not only
to those they deal with, but to the citizens at large.”

Matter came before the High Court of Delhi in writ petition
(civil) No. 4748 as to whether National Stock Exchange of India Ltd. is Public
Authority or not. The Full Bench decision of CIC as reported earlier in this
feature, had decided that NSE, BSE and all other stock exchanges are PA.

The definition of ‘public authority’ u/s.2(h) reads as under
:

‘public authority’ means any authority or body or institution
of self-government established or constituted :

(a) by or under the Constitution;
(b) by any other law made by Parliament;
(c) by any other law made by State Legislature; (d) by notification issued or
order made by the appropriate Government, and includes any :

(i) body owned, controlled or substantially financed;

(ii) non-Government organisation substantially financed,
directly or indirectly by funds provided by the appropriate Government.

S. 2(h) of the Act consists of two parts. The first part
states that public authority means any authority or body or institution of
self-government established or constituted by or under the Constitution, by any
enactment made by the Parliament or the State Legislature or by a Notification
issued or order made by the appropriate Government. The second part starts from
the word ‘includes’ and states that the term ‘public authority’ includes bodies
which are owned, controlled or substantially financed directly or indirectly by
funds provided by the appropriate Government and non-Government organisations
substantially financed directly or indirectly by funds provided by the
ap-propriate Government.

It is obvious that the term ‘public authority’ has been given
a broad and wide meaning not only to include bodies which are owned, controlled
or substantially financed directly or indirectly by the Government, but even
non-Government organisations, which are substantially financed directly or
indirectly by the Government. The idea, purpose and objective behind the
beneficial legislation is to make information available to citizens in respect
of organisations, which take benefit and advantage by utilising substantial
public funds. This ensures that the citizens can ask for and get information and
know on how public funds are being used and there is accountability,
transparency and openness. Even private organisations, which are enjoying
benefit of substantial funding directly or indirectly from the Governments, fall
within the definition of ‘public authorities’ under the Act.

The Court then has extensively discussed the meaning of words
such as ‘authority’, ‘substantially financed’, ‘body’, ‘institution’, etc. While
interpreting ‘establish’ the Court noted : “Thus, it cannot be said that the
only meaning of the word ‘establish’ to be found in the sense in which an
eleemosynary or another institution is founded. The word ‘established’ need not
mean the initial foundation and it includes creation, confirmation or
recognition.

Then interpreting the word ‘constituted’, the Court stated
that the word ‘constituted’ is wider than the ‘established’. The word
‘constituted’ in S. 2(h) of the Act not only refers to the first act/acts by
which a body or organisation is set up, but a subsequent act or acts which will
have the effect of conferring on an organisation or a body, a special status and
constitute a ‘body’ with status of an ‘authority’ or institution of
‘self-government’ for the purpose of S. 2(h) of the Act. A private institution
or a body may be incorporated or formed by acts of private persons, but
subsequent statutory enactment or an order or Notification issued by the
appropriate Government can result in constitution and conferring upon the said
body, status of an ‘authority’ or an institution of ‘self-government’.

National Stock Exchange (NSE) is a company incorporated on
27-11-1992. Reading from the objects as per its Memorandum, it is noted that NSE
was incorporated for the purpose of establishing a stock exchange for which it
was necessary and required that they should be registered and/or recognised
under the Securities Act. It is only after the registration or recognition under
the Securities Act that NSE could carry out any of the functions or objects for
which it was incorporated.

Once a body or an institution has got its
recognition/registration under the Securities Act, it can operate and function
as a stock exchange and perform the said public functions. Registration or
recognition u/s.4(3) of the Securities Act by the Central Government has the
effect of constituting or establishing an ‘authority’ or an institution of
‘self-government’ as defined u/s.2(h).

NSE also satisfies requirements of the second part of the S.
2(h) of the Act. It is a ‘body’ which is controlled by Central Government. It is
not possible to accept that the control exercised is merely regulatory and is
not a pervasive and deep control.

The Court then writes :

“The Apex Court in Unni Krishnan J.P. v. State of Andhra
Pradesh held that when a private body carries on public duty, as in the case of
an institution whereby recognitions and affiliations are to be granted with
conditions, Stock Exchanges are also recognised subject to various conditions.
Unlike the companies registered under the Indian Companies Act, the bye-laws of
a Stock Exchange can be amended. Even for amendment in bye-laws, the Stock
Exchange requires approval of the Central Government. The Central Government,
having regard to the provisions of the 1956 Act, as noticed hereinbefore, can
interfere in the functions of the Stock Exchanges at every stage.”

The Court finally ruled :

In view of the aforesaid findings, it is held that the
petitioner is a public authority as it is an authority or institution of
self-government constituted or established by Notification or order issued by
the appropriate Government. It is also held that the petitioner is controlled by
the appropriate Government. The writ petition accordingly has no merit and is
dismissed. However, in the facts and circumstances of the case, there will be no
order as to costs.

The above is a single-Member judgment. The same is now
challenged.

Senior advocate Abhishek Manu Singhvi, appearing for NSE, contended that the single-Judge Bench had erred in bringing it within the ambit of the RTI Act, as it is neither a Government body nor financed by the Government.

A Division Bench headed by acting Chief Justice Madan B. Lokur stayed the operation of a single-Bench order which had on 15th April held that stock exchanges are ‘quasi’ governmental bodies which are bound to disclose information to the public under the transparency law.

Learned counsel accepts notice on behalf of the respondents 2 to 4. Notice may now be issued to the respondent No. 1. returnable on 3rd August, 2010.

[Writ Petition (Civil) No. 4748 of 2007 : National Stock Exchange of India Ltd. v. Central Information Commission & Others, decision dated 15-4-2010]

Part B: The RTI ACT

Fourth Annual Report of 2009 of Maharashtra State Information Commission

Some salient features of the Report :

The number of applications received in the State in the year 2006 were 1,23,000, in the year 2007, 3,16,000, in the year 2008, 4,16,090 and in the year 2009, 4,40,728. The number of applications in other big States is less than one lakh. At the international level the number of applications received in Britain are 90,000 and in Mexico 1,25,000, whereas the number of applications received by the Central Government are three and a half lakh. This indicates an overwhelming response to the RTI Act amongst the people of Maharashtra.

The Right to Information Act has brought about transparency, accountability and a sense of participation with the administration. It is necessary that administration, civil services, media, non-government organisations and all other sections of society accept these newer concepts. With these objectives we can attain good governance. The RTI Act is not only limited to administrative reforms, but it is seen as an instrument for upholding constitutional fundamental rights and human rights on a larger scale. Transparency and openness have now become acceptable principles. Supplying information is the rule, whereas denying information is the exception. Similarly the desire to eradicate corruption and fight against injustice is increasing amongst citizens. The Act has been successful in curbing corruption to some extent. This is not a small achieve-ment. The feeling of helplessness of the citizen has been reduced to some extent on account of this Act. The feeling that people’s representatives and Government officers are accountable is now a well-recognised fact amongst the general public. This Act has made available a level playing field to youth, old and retired persons. Many enlightened citizens, non-government organisations are prevailing on the Government to follow policies of public interest with the help of this Act. It can be said that this Act has given birth to a new era of proactive disclosure.

Supportive to S. 4 of the RTI Act where a public authority is required to suo moto declare certain specified information, there is a provision in the Chapter-III of the Maharashtra Government Employees Transfer Regulations and ‘Prevention of Delay in Discharging the Duties by Government Employees Act-2005’ to perform their duties as laid down in the Citizens Charter, laying down the levels of supervision and completing the Government work within the prescribed time schedule. There is also a penal provision for delay. If all these laws are read together it can be seen that legal framework has come in place in the State for good governance.

It was the first step to evolve the institutional mechanism for implementing the RTI Act. As a measure to reach more people as a part of this institutional frame work, the Government has set up Benches of the Commission at the regional level. Maharashtra is the only State in the country to take up such initiative. The Information Commissioners are deciding the cases at the district level, with a view to reach more and more citizens. As a part of this exercise Dr. Joshi, State’s Chief Information Commission-er, has personally heard 1200 appeals at Dhule, Jalgaon & Nashik.

The Commission has undertaken hearing of appeals through video conferencing. In 2009, S.I.C. Greater Mumbai has heard 913 appeals through video conferencing. The regionwise distribution is as follows :

Pune Region

…

274

Aurangabad Region

…

390

Nagpur Region

…

173

Amravati Region

…

Total

…

913

State Information Commission is of the view that RTI should be a part of syllabus also.

Some statistics :

In respect of 36
departments in Maharashtra Mantralaya :

There are 76747 PIOs and 19016 AAs

Number of RTI applications

received
by PIOs in 2009

440728

pending
as on 1-1-2009

57107

disposed
in 2009 and

information provided

439061

rejected

10893

Amount collected for

providing
information

in
2009

Rs.1,23,04,361

Number of first appeals
in 2009

Received
in 2009

43848

Pending
as on 1-1-2009

8694

Disposed
of in 2009

45953

Disposed
positively

40908

Rejected

5045

Pending
as on 31-12-2009

6589

Part C: OTHER NEWS

Marathi film on RTI : ‘Ek Cup Chya’

One can’t believe that two hours’ film in Marathi language with English subtitle on RTI can be so interesting and absorbing that one enjoys every minute thereof while watching it.

It is Ek Cup Chya, a movie about the Right to Information Act (RTI) as an effective tool against injus-tice (the cup of tea, a symbol of hospitality being the metaphor for corruption here).

The storyline is simple : a humble state bus conductor is slapped with a heavy electricity bill. Humiliated by the bureaucracy, the family embarks on their quest for justice using RTI. “The film operates at two levels,” informs the producer. “As a family drama and as pure information. A lot of research has gone into it with inputs from activists like Aruna Roy, Arvind Kejriwal etc.”

I was the chief guest at its screening at SP Jain Insti-tute of Management on April 28. Hopefully, I shall arrange its screening in due course for all interested in watching it.

Assets disclosure by MPs :

At least 70 Lok Sabha MPs, including former Prime Minister HD Deve Gowda, Rashtriya Janata Dal (RJD) chief Lalu Prasad and cricketer-turned-politician Navjot Singh Sidhu, have not yet disclosed details of their assets, a Right to Information (RTI) application has revealed.

The information was obtained in reply to an application filed by RTI activist Subhash Chandra Agarwal with the Lok Sabha Secretariat, seeking names of the members who have not disclosed details of their assets and wealth to the speaker.

“No action has so far been taken against defaulting members . . . . the reason for not taking any action against those Lok Sabha members who have not submitted details of assets and liabilities to the Lok Sabha speaker is the non-receipt of any complaint from any other member or any citizen of India in this regard as required under Rule 5(1) of the members of the Lok Sabha (Declaration of Assets and Liabilities) Rules, 2004.”

Legalising alterations to the buildings :

All is not fine with the fines collected by various civic authorities in Mumbai as an RTI application filed by activist Aaftab Siddique reveals.

The building proposal department in ward H West has collected over Rs.32.25 crore between 2007 and 2009 as fine to legalise alterations, after submitting the floor plans and drawings for approval. The health department has collected fines of Rs. 33.72 lakhs only between 2000 and 2009 while the licence department has collected barely Rs.3 lakhs in the same period.

Dues to retirees at BMC :

Data procured under RTI from various departments of the Brihanmumbai Municipal Corporation (BMC) show that dues to the tune of Rs.30.41 crore is yet to be paid to those who retired over the past four years.

RTI activist, Mr. Milind Mulay, had filed a query under RTI. When he checked with many officers at the ward level, they were not even aware of the number of people who have retired from their office in the last four years. He writes : “My mother, Vijaya Mulay retired as a nurse from the Marol Maternity Home, but the BMC made her run around for almost one year and a half and even after that, she did not get her dues. She then used the RTI Act to get her file moving.”

Red tape at BMC :

One Mr. Sharad Jadhav has been complaining about the irregularities in awarding a licence to a café located in one of the by-lanes of Dongri in south Mum-bai. Not getting a response, Jadhav finally wrote to the state Anti-Corruption Bureau (ACB). The bureau forwarded the complaint to the Municipal Commissioner for verifying the ‘allegation’ that the civic officials had turned a Nelson’s Eye to Sadguru Café’s illegal construction.

When no action was forthcoming from BMC, Jadhav filed an RTI application to find out about the status of his complaint. Reply received stated : “The BMC cannot give information on the subject as it never received any such letter from the ACB office.” After much criticism in the media, the police officials finally claimed that they had ‘found it’.

BCAJ Admin

Right to Information

Part A : Decisions of CIC

Mr. Mahavir Chopda of Mumbai addressed a few queries under
the RTI Act to NMIMS University of Vile Parle (W), Mumbai. The queries raised
included :

In how many instances did students cancel admission after
paying fees for admission to your FT-MBA Course ?

What amount of fees was retained by NMIMS (i.e.
collected but NOT refunded to students) due to the above cancellations ?

PIO refused to give the information and the First AA did not
reply to the appeal.

In the appeal before CIC, the representative of NMIMS
submitted that NMIMS is not a public authority. To decide on this issue, CIC
stated that two matters need to be determined :

a) Whether NMIMS is public authority by virtue of being a
deemed University.

b) Whether NMIMS is ‘substantially financed’ by Government.

In the hearing before CIC, Mr. Shekhar Gupta appeared on
behalf of NMIMS. He was asked to inform the Commission whether they have
received land at concession rates, or any other subsidies. He was also asked
whether donations received by the Institution are exempt from payment of Income
tax. If any of the concessions described have been availed of, he was to give a
Chartered Accountant’s certificate certifying the value of these concessions.

The respondent has stated that they are unaided Institution.
It was also argued that information sought is exempt u/s.8 (1)(d) of the RTI
Act. An affidavit was filed by Mr. Madhav N. Welling, Pro-Vice Chancellor of
NMIMS University dated 3 February, 2009 stating that the deemed University has
not obtained any land at concessional rates nor are the donations received
exempt from payment of Income tax.

‘Public Authority’ is defined u/s.2 (h) of the RTI Act. It
includes any authority or body or institution of self government established or
constituted . . . . by notification issued or order made by the
appropriate government.

Section 3 of the University Grants Commission Act, 1956,
which provides for the constitution of Deemed Universities reads as follows :

“The Central Government may, on the advice of the Commission,
declare by notification in the official Gazette, that any institution for higher
education, other than a University, shall be deemed to be a University for the
purpose of this Act, and on such a declaration being made, all the provisions of
this Act shall apply to such institution as if it were a University within the
meaning of clause (f) of Section 2.”

CIC noted : Thus, it is clear that a deemed University
gets this status by virtue of a notification issued by the Central Government.
NMIMS has been conferred the status of a deemed University by virtue of
notification No.F9-37/2001-U-3 dated 13 January, 2003 of the Government of
India. It clearly meets the criterion of sub-clause (d) of clause (h) of section
2 of the RTI Act. Hence, all deemed Universities are Public Authorities as
defined under the RTI Act. Since NMIMS University is also a deemed University by
virtue of a notification by the Central Government it is a Public Authority and
must furnish information as mandated by the RTI Act.

The Commission also held that provisions of section 8(1)(d)
do not exempt the information sought, as the said information is not of
commercial confidence, trade secrets or intellectual property the access to
which would harm the competitive position.

In view of the above view taken by the Commission, it held
that NMIMS University is a Public Authority as defined in the RTI Act and must
give the information sought by the appellant. “The information shall be supplied
by Mr. Madhav N. Welling, Pro-Vice-Chancellor of NMIMS University to the
appellant free of cost before 20 April 2009”.

[Mr. Mahavir Chopda vs. NMIMS University, Decision No.CIC/OK/A/2008/01098/SG/2550
dtd. 31.03.2009].

Part B : The RTI Act

Standing committee of the Parliament on RTI Act, 2005 :

In previous 4 issues of BCAJ, 10 items have been reported :

1. Level of awareness

2. Use and Misuse of the RTI Act

3. Reduction of 20-year period for keeping documents

4. Voluntary Disclosures

5. Changes in Section 8

6. Penalties

7. Use of the RTI Act and refusal of information

8. Grievance redressal

9. Application fee

10. Strengthening the RTI Act

Now 11th and final item is being reported :

Central Information Commission

The Central Information Commission has a huge backlog of cases, which seems to grow larger everyday. This is mainly due to the very poor support system and infrastructure provided by the government to the Information Commission. For the Commission to function effectively, they need to have access to a large number of qualified advisors who can do a preliminary analysis of each appeal and complaint, thereby making the task of the Commissioner easier.

Given the role the Commission has to play, especially in adjudicating on matters relating to the government, it is important that the Commission retains its intellectual and functional independence. This is difficult to do when departments and ministries of the government control their budgets. It is, therefore, important that the budgetary allocations for the Commission are voted directly by Parliament or, at the very least, are a separate plan head without being subsumed under any ministry.

It has been observed that various public authorities are not following many of the Commission’s orders and directions. Considering the role the Parliament envisaged for the Information Commission, this is essentially subverting the wishes of the Parliament.

Therefore, it is important that the Prime Minister’s office send out a strong letter directing all public authorities to strictly follow the orders and directions of the Information Commission, unless they have been able to obtain a stay from a competent court. The PMO should also set up a mechanism to review compliance on a monthly basis and the report of compliance should be discussed at the three monthly meeting of the earlier suggested RTI Council.

The manner in which Information Commissioners are selected is shrouded in secrecy and reeks of arbitrariness and patronage. Though the Act very clearly specifies that Information Commissioners must be ‘persons of eminence in public life’, for the government this has mostly meant retired civil servants. No effort has been made to open up the process of selection to public scrutiny, or even to share with the public the rationale for choosing the people who are chosen and not others. This is so even when there have been demands from the public to do so, as in the case of the recent appointment of four new information commissioners. It is ironic that while appointing the Central Information Commissioners under the RTI Act, the Government of India repeatedly violates both the spirit and the letter of the RTI Act, specifically Section 4(1)(c & d).

These sections specify that the government must, suo moto: “publish all relevant facts while formulating important policies or announcing the decisions which affect public; …. provide reasons for its administrative or quasi-judicial decisions to affected persons”. Surely the appointment of Information Commissioners is an administrative decision that affects all the people of India, and also an ‘important decision that affects the public’ !

Part C : Other News

Haj House in Mumbai

Replying to an RTI application filed by Mumbai-based social activist A. M. Attar in November 2008, the Haj Committee of India (HCI) has said that Haj House – the committee’s headquarters – does not belong to the Muslim community.

The popular notion that the massive Haj House near CST, built with donations from the community without any government funding, belongs to the Muslim community is wrong. The HCI, which falls under the ministry of external affairs (MEA), has clarified that Haj House is not a Muslim property and that it belongs to the MEA. Interestingly, The Haj Committee Act, 2002 does not clarify who owns Haj House.

“Muslims had contributed to the construction of the building. Apart from a couple of months when the Haj season is on, the building remains unused. This is gross under-utilisation of a prime property”, said city-based hotelier A. M. Khalid who, along with Attar, is fighting to get Haj House out of the MEA’s control.

CA Examination

Students who fail in chartered accountant exams can find out their mistakes by going through their answer sheets as the Delhi HC directed the Institute of Chartered Accountants of India (ICAI) to provide a certified copy of the paper of students under the Right to information Act. Dismissing an ICAl’s plea against a CIC order, the HC said the answersheet cannot be excluded from the purview of the RTI.

New Rules for RTI applications by NRI

In order to simplify the RTI application process from abroad, the CIC has framed new rules enabling NRIs to pay application fees and information costs at the Indian embassies and missions abroad. “The commission will meet officials from the external affairs ministry and DoPT to smoothen issues related to the mode of payment and acceptance of appeals. Embassies may accept only the fee and information cost and provide e-receipt to applicants”, CIC chief Wajahat Habibullah said.

Padma awards

In response to a Right to Information query filed by Subhash Chandra Agarwal, the Home Ministry has admitted that “no specific record of the deliberations of the meeting of the Padma awards committee is maintained.

Only the final recommendations of the awards committee are submitted for the approval of the Prime Minister and the President”.

In what appears to be an attempt to shrug off disclosure, the government said there were no ‘specific records’ created in terms of receipt of nominations when asked about the number of recommendations that were received by the Home ministry by the cut-off date of September 30.

Incidentally, the decision on the awards was taken over a period of three days in meetings held on December 19, 20 and 22, 2008. The non-official members of the committee nominated by PM Manmohan Singh included Prof. [yotindra Jain, Kapila Vatsyayan, R Chidambaram, Tarun Das and Sayeeda Hameed.

Assets of the Ministers from Rajya Sabha

Earlier PMO had ruled that information on MP’s assets as being furnished to the speakers of the Lok Sabha (LS) and Rajya Sabha (RS) are exempt.

On appeal to CIC, he referred the matter to the speakers of LS and RS. In response, the Rajya Sabha has agreed to provide asset details of the Union Ministers who are members of RS. In reply to RTI query, it provided the information details of assets and liabilities of 16 ministers out of 18 as available.

PM Manmohan Singh owns only Maruti 800, Mr. Praful Patel is the richest cabinet minister with combined wealth of Rs.46.8 crores, Mr. A. K. Antony has the least financial muscle with combined worth of Rs.17.9 lakhs.

Report of Maharashtra State Information Commission

Maharashtra SIC submitted the annual report of 2008 to Vidhan Sabha on 16.03.09. It is a document in Marathi. English translation is under preparation and hopefully will be available in early June. Meantime, some interesting statistics:

5 Commissioners together have imposed penalty in 256 cases, total amount of penalty levied Rs.34,01,432.

Total pendency of appeals as on 31.12.08 is 14,273 (In Mumbai 1574, in Konkan 1,339, Pune 3,863, Nashik 10, Aurangabad 3,584, Amravati 912, Nagpur 970).

Total pendency of complaints u/s.18 is 1207, (highest in Mumbai 560).

It is understood that Maharashtra is the first state in India to present annual report of 2008 as required under section 25 of the RTI Act.

BCAJ Admin

Right to Information

Part A : Decisions of CIC

S. 5(4) of the RTI Act :

Ss.4 of S. 5 of The RTI Act provides that the Public Information Officer may seek the assistance of any officer as he or she considers it necessary for the proper discharge of his or her duties.

Rakesh Agarwal of New Delhi applied for inspection of certain records of Tis Hazari Court, New Delhi.

In reply, the PIO stated that the appellant can inspect the records or take copies of the documents with the permission of Ld. Presiding Officer.

The appellant objected to the condition put for inspection in an appeal to CIC.

CIC, Shailesh Gandhi, in the Order noted as under :

“The onus lies on the PIO to approach any officer of the court as he considers necessary to procure the information that the appellant is seeking. If the appellant is exercising his right to information under the RTI Act, then he is within his statutory rights to only approach persons designated as PIO or APIO. He is not expected to seek permission from persons who are not designated under the RTI Act. The purpose of putting in place S. 5(4) is to ensure that applicants for information do not have to run from pillar to post to access information to which they are rightfully entitled to under the RTI Act. In present case, to ask the appellant to apply for permission from the Presiding Officer of the Court is in clear contradiction to the spirit and word of the law. The Commission considers the PIO’s reply as an instance of shirking responsibility and takes strong exception to such actions.”

S. 28 of the RTI Act :

S. 28 provides that the competent authority (the Chief Justice of all High Courts and Supreme Court are competent authorities u/s.2(e) of the RTI Act) may make rules to carry out the provisions of the RTI Act.

The Delhi High Court (Right to Information) Rules, 2006 as amended include :

The information specified in S. 8 of the Act shall not be disclosed and made available and in particular the following information shall not be disclosed :

(a) Such information which relates to judicial functions and duties of the Court and matters incidental and ancillary thereto.

CIC in his order noted as under for above rule :

The Delhi High Court RTI Rules have been framed u/s.28 of the RTI Act. This provision clearly states that the competent authority may make rules to carry out the provisions of the Act. Therefore, rules framed by the High Court u/s.28 cannot run contrary to the fundamental basis of the RTI Act which is to ensure that citizens can enjoy their fundamental as well as statutory right to information. Rule as above, in effect, appears to add another ground based on which disclosure of information can be exempted. No public body is permitted under the Act to take upon itself the role of the Legislature and import new exemptions hitherto not provided. The Act leaves no such liberty with the public authorities to read law beyond what it is stated explicitly. There is absolutely no ambiguity in the Act and creating new exemptions will go against the spirit of the Act.

Under this Act, providing information is the rule and denial an exception. Any attempt to constrict or deny information to the sovereign citizen of India without the explicit sanction of the law will be going against rule of law.

Right to information as part of the fundamental right of freedom of speech and expression is well established in our constitutional jurisprudence. Any restriction on the fundamental rights of the citizens in a democratic polity is always looked upon with suspicion. Even the Parliament, while constricting any fundamental rights of the citizens, is very wary. Therefore, the Commission is of the view that no competent authority has the sanction to import new exemptions and in the process curtail the fundamental right of information of citizens”.

Above two issues are part of the decision in Mr. Rakesh Agarwal v. Tis Hazari Court, New Delhi : CIC/SG/A/2009/000677/3392 of 22-5-2009.

PM’s surgery :

Mr. Jagdish Jetli made an RTI application to AIIMS, New Delhi seeking information on 7 points connected to the second heart by-pass surgery on the Prime Minister Dr. Manmohan Singh by a team drawn from Asian Heart Institute (AHI), Mumbai led by Dr. Rama Kant Panda. Information sought included :

Details of expertise of all members of the AHI team

Rules of the AIIMS under which a team from a private institute was asked to conduct this surgery.

The CPIO gave certain information which according to Mr. Jetli was vague and evasive.

The Bench of Mrs. Annapurna Dixit, CIC decided as under:

“The respondent submitted that the AIIMS has nothing on record regarding the qualifications of Dr. Panda who conducted the by-pass heart surgery, nor have reasons for his selection been recorded. He stated that the decision to invite Dr. Panda was taken jointly by the PMO and family members of the Prime Minister. The appellant’s contention was that the public has a right to know why a premier institute such as the AIIMS which is staffed by the best doctors in the country and with the best of medical facilities had to invite a “doctor from outside to conduct the operation in its premises. He added that this is a matter of great concern to the public and that inviting a doctor from another institute has eroded the reputation of AIIMS. Keeping the peculiar facts of the case in mind and in the light of the fact that Dr. Panda had used the facilities belonging to AIIMS, which is a public authority, the Commission directs the CPIO to obtain the relevant information from the Asian Heart Institute regarding particulars of Dr. Panda and to provide the same to the appellant. The appellant also to be informed about how the decision to invite Dr. Panda to conduct the surgery was arrived at and for what reasons and also be provided with minutes of any meetings in this connection, available with the AIIMS. All information to be provided by 20th June, 2009.”

[Mr. Jagdish Chander Jetli v. AIIMS, CIC/ AD/ A/ 09/00609 dated May 21, 2009]

Part B : The RTI Act

S. 25 of the RTI Act provides that the Central Information Commission and the Sta te Informa tion Commissions as soon as practicable after the end of each year, prepare a report on the implementation of the provisions of the RTI Act during the year and forward a copy thereof to the appropriate Government.

Annual Report 2006-07 of Central Information Commission is now submitted in April 2009. It is surprising that it has taken two years to prepare and publish the annual report. One does not know when Annual Reports of 2007-08 and 2008-09 would be prepared and published. Words ‘as soon as practicable’ are nebulous. One wishes that time limit was set in the Act as it stands in other Acts like the Companies Act. As reported in this feature in June, Maharashtra SIC submitted the annual report of 2008 to Vidhan Sabha on 16-3-2009, i.e., within less than 3 months, praiseworthy achievement. Hereunder, I reproduce salient features of the Annual Report of the Central Information Commission as appears in the executive summary printed in the said Report:

i) The number of requests made to each Public Authority [Vide S. 25(3)(a) of RTI Act] : the period under report witnessed exponential increase in the number of requests (1,71,404) received by Public Authorities. If all ministries are taken together the number of requests received in year 2006-07 are seven times over previous year. This increase will rise to more than 8 times if comparison is made for top ten ministries. The number of requests received by Public Authorities of top ten Ministries in year 2006-07 were 1,38,501 in comparison to 16,680 during 2005-06.

ii) Rejection of the requests [Vide S. 25(3)(b) of RTI Act] : out of 1,14,724 requests received by top 5 ministries only 8.9% requests are rejected during 2006-07 in comparison to rejection of 26.5% requests by top five ministries under different sections in the previous year. When all ministries are considered together, only 8.98% requests received are rejected in the year 2006-07 in comparison to 13.9% in the previous year. The major rejections were u/s.8 of RTI Act 2005 followed by u/s.11, u/s.24 and u/s.9. On an average, authorities under different ministries disposed 66% of the requests received in year 2006-07.

iii) Number of appeals/complaints decided by the Central Information Commission (Vide S. 25(3)(c) of RTI Act) : Total number of appeals or complaints received by CIC were 6839 during 2006-07 (1156 in Quarter-I, 1483 in Quarter-If, 1583 in Quarter-Ill, and 2617 in Quarter-Tv). The total number of appeals received by Public Authorities during 2006-07 was 15298. Out of these 8466 (74.93%) appeals were accepted by Public Authorities and 4888 (31.95%) were rejected.

iv) Disciplinary action taken [Vide S. 25(3)(d) of RTI Act] : The total number of show cause notices issued against various public information officers by Central Information Commission for not being able to comply with the provisions of the RTI Act during 2006-07 were 259. Out of these 259 cases, penalties are imposed in 24 cases u/s.20(1) of the RTI Act and also recovered in 12 cases. In addition, S. 20(2) was invoked in 8 cases. Further, compensation was awarded to 12 appellants by the Central Information Commission u/s.19(8) of RTI Act.

Part C : Other News

Amendments to the RTI Act :

In the address by the President of India, Shrimati Pratibha Devisingh Patil to the Parliament on 4th June 2009, in Para 32, she has covered number of measures on which her Government will initiate steps within the next hundred days. One of the items therein is :

Strengthening Right to Information by suitably amending the law to provide for disclosure by Government in all non-strategic areas.

However, it appears that amendments proposed are completely of different nature: The Times of India on June 19 reports:

In a body blow to claims of transparency, the UPA Government has proposed amendments to the RTI Act exempting all file notings except those dealing with social and development issues besides restricting access to pending policy decisions, cabinet documents and examrelated documents. The amendments also envisage increasing RTI fees substantially. The draft amendments proposed by the DoPT signal that the Government is keen to bring in changes in the law that it had been forced to drop in 2006 under pressure from Left parties and RTI activists. In a move aimed at discouraging ‘motivated information-seekers’ the DoPT Ministry has suggested that payment (at present Rs.10)should be hiked. There is a view in the Government that citizens should be made to pay for the pay of the officers working on RTI besides the amount for photocopying or accessing the information sought.

Objecting to the above proposal, Mr. Shailesh Gandhi, earlier RTI activist and presently erc has addressed a letter to the Prime Minis ter.

He states: It would be appropriate if the Government transparently accepts certain boundaries in the exercise of improving transparency.

The minimum requirements for this would be :

1) No reduction in the scope of S. 2(0, (h), (i) and (j).

2) No increase or addition in the exemptions u/s.8(1) of the RTI act.

The law has been spread by citizens across the coun-try and they value it very dearly. There are some worries in their minds about losing anything in the exercise of their fundamental right. It would be in the fitness of things if the Government declared the amendments they are proposing to the Act, and gave the reasons for the amendments publicly. I request you to clarify these matters soon so that citizens feel reassured.

• File notings :

Probably, as noted above, the proposed amendment for non-disclosure of file notings is caused by the serious battle going on between CIC and DoPT since years. CIC has often ruled (including under the Full Bench decision) that file notings are information as defined u/s.2(f). On the other hand, DoPT continues to hold the view that it is not an information. In FAQs as appearing on www.persmin.nic.in the Ministry, on interpretation of ‘what does information mean ?’ answers:

Information means any material in any form including records, documents, memos, emails, opinions, advices, press releases, circulars, orders, log books, 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 but does not include file notings’.

In an unprecedented move, CIC chief Wajahat Habibullah in early June issued summons to Joint Secretary S. K. Sarkar and Deputy Secretary Anuradha Chagti to appear on June 17 to explain why they should not be prosecuted under the IPC and penalised under the RTI for their failure to correct the misleading claim made on the DoPT website about file notings.

The provocation was the DoPT’s refusal, despite repeated directions to correct the misleading claim made on its website, that file notings were not part of the information that could be disclosed under the RTI. While other public authorities, including the Law Ministry and the Sc, have long accepted the CIC’s ruling that file notings are not exempt from disclosure, the DOPT has maintained otherwise on its website, much to the CIC’s chagrin. Habibullah found it. ‘appalling’ that the nodal department of RTI had ‘sought to emasculate the mandate’ of S. 19(7) which stipulates that the CIC’s decisions are ‘binding’.

RTI rescues Chembur residents from illegal garages:

For over five years, around 20,000 families in Chembur, Mumbai faced cronic problems of noise and air pollution coming from nearby illegal commercial garages and workshops. Their repeated complaints to the civic authorities failed to bring any relief. Irked by the indifference from the authorities, the residents filed a Right to Information plea and have now got their way. The RTI application clearly stated that these establishments were operating without licences. Not only that, they had encroached upon the footpaths violating more rules.

The civic officials have admitted that the RTI information will help them to come strongly against the illegal garages. The residents have more than one reason to cheer now, as not only their action will ensure less pollution, but it will also stop water-logging during the monsoons.

• RTI and e-governance :

Citizens across the country can now exercise their Right to Information on the phone and Internet. Inspired by the success of [aankari, a Bihar State Government initiative to accept RTI applications through phone calls, the Centre is all set to replicate the model across the nation.

Listing his priorities after taking over as the Min-ister of State for Personnel and Public Grievances, Mr. Prithviraj Chavan said that the Government of India would soon facilitate RTI queries through the phone and Internet by adopting the Jaankari model, albeit with more refinements in technology.

The Bihar Government’s citizen-centric Jaankari project had earned it the national e-governance award last year. Using the effective tools of voice communication, thus enabling even the poor and uneducated to file RTI queries. The Jaankari initiative only involves making a phone call by dialing 155311 and communicating details of the desired information to a call-centre person. The call-centre executive then drafts an RTI application and sends it to the public authority concerned.

• Electricity Consumption bills (ECb) in Mumbai:

You may be shocked with these figures but they are as obtained under RTI application:

We pay taxes to meet above bills!

BCAJ Admin

Right To Information

Right to Information

Privacy &/v. Disclosure

One American writer has said:

“One man’s freedom of information is another man’s invasion
of privacy.”

The personal information of an individual need not be made
public in every case, as he has a right to be left alone, which now has been
recognised as a fundamental right the world over.

Article 21 of the Constitution of India:

21. Protection of life and personal liberty:

No person shall be deprived of his life or personal
liberty except according to procedure established by law.

The Supreme Court has ruled, modelled on the decisions of the
US Supreme Court, with regard to privacy. The Court observed in R. Rajagopal
alias R. R. Gopal v. State of Tamil Nadu (1994) 6 SCC 632:

The right to privacy is implicit in the right of life and
liberty guaranteed to the citizens of this country by Article 21. It is a
‘right to be left alone’. A citizen has a right to safeguard the privacy of
his own, his family, marriage, procreation, motherhood and education among
other matters. None can publish anything concerning the above matters without
his consent. If he does so, he would be violating the right to privacy of the
person concerned and would be liable in action for damages.

Article 19 of the Constitution of India reads:

“All citizens shall have the right to freedom of speech and
expression.”

That right, as per the Supreme Court of India, includes the
right to information. S. 8(1)(j) of the RTI Act:

8(1) Notwithstanding anything contained in this Act,
there shall be no obligation to give any citizen

(j) information which relates to:

§ personal information

§ the disclosure of which has no relationship to any public activity or
interest, or

§ which would cause unwarranted invasion of the privacy of the individual

§ unless the Central Public Information Officer or the State Public
Information Officer or the Appellate Authority, as the case may be, is
satisfied that the larger public interest justifies the disclosure of such
information:

Provided that the information which cannot be denied to the
Parliament or a State Legislature shall not be denied to any person.

Landmark judgment of Delhi High Court (F.B.) pronounced on
12-1-2010:

In Secretary General, Supreme Court of India v. Subhash
Chandra Agarwal: The Full Bench of the Delhi High Court concurred with the
view of the learned single Judge that the contents of asset declarations,
pursuant to the 1997 Resolution, are entitled to be treated as personal
information, and may be accessed in accordance with the procedure prescribed
u/s.8(1)(j); and that they are not otherwise subject to disclosure. Therefore,
as regards the contents of the declarations, whenever applicants approach the
authorities under the Act, they would have to satisfy themselves u/s.8(1)(j)
that such disclosure is warranted in ‘larger public interest’.

Privacy issues & RTI:

S. 8(1)(j) talks of personal information:

Dictionary defines:

§
‘person’ as human being, an individual

§
‘personal’ as relating to or affecting an individual

Hence, S. 8(1)(j) only covers natural persons, i.e.,
individuals, it covers privacy of the individuals only.

Hence, other entities like companies, HUF, trusts, etc. are
not covered under this clause and any information on them cannot be affected by
the exemption u/s.8(1)(j).

Similarly, no such entities can take protection under the
Right of Privacy, a fundamental right guaranteed under the Article 21 of the
Constitution.

Re. Individual’s personal information gets exemption under
this clause on the following three criteria:

1. ‘It must be
personal information’:

Personal information here has reference to the third party’s
information and not one’s own.

Extract from a Full Bench decision (five members of the
Central Information Commission) dated 23-4-2007, explaining the scope and ambit
of this clause: (Para 32)

In this case there were six applicants/complainants and 5
public authorities. Out of 5 Information Commissioners, three are presently in
chair, two have retired.

This Section has to be read as a whole. If that were done, it would be apparent that personal information does not mean information relating to the information seeker, but about third party. That is why, in the Section, it is stated “unwarranted invasion of the privacy of the individual”. If one were to seek information about oneself or one’s own case, the question of invasion of privacy of one’s own self does not arise. If one were to ask information about a third party and if it were to invade the privacy of the individual, the information seeker can be denied the information on the ground that disclosure would invade the privacy of a third party. Therefore, when a citizen seeks information about his own case and as long as the information sought is not exempt in terms of other provisions of S. 8 of RTI Act, this clause cannot be applied to deny the information. Thus, denial for inspection/verification of his own answer sheets by a citizen applying the provisions of S. 8(1)(j) is not sustainable.

2. It must not have been disclosed to the public authority as a part of public activity:

When a citizen provides information in discharge of a statutory obligation, it is a disclosure as a part of public activity. The same cannot be exempted under this clause. For example:

Income-tax return — Not exempt.

The Assessment Order — Exempt.

Names of persons who applied for arms licenses — Not exempt.

See:

Mr. Jagvesh Kumar Sharma, New Delhi v. PIO, Govt. of NCT of Delhi Decision No. CIC/WB/A/2008/00993 dated 16-3-2009

One para thereof:

Various public authorities in performing their functions routinely ask for ‘personal’ information from citizens, and this is clearly a public activity. When a person applies for a job, or gives information about himself to a public authority as an employee, or asks for permission, licence or authorisation, all these are public activities. Applying for an arms licence certainly falls in this category. As a matter of fact S. 4(1)(b)(xii) requires a suo moto publishing of ‘particulars of recipients of concessions, permits or authorisations granted by it’.

3. The disclosure of the information would cause unwarranted invasion of the privacy of the individual
What is unwarranted invasion of privacy of a person cannot be enlisted exhaustively. However cases have arisen before numerous adjudicative bodies on the issue of invasion of privacy arising out of the requests to furnish information under the RTI Act. To cite an example is the case before the Central Information Commission in Mr. Harish Lamba v. Indian Council of Medical Research, CIC/AD/A/20009/0010371 dated 2nd September, 2009. The Commission denied to provide information about expenses on educa-tion of the children of members of the Committee u/s.8(1)(j) as it was held to be personal information disclosure of which will cause unwarranted invasion of privacy of individuals constituting the Project Review Committee.

The right of privacy is an evolving right and the extent of its strength and reach is different in different countries.

Privacy is the ability of an individual or group to seclude themselves or information about themselves and thereby reveal themselves selectively. The boundaries and content of what is considered private differ among cultures and individuals, but share basic common themes. Privacy is sometimes related to anonymity, the wish to remain unnoticed or unidentified in the public realm. When something is private to a person , it usually means there is something within them that is considered inherently special or personally sensitive. The degree to which private information is exposed therefore depends on how the public will receive this information, which differs between places and over time.

Assuming that this clause is applicable after undergoing above three criteria, still it is overridden if larger public interest justifies the disclosure of such information.

Such matters could be of many types — e.g.,:

criminal activity of any individual

tax evasion matter

medical related information on the Prime Minister and the President of India.

Para from the decision in
Mr. Mahesh Kumar Sharma
v. PIO, Govt. of NCT of Delhi
Decision No. CIC/AT/A/2008/01262/SG/2109 dated 27-2-2009

The test of public interest is to be applied to give information only if any of the exemptions of S. 8 apply. Even if the exemptions apply, the Act enjoins that if there is a larger public interest, the information would still have to be given. There is no requirement in the Act of establishing any pub-lic interest for information to be obtained by the sovereign citizen; nor is there any requirement to establish larger public interest, unless an exemption is held to be valid.

Para from the Decision No. CIC/OK/A/2008/00860/ SG/0809, dated 31-12-2008.

The concept of public interest cannot be invoked for denial of information. The Section empowers the Public Information Officer to provide the exempted information if it is in the larger public interest; meaning thereby that access to the exempted information can be allowed if public interest is served in providing the information.

The term ‘privacy’ means things in different contexts. Different people, cultures, and nations have a wide variety of expectations about how much privacy a person is entitled to or what constitutes an invasion of privacy.

Almost all countries have laws which in some way limit privacy; an example of this would be law concerning taxation, which normally require the sharing of information about personal income or earnings.

Similarly, if one is in job with the Government or is politician contesting for seat in Parliament, etc. he is obliged to disclose certain information publicly. Transparency is inseparable from good governance and privacy has then to be sacrificed for such occupation/situation and disclosure of many personal information has to be accepted as essential for democracy to be meaningful.

There are many types of privacy e.g.,

Physical: In the USA, the right of the people to be secured in their houses, against unreasonable security and seizures is guaranteed. In India, our Income-tax Act provides for power to search and survey and over-rides privacy right, but reasonable restrictions also are built into the provisions like S. 133A(2) which provide that an income-tax authority may enter any place of business or profession referred to in Ss.(1) only during the hours at which such place is open for the conduct of business or profession and, in the case of any other place, only after sunrise and before sunset.

Informational: Various types of personal information come in public domain, specially financial e.g., many transactions reported through Annual Information Returns (AIR) being furnished by many bodies like MFs, property registration authorities (see ITR-2, instruction 9) are to be disclosed. However, one is allowed to keep :in privacy outlets of one’s wealth/income other than required to be disclosed under AIR.

Medical privacy allows a person to keep their medical records from being revealed to others. This may be because people have concern that it might affect their employment. Or it may be because they would not wish others to know about medical or psychological conditions or treatment which would be embarrassing. Revealing medical data could also reveal other details about one’s personal life (such as about one’s sexual activity for example).

The secret ballot is the simplest and most widespread measure to ensure that political views are not known to any one other than the original voter. It is nearly universal in modern democracy, and considered a basic right of citizenship. In fact even where other rights of privacy do not exist, this type of privacy very often does.

There is also concept of privacy in relation to spiritual and intellectual attributes of an individual, also many other types of privacy concepts prevail.

The concept of privacy is most often associated with western culture. Universal Declaration of Human Rights, Article 12 states:
No one shall be subjected to arbitrary interference with his privacy, family, home or correspondence, nor to attacks upon his honour and reputation. Everyone has the right to the protection of the law against such interference or attacks.

In India, this right is not very deep. It would de-pend on each case to determine whether privacy is invaded in an unwarranted manner or not.

In fact, as regards the UID project, privacy right is extensively invaded and many civil society individuals are disturbed about it. Various representations have been made to the Authority through civil society meetings and discussions. In response, the Government has set up a group of officers under the Secretary, DOPT to develop frameworks for data protection, security and privacy.

It is difficult to balance between privacy and disclosure. An individual would say that he has the ‘right to be let alone’ yet he wants to live in the society and not alone, he wants to be part of the society. He has then to be open for disclosure. Hence, there is a right to privacy and the need for disclosure.

Dr. Alan Westin (He is a professor of Public Law & Government Emeritus, Columbia University, Department of Political Science and has conducted 30 privacy surveys and created privacy indexes) once wrote:

Each individual is continually engaged in a personal adjustment process in which he balances the de-sire for privacy with the desire for disclosure and communication of himself to others, in light of the environmental conditions and social norms set by the society in which he lives.

In India the subject of ‘privacy’ has hardly been in public debates. However as noted above, the UID project has opened up this subject, more now with ‘2G Scam tapes’. The Income-tax authorities have tapped the phones of Niira Radia, a powerful lobbyist. The same have been leaked and partly now are in public domain. Issue is raised by Mr. Ratan Tata whether his right to privacy is violated. Let me quote some opinions on the same?: one pro-disclosure, one against and the third balanced.

Advocate Prashant Bhushan:

I think it (tapes made public) is absolutely in public interest. The Income-tax Department taped all these conversations legally. If whoever leaked it did it in public interest, it could be argued that he or she is a whistle-blower. But there is no precise definition of public interest. If somebody asked for the tapes through the Right To Information Act, they could be denied only on the premise that it would compromise the investigation, or that it contains personal information that has no relevance to public interest at all. Whatever has come out in public domain is not personal information. It’s all purely official communication, which is of interest to the public. Tata was talking to Radia, only because she happened to be employed by the Tata group as its lobbyist.

Mr. Deepak Parekh on NDTV’S ‘Walk the talk program’ said: “the tapes and the leaked conversations were an invasion of privacy.”

Mr. Arun Jaitley writes on this issue of privacy related to these tapes:
“The intercepted materials are ordinarily not likely to be secrets of the State. Their disclosures are neither prohibited, nor can at present be penalised. It is expected that the same would be available with the relevant departments of the Government and a legitimate disclosure of the same could be made either through the RTI Act or through an investigative process if the same are utilised for that purpose. If the material intercepted deals with matters concerning the affairs of the State, unauthorised intervention in the functioning of a government or commission of an offence, it could be handed over to the competent authority dealing with the matter. However, if the conversations so taped are private in nature and have no bearing whatsoever on the functioning of the State, it would ordinarily be expected from the competent authority to direct that such conversations or intercepts be maintained in absolute secrecy and its disclosure and use is prohibited.

However, those who seek to interfere in the matters of the State and influence decisions concerning the State of play in the political arena are hardly expected to contend that a cloak of secrecy be maintained around their roles. They may have a right to privacy in relation to their private lives, but not in relation to activities which are wholly political or related to the public affairs of the State.”

On macro level on this issue of privacy &/v. information, let me quote Barack Obama:
Open government is, within limits, an ideal that we all share. US president Barack Obama endorsed it when he took office in January 2009. ‘Starting today,’ he told his cabinet secretaries and staff “every agency and department should know that this administration stands on the side not of those who seek to withhold information, but those who seek to make it known.” He then noted that there would have to be exceptions to this policy to protect privacy and national security.

An iconic industrialist, Mr. Ratan Tata feels violated, is outraged over the public disclosure of his private conversation with lobbyist, Niira Radia. Mr. Tata has filed a petition in the Supreme Court invoking Article 21 of the Constitution, arguing that what has happened is an invasion of his privacy.

I have always wondered whether the right of privacy is opposite to the right to information or these two fundamental rights make balance for human dignity and human values. I believe that there cannot be any general conclusion as to which right universally overrides the other; each case has to be decided on the issue involved.

Let us hope that the Supreme Court decision enlightens the citizens on this vital issue of human rights and restrictions therein. It shall be a land-mark decision. Citizens await the same, hopefully in February 2011.

(I was invited by the Institute of Secretarial Training and Management, Department of Personnel & Training, Ministry of Personnel, Public Governances & Pensions, GOI to make a presentation on the subject ‘Privacy Issues & RTI.’ This article is based on the said presentation and further developed by other information available on this subject on Wikipedia and other websites and the recent news items related to tapes of telephone conversion between Niira Radia and others in newspapers and magazines).

BCAJ Admin

Right to Information

Part A : Decisions of CIC

S. 2(h) of the RTI Act :

Many bodies operate primarily as service to the citizens of India, though some of them may be even commercial or business bodies. When RTI application is received by them, they take a view that RTI Act does not apply to them. They contend that they are not ‘Public Authority’ (PA) as defined u/s.2(h) the Act.

Basically, such bodies need to be transparent and accountable not only to those they deal with, but to the citizens at large. Such bodies include co-operative societies, NGOs, various educational and medical institutions and so on.

One may appreciate if the RTI application is mischievous in nature or is for harassment, and the body takes the view that it is not a PA, but not when citizen requests for information which leads the body to become more transparent and accountable.

Matter came before Central Information Commission in respect of (1) LIC Housing Finance Ltd. (LICHF) (2) LIC Mutual Fund Asset Management Co. Ltd. (LICMF) and (3) G.I. Housing Finance Ltd. (GIHF). Applications and complaints are filed by 10 individuals and the decision is given by 3-member bench of Chief IC and two other ICS.

All above 3 bodies took the view that they are not PA and refused to provide the information sought.

Facts of the above three bodies are as under :

    LICHF : It is a Public Ltd. Company. 45.918% of shares are owned by LIC (40.497 %) and three other PSUs.

    LICMF : It is a Public Ltd. Company. LICMF made detailed submissions and based on 16 submissions made, stated that it is not PA. The same included : It is purely a business/commercial entity, it is not a Government Company as defined u/s.617 of the Cos. Act and the shares held by LIC in it are not even 50%.

    GIHF : Government-owned companies hold 47.7% of total shares, directorship on its Board is linked to the tenure of the respective Director with a Government-owned or controlled organisation.

Decision :

CIC held that the above facts are sufficient enough to bring these three bodies within the definition of the term ‘substantially financed’ as in S. 2(h)(d)(ii).

CIC also noted that ‘Substantially financed’ does not mean more than fifty percent financed or majority shareholding by the Appropriate Government.

It also held that :

It can be inferred that the control of LIC over LICHFL is explicit and effective.

LICMF is administratively controlled by the LIC of India.

GICMF is controlled by six Public Authorities.

Hence, it held : “In view of the above observations and findings, we decide that all the three respondents, LIC Housing Finance Limited, LIC Mutual Fund Asset Management Co. Limited & GIC Housing Finance Limited are ‘Public Authorities’ under the RTI Act. All of them are, therefore, obliged to take all necessary steps to carry out their duties and responsibilities assigned by the Act. Insofar as these appeals/complaints are concerned, the Commission directs the respondents to provide the requested information to the concerned applicants within a period of three weeks from the date of receipt of this decision.

[10 Appellants & Complainants v. LIC Housing Finance Ltd., LIC Mutual Fund Asset Management Co. Ltd. and G.I. Housing Finance Ltd. decided on 28-10-2009]

Travel and medical expenses of the President of India : S. 7(9) of the RTI Act :

The appellant, Shri Chetan Kothari of Mumbai, in four different appeals sought information regarding travel and medical expenses of (a) the President of India (b) Vice-President of India, and (c) The Prime Minister of India.

Hereunder are covered two appeals re. (a) above. He had sought the above information not just for the incumbent but also for the earlier Presidents with break-up of each covering 11 Presidents starting with Dr. Rajendra Prasad and ending with Smt. Pratibha Patil. Also break-up for the period when they were not serving as President of India.

CPIO responded as under :

“The information asked for would have to be compiled and would disproportionately divert the resources of public authority and will be detrimental to the normal functioning of the office.”

CIC while deciding the matter read out the contents of S. 7(9) to CPIO of the President’s Secretariat and asked him to identify under what clause of the Act he was authorised to actually refuse information sought, since this clause deals only with the option of providing information in a form other than that asked for. CPIO Shri F. A. Kidwai submitted that according to his understanding this clause entitled the CPIO to refuse the information if it would disproportionately divert the resources of the public authority or would be detrimental to the safety or preservation of the record in question.

Decision Notice :

Ss.(9) of S. 7 does not authorise a CPIO to refuse information under the RTI Act, but only allows him to provide the information sought in a form other than that sought. The best way of doing this is to interact with the appellant and provide him the information in alternative form. The decision of the CPIO in both applications to the President’s Secretariat is, therefore, invalid and inasmuch as it is supported in the order of the Appellate Authority, both orders of the Appellate Authority Ms. Chaube are set aside.

In the normal course, the orders of the President’s Secretariat would have been set aside and it would have been directed to consider the appellant’s two RTI applications of 9-2-2008 and 29-5-2008 afresh. However, since the Ministries holding information sought are different to the President’s Secretariat as elaborated by Ms. Rasika Chaube in her order of 14-7-2008, the applications are now transferred to the CPIOs of Ministry of Health, Ministry of External Affairs and Ministry of Defence who will process these applications in response to the RTI applications made to them directly by Shri Chetan Kothari. Appeals concerning the President’s Secretariat are, therefore, allowed, but without cost.

(Note : The above reporting covers decision on two out of four appeals. Other two for the expenses on the VP of India and on the PM of India are not covered in this issue.)

Part B : The RTI Act

Continuing from October to December BCAJ, the summary of two reports :

One study by PricewaterhouseCoopers (PWC) as appointed by the Department of Personnel and Training (DOPT), titled ‘Understanding the key issues and constraints in implementing the RTI Act’. Its final report as Executive Summary is published in June 2009.

Second study by National Campaign for People’s Right to Information (NCPRI) and RTI Assessment & Analysis Group (RaaG) in collaboration with number of other social bodies including TISS, Mumbai under the title ‘Safeguarding the Right to Information’. Its interim findings are published in October 2008.

DOPT-PWC Report :

Improving efficiencies at Information Commission :

The appeal process is a key component of the RTI Act. It is one of the controls established to ensure that the information is provided to common citizens.

Key issues observed :

Any person who does not receive a decision within the time specified in Ss.(1) or clause (a) of Ss.(3) of S. 7, or is aggrieved by a decision of the Public Information Officer may, within thirty days from the receipt of decision, appeal to an officer who is senior in rank in each Public Authority — commonly referred as the First Appellate Authority [S. 19(1)]. A second appeal against the decision shall lie within ninety days from the date on which the decision should have been made or was actually received, by the Central/State Information Commission [S. 19(3)]. However, there are significant challenges observed at the Information Commission. The findings of the study were as follows :

Large pendency of cases with a wait time of 4-12 months existed in most of the States. This discouraged people from filing appeals.

Information seeker survey pointed out that 47% of the citizens did not receive replies to their RTI application with 30 days.

Appellants had to incur expenses to attend the hearing of second appeals at Information Commission. As per S. 19(8)(b), the Information Commission may require the Public Authority to compensate the complainant for any loss or other detriment suffered. However whether this clause can be invoked for compensating the travel expenses of the appellants is an area of contention and was not observed during the study.

The adjudicatory role of the Appellate Authority is critical in making this Act a success. As per the estimates, projected numbers of the secondary appeals would grow to 2.5-3.0 lakhs by the year 2011. This would require developing innovative ways to dispose of cases, without diluting the rights of either party.

Recommendations :

Improving the disposal rate of complaints/appeals by the Information Commission through the following recommendations :

Hearings through video conferencing : Since the Information Commissions are situated in State capitals (with exceptions like Maharashtra), it is inconvenient for applicants to be present during the scheduled hearing. This problem assumes significance in cases of matters pertaining to the Central Government, where the appellant has to travel to New Delhi. It is proposed that the Information Commissions use video conferencing (VC) as a mode of communication for such hearings. VC facility is available at each district headquarter which may be used for this purpose.

The CIC, as per S. 12(7) and SIC, as per S. 15(7), with the approval of the appropriate Government should open offices at other locations, so as to reach out to the masses.

Passing order on merit of the case without hearing. This would address issues of rescheduling the hearing, in case of absence of the appellant or the PIO.

Usage of software application for managing the processes at the Information Commission. This application should assist in improving productivity/efficiency in disposal of cases, drafting of orders, day-to-day office administration etc.

Further the recommendations on other important issues are as follows :

Composition of Information Commissions : As per the S. 12(5) and S. 15(5), the composition should be such that it should have people with wide knowledge and experience in law, science and technology, social service, management, journalism, mass media or administration and governance. To implement these sections in spirit, it is recommended that the people who have worked in Government should be restricted to 50% (if not less) as recommended in the ARC report.

To facilitate the induction of the new Commissioner, where he/she does not have a back-ground of law/quasi-judicial role, he/she should go through an induction period before assuming full charge.

Usage of RTI-compliant standard templates should ensure quick and reasoned orders to the appellant. It may be noted that the templates have a strong linkage to the Act and leave little room for errors.

Raag & NCPRI Report :

Current status and preliminary findings :

4) RTI case studies :

RAAG has now collected some 5,000 case studies from across the country in a further effort to understand who is using the Act, to what end, and what the outcomes have been. While thus far, case studies have been culled primarily from the national Hindi and English press, and by looking at relevant websites, mailing lists and blogs, attention is now turning to collecting more stories from the vernacular press as well.

These case studies show myriads of citizens using the Act in previously unknown ways, disproving the misperception that only RTI activists use the Act. Since the Act was born from people’s needs, it has been branching out continually as more and more people use it. For example, while it may strengthen some people’s Right to Life by helping them answer ration-related questions; it also helps others close down a polluting factory. In some cases, applicants faced threats, not all of which were ‘paper tigers’. In others, a larger group came forward to support an individual’s application. There are even interesting cases of Internet users forming their own online RTI support groups to help each other fill applications.

Similarly, there are extremely encouraging stories of RTI success by individuals or groups that are generally stonewalled by the Government, such as women, SCs and STs, people coping with physical challenges. Examples include economically-weaker sections using it to get school admissions for their children, a visually-challenged person using it to question his village panchayat, a ninety-year-old woman to get her passport, and supposed beneficiaries of the Indira Awas Yojna to avail of this scheme.

Other stories are emanating directly from field groups throughout the country. Many people’s movements, citizens’ groups, and non-governmental organisations now rest their work heavily on the Right to Information Act, using it for broader societal purposes.

In other words, RTI activism does not stand in isolation, but is being used as a potent instrument to improve governance and transparency across a variety of issues, including the Public Distribution System, municipalities, elections, trade unions, genetically-modified foods, dams, and the National Rural Employment Guarantee Act.

Cases of particular interest are being culled out and sent for rewriting, to make them more readable from the human interest angle. These will then be compiled into a compendium to be released in January. The RAAG team is also hoping to commission an author to write a novel featuring the Right to Information Act. These case studies will also become the basis for a play on the Right to Information Act, to be performed in January.

5) Website survey of S. 4 compliance :

As mentioned earlier, the departmental websites of the 240 state and district-level Public Authorities covered in the urban survey are also being evaluated for S. 4 compliance. This is to ascertain whether Public Authorities have begun to ‘pro-actively’ report the detailed operational, financial, and service-related information the Act requires of them.

The website survey of all 240 state and district-level sample Public Authorities is now half-way done.

One of the major findings of this ‘work in progress’ is that most S. 4-related information is not found on the website of the Public Authority itself as would be most logical, but on the State or Central RTI portal. Many websites also have frequent connectivity problems, making it difficult for citizens to use them to find the information they are seeking. There are also significant differences in the quality and depth of websites across States, with some providing extremely detailed and insightful information to citizens, while others provide almost nothing. However, a general pattern is that State Government websites tend to contain more information than District Government websites.

6) Survey of RTI coverage by the media :

As mentioned earlier, the People’s RTI Assessment is analysing the role that the print media has played as a disseminator and user of the Act. Leading newspapers and magazines in over ten states (Bihar, Goa, Gujarat, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Orissa, Rajasthan, Uttarakhand, Tamil Nadu), as also leading national English and Hindi publications are being analysed. Each state analysis is being undertaken by a partner organisation or individual.

This national analysis of the media is intended to answer the following questions :

How much coverage have different publications given to RTI-related issues and cases ?

What role have different publications played in raising public awareness about the RTI Act and its use ?

What tone and approach have different publications assumed vis-à-vis the RTI Act ?

Have newspapers, magazines and other publications used the RTI as a tool for investigative journalism, and have they found it useful ?

What does the Indian media establishment (i.e., owners, editors and journalists) think of the RTI Act ?

Has the Indian media establishment begun to internalise the RTI in letter and/or spirit by enhancing the transparency of their own functioning ?

Additionally, State partners are collecting clippings of all RTI coverage in their States, and RAAG intends to upload this entire collection onto a national People’s RTI Assessment portal.

Status — This analysis is now half-way done, and State partners are beginning to send in the first draft for their analysis reports. From a cursory review of these, it appears that RTI coverage of the media is not as intense as might be assumed, and that many journalists are still learning how to use the RTI for investigative purposes.

State media survey consultants will now begin the process of interviewing editors, journalists, and media house owners to determine their perceptions about the RTI and its potential impact in India. The final analysis report should be complete by late December 2008.

Part C : Other News

Important pronouncements by the Commission :

When Shailesh Gandhi, CIC was in BCAS office addressing RTI activists and journalists, he distributed compilation of 8 important profound pro-nouncements by the Central Information Commission.

In this part, the first is being covered, others to be followed in subsequent issues :

1. No imagined exemptions :

This Commission is conscious of the fact that it has been established under the Act and being an adjudication body under the Act, it cannot take upon itself the role of the Legislature and import new exemptions hitherto not provided. The Commission cannot of its own impose exemptions and substitute their own views for those of the Parliament. The Act leaves no such liberty with the adjudicating authorities to read law beyond what is stated explicitly. There is absolutely no ambiguity in the Act and tinkering with it in the name of larger public interest is beyond the scope of the adjudicating authorities. Creating new exemptions by the adjudicating authorities will go against the spirit of the Act.

Under this Act, providing information is the rule and denial an exception. Any attempt to constrict or deny information to the Sovereign Citizen of India without the explicit sanction of the law will be going against rule of law.

Right to Information as part of the fundamental right of freedom of speech and expression is well established in our constitutional jurisprudence. Any restriction on the Fundamental Rights of the Citizens in a democratic polity is always looked upon with suspicion and is invariably preceded by a great deal of thought and reasoning. Even the Parliament, while constricting any fundamental rights of the citizens, is very wary. Therefore, the Commission is of the view that the Commission — an adjudicating body which is a creation of the Act — has no authority to import new exemptions and in the process curtail the Fundamental Right of Information of citizens.

Undiplomatic disclosures :

Soli Sorabjee under ‘Soli LOQUIES’ writes in Sun-day Express of 25-10-2009 (extracts) :

Thanks to the freedom of Information Act in the UK, there have been startling revelations in the release of letters written by British ambassadors about foreign governments and the people of the country where they had been stationed.

The most devastating assessment was in a 1967 memo by Roger Pinsent, Britain’s ambassador to Nicaragua, stating that “the average Nicaraguan is one of the most dishonest, unreliable, violent and alcoholic of Latin Americans”. The letters are brutally frank but certainly not diplomatic. A successful application under our RTI Act for disclosure of assessments made by our diplomats about countries where they were posted would be very illuminating. The problem is that any disparaging criticism, even if true, would be withheld by timorous babus because of likely potential damage to foreign relations with other countries. Unfortunately, satyameva jayate has no place in these matters.

Unauthorised alterations in the flat :

One, Ms. Kanika Golder, was put in the dock by her housing society after she made unauthorised alterations in her flat purchased on the 20th floor of the storeyed Shivalaya Residency Co-operative Housing Society in Thakur Complex, Kandivli (E). She took the RTI route to find out that almost every neighbour of hers had also made such unauthorised constructions. But after follow-ups with the BMC failed to yield any result, she approached the Bombay High Court.

A report submitted by the BMC to the Court admit-ted that almost every flat holder had illegally encroached upon the corridor up to the lift door. There was an amalgamation of flats and major alteration inside the flats. The refuge area has also been encroached upon. Even though the BMC tried to argue that the illegalities cropped up at the time of construction, a Division Bench of Justices Ranjana Desai and Mridula Bhatkar ruled, “We are not concerned with the question as to whose instance the encroachment is done. If there is any encroachment, it should be removed immediately, because if the area outside the lift is encroached upon, in case of fire or other such calamity, it may prove hazardous. If the refuge area is occupied, it is also dangerous to the housing society,” the order said.

When the Court came down heavily on the civic body, the BMC begun action by demolishing certain portions in the tower.

RTI helps retired Government employees to get their dues :

RTI activist, Milind Mulay, was prompted to file the RTI query as his mother, Vijaya S. Mulay, who re-tired as a nurse from Marol Maternity Home, did not get her dues for over one and a half years. “I was made to run from pillar to post, but they found a new excuse every day,” Mulay said.

RTI replies had revealed that the leave encashment dues of many employees had remained unpaid.

In a Circular dated November 10, the State Finance Department ordered that full payment should be made to the retired government employees. The Circular also said that excuses like not having full details (like the revised pay) should not be used to delay payments.

The payment should be made in full and at one stroke. If there is any difference in the amount because of revised dues, even that should be given in the lump sum instead of in part payments, the Circular said.

In the Fire Brigade alone, 41 firemen had not been paid leave encashment dues for three years.

The RTI replies revealed that around Rs.6.81 crore have been pending in dues to the 787 employees. Fourteen municipal wards alone are sitting on the files of 308 employees.

A senior fire officer who won the President’s Gallantry Award for meritorious service said that “for around one and a half year he was curtly asked to call up later. Many Fire Officers and firemen like me did not take leave for months together, working seven days a week. But this is the way the department has rewarded us”.

RTI and emails at BMC :

BMC is trying to make it easier for citizens to file online complaints to officers. RTI reply showed that only 40% of BMC personnel used their official email IDs.

The Chief Minister has now in the Circular dated November 9, instructed personnel in all government departments, including the civic corporation, to use their official email IDs for departmental communication, especially in instances where files get stuck for months together.

The BMC now plans to make all official IDs according to the officer’s post (or office) and not his or her name. These way complaints from the public will reach the new officer even if the old one is transferred. BMC officials admitted that the civic corporation has done little to promote the use of online facilities among employees or citizens. There are now plans to bring out pamphlets with the details of all official email IDs. “We will also provide the email IDs in the civic guide,” an official said.

RTI replies on BMC employees Internet usage pat-terns had revealed that in a 20-day period only around 40% of personnel actually used their official e-mail IDs. Data provided by the BMC’s IT cell showed that while 2,897 official IDs were created by the department, an average of only 1,172 emails were sent daily. Further,

An average of 312 e-mails bounced back and 47 were rejected from official IDs every day;

A senior BMC official has said that only 1% of civic Public Information Officers have official e-mail IDs.

Rs.5, 000 demanded for reply in about 45 pages to RTI application :

The Delhi University (DU) seems to be taking sides when it comes to answering queries through the Right to Information Act. Months after Amitabh Amit, a civil servant and ex-DU student, alleged that two DU professors — including PM Manmohan Singh’s daughter Upinder — victimised him for objecting to an ‘anti-culture’ essay in the course, the varsity has sent him a bill of Rs.5, 000 to cover costs incurred to answer the question.

In reply to a fresh RTI application filed by Amit, District Information and Public Information Officer, DU said they spent the sum on typing and photo-copying information to answer his earlier query about Professor Singh, and only after receiving the amount due for the previous query, will it be pos-sible to entertain further questions.

DU’s late realisation has surprised Amit. “I am being victimised because I dared to question the PM’s daughter. Even if you consider all the answers sent to me, they will not be more than eight to nine replies of four to five pages each. I don’t know how they charged me Rs.5,000,” he said.

According to RTI activist, the usual charge for an RTI reply is Rs.2 per page. Therefore, Amit should not have been charged more than Rs.90.

Details on Judges’ appointment :

The Supreme Court on December 4 stayed an order of the Central Information Commission (CIC) to the Apex Court to make public details of discussions in the collegium relating to appointment of Judges and the correspondence between the Chief Justice of India and another Judge relating to alleged interference of a Union Minister in a pending case.

Accepting Attorney General G. E. Vahanvati’s suggestion that the matter was of grave importance and required threadbare scrutiny, a Bench issued notice to RTI applicant S. C. Agrawal and posted the matter for hearing after five weeks.

This marks the beginning of the SC’s maiden judicial journey to examine the impact of the RTI on the happenings in the inner sanctum of the highest echelon of judiciary relating to administration of justice, which had been traditionally kept away from public knowledge.

An important clarification came from the Bench before it embarked on the journey — “there is no backtracking on right to information”. Probably, it was hinting at the recent decision of Judges of the Apex Court to put their assets and liabilities on the official SC website.

Appearing for the RTI applicant, Counsel Prashant Bhushan said it was the SC which had got the ac-colades for pushing the right of a citizen to access information. But, a perception is gaining ground that when it came to enforcing the right to information on judiciary, the SC was backtracking.

A firm assurance came from the Bench that the judiciary was not against the citizen’s right to information. It said : “You can take it from us that there is no backtracking on the right to information. We will examine the issue threadbare”.

Assailing the direction to make public information which was available only with the CJI, the SC, in its two petitions, said the CJI held the information pertaining to the appointment of Judges in a fiduciary capacity. So it should be exempted from the public under the RTI Act.

Endorsement of food products of Pepsi :

A RTI battle by a doctor against his colleagues for endorsing two Pepsi products had made the Central Information Commission (CIC) sit up and direct the Medical Council of India (MCI), a statutory body to regulate standards of medical practice in the country, to take up the issue with their Ethics Committee.

The Indian Medical Association (IMA) had, under a cloud of controversy, gone ahead and given its seal of approval to Pepsi’s Tropicana fruit juices and Quaker cereals. Dr. K. V. Babu, a native of Kannur district in Kerala and a life member with the IMA, chose to stand back from his fellowmen to question how ethical is it for doctors to support Pepsi’s commercial products. He took his queries right up to the CIC after the MCI and later the Ministry of Health and Family Welfare passed the buck from one to the other. “IMA is endorsing food products of Pepsi and that such endorsement is unethical,” Information Commissioner Annapruna Dixit voiced Babu’s questions in a recent hearing, later recorded in her order.

“He requests clarification since he is an IMA member. He wants to know whether endorsement of a commercial product by a medical organisation is unethical or not,” the Commissioner explained.

She directed the Medical Council “to place the issue before the Ethics Committee at its next meeting and to inform Dr. Babu the decision taken by the committee” by December end 2009. The Commission ordered the Public Information Officer, IMA, to furnish necessary information to the doctor by December 15.

BCAJ Admin

Right to Information

Part A: Decision of CIC

Section 8(1)(b), (d), (e), (h) and (j)

Mr. Rakesh Kumar Gupta of Delhi has sought information regarding matters relating to the income tax of eight parties: (a) Three limited companies including Escorts Ltd (b) Three centers of Escorts Heart Institutes & Research, and (c) Mr. Rajan Nanda and Dr. Naresh Trehan.

Both the PIO and FAA refused to grant information, holding that the information related to third parties, and the third parties, in reply to the notice issued to them, had strongly objected the disclosure of information relating to their income tax records.

According to the PIO, the applicant was not able to substantiate as to what the overriding public interest in disclosing the information relating to third parties is, and that unless the case of public interest is established, the disclosure would lead to an invasion of privacy of the assessees.

It was easy for the Commission to take the decision that clauses (b)(d), (e) and (h) do not apply to this case. The said clauses cover (b) Information forbidden to be published by any court of law, etc. (d) Information which is in the nature of trade secrets, intellectual property, etc. (e) Information held in a fiduciary relationship, etc. (h) Information which would impede the process of investigation, etc.

However, as to applicability of clause (j), the ‘order’ discusses the issue in detail and takes a view contrary to the view taken by many earlier decisions of the Commission. The said clause 8 (1)(j) provides the following: Notwithstanding anything contained in this Act, there shall be no obligation to give any citizen information, which relates to personal information, the disclosure of which has no relation to any public activity or interest, or which would cause unwarranted invasion of the privacy of the individual unless the Central Public Information Officer or the State Public Information Officer or the appellate authority, as the case may be, is satisfied that the larger public interest justifies the disclosure of such information. Provided that the information which cannot be denied to the Parliament or a State Legislature shall not be denied to any person.

As the subject matter of this case is of interest to the profession and as it is a landmark decision, I reproduce this part of the decision almost completely:

“The final exemption claimed by the Department as in the case of Dr. Naresh Trehan and three other third parties is under the Section 8(1)(j). The three other third parties are the Escorts Heart Institute and Research Centre, Delhi, Escorts Heart Institute and Research Centre, Chandigarh, and Escorts Heart Institute and Research Centre Ltd. Section 8(1)(j) is with regard to personal information and, therefore, it can only be claimed by natural persons and not by corporate entities. The three institutes cannot claim to have ‘personal’ information. There is a difference between having a personality, i.e., a legal personality, and owning ‘personal information’. Personal information is information relating to a natural person, not a legal person. Words in a law should normally be given, including the meanings, in common language. In common language, we would ascribe the adjective ‘personal’ to be an attribute, which applies to an individual and not to an institution or a corporate body. From this, it flows that ‘personal’ cannot be related to institutions, organisations or corporates. Hence Section 8(1)(j) cannot be applied when the information concerns institutions, organisations or corporates. Therefore, the Commission is of the opinion that Section 8(1)(j) cannot be relied on by these three third parties, as they are not natural persons.

With regard to the information relating to Dr. Naresh Trehan, it has been argued by his representative that the information sought is personal as it contains personal financial information of the assessee, including various assets, income and expenditure and the disclosure of this information has no relationship with any public activity or interest. It has been alleged that the information has been sought with ill will and malice, with the motive to harass and blackmail the assessee. Furthermore, the Appellant is likely to misuse the information and could endanger the life and property of the assessee if the information goes in the hands of unsocial elements. There is no larger public interest served in disclosing this information to the Appellant.

The Commission has considered the submissions made by the Appellant, the Department and the representative of Dr. Naresh Trehan. To qualify for this exemption, the information must satisfy the following criteria:

1. It must be personal information.

There is no doubt that information with regard to Dr. Naresh Trehan is personal information.

2. It must not have been disclosed to the public authority as part of a public activity

The phrase ‘disclosure of which has no relationship to any public activity or interest’ means that the information must have been given in the course of a public activity. Various public authorities, in performing their functions, routinely ask for ‘personal’ information from citizens, and this is clearly a public activity. When a person applies for a job, or gives information about himself to a public authority as an employee, or asks for permission, licence or authorisation, all these are public activities. Also when a citizen provides information in discharge of a statutory obligation, this too is a public activity. Therefore, information provided by an assessee to the department for purposes of income tax assessment is information disclosed in relation to a public activity and therefore this part of Section 8(1)(j) is inapplicable in the present case..

3. The disclosure of the information would lead to unwarranted invasion of the privacy of the individual.

Certain human rights such as liberty, freedom of expression or right to life are universal and therefore, would apply uniformly to all human beings worldwide. However, the concept of ‘privacy’ is a cultural notion, related to social norms, and different societies would look at these differently. Therefore referring to laws of other countries to define ‘privacy’ cannot be considered a valid exercise to constrain the citizen’s fundamental Right to Information in India.

Parliament has not codified the right to privacy so far, hence in balancing the Right to Information of Citizens and the individual’s Right to Privacy, the Citizen’s Right to Information would be given greater weightage.

The State has no right to invade the privacy of an individual. There are some extraordinary situations where the State may be allowed to invade the privacy of a citizen. In those circumstances, special provisions of the law apply; usually with certain safeguards.

Therefore, where the State routinely obtains information from citizens, this information is in relationship to a public activity and will not be an intrusion on privacy. As this information has been provided by the assessee to meet his legal obligations, there is no unwarranted invasion of his privacy by the state. Therefore the disclosure of the same information to another person cannot be construed as being an unwarranted invasion of the privacy of the individual.

Given our dismal record of misgovernance and rampant corruption which conspires to deny citizens their essential rights and dignity, it is in the fitness of things that the Citizen’s Right to Information is given greater primacy with regard to privacy.

Hence information provided by individuals in fulfillment of statutory requirements will not be covered by the exemption under Section 8 (1) (j).

It has come out during the hearing before the Commission, – and through the submissions made by the various parties, – that the Appellant is an informer for the Department. Escorts has also raised the matter in its written submissions of 17 September 2009, and asked the Commission to decide, ‘Whether an informer of the I.T. department can seek information in respect of the records of a third party for an ulterior motive?’ The ulterior motive being referred to appears to be the reward money, which the appellant might get.

The Appellant has given a list of additions made by various Tax evasion officers relating to the information being sought by him”

The Order then gives details of such additions (same are not reproduced here) running into crores of rupees.

Thus, the appellant has pointed out that Assessing officers have added hundreds of crores as additional income and CIT (A) has also confirmed some of them. He fears that a lot of alleged tax evasion will go unpunished, leading to a loss of revenue and perhaps his reward money. If citizens monitor this through RTI, it could be a major gain for public revenue and perhaps a good check on corrupt officials.

Based on above, Commission directed PIO to provide the inspection of the records and also the other information sought by the appellant before 15th January 2009.

[Mr. Rakesh Kumar Gupta vs. The PIO c/o CIT (Central)-2 New Delhi: No. CIC/ LS/A/2009/000647/SG/5887 of 14-12-2009]

Part B: The RTI Act

Continuing from October to January BCAJ, the summary of two reports:

One
study by PricewaterhouseCoopers (PWC) as appointed by the Department of
Personnel and Training (DOPT), titled “Understanding the key issues and
constraints in implementing the RTI Act.” Its final report as Executive
Summary is published in June 2009.

Second study by National Campaign for People’s Right to Information (NCPRI) and RTI Assessment

Analysis Group (RaaG), in collaboration with a number of other social
bodies including TISS, Mumbai under the title “Safeguarding the Right to
Information”.

DOPT-PWC Report:

Institutionalising third party audit

It
is strongly felt that in the absence of a strong review mechanism,
there is a high probability that the level of RTI implementation would
regress to lower levels.

Key issues observed

Some of the key facts observed during the study:

Limited infrastructure/processes with SIC to carry out
responsibilities under Sections 19(8) (a), 25(1), 25(2), 25(3f) 25(3g)
and 25(5), leading to non-compliance by PAs with regard to RTI
provisions.

No/inadequate mechanism for monitoring
proactive disclosure, resulting in low compliance to Section 4(1b) of
the RTI Act (65% of the PAs have not published their proactive
disclosure on the websites).

Non-adherence to service levels of 30 days causing delay in providing information to the RTI applicant.

Recommendations

To ensure better service delivery by authorities and officials, third
party audits should be institutionalized to support the Information
Commission in carrying out responsibilities under Sections 19(8)(a),
25(1), 25(2), 25(3f), 25(3g) and 25(5). Institutionalising regular
audits would facilitate the Public Authorities’ compliance with the RTI
Act (through the audit findings made available by Information
Commission). In this context, it is recommended to have a third party
audit (at least annually) to support the Information Commissions and RTI
Implementation Cell to monitor the performance of Public Authorities
and to take appropriate action in case of any deviation.

Moreover, it is also suggested that the SIC website should have a list
of all the Public Authorities within the jurisdiction of the Information
Commission. The website should have a feature for citizens to report
noncompliance (through tick-mark options) for a Public Authority. The
reports generated through this application, would be helpful for a
Public Authority and the Information Commission to take appropriate
actions.

Raag & NCPRI Report:

Current status and Preliminary Findings:

(7) RTI and the Courts

This
component is compiling data on court cases, in which appellants have
challenged State or Central Information Commissions. Analysis is being
driven by the following questions:

What types of CIC and SIC rejections are being taken to the High Court and to the Supreme Court?

What types of appellants are tending to do this?

How quickly is the higher judiciary resolving these cases?

Have judicial rulings, by and large, upheld the spirit of the RTI? In
which cases have judicial rulings tended to be in favour of appellants,
and in which against?

Has the referral of such cases to the
court influenced the offending public authority to provide requested
information, even if there is a judicial ruling?

Preliminary findings

Status
– This analysis has commenced with a review of RTI cases in the Delhi
High Court. Since many of the appeals heard by the Central Information
Commission are referred to the Delhi High Court, this makes it potential
representative of the RTI cases being heard by other High Courts as
well. Additionally, many Delhi Right to Information Act cases are
currently also lying before the Delhi High Court.

While 18
RTI cases have been located in the Delhi High Court records so far, only
15 of these have been selected for examination for analysis for the
Interim Report. These were filed before the Delhi High Court and Supreme
Court of India from 2006 to 2008.

In most of these cases,
the applicant—and not the Government—has taken the case to Court. Only
in four cases has the Union of India (UOI) approached the Courts. Even
though the sample size is small, a preliminary analysis reveals that the
Courts have shown sensitivity by admitting Writ petitions that
challenge the decisions of the Central Information Commission. However,
it must be pointed out that it is premature to comment upon the normal
outcome of such cases given that very few have as yet been decided.

But
given the way cases have been progressing, it can be inferred that many
RTI cases are pursued much like regular cases, in a “run of the mill”
manner. In one pending case, in which the applicant sought information
about the responsibilities of MCD officials charged with cleaning public
places of a certain village of Delhi, the judiciary has ignored the
public cause involved and MCD threats to the applicant and his family.
The case has lain before court for more than 1.5 years.

However,
in other cases, landmark judgments have been made, and that too
expeditiously, pointing to the beginning of systemic change in the
judiciary’s approach to RTI. One such is the Bhagat Singh vs. CIC &
Income Tax Department of Dec 2007, in which the judgement is liberal. It
interprets the exemption to information disclosure under Sec 8 (1) (h)
that disallows disclosure on the ground that “information which would
impede the process of investigation or apprehension or prosecution of
offenders”. The judgment is particularly important as it sets a
precedent and strongly supports the spirit and underlying principles of
the Right to Information Law. Further, the judgment was delivered within
8 months of its filing.

RTI and International Donors

Background:
While international donors fund social, infrastructural, and
institutional capacity -building activity, they have historically only
been required to report to the Indian Government. Resultantly, citizens
often have little information or say in how these programmes work or the
impact they have.

This component of the study is studying donor
disclosure policies to understand what kinds of information they require
donors to share directly with the Indian public, how these policies
compare with the requirements that the Right to Information Act places
upon Indian public authorities, and how the Right to Information Act is
shaping donor thinking on this issue. The analysis will also examine
donor disclosure policies in practice, and whether donors are sharing
the maximum information permissible or just their minimum requirement.
Also being studied is donor spending on RTI programmes in India, to
understand the manner in which they are attempting to influence the RTI
regime in the country.

Eleven international donors are being
studied, including nine of the largest multilateral and bilateral
government donors to India (World Bank, Asian Development Bank, Japanese
Bank for Inter-national Cooperation, GTZ, Russians, United Nations
Development Programme, European Union, DFID and USAID) and two of the
world’s largest private grant -giving foundations with operations in
India (Bill and Melissa Gates Foundation, Ford Foundation).

Research
comprises a desk review of the public information disclosure policies
and practices of the selected international donors, complemented by
face-to -face interviews with key stakeholders (including international
donors’ governance and accountability advisors in India, government
officials, beneficiaries, and members of the public).

Research is
still at a preliminary stage, although the desk review of information
disclosure policies and practices of all donors is now almost complete.

Early findings

UNDP, ADB and World Bank disclosure policies were easily available on
the Internet; other donors’ disclosure policies were not so easily found

While UNDP’s, ADB’s and the World Bank’s public disclosure policies
have undergone a series of revisions, ADB was the first to revise its
policy following stakeholder consultations.

With respect to information that is exempt from disclosure:

UNDP – Broad definition of exceptions

ADB – well defined list

WB – everything else apart from documents about WB strategies and programmes is denied / discretionary

UNDP,
ADB and the World Bank all provide a list of documents related to their
operations (strategies, programmes and projects), but only ADB’s policy
appears to have a presumption in favour of disclosure.

Part C : Others News

Important Pronouncements by the Commission :

When
Shailesh Gandhi, CIC, was in the BCAS office addressing RTI activists
and journalists, he distributed compilation of 8 important and pro-found
pronouncements by the Central Information Commission (Continuing from
January 2010)

2. Alternative routes to access information

No
Claim has been made by the PIO of any exemption under the RTI Act to
deny the information. If a public authority has a process by a Citizen
other than the route provided by the Right to Information Act, it is the
Citizens’ right to decide which route he wishes to use. The existence
of another method of accessing information cannot deny the Citizen his
freedom to use his fundamental right codified under the Right to
Information Act. If Parliament wanted to restrict his right, it would
have been stated in the law. Nobody else has the right to constrain the
rights of the Citizen.

There is no Provision in the Right to
Information Act, which restrains the Citizen’s right to use it, if
another route to access information has been of-fered or is available.
It is a Citizen’s right to use the most convenient and efficacious means
avail-able to him.

Section 2(h) of the RTI Act

In
the last issue of BCAJ, under Part A, was cov-ered the Order of CIC on
section 2(h). I had there mentioned that many bodies operate primarily
as service to the citizens of India but they take a negative view that
they are not covered under section 2(h) and hence RTI Act does not apply
to them.

It is reported that following bodies disputing
application of RTI to them are now held by Delhi H.C to be covered under
RTI Act.

Indian Olympic Association

The Commonwealth Games Organizing Committee

Sanskriti School

Justice Bhat stated:

The
RTI Act recognizes that non-state actors may have responsibilities of
disclosing information which would be useful and necessary for the
people they serve as it furthers the process of empowerment, assures
transparency and makes democracy respon-sive and meaningful.

CIC has ruled that the Bar Councils are covered under the RTI Act and
they have been directed to set-up a mechanized for operation of RTI.
CIC’s decision is based on the fact that Bar Councils are set-up under
the Advocate Act 1961, Passed by Parliament.

Against above rulings, it is interesting to note what happened in the Supreme Court early in January’10

The
Supreme Court stayed the Orissa high court order, which had upheld a
2006 order of Naveen Patnaik government bringing Reliance Power owned
two power distribution companies under the purview of RTI Act.

The
advocate of the power distribution companies argued before the Supreme
Court that the RTI Act was applicable only to “public authority”, the
meaning of which was erroneously expanded by the government and agreed
to by the HC to include the power distribution companies under the RTI
Act.

In this connection remarks of Hon. Justice Chandra-chud as
reported in BCAJ of Dec 09 (Page 117) are very relevant. He said:
“Definition of ‘Information’ given in the Act, covers information
relating to any private body which can be accessed by a Public Authority
under any other law for the time being in force”. Thus, what can be
accessed by Public Authority can be accessed by any individual citizen
also. Therefore, though the implementation is presently focused on
Public governance or Public officials, it has to be extended to private
governance in course of time.

Missing File

nine
applicants got jobs with various central government organisations,
1,993 applicants got placement in state government offices,
quasi-government and local bodies affiliated to the state and the
central government provided placement to 1,265 applicants and 1,115
placements came from private sector.

“The exchange does not give
jobs to lakhs of educated youngsters. Only a lucky few get placements.
They have become irrelevant in today’s privatised economy,” said RTI
economist Chetan Kothari who had filed a query.

The Judgement of the Courts

The
Supreme Court ruled that the judge cannot be asked under the RTI Act as
to why and how he came to a conclusion in a judgement.

Said the
bench of Chief Justice K G Balakrishnan and Justice B S Chauhan: ‘A
judge speaks through his judgments and he is not answerable to anyone as
to why he wrote the judgement in a particular manner’.

Renaming of High Courts

The
BMC has lost the file of a controversial South Mumbai building, which
was in the name of Dawood Ibrahim’s wife. This information was revealed
in a reply to the RTI application filed with the municipal
commissioner’s office. In his reply dated December 22, 2009, T M Bhatia,
assistant engineer-building and factories (C ward), said the file
papers pertaining to the building were not traceable/available.

Disclosure of assets held by Public servants

After
politicians and judges of the Supreme Court, now the assets of babus
have also been prised open to public scrutiny by RTI. In a landmark
order, the Central Information Commission (CIC) has said that disclosure
of information such as assets of public servant, routinely collected by
the public authority, should be made available to the public under the
Right To Information Act.

Employment Exchanges – how they operate!

In
reply to an RTI query, it is gathered that only 4,532 of the total
number of 30 lakh-plus job-seekers, who went through the Maharashtra
employment exchanges last year, got jobs. One hundred and fifty

In
reply to the RTI query, the ministry of law and justice has stated that
it has received the proposal to change names of four high courts.

The proposal to change the names of Bombay HC to Mumbai HC, Calcutta
HC to Kolkata HC, Gauhati HC to Guwahati HC and Madras HC to Chennai HC
is under consideration of the government.

RTI Act and Consumer Protection Act (CPA)

Very
interesting and a landmark judgement both for the RTI Act and the CP
Act has been delivered under the CP Act. Issue is whether failure to
furnish information without valid reason constitutes a deficiency in
service for which compensation can be sought by a consumer complaint.

The
applicant, Dr. Rao won the matter before the District Consumer Forum
but lost it before the Karnataka State Commission. The issue has now
been decided by the National Commission in a trend setting judgement.

The
National Commission observed that the settled law was that even if a
particular law barred the jurisdiction of courts, a complaint could
still be filed under the provision of the CPA as it provided an
additional remedy. The RTI Act did not bar the jurisdiction of the
consumer fora. Also, the provisions for appeal under the RTI Act were
restricted to the failure to furnish the information sought, but there
was no provision to claim compensation for deficiency in service. An
applicant under the RTI Act has to pay fees for getting the information,
and hence he acquires the status of a consumer. If there is any
deficiency in service in respect of providing such information, a
complaint could be filed under the CPA for claiming compensation.

BCAJ Admin

ORDERS OF CIC

Right to information

S. 2(f) :

S. 2(f) defines the word ‘Information’ :

Sunil Kumar had asked Department of Revenue a series of
questions aimed at eliciting from the Department of Revenue their interpretation
of the provisions of the Budget, the Finance Act and the notifications issued
thereof.

Citing certain decisions of the Commission and the definition
of information u/s.2 (f) of the RTI Act as well as on the basis of the
confidentiality of the Budget and its provisions including the Finance Act,
respondents declined to disclose the information through CPIO’s communication
dated 25-3-2010 and the decision of the Appellate Authority, dated 23-4-2010.

Central Information Commissioner (CIC), A. N. Tiwari, held
that ‘given the nature of the queries appellant had included in his RTI
application, it is obvious that he has been seeking from the respondents their
interpretation of various provisions of the Budget, the Finance Act and the
notifications thereof. This cannot qualify to be information u/s.2(f) and hence
has been rightly declined by the respondents.’

During the hearing, it was stated on behalf of the
respondents that on the basis of the feedback received from the citizens and
various trade and financial organisations, government, from time to time, issues
clarifications regarding specific points in various Acts, Rules, notifications,
etc. One such clarification has been issued by the Ministry of Finance covering
most of the grounds and the points mentioned in appellant’s RTI application.
Respondents were willing to provide a copy to the appellant for his reference
and use. They however reiterated their point that it was not open to any private
citizen to use the RTI Act to seek from the respondents their specific comments
about interpretation of laws, Acts, Rules and notifications. CIC held that
respondents’ contention is valid and was upheld.

[Sunil Kumar v. Department of Revenue, No. CIC/AT/A/2010/00342
dated 3-9-2010]

Co-operative
Bank

— whether Public Authority : S. 2(h) :

CIC Mr. M. L. Sharma has ruled that Co-operative Banks are
not Public Authority in the matter of two appeals by Preeti Goyal.

CIC stated that a bare reading of clause (h) of S. 2 of the
RTI Act would indicate that a private body or a co-operative society can be said
to fall in the domain of this clause, if it is substantially financed, directly
or indirectly, by the funds provided by the appropriate Government. Admittedly,
the society in question has not received any funds either from the Central
Government or the Government of Union Territory of Chandigarh. By this logic, it
cannot be said to be a public authority. Needless to say, once it is held that
the society in question is not a public authority, it has no liability to
provide any information under the RTI Act.

General Manager Mr. Dhillon of Chandigarh State Co-operative
Bank Ltd. appeared before the Commission and in a written representation relied
on certain decisions, the ratio whereof is that Co-operative Banks do not fall
in the ambit of S. 2(h) of the RTI Act.

The relevant para of the representation is extracted below :

“In the latest judgment reported as 2009 (5) RCR (Civil) 394
— Bidar District Central Co-operative Bank Ltd., Bidar v. The Karnataka
Information Commission, Bangalore and another and 2009 (5) RCR (Civil) 833;
Dattaprasad Co-operative Housing Society Ltd. v. The Karnataka Information
Commission, Bangalore and another, it has been held by the Karnataka High Court
that co-operative society does not fall within the purview of S. 2(h) of the RTI
Act. Similar view has been taken by the Bombay High Court in a judgment reported
as AIR 2009 Bombay 75, wherein it has been held that a Co-operative Bank
registered under the Maharashtra Co-operative Societies Act is not a public
authority.”

Based on above CIC held that the Chandigarh State
Co-operative Bank Ltd. is not a public authority.

[Preeti Goyal v. Chandigarh State Co-operative Bank Ltd.,
Appeals No. CIC/LS/A/2010/000657 & 658, decision dated 16-9-2010]

PART B : THE RTI ACT, 2005

In the last two issues of BCAJ, I had covered talks by Gopal
Krishna Gandhi and Nandan Nilekani at the inaugural and concluding sessions
respectively at CIC’s 5th annual convention held on 13th & 14th September 2010.
Hereunder is the brief summary of talks at the inaugural session by Mr. Veerappa
Moily and at four technical sessions in between :

Dr. Veerappa Moily agreed RTI has caught our imagination.

Right to Information has the key to strengthening
participatory democracy and ushering in people centred governance. For creation
of a global information society, it is essential to safeguard plurality of
opinions, and to promote ‘open access to networks for service and information
suppliers’ and ‘free expression of ideas’.

The 1st technical session ‘RTI and Public Private
Partnership Projects’ was chaired by A. N. Tiwari, CIC (now Chief Central
Information Commissioner).

He summarised the discussion and concluded that many
infrastructure projects on PPP mode satisfy the basic tenets of a Public
Authority as defined under the RTI Act. He also observed that in the years to
come the RTI may go a long way in operationalising the PPP more objectively. He
was of the opinion that the governments themselves should declare whether a
particular PPP project is a public authority under RTI Act or not.

The 2nd technical session : ‘Responsibility of Political
Leadership in Promoting RTI’ was chaired by V. Narayansamy, Hon’ble Minister
of State, Planning & Parliamentary Affairs.

Sri Narayansamy: Right to Information is a tool in the hands of citizens which keeps the bureaucracy on its toes. However, he stated that the citizens are suffering in getting the information, even though they fulfill all their obligations as required under the Act. They are given misleading, truncated and irrelevant information and some people misuse it as well. He commended the role of the Commissions and cited two decisions of CIC. In one of the cases the Commission directed the PMO to disclose the assets of the Ministers, which they complied and while in another case, the Commission, directed the DoPT to disclose file notings. The Hon’ble Minister expressed his grief over the killings/threats of RTI activists. He said that the Government is sensitive to the situation and is bringing about special legislation for whistle blowers protection and privacy Act. The role of the politicians, the law makers does not stop with the enactment, it includes efforts in ensuring implementation. Shri Narayansamy concluded that the Judiciary should be made accountable. All three wings of the government have to function under the provisions of the RTI Act.

The 3rd technical session : ‘RTI & Judiciary’ was chaired by Wajahat Habibullah. One of the panelists was Justice A. P. Shah. His conclusions were:

Conclusion : Demands for change to existing systems in the judiciary must be met rationally, bearing in mind the objectives sought to be achieved. Will the proposed changes promote public respect for the judiciary and the rule of law? Will they strengthen democratic principles ? How do they relate to the constitutional requirement of judicial independence? The guiding principle should always be accountability but let it always be commensurate with judicial independence and impartiality. The challenge is to develop mechanisms of accountability that do not undermine judicial independence.

The 4th Technical Session : ‘Challenges and Opportunities in RTI — Role and Responsibility of Media/CSO’ was chaired by Ms. Mrinal Pande, Chairperson, Prasar Bharti.

One of the panelists, Ms. Ravi Singh stated that RTI is as important as the right to food and right to education. Since constant vigilance is the price for freedom, the role of NGOs, the media, the courts and the civil society is important.

Another panelist, Shailesh Gandhi observed that all the stakeholders of the RTI have to work together to create a supportive environment for the Act to flourish.

Part C: Information On & Around

Ration offices in Mumbai and around:

Vigilance Committees play a crucial role in addressing the grievances of local residents against ration shops. But information obtained under the RTI has revealed that due to vacancies in these committees, several areas are under represented.

Anil Galgali, an RTI activist who procured this information, said, “A Vigilance Committee is supposed to meet once a month to redress the grievance of the residents. But the provision for a Vigilance Committee is meaningless if it does not have any members.”

The vigilance committee also ensures that commodities in rationing shops are sold as per the directives of the government. “An inefficient vigilance committee is a setback for below poverty line (BPL) ration card holders who rely heavily of essential items sold through ration shops. Absence of an efficient vigilance body means that there are no effective checks and balances on the public distribution system (PDS),” he added.

It has come to light that in five of the 53 rationing offices in Mumbai, Thane and Navi Mumbai, there is not a single member on the vigilance committee.

University of Mumbai flouting RTI Act:

PIO of the University of Mumbai and also AA never responded to the RTI Application/Appeal filed by S. K. Nangia, RTI activist even after repeated reminders. However, on the application dated 15-3-2010, finally, AA fixed the hearing on 30-10-2010.

Now, the activist has written to Rajan Welukar, vice-chancellor at the University of Mumbai, highlighting the problems faced by citizens in seeking information from the university. He has also asked for reasons for the delay of more than six months for an appeal hearing to be held.

Senior official at the university states that they were tied up with other routine work in the university and shall write a regret letter to the applicant for the delay.

Taxis in Mumbai:

According to the data provided by the RTO, from April 2009 to March 2010, 303 cases of refusals, 1,236 cases of meter tampering and over charging and 85 offences of rude behaviour were registered. In comparison, complaints launched between April and September shot up to 3,500, with the offence of drivers refusing multiplying eight times from 303 to 2,400 cases.

STOP PRESS

Information on selection of Judges:

A two-judge Bench of the Supreme Court wondered whether the time had come to make public the details of appointment of judges to the Supreme Court and High Courts. A Bench comprising Justices B. Sudershan Reddy and S. S. Nijjar referred to a constitution Bench, the crucial question on disclosing correspondence between the Chief Justice of India and the Law Minister on appointment of HC and SC judges under the RTI Act.

This is a significant development as 19 High Courts have opposed the order of the Delhi HC allowing disclosure of information on appointment of judges. Even the Delhi HC has opposed the pronouncement on administrative grounds. The sole exception is the Gauhati HC.

Echoing the views of the HCs, Attorney General G. E. Vahanvati told the Bench, “Information made available to the CJI in respect of appointment of judges of HCs as well as the SC is held by him in trust and in fiduciary capacity.”

Justice Reddy said, “The current debate is a sign of a healthy nation. This debate on the Constitution involves a great and fundamental issue.” Writing the judgment for the Bench, he said precedents relating to interpretation of the Constitution on this issue need not mean stagnancy. “The ultimate question must be, what do the words of the text (Constitution) mean in our time,” he said. The bench framed the following questions for the consideration of constitution Bench:

Whether the concept of independence of judiciary requires and demands prohibition of furnishing of the information sought?

Whether the information sought amounts to interference in the functioning of judiciary?

Whether the information sought cannot be furnished to avoid any erosion in the credibility of the decisions and to ensure a free and frank expression of honest opinion by all constitutional functionaries, which is essential for effective consultation and for taking the right decision ?

Whether the information sought is exempt u/s.8(1)(j) of the RTI Act?

Very sensitive and crucial issue for RTI to get wide spectrum of coverage now awaits fill this judgment gets pronounced.

BCAJ Admin

Right To Information

Part A: Decisions of the Court and CIC

S. 2(h), 2(f), 8(1)(e), 8(1)(j) of the RTI Act :

It is a very unusual court case when the Supreme Court of India (SCI) files writ petition to the Delhi High Court (DHC) ! The issue came up before the DHC whether the Chief Justice of India (CJI) is a Public Authority and whether CPIO of the SCI is different from the office of the CJI and if so, whether the RTI Act covers the office of CJI.

The writ petition covers a number of issues and the judgment runs into 70 printed pages (85 paras). Decisions on some of the issues are reported hereunder.

The CJI is a public authority u/s.2(h) of the RTI Act.

Asset declaration by the SC Judges, pursuant to the 1997 resolution is ‘Information’ within the meaning of the expression u/s.2(f) of the RTI Act. In Para 36 of the judgment, the DHC gave a very significant interpretation for this expression ‘Information’. It says :

As is evident, the definition is extremely wide; the crucial words are ‘any material in any form’. The other terms amplify these words, explaining the kind of forms in which information could be held by an authority. It also includes ‘information relating to any private body, which can be accessed by a public authority under any other law for the time being in force.’ Facially, the definition comprehends all matters which fall within the expression ‘material in any form’. There is no justification in cutting down their amplitude by importing notions of those materials which are mandatorily held by it. The emphasis is on the information available, having regard to the objectives of the Act; not the manner in which information is obtained or secured by the authority. Thus, inter se correspondence of public authorities may lead to exchange of information or file sharing; in the course of such consultative process, if the authority borrowing the information is possessed of it, even temporarily, it has to account for it, as it is ‘material’ held. As far as the later part of the definition, i.e., accessing of information by or under any law is concerned, it appears that this refers to what is with a private organisation, but can be accessed by the public authority, under law. The Court deduces this, because the theme is included by the conjunctive ‘and’; but for such inclusion, such private information would not have been subjected to the regime of the Act. Therefore, it is held that all ‘material in any form’ includes all manner of information; the absence of specific exclusion leads this Court to conclude that asset declarations by judges, held by the CJI are ‘information’, u/s.2(f).

CJI does not hold such declarations in a fiduciary capacity or relationship and hence not exempt under clause (e) of S. 8(1) of the RTI Act.

Contents of asset declarations pursuant to the 1997 and the 1999 Conference Resolution are entitled to be treated as personal information, and may be accessed in accordance with the procedure prescribed u/s.8(1)(j). Here, I also reproduce para 62 of the judgment which is very enlightening :

The right to access public information, that is, information in the possession of State agencies and governments in democracies, is an accountability measure empowering citizens to be aware of the action taken by such state ‘actors’. This transparency value, at the same time, has to be reconciled with the legal interests protected by law, such as other fundamental rights, particularly the fundamental right to privacy. Certain conflicts may underlie particular cases of access to information and the protection of personal data, arising from the fact that both rights cannot be exercised absolutely in all cases. The rights of all those affected must be respected, and no single right must prevail over others, except in clear and express circumstances. To achieve these objectives, and resolve the underlying tension between the two (sometimes) conflicting values, the Act reveals a well-defined list of 11 kinds of matters that cannot be made public, u/s.8(1). There are two types of information seen as exceptions to access; the first usually refers to those matters limited only to the State in protection of the general public good, such as national security, international relations, confidentiality in cabinet meetings, etc. The second class of information with State or its agencies, is personal data of individual citizens, investigative processes, or confidential information disclosed by artificial or juristic entities, like corporations, etc. Individuals’ personal data is protected by the laws of access to confidential data and by privacy rights. Often these guarantees — right to access information, and right to privacy, occur at the same regulatory level. The Universal Declaration of Human Rights, through Article 19 articulates the right to information; Article 12 at the same time, protects the right to privacy :

“no one shall be subjected to arbitrary interference with his privacy, family, home or correspondence, nor to attacks upon his honour and reputation. Everyone has the right to the protection of the law against such interference of attacks.”

[CPIO, Supreme Court of India v. Subhash Chandra Agarwal & Anr., W.P. (C) 288/2009 decided on 2-9-2009]

S. 8(1)(a), (e) and (j) of the RTI Act :

The applicant, Sh. Chetan Kothari (of Mumbai) filed an RTI application with the CPIO, Ministry of Health & Family Welfare seeking information about medical, surgical or such other health-related problems of the Prime Minister. Specific points as follows :

(a) Major and minor types of operations done on the Prime Ministers of India during their tenure as Prime Ministers during the last five years, giving yearwise break-up of major/minor surgeries separately;

(b) Medical-related expenses incurred during each such operation, giving yearwise break-up of last five years;

(c) For how many days were the patients hospitalised during such major/minor operations giving yearwise break-up with names of the hospitals for last five years;

(d) Who bore the medical expenditure, whether deducted from PM’s salary or paid by the Government of India in a yearwise break-up form;

Both CPIO and the first AA refused the information sought on the ground that the medical care scheme for the Prime Minister being a classified document, information pertaining to the same was exempt from disclosure.

The evasive response of the Respondent Public Authority compelled the appellant to file a second appeal before the ere. The appellant contended that denial of information by the respondent public authority without quoting the appropriate Section, under which exemption from disclosure was sought, indicated the deliberate attempt of the public authority of hiding the information and leading to wrongful denial of information.

Extracts from the decision:

The first query seeks information about the number of major and minor operations done on the Prime Minister / s during the last five years. This information is an indicator of the health and medical history of the present Prime Minister of the country and is classified as sensitive and ‘Secret’ information as per the Government Notification as also defined in the Office Memorandum of the Government of India, Ministry of Home Affairs, dated 6-2-2002 titled Guidelines on review of departmental security instructions wherein the Clause 2.1 of the Security Classifications clearly defined ‘Secret’ as “…. information and material, the unauthorised disclosure of which could be expected to cause serious damage to the national security or national interests or cause serious embarrassment to the Government in its functioning”. Thus this information is exempt u/s.8 (l)(a)’of the RTI Act since disclosure of information about the health and/ or medical problems of the Prime Minister could be misused and/or abused to the detriment of the national interest and security. Hence, such sensitive information, which could jeopardize national security and interest, need not be disclosed.

In so far as the information as sought by the appellant against the points (b), (c) and (d) is concerned, some information already exists in the public domain like the information pertaining to the present Prime Minister’s by-pass heart surgery, number of days spent in hospital, medical expenses incurred for the operation and as to who – paid for the operation.

The remaining information, if any, still unavailable in public domain, despite the wide coverage by the media, deals with information of personal nature and is exempt under the scope of S. 8(1)G) of the RTI Act. In fact, the appellant has not made out a case that the said information is sought to serve any cause of larger public interest.

The respondent in his oral submissions has further sought exemption from disclosure of information under provisions of S. 8(1)(e) of the RTI Act, on account of the said information being of fiduciary nature between the Prime Minister and his team of doctors and medical experts. At this juncture, ‘fiduciary relation’ needs to be analysed in the light of its various connotations. The word ‘fiduciary’ is derived from the Latin termfiducia meaning’trust’.

The fiduciary relationship can also be one of moral or personal responsibility due to the superior knowledge and training of the fiduciary as compared to the one whose affairs the fiduciary is handling. In short, it is a relationship wherein one person places complete confidence in another in regard to a particular transaction or one’s general affairs of business.

S. 16 of Indian Contract Act also clarifies ‘fiduciary relationship’ while defining ‘Undue Influence’.

In fiduciary relationship, a person with the legal duty to act primarily for another’s benefit enjoys a position of trust, good faith and responsibility.

Thus the word ‘Fiduciary’ is often used as an alternative term for ‘trustee’. The relationship between doctor-patient, lawyer-client or banker-customer are the various examples of fiduciary relationship. Thus, the Respondent Public Authority stands in fiduciary relation with the Prime Minister, holding the information in trust/ confidence.

In view of the above-mentioned facts and circumstances of the case, the Commission observes that the information, as sought by the appellant, and if not already available in the public domain, the respondent public authority holding the said information in fiduciary capacity on behalf of their patient (in this case, the Prime Minister), is exempt under provisions of S. 8(1)(e) of the RTI Act. So whether the patient is a Head of a State or a common person, the information nevertheless re-mains fiduciary and is exempt from disclosure to the public at large,since it is held in great confidence and trust.

Thus, it was held by the Commission that the information as sought by the appellant is exempt on the threefold grounds of national security, protection of individual’s right to privacy and also because the information is available with the DGHS in fiduciary capacity.

Therefore, among the information sought, the in-formation about the health and medical problems of the present and former Prime Ministers which already exists in the public domain, due to extensive media coverage or otherwise, like the recent cardiac surgery of the present Prime Minister, may be provided by the CPIO by 15 November, 2009 to the appellant.

[Sh. Chetan Kothari v. 1. Ministry of Health & Family Welfare 2. DGHS, CIC/ AD/C/2009/000620 decided on act. 15, 2009 by CIC Annapurna Dixit]

Part 2 : The RTI Act

Continuing from October & November BCAl, the summary of two reports :

One study by PriceWaterhouseCoopers (PWC), appointed by the Department of Personnel and Training (DOPT), is titled as ‘Understanding the key issues and constraints in implementing the RTI Act.’ Its final report as Executive Summary is published in June 2009.

DOPT-PWC report :

Common infrastructure & capacity building:

The study also focussed on the information provid-ers to understand how well-equipped the Government/PA machinery is to respond to the needs of the RTI. This was studied from various aspects – training/knowledge, usage of IT, availability of basic infrastructure (like availability of photocopier at Panchayat level), etc. and whether adequate bud-gets existed to address the limitation.

o Key issues:

Record management:

o More than 38% of PIOs stated ineffective record management system for delay in pro-cessing

o Approximately 43% of the PIOs were not aware of the record management guidelines

Training/Knowledge:

o Approximately 45% of PIOs mentioned that they had not been provided training in RTI

o Approximately 43% of PIOs were not aware of the proactive disclosure of their PAs

o Approximately 39% of the PIOs were not aware of key SIC (State Information Commission) judgments

o Training was limited to the provision of the RTIAct. Key aspects related to public dealing, motivation, technology, service levels, etc were not addressed.

Usage of information technology:

o Lack of software application capturing details mentioned in S. 25(3)

o Lack of software application to improve effi-ciency at the Information Commission

Low motivation of PIOs :

o Most of the PIOs have taken up the role un-willingly, leading to low motivation among them. Often, junior officers have been given the role of the PIOs and First Appellate Authority

o There was a perception among PIOs that lack of adequate budget and infrastructure ham-pers RTI implementation

o Approximately 89% PIOs said that there was no additional allocation of staff for RTI, while their work has increased.

The gaps highlighted above are partly due to lack of clear accountability established through appropriate Government rules and lack of controls to measure the level! effectiveness of implementation. This has been addressed in the report through detailing the roles and responsibilities of various entities and establishing a control mechanism through the use of IT and Third-Party Audits.

o Recommendations:

Re-organisation of record management system to promote information management. A separate study is recommended to improve the current record management guidelines and make them ‘RTI friendly’.

The following interventions in training to be taken:

o Knowledge Resource Centre should be the owner of developing and updating the training content.

o At the State level, the State Nodal Department Agency should design a training implementation plan with support from the State Administrative Training Institute and National Training Agency.

Head of the Public Authority should own the responsibility of training the officials in its Department through State Administrative Training Institute or State-empanelled agencies.

Preparation of RTI ready plan: It is suggested that each Public Authority should do a self evaluation and identify areas of improvements and budget requirements. This would help in meeting the infrastructural needs, thereby meeting the requirements of the Act.

In order to ensure good performance of PIOs in implementing the RTI Act :

Allocation of responsibility of PIOs and AAs ~ to senior level officials in a Public Authority
is required.

o A mandatory column on the PlO’s performance must be added into the forms of Annual Confidential Reports (ACRs)/even if the posting as PlO is only a part of the over-all responsibilities handled by him/her.

o A monetary incentive for the PIOs may be considered at PA level. Often, the PIOs are”‘ liable to pay penalty, for reasons beyond their control. So while a penalty has been man-dated by the Act, the PAs should also get rewarded for good performance. This is important at places where PIOs handle a high volume of RTI applications.

Specific software applications/’information request management’ for implementation at Pub-lic Authority level and at the Information Commission.

Usage of RTI-compliant standard template for quick and rational responses to the applicant.

The ARC report had suggested that as a one time measure, GoI should earmark 1% of the funds of all flagship programmes for a period of five years for updating records, improving infrastructure, creating manuals, etc. (an amount not exceeding 25% of this should be utilised for awareness generation). This was a good suggestion to address the above-mentioned issues. On the same lines, it is suggested that all Central and State Ministries/Departments should earmark 1% of their planned budgets for implementing the recommendations suggested in this report.

Raag & NCPRI Report:

Current status and preliminary findings:

3) Analysis of RTI Rules made by States and High Courts:

Background: The RTI empowers State Governments and Competent Authorities to frame rules to operationalise the Act, as also to educate both Government functionaries and citizens about the Act. These rules are critical, since they detail application fees, payment for information requested, and mode of payment. Moreover, the RTI Act [So 7(5)] states that the application fee shall be ‘reasonable’, so as to facilitate the use of the Act by ordinary citizens.

The People’s RTI Assessment 2008 is analysing the RTI rules made by the Central and State Governments (appropriate government) and the Supreme Court, High Courts, the Parliament and State Legislatures (competent authorities) to determine whether they keep with the Act in letter and in spirit, and how people and transparency friendly they are. The necessary data was collected through desk research and by filing RTI applications asking for the required information.

The analysis of High Court RTI rules is now almost complete, as is that of the variety of RTI-related payment modes required by individual states.

Preliminary findings:

High Court R1’I rules – Of India’s 21 High Courts (excepting in [ammu and Kashmir), RTI rules have been framed for at least 17 (Allahabad, Andhra

Pradesh, Assam, Chhattisgarh, Delhi, Gujarat, Himachal Pradesh, Jharkhand, Karnataka, Kerala, Kolkata, Madras, Mumbai, Orissa, Patna, Punjab, Haryana, and Rajasthan).

A detailed analysis of these rules suggests that many of these rules seem to be in violation of the RTI Act, and some go beyond the scope of the RTI Act, under which they have been framed.

For example, the High Courts of Karnataka, Chhattisgarh, Delhi, Gujarat, Punjab and Haryana have through the rules, sought to add exemptions over and above the exemptions specified in the RTI Act, specifically in S. 8(1) and S. 9. These High Courts have also sought to set up, through the rules, an appeals process which is at variance with that laid down in the RTI Act. The RTI rules of the High Courts of Delhi, Kolkata, and Gujarat also ignore the penalties specified in the RTI Act and specify their own penalties which are at variance with the ones specified in the RTI Act.

Similarly, the High Courts of Patna, Punjab & Haryana, Gujarat, Delhi, and Himachal Pradesh have framed rules that explicitly violate S. 6(3) of the RTI Act. Whereas the RTI Act says that where a PlO receives an application that in whole or part asks for information that is with some other public authority, the PIa must transfer that information to the concerned PIa within 5 days. However, the rules of the said High Courts state that all applications shall be rejected if the information they seek is outside the jurisdiction of the public information officer. These rules go on to declare that applications will also be rejected if the information they seek can be obtained under High Court rules or other general rules (Civil/Criminal) operational in a High Court. This is despite the fact that the RTI Act specifies that where there is an inconsistency with any other law, the RTI Act will prevail (S. 22).

All this is despite the fact that there are several rulings of the Supreme Court of India saying that rules cannot go beyond or modify the statute under which they are framed.

Modes of payment – In filing RTI applications in states other than the one you reside in, a major problem is the transmission of application fee and the additional fee that is to be paid for photocopying, etc. Different states prescribe different modes of payment (and different rates of payment). In some states they only accept treasury chalans, but making treasury chalans in Delhi for other states has proved to be nearly an impossible task and despite spending nearly a week running around, we have not yet been successful. Others demand court fee stamps or non-judicial paper of their state – which of course is not available in Delhi or in any other state!

Demand Drafts are also sometimes problematic, since these can only be accepted if made in the name of a specifically-designated official and the name of the designated officer is often not available, not even on the PA website or the State RTI portal. The RAAG team had to call up each department, and even then it was difficult to get this information. In many cases, we were thus compelled to request our teams in the concerned state to make payment on our behalf. But this is not possible for all citizens to do.

Part C : Other News

Blatant case of corruption exposed:

In a blatant case of corruption, a civic body spent Rs.2.5 lakh on fitting paver blocks on a particular road. But the road continues to be in as pathetic a state as ever.

On paper, the Kalyan-Dombivli Municipal Corporation (KDMC) is said to have got the work done from a contractor, even paid him the money. But the paver blocks are nowhere in sight.

As per papers available with Mumbai Mirror, paver blocks were to be installed on a 300 metre stretch of Gaushala Road in Kalyan (W). The task was sanctioned in March 2008 and work began in November 2008, the work was completed in January 2009. What’s more, a month later KDMC even paid the contractor Rs.2.5 lakh !

The seam was exposed after Narsinh Deshmukh, from Kalyan, obtained details under the RTI Act, and even filed multiple complaints. When nothing came of the complaints, he decided to go on a hunger strike.

“I just sat on the footpath with all the documents. I also initiated a signature campaign. However, hours after I began my hunger strike, it started raining heavily and my resolve was weakened,” he said.

But friends and locals who had seen the papers pertaining to the road, got him umbrellas and stood by him.

Finally, KDMC Commissioner Govind Rathod heard about Deshmukh’s hunger strike, and decided to check things out. “I went to the road and found that paver blocks were not in sight. Later, I found that our engineers had got the paver blocks fixed on another road, which was a private area,” confirmed Rathod. He added that it is nothing but a blatant case of corruption.

Rathod immediately ordered an inquiry, and even issued show-cause notices to a deputy engineer and junior engineer concerned. It was only after the inquiry committee was set up that Deshmukh called off his hunger strike.

Rs.28 lakh on decoration, mostly on flowers!

When Karnataka Government decided to hold cabinet meeting in Gulbarga, they spent Rs.28 lakh on decoration alone – most of it on flowers. Information was obtained by The Times of India by filing RTI query.

The decoration expenditure included putting up many buntings and welcome arches for 34 ministers, their secretaries and staff, who had taken the trouble of travelling 623 km from Bangalore to Gulbarga for the cabinet meeting.

The total expenditure for this one meeting was a shade lower than Rs.1 crore – Rs.92.39 lakh.

Speed-Post is now ‘snail’ post! !

An article sent through Speed-Post is supposed to reach its destination – be it any part of the country within 24 hours. However, Post Office data shows that 27,774 items sent even within Mumbai limits from Post Offices in the western suburbs overshot the deadline.

The 2006 postal directive to all Post Offices states that under the money-back guarantee scheme, the sender has the right to ask for refund in case the article does not reach within the stipulated time. “It is unfortunate that things sent to destination even within Mumbai do not reach on time,” said Dadar based RTI activist Milind Mulay. Articles, worth around Rs.5.90 lakh, were delivered late. Mulay claimed that all the senders should now demand for
a refund.

Political posters in Mumbai :

In 2008, political parties plastered the city with approximately 20 lakh posters and hoardings of candidates – birthdays, festival greetings, victories, welcomes, etc. Of these, just 1,590 were legal as they had taken permission from the BMC. This means 19,98,410posters, etc. were liable to pay a fine to the BMC – between Rs.1,000 and Rs.5,000 each.

RTI application has revealed that not a single political party paid the fine, a loss of Rs.30 lakh approxi-mately, to the BMC exchequer.

This year too, till September 19, of the 52,788 political posters, just 1,349 had BMC permission. Here again not a rupee was paid to the BMC – a loss of Rs.12 lakh. The same was true for 2007. There are no figures available for the pre-assembly and post-poll posters, etc., but the figures would be phenomenal.

In contrast, the BMC collected Rs.51,89,901 as fine from non-political hoardings, primarily of films, product advertisements, etc.

R. B. Bhosale, Deputy Municipal Commissioner (Special) said, “It is very difficult to nail an offender in the case of illegal posters/banners/hoardings. For instance, if it’s a banner celebrating Vilasrao Deshmukh’s birthday, we can’t go and ask him to pay the fine. Even if it has the signature of the party’s office bearer’s name, he washes his hands off, saying he hadn’t authorised it. For non-political hoardings there is always a mention of a store or a product and it is easier to nail the offender.”

Leader of Opposition in RTI ambit :

After ruling that the office of the Supreme Court of India comes under the ambit of the Right to Information (RTI) Act, the Central Information Commission has ruled that the office of the Leader of Opposition in the Lok Sabha was also covered under the RTI Act. It is a public authority as it is created by a notification of the government, but reserved his decision on whether the office was part of the Lok Sabha Secretariat or an independent office. Disregarding the orders of the ClC, the Lok Sabha Secretariat has not set up the information office for the leader of opposition as per the requirement of the RTI Act despite repeated letters from L. K. Advani’s office.

How much of snacks, etc. in 8 months!

An RTI query revealed that Puducherry Chief Minister V. Vaithilingam and his five colleagues had spent more than Rs.36 lakh on tea, snacks and beverages while hosting visitors in just eight months between Sept. 2008 and April this year. Welfare Minister topped the list by spending Rs.l0.5 lakh.

Do the Right Thing:

The limes of India in the Editional on November 3, 2009 covers some significant points on life in a democracy. I reproduce it fully hereunder:

It has been four years since the Right to Information (RTI)Act came into force, ushering in a new era of transparency and accountability, or so it was hoped. While RTI might not have been the unqualified success many expected it to be, it is an important tool that civil society can use to keep the government honest. That’s why we are watching the debate raging over the appointment of the next Chief Information Commissioner (ClC) with some apprehension.

Civil society groups have every right to suggest a name for a post as important as that of the ClC. RTI is an instrument that gives citizens some measure of control over information, and it is understandable that civil society would be wary that excessive intervention from: the bureaucracy would blunt the Act’s powers. But by asking that decorated police officer Kiran Bedi be appointed to the top post and demanding that the merits of a different choice be explained to them, information rights activists have polarised the debate to the point of blackmaiL

Lobbies are a fact of life in a democracy, but the kind of pressure tactics that those lobbying on behalf of Bedi have employed are likely to put the government on the defensive. In entering into a confrontation with the government over the post of ClC, the activists have failed to take into account that it is not only they who have a stake in RTI and its functioning, the State is also a stakeholder, and as with all disagreements where many actors are involved, all views must be taken on board and a consensus involved.

Since its inception, RTI has met with mixed success. The results of a recent study into the conduct of information commissioners across the country indicate that only 27% of RTI applicants receive the information they asked for, while a significant chunk of the population remains unaware of how to file an application for information. Another potential problem is that only two of every 100 RTI Act violations are penalised. Even when Information Commissioners direct officers to release information, a majority- as much a 61% – ignore the order. With so many questions over the implementation of the Act, it is important that the debate over RTI is not restricted to the appointment of the ClC. Information rights activists should work towards strengthening RTI by beginning a discussion on how best to expand its scope.

(Arvind Kejriwal retorted on above as published in The Times of India on November 6, 2009. Though not reproduced here, due to constraint of space, you may view it on timesofindia.indiatimes.com)

BCAJ Admin

ORDERS OF CIC

Right to information

Part A: ORDERS OF CIC

S. 8(1)(e) & (h), S. 11 and S. 22 :

The first time a multi–member Bench of the Central
Information Commission has not given a unanimous decision. It is a split
decision. Two Information Commissioners : Mr. A. N. Tiwari and Mr. Satyananda
Misra delivered one decision and Information Commissioner Mr. Shailesh Gandhi
delivered the counterdecision.

Mr. C. Seetharamaiah (Mr. CS) made an RTI application to the
Commissionerate of Customs and Central Excise (CCCE), in which he requested for
the correspondence, telephone conversations, etc. between the Central Bureau of
Investigation (CBI) and CCCE in connection with the prosecution under the
Prevention of Corruption Act launched
on his son who was working as an Inspector of Central Excise.

The CPIO and the AA denied the information stating that if
furnished, it would impede the process of prosecution, exemption being covered
u/s.8(1)(h).

Further, the AA stated that as the information sought for
includes the third party’s (CBI) investigation report, the matter was referred
to CBI and it had replied that the same may not be revealed as the case is under
trial and parting with these documents would impede the prosecution of
offenders.

Due to the fact that certain important points of law needed
to be decided, the matter was referred to a three-member Bench by Mr. A. N.
Tiwari.

In the proceedings of this matter, all 3 parties viz.,
Mr. CS, CCCE and CBI made extensive submissions: Mr. CS submitted that the very
purpose of the RTI Act would be defeated if such information is not furnished.
“The officers who are being prosecuted for matters pertaining to discharge of
their official duties, if innocent, have to go through the vexatious prosecution
for years together. Revealing of information, as provided under the Right to
Information Act, 2005, may hasten the judicial process and help the innocent. As
already held by the Central Information Commission, there cannot be misuse of
the truth and the information available to a prosecutor should be made available
to the alleged offender also. It would be appreciable for everyone if the pace
of the judicial process is increased with the help of information obtained under
spirit of democracy.”

The CCCE and CBI argued that an accused in an ongoing
prosecution should not be allowed to access any information which may be
evidence in that prosecution. An accused in ongoing prosecution is free to
demand such information from the Trial Court and it is a matter which is
entirely within the jurisdiction and the discretion of the Trial Court.

Two members stated that the word ‘impede’ used in
S. 8(1)(h) holds the key to whether information requested by the appellant
should be allowed to be disclosed.

It was also the two members’ view that information which is
evidence or is related to evidence in an ongoing prosecution comes under the
control of the Trial Court within the meaning of S. 2(j) of the RTI Act, which
states as follows :

‘ “right to information” means the right to information
accessible under this Act which is held by or under the control of any
public authority and includes the right to . . . . . .’

I now reproduce 3 paras (part or full) of the decision :

28. It is significant that this S. 2(j) uses two
expressions about the location of given information, i.e., ‘held’ and
‘under the control of’. In our view, expression ‘held’ implies that a public
authority has physical possession of given information. The word ‘under the
control of’ implies that the information, regardless of which public authority
holds it, is under the control of a specific public authority on whose orders
alone it can be produced in a given proceeding. In the present case, the
material sought by the appellant is undoubtedly related to an ongoing Court
proceeding and hence it can be rightly said to be under the control of the
Trial Court, who alone can decide how the information is to be dispensed. Any
action under the RTI Act or any other Act for disclosure of that information
to the very party who is arraigned before the Trial Court or to anyone
representing that party, would have the effect of interfering with the
discretion of the Court, thereby impeding an extant prosecution proceeding.

29. Since the Information requested by the appellant is
under the control of the Trial Court, it is open to the appellant to approach
that Court through an appropriate proceeding under the criminal laws or if he
so wishes, u/s.6(1) of the RTI Act. The Court can then take action u/s.2(f) of
the RTI Act in case it decides that the petitioner should be allowed access to
the information he had requested. The key point is that either of these two
actions has to be before the Trial Court and not the respondent-public
authority (viz. Office of Commissioner of Customs, Central Excise and
Service Tax) or the third party (viz. CBI) as in this case. We agree
with the respondents that the integrity of a criminal proceeding before a
Trial Court in matters of what to allow to be produced as evidence should be
taken by the Court itself and not otherwise. We also note the fact that under
criminal laws, a public authority is authorised not to produce a certain
information or record in the Trial Court unless so directed by the Court
itself. Forcing the public authority to part with any such information — which
it would otherwise not have disclosed before the Trial Court — through an RTI
— proceedings would amount to imposing on the prosecuting public authority,
obligations which it was not obliged to bear.

30. It is, therefore, important that all determinations
about disclosure of any information relating to an ongoing prosecution should
be through the agency of the Trial Court and not otherwise.

The two members further noted :

33. According to the preamble to the RTI Act, one of the
purposes the Act designed to sub-serve was to combat corruption. We look
askance at any effort to convert the RTI Act into a tool to weaken the edifice
of law which seeks to bring to book errant public servants, especially when
such public servants have all the means available to them to present their
case before the Trial Court and seek from it the very information they now
want them to be provided through the RTI Act.

34. The two members also noted that their
decision is also backed by the fact that the whole matter falls within the
ambit of S. 11(1) read with S. 7(7) of the Act since “it relates to or has been
supplied by a third party and has been treated as confidential by that third
party…..”

CBI had argued
that its objection to disclosure of information u/s.11 can be ignored only if
“public interest in disclosure outweighs in importance any possible harm or
injury to the interests of such third-party”.

CBI had argued
that there was no public interest. On the contrary, public interest is
positively harmed when interested parties are given the privilege of
interrogating a prosecuting agency about its actions vis-à-vis that party
through an RTI — proceeding when the prosecution before a Trial Court is
already extant.

Based on the
above, two members took the view: “Neither the provisions of the RTI Act, nor
the canons of justice, or equity commend disclosure of information as requested
by this appellant.”

Dissenting
decision:

IC Shailesh
Gandhi came to the conclusion that the information sought must be disclosed,
since there are no reasons in law to deny the information. IC writes thus:

“The
Commission’s decisions have been unanimous so far, and I am hesitant to break
this tradition. But I believe when there are different views on transparency,
it is worthwhile to voice them. I am inspired by Justice Mathew who had said in
the Supreme Court in State of UP v. Raj Narain (1975), ‘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. The 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 re-percussion on public security. To cover with
veil of secrecy, the common routine business, is not in the interest of the
public. Such secrecy can seldom be legitimately desired. It is generally
desired for the purposes of parties and politics or personal self-interest or
bureaucratic routine. The responsibility of officials to explain and to justify
their acts is the chief safeguard against oppression and corruption.” I
sincerely believe that India could benefit immensely from RTI which is but a
search for the truth as it exists on the records of public authorities. Denial
of information must be an exception, since it is a denial of the fundamental
right of the sovereign citizen of India, and must rigorously meet the
requirements of the exemptions of S. 8(1) of the RTI Act. I cannot agree to
views which I feel do not reflect the law in letter and spirit.

He first dealt
with submissions of CBI that S. 8(1)(e) and S. 8(1)(h) and S.11 are applicable.

He held that for
S. 8(1)(e) to apply, there must be a fiduciary relationship and the holder of
information must hold the information in his fiduciary capacity. All
relationships usually have an element of trust, but all of them cannot be
classified as fiduciary. In these relationships, the lawyer and the doctor act
on behalf and in the interest of their client and patient. But in the present
case the Department would not be considering the report on behalf of CBI or in
the interest of any particular entity or individual. Therefore exemption
u/s.8(1)(e) claimed by the CBI is not tenable under the Right to Information
Act.

Mr. Shailesh
Gandhi then referred the provisions of S. 22.

“S. 22
provides:

The provisions
of this Act shall have effect not-withstanding anything inconsistent therewith
contained in the Official Secrets Act, 1923, and any other law for the time
being in force or in any instrument having effect by virtue of any law other
than this Act.”

He quotes
Justice Sanjeev Khanna of the High Court of Delhi in ‘Union of India v. CIC’:

“S. 22 of the
RTI Act gives supremacy to the said Act and stipulates that the provisions of
the RTI Act will override notwithstanding anything to the contrary contained in
the Official Secrets Act or any other enactment for the time being in force.
This nonobstante clause has to be given full effect to, in compliance with the
legislative intent.”

The two members
had taken the view that S. 8(1)(h) applies. Two reasons were given for it.

One: Disclosing
names of the officials involved in the report would impede the prosecution. Mr.
Gandhi argued?: “The officials may claim exemption u/s.8(1)(g), but this would
again be open to judicial scrutiny by the Commission and would not be
necessarily accepted. Even if this were accepted, the Commission u/s.10 could
direct severance of the names of the officers mentioned in the report.”

Two: According
to Mr. Gandhi, no reasons have been advanced showing how the prosecution would
be impeded by disclosing the information. When denying a right to the citizen,
it has to be established beyond doubt that prosecution or apprehension of an
offender would be impeded. This has not been done. If the Parliament wanted to
exempt all information which was the subject matter of a prosecution, it would
have said this. The Parliament has specifically exempted only the information
which would ‘impede’ the process of investigation or prosecution.

Further, he
writes:

“The argument
that the information can be made available to the appellant’s son in
accordance with the provisions of the Criminal Procedure Code is in itself
self-defeating. This is because it establishes that CBI and the prosecuting
agencies have no objection in the appellant’s son accessing the information per
se. Their objection is to the route adopted and to the fact that the Commission
may order the disclosure of information. The majority decision appears to subscribe
to this. With regard to the Right to Information Act, the Commission is the
final decision-making body. The Trial Court has jurisdiction over matters
coming before it, but not over appeals and complaints under the Right to
Information Act. The Commission cannot abdicate its re-sponsibility and
authority in deciding about disclosure of information under the RTI Act to any
Court. The existence of an alternative route to access information, does not in
itself provide an exemption to disclosure u/s.8(1) of the RTI Act. Unless the
information sought is proven to be exempt u/s.8(1) or 9 of the RTI Act, the
Commission cannot accept any other exemption external to either of these
provisions. The CBI has not advanced any spe-cific argument to show how the prosecution
would be impeded to claim exemption from disclosure u/s.8(1)(h).

Mr. Shailesh
Gandhi contradicts the interpretation of the majority decision on S. 2(j)
referred to in para 28 (supra). He states:

“The word used
in the provision is ‘or’ and not ‘and’. Thus information may be sought either
from the public authority holding the information or the public authority
having control over the information. The Parliament has deliberately drawn this
distinction as in some cases these two public authorities may be two entirely
different entities. Therefore, if a public authority holds the information, it
must provide the same to the RTI applicant in accordance with the provisions of
the RTI Act. It is not at all necessary for that public authority to control
that information as well. In the present case, the Trial Court may have control
over the record, but the CBI is the public authority holding the SP report.
Therefore, the SP report can be sought from the Commissioner of Customs &
Central Excise or from the Trial Court. Since the appellant has sought it from
the Commissionerate, the public authority holding the information must provide
the same.”

As to arguments
advanced for application of S. 11,

Mr. Shailesh
Gandhi writes:

“It is clearly
stated at S. 11(1) that ‘submission of third party shall be kept in view while
taking a decision about disclosure of information’. S. 11 does not give a third
party an unrestrained veto to refuse disclosing information. It only gives the
third party an opportunity to voice its objections to disclosing information.
The PIO will keep this in view and take a decision about disclosure of
information. If the PIO comes to the conclusion that the exemptions of S. 8(1)
apply, he may refuse to disclose the information.”

“S. 11 of the
RTI Act is a procedural provision which requires the PIO to approach a third
party if the information sought relates to such third party. S. 11 is not a
substantive provision and therefore is not an exemption in addition to those
provided in S. 8(1) and S. 9. Once the PIO receives the objections, raised by
the third party, he must keep these in view while deciding whether to disclose
the information or not. This decision has to be in consonance with the other
provisions of the RTI Act and therefore exemptions claimed by the third party
have to be justified by the PIO u/s.8(1) or S. 9. The provision of S. 11(4)
gives the right to the third party to appeal against the decision of the PIO.
This would not have been relevant if the mere denial by the third party of
disclosure of information were to be considered to be final.

Then disagreeing
with the contention raised in para 33 (supra), he writes?:

“I most
respectfully disagree with this contention since it appears to propound a
principle that an accused in a corruption case can be denied his fundamental
right. Right to Information is a fundamental right of the citizens codified by
the RTI Act, 2005. A fundamental right cannot be curtailed arbitrarily and
without the sanction of law. It does not matter if the person accessing the
information or the person in relation to whom information is sought is a
convict or an accused. He cannot be denied his fundamental right. The duty of
the Commission is to ensure that the RTI Act is implemented properly and to ensure
that it does not take into account extraneous considerations while deciding on
appeals and complaints before it.”

Finally, paras
51 and 52 of his decision:

51. To summarise:

(a) The information sought is not exempt
u/s.8(1)(e) or (h) for reasons explained above.

(b) The RTI Act clearly overrides all other
prior Acts in matters of disclosures of information as per S. 22.

(c) Refusal of information can only be based
on the RTI Act, when an application is made under this Act. The Commission is a
creation of the RTI Act and can only agree to denial of information which is
expressly exempted u/s.8(1) or u/s.9 of the RTI Act.

(d) If there are various routes by which a
citizen can access information, it is his prerogative to use one which he finds
convenient.

(e) S. 11 is not a provision which can be
used to justify exempting information from being disclosed, unless it is
covered by S. 8(1).

52. In view of the reasons stated above, I
find the arguments put forward for the denial of information to be untenable.
Hence I cannot agree with the majority decision, and it is my considered
opinion that the information sought by the appellant is not covered by the
exemptions of S. 8(1) of the RTI Act and hence should be disclosed.

Note?: Full
decision shall be posted on website of BCAS and PCGT for anyone interested in
reading these extremely well-reasoned two counter decisions.

[Mr. C.
Seetharamaiah v. Commissionerate of Customs & Central Excise (Third Party?:
Central Bureau of Investigation)?: Appeal No. CIC/ AT/A/2008/01238 dated
19-9-2008 — decision dated 7-6-2010]

PART B: THE
RTI ACT

Payment of
fee under the RTI Act, 2005:

S. 6(1), S. 7(1)
& S. 7(5) provide for fee payable for accessing information being
application fee and fee for information supplied in photocopies, print or in
any electronic format. Proviso to S. 7 states that the fee prescribed by the
rules shall be reasonable. DoPT of Persmin, Government of India vide office
Memorandum (No. 12/09/2009.IR) has issued some clarifications on this subject.
The same are summarised hereunder?:

The Rules or the Act do not give power to the
PIO to charge any fee other than prescribed in the Fee and Cost Rules.
Attention is drawn to the common order of the
CIC in one appeal and one complaint which reads as under:

“Thus, there is provision for
charging of fee only u/s.6(1) which is the application fee: S. 7(1) which is
the fee charged for photo-copying, etc. and S. 7(5) which is for getting
information in printed or electronic format. But there is no provision for any
further fee and if any further fee is being charged by the public authorities
in addition to what is already prescribed u/s. 6(1), u/s.7(1) and u/s.7(5) of
the Act, the same would be in contravention of the Right to Information Act.
The ‘further fee’ mentioned in S. 7(3) only refers to the procedure in availing
of the further fee already prescribed under 7(5) of the RTI Act, which is
‘further’ in terms of the basic fee of Rs.10. S. 7(3), therefore, provides for
procedure for realising the fees so prescribed.”

·
It is hereby clarified that where a Public
Information Officer takes a decision to provide information on payment of fee
in addition to the application fee, he should determine the quantum of such fee
in accordance with the fee prescribed under the Fee and Cost Rules and give the
details of such fee to the applicant together with the calculation made to
arrive at such fee. Since the Act or the Rules do not provide for charging of
fee towards postal expenses or cost involved in deployment of manpower for
supply of information, etc., he should not ask the applicant to pay fee on such
account.

Part 3 :
INFORMATION ON & AROUND

·
Appointments of Information Commissioners

The Government
will be appointing 22 commissioners this year. Of the 22 commissioners who are
retiring, six are with the Central Information Commission, including its chief
Wajahat Habibullah.

In August 2008,
DoPT recommended its Secretary S. N. Mishra, Annapura Dixit, Ashok K.
Mohapatra, R. B. Shreekumar, M. L. Sharma and Shailesh Gandhi for appointment
as information commissioners in the Central Information Commission.

Except Gandhi,
whose name was
proposed by several RTI
activists, names of the others were not recommended by anyone. But their
bio-data got included in the proposal for appointment of information
commissioners.

On the other
hand, three persons — Ravi Shankar Singh, Sudhanshu Ranjan and Dr. Krishna
Kabir Anthony — who applied and were also recommended by politicians did not
find a place in the agenda for the selection committee headed by the Prime
Minister. There were 12 others like them.

Arvind Kejriwal
who got the above info under RTI query says:

“it appears the
DoPT has become the de facto selection committee and the selection committee
provided under the law has been reduced to an endorsement committee.”

·
BMC employees not being transferred:

Months after
Bandra residents managed a landmark victory forcing the transfer of at least
eight engineers who had been tossed around in the H-West ward for 20 years, an
RTI query has revealed that a similar situation exists in Andheri as well. As
many as 50 employees, including peons, engineers and clerical staff, haven’t
been transferred, some since the 80s.

The RTI query
filed by activist Aziz Amreliwala revealed that despite the BMC Rules that make
rotation of officials mandatory every three years, at the K/East ward, 11
engineers, including sub, junior and assistant engineers, have enjoyed the same
post for several years. In fact, some of them have even been promoted. Experts
blame a nexus between officials and politicians that make the transfers of
employees impossible.

·
Maharashtra Chief IC

Dr. Suresh
Joshi, Chief Information Commissioner retires on 12-10-2010 (exactly on the 5th
anniversary of RTI).

Political
activist Chandrashekar Prabhu, additional chief secretaries M. Rameshkumar and
Bhupati Prasad Pandey, retired bureaucrats Leena Mehandale, S. S. Hussain and
state human rights commission member Subhash Lala are prominent among the
150-and-odd persons competing for the post of the State CIC.

Dr. Joshi has
gone on leave and entrusted his task to the junior-most IC, Ramanand Tiwari.
Other Information Commissioners who are senior to Mr. Tiwari have taken
objection to the decision of Dr. Joshi.

Ever since the
appointment of retired IAS officers as info commissioners, a cold war is on
between IAS and non-IAS commissioners. When the process of appointment of
Information Commissioners was in progress, activist Anna Hazare had personally
called on the then CM and President of India, saying that the Government should
not appoint retired babus for such sensitive posts. Currently out of the 7
commissioners, 3 are retired IAS and 4 are non-IAS officers.

Meanwhile, over
42 serving and retired IAS officials and 89 individuals have applied for the
post of info commissioners. The Nashik Information Commissioner’s post is lying
vacant. Aurangabad IC died in July 2010.

·
Panchayati Raj Ministry:

The Panchayati
Raj Ministry, responsible for decentralisation and local governance in states,
but more importantly, empowering the rural poor, has been spending crores every
year as rent on space acquired at a 5-star hotel in south Delhi being 5,500
sq.ft. space on the sixth floor of Samrat Hotel in Chanakyapuri.

This information
came to light in reply to an RTI application filed by a Delhi-based activist.
Rent per month was `190 per sq.ft., for a period of two years commencing from
September 1, 2006, to be extended further with an increase of 8% after expiry
of the tenure. After the period lapsed on August 30, 2008, the present rate of
rent became `210.60 per sq.ft., from September 1, 2008. The total adds up to
more than `5 crore spent as rent so far.

·
Corruption Eradication Committees:

Maharashtra
State Government’s commitment to combating corruption is facing its real test
in Thane, where a citizen activist has put a spotlight on the District
Collectorate for failing to comply with rules concerning the setting up of
Corruption Eradication Committees (CEC) at the taluka and district level.

The watch-dog
committees, comprising 10 citizens, selected after police verification, besides
a team of administrative and police officials, have been armed with the authority
to inquire into complaints of corruption. The anti-graft panels, initiated in
1996 during the Shiv Sena-BJP regime, raised hopes of finally getting justice
among aggrieved citizens as non-official members would ensure redressal of
public issues during monthly meetings.

The Thane
Collectorate, however, seems to be an exception to the rule aimed at equipping
people with the authority to question the corrupt. Of the 15 talukas, none has
a fully constituted CEC. In fact, the district CEC has just three non-official
representatives as against the mandatory ten.

·
Cost of getting the information:

Citizens and RTI
activists have a reason to cheer. Now, they can save thousands of rupees which
they pay fee to get ‘readily available’ information under the RTI Act,
According to the Information Commission, they will get the information for Rs 2
per page, as stipulated in the Act.

Several RTI
applicants had complained that they were made to pay through their nose,
particularly while seeking information from BMC’s property-related departments,
such as assessment. Also officers often did not sign or attest papers while
giving information. When they were asked to sign on the documents, they used to
ask applicants to pay as per the BMC rate card which existed before the RTI Act
came into existence. The practice continued despite the fact that the RTI Act
has a superseding effect on all prior rules.

For example,
certified copies were charged at `230 per property in the assessment
department. If the applicant had to ask property details or building details
for more than one property, they would pay in thousands. Apart from this, the
inspection of voluminous information that is free for the first hour and `5 for
every 15 minutes was being charged `150 per hour.

The order from
Information Commission comes after a sustained battle of over one and a half
year by NGO, Mahiti Adhikar Manch, and some active citizens. The State Chief
Information Commissioner, Dr. Suresh Joshi, who heard the matter in March 2009,
passed order dated July 9, 2010, after a series of meetings with additional
municipal commissioners.

BCAJ Admin

Right to Information

Part A : Decisions of CIC

l S. 2(f) and S. 7 :

Mr. Rakesh Agarwal sought the following information under RTI application to Mr. K. S. Rawat, PIO, Tis Hazari Courts, Delhi :

1. Whether intimations are sent by each traffic court of Delhi presided over by Spl. M.M.S. as required by S. 210 of the Motor Vehicles Act 1988 ?

2. If not, reasons for the same.

3. If yes, copies of all such intimations that pertain to convictions on 9 and 10 January 2008 across all Traffic Courts of Delhi.

The PIO held that information sought for was not held by or under the control of any public authority and therefore did not fall u/s.2(f) of the RTI Act, which defines ‘information’.

Further, the PIO stated that the appellant was representing his newspaper/magazine called ‘Nyay Bhumi’ and had filed 3 RTI applications in 15 days and the appellant was working for promotion of his business rather than serving social interest. Hence, it was a blatant misuse of the RTI Act.

The First Appellate Authority (FAA) directed the PIO to collect the information from the Courts dealing with traffic cases and send it to the appellant within 20 days. The order was passed by FAA beyond 45 days and no hearing was given.

The following two were grounds of appeal before CIC :

The PIO demanded payment for providing information thereby violating S. 7(6)

FAA did not afford a hearing to the appellant and received the FAA’s order on 25-2-2009 thereby exceeding the time limit set in the Act.

It may be noted that the PIO had first held that information sought was not covered u/s.2(f) and only when FAA directed to furnish information, he agreed to provide it but only on payment of prescribed fee (i.e., Rs.2 per page). While the appellant’s contention was that having not validly denied supply of information, the same has to be submitted free as provided u/s.7(6) which reads as under :

S. 7(6) : Notwithstanding anything contained in Ss.(5), the person making request for the information shall be provided the information free of charge where a public authority fails to comply with the time limits specified in Ss.(1).

CIC in the decision stated :

“It is a basic tenet of statutory interpretation that words of a statute should be interpreted keeping in mind the context in which they appear. Information is to be provided free of cost if S. 7(1) is not complied with. Rejection of a request for any of the reasons specified in S. 8 or S. 9 has to be valid rejection in law. If a ground for exemption from disclosure is wrongly relied upon, then it does not amount to ‘rejection of a request’ as started in S. 7(1). It is absurd to contend that the appellant must be made to pay the additional fees when the PIO wrongly denies information. The Commission finds the PIO’s deliberate misconstruction of the law unacceptable. This is an attempt to obstruct the implementation of the RTI Act and to delay the provision of information to the appellant without any reasonable cause.

CIC also observed that the PIO on several occasions, all of which are on record, has made unwarranted and irrelevant observations which give the impression that the PIO is malafidely denying information to the appellant. The Commission strongly advised the PIO to refrain from making such comments in future.

Based on the above, the Commission directed the PIO to provide the information to the appellant free of cost. He was also asked to show cause as to why penalty should not be imposed and disciplinary action be not recommended against him u/s.20(1) of the RTI Act.

[Mr. Rakesh Agarwal v. PIO, Tis Hazari Courts, Delhi, CIC/SG/A/2009/000675/3390, dated 22nd May 2009]

Ration card :

The appellant had applied for a ration card in 2006 and in spite of repeatedly being shunted to various places did not get any ration card. The PIO stated that the Government has subsequently declared as to how many BPL cards will be issued and time was set for applications to be made for BPL cards. The Delhi Government accepted applications for BPL cards in February-March 2009 and decided on a maximum number of cards which are to be given. He stated that the applications were received and sent to a Vigilance Committee headed by MLA of the area. He admited that these cards are supposed to be given in 45 days, but the time at the Vigilance Committee headed by MLAs takes indefinite time.

CIC Shailesh Gandhi in the decision stated :

The appellant has not been given any appropriate reply indicating what is happening to her ration card application. The approximate loss to her per month of free foodgrain and kerosene is about Rs.500 per month. The appellant should have got proper answer to her RTI application by 6-4-2009. The loss of free foodgrain due to her is already for three months by which she has suffered loss of Rs.1500. The Commission also feels that the loss of time and trauma which she suffered on account of not getting her due entitlement and pursuing this application and appeal should be compensated with another Rs.1000. Hence the Commission awarded a total compensation of Rs.2500 to the appellant for loss of entitlement and to compensate for the effort and the trauma suffered in pursuing this matter.

The PIO was directed to give the information to the appellant before 10th July 2009 about the status of her application giving names and designations of the officers who have dealt with the BPL card application and where the application is presently.

[Smt. Nagina Devi, Delhi v. PIO, Food Supplies & Consumer Affairs, GNCT of Delhi, CIC/SG/A/2009/001213+1214/3969, dated 2nd July 2009]

Part B : The RTI Act

Annual Report Maharashtra State Information Commission :

Please refer to RtoI of June, 2009. Under other news, I had reported some statistics as covered in the Annual Report of Maharashtra State Information Commission. Now the report in English is published and Dr. Suresh Joshi, CSIC has kindly sent me a copy.

It is Third Annual Report of the year 2008. Some interesting extracts from it:

1,23,000 applications in 2006, 3)6,000 in 2007 and 4,16,090 in 2008 have been received respectively. In bigger States of our country less than one lakh applications come in one year. In the international arena England receives about 60,000, Mexico about 94,000. Similarly the Central Government receives about two and a half lakh applications. Thus it is seen that the people of Maharashtra have given tremendous response to this Act.

Understanding the important issues touching the lives of the people by using this Act agitating them on proper platform, fighting injustices, checking corruption, increasing the commitment of government employees to work and increasing the overall transparency in government functioning – many such like issues have been addressed due to the use of this Act.

Many young people have thrown themselves in this movement of the Right to Information. Similarly, many people above 60 years have also participated in spreading awareness about right to information. It is heartening to see that associations of officers, employees of the Government of Maharashtra have declared their support for this Act and have appealed to their members to give maximum information to the people through this Act. All these factors have proved useful in obtaining people’s support for this Act.

Maharashtra is the only State in the country where Benches of the Information Commission have been set up at the Division, level. Greater Mumbai, Konkan, Pune, Aurangabad, Nagpur already have Benches. Towards the end of 2008 Amravati Bench was constituted and on 24 December 2008 the Information Commissioner was appointed there. Only Nashik Bench now remains to be established and I am hopeful that it would be done soon.

Due to the formation of Divisional Benches the Commission’s work has reached nearer to the people. Commissioners have not only heard appeals at the divisional headquarters, but have attempted to hear them at the District level. Therefore people realised that ‘the Commission has come to our doors’ and this was perhaps one of the reasons for increasing number of RTI applications.

In 2007 the Commission decided 3611 appeals and complaints. This number is 15026 for the year 2008. The Commission has also started arranging hearings through video conferencing.

Annual Report 2006-07 of Central Information Commission :

(continuing from July 2009)

v) Collection of Charges by Public Authority (Vide: S. 25(3)(e) of RTI Act) : All the Minis-tries/Departments/ Apex-level Offices taken together collected Rs.30,71,167 in the year 2006-07. In the year 2005-06, the amount collected was Rs.5,08,490. There is six times increase in the amount collected in year 2006-07 over the previous year. Top 10 Ministries collected a total of Rs.22, 82,984 (74.33% of the total) in the year 2006-07.

vi) Disposal of appeals (Vide: S. 25(3)(c) of RTI Act) : All the Ministries/Departments/ Apex-level Offices, on an average, disposed 75% of the appeals received during the year 2006-07. Out of 57 Ministries/Departments/ Apex-level Offices, 22 Ministries have disposed 100% appeals during the year and 65 Public Authorities have received more than 50 appeals.

vii) Implementation of the Act (Vide: S. 25(3)(f) of RTI Act) : Efforts taken by Public Authorities to administer and implement the spirit and intention of RTI Act include launching of website to disseminate information with respect to Act and developing Public Grievance Redressal and Monitoring System (PGRMS) by some Ministries. Suggestions were received from Public Authorities about increasing fee for seeking information, for filing first and second appeals, increase in time to respond for older records, and taking up more capacity building programmes.

viii) Recommendations for Reforms, etc. (Vide: S. 25(3)(g) of RTI Act) : The Central Information Commission has made valuable recommendations for reforms and with respect to specific Ministries with a view to make RTI Act more effective. The recommendations include (a) streamlining the procedure of dealing with RTI applications, (b) strengthening of the staff for efficient disposal of RTI applications, (c) implementation of homogeneous fee structure, (d) full conformance with spirit of RTI Act, (e) respect for dignity of citizens. In addition CIC made some observations with similar objectives. These observations are with respect to (a) promotion of employees of Public Authorities, invasion of the privacy, (c) interpretations of rules and Acts, (d) language issues, (e) communication issues, (f) adherence to record retention policies and process of weeding out information, (g) computerisation, (h) training of the staff, and status of governing body and strengthening of staff grievances redressal system.

Part C : Other News

• Unclaimed money in the banks:

Coming down heavily on banks that keep funds in ‘suspense accounts’, the Central Information Commission has asked RBI to disclose details regarding ICICI Bank. CIC also directed RBI to provide information in 10 days if other banks, including govt-run ones, were following this practice. In his order, Information Commissioner Satyananda Mishra asked RBI to give a “comprehensive reply stating categorically if the RBI had ever issued any instruction on the subject and if according to them such practice was being followed in other banks including public sector banks”. The decision could have far-reaching impact in bringing information on unclaimed money into the public demain.

• File notings :

[Further to file notings as appeared in July 2009 issue]

In a Circular issued in the third week of June, DoPT has stated, “It is hereby clarified that file notings can be disclosed except those containing information exempt from disclosure u/s.8 of the Act.” DoPT’s move comes after the CIC had issued notice to two Department officers seeking reason why they should not be prosecuted for disobeying its orders. The Commission had asked the Department to correct its website which said notings couldn’t be disclosed under the Act. DoPT Minister Prithviraj Chavan has said that notings were not part of the proposed amendments to the RTI Act.

• BSE and SEBI :

Yogesh Mehta, a former sharebroker, and whom BCAS foundation RTI clinic on ongoing basis provides assistance has again received an order from CIC in his favour. CIC in a landmark order has directed the SEBI to procure information from the BSE’s Investor Protection Fund (IPF) and provide it to Mr. Mehta whose shares worth lakhs of rupees are lying impounded with IPF since last 13 years.

While BSE did not have any objection in providing information to SEBI, it was of the view that SEBI cannot provide the same to the citizen under the RTI Act. It is learnt that now a big battle awaits between BSE, SEBI and the applicant.

• Mediclaim Policy refund:

The RTI Act has come to the help of thousands of Mediclaim policy holders who have been struggling to get refund for the excess premium they have paid. The Central information Commission (CIC) has directed New India Assurance Company Ltd. to make public the details of the total number of policy holders who are still to get a refund for the excess premium charged. The CIC has asked the company to provide the information on the company’s website and send a copy of information to the Insurance Regulatory Development Authority.

Is vacation an excuse to delay on RTI application?

CIC has ruled that there is no law that allows Courts to give up their obligation under the Right to Information Act even if many staff members are on vacation. CIC’s disapproval came on HC’s failure to furnish an RTI response to an applicant on the ground that staff is lean owing to vacation.

“The Commission finds it difficult to accept that any public authority can claim vacation from RTI for one month which is not provided for in law,” Information Commissioner Shailesh Gandhi noted in a recent decision.

BCAJ Admin

ORDERS OF CIC

r2i

Part A : ORDER OF CIC

In the last (August 2010) issue, I reported on one full-bench
(split) decision of CIC. In this issue, I report two full-bench decisions
pronounced, one in June and the other in July.

An interesting matter came for decision in this case. The
appellants, Sri Manohar Parrikar of Goa and two other individuals, had made RTI
applications seeking all documents including correspondence, notings,
explanations between the office of AG (Audit) and certain bodies like Goa
Infrastructure Development Corporation, Government of Goa, etc.

The PIO furnished certain documents and denied some other
information sought, including the intermediary documents. FAA held that “the
intermediary documents are merely working papers and may not come within realm
of ‘information’ under the RTI Act and the same be furnished. The PIO did not
comply with the same.

The appellants then filed appeals before CIC. Before deciding
the matter, CIC sought the advice of the Secretary General of Lok Sabha and the
comptroller and the Auditor General of India. The Commission received the same.

In the view expressed by the C&AG, it held that “audit notes,
etc. are work papers and do not contain the final view of the Accountant
General. The information therein is based on the document obtained from the
auditee only. Such information would come within the scope of S. 8(1)(c)* of the
Act and disclosing such information may cause a breach of privilege of the
Parliament. This would be against the oath taken by the C&AG to uphold the
Constitution and the laws of the land.”

The C&AG also pointed out that based upon the Audit Report,
the CBI had launched a criminal proceeding against the appellant, Shri Manohar
Parrikar in Case No. RCO0015A/2007. It was, therefore, mentioned that any
disclosure at this stage would impede the process of ongoing
investigation/prosecution and thus bring the matter within the scope of S.
8(1)(h)** of the RTI Act.

The C&AG note also cited a passage from the U.K. Freedom of
Information Act, 2000, in which audit-related matters were exempt from
disclosure. It argued that the logic of the UK Act would also apply in the
Indian context as the United Kingdom and India were both parliamentary systems.

Appellant argued before the CIC that the C&AG’s
constitutional obligation to carry out specific mandate could not be treated as
a bar on the disclosure of the information, which undoubtedly is held in the
control either of itself or the office subordinate to it. Learned counsel for
appellant cited an order of the Delhi High Court, in which it was held that
authorities entrusted with constitutional obligations also carry a moral
responsibility of transparent conduct. He argued that the information given to
the Accountant General by the departments or the authorities under the
Government — Central or State — was neither fiduciary, nor was it confidential.
To call any information as immature, preliminary, intellectual input, unfinished
and so on, could not be a reason to withhold such information from disclosure
when S. 2(f) of the RTI Act defines all such items of information — and much
more as ‘information’ within the meaning of the Act. The stage of evolving
information was not a reason to bar its disclosure. The appellants’ counsel
further pointed out that this particular Accountant General’s Report was already
placed before the Legislative Assembly of Goa State and was thereby an open
document.

The C&AG’s representative also submitted that all reports
placed before the Parliament were in fact the property of the Parliament. As
such, all material connected with such a report should also be treated as the
property of the Parliament, which could be disclosed only if the Parliament so
authorised it. He pointed out that all Accountant General and C&AG Reports
placed before the Parliament are examined by the Public Accounts Committee,
whose deliberations are not open to public and thereby are confidential. All
material relating to the C&AG or the AG Reports are, therefore, inferentially
before the Public Accounts Committee and thereby become confidential as the
deliberations before the Committee are held to be confidential.

Decision Notice :

The Three-member bench held that provisions of S. 8(1)(c) of
the RTI Act are not attracted. The decision notes :

“As has been pointed out by the Secretary General of Lok
Sabha, the Constitution does not mention items such as draft reports, half
reports, half margins or draft audit notes and so on. If these are
information within the RTI Act, their disclosure liability has to be
determined in terms of the provisions of the Act. On the subject of whether
disclosure of this variety of information would constitute premature
revelation of matters before the Parliament or the State Legislature, the
Secretary General, Lok Sabha citing Kaul & Shakdher in ‘Practice and
Procedure of Parliament’, stated that premature publicity in the press to
notices of questions, adjournment motions, resolutions, answer to questions
and other similar matters connected with the business of the House did not
comprise breach of privilege, although it may be ‘improper’. It was no-doubt
breach of privilege to publish any part of the proceeding or evidence given
before a Parliamentary Committee before such proceedings or evidence or
documents had been reported before the House, unless the Committee itself
decides that either all or part of its proceedings may be publicised.
According to the Secretary General “it is doubtful whether the report of
C&AG qualifies to be treated as the report of a Parliamentary Committee or
evidence tendered before a Parliamentary Committee. Half margins, draft
audit notes, etc., as already stated, do not have any relevance insofar as
parliamentary papers are concerned.”

The Commission also went through clauses 1.4(XII) and
(XIV) of the parliamentary procedure. It then held :

“It is then obvious from a reading of the Secretary General’s note to the Commission as well as the extracts of the parliamentary procedure, that while all evidences and depositions before the Parliamentary Committees are no doubt held secret as well as proceedings before it, it cannot be stretched to mean that every single item of information, held anywhere, that may, now or in future, become part of the proceeding before the Parliamentary Committee, or may be required to be produced as evidence before it, should also come under the exemption from disclosure. While all evidence or material, which is part of a proceeding before a Committee of the Parliament, has to remain secret until the Committee wills otherwise, every other material, which does not answer that description, is beyond the bar. In other words, while the actual material in a proceeding before a Parliamentary Committee is prohibited from disclosure, such prohibition would not apply to such material, which is not yet part of an ongoing proceeding. The audit notes, marginal notes, etc. come decidedly in the latter category.”

The Commission was also not persuaded by the C&AG’s argument that these items of information were at a very preliminary stage and should not be allowed to be disclosed for that reason. According to the C&AG’s own averments, these are items of information within the meaning of S. 2(f) of the RTI Act. And if it were so, the only reason why it should be prohibited from disclosure, was that it attracted one of the exemption Sections of the RTI Act 2005. That is not the case in the present matter. Therefore, it held that these items of documents and records, being information in themselves, merit disclosure.

Based on above, the Commission directed the CPIO to disclose all information requested by the three applicants.

[(1) Shri Manohar Parrikar, (2) Shri Jayanta Kumar Routary, (3) Shri Gurbax Singh v. (1) Accountant General, Goa, (2) Accountant General (Civil Audit), Orissa, (3) Accountant General (Audit), Punjab : Appeal No. CIC/AT/A/2007/00274, CIC/AT/ A/2008/00726 and CIC/AT/A/2009/000732, decided on 10-6-2010]

S. 8(1)(j), S. 2(f), S. 2(j) and S. 2(n):

The three-member CIC decision in the application by Mrs. Bindu Khanna has significant implication. It is my view that media has wrongly interpreted this decision.

The appellant Ms. Bindu Khanna, a teacher in a private school, namely, Pinnacle School, wanted certain information relating to her employment, mainly her service records, leave and other statutory allowances, working hours, medical facilities, pension and gratuity benefits, etc. She made various oral as well as written requests to the school. When she did not get the said information, she approached the Directorate of Education by filing an RTI application dated 11-2-2008.

When in response to her RTI application, she did not get the information sought, she had made an appeal to the Commission, which directed the Directorate to secure the information from the school and provide to the applicant.

Pinnacle School which is third party in these proceedings approached the Delhi High Court by filing writ petition No. 6956/2008 and contended before the Court that the RTI Act was not applicable to the school, inter alia, for the following reasons :

i) Pinnacle school is a private school;

ii) The Delhi School Education Act and Rules framed thereunder do not provide for disclosure of information.

The School also contended before the H.C. that the Commission passed the impugned order without hearing them and without complying with the principle of natural justice. The High Court by order dated 15th September, 2009 set aside the impugned order dated 15th September, 2008 passed by the Commission on account of failure to comply with the provisions of S. 19(4) of the RTI Act and remanded the matter back to the Commission for fresh adjudication in accordance with law.

At the time of hearing before the full bench, the petitioner submitted that the Delhi School Education Act and Rules framed thereunder are a complete code governing all aspects of functioning of aided and unaided recognised schools. A combined reading of S. 2(f) of the RTI Act and the Delhi School Education Rules

[in particular Rules 50(xviii) and (xix)] shall conclusively establish that the respondent Directorate as the governing authority of the school, has the requisite powers vested in it to access the information sought by the appellant. The petitioner further submitted that the third party by denying the information u/s.8(1)(j) of the RTI Act has already conceded the applicability of the RTI Act and had not made any representation to the effect that the information sought could not be given as the provisions of the RTI Act were not applicable to them.

The third party submitted that the RTI Act is not applicable to the private schools and it is the Directorate of Education, which had to be approached in this connection. They further contended that the Delhi School Education Act and Rules framed thereunder do not provide for disclosure of information. This stand of the third party was in contradiction of the stand already taken before the PIO and the First Appellate Authority that the information sought by the appellant was exempted u/s.8(1)(j) of the RTI Act and cannot be disclosed.

The Commission came to the conclusion that the third party had conceded in all earlier proceedings that the RTI Act applies to it and now cannot contend that the RTI Act does not apply to it. Hence, that issue was not dealt with at all.

Hence the issue for determination was:

“Whether the third party, a private school performing public function, can refuse to furnish the information u/s.8(1)(j) of the Act, particularly when the FAA of the respondent has ordered to disclosure of information.”

The Commission analysed three items of definitions from S. 2, namely, ‘information’ (2f), ‘right to information’ (2j) and ‘third party’ (2n). The Commission also looked into The Delhi Education Act and the Rules, especially 2 clauses of Rule 50, reproduced hereunder :

“Rule 50 : Conditions for recognition — No private school shall be recognised, or continue to be recognised, by the appropriate authority unless the school fulfils the following conditions, namely :

xviii) the school furnishes such reports and information as may be required by the Director from time to time and complies with such instructions of the appropriate authority or the Director as may be issued to secure the continued fulfilment of the condition of recognition or the removal of deficiencies in the working of the school;

xix) all records of the school are open to inspection by any officer authorised by the Director or the appropriate authority at any time, and the school furnishes such information as may be necessary to enable the Central Government or the Administrator to discharge its or his obligations to the Parliament or to the Metropolitan Council of Delhi, as the case may be.”

Based on the above, the Commission held:

“The order passed by the First Appellate Authority directing the third party to provide complete information to the appellant and the decision of the Commission affirming the orders of the First Appellate Authority are perfectly in compliance with the provisions of the Act. The third party is hence obliged to comply with the said orders. The Commission, therefore, directs the respondent to seek compliance of the aforementioned order from the third party-Pinnacle School to provide information as sought by the appellant.”

The Commission also in the penultimate para stated as under:

“The issues relating to management and regulation of schools responsible for promotion of education are so important for development that it cannot be left at the whims and caprices of private bodies, whether funded or not by the Government.”

It is my view that the decision does not rule that the RTI Act ‘per se’ applies to the private unfunded schools. If the school concedes that the Act applies, then it cannot escape in furnishing information if under the combined definitions u/s. 2(f) and u/s.2(j) read with the rules of the relevant Education Act, the information is covered, then it is accessible and cannot be denied.

[Ms. Bindu Khanna v. Directorate of Education, Government of NCT of Delhi, (third party, Pinnacle School, New Delhi) : Decision No. 5607/IC(A)/2010 of 14-7-2010]

PART B : THE RTI ACT

Extracts from the Article of Antara Dev Sen, editor of the Little Magazine in the AGE of 24-7-2010.

Thinking allowed:

Earlier this week, Amit Jethwa was shot dead in front of the Gujarat High Court. He was in his thirties, a caring, law-abiding citizen, committed to the environment, humanity and animal life. And like most dedicated souls, he believed that he could stem the rot in the system and make a difference by diligently using democratic tools of empowerment.

He relied heavily on the Right to Information Act to plug the holes in the system. Till the holes got him.

Amit Jethwa was fighting against illegal mining in the Gir forests, which hosts the world’s last Asiatic lions. But he was up against the mining mafia, the Forest Department and politicians involved in the racket. Not an easy fight for a lone ranger. Besides, he had made enemies by campaigning against corruption.

But he was losing faith in civil society. Barely a week before he was gunned down he had told a reporter about his disenchantment. “I know how risky it is for me and my family to wage war against mining mafia”, he lamented. “Without the support of people nothing is possible.”

Which is precisely where the power of the RTI lies. In the hands of the masses, it is a potent tool to chisel democracy with. But in the hands of a lone passionate soul, it may be a dangerous weapon ready to explode in your face.

Information is power only when you are allowed to use it. It works wonders in a free society, where people have justiciable democratic rights, where governance has not failed as miserably as in our country. The right to information can be a human right only where there has been a certain level of development, where certain democratic freedoms are protected. If the state cannot protect your right to life, it’s best not to exercise your right to information too much.

Let’s look at some of the cases this year. In January 2010, Satish Shetty, 39, was hacked to death in Maharashtra. The activist had been battling land scams and government corruption, had received death threats and asked for police protection — which he didn’t get — and was killed while taking his morning walk.

In February, also in Maharashtra, RTI activist Arun Sawant was shot dead near the Badlapur Municipal Office in Thane for fighting administrative corruption.

Meanwhile in Bihar, RTI activist Shashidhar Mishra was gunned down in front of his home in Begusarai. A tireless crusader against corruption in welfare schemes and the local government, he was called ‘Khabri Lal’ for his dedication to information.

Meanwhile in Gujarat, Vishram Laxman Dodiya, who had filed an RTI petition regarding illegal electricity connections by Torrent Power, was murdered.

In April, RTI activist Vitthal Gite, 39, was killed in Maharashtra for exposing village education scams.

And in Andhra Pradesh, Sola Ranga Rao, 30, was murdered in front of his home for exposing corruption in the funding of the village drainage system.

In May, Dattatray Patil, 47, was murdered in Kolhapur, Maharashtra. A close associate of activist and RTI guru Anna Hazare. His fight against corruption had got some of the area’s top policemen removed and action initiated against local municipal corporators.

Besides murder, there are failed murder attempts, violent threats and fake police cases. Take Maharashtra:

In March, environmentalists Sumaira Abdulali and Naseer Jalal were ruthlessly attacked by a politically backed sand mafia in Raigad, and survived only because journalists accompanying them used their influence and mobile phones. None of the accused was arrested. In April, Abhay Patil, advocate and RTI activist, had a mob clamouring for blood at his door. Apparently, they wanted him to withdraw all complaints of corruption against MLA Dilip Wagh. When his wife, a police constable, called the cops for help, they asked her to come to the police station and lodge a complaint. Later she faced fake charges and was suspended, allegedly at the behest of Home Minister R. R. Patil. Then in July, Ashok Kumar Shinde was attacked for his RTI and Public Interest Litigation (PIL) against a corruption racket in the Public Works Department linked to the Bombay High Court.

Worse than physical assault is abusing the law to attack activists. Take the case of E. Rati Rao, senior scientist, activist and journalist, in Karnataka. In March she was charged with sedition and attempting to cause mutiny or communal discord for protesting against ‘encounters’ and atrocities on dalits, tribals, Muslims and other minorities. Meanwhile, in distant Orissa, another activist-journalist, Dandapani Mohapatra, was targeted by the police, his home raided and his books and magazines confiscated without a warrant. He was labelled as a suspected Maoist.

An activist fighting for our rights cannot win without our muscle. Once an RTI activist is killed, civil society must force the police to investigate not just the murder, but all that he was unearthing. Only then will we be able to stop this murderous silencing of the activists.

By not protecting the RTI activists, by allowing cases of harassment they file to be closed without punishing the perpetrators, the state is failing to uphold the spirit of the RTI Act. And weakening the spirit of democracy.

Part C : InformatIon on & around

Info on funds of political parties:

An analysis of the Income-tax Returns of political parties accessed by the ADR under the RTI Act has revealed that the BSP had a maximum growth rate of 59% in total asset from 2002-03 to 2009-10, followed by the NCP (51%) and SP (44%).

It appears that all political parties are in the pink of financial health :

Income

Aggregate income :

for 2009-10

2002-03 to 2009-10

Congress

497

1518

BJP

220

—

BSP 182

—

CPI

RJD 4

263

NCP 40

109

CPM 63

339

Emergency period in India’s history:

An RTI query was made to get certain documents pertaining to emergency period 1975-77. Request was for correspondence between the then president Fakhruddin Ali Ahmed and the Government. Both the Ministry of Home Affairs and National Archives of India replied that they have no such records.

15 questions listed in the RTI application pertain to the competent authority’s duly attested copy of all relevant records or documents, including the noting portion, on causes leading to the declaration of emergency and its nature, on the proceedings, recommendation and resolution adopted by the Union cabinet to declare the state of emergency and the names of those who attended the cabinet meeting, on how the recommendation was conveyed to the President and by whom, orders, directions, guidelines, wireless, telex and telegraphic messages issued by the Government to impose the state of emergency.

The presumption is that they (the officers) have either destroyed them or they don’t want to give them.

The complaint u/s 18 of the RTI Act is made to Chief CIC, but so far he has not responded to the same.

Assets disclosure by the Ministers of the Central Government:

All efforts under the RTI Act to get details of assets of the Ministers in the Central Government so far have brought no results.

When PMO was asked to furnish such information, it referred the matter to the Lok Sabha Secretariat (LSS) to get its nod to disclose the Ministers’ assets.

In reply LSS stated that there is no provision of such permission under the RTI Act and that the PMO itself has to take a call on such sensitive matter. Now PMO has to take a decision whether to disclose or deny.

Brihanmumbai Municipal Corporation (BMC):

If you wish to lodge a complaint with BMC, you no longer have to search for the name of the officer concerned. After an RTI query, the BMC has now decided to create 3,000 e-mail addresses based on officers’ designations instead of their names.

After pursuing the matter for a year, RTI activist Vihar Durve finally succeeded in getting general e-mail addresses created for the BMC officials.

“These days people are more comfortable writing e-mails than sending letters or going and meeting the officials personally. Though the BMC has a provision for mentioning e-mail addresses, it had not posted any e-mail address on website” said Durve.

The BMC has now created and posted e-mail addresses of top officials like the Commissioner and Additional Municipal Commissioners on its website. For the rest of the officers, the same are in the process of being created and posted on the website.

An interesting write-up in MIDDAY(30 July, 2010) by Hemal Ashar:

Once upon a time in Mumbai

Now that the movie ‘Once Upon a Time in Mumbai,’ about the city’s underworld has been released amidst much controversy, here is what actually happened Once Upon a Time in Mumbai.

We could go to the movies for Rs.20 a ticket and spend Rs.10 on samosas and Rs.10 on a popcorn packet while touts would murmur outside in a sinister, hush-hush manner, “70 rupees mein black.” Beggars would actually be happy with the Re.1 you gave them and not look like you are entitled to give them a blue-chip share instead.

Getting your children into school did not mean intense stress levels, high BP and cardiac conditions like blocked arteries resulting in an angioplasty as admission day neared.

A flat in the city’s toniest South Mumbai area would go for Rs.3 lakh and South Mumbai’s swish club like Willingdon offered the much-coveted life memberships at Rs.15,000, that too, payable in instalments. Page 3 was just another page in a book, newspaper or magazine and not a description of a person.

People thought that RTI always stood for Ratan Tata Institute on Hughes Road where you went to buy baby clothes and Parsi-style embroidered nightwear and not Right to Information to dig out dope on corrupt deals.

Your English teacher would scoff at this junk you are reading saying, “think of all the trees being chopped down to print the rubbish this columnist has written and here you are wasting time reading it” and you would hang your head in shame instead of laughing like you are doing now.

Court’s view on ‘information’ under the RTI Act:

Making a mockery of this much-vaunted legislation, these courts have made out on their administrative side that the only kind of information that can be accessed by citizens under RTI is what is already ‘in the public domain’.

When it challenged the Central Information Commission’s direction on the declaration of assets by judges, the SC, in its petition before the Delhi HC earlier this year, had claimed the RTI’s definition “shows that the information which is required to be given must be information in the public domain.” Accordingly it argued that the application regarding declarations of assets by judges under a 1997 resolution of SC judges was “not maintainable inasmuch as the information sought for was neither in the public domain, nor was it required to be given or maintained under any statute or law.”

If the SC’s interpretation of the definition of information were to be valid, none of the public authorities should have been, for instance, disclosing file notings because, given the confidential manner in which they are written by bureaucrats and ministers during decision-making, they are clearly not in the public domain. It is the operation of RTI that has brought into the public domain all manner of information that would have otherwise remained behind the official veil of secrecy. The wide-ranging definition of information contained in S. 2(f) of RTI does not bear out the SC’s claim that it is limited to material lying in the public domain. In fact, the SC seems to have imported the expression ‘in the public domain’ into its petition on the basis of the rules framed by the Delhi HC.

(Extracts from The Times of India of 14th August)

BCAJ Admin

Right to Information

r2i

Part A : CIC’s decisions

Mr. D. E. Robinson of Goa requested for certain financial information from the
Commissioner of Income Tax, Panjim in respect of all the contesting candidates
for election in Goa in the year 2006.

The information sought was :

Whether in all the cases where the contesting candidates have
declared immovable property viz. ‘urban land’ as defined in S. 2(ea),
explanation 1(b) of the Wealth Tax Act, (including agricultural land situated
within the 8 km limit of notified towns), the values declared were verified in
the context of tax liability under the Wealth Tax Act.

Further he had asked in how many cases such lands were
declared in the tax records or not declared and in how many cases action was
taken to bring the said properties to tax under the Wealth Tax Act, etc.

The information was declined citing exemption u/s.8(1)(j) of
the RTI Act. Reply also stated that the matter was under verification and the
results could be disclosed only after the process was completed.

The Appellate Authority interestingly dealt the matter very
differently. He held that information requested by the appellant was general
statistical information and there was no question of referring it to a third
party — as was done by the CPIO — as the requisite information was not supplied
by that third party. He noted that this information was presented by private
persons/party in the affidavits filed before the Election Commission. The CPIO,
according to the AA, was responsible only to furnish information held by his
office and not which was held by other public authorities such as the Election
Commission. He noted that information requested covered information relating to
all candidates who contested election in Goa in the year 2006, which according
to the Appellate Authority was ‘general in nature’. He advised the appellant to
identify and specify the information required by him and to submit a fresh
application to the CPIO where the information was known to be held. The
Appellate Authority dismissed the first appeal of the appellant.

The appellant before CIC contested the conclusion of the
Appellate Authority with very detailed submissions in writing. In one of the
paras he also wrote : “It is evident from the facts that neither the field
officers, nor their superiors took any action to collect the revenue
legitimately due to the State by performing their bounden duty. In such
circumstances, the CPIO should have informed the appellant that no action had
been taken and the field officers and the Commissioner have failed to do their
duty. The reply given by the CPIO is evasive and seeks to cover up serious lapse
on the part of the Department.”

CIC gave interesting decision. He praised the appellant as a
public-spirited person who wishes to use the RTI Act to bring into open,
attempts by certain candidates in the elections to State Legislatures and the
Parliament to escape public scrutiny of the statements they make to the Election
Commission and to the Income-tax authorities as well as to other State agencies
about their personal wealth. The appellant believes — and rightly so — that if
declarations by these candidates were to be carefully analysed by public
authorities dealing in tax collection as well as those engaged in conducting
free and fair elections such as the Election Commission, a number of skeletons
will come tumbling out of cupboards. He bemoaned the fact that public
authorities failed to take coordinated action to prevent, what he believed to
be, manifest violation of the laws of the land by contesting candidates in
election.

However the issue is decided as under :

The response of the Appellate Authority (AA) has been to
examine the matter strictly within the four-corners of the RTI Act. Hence his
conclusion that the CPIO was required only to give that information which he
held and not what was in the control of other public authorities. AA did not go
into the subject of the obligation of the Income-tax Department to collect all
information from wherever it might be available in order to make a correct tax
assessment of an assessee and especially when such assessee happens to be a
candidate contesting in an election, which requires him to make a correct and
complete disclosure of his income and wealth.

The force of the logic employed by the appellant is
compelling. All he urges is that public authorities expand the focus of their
responsibilities and travel beyond the narrow limits of their assignments to
reach out to the information held at multiple points in order to make a correct
assessment which will have vast implications for tax collection as well as for
the sanctity of elections. One would be tempted to grant him the information he
has requested, but the difficulty is that the type of information he has asked
for is not maintained centrally by the public authority to which his RTI
petition is addressed.

In view of the above, it is not possible for the Commission
to go against the decision of the Appellate Authority. The type of information
which the appellant has requested is decidedly not maintained centrally in the
usual course of business. The RTI Act cannot be invoked to force a public
authority to collect information in a particular manner. In fact, it can only
direct disclosure of the information that is available. As such, in spite of
empathy with the spirit of the appellant’s RTI application, this Commission is
unable to order the public authority to provide him the requested information.

However, considering much of what this appellant has said in his RTI submissions – which from all accounts, appears to be an expression of the anguish of a public-spirited and a concerned Indian citizen about overt violations of law regarding various types of disclosures – the public authorities connected with the type of information he has requested, viz. the respective Income-tax Departments and the Election Commission, may take note of these submissions to consider putting in place systems and mechanisms which would create conditions for automatic cross-check and scrutiny of incomes and wealth statements filed, not only before the Income-tax authorities, but also before authorities such as the Election Commission by contesting candidates. The system, if devised, has the potentiality to help the long reach of law to force candidates in elections (who also happen to be tax assessees) to act truthfully and responsibly in matters of disclosure of incomes.

CIC then directed that a copy of his order may be sent to the Chief Election Commission as well as to the Revenue Secretary of the Government of India and the Chairman of the CBDT for such action as they may deem fit, given the objectives spelt out above.

[Mr. D. E. Robinson v. Income-tax Department, ENo. CIC/ AT/ A/2007 /01522 of 27-6-2008]

• What is the Third Party infonnation?

Shri R. K. Sarkar in his RTI application sought information pertaining to Shri Kalyan Chowdhury, who was the Commissioner of Income-tax, Burdwan. The queries were generally related to whether any enquiry was conducted against Shri Chowdhury by his superiors as, according to the appellant, Shri Chowdhury attended office only thrice a week on account of he residing in Kolkata although his posting was at Burdwan. Besides, the appellant wanted to know the details of reimbursement of his telephone bills and so on.

The information was denied on the ground that this was personal information and exempt u/s.8(1)(j) of the RTI Act.

CIC in his decision held that the reasoning of the respondents is flawed. The queries which the appellant has made were regarding Shri Kalyan Chowdhury’s functioning as a government employee and there is no reason why such information should be withheld from the appellant. The Commission in the past has authorised disclosure of information related to individual government servants, which concerned his function as such public servant.

In view of the above, the matter was remitted back to the Appellate Authority to examine the issue denovo with regard to the each query in the light of the observations made as above and to give his finding within 4 weeks from the date of receipt of the order.

[Shri R. K. Sarkar v. Income-tax Department, ENo. CIC/ AT/ A/2008/00232 of 30-6-2008]

Part B : The RTI Act

In the August issue, I had reported on some of the major recommendations on ‘Enforcement of S. 4 of the RTI Act’ of the conference of all ercs and SICs. In this issue, I report on some interesting recommendations of the said conference on other issues connected with the RTI Act.

1. There are instances of non-compliance of orders passed by the Commission. Specific provisions may be included in the RTI Act itself for dealing with contempt proceedings.

2. S. 20 of the RTI Act provides that subject to the contents and conditions of that Section, CIC/ SIC shall impose a penalty.

Issue is: What is the meaning of the word ‘shall’. Does it mean that it is mandatory on CIC/SIC to levy the penalty if the conditions of the Section are covered or is it discretionary?

To reduce uncertainty in this matter, the conference recommends: S. 20 should be amended so as to give discretion to the Commission to decide the quantum of penalty. The word ‘shall’ appearing in S. 20(1) may be substituted by the word ‘may’.

3. Today, only PIOs are made accountable under the Act, the conference recommends: Accountability of public authorities and First Appellate authorities should be ensured: Amendments may be made in S. 20 and S. 2l.

4. The conference also recommends that the Commission be given power to dismiss frivolous or vexatious complaints and the power to review its own decisions.

5. For furthering evolution of the RTI regime, the conference recommends:

The RTI Act should be included in the syllabus at high school and college-level education.

Information of public interest can be taken to door-steps of citizens.

Commissions can prioritise second appeals/ complaints, which are of public interest, over the ones which are self-centric and self-serving.

Uniformity in fees, further fees (costs) and charges for inspection, etc. throughout the country.

Uniformity as regards disclosure obligations for items such as Annual Confidential Reports (ACRs), Annual Property returns (APRs), DPC proceedings, Income-tax returns, etc.

More publicity on the RTI Act should be done by Doordarshan and All India Radio. Alternatively, the Central Information Com-mission can run its own private TV channel dedicated to RTI.

RTI journal be made for circulation among the Commissions.

Honorarium/incentives to PIOs/ APIOs for doing additional work.

Part C : Other News

Good governance:

N. Vittal, the former CVC writes regularly in Mumbai Mirror. In one of his recent articles, what he has written is very relevant for all of us to read:

Non-governmental organisations represent a growing significant element in the dynamics of better governance in our country. In a backward State like Rajasthan, the activism shown by Aruna Roy and her Mazdoor Kisan Shakti Sangathan (MKSS)have made the Right to Information (RTI) Act a significant element in checking and monitoring programmes affecting the public. The national Rural Employment Scheme, perhaps, is best monitored in that State, thanks to the tradition of MKSS activism.

An interesting aspect was highlighted by a visiting American professor, Sussman, an expert on the Freedom of Information Act in the United States, who has been studying the implementation of the Right to Information Act in India. He found that in West Bengal, the bureaucracy was very defensive, making access to information as difficult as possible. All applications have to be made on a Rs.10 stamp paper, which most of the time is not available. On – the other hand, in Bihar, he found that the Government and the media were going out of the way to introduce jingles and advertisements to educate the public about the right available to them under the RTI Act. In Tamil Nadu, the Information Commissioner is optimistic that in due time, this Act may turn out to be effective in empowering the people by bringing greater transparency in the system.

Using the Right to Information Act, active NGOs can effectively monitor the performance of bureaucracies and ensure that there is greater transparency and less corruption. This is the formula needed for good governance.

Travel bills of the Ministers of Maharashtra Government:

Ministers of Maharashtra Government ran up travel bills worth over Rs.7 crore in the first three years of their tenure. The public exchequer had to shell out these funds to pay for Ministers’ trips to their constituencies as well as some foreign jaunts.

Chief Minister Vilasrao Deshmukh’s globe-trotting took him to the top of the list as he incurred expenses of Rs.63.96 lakh. The CM’s domestic travel expenses came to Rs.32.45 lakh, while his foreign jaunts cost Rs.31.51 lakh.

Next in line whose travel bills ran up to Rs.47.86 lakh is Anil Deshmukh, Public Works Department. Maharashtra’s Ministers incurred a total travel bill of Rs. 7.44.crore from April 1, 2004 to March 31,2007, according to figures provided by the Pay and Accounts Office of the State Government in reply to the RTI query.

• Do MPs/ MLAs constitute public authorities? :

UPA Chairperson Sonia Gandhi, who played a pivotal role in seeing the RTI Act through, is herself in the dock. As an MP, she faces the possibility of being penalised Rs.250 per day for not responding to an RTI plea, as a citizen has complained to the Central Information Commission (CIC).

Whether information sought by an applicant from public representative qualifies as information sought under the RTI is the issue. Whether an individual, as an MP or an MLA, constitutes a public authority is also an issue. The Lok Sabha Secretariat (LSS) has taken a stand implying that an MP is not a public authority as defined under the RTI Act.

An RTI. application is also made to MP Rahul Gandhi seeking information on recommendations made by him or his representatives to Ministries and Departments on assistance to NGOs.

The CIC has taken up hearing of five complaints under the RTI, two against Sonia Gandhi and one each against MP Rahul Gandhi, MLA Sahib Singh Chouhan, and Sunita Sharma, municipal councilor. As the issues were related, the complaints were grouped together.

The CIC, in its interim decision, held that an MP has been conferred a specific authority by the Constitution, in return of which he receives remuneration from public funds. But, before taking a decision in this regard, it felt that the interested parties be given an opportunity to be heard.

The CIC has asked the Central Public Information Officer of LSS to appear before it on September 15.

CAG wants to conduct ‘performance audit’ of the Central Information Commission:

In a clash between two apex bodies of accountability, the Central Information Commission (CIC) has reacted adversely to the ‘performance audit’ proposed by the Comptroller and Auditor General (CAG) on the implementation of the Right to Information Act.

CIC questions the very jurisdiction of CAG to hold it to account. It asked CAG to ‘specify the terms of the reference’ of the proposed performance audit before it takes a call on whether it should submit at all to the constitutional body’s jurisdiction.

In an attempt to give a legal cover to its jurisdictional objection, the CIC pointed out that it was “an autonomous entity and the orders passed by it are final and binding, subject to scrutiny only by way of a writ under the Constitution of India.”

Already, very sensitive issue, whether the RTI Act covers the Courts beyond their administrative matters is under controversy. Now this becomes another sensitive issue.

• Power bills:

In the July issue, report was made on power bills of the President of India. Now the RTI application has brought to light ‘light’ bills of the Maharashtra Ministers. The following table shows two interesting figures where the bills in 2007-08 cross Rs.I0 lakhs.

The elected representatives defended themselves stating that the power bills are’ quite normal’ as the residential area is huge and they also have servant quarters which have connection from the same meter. “We see to it that the power consumption is minimised in all ways. Strict instructions have been given to all those who are employed here to use the power judiciously”, Bhujabal said.

• Driving licence:

The RTI query reveals that the three RTOs in Mumbai issued 11.12 lakh duplicate licences in the last five years, while they issued 12.12 lakh new licences during the same period.

This effectively means that Mumbaikars lose 609 licences every day, which looks more like a Ripley’s believe-it-or-not factoid.

• PMO does not respect the spirit of RTI :

On taking the oath of office, every Minister is handed a copy of the code of conduct. It says, among other things, that Ministers should disclose to the PMO details of their assets, liabilities and business interests along with those of their family members.

On 6-11-2007, ‘India Today’ invoked the RTI, seeking information from the Prime Minister’s Office (PMO) whether Union Ministers had filed details of their assets and liabilities.

No information is provided on this application except replies that “the matter is under consideration of the competent authority and the information/reply will be sent in due course.”

Three reminders have been sent, but there is no action. Complaint has been made to CIC on 17-3-2008. Even that is yet not taken up for action.

• RTI fee may be scrapped:

A Parliamentary Committee has decided to recommend scrapping of fees at the time of filing applications seeking information from Government Departments under the Right to Information Act. The Parliamentary Committee, headed by Dr. E. M. Sudarasna Natchiappan, has said scrapping of fees at the initial stage would help in effective implementation of the two-year old law.

“The technicality of admitting an application only on receiving a fee of Rs.10 is undermining such a revolutionary law. We feel that there is an urgent need to do away ‘With this step which reflected a bureaucratic mindset,” Natchiappan told HT.

Study efficacy of RTI :
The Department of Personnel and Training has decided to get international accounting firm Pricewaterhouse Coopers to study the efficacy of the Right to Information Act as it marks its third year on October 12. The RTI Act has been showcased by the UPA Government as one of its key achievements.

Suspicious that this study could end up helping babus instead of citizens, leading RTI activists, including Aruna Roy and her Mazdoor Kisan Shakti Sangathan (MKSS) and Shekhar Singh and his National Campaign for People’s Right to Information (NCPRI) have launched their own alternative study.

They have formed RAAG (RTI Accountability and Assessment Group) which will examine what they call/the RTI regime.’ Significantly, Google Foundation has stepped in to make this study possible by offering $ 250,000 as an initial grant.

• PAN card:

In one appeal before ClC, the appellant wanted to know from the Income-tax Department as to what has happened to his application for cancellation of his PAN card. In reply, the Department has informed the appellant that the Income-tax Department was not empowered to cancel any PAN card once it was issued.

Readers may consider whether information furnished is correct. Ss.(7) of S. 139(A) provides:

7) No person who has already been allotted a permanent account number under the new series shall apply, obtain or possess another permanent account number.

All those who were issued two PAN cards were compelled to surrender one. Obviously the same must have been cancelled by the Income-tax Department. Further, what happens after the PAN holder dies, the firm which is allotted PAN gets dissolved, etc. Are PAN numbers not to be cancelled?

BCAJ Admin

Right To Information

r2i

Part A : Decision of the High Court of Delhi

This feature, divided into three parts, normally starts with
CIC’s decisions. In past, more than once a departure was made, instead of CIC’s
decisions, it covered Courts’ decisions. Since long, I have been making efforts
to procure RTI decisions of the Courts, High Courts and Supreme Court, when
CIC’s/SIC’s decision is challenged under the writ. Search has remained elusive.
However, one CA member requested me to give him citation of the Delhi High Court
Order reported under ‘Other News’ in BCAJ of April, 2008 under “Mere existence
of an investigation, no ground for refusal of information”. I had no citation
available. It gave me the motivation to really search hard — a challenge. With a
friend of mine, we went on serious search on Net and finally traced out the
order through Google search. It deals with the tax evasion petition submitted to
the investigation wing of the Income-tax Department, hence interesting to the
readers. The said order is briefly summarised hereunder :

Before I do so, let me record that CIC’s decision against
which the writ is filed was reported in this feature in September, 2006.

Mr. Bhagat Singh, the petitioner in this case, was married in
2000 to Smt. Saroj Nirmal. In November, 2000, she filed a criminal complaint
alleging that she had spent/paid as dowry, Rs.10 lakhs. Alleging that these
claims were false, the petitioner, with a view to defend the criminal
prosecution launched against him, approached the Income-tax Department with a
tax evasion petition (TEP) dated 24-9-2003. Thereafter, in 2004 the Income-tax
Department summoned the petitioner’s wife to present her case before them.
Meanwhile, the petitioner made repeated requests to the DIT (Investigation) to
know the status of the hearing and TEP proceedings. On failing to get a
response, he moved an application under the RTI Act in November 2005. He
requested for the following information :

(i) Fate of the petitioner’s complaint (tax evasion
petition) dated 24-9-2003.

(ii) What is the other source of income of the petitioner’s
wife Smt. Saroj Nirmal than from teaching as a primary teacher in a private
school.

(iii) What action the Department had taken against Smt.
Saroj Nirmal after issuing a notice u/s. 131 of the Income-tax Act, 1961,
pursuant to the said TEP.

The application was rejected by PIO of the Income-tax
Department u/s.8(1)(j) of the RTI Act, holding that information sought was
personal in nature and did not further public interest. The Appellate Authority
also dismissed the appeal citing provisions of S. 8(1)(j) and also 8(1)(h) under
which exemption is granted, if the information would impede the process of
investigation or apprehension or prosecution of offenders.

In the second appeal, CIC vide its order dated 8th May 2006,
set aside the rejection of information and held that “as the investigation on
TEP has been conducted by DIT (Inv), the relevant report is the outcome of
public action which needs to be disclosed. The same cannot be exempted
u/s.8(1)(j) as interpreted by the Appellate authority. Accordingly, DIT (Inv)
was directed to disclose the report as per the provision u/s.10(1) and (2),
after the entire process of investigation and tax recovery, if any, is complete
in every respect.

After the above Order also, the Income-tax Department did not
furnish the information, probably
holding that the entire process of investigation is not complete yet. Enquiry by
CIC’s office at the instance of the petitioner, to the Income-tax Department
(Investigation) for its comments with respect to non-compliance of the Order and
to show cause as to why a penalty should not be imposed u/s.20 of the RTI Act,
also brought no response.

The petitioner in this writ petition requested the Court to
partially quash CIC’s Order insofar as it directs disclosure after the entire
process of investigation and tax recovery is completed. “It was urged that CIC,
after appreciating that there was no merit in the plea regarding applicability
of S. 8(1)(h), and being satisfied, should not have imposed the condition
regarding completion of proceedings, which could take years. Such power to
restrict access to information did not exist under the Act.

Paragraphs 11 to 14 of the Order reflect the tenor of the RTI
Act and hence instead of paraphrasing them are reproduced in original :

11. The Universal Declaration of Human Rights, adopted by the United Nations in 1948, assures, by Article 19, everyone the right ‘to seek, receive and impart information and ideas through any media, regardless of frontiers’. In (the case of) Secretary, Ministry of Information and Broadcasting, Govt. of India and Ors v. Cricket Association of Bengal and Ors., [1995 (2) SCC 161], the Supreme Court remarked about this right in the following terms :

The right to freedom of speech and expression includes the right to receive and impart information. For ensuring the free speech right of the citizens of this country, it is necessary that the citizens have the benefit of plurality of views and a range of opinions on all public issues. A successful democracy posits an ‘aware’ citizenry. Diversity of opinions, views, ideas and ideologies is essential to enable the citizens to arrive at informed judgment on all issues touching them.

This right to information was explicitly held to be a fundamental right under Article 19(1)(a) of the Constitution of India for the first time by Justice K. K. Mathew in State of UP v. Raj Narain, (1975) 4 SCC 428. This view was followed by the Supreme Court in a number of decisions and after public demand, the Right to Information Act, 2005 was enacted and brought into force.

12. The Act is an effectuation of the right to freedom of speech and expression. In an increasingly knowledge-based society, information and access to information holds the key to resources, benefits and distribution of power. Information, more than any other element, is of critical importance in a participatory democracy. By one fell stroke, under the Act, the maze of procedures and official barriers that had previously impeded information has been swept aside. The citizen and information seekers have, subject to a few exceptions, an overriding right to be given information on matters in the possession of the state and public agencies that are covered by the Act. As is reflected in its preambular paragraphs, the enactment seeks to promote transparency, arrest corruption and to hold the Government and its instrumentalities accountable to the governed. This spirit of the Act must be borne in mind while construing the provisions conained therein.

13. Access to information u/s.3 of the Act is the rule and exemptions u/ s.8, the exception. S. 8 being a restriction on this fundamental right, must therefore be strictly construed. It should not be interpreted in a manner as to shadow the very right itself. U / s.8, exemption from releasing information is granted if it would impede the process of investigation or the prosecution of the offenders. It is apparent that the mere existence of an investigation process cannot be a ground for refusal of the information; the authority withholding information must show satisfactory reasons as to why the release of such information would hamper the investigation process. Such reasons should be germane, and the opinion of the process being hampered should be reasonable and based on some material. Sans this consideration, S. 8(1)(h) and other such provisions would become the haven for dodging demands for information.

14. A rights-based enactment, akin to a welfare measure, like the Act, should receive a liberal interpretation. The contextual background and history of the Act is such that the exemptions, outlined in S. 8, relieving the authorities from the obligation to provide information, constitute restrictions on the exercise of the rights provided by it. Therefore, such exemption provisions have to be construed in their terms; there is some authority supporting this view [See Nathi Devi v. Radha Devi Gupta, 2005 (2) SCC 201; B. R. Kapoor v. State of Tamil Nadu, 2001 (7) SCC 231 and V. Tulasamma v. Sesha Reddy, 1977 (3) SCC 99]. Adopting a different approach would result in narrowing the rights and approving a judicially mandated class of restriction on the rights under the Act, which is unwarranted.

Thus holding, the Court stated that Orders of PIO, and CIC do not reflect any reasons why the investigation process would be hampered. It further stated “S. 8(1)(j) relates only to investigation and prosecution and not to recovery. Recovery in tax matters, in the usual circumstances, is a time-consuming affair, and to withhold information till that eventuality, after the entire proceedings, despite the ruling that investigations are not hampered by information disclosure, is illogical.

As to the issue of whether the investigation has been complete or not, the Court held that the authorities have not applied their mind about the nature of information sought. As is submitted by the Petitioner, he merely seeks access to the preliminary reports of investigation pursuant to which notices u/s.131, u/s.143(2), u/s.148 of the Income-tax Act have been issued and not as to the outcome of the investigation and reassessment carried out by the Assessing Officer. As held in the preceding part of the judgment, without a disclosure as to how the investigation process would be hampered by sharing the materials collected till the notices were issued to the assessee, the respondents could not have rejected the request for granting information. The CIC, even after overruling the objection, should not have imposed the condition that information could be disclosed only after recovery was made.

The Court then ruled that “the order of the CIC dated 8th May 2006 insofar as it withholds information until tax recovery orders are made, is set aside”. PIO and AA were directed to release the information sought, on the basis of the materials available and collected with them, within two weeks.

The Court also made adverse comments on the Income-tax Department’s PIO and AA by stating that the materials on record clearly show the lacka-daisical approach by them in releasing the information sought.

Part B : The RTI Act

Chapter 5 of the Annual Report 2005-06 as published by the Central Information Commission is titled: Significant initiatives by Ministries/Departments/Public Authorities (hereinafter referred to as entities) and suggestions for reforms.

Some significant initiatives taken by the entities are summarised hereunder.

S. 25(3)(f) of the RTI Act mandates the public authorities to report:
“Any facts which indicate an effort by the public authorities to administer and implement the spirit and intention of the Act.”

Report presents efforts made by some entities to administer and implement the Act beyond mandatory requirements.

10 entities have set up Information Facilitation Centre/RTI Cell to accept information requests and payment of fees and/ or a separate RTI Section/Cell to implement the Act.

Some entities have drafted an internal procedure to implement the RTI Act, some have set up cash register for application and other information fees, so that the money received can be monitored and accounted for. Some reported that they have taken the initiative of designating alternate Public Information Officers and Assistant PIOs. Three of them viz. the Noida Special Economic Zone (Ministry of Commerce & Industry), the Office of the Registrar of Companies Tamil Nadu-Coimbatore (Ministry of Company Affairs) and the State Bank of India (Ministry of Finance) have reported that they have disseminated awareness about the Act amongst the public.

Several public authorities have also reported that they have undertaken training of their Public Information Officers and issued guidelines about implementing the Act.

The National Information Centre (NIC) is in the process of setting up a RTI Request Management Information System (RRMIS) to monitor requests received u/ s.6 of the Act. There are three modules. The concerned public authority, the Central Information Commission and the Assistant Public Information Officer at the Department of Posts can use these modules:

Request and First Appeal Module for Public Authority

Second Appeal Module for Central Information Commission (CIC)

Request and Appeal Module for Central Assistant Public Information Officer (CAPIO), Department of Posts.

There is also an updation system where the stage at which the application is, can be updated as and when required.

Suggestions received from public authorities for reforms shall be covered in the next issue.

Part C: Other News

RTI gives visually impaired great relief:
The RTI Act came to the rescue of 200 visually impaired and physically-challenged Thane residents. Their battle of five years came to an end when in response to RTI application, State Chief Information Commissioner (SCIC) directed Thane Municipal Corporation (TMC) to provide details of the allotment of telephone booths and also requested TMC to expedite the matter. It is understood that the applicant has received the details and also the allotments have been made. serc Mr. Joshi was very pleased and remarked:

“The Order went beyond the RTI Act’s ambit as the panel considered the anguish of the hundreds of physically-challenged people who were willing to put in hard labour, but denied employment opportunities”.

• CIC’s office has no information:
RTI application revealed the shocking state of affairs in the very office which is the last refuge under RTI regime. One RTI activist, Shruti Singh Chauhan sought details of cases heard by the erc, but where verdicts were still not announced. She was told that the Commission did not maintain records of cases with it. Information has shocked one and all including erc Chief, Mr. Habibullah. He has now cracked the whip and ordered an in-house upgrade of records. CIC advises public authorities to ensure transparency in maintaining records. The Act also so provides. It was a shame that CIC’s own office defaulted in it. Who will fine it! Now it is ordered that within one month it will get up-to-date in its record keeping.

The Times of India wrote an editorial in this context to say that it is unconscionable that the very body created to bring about greater transparency in the working of public bodies is itself unable to furnish information about its own operation. Further two paras read :

The Right to Information Act is perhaps the most powerful legislation that empowers citizens to check on the functioning of public establishments. It has the ability to curb corruption, which is one of the biggest evils facing the country. Lack of transparency and accountability on the part of Government officials increases the propensity for corruption.

Although the Right to Information Act is landmark legislation, it is just a stepping stone towards eradicating corruption and bringing about lucidity in the working of the Government. Right to information has to mature and translate into duty to inform. Just like businesses are accountable to investors, the Government too should be made accountable to citizens.

• Maharashtra MLAs – unjust allowance:
RTI has many dimensions. Recently unexpected dimension came to light: Action taken out of fear of exposure under RTI. It is understood that the Maharashtra State Government has approved a proposal to allow each legislator to claim Rs.25,000 per month as mileage allowance without any obligation to produce bills to avoid giving explanations to citizens under the Right to Information Act or in response to a Public Interest Litigation (PIL).

As per existing rules, a legislator can demand a vehicle from the district collector to tour his/her constituency. If the administration fails to. provide one, the legislator can make his own arrangements and produce the bills before legislature secretariat and claim a maximum of Rs.25,000 in a month (based on a rate of Rs.I0/km).

Being aware that RTI can expose the legislators, it is now suggested to remove the need to produce bills, the mileage allowance would be credited to the account of each legislator every month. The State Cabinet accepted the proposal.

• Our MPs don’t pay MTNL telephone bills!
The telephone line of an average Mahanagar Telephone Nigam Limited subscriber would be disconnected if he did not pay bills by the stipulated due date. But the telephone lines of several MPs and various State and Central Government establishments ate still operational even though bills amounting to crores are still pending.

RTI query revealed that outstanding from such leaders (?) who have to set example of discipline have outstanding dues of Rs.375 crores over the last 3 years.

• S. 8(1)(a), (d) and (e) of the RTI Act:
Can the details of a Memorandum of Understanding (MOU) signed between the State Government and a multinational chemical firm undermine the sovereignty and integrity of the nation? The Maharashtra State Industries Department thinks so.

RTI application had sought information on MOU signed between the Industries Secretary and Dow Chemicals International Pvt. Ltd. for starting a facility to manufacture some chemicals at Chakan near Pune. Dow is responsible for producing Agent Orange and napalm – used in the Vietnam War. It also produces ozone-depleting CFCs and the widely-used insecticide, Dursban.

In reply to RTI application, the PIO of the Indutries Department rejected the application by stating that it is exempt information under clauses (a), (d) and (e) of S. 8(1) of the RTI Act.

It is felt that denial is unjustified as it is difficult to appreciate how a commercial deal between private chemical firm and the State can harm the interests of the nation [clause (a)], or can be considered as disclosing trade secrets / intellectual property [clause (d)] or can be considered as information pertaining to private party held in a fiduciary relationship [clause (e)].

• Asset declaration by judges:
In response to RTI application, the Supreme Court’s CPIO has stated that the information relating to declaration of assets by Judges is “not held by or under the control of” its registry and therefore could not be furnished by him.

Reply has exposed the SC’s resistance to transparency. Though the CJI can easily say whether Judges have been filing declarations of their assets, the CPIO has claimed that the information is not in possession of the registry. The matter is now pending before the CIC.

• Mumbai City Police:
The details of the city police budget obtained under the RTIAct reveal that Rs.559 crore (i.e., more than 75%) is being spent only to keep 40000 personnel in service out of the budget of Rs.716 crore.

Experts feel that at a time when the city faces the threat of organised crime and terrorism, the police should not spend all its money on salaries, though conceding that maintaining a police force is expensive as unlike other Government departments, it does not earn revenue. Yet, it still does not justify the present scenario.

BCAJ Admin

Right To Information

r2i

Tax records of political parties :

Very interesting and significant decision is given by CIC Mr.
A. N. Tiwari under appeal decided on 29-4-2008.

One Ms. Anumeha C/o. Association for Democratic Reforms (ADR)
of New Delhi had sought information from the CPIO, Central Board of Direct
Taxes, New Delhi as noted hereunder. The said application was transferred to
appropriate 9 CPIOs i.e., the appropriate Commissioners of Income-tax
(including CIT of Mumbai, New Delhi, Chennai). The information sought was on the
following three points :

(i) Whether the political parties mentioned in the RTI
application have submitted their Income Tax Returns for the years 2002-03,
2003-04, 2004-05, 2005-06, 2006-07.

(ii) PAN allotted to these parties.

(iii) Copies of the Income-tax returns filed by the
political parties for the afore-mentioned years along with the corresponding
assessment orders, if any.

While CIT, Jammu & Kashmir and Guwahati provided the
information, all other CPIOs declined to divulge information citing various
reasons, some of which were :

Information is covered u/s.8(1)(d), (e), (g), (h) or (j) of the RTI Act.

Permanent Account Number (PAN) is a statutory number, which functions as a
unique identification of each taxpayer. Making PAN public can result in misuse
of this information by other persons and could compromise the privacy of the
financial transactions linked with PAN.

Information relates to third parties who have objected to the disclosure of
this information.

Information is subject to confidentiality u/s.138 of the Income-tax Act, 1961.

In the first appeal made to CCIT, Bhubaneswar, the matter was
remanded to the CPIO but in other cases, concerned CCITs dismissed the appeals.

Before the Commission in the second appeal, the appellant
made certain submissions including the following :

(i) The avowed objective of a political party in a
democracy is to represent people in Parliament and Legislature that are
law-making bodies through the process of elections and that their very
existence is indicative of their goal of representing the interests of the
people who elect them to power.

(ii) Each and every act of theirs should be open to public
scrutiny. Transparency in their working and financial operation is essential
in larger public interest and all sections of government, including the
Income-tax Department, are duty bound to hold the public interest above the
interests of political parties.

(iii) The disclosure of financial information relating to
political parties including I.T. returns and assessment orders to general
public would promote such transparency and reduce the role of black money and
other undesirable, even illegal activities in the operation of political
parties.

Since the information sought involved significant issues, the
Commission decided to issue notices of hearing to all the 20 political parties
in respect of which information was sought and also to the Election Commission
and the Ministry of Law and Justice asking them to file their written
submissions.

Both the Election Commission and the Ministry of Law &
Justice filed their comments. Also political parties submitted their comments.
While CPI & CPM submitted ‘no objection’ to the disclosure of information, other
political parties including (1) BSP (2) NCP (3) The Samajwadi Party (4) BJP (5)
DMK (6) AICC objected to the disclosure of information on various grounds.

The applicant in her rejoinder to the replies submitted by
the above-noted parties made written submissions, which included following
points :

That she herself and her organisation are completely non-political and non-partisan. The Association for Democratic Reforms (ADR), which she represents, works for improving the governance, democratic, political and electoral processes in the country. Earlier also they have filed Public Interest Litigations (PILs) in the Delhi High Court, which resulted in the landmark and historic judgment of the Supreme Court (March 13, 2003) making it mandatory for candidates contesting elections to State Assemblies and Parliament to disclose their criminal antecedents, if any; assets and liabilities; and educational qualifications, by way of a sworn affidavit to be filed as an essential part of the nomination form.

It is also pertinent to refer to the recommendations of the Law Commission of India contained in their 170th Report on ‘Reform of the Electoral Laws’. An extract from para 3.1.2.1 of which is reproduced below :

“It is therefore, necessary to introduce internal democracy, financial transparency and accountability in the working of the political parties. A political party which does not respect democratic principles in its internal working cannot be expected to respect those principles in the governance of the country. It cannot be dictatorship internally and democratic in its functioning outside.”

The appellant also submitted that where plural remedies occur under different enactments, even if inconsistent, they empower a person to choose one, (Bihar State Cooperative Marketing Unions Ltd. v. Uma Shankar Saran, AIR 1993 SC 1222). In the alternative, assuming without prejudice that there is no inconsistency or discordance between the provisions of the RTI Act and S. 138 of the Income-tax Act and both can be given effect to, then the existence of an alternative remedy u/s.138 of the Income-tax Act or any other Act would not bar a citizen from seeking information tinder the RTI Act, 2005 and to accept any other interpretation would mean to render the RTI to a nullity. The RTI Act is an encompassing piece of iegislation and S. 2(f) of the said Act specifically defines ‘information’ to include If information relating to a private body which can be assessed by a public authority under any other lawfor the time being in force. ” The Right to Information Act, 2005 (RTI Act) on the other hand is a specific and special piece of legislation directed towards providing for access to information under the control of public authorities.

The Commission framed the following issue for determination:

Whether income tax returns along with its assessment order and PAN of various political parties can be considered to be exempted u/s.8(1)(d), (e), (g), (h) and (j) of the RTI Act and as to whether such information can be disclosed in larger public interest?

In its decision covering 22 paras and running into nearly 8 pages, the Commission, ruled on the above issue. Some paras in full and others in part are reproduced hereunder:

Political parties are a unique institution of the modern Constitutional State. These are essentially civil society institutions and are, therefore, non-governmental. Their uniqueness lies in the fact that in spite of being non-governmental, political parties come to wield directly or indirectly influence exercise of governmental power. It is this link between State power and political parties that has assumed critical significance in the context of the Right of Information Act which has brought into focus the imperatives of transparency in the functioning of State institu-tions. It would be facetious to argue that transparency is good for all State organs, but not so good for the political parties, which control the most important of those organs. For example, it will be a fallacy to hold that transparency is good for the bureaucracy, but not good enough for the political parties, which control those bureauracies through political executives.

In modern day context, transparency and accountability are spoken of together as twins. Higher the levels of transparency, greater the accountability. This link between transparency and accountability is sharply highlighted in the Preamble to the RTI Act.

The RTI Act aims at expanding accountability through transparency at all levels of governance. It is difficult to be persuaded by the argument that though political parties control the political executives who are their appointees these parties should be allowed to be insulated from the demands of transparency.

The question that additionally needs to be asked is whether the avowed purpose of the RTI Act, as set out in its Preamble to combat corruption is being achieved by allowing the finances of the political parties to remain beyond public scrutiny or even public view. There is now widespread concern about a hyphenated relationship developing between party finance and political corruption. The lack of openness and transparency in party finance is matched by the lack of adequate State regulation of such finance.

The scheme of the Act makes it abundantly clear that disclosure of information to a citizen is the norm and non-disclosure by a public authority an exception and it necessitates justification for any decision not to disclose information.

Democratic States, the world over, are engaged in finding solutions to the problem of transparency in political funding. Several methodologies are being tried such as State subsidy for parties, regulation of funding, voluntary disclosure by donors at least large donors and so on. The German Basic Law contains very elaborate provisions regarding political funding. S. 21 of the Basic Law enjoins that political parties shall publicly account for the sources and the use of their funds and for their assets. The German Federal Constitutional Court has in its decisions strengthened the trend towards transparency in the functioning of political parties. It follows that transparency in funding of political parties in a democracy is the norm and, must be promoted in public interest. In the present case that promotion is being effected through the disclosure of the Income-tax returns of the political parties.

Based on the above, the Commission ruled as under:

The Commission directs that the public authorities holding such information shall, within a period of six weeks of this order, provide the following information to the appellant:

Income-tax returns of the political parties filed with the public authorities and the assessment orders for the period mentioned by the appellant in her RTI-application dated 28-2-2007.

The Commission also directs that the PAN of those political parties whose Income-tax returns are divulged to the applicant shall not be disclosed. It has been decided not to disclose PAN in view of the fact that there is a possibility that this disclosure could be subjected to fraudulent use, reports of which have lately been appearing. It is, therefore, considered practical that while Income-tax returns and the assessment orders pertaining to political parties be disclosed, there should be no disclosure of the PANs of such parties.

[Ms. Anumeha, Clo ADR, New Delhi v. CCITICIT of 9 jurisdictions in nine appeals bearing different numbers]

Part B : The RTI Act

Standing Committee of the Parliament on RTI Act, 2005:

In February 2009, the items were reported :

1. Level of awareness.

2. Use and misuse of the RTI Act.

Hereunder other 2 items:

Reduction of 20-year period for keeping documents:

A common misunderstanding is that the RTI Act only allows access to information that is less than 20 years old. In fact, the RTI Act does not exempt information on the basis of how old it is.

Currently the law [(So8(3)] only allows three categories of exemptions for information older than 20 years, namely, national security [8(1)(a)], Parliamentary privilege [8(1)(c)], and cabinet papers [8(1)(i)]. Therefore, the law does not restrict access to information, which is more than 20 years old, but actually makes it easier to access older information than current information, which is less then 20 years.

However, this does not mean that departments have to preserve records for perpetuity. Departments are free to destroy records or to transfer them to archives as per their rules and procedures related to the destruction or archiving of records. S. 19(8)(a)(iv) of the RTI Act empowers and obligates the Information Commissions to examine the rules and procedure relating to the destruction of records of any public authority and to give directions as necessary to bring these in tune with the intention of the RTI Act. Therefore, we do not think any change is required.

Impediments, including the Official Secrets Act : Our study suggest that the major impediment to the implementation of the RTI Act is the lack of awareness among the people on how to use the Act and what benefits it could have.

A close second is the mindset of the public authorities and the PIOs to find all possible reasons to deny information. The fact that Information Commissions are not imposing penalties, as mandated by the RTI Act, has made many PIOs think that there are no costs to be paid for denying information on the flimsiest of grounds.

Though the RTI Act specifically provides for the overriding of the Official Secrets Act, when there is a conflict between the two, the fact is that the continued existence of the Official Secrets Act (OSA) does cause a fair amount of confusion among both the applicants and the PIOs. Therefore, it might be the best to repeal the OSA and to put the few important provisions that are required, despite the RTI Act, either into an another existing Act like the National Security Act, or into a new Act.

Voluntary disclosures:

We believe that the suo motu voluntary disclosure of information is critical to the success of the RTI Act. As already mentioned, this is perhaps the most effective way in which the pressure of RTI applications on government departments can be minimised. Suo motu declarations not only save time, but also provide protection to applicants from the weaker segments of society, who are otherwise targeted by those who have a vested interest in keeping the information secret.

Suo motu declarations also ensure that government is not just reactive to those who seek information but treats all potential applicants equally. For example, our experience shows that where suo motu declarations are not insisted upon, ration shop owners make sure that those few people who file RTI applications are properly serviced and do not have a cause for complaint. However, this leaves out the very large majority, who for one reason or another either do not file applications or cannot file them. On the other hand, where the complete records of a ration shop are put into the public domain suo motu, the ration shop owner cannot anticipate who among the various customers would check the records and point out any discrepancies. Therefore, the ration shop owner is forced to ensure that everyone’s records are accurate.

Our experience is that most public authorities do not bother to be in compliance of S. 4, and certainly do not put out all the information that could be put out, suo motu. Partly this is because the law does not directly mandate any penalty for non-compliance with S. 4. In addition, there are also no incentives for public authorities to make the effort.

It would perhaps be best if an independent agency from within the government, like the National Informatics Centre (NIC) of the Government of India is given the responsibility of creating, maintaining and updating websites and printed material giving the required suo motu information for all ministries and departments of the government. Additionally, the concerned ministries and departments could also be given positive incentives -like perhaps trophies for those who perform best in terms of suo motu disclosures.

It is also important that suo motu disclosures are not just web-based, as many people in India do not have r access to the web. These should be in printed form, through sign-boards, radio, TV, and even by using voice mail in cell phones and innovatively communicating information through songs and theatre (like the MKSS songs that sing out all the provisions of the RTI Act, and explains them in verse !)

Part C : Other News

Justice D. Y. Chandrachud on the RTI Act:

The Right to Information Act has brought about an enormous change in the way we are governed, assured Justice D. Y. Chandrachud of the Bombay High Court at a recent talk on ‘Democracy, Governance and the Rule of Law’. It transpired that people don’t just seek details of case backlog or judges’ salaries, sometimes there are ‘wholly frivolous’ que-ries as well. Recently, an RTI application asked the High Court to reveal how much was spent on flower decoration at a recent function or at the banquet. The Judge, however, said people have a right to ask even irrelevant details. A Court officer is now tracking the floral budget. He might just come out smelling of roses.

BMC to punish the officer for RTI delay:

The Brihanmumbai Municipal Corporation’s city engineer has issued a show-cause notice to a Public Information Officer – in this case, the Deputy Chief Engineer (Planning and Development) – asking why his increment for next year should not be withheld. The order comes after State Information Commissioner Suresh [oshi levied a fine Rs.25,000 on the officer for not dispatching a Right to Information (RTI) application to the department concerned in time. The State Information Commissioner had also said in his order that the Municipal Commissioner should investigate the delay and take action as necessary.

Answer sheet on examination paper:

The Calcutta High Court allowing transparency in the evaluation system ruled that students had the right to see their answer sheet and educational institutions should allow it. The verdict came on an appeal by Calcutta University against a Single Bench’s order directing it to show a maths answer sheet to Presidency College student Pritam Rooj after he had sought a re-evaluation. Under the current system, students who doubt the marking can seek a revaluation of their answer sheets. But that is done by the examiner and students have to take the examiner’s word for it. Giving its ruling, a Division Bench comprising Chief Justice S. S. Nijjar and Justice Dipankar Datta directed those concerned to act on all such pending applications and show the answer sheets to aggrieved students within a month. The Bench, however, also set a time limit for students to see their answer sheets.

Performance of Information Commissioners of Maharashtra :

Project expedited on RTI application:

Today the villagers of Rangpar (a tiny village of 750 people, 25 km from Wankaner in Rajkot district) were happy to see that there is a 2 km road connecting their village to highway. The Gando Baval (babool) shrubs along the roadside have been cleared by the grampanchayat authorities. It took a visually challenged Ratna Ala, 26, to open the eyes of the authorities through the right to information (RTI)Act. At last some development work has been started by grampanchayat in Rajkot. For the last two years Ala has been using RTI to get information on how many schemes the panchayat implemented and how much money they spent. Though he did not get accurate information, it helped the panchayat realise that its inefficiency would be exposed. Ala’s struggle is on, but he is happy that the road has been constructed and the dense shrubs, which were a hindrance to passers-by, are cleared.

Discloser of the assets of Commissioners of Information:

Information Commissioners have chosen not to disclose their own assets on the ClC’s website in a development which may cause many to wonder whether the transparency watchdog has trouble following what it preaches to others.

In a candid admission, Chief Information Commissioner Wajahat Habibullah said “All Information Commissioners have declared their assets, but they felt that this information should not be put on the Commission’s website. They did not want it on the ClC website.”

Queried further on why the transparency watchdog was not keen on disclosure of its assets, Habibullah said, “The Commissioners felt that they could put up the information on their personal websites”. Crucially, none of the eight Commissioners have their own website.

BCAJ Admin

Right To Information

r2iPart A : CIC’s decisions

Guidelines on scrutiny
of income-tax returns by CBDT :

A very interesting and important issue regarding scrutiny
policy for non-corporate assessees and disclosure of instructions, directions
and clarifications issued by the CBDT on the scrutiny policy came up before CIC.
The same is decided by a Bench of 3 Commissioners.

Shri Kamal Anand of People for Transparency of Sangrur was
the appellant. He had sought for a number of information, some were furnished by
PIO and AA, and some were denied by holding that the same are exempt u/s.8(1)(a)
of the RTI Act. Hence, the matter came up before CIC. The issue for
determination before CIC was :

Whether supply of instructions, directions, clarifications
relating to scrutiny policy for non-corporate sector could be held to be
prejudicial to economic interest of the State and hence could be denied
u/s.8(1)(a) of the Right to Information Act, particularly when broad
parameters of the scrutiny guidelines have already been provided to the
appellant ?

It may be noted that initially this appeal was heard by a
Single Member of the Commission and he had directed the Department of Revenue to
have the matter considered by the highest level in the public authority and come
up to the Commission with the Department’s viewpoints.

The Department made detailed submissions
after having been duly considered by the Union Finance Minister and as approved
by him. In the submissions, the Department stated that it is of the view that
disclosure of scrutiny guidelines adversely affects the economic interest of the
State and facilitates committing the offence of tax evasion. Therefore, these
should not be disclosed to the public.

Three Members’ Bench after considering the submissions
received, held as under :

It is certainly within the domain of the concerned public
authority to decide and determine as to whether disclosure would adversely
affect the economic interest of the State or not. The Commission can only look
into as to whether the determination by the Department about the probable effect
of a particular policy disclosure is based on objective criteria or not, or as
to whether the Department has arrived at a particular conclusion in a reasoned,
or in a mechanical or arbitrary manner. Here is a case where a public authority
at the highest level has analysed the whole issue at our behest and has given
its considered opinion to this Commission about the possible effect of the
disclosure on economic interest of the State. We must conclude that the
implications of disclosure have been put to the closest scrutiny.

The Commission cannot, therefore, enter into the adequacy or
otherwise of the criteria taken into account by the concerned public authority.
It cannot surpass an objective consideration and place its own subjective
consideration thereon. When a denial is covered by an exemption clause u/s.8 of
the Right to Information Act, so long as such application of exemption is based
on objective criteria and is not arrived at in a mechanical or arbitrary manner,
this Commission does not intend to interfere in such issues.

Based on the above, the Commission held that denial of
information is justified u/s.8(1)(a) of the RTI Act.

[No. CIC/AT/A/2007/00617 : Shri Kamal Anand v. Central
Board of Direct Taxes, 11-2-2008]

For the information of the readers, S. 8(1)(a) reads as
under :

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.

RTI Act v.
S. 138 of the Income-tax Act :

Three issues for determination before the Bench of 3 Members
of the Central Information Commission were :

1. Whether certain information can be provided to the
appellant under the RTI Act when S. 138 of the Income-tax Act prohibits
disclosure of such information ?

2. Whether in such a situation the overriding provision as
contained in S. 22 of the RTI Act comes into play ?

3. Whether S. 8(1)(j) of the RTI Act is applicable to the
case of the appellant ?

The application was made by Shri G. A. Rawal of Ahmedabad,
who is an informant to get information on ‘Tax payable as per the decision of
Settlement Commission in the case of Winprolene Plastics and tax paid by the
said company.’ Information sought was denied by holding that the same is
prohibited u/s.8(1)(j) of the RTI Act.

Decision and reasons :

l
Both the Right to Information Act, 2005 and S. 138 of the Income-tax Act, 1961
deal with disclosure of information. While the Right to Information Act is a
general law concerning the disclosure of information by public authorities, S.
138 of the Income-tax Act is a special legislation dealing with disclosure of
information concerning assessees. This Commission in Rakesh Kumar Gupta v.
ITAT, of 18th September, 2007 decided by a Full Bench, has dealt with the
issue of applicability of special law to the exclusion of the general law. (Note
: This decision was extensively covered in this feature in the BCAJ of November
2007.)

• Crucial two terms u/s.8(1)(j) are ‘personal information’ and ‘invasion of the
privacy’. In the decision, the Commission has analysed the ambit and scope of
both the terms.

• The interpretation of S. 8(1)(j) has been the subject of some dispute. The Section deals with excluding from the purview of the RTI Act (a) in-formation of a personal nature which has no relationship to a public activity or interest, and (b) whose disclosure would lead to unwarranted invasion of privacy.

• Insofar as (b) is concerned, there is very little doubt that there could be a set of information which may be said to belong to the exclusive private domain and hence not be liable to be disclosed. This variety of information can also be included as ‘sensitive and personal’ information as in the U.K. Data Protection Act, 1998. Broadly speaking, these may include religious and ideological ideas, personal preferences, tastes, political beliefs, physical and mental health, family details and so on.

• But when the matter is about personal information unrelated to public activity, laying down absolute normative standards as touchstones will be difficult. This is also so because the personal domain of an individual or a group of individuals is never absolute and can be widely divergent given the circumstances. It is not possible to define ‘personal information’ as a category, which could be positively delineated; nevertheless it should be possible to define this category of information negatively by describing all information relating to or originating in a person as ‘personal’ when such information has no public interface. That is to say, in case the information relates to a person which in ordinary circumstances would never be disclosed to anyone else; such information may acquire a pub-lie face due to circumstances specific to that information and thereby cease to be personal. It is safer that what is personal information should be determined by testing such information against the touchstones of public purpose. All information which is unrelated to a public activity or interest and if that information be related to or originated in person, such information should qualify to be personal information u/s.8(1)(j).

• Insofar as the assessment details are concerned, they are definitely personal information concerning some individual or legal entity. The assessment details if disclosed may result in an undue invasion to the privacy of an individual. Disclosure of such details, therefore, cannot be permitted unless there is an overriding public interest justifying disclosure. But in the instant case, what has been asked for by the appellant in his RTI application is as follows:

“Tax payable as per the decision of the Settlement Commission in the case of Winprolene Plastics and tax paid by said company.”

• Based on above, the Commission directed the CPIO to provide the information within a period of two weeks from the date of the order.

[No. CIC/ AT/ A/2007 /00490, dated 5-3-2008 in the matter of Shri G. R. Rawal v. Director General of Income Tax (investigation), Ahmedabad]

Note: S. 24 of the RTI Act provides that the Act shall not apply to certain organisations. The Second Schedule lists such organisations. Ss.(2) of S. 24 empowers the Central Government to amend the Schedule by including therein any further organisation. It is understood that on 28-3-2008, (may be to undo such decision in future) the Notification is issued, under which the Directorate General of Income-tax (Investigation) is included in the Second Schedule.

Part B : The RTI Act

Chapter 6 of the Annual Report 2005-06 as published by the Central Information Commission (CIq deals with suggestions to reform by the CIC.

• All stakeholders – citizens, civil society organisations, public authorities and the Information Commissions – have felt that the implementation of the RTI Act has been a mixed experience.

• CIC is of the view that though S. 4, requiring the Government to publish all information except that which the law permits to be kept a secret, is the key to the RTI Act, unfortunately, public authorities neglected it the most in 2005-06. Public authorities find themselves too overwhelmed by information seekers to focus their energies on furnishing or even expanding the scope of suo moto disclosures of information. For this exercise to be fruitful, there has to be an attitudinal change.

Based on the above, CIC suggests that Citizen’s Charters adopted by most public authorities should be made an integral part of S. 4(1)(b) disclosures, so that the public is aware of the commitments of a public authority towards it.

• There has been a lot of demand to expand the modes of depositing the fee of making an RTI application. In an effort to do so, the Government recently decided to accept Indian Postal Orders as a mode of payment. The Commission would recom-mend that even a Rs.lO postal stamp affixed to the application should be considered as valid payment of fee for registration of an RTI application. There is also a case for ensuring that rates of fees across the country are made uniform.

• One complaint has been that the beneficiaries of the Act have largely been public officials and the educated urban people, and the benefits have not percolated to the poor and the people from the rural areas. This indicates that there is a need on the part of Government to fulfil its obligations u/ s.26 of the Act. Public authorities must set aside a specific budget for dissemination of knowledge amongst citizens, so that the provisions of the Act can be utilised at all levels of society, through heightened public awareness.

• The Commission feels handicapped about not being able to hold Central PIOs and public authorities accountable for non-implementation of its orders/ decisions. To give teeth to its powers, it is essential that the Commission be given powers of contempt of Court.

• Provision will need to be made to apply the CIC’s decisions to States with all attendant penalty provisions; to allow State Commissions to refer a matter to the CIC; and to empower the CIC to withdraw a case, which may be before it or a State Commission for appeal.

• The Commission should be empowered, financially and administratively, to allocate funds and undertake suitable research and development activities for the promotion of relevant programmes that are critical for strengthening the information regime, as envisaged in the Act. The Government may set up a Centre for Accountability and Transparency for undertaking activities relating to research in best practices in creating an open access regime and other such related activities that would effectively strengthen the Commission in pursuing its mandate.

Part C : Other News

• BCAS appreciated in Loksatta:

CA Prof. Suresh Mehta has sent a cutting of an article in the Marathi daily ‘Loksatta’ in which appreciation is made of the contribution of BCAS in spreading of RTI movement.

• No provisions for flats for differently abled citizens:

Vijaya Kalan (37) is partially paralysed and she is a heart patient. But what makes her situation worse is the fact that she has to drag herself up and down seven floors from her apartment, whenever there is load shedding in her complex at Kharghar.

From the reply received in response to RTI application, it is gathered that CIDCO, that developed the housing complex, has blatantly over-looked the rights of handicapped people. They have not reserved any apartments for them in the housing societies developed since 1995.

• Is the RTI effective in curtailing corruption?

Ms. Aruna Roy, the mother of the RTI movement in India, is of the view that response of the people has been better than expected. The existing statistics on RTI are based on appeals made to Commissioners and do not reflect the real picture. Actually, a much larger number of people ask for information and get it. Media coverage has focussed on the use of RTI by urban activists or the controversies that have arisen by denial of information in some cases. On the other hand, in rural areas, in a more routine manner, a lot of information is being sought and obtained regularly to serve very useful purposes such as improving the public distribution system.

• Suppression of information:

Justice Chandrachud, talking about his experience as a Judge, said that each time he heard a matter he asked himself “Do I make a difference ?” because he did not see the orders being implemented. “We must contemplate the need to incorporate citizens as stakeholders and increase the participation of citizens in governance as well as allow experimentation”. One of the greatest problems faced by the judiciary was access to information. There is a deliberate act of suppression of information and the Right to Information.Act is performing a valuable function.

• PIO seeking bribe!

In the first case of its kind after the Right to Information Act was enacted nearly three years ago, the Anti-Corruption Bureau (ACB) has trapped an Ulhasnagar Information Officer and his assistant while they were accepting a bribe.

Ulhasnagar resident Gulshan Anand Sachdeo had submitted an RTI application for information on certain plots of land. While the Public Information Officer (PIO) gave him the documents, they were not attested. The PIO and his assistant told Sachdeo that he would have to first pay Rs. 12,000 for things to move.

Sachdeo went straight to the Thane ACB Deputy Commissioner Kishore Jadhav. He named the officer, Raosaheb Govind Bhalerao, and senior clerk Ramchandra Gavit. The ACB told Sachdeo to go back and pretend to hand over the money, which he did. Bhalerao and Gavit were caught in the act.

This is the first time an Information Officer has been caught for asking for a bribe to provide certified documents.

• Power bills of the President of India:

The whole country suffers from power shortage. However, Rashtrapati Bhavan is always kept brightly lit ! Rashtrapati Bhavan has incurred power bills of Rs.16.71 crore over the past five years, almost doubling from Rs.2.4 crore in 2003 to Rs.4.39 crore in 2007.

The information on electricity usage in the President of India’s official residence was revealed in a recent RTI reply. In the five-year period from January 2003 to December 2007, Rashtrapati Bhavan consumed 2.69 crore units of electricity. Its usage rose from 37 lakh units of power in 2003 to 68 lakh in 2007. Last year’s bill of Rs.4.39 crore was higher than the Rs.4.02 crore spent in 2006.

• UNDP report, just released, has found that corruption continues to be a crippling problem in countries in the Asia-Pacific region:

The report has published three sets of ranking produced by Transparency International, the World Bank and the International Country Risk Guide. While India has improved slightly on Transparency International’s corruption index for 2007, it has done worse or remained static in the other two rankings. This is a worrying trend which shows that India’s rapid growth over the past few years hasn’t contributed to a decline in corruption.

Under’ A Thought for Today’ (june 16) “It is difficult, though not impossible, to stop government officials from hiding their corrupt take.” Editorial in The Times of India writes:

“However, the picture is not entirely gloomy. There are encouraging signs of success in tack-ling corruption. Right to Information (RTI) laws have had the effect of making governments more accountable. In 1990, there were only 13 countries in the Asia-Pacific with RTI laws. By 2007, the number had risen to 70. In India, RTI, which is considered to be one of the most progressive such legislations in the developing world, has forced government officials to become more transparent.”

• Fight for your Rights:

A new programme on Right to Information is being telecast every Saturday at 9 p.m. on NDTV Metro Nation (not NDTV India or Profit or Imagine or other associated channels). It is a one-hour long programme called ‘Fight for your Rights’. Arvind Kejriwal is the anchor. The first episode was telecast on Saturday, May 17th. Repeat telecasts can be viewed on Sundays (it is available on the regular cable channel and on Tata Sky DTH, you can access it on NDTV 24 x 7 channel).

BCAJ Admin

Right To Information

r2i

Part A : Decisions of CIC and SIC

S. 8(1)(g) of the RTI Act :

S. 8(1) of the RTI Act provides exemption from disclosure of
information, clause (g) thereof says : “Information the disclosure of which
would endanger the life or physical safety of any person or identify the source
of information or assistance given in confidence for law enforcement or security
purposes.”

The issue in the case of Brij Lal v. Deputy Commissioner
of Police was whether a copy of the enquiry report which was conducted by
vigilance branch of the police can be supplied. PIO held the view that the same
cannot be provided due to exemption u/s.8(1)(g). The first AA ordered that
copies shall be provided after deleting the name and identity of the witnesses.
In the appeal before CIC, Mr. Brij Lal asked : “It is appealed that a full and
clean copy of the Inquiry Report indicating clearly the names of the persons
concerned be provided.”

The restriction mentioned in S. 8(1)(g) would seem to clearly
apply to this case as the witness gives assistance in confidence for law
enforcement. Therefore, the names and identity of witnesses are generally not
disclosed, as it may endanger their life or physical safety.

On examination of the report however CIC found that it also
deletes the names of complainant, accused and enquiry officer. The definition
above equally and clearly does not cover names of complainant, accused or
enquiry officer. This will be particularly so when the RTI applicant himself is
either the complainant or the accused. To this extent, therefore, CIC directed
that a fresh copy of the enquiry report be provided to the appellant restoring
the names of the complainant, the accused and the enquiry officer wherever
deleted.

[Brij Lal v. DCP, North West, Appeal No. CIC/WB/A/2007/00516,
decided on 15-5-2007]

S. 6(3) of the RTI Act :

In the last month, one decision of SIC of Maharashtra was
reported. Herewith is one other decision of Dr. S. V. Joshi (CSIC, Maharashtra)

Shri S. K. Nangia had sought from Jt. Chief Registrar,
Directorate of Industries, Government of Maharashtra, information regarding
Notification/ order issued by the Government designating co-operative industrial
estates in Mumbai as public authority.

PIO replied that this information be obtained from the
Government. Citing the provisions of S. 6(3) (which requires PIO to transfer the
RTI application to the appropriate public authority if the information sought is
held by that another public authority, etc.) Shri Nangia insisted that PIO so
do. There was no response. He then filed another RTI application. Again, this
application and the first appeal also remained unattended to. Hence, he filed
the complaint before SCIC. Dr. Joshi made the following order :

In his submission before the Commission, PIO admitted that
as per his knowledge there is no system of publishing the names of the
institution to whom RTI Act is applicable in the Gazette. In fact, this fact
ought to have been made clear by the PIO to the applicant instead of asking
applicant to go to the Government.

PIO has however given instance of his commitment to RTI.
According to him, taking advantage of difference of opinion about
applicability or RTI to co-operative institutions, when Kandivali Co-operative
Industrial Estate was avoiding appointment of PIO, he doggedly pursued the
matter and saw to it that they appoint PIO.

His lapses were basically because of lack of knowledge.

“This Commission feels that all the replies to the
application should have been given by the PIO without him making reference to
the Government or asking applicant to go the Government which he should do
within 5 days of receipt of this order.” Taking into consideration the fact
that he has tried to reply within the time limit and also his commitment to
RTI, Commission decided to give him a chance to work better and discharge his
responsibility under RTI properly by merely reprimanding and not by imposing
any fine.

[Shri S. K. Nangia v. PIO and Joint Chief Registrar,
Directorate of Industries, Mumbai, Complaint No. 2008/621/02, decided on
10-11-2008]

Part B : The High Court decision

The petitioner is PIO, Dr. Celsa Pinto. She has challenged
the order dated 27-7-2007 passed by the Goa Information Commission, holding her
responsible for furnishing incorrect, incomplete or misleading information.

The complainant had sought information on various letters
from GPSC for filling up certain posts, seniority list, etc. She also had asked
the following information :

(i) Copy of the seniority list of the common cadre of the
Librarian post from the Directorate of Education, Technical Education and
Higher Education.

(ii) Why the post of curator was not filled up by promotion
after retirement of V. B. Hubli, and the post filled by direct recruitment
through GPSC ?

(iii) Why the Librarian from the Engineering College was
not considered for promotion for the post of Curator in the Central Library
when it was fallen vacant due to retirement of Shri V. B. Hubli ?

Initially, Dr. Pinto replied to all items of information sought including two questions above as ‘Not available’.

The matter came up before the Goa Information Commission in appeal.

The Goa Information Commission has held the petitioner guilty of furnishing incomplete, misleading and false information and has imposed a penalty of Rs.5,000 which is liable to be deducted from the petitioner’s salary.

Before the High Court, it was submitted that SIC has wrongly held that the petitioner provided incomplete and misleading information, etc.

The High Court passed the following order:

The Commission has with reference to question No. 1 held that the petitioner has provided incomplete and misleading information. As regards point No. 1, it has also come to the conclusion that the petitioner has provided false information in stating that the seniority list is not available. It is not possible to comprehend how the Commission has come to this conclusion. This could have been a valid conclusion if some party would have produced a copy of the seniority list and proved that it was in the file to which the petitioner, Information Officer, had access and yet she said ‘Not Available’. In such circumstances it would have been possible to uphold the observation of the Commission that the petitioner provided false information in stating initially that the seniority list is not available.

As regards the requisition Nos. 2 and 3 by which the petitioner was called upon to give information as to why the post of Curator was not filled up by promotion and why the Librarian from the Engineering College was not considered for promotion, the petitioner had initially answered by stating that the information was “N.A.” (Not Available). Thereafter, she had clarified by stating that it means “I don’t know”. The Commission has initially observed in para No. 13 that it does not see anything wrong in the petitioner’s reply that she does not know the information because “P.LO. cannot manufacture the information.”

It can be recalled that the petitioner corrected the information by explaining that “Not Available” meant “she does not know.” It is not possible to accept the reasoning of the Commission. There is no substance in the observation that merely because the petitioner initially said “Not Available” and later on corrected her statement and said she does not know, the petitioner provided incomplete and incorrect information. In the first place, the Commission ought to have noticed that the Act confers on the citizen the right to information. Information has been defined by S. 2(f) as follows:

“S. 2(f) – Information means any material in any form, including records, documents, memos e-mails, opinions, advices, press release, circulars, orders, logbook, contracts, reports, papers, samples, models, data materials 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 definition cannot include within its fold answers to the question ‘why’, which would be the same thing as asking the reason for a justification for a particular thing. The Public Information Authorities cannot expect to communicate to the citizen the reason why a certain thing was done or not done in the sense of a justification, because the citizen makes a requisition about information. Justifications are matter within the domain of adjudicating authorities and cannot properly be classified as information.

In this view of the matter, the order of the Commission appears to suffer from a serious error of law apparent on record and results in the miscarriage of justice. In the result, the impugned order is hereby set aside.

[Dr. Celsa Pinto v. Goa SIC & Anr., W.P. No. 419 of 2007, decided on 3-4-2008]

Part C : Other News

• RTI information provided with condition:

In an ingenious attempt to have its cake and eat it too, AIIMS has made a disclosure under the RTI with the condition that it was meant only for the applicant’s ‘personal consumption’ and he should not share it with the media without the ‘written permission’ of its director.

Such conditional disclosure is contrary to the scheme of RTI as it allows the applicant to use the law for any purpose. This is evident from S. 6(2), which exempts the applicant from giving “any reason for requesting the information”.

• SIC, Maharashtra needs police protection:

Chief Information Commissioner Suresh [oshi was among those stuck in office till late in the night on 26/11 though he was nowhere near CST, Hotel Taj, Hotel Oberoi-Trident or Nariman House where terrorists struck. He had been besieged by a group of six RTI activists who allegedly made him sit back well past midnight demanding that he pass an order on an RTI appeal that very day.

Joshi has now written to Police Chief Hasan Gafoor seeking police protection, pointing out that many of the people who visit his office are accused in bomb blasts or named in criminal cases.

Speaking to Mumbai Mirror, Joshi said: “The RTI activists are good people, but they were adamant and were unwilling to leave. Their desire was that I pass an order the same day, but I was firm (on not doing their bidding). They cannot dictate to us. Earlier, we did not feel the need for protection, but now we can’t predict the nature of people visiting our office.”

• RTI and Stamp Duty refunds:

If you are still waiting to get your refund from the stamp duty office even after months of filing your application for the same, the Right to Information (RTI) Act can come to your rescue.

The information law can not only help you get the refund, but also penalise the errant bureaucrat who hasn’t responded to your queries.

Tarun Ghia, a chartered accountant, had sought information on the number of applications that had come for stamp duty refund and the total amount of refund that had been disbursed in the last two years. Mr. Ghia also said that the unreasonable delay may instigate corruption and will be the cause for misery for the common man.

A person is eligible for refund when he has paid the stamp duty, but the document remains unexecuted. Such cases are common, especially in real estate transactions, and the stamp duty office is flooded with applications for refund.

The State Information Commission (SIC) has imposed a penalty of Rs.25,OOOon the Deputy Super-intendent of Stamps, Mumbai, for not providing information to an applicant on stamp duty refunds.

BCAJ Admin

Right To Information

Right to Information

S. 8(1)(h) :

S. 8(1)(h) reads as under :

8(1) Notwithstanding anything contained in this Act,
there shall be no obligation to give any citizen,

(h) information which would impede the process of
investigation or apprehension or prosecution of offenders;

The petitioner, Bhagat Singh in the writ proceedings
approached High Court of Delhi seeking partial quashing of the Order of CIC and
also petition to direct PIO to supply the information sought by him immediately.

The facts of the case are as follows :

The petitioner was married in 2000 to Smt. Saroj Nirmal. In
November 2000 she filed a criminal complaint alleging that she had spent/paid as
dowry an amount of Rs.10 lakh. Alleging that these claims were false, the
petitioner, with a view to defend the criminal prosecution launched against him,
approached the Income-tax Department with a tax evasion petition (TEP) dated
24-9-2003. Thereafter, in 2004 the Income-tax Department summoned the
petitioner’s wife to present her case before them. Meanwhile, the petitioner
made repeated request to the Director of Income-tax (investigation) to know the
status of the hearing and TEP proceeding. On failing to get a response he moved
an application under the Act in November, 2005. He requested for the following
information :

“(i) Fate of petitioner’s complaint (tax evasion
petition) dated 24-9-2003.

(ii) What is the source of income of petitioner’s wife
Smt. Saroj Nirmal other than from teaching as a primary teacher in a private
school ?

(iii) What action the Department had taken against Smt.
Saroj Nirmal after issuing a notice u/s.131 of the Income-tax Act,
1961/pursuant to the said Tax Evasion petition.”

The application was rejected by PIO u/s.8(1)(j). The first AA
also rejected it not only u/s.8(1)(j) but also u/s.8(1)(h).

In the second appeal before CIC, it rejected the contention,
of PIO & AA that clause (j) applies. As to clause (h), it ruled :

“as the investigation on TEP has been conducted by DIT
(Inv), the relevant report is the outcome of public action which needs to be
disclosed. This, therefore, cannot be exempted u/s.8(1)(j) as interpreted by
the Appellate Authority. Accordingly, DIT (Inv) is directed to disclose the
report as per the provision u/s.10(1) & (2), after the entire process of
investigation and tax recovery, if any, is complete in every respect’’

Before the Court, petitioner submitted that disclosure of the
information sought could not in any way impede the investigation process nor CIC
has given any reason as to how such disclosure would hamper investigation.

The Court in para 12 analysed the Right provided under the
RTI Act, 2005 and in paras 13 & 14 analysed the right of information vs. denial
thereof :

12. The Act is an effectuation of the right to freedom of
speech and expression. In an increasingly knowledge-based society,
information, and access to information holds the key to resources, benefits
and distribution of power. Information, more than any other element, is of
critical importance in a participatory democracy. By one fell stroke, under
the Act, the maze of procedures and officials barriers that had previously
impeded information, has been swept aside. The citizen and information seekers
have, subject to a few exceptions, an overriding right to be given information
on matters in the possession of the state and public agencies that are covered
by the Act. As is reflected in its preamble paragraphs, the enactment seeks to
promote transparency, arrest corruption and to hold the Government and its
instrumentalities accountable to the governed. This spirit of the Act must be
borne in mind while constructing the provisions contained therein.

13. Access to information, u/s.3 of the Act, is the rule
and exemption u/s.8, the exceptions. S. 8 being a restriction on this
fundamental right, must therefore be strictly construed. It should not be
interpreted in manner as to shadow the very right itself. U/s.8, exemption
from releasing information is granted if it would impede the process of
investigation or the prosecution of the offenders. It is apparent that the
mere existence of an investigation process cannot be a ground for refusal of
the offenders; the authority withholding information must show satisfactory
reasons as to why the release of such information would hamper the
investigation process. Such reasons should be germane, and the opinion of the
process being hampered should be reasonable and based on some material. Sans
this consideration, S. 8(1)(h) and other such provisions would become the
heaven for dodging demands for information.

14. A right based enactment is akin to a welfare measure
and like the Act, should receive a liberal interpretation. The contextual
background and history of the Act is such that the exemptions outlined in S.
8, relieving the authorities from the obligation to provide information,
constitute restrictions on the exercise of the rights provided by it.
Therefore such exemption provisions have to be constructed in their terms;
there is some authority supporting this view [see Nathan Devi v. Radha Devi
Gupta, 2005 I AD (SC) 357; VII (2004) SLT 615; 2005 (2) SCC 201; B. R.
Kapoor v. State of Tamil Nadu, VI (2001) SLT 659; 2001 (7) SCC 231 and
V. Tulasamma v. Sesha Reddy, 1977 (3) SCC 99]. Adopting a different
approach would result in narrowing the rights and approving a judicially
mandated class of restriction on the rights under the Act, which is
unwarranted.

The Court then held as under:

“As to the issue of whether the investigation has been complete or not, I think that the authorities have not applied their mind about the nature of information sought. As is submit-ted by the Petitioner, he merely seeks access to the preliminary reports investigation pursuant to which notices u/s.131, u/s.143(2), u/s.148 of the Income -tax Act have been issued and not as to the outcome of the investigation and reassessment carried on by the Assessing Officer. As held in the preceding part of the judgment, without a disclosure as to how the investigation process would be hampered by sharing the materials collected till the notices were issued to the assessee, the respondents could not have rejected the request for granting information. The CIC, even after overruling the objection, should not have imposed the condition that information could be disclosed only after recovery was made.”

The Court then set aside the order of CIC in so for as it withholds information until tax recovery orders are made. It also directed PIO and AA to release the information sought on the basis of the materials available and collected by them within two weeks.

[Bhagat Singh v. CIC and others, WP(C) No. 3114 of 2007 dated 3-12-2007] [RTI R IV (2010) 223 (Delhi)]

PART B?: The RTI Act, 2005

S. 19(8)(a) and implementation of S. 4 of the RTI Act:

S. 19 deals with “Appeal. Ss.(8) grants certain powers to the Information Commission (both central

& state). Ss.(8) reads as under:

(8) In its decision, the Central Information Com-mission or State Information Commission, as the case may be, has the power to:

(a)   require the public authority to take any such steps as may be necessary to secure compliance with the provisions of this Act, including:
(i)   by providing access to information, if so requested, in a particular form;
(ii)   by appointing a Central Public Information Officer or State Public Information Officer, as the case may be;
(iii)   by publishing certain information or categories of information;
(iv)   by making necessary changes to its practices in relation to the maintenance, management and destruction of records;
(v)   by enhancing the provision of training on the right to information for its officials;
(vi)   by providing it with an annual report in compliance with clause (b) of Ss.(i) of S. 4;
(b)   require the public authority to compensate the complainant for any loss or other detriment suffered;
(c)   impose any of the penalties provided under this Act;
(d)   reject the application.

It appears for the first time Commission has is-sued directions to Public Authorities u/s.19(8)(a) of the RTI Act as above jointly signed by 7 Central Information Commissioners. Document is dated 15-11-2010. Brief contents of the said directions are as under:

Commission has been nothing in its decisions that although the RTI Act has now been in place for five years, a key element of the law- voluntary disclosure by public authorities, enshrined in S. 4 of the Act has not been fully implemented in letter and spirit. There are, no-doubt departments and public authorities, which are more transparent and open than the others, but most do not conform to the matrix of disclosure set out in S. 4.

Secrecy in the functioning of the public authority should be the exception and not the norm, since as stated in the preamble to the RTI Act, transparency of information is vital to a functioning democracy.

The first step towards promotion of transparency in the functioning of the public authority should be an improvement in the record-management practices. S. 4 lists out the ingredients of record management in some detail.

The time has now come when the public authorities must start a sustained drive to inform their governance practices with transparency and to take the series of small steps required to put in place a system which promotes it. S. 4 provides only a window to possible actions and much more will need to be done in order to achieve the type of goals which are envisaged.

Based on above introductory write up, the Commission by powers invested

U/s.19(8)(a) of the RTI Act has directed that obligations set out in S. 4 of the RTI Act be discharged by the public authorities as per the time limits set out by it. Its directions pertain to two items:
(1) Record Management Obligation and (2) Personnel related details and functions of public authorities.

S. 4 requires public authority to publish certain information covering above two subjects. Commission notes that action in this regards has been tardy and that it is time that these requirements of S. 4 be fully implemented in a systematic manner and directs

That these actions as ordained above shall be completed by all public authorities within a period of 120 days from the date of this order.

Commission further directed that,

(i) The information in compliance with S. 4 obligation by Public authorities shall be uploaded on a portal to be set up exclusively for this purpose by the CIC.

(ii) Within 30 days of this order, each public authority shall designate one of their senior officers as ‘Transparency Officer’ (with all necessary supporting personnel), whose task it will be
(a) to oversee the implementation of the S. 4 obligation by public authorities, and to apprise the top management of its progress.

(b) to be the interface for the CIC regarding the progress of (a).
(c) help promote congenial condition for positive and timely response to RTI-requests by CPIOS, deemed-CPIOs.

(d) to be a contact point for the public in all RTI-related matters.
(iii) Names of the transparency officers shall be communicated to throw Commission by public authorities.

Each ministry or department of the Government has been directed to forward these directions to public authorities u/s.25(2) of the RTI Act, 2005.

The Commission has written to all secretaries in each ministry or department of the Government of India and has requested them to forward the directions to Public Authority under their jurisdiction exercisable u/s.25(2) of the RTI Act.

In such communication, the Commission writes;

(a) The ultimate aim of the RTI Act is that public should have access to most information held by public authorities without the use of the RTI laws. S. 4 of the RTI Act is an initial, but necessary, prelude to achievement of that objective. Hence the importance of this Section.

The Commission is to set up portal for uploading all S. 4 compliance-related information. The idea is that an average citizen should be able to see for himself as to how public authorities have progressed in complying with the transparency obligations cast on them by S. 4 of the RTI Act.

It is now learnt as reported in media that DiPT has challenged the demand made by the Commission for Pro-active disclosure and appointment of transparency officers by public authorities. DoPT itself has refused to follow CIC’s directions as noted above CIC has now sought legal advice on the objections raised by DoPT.

Citizens and RTI Activists are perplexed at this attitude of DoPT. Now, Chief Information Commissioner, Satyananda Mishra has reacted & stated; “I do feel that the ministry should rise above the technicality and look at the objectives of the CIC order which was to ensure that Government implement the provisions of the Act”.

Let us hope that other ministries. Departments do not flout these directions so boldly and proactively demanded by the Central Information Commission.

INFORMATION ON & AROUND

RTO’s (Regional Transport Office) working in Mumbai:

If you have to wait for days to get a new license or renew an existing one, do not get surprised. Frustrated by delays in issuing licences/duplicate permits and also in the ‘annual passing (clearance)’ of autos/taxis, an auto union led by Thampy Kurlan recently sought data under RTI, which showed a sharp contrast between vehicular population and the RTO staff strength in Mumbai.

In March 1999, the total number of registered vehicles in all three Mumbai RTOs was 9.10 lakh. This rose to 16.74 lakh by March 2009. Similarly, the number of driving licences issued till March 1999 was 33.5 lakh, which increased to 56.77 lakh in March 2009. In comparisons, the staff strength (of RTO) declined from 913 officers and men (in 1999) to just 738 employees in 2009.

Working in MANTRALAYA, Mumbai:

IT pays to be a government servant?! For, where else would you not be sackled if you did not report to duty for even one day in almost two years?

That, unfortunately, is the state of affairs in Mantralaya where action is still pending against such employees, as was revealed in the Law and Judiciary department’s reply to an RTI by MID Day. However, despite filing the RTI application on absenteeism in Mantralaya almost a month back, the 34 other departments have not replied to it at all.

The RTI was sent to the Public Information Officer, General Administration Department (GAD), on November 25, 2010, it sought information on Mantralaya staffers who remained away from duty and the action that was taken against them by the government. On December 6, S. B Dalvi, information officer from the Law and Judiciary department, replied to the RTI and stated that 5 out of the 300-plus employees in the department have been irregular at work and have not been reporting for more than 18 months.

SEBI challenges CIC’s order in Court:

SEBI has moved Bombay High Court against an order of the Central Information Commission (CIC) to make public action by it on a complaint against RIL in 2000 on the sale of 12 crore shares for the benefit of its promoters. The CIC, on an RTI application by Arun Agrawal, had directed SEBI to provide details of action taken on the complaint of S. Gurumurthy of Swadeshi Jagran Manch

Right of service after RTI:

Times of India under ‘YOUR RIGHT TO KNOW’ writes: Without the right to service, the RTI will be rendered meaningless as mere knowledge of what the babu has noted in the files is not enough. It must be supplemented by giving people the right to demand service from civil servants. This alone can make files get dusted out and translate decisions to actual work on the ground.

Youngest Indian to file an RTI query:

At CNN/IBN Citizen Journalist awards ceremony this month an award is given to Aishwarya Sharma, from Lucknow, young girl of 9 years who filed a Right to Information (RTI) query for removal of a garbage disposal site in front of her School.

Her initiative was a success and a Public Library has now been constructed in that place.

BCAJ Admin

Right To Information

r2iRight to Information
is a fundamental right :

One Mr. Mangla Ram Jat of Jaipur had sought the following
information from the PIO of Banaras Hindu University (BHU).

“Kindly make available to me the complete text of the
‘question paper’, provided by the university to the examinees of the pre-P.G.
Medical (M.D/M.S) Examination 2008 held on 17-2-2008 by the Institute of
Medical Sciences, along with standard answer key adopted by the university.”

He received the following reply :

“With reference to the information/document sought by you
under the RTI Act, this is to inform you that the question paper along with
the key answer to M.D/M.S Exam-2008, conducted by the Institute of Medical
Sciences, BHU cannot be given to you as the disclosure of the same is not
favourable in larger public interest.”

First AA also rejected the appeal. Second appeal then was
filed on 31-5-2008, which came for hearing before the Central Information
Commissioner Mr. Shailesh Gandhi. In his order, he has dealt with some basic
issues and the high power of RTI. The order is considered as landmark and hence
many paras thereof are reproduced hereunder :

The Right to Information is one of the most fundamental human
rights recognised by the world community and stands incorporated in the
Universal Declaration of Human Rights and International Covenant on Civil and
Political Rights (Art. 19). This has always been a fundamental right of the
citizens under Article 19 (1)(a) of the Constitution of India, and stands
codified as the Right to Information Act, 2005.

Before going further, it is desirable to look into the
Preamble of the Act and some of its provisions. The Preamble reads as :

“And whereas democracy requires an informed
citizenry and transparency of information which are vital to its functioning
and also to contain corruption and to hold governments and their
instrumentalities accountable to the governed;

“And whereas revelation of information in actual
practice is likely to conflict with other public interests including efficient
operations of the governments, optimum use of limited fiscal resources and the
preservation of confidentiality of sensitive information;

“And whereas it is necessary to harmonise this conflicting
interest while preserving the paramountcy of the democratic ideal;

“Now therefore, it is expedient to provide for furnishing
certain information to citizens who desire to have it.”

The preamble is the soul of the Act and gives an insight into
the minds of the framers of the Act. It clearly spells out the aims and
objectives of the Act. Accountability and transparency are the paramount
objectives of the Act. Right to Information is not only a legal right, but also
a fundamental right as enunciated by the Supreme Court in plethora of judgments.

S. 3 of the Act states : “Subject to the provisions of this
Act, all citizens shall have the right to information.”

As per S. 3 of the Act, citizen’s right to access information
under the Act is absolute, subject only to limitations prescribed under the Act.
This Section forms the core of the Act and is a crisp, unambiguous declaration
of the aims and objectives of the Act. To make this right meaningful and
effective, citizens are not required to give any justification for seeking
information as laid down in S. 6(2) which reads as follows :

“An applicant making request for information shall not be
required to give any reason for requesting the information or any other
personal details except those that may be necessary for contacting him.”

The obligation on the public authority to give information to
the sovereign citizens is absolute and is limited only by S. 8 and S. 9. (the
said Sections not reproduced here).

Any refusal of information has to be only under one or more
grounds mentioned in S. 8 (1) or S. 9. The Act gives no scope to the
adjudicating authorities to import new exemptions other than those that have
been provided under the Act and thereby deny the information. In a democracy the
government belongs to the people and therefore the rights of the owner to access
this information has to be respected very carefully. Since in S. 3 it has been
stated that ‘subject to the provisions of this Act, all citizens shall have the
right to information’, it follows that denial of information can only be on the
basis of the exemptions in the Act and no other grounds for denial are valid.

A similar question relating to revealing information
regarding exam details came up for consideration under the Act before the High
Court of Calcutta in the matter of Pritam Rooj v. University of Calcutta and
Ors., (AIR 2008 Cal. 118). This judgment which was pronounced on 28-3-2008,
after the orders of the Commission which have been relied upon by the
respondent, states :

“The umbra of exemptions must be kept confined to the
specific provisions in that regard and no penumbra of a further body of
exceptions may be conjured up by any strained devise of construction”.

Going through the decision in Appeal No. 845/ICPB/2007 titled
as B. L. Goel v. AIIMS relied upon by the respondent, the Commission
finds that none of the exemptions as required under the Act to deny information
have been relied upon by the Commission while deciding the said appeal. The
Commission is of the view that the aforesaid appeal was decided citing argument
of ‘public interest’, which is not an exemption under the Act. While deciding
the said appeal, the Commission came to the conclusion that ‘by disclosing this
information we will not be able to protect any larger public interest’. However,
this Commission, after going through the above quoted Sections of the Act is of
the view that nothing in the Act envisages denial of information on the ground
that the information will not be able to protect any larger public interest.

The test of public interest is to be applied to give information, only if any of the exemptions of S. 8 apply. Even if the exemptions apply, the Act enjoins that if there is a larger public interest, the information would still have to be given. There is no requirement in the Act of establishing any public interest for information to be obtained by the sovereign citizen; nor is there any requirement to establish ‘protecting of any larger public interest’. Therefore, in view of the above provisions of the Act, the denial of information in the Commission’s orders is ‘per incuriam’. I therefore, respectfully differ with the view taken by the Commission in B. L. Goel v. AIIMS.

This Commission is conscious of the fact that it has been established under the Act and being an adjudicating body under the Act, it cannot take upon itself the role of the legislature and import new exemptions hitherto not provided. The Commission cannot of its own impose exemptions and substitute their own views for those of the Parliament. The Act leaves no such liberty with the adjudicating authorities to read law beyond what it is stated explicitly. There is absolutely no ambiguity in the Act and tinkering with it in the name of larger public inter-est is beyond the scope of the adjudicating authorities. Creating new exemptions by the adjudicating authorities will go against the spirit of the Act.

Right to Information as part of the fundamental right of freedom of speech and expression is well established in our constitutional jurisprudence. Any restriction on the fundamental rights of the citizens in a democratic polity is always looked upon with suspicion and is invariably preceded by a great deal of thought and reasoning. Even the Parliament, while constricting any fundamental rights of the citizens, is very wary. Therefore, the Commission is of the view that the Commission, an adjudicating body which is a creation of the Act, has no authority to import new exemptions and in the process curtail the fundamental right of information of citizens.

Even the exemptions u/s.8(1) are not absolute, and are subject to larger public interest as mentioned in S. 8(2) which reads,

“Notwithstanding any of the exemptions permissible in accordance with sub S. (1), a public authority may allow access to information if public interest in disclosure outweighs the harm to protected interest.”

Therefore, for the reasons stated above, the Commission comes to a conclusion that there can be no sanction of law for denying the information to the appellant.

The appeal is allowed.

The PIO will give the information sought by the appellant in his RTI application before 15 January, 2009.

[Mr. Mangla Ram fat v. CPIO, Banaras Hindu University, Appeal No. CIC/OK/ A/2008/00860 decided on 31-12-2008]

CIC v. SC:

A very interesting, delicate and significant issue has surfaced in the context of jurisdiction of Central Information Commission v. that of Supreme Court of India.

Chief Justice of India (CJI) Balakrishnan had taken the view:

“The Chief Justice is not a public servant. He is constitutional authority. RTI does not govern constitutional authorities”.

While the Chief Central Information Commissioner, Wajahat Habibullah held the view:

“The office of the CJI comes under the purview of the RTI”.

Facts of the appeal which came before the Central Information Commission are:

Shri Subhash Chandra Agrawal submitted an application under the RTI Act in November 2007 requesting the tPIO of Supreme Court of India (SC) to provide him a copy of the resolution dated 7-5-2007 passed by all the Judges of the SC which required every Judge to make a declaration of assets in form of real estate or investments held in their names or in the name of their spouses and any person dependent on them to the CJl. The appellant also requested the CPIO to provide him information on any such declaration of assets, etc. ever filed by the Hon’ble Judges of the Se. The RTI application also covered a request for information concerning any declarations filed by the High Court Judges about their assets to the respective Chief Justices in the various High Courts. While the CPIO of the SC provided a copy of the resolution dated 7-5-1997, as referred to above, he declined to provide the remaining part of the information concerning the declaration of assets by the Hon’ble Judges of the SC and High Courts on the ground that the said information is not held by or under the control of the Registry of the SC of India.

The First AA after hearing the appellant in person and after perusal of the records decided to remand back the matter to the CPIO to consider the question as to whether S. 6(3) of the RTI Act is liable to be invoked by the CPIO. The CPIO heard the appellant again in respect of the applicability of S. 6(3) of RTI Act to the facts and circumstances of the case and after considering the matter decided as follows:

“In the case at hand, you yourself knew that the information sought by you is related to various High Courts in the country and instead of applying to those Public Authorities you have taken a short circuit procedure by approaching the CPIO, SC of India remitting the fee of Rs.lO payable to one authority and getting it referred to all the Public Authorities at the expense of one CPIO. In view of this, the relief sought by you cannot be appreciated and is against the spirit of S. 6(3) of the RTI Act, 2005.

You may, if so advised, approach the concerned Public Authorities for desired information.”

When the second appeal came before the Central Information Commission, it decided to constitute full bench of the Commission and heard the matter. Both the parties were represented by senior advocates, the appellant by Shri Prashant Bhushan and another and the SC by Shri Amarendra Sharan, additional Solicitor General and another. Arguments of both the sides are as under:

Learned counsel appearing on behalf of the Supreme Court of India submitted that the RTI application had two parts, the first part related to copy of Resolution, which has already been provided to the appellant, and the 2nd part relates to declaration of assets by the Supreme Court Judges. CPIO submitted that the Registrar of the Supreme Court does not hold the information. The learned counsel submitted that the Resolution passed by the Judges is an inhouse mechanism. The declaration regarding assets of the Judges is only voluntary. The resolution itself describes submission of such declarations as ‘confidential’. It was also submitted that any disclosure of these declarations would be breach of fiduciary relationship. The learned counsel also submitted that the declarations are submitted to the Chief Justice of India not in his official capacity but in his personal capacity and that any disclosure will be violative of the Resolution of the Hon’ble Judges which seeks to make these declarations ‘confidential’. It was also contended that the disclosure will also be contrary to the provisions of S. 8(1)(e) of the Right to Information Act.

Learned counsel appearing for the appellant submitted that the declaration of assets by the Judges is ‘information’ within the meaning of S. 2(f) of the RTI Act and the same is held by the Supreme Court, which is therefore accessible within the meaning of S. 2(h) of the Act. If the Registrar of the Supreme Court states that the information is not held by them but held by Chief Justice of India, then the Chief Justice of India is a separate Public Authority independent and distinct from the Supreme Court of India. The Commission, therefore, has to decide as to whether the Supreme Court of India and the Chief Justice of India are part of the same Public Authority or the CJI constituted a separate and independent Public Authority. If the two are different and distinct Public Authorities then the CPIO should have transferred the RTI application to the Chief Justice of India under S. 6(3) of the Right to Information Act. He also argued that the information held either by the Supreme Court or by the Chief Justice of India cannot be denied to a citizen seeking the same under the provisions of the Right to Information Act.

Based on the above, the Full Bench consisting of IC A. N. Tiwari, IC Prof. M. M. Ansari and Chief IC-Wajahat Habibullah decided as under:

The Supreme Court of India is an institution created by the Constitution and is, therefore, a Public Authority within the meaning of S. 2(h) of the Right to Information Act.

The status and position of the Chief Justice of India is unique under the RTI Act. The Chief Justice of India is also designated as ‘Competent Authority’ u/s.2(e) of the Right to Information Act.

The Chief Justice of India in case of Supreme Court of India and the Chief Justice of High Court in case of High Court are also thus designated as ‘Competent Authority’ within the meaning of S. 2(e) of the RTI Act and S. 28 of the Right to Information Act empowers them to frame Rules to carry out provisions of Right to Information Act.

It may further be mentioned that while the Rules ” made by the Central Government u/ s.27 are required to be laid before each House of Parliament and the Rules made by the State Governments are required to be laid before each House of Legislature, there is no such requirement in respect of the Rules framed by the Chief Justice of India in case of Supreme Court and Chief Justice of a High Court in case of a High Court u/ s.28 of Right to Information Act.

The rule-making power has been explicitly given for the purpose of carrying out the provisions of the RTI Act. The Act, therefore, empowers the Supreme Court and the other competent authorities under the Act and entrusts upon them an additional responsibility of ensuring that the RTIAct is implemented in letter and spirit. In view of this, the contention of the respondent Public Authority that the provisions of Right to Information Act are not applicable in case of Supreme Court cannot be accepted.

After deciding the above, the Commission went on to decide whether the Chief Justice of India and the Supreme Court of India are two distinct Public Authorities or one Public Authority.

In the order, it records as under:

If the provisions of Article 124 of the Constitution are read in view of the above perspective, it would be clear that the Supreme Court of India, consisting of the Chief Justice of India and such number of Judges as the Parliament may by law prescribe, is an institution or authority of which the Hon’ble Chief Justice of India is the Head. The institution and its Head cannot be two distinct Public Authorities. They are one and the same. Information, therefore, available with the Chief Justice of India must be deemed to be available with the Supreme Court of India. The Registrar of the Supreme Court of India, which is only a part of the Supreme Court, cannot be categorised as a Public Authority, independent and distinct from the Supreme Court itself.

In view of this, the question of transferring an application u/ s.6(3)of the Right to Information Act by the CPIO of the Supreme Court cannot arise. It is the duty of the CPIO to obtain the information that is held by or available with the Public Authority. Each of the sections or department of a Public Authority cannot be treated as a separate or distinct Public Authority. If any information is available with one section or the department, it shall be deemed to be available with the Public Authority as one single entity. The CPIO cannot take a view contrary to this.

It may be noted that the information sought in this case was very limited, the applicant was not seeking a copy of the declarations or the contents therein or even the names, etc. of the judges filing the declaration, nor is he requesting inspection of any such declaration already filed. He is seeking simple information as to whether any such declaration of assets, etc. has ever been filed by the Judges of the Supreme Court or High Courts. The Commission held that what he was seeking cannot be held to attract exemption under clauses (e) or G) of S. 8(1).

Finally, the Commission held as under:

In view of what has been observed above, the CPIO of the Supreme Court is directed to provide the information asked for by the appellant in his RTI application as to whether such declaration of assets, etc. has been filed by the Hon’ble Judges of the Supreme Court or not within ten working days from the date of receipt of this Decision Notice.

[Shri Subhash Chandra Agrawal v. Supreme Court of India, Appeal No. CIC/WB/ A/2008/00426 de-cided on 6-1-2009]

It is reported that SC has moved the High Court over the above order. It is the unusual situation when the Apex Court approaches a lower Court. However, as the decision of CICs can be challenged only in a High Court, such unusual situation is created. It is also reported that the Delhi High Court has stayed an order of Central Information Commission. It is also interesting to note that Justice S. Ravindra Bhat has appointed noted jurist FaH Nariman as the amicus curiae to assist the Court and has fixed February 12 as the date of hearing.

It is further reported in the media:

In his communication to the HC, Nariman said, “1 must regretfullydecline the honour since I have very decided views on the matter”.

Nariman made it clear to the HC that he would not be able to maintain neutrality expected of amicus curiae in the matter.

Interestingly, in his letter to the newspaper titled ‘Chuck it, My Lords’. Nariman recalled his visit to the US when he had come across a US law that mandated each SC Judge not only to make public his assets each year but also about each gift which was worth more than $ 50.

(Full copy of this very interesting and landmark order of the Commission is being posted on www.bcasonline.org for those interested to read the full order.)

Part B : The RTI Act

Standing Committee of the Parliament on RTI Act, 2005 :

National Campaign for People’s Right to Information (NCPRI) has made a presentation before the above committee. Some of the items of the said presentation are worth noting to understand present deficiencies of the RTI Act. I shall reproduce them in this column in 3 parts, starting from this issue:

Level of awareness:

Our study suggests that the level of awareness about the RTI Act is very poor, especially in the rural areas. The Department of Personnel and Training, Government of India seems to have done very little to raise awareness about the Act. Much more needs to be done, especially by roping in the television channels, the print media, the All India Radio, and various NGOs.

Spreading awareness amongst the illiterate radio and television programmes are particularly important for this, as are awareness programmes run by NGOs. Workers of political parties can also spread awareness and facilitate use. In any case, there should be one or two nodal people in each village, perhaps the schoolteacher or the health worker,who have received some training, have some material, and are willing and able to help the rural people, especially the illiterate, to access information.

Another mechanism for spreading awareness of RTI among illiterate segments of the population is through social audits Social audits areincreasingly happening in various states around the NREGA, and attracting a large number of rural people, many of whom are illiterate wage-labourers wanting to get their rights under NREGA. In fact, the NREGA guidelines go beyond the RTI Act by stipulating provision of information to applicants within 7 days, rather than the 30 days stipulated under the RTI. RTI principles can therefore be incorporated as mandatory requirements in various other schemes and this would help even the illiterate to understand and exercise their right to information. The Planning Commission could be requested to mandate this in all central and centrally-sponsored schemes and to provide the resources for training and other requirements to make this implementable.

Use and misuse of the RTI Act:

Our study suggests, by extrapolation, that from October 2005 until October 2008, nearly five lakh RTI applications have been filed in rural areas. The number in urban areas is perhaps double this. Delhi itself has nearly eighty thousand applications filed in the last three years.

Despite an extensive survey, no evidence has emerged on the misuse of the RTI Act. There are instances where RTI applications are vague or requisition vast amounts of information; however, these are adequately covered under the law. In fact, it is not clear how the RTI Act can be misused for it only gives access to the truth and how can the truth be misused?

There are two types of apprehensions, one that officers will be blackmailed and the other that they will be harassed because of too many applications. As far as the first apprehension goes, you can only be blackmailed if you have done something wrong. Therefore, rather than demanding that information should not be shared because wrong acts have been committed, it would be better to stop doing wrong things because information will be shared.

Besides, one way of preventing the use of information accessed through the RTI Act to blackmail officials is to put up copy of the application and of the response on the website (except in those few cases where privacy is involved). Once this information is in the public domain, there would be no scope of blackmail.

Few departments receive a large number of applications. Our survey looked at over three hundred departments across the country and at differing levels. The data that emerges suggests that in almost all these departments, a public information officer does not spend more than one or two hours a week (average of between 12 and 24 minutes per working day) on RTI related work.

In any case, even those few public authorities where there is greater pressure, the department can make things much easier for itself if it periodically assesses the type of information the citizens want, and put this suo moto in the public domain, as required u/ s.4 of the RTI Act.

Part C : Other News

Delay in disposal of appeals in Maharashtra State Information Commission:
Dr. Suresh Joshi has replied 3 questions asked by DNA Journalist after some of us RTI activists met him on 30-12-2008.

Q. Activists feel the RTI Act is losing its relevance they say there are pending cases as old as 2006. What is the value of getting information three years after it was asked for ?

Ans. : That is not the case. Hearings are on and Maharashtra is one of the States that get maximum applications. The problem is of shortage of staff. There was a backlog earlier when we started, as I was the only Commissioner. Last year, people had to wait a year and a’ half for the hearing; now, Commissioners are clearing around 1,400 cases each month.

Q. Does a sympathetic approach towards PIOs mean citizens are cited as flaws, negating the relevance of the RTI Act?

Ans. : That’s not true. There are 300 cases of penalties on PIOs till November 2008, with Rs.21 lakhs collected in fines. This average comes to Rs.6,000 to 7,000. If the case is genuine, we fine up to Rs.25,000, or we give them a chance to give information. We fine people when we see an obvious case where they are violating the Act.

Q. Activists say your argument of less staff is a false, deviating attention from the slow processing of cases. They say that in order to shield erring officials who should be fined, offers of help are not taken up.

Ans. : People have helped us out. Some have even worked with us, but they 0.0 not understand that we need to go through all the files. The way they tell us and the format they make does not work out.

RTI query on online lotteries:

In reply to the RTI query filed by the Maharashtra Rajya Lottery Association President, Nanasaheb Kute-Patil, the State Lottery Department said that there is no Central Government law for single-digit lotteries, commonly known as online lotteries.

Noise pollution:

Tired of noise pollution from the playground opposite his home, Kandivli (West) resident Lennon Miranda used the RTI to find out why the play-ground is being used to organise massive functions and fairs without BMC permission.

After receiving RTI application, BMC first put up a board at one end of the ground stating, “it is in the possession of the BMC”, but some days thereafter washed its hands off the property and says that the ground does not belong to the BMC and is a private property.

Assistant engineer Marathe of the Buildings and Factories Department of the ward seconds the above claim, and says that copies of the RTI reply saying the BMC has not given any permission have been sent to the police stations for further action.

Building plans:

The Civic Administration (BMC) has decided that it will not give out prints of the layout to anyone under the RTI Act.

Kishore Gajbhiye, Additional Municipal Commissioner, said it was feared that the information may be misused by terrorists, “It is a classified document and will not be made available.”

But, civic observers say the terrorist attack is being used by the BMC’s Building Proposal Department to block information. It cannot be a confidential document unless it comes under the Exemption clause of the RTI Act. The civic body’s HQ is not a defence installation, nor does the information affect the security of the country.

BCAJ Admin

Right To Information

r2i

Part A : Decisions of CIC and SIC

Concept of privacy
vis-à-vis the public servant :

As reported in BCAJ of October 2008, 4 more Information
Commissioners have been appointed at the Central Information Commission, one of
them being the RTI Activist from Mumbai, Shailesh Gandhi. In the very first
month of performing as CIC, he has discharged his duties well. He has disposed
of 142 appeals, has issued show-cause notice for imposing penalty in 32 matters
and has levied penalty of Rs. 7,500 in one case. Hereunder, is a brief report on
one of the 142 appeals decided by Shailesh Gandhi :

Mrs. Shruti Singh Chauhan had sought information from
Additional Secretary (Home), Government of NCT of Delhi about prosecution of
certain officers during the period 1-1-2000 to 30-4-2007.

PIO replied that information relates to personal information,
the disclosure of which has no relationship to any public activity or interest
and it would cause unwarranted invasion of privacy of the individuals. First AA
dismissed the appeal “on grounds of non-merit of the case, as the information
sought for is voluminous, sensitive and does not serve any public interest.”

CIC held : Firstly, if charges have been investigated and
found to have been substantiated, leading to asking for a sanction for
prosecution, this information cannot be considered as relating to the privacy of
an individual. Acts of public servants, where there is a reasonable ground to
believe wrongdoing, cannot be a private matter of a public servant. It has been
well accepted that the charges against public servants must also be disclosed to
the people. It has also been held that Members of Parliament and other
representative bodies must themselves declare charges against themselves on
oath, even when they stand for an election. Given this background, a claim that
disclosing names of those against whom sanction for prosecution has been sought
is an invasion of privacy and has no public interest, is completely erroneous.
In any case, as soon as prosecution is launched, the names and identities of
those being prosecuted would be in the public domain.

Based on the above view, CIC allowed the appeal and ruled :
“The Commission disapproves of the practice of PIOs using the exemptions of S.
8(1) without providing reasoning. The Commission is likely to view such practice
as a denial of information without reasonable cause and take consequent actions
as per the law. This time however, we feel the ends of justice will be met by
directing the Public Authority to be more diligent when using the exemption
clause. The PIO will give the information to the appellant by 10th November
under intimation to the Commission.

[In the matter of Mrs. Shruti Singh Chauhan : Decision No.
CIC/WB/A/2007/01096/SG/0080, decided on 16-10-2008]

Civil work relating to open pit in Mulund (W), Mumbai :

An interesting decision is given by Chief SIC, Maharashtra,
Dr. S. V. Joshi on 10-11-2008.

Shri S. K. Nangia filed a complaint application u/s.18 of the
RTI Act on 9-9-2008. His original application sought information from MMRDA
about details of civil work relating to an open pit in Mulund (W) which caused
an accident of a car falling in a pit on account of the same being left open and
unfenced. In reply, the PIO advised the applicant to seek this information from
police station. In response to the first appeal on PIO’s reply, the AA directed
the PIO to provide the information sought. However, it was still not furnished.
Shri Nangia then filed a complaint with the Commission. SCIC held :

Firstly, it was totally wrong on the part of the PIO to
direct applicant to seek information from the concerned police station. In this
case, information was really with MMRDA, but even if it was with police station,
it was the responsibility of the PIO to send that application to the police
station asking them to provide information directly to the applicant. This is
considered to be serious lapse on the part of PIO.

The applicant’s application is to get information about who
were in charge of work. Police has already registered the offence and judicial
verdict will come in due course. It is pertinent to note that applicant is not
asking who is responsible for this mishap. He is merely asking the names of
officers who were entrusted with overseeing and supervision. This information if
already not given to the applicant be given in 5 days time on the receipt of
this order.

Lastly, applicant has stated that he has spent time, effort
and money for filing an appeal with AA, filing fresh application with police and
making payment of charges to the Police Department for information which all
could have been avoided had the PIO provided correct and complete information
for which he demanded a token compensation of Rs.100. The Commission appreciates
the concern of the applicant that he wants to stress the point of accountability
and is really not interested in financial reimbursement. He ordered that this
amount should be given to the applicant by MMRDA by recovering it from the PIO.

In short, the PIO has to pay penalty for the delay of 38 days
i.e., Rs.250 * 38 of Rs.9,500. This be recovered from his salary in two
instalments and deposited as per the Government’s procedure. The copy of
challans having paid this amount be sent to the Commission for record.

[Shri S. K. Nangia, Mumbai v. PIO, MMRDA : Complaint
No. 2008/622/02, decided on 10-11-2008]

Part B : The RTI Act

Challenges of Change

When we are no longer able to change a situation,

we are challenged to change ourselves.

— Viktor Frankl

This year is the diamond jubilee year of glorious services of
BCAS. Theme of the Diamond Jubilee Conference held on 8th November was :
Challenges of Change — Always ahead.

BCAS has always been ahead in its services to the profession, to its members and other CAs, CA students and society at large : the view endorsed by all speakers at this above conference.

However, at times I think that to be ahead holistically and in real terms, BCAS cannot be a bystander to just watch the changes that have been happening on the national scene and challenges that are being faced by concerned citizens. BCAS and its members can’t limit solving only challenges of change to the professional areas. On that yardstick, I believe that to be ahead, it has to gear itself much more proactively to the challenges of change that the nation faces.

The Right to Information Act has brought in changes which have challenged the sleeping and non-inclusive minds et built up in the governance of this country. Frankly, citizens have also remained passive and maintained a lackadaisical attitude and in keeping with the Indian psyche, have remained tolerant to all injustice, corruption, non-accountability, etc.

There are many stakeholders in the implementation of the RTIAct. They include: (1) Public Authorities and PIOs & AAs (information providers) (2) Information Commissions, States and Central (3) Central and State Governments (4) Indian Citizens (both urban & rural) (Information seekers) (5) Media (6) Activists’ groups, NGOs, CBOs, etc. (7) Competent authorities such as the Courts, the House of the people, etc.

The RTI Act has heralded citizens’ rights to be recognised, has operationalised the fundamental right of the citizen guaranteed under Article 19 of the Constitution of India and has empowered citizens to be part of democratic operation of the country. The Act has thrown a challenge to all stakeholders to get tuned to changes in the governance brought in by this revolutionary and extremely powerful Act, the likes of which India has never witnessed before. Prime Minister, Dr. Manmohan Singh, while inaugurating 3rd Annual Convention of the Central Information Commission on 3rd November talked on various challenges of change brought about by the RTI Act. He said:

There will be a major challenge for public authorities in the arena of information house-keeping. There is a challenge for the information seekers in not misusing the right available in the Act by making vexatious demands and thus deprive genuine information seekers of their legitimate claims on limited public resources and so on.

Mahatma Gandhi had once said: Political freedom has no meaning unless it leads to win economic, social and moral freedom. The Right to Information Act and National Rural Employment Guarantee Act (NREGA) are two acts which are tools to bring social and economic freedom respectively, which would then lead to moral freedom.

Weprofessionals, educated and intellectuals are the major stakeholders for the success of these two Acts. As Barack Obama, the President-elect of the USA said “So tonight, let us ask ourselves – if our children should live to see the next century, what change will they see? What progress will we have made? This is our chance to answer that call. This is our moment. This is our time …. “

We professionals need to raise the same questions to ourselves: How are we going to shoulder challenges of sweeping changes happening on the national scene on account of implementation of these two Acts: RTIand NREGA. Are we going to just witness sea change in the lives of millions of citizens with the operation of those two instruments legislated by the Government of India or be a part of the makers of this change, partners in advancing its benefits to really go ahead? I hope that in coming years BCASFoundation and BCASmembers becomepart of this movement of change and go ahead in bringing new standards of transparency and accountability, bringing positive change that shall give hope for better INDIA, happier inclusive society,so essential for experiencing the value of democracy.

Part C : Other News

• Landlease of Gujarat farmers:

The farmers in Gujarat are moving RTIapplications to the State Government seeking documents related to land ownership. Armed with archaic documents prepared during the British Raj and written in rich Gujarati prevalent during the rule of the Gaikwads, farmers are approaching the State Government with a hope. The farmers are optimistic that the land leased to the then Bombay Province by their fore-fathers in 1912,for 99 years would be returned to them. The State Government, however, is unper-turbed and says the British did compensate the farmers for the land, and that there is no question of the situation taking a Singur-like turn.

Not prepared to wait until the lease period gets over in 2011, the farmers became active with RTI applications ever since they learnt that the State has allotted 1,100acres of land to the Tatas. However, they clarify that they are neither against Nano, nor are they creating a noise because of its arrival. “Documents in our possession are older than Tata Group’s presence in Gujarat. We are not trying to ride the wave and earn an extra buck. We are just seeking our land back, once the lease period is over.”

• RTI Activist Chetan Kothari :

Mr. Chetan Kothari writes in Sunday MID DAYof October 12, 2008: “I was duped to the tune of Rs. 11 lakh that I invested in plantation and holiday packages of Suman Motels Limited in the late 90s. I used RTI to get information about the company,so that I could pursue my case in the Court.” The two RTI applications revealed that despite 200warrants and summons issued in the name of the MD of the company, none of them were executed. This made his case strong as he was representing 600 people who were duped similarly.

Mr. Kothari believes that information is a tool which when used in a positive way can bring about a revolution and zeroing in on subjects requires a lot of reading and general awareness.

• Documentaries on RTI :

The awareness about the RTI Act, 2005 is slowly catching up in the country. Helping this cause is a small tribe of documentary makers, who through the visual medium are trying to make people aware of RTI’s power.

Documentary-filmmaker Priyanka Tiwari, who works for a Delhi-based NGO Kabir that works on RTI,has made 15 short films in the last two years. She says apart from creating awareness, they also portray success stories. (Some of these CDs are available at BCAS Library.)

Satish Shinde from Films Division claims to have made the first feature film on RTI. “The challenge was how to make the act visually appealing,” recalls Shinde. The film has also been dubbed in 12 languages. Like NGO,Kabir, Shinde’s film is also widely used by NGOs. He feels that, generally, the RTI awareness has risen by 30 to 40%.

• BMC becoming Pro-RTI:

Getting information under the RTIAct will soon be just a click away. In a month’s time, citizens will be able to file their RTI application on the website of Brihanmumbai Municipal Corporation.

According to BMC officials, the process will be centralised and the applications will be forwarded to the civic body’s concerned departments. The payments can be made in the same way as property taxes are paid. The website will allow people to post their address, so that they can be provided with the necessary documents.

• Refund for delayed courier charges:

What if an important document couriered to you through the postal services reached you after a day’s delay? You would have either cursed the system or may not even have noticed it as most courier parcels hardly reach their destinations on time. But Dadar resident Milind Mulay decided not to take it lying down. Mulay used the Right to Information (RTI) Act to get a refund when two articles he had sent through speed post reached their destination after a day’s delay. He had sent two couriers to Thane and Kalyan from the Shivaji Park post office at Dadar.

He first did some leg-work and found out from the website of the Indian Postal Service about the rules and regulations in case of delay. The web site also has an option by which one can track the path of the courier. But the web site had not updated the path of his courier. So he went to the post office’s west division headquarters and asked them to give a copy of the delivery slips. The receipts showed that the parcels were not delivered on time. Mulay then wrote a letter to the post office asking for compensation for the delay. The officials at the post office did not bother to answer his letter, he then filed an RTI application.

The senior superintendent of the Mumbai city west division responded within 10 days and refunded the entire amount Rs.50 for the delay. He also said this was in accordance with the money-back guarantee scheme. The delay occurred due to a service fault and a detailed report has been sought from the respective section.

Mulay said he was prompted to file an RTI query as numerous people in the country faced this problem. More than the financial part, he wanted to show that the RTI Act can be put to everyday use and cut the red tape in the Government.

BCAJ Admin

Right to Information

New Page 3

Part A : CIC’s decisions

Public Notaries

Mr. Dhiresh Shah, advocate and notary of Ahmedabad made an
application-appeal to the Central Information Commission in connection with the
processing of the applications of Public Notaries for the renewal of their
licences issued by the Department of Legal Affairs.

During the hearing of the appeal, Mr. Shah pointed out that
there were gross and avoidable delays in renewing the licences of Notaries,
which not only frequently resulted in breaks in their service as Public
Notaries, but also caused them financial hardship and mental worry, and in some
cases, even loss of reputation. He pointed out that the main purpose of his
coming before the Commission was to ensure that a transparent and accountable
system was kept in place, so that not only the renewal applications of Public
Notaries were attended to with speed, but also there was certain accountability
about timely renewal of these licences.

CPIO, Implementation Cell, Department of Legal Affairs,
Ministry of Law and Justice, New Delhi submitted that the information as
requested by the appellant was not centrally maintained. As such, it was beyond
their power to collect and collate it in order to supply it to the appellant.

Upon hearing the parties, the impression the Commission got
was that the respondents were aware of the shortcomings in the system of renewal
of licences of Public Notaries, which caused unexplained and avoidable delays in
effecting these renewals. There was no centralised monitoring of receipt of
renewal applications, their processing and issue of renewal certificates.

The Commission felt that this is one system which was crying
out for reform. The Commission recommended to the public authority — the
Department of Legal Affairs — to institute a system of centralised monitoring of
receipt, processing and final approval of all applications received from Public
Notaries for renewal of their licences. This information should be placed on the
website in order to enable those whose interest it touched to keep themselves
informed about the progress of their renewal applications. Since the number of
such applications in a year is not more than 500 to 600, there is no reason why
centralised monitoring for it could not be put in place. The effort on the part
of the public authority should be to renew the licences well before the expiry
of the time for which the licences were initially issued. This system will not
only save Public Notaries a good deal of anxiety and botheration, it will help
bring to the system much needed accountability and transparency.

Based on the above, CIC directed the head of the public
authority, viz. Secretary, Department of Legal Affairs, to apprise the
Commission within two months of the receipt of the order as to the action taken
by it in respect of the above recommendation of the Commission [S. 19(8)(a) of
RTI Act].

In the course of the hearing, Mr. Shah also pointed out that
the public authority was required to publish in an Official Gazette all
notary-related information which included the issue of notary licences and their
renewals. This has not been done for the past several years.

The Commission also directed that a notice be issued to the
head of the public authority as to why a compensation of Rs.15,000 (Rupees
fifteen thousand only) not be awarded to the appellant for the detriment
suffered by him.

However, Mr. Shah pointed out that he was not interested in
either imposition of a fine or penalty on the respondents, nor was he interested
in compensation. What he actually wanted was that the system must be so improved
as to free it from its several shortcomings which affected a broad cross-section
of Public Notaries. The Commission appreciated the appellant’s position.

We also appreciate Mr. Dhiresh Shah’s spirit.

[No. CIC/AT/A/2007/01451 of 22-4-2008 : Shri Dhiresh
Shah v. Department of Legal Affairs, Ministry of Law and Justice, New Delhi]

Travel cost of RTI applicant :

This is the case of complaint by Mr. Yogesh Mehta of Mumbai (BCAS
Foundation assists him in his fights from time to time) requesting for penalty
[S. 20(1)] on SEBI and compensation from SEBI [S. 19(8)(b)].

In one RTI application received by SEBI on 6-2-2006,
information was furnished on 14-7-2006. In the other RTI application received by
SEBI on 13-2-2006, information was furnished on 29-9-2006.

The Order of CIC is as under :

The main contention of the respondents (SEBI) is that delay on their part was not intentional and occurred as the requested information was not readily available with SEBI and has to be obtained from BSE. They have emphasised the fact that, as acknowledged by appellant, all information has been provided to him. The respondents have maintained that the information requested by the appellant/complainant, Mr. Yogesh Mehta pertained to several transactions and agencies, collecting and collating the same naturally took time. They have urged that the delays were not without reasonable cause.

On perusing the records and hearing the submissions of both parties, it is decided that no penalty need by imposed on the respondents, because the delay that has occurred in providing the information to the complainant is attributable to the complex nature of the information request

On perusing the records and hearing the sub-missions of both parties, it is decided that no penalty need by imposed on the respondents, because the delay that has occurred in providing the information to the complainant is attributable to the complex nature of the information requested, which needed time-consuming collection and collation process, which brings it within the ambit of ‘reasonable cause’ u/s.20(1) of the RTI Act.

However, the Commission cannot be oblivious to the fact that the delays in this matter have resulted in detriment to the complainant and has impacted the complainant’s rightful claim to timely information under the RTI Act. He has been compelled to attend CIC hearings on several dates at his own cost for pressing his complaints against the respondents. He has suffered avoidable expenditure in doing so. It is, therefore held that the complainant is entitled to a suitable compensation under Section 19(8)(b) of the RTI Act.

In view of the above, it is directed that the public authority, viz. SEBI shall pay an amount of Rs. 10,000 (Rupees Ten Thousand only) as compensation to the complainant within 2 weeks from the date of receipt of this order and intimate the fact of payment to the Commission within 1 week of effecting it. The compensation amount may be paid from the resources of the public authority, viz. SEBI.

[No. ClC/ AT/ A/2006/00591 & 00592 of 26-6-2008 : Mr. Yogesh Mehta v. SEBI]

Income-tax records of a Charitable Trust:
A very significant issue of the concept of personal information vis-a-vis public charitable trust is involved in this case. Mr. J. K. Sachdeva sought information from Directorate General of Income-tax (Exemptions) of one NGO, the Institute of Business Studies and Research, Belapur, Navi Mumbai.

He sought the following information:

a) Have the trustees filed income-tax returns fo;: years 2004-05 and 2005-06 ?

b) If yes, how much income-tax they have paid for the trust? Copies of the audited statements be provided to me.

c) Has all the expenditure incurred by them been for charitable purpose?

d) How much salaries either in cash or in kind/ movable properties been drawn by the trustees?

e) Have they accounted for all the cash amount received as advanced premium from the students?

f) Have they submitted to the department the purchase agreements of all the properties bought in personal name or in the name of trustees? If yes, copies may be provided to me please.

Information was provided for (a) above, but PIa declined to disclose the rest citing exemption u/ s. 8(1)0) read with S. 11(1) of the RTI Act and on re-lying on number of CIC’s decisions in similar cases.

The Commission, however, noted that this appeal is different from other petitions regarding access to income-tax-return-related information, in the sense that the present appeal is about information regarding a public charitable trust. Given the character of a public charitable trust, it is important to decide whether the income-tax-related information of such trust, when all of its activities are open to public scrutiny, at all be allowed to remain confidential. In other words, whether or not to disclose such information will have to be examined in the context of the Indian Trusts Act, 1882 and whether there could be a public interest in disclosure of such information u/s.8(2) of the RTI Act. Applying S. 8(1)(j), which speaks about personal and private information, to a public charitable trust also needs to be closely examined.

The Commission then felt that these matters should be first seen at the level of the public authority (Appellate Authority) given the public authority’s experience in similar matters. Income Tax Commissioners enjoy the power, u/ s.138(b) of the Income-tax Act, to decide whether confidentially held information, such as certain classes of income-tax returns, be disclosed in public interest. A determination regarding whether to disclose in public interest income-tax returns of public charitable trust, is thus quite in order.

In view of the above, the Commission remitted back the matter to the Appellate Authority (AA), Mr. Laxman Das, Director General of Income Tax (Exemptions), with a direction that he shall give a earing to the parties, including the third-party, and take a decision in this matter within 4 weeks from the date of receipt of this Order.

We shall follow up this case with interest as to what is the final decision in the matter (hopefully shall report in BCAJ next issue).

[No. CIC/ AT/ A/2008/00170 of 30-6-2008: Mr. J. K. Sachdeva v. Directorate of Income-tax (Exemptions)]

Part B : The RTI Act

I am of the opinion that S. 4 of the RTI Act, which provides for ‘Obligations of public authorities’, is the most important Section of the Act to achieve its objectives. To enable the public authorities to comply and carry out these obligations effectively, the Act which received the assent of the President of India on 15-6-2005, vide S. 1(3) read with S. 4(1)(b) provided that every public authority shall publish within one hundred and twenty days (i.e., 12-10-2005) from the enactment of this Act (i.e., 15-6-2005) 17 different items of information.

It is the experience of all that many public authorities even more than 32 months after 12-10-2005 have not complied with these obligations.

Conference was held of all CICs and SICs on 17-10-2007. One of the topics of the discussion was:

“Enforcement of S. 4 of the RTI Act and creation of ‘E-Districts”‘. Some of the major recommendations (9 out of 17) of the conference are hereunder listed:

1. The duty of the Government is to pro-actively make available key information to all. The Public Authorities to ensure that all records that are appropriate to be computerised are, within a reasonable time and subject to availability of resources, computerised and connected through a network all over the country on different systems so that access to such records is facilitated.

2. It is suggested that strict directions be issued by the Central Government, that all the State Governments/Public Authorities should fulfil their obligations laid down u/ sA of the RTIAct, 2005. Failing which, it may lead to penal provisions being invoked against such Public Authority. Secretary of the Department may be held responsible in this regard and be clearly held culpable in case of non-compliance of S. 4(1)(b).

3. The Central and State Governments must necessarily make adequate fiscal allocations for computerisation and connectivity from Information Commission level to Mandal/Taluk level Public Authorities, so as to effectively operationalise the provisions of the RTI Act.

4. Standardisation of procedure is a must for the disclosures mandated u/ sA of the Act.

5. Make all Government services accessible to the common man in his locality, through common service delivery outlets and ensure efficiency, transparency and reliability of such services at affordable costs to realise the basic needs of the common man.

6. Citizen-centric approach to delivery of selected (bulk) services through Common Service Centres (CSC) involving back-office enablement, by way of digitisation of relevant records, process redesign and automation of processes/work-flow.

7. Notification of e-District services u/sA(l) of the Act to enable and legally enforce sharing of information as prescribed, electronically.

8. e-District to act as an enabler for facilitating objectives/services relating to RTI being achieved/ delivered. RTI’s legal framework to be leveraged by e-District to make information sharing/ e-services irreversible.

9. Need/feasibility of notifying CSCs as APIOs under the Act.

Part C : Other News

• Personal Information:

Residential phone number, mobile number and e-mail fall under the category of personal information. This was decided by the Information Commission in response to the RTI application seeking such details for the President of India.

• PIO provides false information:

PIO of the Brihanmumbai Municipal Corporation (BMC) replied in response to an RTI query that BMC has already written to SSC Board when asked as to what BMC is doing to make instructions in Tamil medium possible up to class X, which presently is only up to class VII in select BMC schools. Fact is that such letter was not written and was written a few days after such a query was raised. Interesting point is that when BMC Commissioner Jairaj Phatak was informed on this issue, he said: “There must have been some technical error. What they would have meant is that the letter was in the process of being drafted.”

• Cabinet documents:

Mr. Suresh Joshi, SIC, Maharashtra holds the view that u/s.8(1)(i) of the RTI Act, all the documents brought before the State Cabinet are confidential and there is no access to such documents under the RTI. The senior official in the Secretariat also says “Once decisions are taken, we will issue specific orders. However, applicants are asking for the cabinet note, which contains stringent remarks on all the departments. In our opinion, such documents should not be made public.”

However, it is the view of the Central Information Commission that all file notings are available for access in the RTI. Further, S. 8(1)(i) which provides for exemption also has proviso thereto restricting the exemption. Clause with two provisos is as under:

8(1)(i): Cabinet papers including records of deliberations of the Council of Ministers, Secretaries and other officers:

Provided that the decisions of Council of Ministers, the reasons thereof, and the material on the basis of which the decisions were taken shall be made public after the decision has been taken, and the matter is complete, or over:

Provided further that those matters which come under the exemptions specified in this Section shall not be disclosed.

• Information on FIls under the RTI Act:

Acting on an RTI appeal over SEBI’s denial to divulge details on yearly net investment figures by each FII during 2005, 2006 and 2007, the apex information panel has asked SEBI to consult other stake-holders like the Finance Ministry, the RBI and over 800 FII and decide on the matter afresh. SEBI has to take a call on this matter within two months.

While issuing the order, Information Commissioner, A. N. Tiwari said: “SEBI would examine the matter closely in terms of extant practices/instructions, consult all or a section of stakeholders, examine international practices and obtain views of top functionaries in the field and the Government, before formulating a response.”

Even as the Commission had brought stock exchanges under the RTI last year, the Bombay Stock Exchange and the National Stock Exchange havo challenged it before the Courts. Ironically, in that case the SEBI stood against the Finance Ministry to argue that bourses should be brought under the transparency law.

Air-travel on Air India of high-profile passengers:
Air India has requested the Government to exempt travel information on high-profile passengers -like politicians, businessman and film stars – from being divulged under the Right to Information (RTI) Act as it would hamper its business interests.

In the request made, it is stated: Aviation is a competitive industry and only Air India is covered under the RTI. We will lose out on business interests if we give out details.

Air India is also troubled with a recent query by a TV channel on how Judges were holidaying at public expense, which class the Judge (and his wife) travelled. According to some report, “The Chief Justice of India, K. V. Balkrishnan, made seven tripss abroad in 2007 travelling first class with his wife at Rs.39 lakh (air fare) – something that no other airline would ever divulge.”

BCAJ Admin

Right to Information

Part A : Decisions of CIC

S. 27 and S. 28 r.w. S. 2(e) of the RTI Act :

Issue before the M.P. High Court was whether any public authority can make its own rules and prescribe thereby the fees to be paid for issue of information and copies of documents, etc.

Cantonment Board, Jabalpur (CBJ) passed the resolution and prescribed the fees to be paid under the RTI Act. Under it, fees prescribed were Rs.50 per page of A4 size (against Rs.2 as prescribed in the Central Government RTI rules).

The appellant was asked to deposit Rs.650 towards cost of providing information sought. He accordingly filed a writ. Before the Court, CBJ contended : “The Cantonment Board, Jabalpur has determined the schedule of fees looking to the schedule adopted by the M.P. Government and the Hon’ble High Court of M.P. The Cantonment Board, Jabalpur had done so as the expenses incurred in issuing copies and information were much higher than the fees being paid by the applicants seeking information. The Cantonment Board, Jabalpur being a local body akin to the Municipal Corporation adopted the schedule of fees existing for the Municipal Corporation in the State of M.P”.

Further, it was contended that the information is sought at times from various old records more than 50 years old. It requires involvement of staff which is already short. Considering these and various other aspects, reasonable cost for providing information has been prescribed vide Resolution No. 37, dated 20-12-2005, which is within the powers of the Cantonment Board, Jabalpur being municipal body. It has been mentioned specifically that the High Court has fixed minimum fees of Rs.50 per application in case of general application and Rs.500 in case of information related to tenders, documents, bids, business regulations and the actual cost of medium or printing cost price in case of other documents vide No. 15-R(J), dated 10-1-2006, copy of which is on records as Annexure R/2. However, during pendency of the writ petition, the Cantonment Board, Jabalpur acceded to the request of various sections of people and withdrew Resolution No. 37, dated 20-12-2005 vide Resolution No. 6, dated 13-9-2007. Accordingly, it is contended that the petition has been rendered infructuous.

The Court noted that although the resolution in question has already been withdrawn, in view of the stand taken by the respondents that the Resolution No. 37 was rightly passed and further in view of the relief for refund of costs it is thought proper to decide the issue raised herein.

It has been contended by the respondents that the Cantonment Board is a local body like Municipal Council and is well competent to make the rules regarding fees and costs as made by the Court. Suffice to say that the Chief Justice of the High Court is a competent authority within the ambit of definition as contained in S. 2(e) of the Act and therefore, by virtue of S. 28 it has powers to make rules with regard to fees and cost in exercise of powers under S. 28 of the Act. The Cantonment Board, Jabalpur being outside the purview of the term ‘Competent Authority’ within the meaning of S. 2(e) of the Act is not competent like the Chief Justice of High Court to make rules. In this view of the matter, the subject Resolution No. 37, dated 20-12-2005 was without any power and had no legal sanctity. Reliance on the prescription of fee and cost by the High Court is absolutely incorrect and misconceived. Since Resolution No. 37 has already been withdrawn, it is not required to be quashed.

Accordingly, the Court ruled that money received in excess is illegal and by no stretch of imagination it can be retained by CBJ contrary to their entitlement and CBJ was directed to refund the excess money out of the amount deposited by the applicant.

[2009 (1) ID 144 (M.P. High Court) : Amar Chand Bawaria v. Union of India and Others, W.P. No. 9264 of 2007, decided on 5-9-2008]

? Penalty – Reasonable cause Here, in this case, penalty of Rs.10,000 was imposed on the State PIO, S. P. Arora, estate officer of HUDA to be recovered in four monthly instalments for the lapse on his part for delay in furnishing the information. The Commission had also imposed a cost of Rs.2000 on account of considerable harassment to the applicant of the information.

The facts of the case were : The sequence of the events would show that the information was sought on 29-1-2007 on one plot when the file of the plot in question was lying with the Bank. The file was received back on 22-2-2007, but again sent to the Bank on 13-3-2007. The same was received on 30-3-2007 and information was supplied on 10-4-2007.

The Court held : “The penalty can be imposed only if there is no reasonable cause for not furnishing the information within the period of 30 days. The word ‘reasonable’ has to be examined in the manner which a normal person would consider it to be reasonable. The right to seek information is not to be extended to the extent that even if the file is not available for the good reasons, still steps are required to be taken by the officer to procure the file and to supply information. The information is required to be supplied within 30 days only if the record is available with the office. The inference cannot be drawn of the absence of reasonable cause for the reason that file could have been requisitioned back from the Bank. Since file was not available with the office, the inference drawn does not seem to be justified.”

In view thereof, the Court was of the opinion that the order of imposing penalty on the petitioner is not sustainable in law. Consequently, the writ petition was allowed. The impugned order passed by the State Public Information Commission was set aside.

[2009 (1) ID 1 (Pb & Hry. High Court) : S. P. Arora, SPIO Cum Estate Officer, HUDA v. State Information Commission, Haryana and Others, CWP No. 15288 of 2007, decided on : 17-10-2008]

Part B: The RTI Act

Standing Committee of the Parliament on RTI Act, 2005:

In February 2009, two items were reported:

1. Level of awareness.

2. Use and misuse of the RTI Act.

In March 2009, another two items were reported:

1. Reduction of 20 years period for keeping docu-ments.

2. Voluntary disclosures.

Hereunder further 3 items:

Changes in S. 8 :

Though provisions u/ s.8 are all reasonable, one of the most misused Section of the Act, as seen through our study, is S. 7(9). This Section says that information shall ordinarily be provided in the form in which it is sought, unless it would disproportionately divert the resources of the public authority. Unfortunately, many government departments are hiding behind this Section to deny all sorts of information even though a close reading of the Section would make it clear that it does not allow you to deny any information, but only allows you to give it out instead in the form available. A circular from the Department of Personnel and Training has confounded the confusion further. Therefore, a clarification needs to be issued through all Information Commissions that this Section of the Act cannot be used to deny information, but only allows the PA to give asked-for information in the form available, rather than in the form asked for.

Another Section that is being misused to deny in-formation is S. 11(1). Again, a close reading of this Section makes it clear that:

(i) Only that information can be considered third-party under this Section, which has been treated as confidential by the third party. Therefore, all information about a third party does not come under this Section.

(ii) That even third-party information of this type cannot be withheld unless it is exempt u/ s.8 (1).

This Section of the Act is intended to give the concerned third party an opportunity to try and convince the PIa that the information asked for is exempt under one of the subsections of S. 8(1) or S. 9. Therefore, it obligates the PIO to give an opportunity to be heard to the third party.

However many PIOs are rejecting information that pertains to a third party even when it is not considered confidential by that third party, and without giving any notice to the third party or giving any ground for rejection u/s.8(1) or u/s.9, as required.

Penalties :

Though the quantum of penalty prescribed is appropriate for the present, unfortunately there is no inbuilt provision for it to be automatically enhanced. Therefore, it would be useful to have a provision, which raises the quantum of penalty on an annual basis, to keep pace with inflation.

The prescription that Rs.250 per day should be imposed as penalty might be appropriate for cases of delay, but is not appropriate for other categories of offences, like refusal to accept application, wrong-ful denial, giving false information, destroying information, etc. These offences cannot be measured in days. Therefore, it would be more appropriate if for these offences a minimum and a maximum penalty was prescribed, giving discretion of the quantum to the Commissioner. These could be a minimum of Rs.5,OOO and a maximum of Rs.50,000 to be raised in keeping with inflation.

It is also important that penalties should be imposable on public authorities if they violate the RTIAct. So, for example, a public authority that does not comply with S. 4 (suo moto) declaration provisions, or does not appoint PIOs and APIOs, or in any way violates the provisions of the RTI Act, should also be required to pay a penalty of a minimum of Rs.25,OOO and a maximum of Rs.5 lakhs.

Use of the RTI Act and refusal of information:

We have used the RTI Act over three hundred times in the last three years. A bulk of this has been as a part of our study to assess the implementation of the RTI Act. However, there are many other instances where we have filed RTI. One interesting case, where information was denied to us, related to our request for access to records regarding the appoint-ment of the Chief Information Commissioner and other Central Information Commissioners in 2005. Though the Central Information Commission or-dered that this information be given to us, it never was and our review petition with the Information Commission is pending for over a year.

We had also applied to the Prime Minister’s Office and to the Department of Personnel and Training for access to records pertaining to the Cabinet decision, in 2006, to amend the RTI Act. This was also denied to us because the Government claimed that as the matter was not yet over and was still under consideration of the Cabinet, it was exempt from disclosure.

Part C : Other News I

RTI helps physically-challenged youth:

K. Sudalai, a physically-challenged youth of Palayamkottai in Tirunelveli district, might soon join the Tamil Nadu State Transport Corporation (TNSTC) as a bus conductor, thanks to the Right to Information (RTI) Act, 2005.

He had completed standard X in 1996 and possessed a conductor’s licence issued by the Regional Transport Authority. However, his name did not find place in the list of candidates eligible to apply for the post of bus conductor in Madurai Division of TNSTC.

When his enquiry as to why he was dropped from the selection despite necessary qualifications was not replied to, he submitted an application under the RTI Act. In reply, he was informed that physically-challenged persons were not fit to be appointed as conductors.

The reply helped the youngster file a writ petition in the Madras High Court to consider his candidature as enunciated in Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995.

Justice K. Venkataraman pointed out that as per the Notification published in the Union Gazette on March IS, 2007, bus conductor was one of the jobs that could be occupied by persons with orthopedic disabili ties.

He agreed with petitioner’s counsel G. Prabhu Rajadurai that there was no reason for the Madurai Division to reject physically challenged persons to the post of conductor when other Divisions were not doing so.

The Judge directed TNSTC to consider the petitioners’ plea within four weeks.

Disclosure of Ministers’ assets:

The controversial issue of disclosure of Ministers’ assets has been hanging fire for over a year. Applicant Subhash Chandra Agarwal had asked for information related to assets of Union Ministers and their kin.

In his order, Chief Information Commissioner Wajahat Habibullah said “the information is not disclosable except with the permission of the Speaker”. This is with reference to the disclosure of information related to Ministers who are LS members. If there is any equivalent rule with regard to the Rajya Sabha, this may also be exercised. The CIC has stipulated a time period of 30 days.

According to sources, there has been precedent when the Speaker has allowed disclosure of assets of LS members. Rules framed by the Parliament committee stipulate that LS members must submit assets in a sealed cover to the Speaker. The information is kept confidential till such time the Speaker deems fit. So far, the Government has been reluctant to part with the information and the PMO holds the view that information sought is exempt u/ s.8 of the RTI Act.

Compliance of S. 4 of the RTI Act:

Maharashtra Information Commission receives the highest number of appeals in this country. Nearly, 16000 appeals and complaints are pending before the State Commission, some of them as old as of 2006. It appears that if the inflow as is presently continues, it will never be able to cope with reduc-ing the pendency. Hence, SCIC Dr. Suresh Joshi has urged State Chief Secretary Johny Joseph to ensure that public servants uphold the spirit of implementation of the RTI Act. In a letter dated February 25, 2009, Joshi warns Public Information Officers (PIa) to implement RTI Act in its true spirit or face action.

In his letter, he writes: “We get the maximum RTI applications in the world and there is no reason why we should not be judged as the most transparent State. PIOs are the fulcrum of the Act. If they do not discharge their responsibilities properly, then there is a fine. If the PIa does not give information on time, it means he is a willful defaulter. He cannot then say tha”the did not know the Act or that he was not trained. We will strictly implement the procedure of the Act”.

Information on selection of Judges:

The Delhi High Court has stayed an order of the Central Information Commission (CIC) asking the Government to disclose documents on the appointment of the Himachal Pradesh Chief Justice, after the Centre pleaded that such information about Judges can’t be revealed under the RTI Act.

Challenging the CIC order that had asked the Govt. to reveal documents and file notings on the appointment of Himachal CJ Jagdish Bhalla, whose promotion file was returned by the then President A. P. J. Abdul Kalam in 2007, Additional Solicitor General P. P. Malhotra pleaded that such information was beyond the RTI purview. Justice S. Ravindra Bhat, after hearing his contention, stayed the CIC order and issued a notice to the RTI applicant on whose plea the Commission had passed the direction.

Numbers at CIC :

The following are the disposals of appeals/complaints at the Central Information Commission from October 2008 to January 2009 :

Losses of State transport vehicles due to riots:

Data available with the Times of India (Tal), accessed through the Right to Information (RTI) Act, shows that the Maharashtra State Road Transport Corporation (MSRTC) incurred damages of around Rs.3 crore in various riots that broke out in different parts of the State in the 32 months between April 2006 and November 2008.

The recent Bombay High Court observation, saying leaders of rioting political parties should be made to pay for their supporters’ violence, has come as a shot in the arm for the transport utilities. MSRTC Vice-Chairman O. P. Gupta told TOI “the transport utility would cite the recent Court order that put the onus on political outfits to pay for damages. The political parties should be made responsible and pay up for the damages incurred”.

VIP Gifts:

The Central Information Commission has given the Ministry of External Affairs (MEA) 20 days to disclose the system of assessing gifts received by ‘political rulers’ and constitutional authorities, including the President of India, the Prime Minister and Judges of higher courts from foreign countries. Information Commissioner Annapurna Dixit directed the Central Public Information Officer of MEA to provide information about how the assessment of these gifts is done and the list of protocol order.

The decision came on an appeal filed by S. C. Agarwal seeking information on the “system fol-lowed on gifts received from foreign countries” by constitutional authorities and others, including the President, Vice-President, LS Speaker, PM, Ministers, Governors, Judges of higher courts, chiefs of three services and others in the protocol list. The appeal also sought a disclosure on whether these gifts were in their official capacity or kept in personal custody or deposited with the Government.

BCAJ Admin

Right To Information

r2i

CIC’s decisions :

Schools, aided or otherwise, are covered under RTI :

In one interesting case, the Central Information Commission,
vide its order dated 18-5-2007, had directed the Directorate of Education, GNCT
of Delhi to obtain u/s.2(f) of the Act, the minutes of the Managing Committee
(MC) meetings from March 2002 to March 2007 from the Purna Prajna Public School,
Vasant Kunj, New Delhi and provide a copy to the appellant, Shri D. K. Chopra.
Subsequently, the ap-pellant informed the Commission that the PIO had not
complied with the above decision and when asked about it, the PIO stated that he
had no legal authority to obtain the information from the school.

The PIO at the hearing in this adjunct matter reiterated that
under the Delhi Education Act, the documents which could be obtained are
specified under Annexure-II in which the document, namely, minutes of the
meeting of the Managing Committee of schools is not included. The Department of
Education was therefore unable to acquire the minutes of the Managing Committee
from the concerned school as directed by the Commission. Though an official of
the respondent is a member of the MC, the PIO has, however, no access to the
minutes of MC.

In the decision, the Information Commissioner noted :

r
A major objective of the RTI Act is to ensure transparency and accountability in
functioning of the institutions, particularly the service providers that have
considerable interface with a larger section of people. The documents, in
question, contain such information that foretell about the health and vitality
of the schools which are responsible for preparing our children to lead the
nation. Moreover, the information asked for is an outcome of deliberations of
the major stakeholders — school authorities, teachers, representatives of PTA
and the Government of Delhi. The minutes of MCs are thus already in public
domain, as these are circulated among the members. How can it be treated as
confidential or secret ? Unfortunately, the Principal of the school and the PIO
have connived to withhold the minutes of the MCs for reasons that contravene
with the larger purpose of creating an information regime for good governance.

r
All the aided or unaided schools are performing
governmental functions to promote high quality of relevant education. An
official of the GNCT of Delhi is nominated by the Directorate of Education as a
member of the Management Committee of all the schools. The nominated member of
the Directorate of Education is therefore the custodian of the minutes of the
MCs u/s.5(4) of the RTI Act. And, there is no reason why such minutes,
reflecting the aspects of governance of the school, should not be put in public
domain. The Government has the control on the functioning of the schools and,
therefore, it has access to the information asked for. And, so has a citizen.

r
Not only the land allotted to private educational institutes is provided at
subsidised rates, but also the fees paid by the students/parents enjoy
income-tax concession. There is thus some element of indirect Government funding
in the activities of even private and un-aided schools. In view of this, the
respondent, which is represented through its officials on the Managing
Committee, is surely the custodian of the information asked for by the
appellant. The decisions of the MCs have significant bearing on the life and
career of the students as well as their parents/guardians and, therefore, there
is no reason why the minutes of the Managing Committee should not be disclosed
to the affected persons i.e., the citizens.

r
The PIO’s contention that the minutes of the MCs are not included in Annexure-II
of the Delhi Education Act and, therefore, he cannot acquire them is not
acceptable, as S. 22 of the RTI Act, 2005 has an overriding effect on all such
provisions that come in the way of promotion of transparency in functioning of
the schools, the activities of which are governmental in nature. The PIO is
directed again to furnish the information at the earliest under intimation to
the Commission.

r
In view of lackadaisical attitude of the concerned PIO and the principal of the
school towards the implementation of the RTI Act, the Commis-sion’s order dated
18-5-2007 has not been compiled with, which is unfortunate. The Director (Edu.),
Directorate of Education, GNCT of Delhi is therefore directed to initiate
appropriate action against the school, including cancellation/withdrawal of its
recognition, as the school has chosen to function in a manner which is not duly
transparent and is, thus, inconsistent with the ethos and purpose of the RTI
Act. An action taken report should be submitted to the Commission at the
earliest.

From the above decision, one can conclude that schools,
whether aided or otherwise, are covered under the RTI Act.

(Shri D. K. Chopra v. Directorate of Education, GNCT
of Delhi : Decision under F. No. CIC/MA/A/2007/00104 of 12-9-2007)

The RTI Act :

Chapter 4 of the Annual Report 2005-06 as published by the
Central Information Commission deals with overview of implementation of the RTI
Act, 2005.

It is a report u/s.25 of the RTI Act on the implementation of
the provisions of this Act during the year 2005-06 (for the period from
12-10-2005 to 31-3-2006).

The implementation report (IR) is made up of various charts and tables. It is interesting to note that in many aspects, the Ministry of Finance tops the chart, some noted as under:

Further, statistics show that out of 4770 requests received by the Ministry of Finance (which forms at least 20% of the total RTI requests in the year) they rejected 1748, which forms 51.6% of all the rejected applications in the year.

This disproportionately high ratio of rejection calls for introspection and training of the staff of public authorities under this Ministry in disposing of the RTI requests.

It seems that out of total 24436 RTI applications furnished in the year (as above) ended 31-3-2006, only 451 went for second appeal to the Central Information Commission (CIC). It disposed of 441 of them. CIC also received 252 complaints u/s. 18; it disposed of 241 of them as on 31-3-2006.

Other News

Mere existence of an investigation, no ground for refusal of information:

Recently, the Delhi HC strengthened the RTI law by interpreting its provisions. Justice S. Ravindra Bhat said: a person who has been accused of dowry demand by a woman or her parents is entitled to get information about the details of income-tax returns filed by the complainant.

One Bhagat Singh, who had been charged by his wife with demanding dowry, sought information about the complainant’s tax returns to prove that the latter spent money on the wedding from unknown sources or had concealed wealth. Any expenditure on marriage must be listed and the source of wealth accounted for.

It is apparent that the mere existence of an investigation process cannot be a ground for refusal of information. The authority withholding information must show satisfactory reasons as to why the release of such information would hamper the investigation process. Such reasons should be germane, and the opinion of the process being hampered should be reasonable and based on some material. Without this consideration, S. 8 and other such provisions would become the haven for dodging demands for information. Moreover, rights-based enactment is akin to a welfare measure and it should be open to liberal interpretation. Otherwise a social act becomes unsocial.

Editorial in DNA:

Given India’s notorious red-tapism, corruption and lack of official accountability, the importance of the Right to Information Act (RTI) cannot be overestimated. Since the RTI was implemented in October 2005, Indians have taken to it in a big way, sensing an opportunity to get information on matters critical to their local communities and to citizens in general.

The bigger problem is that the bureaucracy has still not fully come to terms with the full import of RTI, or if it has, then there have been attempts to ignore it. We have heard of all kinds of impediments, from the silly to the sinister, that are put in the way of the applicant. Then there are departments and ministries which find various excuses to stay out of the ambit of the RTI Act; in one recent case even the PMO was cagey about giving information on the disappearance of Subhas Chandra Bose. India has no law like in the US where archival material automatically comes into the public domain after 30 years. Most citizens will want information on things that touch their lives; but the general principle of openness should apply everywhere, and that is not happening.

Dial up for RTI :

The year 2008 may ring in Right to Information (RTI) on telephone as the Central Information Commission (CIC) has a proposal to open a call centre in Delhi for facilitation of RTI use.

In Bihar, a call centre has been in operation since january 2007. In case of information provided on telephone, the fee stipulated for the use of RTI is added to the telephone bill of the information seeker. .

The centre will also intensify the campaign to train and sensitise designated Public Information Officers on the RTI Act. Till now, only 10 percent of information officers and other government officials have been trained. The officers are being trained in Administrative Training Institutes in different states. These one-day to three-day courses have been devised by Yashada in Pune, Centre for Good Governance in Hyderabad and Institute of Secretarial Training and Management in Delhi.

The Chief Minister’s Relief Fund:

In this feature in February 2008, a small news item was given on this fund. Now the Chief Minister has conceded to get CM Relief Fund covered under the RTI Act. The disclosure obtained under the RTI application has shocked the citizens of the State.

The fund, which lists assisting people trapped in natural disasters as its sole objective, was registered with the Charity Commissioner in 1967. The RTI query has now revealed that a large part of the Rs.50 crore or thereabouts which the CM’s office received in donations between 2003 and 2005 (when first Sushilkumar Shinde and then Vilasrao Deshrnukh were at the helm) went to events conducted by institutions that were in no way related to calamities and disasters.

All details disclosed show blatant misuse of funds.

RTI v. Courts and Legislative Bodies:

Right from inception of the RTIAct, there have been ongoing debates regarding powers of RTI Information Commissioners v. the powers of the Court Judges. Now conflicts have started between RTI Information Commissioners and the State Legislative Assembly. Taking serious note of the issue of notices to the Vidhan Sabha Principal Secretary by the UP Information Commission, the State Assembly resolved that any such summons will be considered a violation of the privileges of the House and necessary action will follow.

The decision of the House comes in the wake of the issuance of two notices by the Commission to the Principal Secretary R. P. Pandey on two petitions to the panel.

In both cases, the Secretary had pleaded that the House was not covered under the Act. On this, the applicants approached the State Information Commission, which in turn issued notices to Pandey. Meanwhile, both matters had been referred to the privileges committee, though one of the notices was later cancelled by the Commission.

Mumbai gets first Information Commissioner:

Ramanand Tiwari is appointed as SIC stationed in Mumbai. It may be interesting to note that only 5% of SICs and CICs are non-bureaucrats, one of them is SIC for Pune division, Vijay Kuwalekar, who is a senior journalist.

ATM operation:

Commercial banks cannot be compelled under the Right to Information (RTI) Act to divulge the operational details of their ATMs installed across cities, the Central Information Commission (CIC) has ruled. “Information pertaining to operation of ATMs is really a matter of commercial confidence. As a matter of fact, a lot of security is involved in such a procedure and such information cannot be given to any outsider,” CIC’s Information Commissioner Padma Balasubramanian held in a ruling on January 29.

Fanners’ suicide:

According to information obtained under the RTI Act, more than 800 farmers committed suicide in the first six months of 2007.

The agrarian crisis has forced 607 farmers to commit suicide in Maharashtra, while 114 have ended lives in Andhra Pradesh. Seventy-three have killed themselves in Kamataka and 13 cases were reported from Kerala in the first half of the last year alone, the information revealed. This despite NDA-ruled States like Punjab and Gujarat having failed to furnish details about the number of farmer suicides to the Union Agriculture Department.

BCAJ Admin

Right to Information

r2i

Part A : Decisions of CIC and SIC

Provisions of S. 19(8) of the RTI Act :

S. 19(8) provides for the powers of the Information
Commissions and includes the power to require the public authority to compensate
the complainant for any loss or other detriment suffered.

An interesting case came up before the State Information
Commission, Goa. Mr. Harihar Chodankar, Mapusa, Bardez, Goa made an RTI
application seeking information of certain details of conservations in different
properties within the jurisdiction of the Calangute Village Panchayat.
Application was rejected by PIO u/s.8(j) of the RTI Act. The first appellate
authority directed PIO to give the information within 15 days. PIO still did not
furnish the information. Hence Mr. Chodankar made a complaint to SIC, Goa u/s.18
of the RTI Act. Even under proceedings before SIC, the PIO went on taking
adjournments and finally wrote to Mr. Chodankar that documents requested are not
available and files not traceable; only in respect of one property, part of the
information was furnished.

SIC then ruled that there is a willful disobedience by PIO.
However as in one year a number of individuals had occupied the position of PIO,
it was difficult to find out who in particular is responsible for the defaults.
SIC, therefore directed the Director of Panchayats to hold an inquiry, fix up
responsibility for missing records in this case and initiate disciplinary
proceedings against the persons found responsible. He directed the Director to
file compliance report to the Commission in six months time.

SIC further noted : “As the appellant/complainant was put to
considerable hardship and also this not being the first case the Village
Panchayat has misplaced its records, we consider it proper to award compensation
to the appellant/complainant in exercise of powers vested in us u/s.19(8) of the
RTI Act. However, as the High Court in a writ petition No. 327/2007, is seized
of the jurisdiction of this Commission to award compensation u/s.19(8) in a
complaint proceeding u/s.18 of the RTI Act, we restrain ourselves from awarding
the compensation.

We shall await to find out what the High Court decides about
the powers u/s.19(8) as CIC has already awarded compensation to the complainant
u/s. 19(8). (See BCAJ : August 2008). No information available whether SEBI who
has to pay this compensation has gone in writ.

[2008 (2) ID 157 (SIC, Goa) : Mr. Harihar Chodankar,
Mapusa, Goa v. PIO, Secretary, Village Panchayat of Calangute, Goa and the
first AA, BDO, Goa]

Fee for certified copy of the information :

Very often at the RTI Clinic of BCAS Foundation, individuals
come to enquire as to what fees are payable for certified copies of the
documents under the RTI Act. The rules provide fee for copies of the document.
Under the RTI (Regulation of fees and cost) Rules of the Central Government, it
is Rs.2 for each page (in A4 or A3 size paper) created or copied. The same is
the fee in the rules of many states. However, there is no rule providing for
fees for certified copies.

Before SIC, Maharashtra, Mr. Bomi Mistry made a complaint
that BMC has been charging fees for certified copies which are not in consonance
with the RTI Act.

However in view of what the Rules provide, SIC (Dr. Suresh
Joshi, CIC) has ruled as under :

Rule 4 does not prescribe the fees for certified copies, therefore, if an
appellant needs certified copies, whatever rates are prescribed by BMC for
certified copies should be charged.

At many places under BMC schedule of rates separate rates for copy and
separate rates for attestation has been mentioned. In such case, for a copy
the fee prescribed under rule 4(b) i.e., Rs.2 per page, etc. should be
charged and for attestation the fees prescribed under schedule of rates of BMC
should be charged.

[Shri Bomi Mistry, Mumbai v. PIO, Assessment and
Collection Department, MCGM, Head Office, Mumbai]

Whether Co-operative Societies are covered under the RTI Act :

Hundreds of individuals have raised this issue. It is
understood that SIC in Maharashtra generally rules that as such the co-operative
societies are not covered, but the information which the societies are required
to file with the Registrar of Co-operative Societies can be accessed from his
office and no information beyond it.

However, there has been a decision, extensively discussing
the issue, running into 42 pages of Gujarat Information Commission on this
subject. The decision/order reads as under :

(i) All co-operative societies registered under the Gujarat State Co-operative Societies Act, 1961 are bodies controlled falling within the ambit of the definition of ‘public authority’ given at S. 2(h)(i) of the Right to Information Act, 2005 and, therefore, are public authorities.

(ii) All co-operative banks since all such banks are registered as co-operative societies are also bodies controlled falling within the ambit of the definition of ‘public authority’ given at S. 2(h)(i) of the Right to Information Act, 2005 and, therefore, are public authorities.

(iii) In view of the above decision, all co-operative societies and co-operative banks are required to abide by the relevant provisions of the Right to Information Act, 2005, particularly Chapter II thereof, dealing with obligations of public authorities, including providing information to the citizens, subject to the provisions contained in S. 8(1), S. 9 and S. 10 of the Right to Information Act, 2005.

The decision is challenged and pending before the Gujarat High Court.

Part B : The RTI Act

The RTI Act is by now a three-year young Act, powerful and bringing solutions to many ills in society. However, no statistics of its implementation are available. It is funny to say that the Act to provide information does not provide information for its implementation! There have been many key issues and constraints in its implementation. In order to study the same, the Government of India, Department of Personnel and Training, in the Ministry of Personnel, Public Grievances and Pensions have appointed Price Waterhouse Coopers Private Limited to conduct a study. PWC has issued a separate questionnaire for feedback from each of the six stakeholders identified by them.

Answers to these questionnaires shall provide to PWC various missing, unavailable information and views of the information providers and information seekers.

Some of the information, very essential to assess the success of the Act, but not available are:

How many Public Authorities (AA) exist, how many of them have complied with their obligations.

How many PIOs and AAs are there in these PAs.

How many applications are made each year, how many go to the first AA and how many then give up and do not go for the second appeal to CIC/SIC.

What is the level of awareness of the RTI Act in urban areas and rural communities.

What are the major difficulties faced by information seekers in filing RTI applications, level of satisfaction or otherwise.

Similarly, what are the major complaints of PIOs in terms of their obligations, time-bound responsibilities to attend to RTI applications along with other duties assigned to them.

Let us hope that the study enlightens various stakeholders – Governments, Information Commissions, Public Authorities, Public Information Officers/ Appellate Authorities, Nodal Agencies (appointed for training of PIOs, etc. and awareness building) information seekers, RTI activists, media, etc.

Part C : Other News

• RTI Helpline :

RTI activists in many cities of India run RTI helpline. Telephone helplines today are an increasingly common part of communication. They are very easy, less expensive and fastest medium of communication in India. With the advent of mobile phone, every 4th/ 5th citizen has access to mobile.

The Public Concern for Governance Trust’s (PCGT) Right To Information (RTI) Helpline in MUMBAI, launched on 2nd October, is purported to be an effective initiative of dealing with governance issues in which large number of people need personal counselling or information for filing RTI applica-tions. RTI Helpline could answer basic questions such as: what is the fee for filing applications, how to pay fees for an RTI application, among other things.

The main goal of PCGT’s RTI Helpline is to inform the public of the many issues of governance that we as a society face today, while also encouraging the citizenry to take up the struggle for governance at individual level. As Mahatma Gandhi said, “The real Swaraj will come not by the acquisition of authority by a few, but the acquisition of capacity by all to resist authority when abused”.

PCGT’s RTI Helpline – 93228822881

RTI – on wheels:

An RTI-on-wheels facility started by the Gujarat Mahiti Adhikar Pahel, an NGO in Gujarat, was showcased in Mumbai and Pune by PCGT from 27th to 30th September. The mobile van is equipped with an LCD projector, screen and computer with internet, scanner, printer, copier and a small library. The vehicle showed films on RTI, distributed pamphlets and assisted people in filing RTI applications.

Thousands of individuals in Mumbai and Pune benefitted by the visit of this unique van to Maharashtra.

Mumbai has lost more than 25000 trees:

Data obtained under the Right to Information Act revealed that the Tree Authority had collected deposits of Rs.9,24,19,OOOfor granting permissions for removal of trees up to March 2006. In subsequent period, further deposit of around Rs.2 crores is received.

Nominated member of the Tree Authority Nilesh Baxi said, “One. thing is certain – out of around 30,000 trees transplanted since 2000, not more than a couple survived. To assume that 25,000 have not been replanted because refunds of the massive deposits are not claimed is one inference. But, in many cases, small-time builders who transplant trees don’t reclaim the amount after getting the no-objection certificate.

RTI Appeals on BMC:

It is learnt that one Assistant Commissioner of Municipal Corporation of Greater Mumbai never even bothered to look at the pending 67 RTIappeals, a blatant violation of the RTI Act.

Penalty for delay in answering RTI application:

The Maharashtra State Information Commissioner, Suresh Joshi has penalised PIa, attached to crime branch’s economic offences wing, for not providing information under the RTI Act within the stipulated period. In his order, [oshi directed that Rs.2,750 should be deducted from PIa S. B. Mohite’s salary as he provided the required information after a delay of 11 days.

Special Report in MIDDAY:

On 12th October 2008, The Right to Information Act completes three years. On this occasion, MIDDAY brought out a two-page special report which I had a privilege to edit. The report is available at BCAS Library for anyone to read. It contains articles by Arvind Kejriwal, Shailesh Gandhi, Julio Ribeiro and myself and one interesting story of 14-year young filing RTI application and bringing facilities to the town he resides in and much useful information.

BCAJ Admin

Limited Liability Partnerships

We continue our examination of various laws and the issues arising therein in respect to an LLP.

1. Infrastructure projects :

1.1 Can an LLP be an SEZ Developer under the Special Economic Zone Act, 2005 ? S. 2(g) of this Act defines the term developer to mean a person who has been granted a letter of approval. S. 2(v) of the Act defines a person to include a company, a firm, an association of persons or body of individuals, whether incorporated or not. An LLP is none of the above but it is a ‘body corporate’. Again an amendment to the SEZ Act would be highly desirable to accommodate LLPs.

1.2 Can an LLP be the entity for developing, operating, maintaining an infrastructure facility such as a road, port, rail, airport, industrial park, etc. ? S. 80-IA(4) of the Income-tax Act which provides for the income-tax deduction specifies that the infrastructure facility must be owned by a company or a corporation or a body established under a Central or State Act. An LLP is none of these. However, if one looks at the Industrial Park Scheme, 2008 and Form IPS-1, then there is no restriction in the Scheme that the entity must be only a company.

2. Consolidation of accounts :

2.1 The LLP Act allows a company to become a partner in an LLP. What if the company owns more than 50% of the voting power of the LLP or controls the composition of the governing body of the LLP ? The issue is : Whether Consolidation of Accounts will be required ?

2.2 Accounting Standard 21 on Consolidated Financial Statements prescribed under the Companies (Accounting Standard) Rules, 2006, speaks about control by a company over an enterprise which may or may not be a company. Hence, the accounts of any entity over which the company exercises control should be consolidated with that of the parent.

2.3 The Expert Advisory Committee of the Institute of Chartered Accountants of India has given an opinion as regards investment by a company in a partnership firm. It opined that if a company is required to prepare consolidated financial statements (CFS) under any statute or it does so voluntarily, then the consolidation should be done in accordance with AS-21 by consolidating the financial statements of the firm with that of the company. The same EAC Opinion should hold good for an LLP.

3. Takeover regulations :

3.1 Reg. 3(1)(k) of the SEBI Takeover Regulations, 1997, exempts an Acquirer from making a Public Announcement in the case of acquisitions of voting power in an unlisted company. However, if the unlisted company is in control of a listed company and by virtue of the acquisition of the unlisted company, the acquirer acquires shares/voting power/control over a listed company, then the acquirer is required to make an offer for the listed company’s shares.

3.2 Now, if a person acquires ‘control’ over an LLP (by virtue of change of partnership in an LLP or otherwise) and the LLP owns shares/voting power/control over a listed company, whether any change in the Partners of the LLP would trigger the provisions of the Takeover Code ? As LLP is not expressly covered by the R.3(1)(k), as it talks about only a company, hence, it is a moot point whether any change in the control of an LLP leading to change in control of a listed company would require a Public Announcement.

4. SARFAESI Act :

4.1 One of the aspects of SARFAESI Act is Enforcement of security interest by banks/financial institution for recovery of a secured debt from a borrower in case of default in repayment.

4.2 An LLP can also be a borrower and if it fails to discharge its liability, the secured creditor may recover his debt in the manner prescribed by the Act, without intervention of the Court or Tribunal.

5. CCI for Mergers of LLP :

5.1 The Competition Act also provides for the regulation of Mergers and Acquisitions to prevent an adverse effect on competition. The Competition Commission of India (CCI) is authorised to approve and regulate the M&A exceeding the prescribed networth and turnover limits. The Act applies to all enterprises including firm, AOP, etc. engaged in any activity relating to production, storage, supply, distribution, acquisition or control of articles or goods, or the provision of services and so on. Therefore, amalgamation of LLPs will also be covered under Competition Law and thereby would be regulated by CCI.

6. Related party transactions :

6.1 S. 295 and S. 297 of the Companies Act, 1956 require the previous approval of the Central Government in case a company makes any loan/guarantee/security to, or enters into certain contracts with certain prescribed persons, being related to the directors of the lending company. The provisions of S. 370 of the said Act will also have to be complied with.

6.2 The list of prescribed persons u/s.295 includes a body corporate in which not less than 25% of the voting power is exercised by one or more directors of the lending company as well as a body corporate which is accustomed to act on the instructions of the Board of Directors or one or more directors of the lending company. An LLP is a body corporate. Therefore, any loan/guarantee/security given by a public company to an LLP which acts as aforesaid would require previous approval of the Central Government.

6.3 However, the approval u/s. 297 will not be required in case a company enters into the prescribed transactions with an LLP.

6.4 Further, S. 299 on Disclosure of Interest by directors would require a director to give a general notice to the Board of Directors if he is a partner in an LLP. Also, if a director is directly or indirectly interested in any contract or arrangement entered into by the company with an LLP, the director should disclose the nature of his interest in the relevant Board Meeting.

7. Clause 49 requirements :

7.1 Clause 49 of the Listing Agreement lays down certain compliances to be made in case of a material unlisted subsidiary of a listed company. These include appointing an independent director of the listed company on the board of such a subsidiary.

7.2 The term ‘material non-listed Indian subsidiary’ has been defined to mean an unlisted subsidiary, incorporated in India, whose turnover or net worth (i.e. paid up capital and free reserves) exceeds 20% of the consolidated turnover or net worth respectively, of the listed holding company and its subsidiaries in the immediately preceding accounting year. Since the term subsidiary has not been defined under the Listing Agreement, one should refer to s.4 of the Companies Act. According to this section, only a company is covered within the definition of a subsidiary. Hence, an LLP cannot be a subsidiary of another company and accordingly it would not be covered within the ambit of Clause 49 of the Listing Agreement.

8. Security Interest on Conversion of a Company into LLP :

8.1 According to Para 2 of the Third Schedule to the LLP Act, a company can be converted into an LLP only if it does not have any security interest subsisting in its assets at the time of application.

8.2 It may be noted that this restriction is not laid down in case of conversion of a firm into an LLP.

8.3 The practical problem that arises in this regard is firstly that “Security Interest” has not been defined in the LLP Act. Secondly, if we take “Security Interest” to mean as understood in common parlance, hardly any company would be able to convert itself into an LLP. This cannot and should not be the intention of the legislature.

8.4 Let us analyse the meaning of the term ‘Security Interest’.

8.4.1 Definition under SARFAESI Act :

According to S. 2(zd) of the Securitisation and Re-construction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI) —

“security interest means right, title and interest of any kind whatsoever upon property, created in favour of any secured creditor and includes any mortgage, charge, hypothecation, assignment other than those specified in S. 31.”

S. 31 of this Act lays down the following cases wherein the provisions of SARFAESI Act shall not apply :

a) a lien on any goods, money or security given by or under the Indian Contract Act, 1872;

b) a pledge of movables within the meaning of S. 172 of the Indian Contract Act, 1872;

c) creation of any security in any aircraft as defined in clause (1) of S. 2 of the Aircraft Act, 1934;

d) creation of security interest in any vessel as defined in clause (55) of S. 3 of the Merchant Shipping Act, 1958;

e) any conditional sale, hire-purchase or lease or any other contract in which no security interest has been created;

f) any rights of unpaid seller under S. 47 of the Sale of Goods Act, 1930

g) any properties not liable to attachment (excluding the properties specifically charged with the debt recoverable under this Act) or sale under the first proviso to Ss.(1) of S. 60 of the Code of Civil Procedure, 1908;

h) any security interest for securing repayment of any financial asset not exceeding Rs. one lakh;

i) any security interest created in agricultural land;

j) any case in which the amount due is less than 20% of the principal amount and interest thereon.

8.4.2 Definition under Black’s Law Dictionary

Security Interest is a form of interest in property which provides that the property may be sold on default in order to satisfy the obligation for which security interest is given.

In other words, the term ‘security interest’ means any interest in property acquired by contract for the purpose of securing payment or performance of an obligation or indemnifying against loss or liability.

8.5 Thus, from the above definitions, it is seen that the definition of ‘Security Interest’ is very wide. At the same time, one cannot conclude that the charge which is created on the assets of a company in order to avail loans especially loans from banks and financial institutions can be treated as security interest subsisting in the assets of the company for the purposes of LLP Act.

In this regard, it is important to note that under the LLP Act, all the liabilities of the private limited company become the liabilities of the LLP. Further, both the entities have limited liability. So there is no difference in the nature of liability of the private limited company and its shareholders on one hand and the LLP and its partners on the other hand. Moreover, Schedule II which provides for conversion from a firm (where its partners have unlimited liability) into an LLP, does not put any such restriction. Therefore, it is difficult to understand the real intention of legislature in putting this restrictive clause in case of conversion of company into an LLP. It would be advisable if the MCA issues a clarification in this respect since this is holding up the conversion by several companies into LLPs.

(Concluded)

BCAJ Admin

Limited Liability Partnerships

We continue our examination of various laws and the issues arising therein in respect to an LLP.

1. Conversion of firm or company into LLP :

1.1 The LLP Act provides for conversion of a partnership firm and company into an LLP. This conversion is similar to the conversion of a firm into a company under Part IX of the Companies Act. Three issues which arise in respect of this conversion of a firm are the stamp duty, the income-tax liability thereon and the impact on tenancies of the firm/company. All of these contentious issues are very important for healthy growth of LLPs as a form of business in India. The Government must take steps to come out with clear-cut laws in this respect to avoid wasteful litigation.

1.2 Stamp duty :

(a) Para 6(b) of the Third Schedule to the LLP Act on Effect of Registration states that all tangible (movable and immovable) property as well as intangible property vested in the company and the whole of the undertaking of the firm shall be transferred to and shall vest in the LLP without further assurance act or deed.

(b) As explained earlier, stamp duty is on an instrument. If there is no ‘instrument’ of transfer, then no stamp duty can be levied.

(c) If there is a statutory vesting of the assets of the erstwhile firm/company in the newly incorporated LLP, there is no transfer under the Transfer of Property Act. Therefore, no conveyance is required and hence, there should not be any incidence of Stamp Duty.

(d) This view is also supported by the old decision in the case of Rama Sundari Ray v. Syamendra Lal Ray, ILR (1947) 2 Cal. 1 rendered in the context of a Part IX conversion. Applying the same principle, it is submitted that a conversion under Part X of the LLP Act, 2008 would not attract any stamp duty as it amounts to a statutory vesting of the assets of the firm/company in the LLP.

1.3 Income-tax :

(a) There is no transfer between the firm/private and the LLP and the word ‘transfer’ used is not in the sense of a ‘transfer’ as between a transferor and transferee, but is only meant to emphasise the vesting of the assets and liabilities in the LLP. Thus, there is no transfer as understood u/s.2(47) and u/s.45(1) of the Income-tax Act. Since there is no transfer u/s.45(1), the computation of capital gains should not arise.

(c) There is no transfer at the time of conversion of a firm/private company into an LLP as it is a case of a statutory vesting of assets and liabilities under the LLP Act like in case of Part IX of the Companies Act. In fact, it is possible to take a view that at no point of time do both the LLP and the firm/company exist. The firm/company is dissolved and the LLP is created simultaneously and it is the transfer which creates the LLP. Thus, since the two entities are not present at the same time, there is no transfer.

(d) This view has been upheld by the Bombay High Court in its decision of Texspin Engg. & Mfg. Works, 180 CTR 497 (Bom.). The Court held that a partnership firm can convert itself into a company under Part IX of the Companies Act, 1956 and further there would be no incidence of capital gains u/s.45(4) of the Income-tax Act. The ratio decidendi laid down by the Bombay High Court can also be applied in the case of conversion of a firm/company into an LLP. Hence, it is submitted that even though there is no express provision to this effect, the conversion should not attract capital gains tax. Incidentally, the Memorandum Explaining the provisions of the Finance (No. 2) Bill, 2009 provided as under :

“As an LLP and a general partnership is being treated as equivalent (except for recovery purposes) in the Act, the conversion from a general partnership firm to an LLP will have no tax implications if the rights and obligations of the partners remain the same after conversion and if there is no transfer of any asset or liability after conversion. If there is a violation of these conditions, the provisions of S. 45 shall apply.”

It may be noted that neither the exemption provision nor restrictive conditions mentioned above are found in the Bill or in the Finance Act 2009.

1.4 Tenancies of the firm :

One of the more contentious issues under the Rent Act is in regard to the position of a partnership firm which is a tenant when there is a change of partners. Can the landlord contend that there is an illegal sub-letting or assignment and hence, he can terminate the tenancy. There are several decisions on this subject and there is no clear-cut touchstone to determine under which situations can it be said that there is an illegal sub-letting and when there is not.

These decisions deal with the case where the partners of the firm change hands. In the case of conversion of a firm into an LLP, the entity remains the same. Only its status undergoes a change. It is not a case where there is a transfer of assets. Hence, in my view, the provisions of illegal sub-letting/ assignment of the Rent Act are not attracted and the tenant would not lose the tenancy. However, the issue is not free from doubt.

1.5 Other issues in relation to conversion :

1.5.1 Some other unanswered issues remain in relation to conversion of a firm/company into an LLP. One is relating to carry forward and set-off of unabsorbed losses. Would S. 79 of the Income-tax Act which denies such a set-off in the case of a change in shareholding apply ?

1.5.2 Another issue is in relation to the continuity of service clause of the employees in the case of a conversion. It is submitted that there would be a continuity of service.

1.5.3 Certain institutions such as the MIDC levy a very huge transfer charge for change of user. However, there is a concession in the case of involuntary transfers done by way of a Court order, e.g., mergers, demergers, etc. Such transfers attract a minimum processing fee of the MIDC. What would be the position in the case of conversion into an LLP is an interesting aspect which needs to be considered.

1.5.4 One issue which may gather steam in the coming years is that of reconversion of an LLP into a company. Can an LLP convert itself into a private/ public company is an aspect on which there is no clarity. The LLP Act is silent on this aspect. Part IX of the Companies Act also does not provide any clear-cut answer. The Companies Bill 2008 has done away with Part IX altogether. Hence, what would happen to a business which selects an LLP structure and after becoming profitable it desires to make an IPO is still a question. Obviously, an LLP cannot make an IPO. Would it ever be possible for the business to access the capital markets? This is one aspect which needs immediate attention or else LLPs would lose some of their sheen.

2. Merger of companies and LLPs:

2.1 One more issue which is worth consideration is whether an LLP can merge into a company or vice-versa. The LLP Act only deals with the amalgamation and restructuring of two or more LLPs.

2.2 However, the Companies Act is much broader in its coverage. It permits the merger of a transferor who is any body corporate with a transferee company which is an Indian company. The Companies Act defines a body corporate to include a company. The LLP Act provides that an LLP is a body corporate. Thus, it stands to reason that an LLP being a body corporate, it can be merged into a company. Since the ultimate authority for both companies and LLPs is the MCA, it would be desirable if they frame rules in this respect.

2.3 As stated above, the Companies Act provides that ‘transferor company’ includes any body corporate, whether a company within the meaning of this Act or not, but a ‘transferee company’ only means a company within the meaning of this Act. Hence, the Transferee Company cannot be an LLP and it must always be a company within the meaning of the Companies Act, 1956. Thus, the merger of a company into an LLP is not possible.

3. VCF regulations:

3.1 One of the main uses of LLPs globally is as Venture Capital Funds. In India, VCFs are regulated by the SEBIunder the SEBI (Venture Capital Funds) Regulations, 1996.

3.2 R.2 of these Regulations defines a Venture Capital Fund to mean a fund established in the form of a trust or a company including a body corporate.

Since an LLP is a body corporate, it can also be one of the forms for a VCF under the SEBI Regulations. However, R.15 provides that the VCF would raise money only through the private placement of its units. S. 32 and S. 33 of the LLP Act state only a partner of an LLP will make contributions to the LLP. There is no provision in the LLP Act for the issue of units. Hence, it is a moot point as to whether an LLP can issue units.

3.3 Further, the Regulations provide that the investee company must be a domestic company only. Hence, an LLP cannot attract funds from a SEBI Registered VCF.

4. Foreign tax credits:

4.1 Assuming that a foreign resident can invest in an LLP under the FEMA Regulations, another question which would arise is what would be the tax treatment of the income received by the foreign partner? An LLP is taxed as a firm and hence, the LLP would pay tax @ 30.9% in India. The draft Direct Taxes Code also continues this system of taxation. When the LLP distributes the after-tax income to its foreign partner, would he be able to claim a credit for the tax paid by the LLP ? Unfortunately, the answer is No. The tax treaty benefits will be lost in such a case and the foreign partner may once again pay tax on the income received by him. This is a great disadvantage for foreigners to invest in LLPs.

4.2 To address the above anomaly, the pass-through system wherein the LLP is ignored as a taxable entity and the partner is directly taxed in proportion to his share was desirable. In fact, press reports indicate that the MCA is keen on such an amendment to the Income-tax Act to bring taxation of LLPs in India at par with several western nations.
(To be continued)

BCAJ Admin

ORDERS OF THE COURT

Right to Information

Part A: ORDER OF THE
COURT

S. 8(1)(e) of the RTI Act :

8 writ petitions, including one
— The Institute of Chartered Accountants of India v. CIC [writ petition
(civil) No. 3607 of 2007], are decided by the High Court of Delhi on 30-11-2009.

As the judgment is of interest
to members of our profession, from the order which runs into 48 pages, I
reproduce verbatim the relevant four paras.

91. Respondent no. 2 herein —
Mr. Y. N. Thakkar had made a complaint alleging professional misconduct against
a member of the Institute of Chartered Accountants of India. The complaint was
examined by the Central Council in the 244th meeting held in July 2004 and was
directed to be filed as the Council was prima facie of the opinion that
the member concerned was not guilty of any professional or other misconduct. The
Council did not inform or give any reasons for reaching the prima facie
conclusion. In fact it is stated in the writ petition filed by the Institute of
Chartered Accountants of India that the Council was not required to pass a
speaking order while forming a prima facie opinion.

92. On 7th January, 2006
respondent no.2 filed an (RTI) application seeking details of reasons recorded
by the Council while disposing of the complaint. The information was not
furnished and was denied by the PIO and the first Appellate Authority on the
ground that the opinion expressed by the members of the Council was
confidential.

93. By the impugned order dated
31st January, 2007 the CIC has directed furnishing of information without
disclosing the identity of the individual members.

94. In the writ petition filed,
the Institute of Chartered Accountants of India has projected that respondent
no. 2 wants, and as per the impugned order, the CIC has directed furnishing of
deliberations and comments made by members of the Council while considering the
complaint, reply and the rejoinder. Respondent no. 2 has not asked for copy of
deliberation or the discussion and comments of the members of the Council. He
has asked for reasons recorded by the Council while disposing of his complaint.
During the course of discussion, members of the Council can express different
views. Confidentiality has to be maintained in respect of these deliberations
and furnishing of individual statements and comments may not be required in view
of S. 8(1)(e) and (j) of the RTI Act. However, I need not decide this question
in the present writ petition as the respondent no. 2 has not asked for copy of
the deliberation and comments. His application is for furnishing of reasons
recorded by the Council while disposing of the complaint. There is difference
between the reasons recorded by the Council while disposing of the complaint,
and comments and the deliberations made by individual members when the complaint
was examined and considered. Reasons recorded for rejecting the complaint should
be disclosed and there is no ground or justification given in the writ petition
why the same should not be disclosed. In fact, as per the writ petition it is
stated that the Council did not pass a speaking order rejecting the complaint
and it is the stand of the petitioner that no speaking order is required to be
passed while forming a prima facie opinion. It is open to the petitioner
to inform respondent no. 2 that no specific reasons have been recorded by the
Council. The consequence and effect of not recording of reasons is not subject
matter of the present writ petition and is not required to be examined here.
Writ petition is accordingly disposed of with the observations made above.

From the above, it will be
observed that it is important to seek information fully and properly. If the
applicant had asked for the comments and deliberations made at the Council
meeting of ICAI, he would have got it, but he had asked only the reasons
recorded by the Council. To make the reporting complete, I also reproduce the
Commission’s decision dated 31-1-2007 as referred to in para 93 of the above
order :

Commissions’ decision :

The CPIO has already furnished
partial information. He has, however, withheld the deliberations of the Council
on the ground that the opinion expressed by the Council members are
confidential. In the spirit of the RTI Act, which aims at creating conditions
for taking informed decisions, the views expressed by the public servants should
be put in public domain to prompt transparency in the decision-making process.
The CPIO is therefore directed to disclose the information sought, after due
application of S. 10(1) of the Act, within 15 working days from the date of
issue of this decision. The identity of an individual member, who may have
expressed his opinion on any issue of complaint should, however, be withheld,
lest the disclosure of identity should endanger his life and liberty.

Part B: THE RTI ACT

We have many RTI success stories
happening at clinics operating at BCAS Foundation and other places. But, we
never report them. However, when ‘The Miracle’ happened for Arvind Dalal, past
President of BCAS and ICAI, I thought it would be worth reporting. Hence, I
requested him to pen a few words and here they are :

The miracle that is RTI
by
Arvind Dalal

I am induced to write this
article on RTI of my personal experience prompted by Narayan Varma, so that it
may inspire others to resort to the unfailing remedy of RTI.

I have a small cottage in
Lonavala which I acquired in March 1993 and launched the document of sale deed
for registration with the seller and the advocate of both parties. I was
informed by the seller and the advocate that original sale deed duly registered
with the Registrar at Pune will be returned to me after ‘reasonable time’ duly
stamped on each page for registration.

Knowing as I do what is ‘reasonable time’ for income-tax proceedings, I did not bother about the registration for ten years even though that is an unreasonable period for registration of a document. But I started pursuing the matter since 2003 and for about four years I was given a stone-walling reply from the Registrar’s Office that the document is not received after registration, but it will take some more time and I will receive the same as soon as reasonable period is over.

Finally in 2007 I was told after several visits to the Registrar’s Office in Lonavala, that the document was received but for want of space in Lonavala office, it is sent to the Registrar’s office at Vadgaon-Maval about 20 miles away from Lonavala. I visited Vadgaon from time to time with my wife and with the advocate. Every time we were informed that the document will have to be searched out from a heap of documents and I must wait till evening to give them enough time to look for the same. My advocate also inquired several times at Vadgaon, but every time the reply was the same that it was not traceable.

I talked to Narayan Varma who suggested to make an application under the RTI Act and he helped me to prepare the application including questions there-in regarding how many documents were lodged for Registration in 1993, which were still pending in 2010 and how many were registered and returned to the applicants, what was the limit prescribed under the Act and more specifically when will my document, lodged in March 1993, be registered.

Within 15 days, I received a reply at my Mumbai address that my documents will be sent to me in due course but in the meanwhile, I could take inspection at Vadgaon by paying the necessary charges. I replied, thanking them for their letter sent after 17 years (Lord Ramachandraji’s vanvas was over in 14 years) and asking them to send original sale deed at the earliest. Lo and behold?! Within ten days, I get the original document in 2010 registered in 1993?!

The moral of the fairy tale is that one must invoke one’s rights as a citizen more frequently under the RTI Act, particularly when activist like Shri Narayan-bhai is out to help us and citizens must exercise their rights under statute given by the government by taking a little extra trouble?!

Part C: OTHER NEWS

Significant pronouncements by the Commission?:
Some time ago, when Shailesh Gandhi, CIC was in BCAS office – Mumbai, addressing RTI activists and journalists, he distributed compilation of 8 important profound pronouncements by the Central Information Commission. Herewith 5 & 6 thereof?:

(Continued from January 2010)

5. Sub judice?:

The Appellate Authority had claimed exemption u/s.8(1)(e), but the PIO has given no reason to justify how S. 8(1)(e) can apply.

The CIC decision cited by the respondent states ‘The matter is sub judice. The Appellate Authority has cor-rectly advised that information in question could be obtained through the Court which is examining the matter.’ No reasoning has been offered as to which exemption clause of the RTI Act applies. The only exemp-tion of S. 8(1) which might remotely apply and under which information can be denied is S. 8(1)(b) states, ‘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;’

This clause does not cover sub judice matters, and unless an exemption is specifically mentioned, information cannot be denied. Disclosing information on matters which are sub judice does not constitute contempt of Court, unless there is a specific order forbidding its disclosure. I respectfully have to disagree with the earlier decision cited by the appellant since it is per incuriam.

This Commission rules that a matter being sub judice cannot be used as a reason for denying information under the Right to Information Act.

6. Privacy?:

U/s.8(1)(j) information which has been exempted is defined as?: “information which relates to personal information the disclosure of which has no relationship to any public activity or interest, or which would cause unwarranted invasion of the privacy of the individual unless the Central Public Information Officer or State Public Information Officer or the Appellate Authority, as the case may be, is satisfied that the larger interest justifies the disclosure of such information?:” To qualify for this exemption the information must satisfy the following criteria?:

It must be personal information. Words in a law should normally be given the meanings given in common language. In common language we would ascribe the adjective ‘personal’ to an attribute which applies to an individual and not to an institution or a corporate.

From this it flows that ‘personal’ cannot be related to institutions, organisations or corporates. [Hence we could state that S. 8(1)(j) cannot be applied when the information concerns institutions, organisations or corporates.]

The phrase ‘disclosure of which has no relationship to any public activity or interest’ means that the information must have some relationship to public activity. Various public authorities in performing their functions routinely ask for ‘personal’ information from citizens, and this is clearly a public activity. When a person applies for a job, or gives information about himself to a public authority as an employee, or asks for permission, licence or authorisation, all these are public activities.

We can also look at this from another aspect. The state has no right to invade the privacy of an individual. There are some extraordinary situations where the State may be allowed to invade the privacy of a citizen. In those circumstances special provisos of the law apply, always with certain safeguards. Therefore it can be argued that where the State routinely obtains information from the citizens, this information is in relationship to a public activity and will not be an intrusion on privacy.

Certain human rights such as liberty, freedom of ex-pression and right to life are universal and therefore would apply in all countries uniformly. However, the concept of ‘privacy’ is related to the society and different societies would look at these differently. India has not codified this right so far, hence in balancing the right to information of citizens and the individual’s right to privacy, the citizen’s right to information would be given greater weightage.

Therefore we can accept that disclosure of informa-tion which is routinely collected by public authority and routinely provided by individuals, would not be an invasion on the privacy of individual and there will only be a few exceptions to this rule which might re-late to information which is obtained by a public au-thority while using extraordinary powers such as in the case of a raid or phone-tapping.

From the Budget speech of Pranab Mukherjee, Minister of Finance on February 26, 2010?:
Inclusive development?:

For the UPA Government, inclusive development is an act of faith. In the last five years, our Government has created entitlements backed by legal guarantees for an individual’s right to information and her/his right to work. This has been followed-up with the enactment of the right to education in 2009-10. As the next step, we are now ready with the draft of Food Security Bill which will be placed in the public domain very soon.

RTI is the new tool in divorce mudslinging?:

An interesting report in MIDDAY of 11-3-2010?:

Case 1?:

Ritika Sharma and her father claimed in the police complaint that they had provided Rs.30 lakh in dowry (in jewellery, cash and kind) to Ritika’s husband Mohan Sharma. Facing the prospect of imprisonment, Mohan Sharma filed an RTI application, seeking the income-tax details of his father-in-law.

It was revealed that Ritika’s father had only declared nominal income. It then became apparent that the claims made by the father-daughter duo about the dowry payment were false. The matter is sub judice. (Names changed)

Case 2?:

A month ago, Visakha Malhotra filed an RTI application seeking details of her ex-husband’s income after she was denied rightful maintenance following her divorce. Her husband had claimed that he was a busi-nessman. “Her petition was based on her right to live with dignity,” said a senior I-T official, on condition of anonymity. (Name changed)

According to income-tax officials, the trend of seeking RTI for dowry and maintenance cases began after a Delhi High Court judgment. In a 2007 case, Bhagat Singh was denied information regarding the earnings of his wife (with whom he had a discord), by the Income-tax Department, on the ground that the matter was being investigated. Singh, who was accused by his wife Saroj Nimal of accepting a dowry of Rs.10 lakh from her, filed a request with the Income-tax Department for investigating into his wife’s sources of income in view of the fact that she was a primary school teacher. In a landmark judgment, the Court directed the Income-tax Department to provide the information sought by Bhagat Singh.

The trend seems to be really catching on now. “There are around 30 ranges in the National Capital Region and each of these ranges processes or receives around 3 to 4 RTI applications seeking Income-tax details and most of them are related to either dowry harassment or maintenance cases.”

Tax refunds?:

At our RTI clinics, we assist many to make RTI application for the pending income-tax refunds. They invariably get the refund. The Times of India on March 15 reported on this subject and said?: Life just got better for millions who have ran from pillar to post for years to secure their tax refunds from the Income-tax (I-T) Department. In the landmark ruling, the Central Information Commissioner has passed an order which says “information on refunds is covered under the Right to Information (RTI) Act.”

M. L. Sharma, the Central Information Commissioner, while passing the order, said?:

“To deny the appellant information sought by him under clause (e) or clause (j) of S. 8(1) is nothing but misappreciation of law.”

“The information sought by the appellant is covered u/s.2(f) of the RTI Act and he has a right to seek information u/s.2(j) thereof. It is clarified that the appellant has not sought any information which the public authority is holding in fiduciary capacity.”

While directing the Income-tax Department to disclose information for the inordinate delay, he also ordered the issue of refunds within three months.

The CIC also rapped the Department for failing to appear in a hearing arranged by the Commission where the appellant was present.

Cabinet’s advice to the President of India?:

Pushing the boundaries in its interpretation of the Right to Information Act (RTI), the Central Information Commission (CIC) said advice given by the Union Cabinet to the President is liable for disclosure under the information law.

Referring to SC ruling on Article 74(2) on the question of constitutional privilege, Chief Information Commissioner Wajahat Habibullah ruled that though the Constitution said the Cabinet’s advice to the President could not be ‘inquired into’, it did not mean that such advice could not be ‘disclosed’. “It does not mean the nature of this advice can’t be disclosed,” he said while directing the President’s Secretariat to al-low checking of files pertaining to communication between former President Shanker Dayal Sharma and ex-PM Narasimha Rao on the issue of extending SC status to Dalits who had converted to Christianity.

Monitoring Govt. projects through the use of RTI?:

Although the State Chief Information Commissioner has asked alert citizens to monitor Government projects through the use of RTI, not many are satisfied with the way their efforts have found support.

The experience of Bhaskar Prabhu, an RTI activist and a member of Mahiti Adhikar Manch, an NGO that monitors Government spending, has not been good enough. Prabhu filed an application to monitor the money spent on grass beds at tree bases on Dr. Ambedkar Road in F/South ward, Mumbai. He also sought information on the expenses on iron guards around the trees. The details sought were for work orders worth Rs.7.26 lakhs that were passed in Octo-ber 2008 and January 2009. The work was to be completed by March 2009.

But the Public Information Officer (PIO) did not respond to his April 2009 application in time. After the hearing at the First Appellate Authority (FAA) in May 2009, the application got misleading and incomplete information.

“They did give information of grass beds, but not the locations of the work. It was impossible to see if the work was completed,” said Prabhu.

There was no information of the 164 iron grill tree guards for which money was already paid. The money set aside for the guards is 25% of entire amount. When he complained to the ward officer and deputy superintendent of gardens, it got known that around 20 guards were put and some petty penalty was imposed on the contractor. There is still no information to conduct the audit, a frustrated Prabhu said.

When contacted, H. Kale, Assistant Commissioner, F/ South ward, said, “The file is not in my hand anymore. It has been given to some other officers. We have slapped a fine of Rs.50,000 on the contractor.”

Skywalks in Mumbai?:

Even as Mumbaikars question the need for so many sky-walks in the city, reply given to a query under the Right to Information Act is an eye-opener. Each of the 67 sky-walks in Mumbai have been proposed by an elected representative — an MP, MLA or a corporator. In fact, there are cases where work on skywalk stopped because the local representatives initially supported it and then changed their stance, following opposition from sane people. Nearly all the requests have been made orally by elected representatives, stated the RTI replies to the Grant Road citizen Arvind Dagha’s queries.

Construction of 67 skywalks at a cost of Rs.1.400 crore has been taken up. Initially, around 50 skywalks were to be constructed at the cost of Rs.600 crore. That number was later increased to 67. A. K. Pehal, in charge of the skywalk project, said they were being constructed only after carrying out a study.

Stop attacks on RTI activists?:

In his Budget speech, Union Finance Minister Pranab Mukherjee said the weaknesses in government systems, structures and institutions posed a challenge to policy planners. He said our public delivery mechanisms prevented the country from realising its true potential. The analysis is spot on. So, how do we fix governance?? Transparency and accountability hold the key to good governance. Institutional reforms are necessary to achieve this. The Government plans to set up a financial sector legislative reforms commission and an independent evaluation office to assess public programmes. These are timely. Many enabling legislations have been passed in recent years to make administrators responsible to citizens. But laws alone aren’t enough. Mindsets also must change if the legal safeguards are to become effective.

The experience of the Right to Information (RTI) Act is instructive. The RTI Act has been a radical step to-wards making administration transparent and ac-countable. Civil society groups have used the RTI Act to expose corruption in public administration and ser-vices. But not all sections of society have reacted favourably to the Act. Often, bureaucrats refuse to part with information demanded under the RTI. A worse trend is to attack RTI activists physically. The latest case is from Maharashtra where a Thane-based RTI activist was shot at. The Government needs to curb such crimes. The message must go out that attacks on RTI activists will not be tolerated. Public delivery mechanisms can improve only if the State and civil society work together to plug loopholes in these systems.

(Editorial in The Times of India, dated 4-3-2010)

Sonia forces PM to put RTI amendments on hold?:

Plans to amend the Right to Information (RTI) Act have been put on ice, with Congress bosses taking up with the Government the complaint of the activists that the proposed changes would lead to dilution of the information law. Senior sources said the amend-ments will have to wait till the time the Government dispels fears of rights activists.

Congress Chief Sonia Gandhi wrote to PM Manmohan Singh some time ago, drawing his attention to the fear of activists. The PM and virtually the entire Government feel the amendments are necessary for smooth functioning of the Government and to keep out frivolous complaints, but Singh has agreed to hold consultations with stakeholders (read activists).

According to some reports, Singh is also in favour of excluding the office of the CJI from the RTI Act ambit. The amendments proposed by the PM would keep the office of the CJI out of the purview of the Act. However, Sonia Gandhi has opposed any such amendments.

BCAJ Admin

Limited Liability Partnerships

1. Introduction :

1.1 31st March, 2009, the last day of the financial year 2008-09, saw the Notification of the Limited Liability Partnership Act, 2008 (‘the Act’). The desirability of LLP as a business entity has been expressed by various committees, such as the Bhat Committee (1972); Naik Committee (1992); Expert Committee on Development of Small Sector Enterprises headed by Sh. Abid Hussain in 1997; Study Group on Development of Small Sector Enterprises (SSEs) headed by Dr. S. P. Gupta (2001), Naresh Chandra Committee on Regulation of Private Companies and Partnerships (2003); Dr. J. J. Irani Committee on New Company Law (2005).

In spite of these recommendations, India has been a bit late in recognising this extremely popular form of a business entity, considering that countries such as the USA have enacted a law dealing with Limited Liability Partnerships (‘LLPs’) as far back as in the early 1800s. Internationally, most venture capital funds/private equity funds/hedge funds are structured in the form of LLPs.

Nevertheless as the old adage goes, ‘better late than never’, India has come out with a law on LLPs at a time when the Small and Medium Sector is growing rapidly and entity such as an LLP is the right answer for this sector. The Finance (No. 2) Bill, 2009 has provided for taxation of LLPs.

1.2 LLPs lie somewhere in between the corporate sector which have limited liability but are highly regulated and the unregulated partnership sector which has unlimited liability. LLPs provide a great deal of flexibility and also limited liability. It is important to note that even though the term LLP signifies a partnership, the Act falls within the purview of the Ministry of Corporate Affairs (MCA) and the Registration and all other procedures are carried out by the RoC and not the Registrar of Firms.

1.3 By a series of Articles, let us examine some of the key features of the Act and some possible issues which may arise.

2. Features of an LLP :

2.1 Body corporate :

The most important aspect of an LLP is that it is treated as a body corporate, i.e., it is an independent legal entity with a distinct identity which is separate from its partners. As compared to this a partnership firm does not have an identity separate from its partners. An LLP has the following features of a body corporate :

(a) It has a perpetual succession.

(b) Its existence is not dependent upon its partners and hence, even if there were to be a change in its partners, the LLP’s status would remain unchanged. Death, insolvency, retirement of any partner has no bearing on the LLP.

(c) The property of an LLP is its own property and not the property of its partners. It can own property, whether immovable, movable or tangible, in its own name since it is a separate legal person.

(d) It is capable of suing and being sued in its own name.

(e) It can have a common seal.

2.2 Liability :

The liability of an LLP is to be met out of its property only and the liability does not extend to the partners. Thus, unlike in the case of a partnership firm, the partners are not personally liable for the dues of the LLP. This feature of an LLP is similar to a company where the shareholders and the company are separate legal entities. If the partner, knowingly, does any act which is outside the scope of his authority, then the LLP will not be bound by any such act. If the LLP does or the partners do any act with an intent to defraud, then the LLP and the partners shall have unlimited liability for all the debts of the LLP.

3. Incorporation Document :

3.1 To incorporate an LLP, the following steps must be taken :

(a) Two or more persons must come together to carry on any lawful business with a view to earn profits.

(b) They must subscribe to an ‘Incorporation Document and Statement’ in eForm-2. The Statement is to be digitally signed by a person named in the incorporation document as a designated partner and he must have a DPIN. The Statement must also be digitally countersigned by an advocate/company secretary/chartered accountant/cost accountant in practice who is engaged in the formation of LLP. In case of foreign nationals residing outside India and seeking to register an LLP in India, their signatures and address on the incorporation documents and proof of identity, where required, shall be notarised before the notary of the country of their origin.

(c) The RoC after satisfying himself about compliance with relevant provisions of the LLP Act will register the LLP, within a maximum period of 14 days of the filing of eForm-2 and will issue a certificate of incorporation in Form-16.

3.2 An LLP should have a registered office. Its name should be as per the guidelines laid down in this respect. The last words of the name should be limited liability partnership or LLP, e.g., the name of an LLP could be ‘Apex Venture Fund LLP’.

3.3 The partners of the LLP have to enter into an LLP Agreement.

4. Partners :

4.1 Just as a company has members, an LLP has partners. As per S. 5 of the Act, any individual or any body corporate can be a partner of an LLP. However, in any of the following cases, an individual cannot be a partner in an LLP :

(a) If he is adjudged to be of unsound mind by a Court.

(b) If he is an undischarged insolvent.

Any body corporate can also be a partner of an LLP. The term body corporate has been defined u/s.2 of the Act to mean a company as defined in S. 3 of the Companies Act, 1956, and also includes an LLP registered under the Act, an LLP incorporated abroad, a company incorporated abroad. However, it does not include a corporate sole, a co-operative society and any other body corporate so notified by the Government. Since an LLP is also a body corporate, one LLP can become a partner in another LLP. Two or more companies can also come together to form an LLP. LLPs could be the future for consortium type of arrangements.

4.2 Each LLP must have a minimum number of 2 partners. This feature is at par with a partnership. There is no limit on the maximum number of partners which an LLP can have. A partnership or an AOP cannot have more than 20 partners/members or else it becomes an illegal association. A private limited company cannot have more than 50 members. However, an LLP has no limit on the number of partners. Thus, in this respect it is at par with a public limited company. It is this feature of an LLP which makes it a very attractive structure from a VC/PE perspective since the fund can have as many investors as it likes.

4.3 Designated Partner:

a) The concept of a ‘Designated Partner’ has been introduced by the Act. S. 7 requires an LLP to have at least 2 designated partners, both of whom should be individuals and one of whom should be a resident in India. If there are only 2 partners in an LLP, then both should be treated as designated partners.

b) In case, both the partners are LLPs/companies, then partners of such LLPs or nominees of such companies should become designated partners.

c) The Act incorporates a part of the definition of the term ‘resident in India’ from S. 2 of the Foreign Exchange Management Act, 1999. A resident has been defined to mean a person who resided in India for not less than 182 days during the immediately preceding financial year.

d) The individual must give his prior consent to become a designated partner.

e) To become a designated partner, an individual must obtain a Designated Partner Identification Number (DPIN).

f) A designated partner is one who is responsible for carrying out all the compliance obligations of the LLP imposed by the Act. He is also liable to all the penalties imposed on the LLP for contravention of any of these provisions of the Act. One may loosely equate him with the Managing Director of a company.

g) Any person can be appointed as a designated partner and he may retire also. Any vacancy must be filled within 30 days.

4.4 Relationship of Partners:

a) The mutual rights and duties of the partners of an LLP are governed by the LLP agreement. If there is no such agreement, then S. 23(4) of the Act provides that the mutual rights and duties of the partners shall be as set out in the First Schedule to the Act. Such an agreement and any changes, therein, must be filed with the RoC.

b) For the purposes of the business of the LLP, every partner of an LLP is an agent of the LLP but not of the other partners. This is a fundamental difference between an LLP and a partnership firm, wherein mutual agency is a key condition of the partnership. Each partner is an agent of the firm and of the other partners. S. 4 of the Partnership Act defines a partnership as “the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all”.

4.5 A person can resign from the LLP by giving a notice to other partners. A person would cease to be a partner on his death or on dissolution of the LLP or if he is declared to be of an unsound mind or if he has been adjudged as an insolvent. When a person ceases to be a partner, the LLP shall file a notice in the prescribed form with the RoC.

5. Contributions:

5.1 A partner of an LLP contributes towards the capital of the LLP. The obligation of a partner to contribute shall be as per the LLP Agreement.

5.2 The contribution can be in the following forms:

a) Tangible, movable, immovable, intangible property or a;ny other benefit to the LLP, e.g., land, goods, IPRs, etc.

b) Money, promissory notes, agreement to contribute cash or property and contract for services to be performed.

The monetary value of the contribution of each partner should be accounted for and disclosed in the accounts.

5.3 If the contribution is in kind, then the same must be valued by a practising CA or an approved valuer. No methodology has been prescribed for the valuation.

6. Tax Treatment:

6.1 The Finance (No. 2) Bill has prescribed the tax treatment for LLPs. The provisions are effective from A.Y. 2010-11. LLPs would now be taxed at par with partnership firms. Thus, the LLP will pay tax on its profits and the partners will receive their share in the LLP tax-free [5. 10(2A)]. The LLP will pay tax @ 30%. The Finance Bill has abolished the surcharge of 10% payable by firms and hence, even LLPs will not have to pay any surcharge. The 3% cess continues and hence, the net rate will be 30.9%.

6.2 LLP will get a deduction for remuneration paid to its working partners. The limits of S. 40(b) have been streamlined and simplified both for firms and LLPs:

a) On the first Rs.3 lakhs of book-profit – A deduction which is the higher of Rs.1.5 lakhs or 90% of the book-profits

b) On the balance book-profits – A deduction @ 60% of book-profits.

Any interest payment by the LLP to a partner in excess of 12% p.a. would be disallowed and any salary, remuneration, commission to non-working partners would be disallowed.

6.3 There will be no incidence of MAT or Divi-dend Distribution Tax or liability to Deemed Dividend on the LLP.

6.4 S. 45(3) would apply to the admission of a partner and S. 45(4) would apply to the dissolution of an LLP or retirement of a partner.

6.5 There is no express provision for the tax treatment of merger or demerger of two LLPs. The provisions contained for amalgamation or demerger in the Income-tax Act, only apply to companies and not to LLPs. It would be beneficial if the Finance Act, 2009 provides for this situation.

BCAJ Admin

Limited Liability Partnerships

1. Accounting requirements :

1.1 An LLP is required to maintain prescribed books of account relating to its affairs. The accounts can be maintained on cash or accrual basis and must be according to the double entry system of accounting. The books must be sufficient to show and explain the LLP’s transaction and must be able to disclose with reasonable accuracy its financial position at any time. They must also enable the partners to ensure that the Statement of Account and Solvency prepared by them complies with all the requirements of the Act.

1.2 The books must specifically deal with the following :

(a) Details of all receipts and payments.

(b) Record of all assets and liabilities of the LLP.

(d) Such other particulars as may be decided by the partners. Thus, the partners can incorporate additional requirements.

As required under the Companies Act, the books are to be preserved for a period of 8 years.

1.3 Within a period of 6 months from the end of the financial year, the LLP shall prepare a Statement of Account and Solvency in Form 8 for the financial year ended. This Statement must be filed with the Registrar of Companies within 7 months from the end of the year to which it relates. The filing fees in relation to the same range from Rs.50 to Rs.200 depending upon the amount of contribution of the LLP. This Statement must be signed by the designated partners. This Statement contains a Statement of Assets & Liabilities (Balance Sheet) and a Statement of Income and Expenditure (P&L Account) of the LLP. The Appendix to this Statement contains various other details, such as :

(a) Details of charges created

(b) Particulars of property on which the charge is created

2. Auditing requirements :

2.1 The accounts of the LLP are required to be audited in case :

(a) its turnover exceeds Rs.40 lakhs, or

(b) its contribution exceeds Rs.25 lakhs.

The turnover limit of Rs.40 lakhs is the same as that laid down for tax audit for a business. However, there is no distinction between an LLP which carries on a business and one which carries on a profession. The auditor must be appointed every financial year by the LLP.

2.2 The designated partners may appoint an auditor at any time for the first FY or at least 30 days prior to the end of any other FY or to fill a casual vacancy.

2.3 If the LLP Agreement so provides, the partners may remove an auditor at any point of time by following the procedure laid down therein. If the Agreement is silent on this point, then the consent of all the partners is required.

2.4 An auditor may resign or specify his unwillingness to be reappointed by giving a notice to the LLP.

3. Annual Return :

3.1 Every LLP must file an Annual Return with the RoC within 60 days of the end of its FY. The Return must be filed in Form 11 and must be signed by a designated partner.

3.2 If the LLP’s turnover is up to Rs.5 crores or it has a contribution of up to Rs.50 lakhs, then the Return must be accompanied by a certificate from a designated partner other than the one signing the Return. The certificate must state that the Return contains true and correct information.

3.3 If the LLP’s turnover exceeds Rs.5 crores or it has a contribution of more than Rs.50 lakhs, then the Return must be accompanied by a certificate from a practising Company Secretary. The certificate must state that the CS has verified the particulars from the books and records and found them to be true and correct. The filing fees in relation to the same range from Rs.50 to Rs.200 depending upon the amount of contribution of the LLP.

3.4 The Return contains the following information :

(a) Contact details of the LLP

(b) Details about the designated and other partners

4.1 One of the best features of the Act is that it provides for the automatic conversion of certain entities into an LLP. Chapter X of the Act provides for the following :

(a) Conversion of a firm into an LLP

(b) Conversion of a private limited company into an LLP

This Chapter is similar to the Chapter IX of the Companies Act, 1956, under which a firm can be converted into a company.

4.2 For the purposes of effecting a conversion of any of the above entities into an LLP, certain Statements must be filed with the RoC. On receiving the documents, the RoC will register the documents and issue a certificate of registration. It may be noted that other than registering the prescribed documents with the RoC, nothing further needs to be done. One of the essential conditions for conversion into an LLP is that all the partners in the case of a firm / all the shareholders in the case of a company must become partners of the LLP.

There is no transfer and no conveyance of the assets from the firm/company to the LLP. There is no liquidation of the company by way of a court-appointed liquidation or a voluntary liquidation. Once the LLP is registered, the company is deemed to have been dissolved and removed from the records of the RoC. There is an automatic change of status of the entity from a firm/company to an LLP.

4.3 If the RoC is not satisfied about certain information, then he may refuse to register the entity as an LLP. An appeal lies against this refusal to the National Company Law Tribunal. Till such time as the Tribunal is notified, the Company Law Board would prevail in the interim.

4.4 All pending proceedings by or against the entity would continue by or against the LLP. In any agreements, deeds, contracts, bonds, instruments, etc., executed by such entity, the LLP would be sub-stituted for such entity /The LLP steps into the shoes of the firm/company. All employees of the firm/ company would continue with continuation of employment under the LLP. Thus, the employees are not worse off by reason of change in status.

4.5 Once the LLP is registered on conversion, the firm/company shall be deemed to be dissolved/ removed from the records of the RoF or RoC, as the case may be.

4.6 The LLP may have to make consequential changes in respect of documents/records standing in the name of the erstwhile firm/company. For instance, for any property registered in the name of the erstwhile company, the Record of Rights/Property Card/Index Il, etc., standing with the Sub-Registrar of Assurances would have to be amended and the LLP’s name would have to be added instead of the company’s name. It should be noted that this change is not taking place by virtue of any transfer. Hence, there should not be any liability to registration fees and/or stamp duty. It would be desirable if the Government enacts amendments to clarify this matter beyond any doubt, since often there is a gap between what is legally correct and what is practically happening.

5. Amalgamations and arrangements:

5.1 The Act contains provisions for the amalgamation, arrangement and reconstruction of LLPs. S. 60 to S. 62 deal with the same. These provisions are similar to S. 391-S. 394 of the Companies Act, but not as wide in its ambit as S. 391-S. 394. S. 60 to S. 62.

5.2 The following schemes are possible:

a) A compromise or an arrangement between an LLP and its creditors.

b) A compromise or an arrangement between an LLP and its partners.

c) A reconstruction of an LLP.

d) An amalgamation of two or more LLPs.

5.3 In order that any such scheme can be approved, a majority of 3/4th in value of the creditors/partners must at a meeting called for this purpose sanction the compromise/ arrangement/ amal-gamation. An application for the same must be made to the Company Law Tribunal. However, till such time as the CLT is notified, the High Courts would have such powers.

5.4 Every order sanctioning the scheme will be made only if the Court is satisfied that the LLP has disclosed all material facts, its latest financial position and details of any pending investigations. While passing the order, the Court would have power to supervise the carrying out of any compromise or arrangement and can also make such modifications in the scheme as it considers necessary. The order must be filed with the RoC in Form 22 within 30 days of making of the order.

5.5 The Act also provides for the merger of two or more LLPs. While passing such an order, the Court may make a provision for the following matters:

a) Transfer of the undertaking of the transferor LLP.

b) Continuation by or against the transferee LLP of any pending legal proceedings by or against the transferor LLP.

c) Dissolution without winding up of the transferor LLP. However, no order for the dissolution will be made until the Official Liquidator first submits his report that the LLP’s affairs have not been conducted in a manner prejudicial to the partners or public’s interest.

d) Provision for any person who dissents to the amalgamation.

e) Such incidental, consequential and supplemental matters as are necessary to fully carry out the amalgamation.

The above provisions also apply to any reconstruction or compromise or arrangement of an LLP.

5.6 Rule 35 of the LLP Rules, 2009 lays down the procedure to be followed in respect of any compromise, arrangement or reconstruction of LLPs. Some of the key provisions are as follows:

(a) An application calling a meeting of the creditors/members must be supported by an affidavit.

(b) The Court may call a meeting or dispense with it. At the meeting voting by proxy is permitted.

(d) A chairman will be appointed for the meeting. He must prepare a report of the proceedings of the meeting.

(e) The report of the meeting’s Chairman and the petition must be presented to the Court.

5.7 The Rules also lay down the procedure for an arrangement for the revival and rehabilitation of an LLP. Some of the key provisions in this respect are as follows:

(a) An arrangement for revival and rehabilitation of any LLP may be proposed in the following circumstances:

(i) If the LLP has outstanding debt which it has failed to pay withn 30 days of the service of the notice of demand or has failed to secure or compound it to the reasonable satisfaction of the creditors and if its creditors representing 50% or more of such debt make a demand; or

(ii) If a petition for winding up of an LLP is pending before the Court and such directions are given by the Court.

(iii) Where the Official Liquidator has filed his report before the Court, in terms of directions given by the Court on the report of the Liquidator.

(iv) Alternatively, the LLP or any creditor or partner, or the Official Liquidator, may make an application for the sanction of the arrangement for revival and rehabilitation before the Tribunal.

(b) An application under sub-rule (12) shall be accompanied by :

(i) A statement of account and solvency of LLP for the immediately preceding financial year, in case the application is made by the LLP;

(ii) Particulars and documents relevant to the scheme including commitments expected from various parties or, proposed restructuring or rescheduling of the debts, undertaking or in case from bank or financial institution through a letter or in any other case through an affidavit of concerned party or parties;

iii) proposed scheme of revival and rehabilitation of the LLP induding a proposal for appointment of an LLP Administrator. The LLP administrator shall be appointed from a panel maintained by the Central Government for winding up and dissolution of LLPs.

c) The Court may hear all the parties concerned and admit or dismiss the application.

d) The LLP Administrator proposed in the scheme shall submit his preliminary report.

(e) On consideration of the report of the LLP Administrator, if the Court is satisfied that the creditors representing 3/4th in value have resolved that it is not possible to revive and rehabilitate the LLP, it may, within 60 days of the receipt of such report, order that winding-up be initiated or sanction the arrangement for revival and rehabilitation of LLP, induding making orders for continuation of the LLP Administrator.

f) The order of sanction of the arrangement by the Tribunal may make provisions, for all or any of the following matters:-

i) powers and functions of the LLP Administrator;

ii) the time period within which various actions proposed in the arrangement to be completed;

iii) any such direction to the LLP or its officers or to the creditors, or to the LLP Administrator or to any other person, as may be considered necessary, for the purpose of implementation of the arrangement of revival and rehabilitation; and

(iv) any other order or orders as may be considered necessary.

(g) The LLP Administrator shall complete all his actions and submit his final report before the Court within 180 days of the Court’s order.

BCAJ Admin

Limited Liability Partnerships

1. Issues under other laws :

In the last three issues, we have analysed various facets of the LLP Act and looked at different provisions contained therein. However, the LLP Act is not an island by itself. One also needs to consider the impact on an LLP by or under various other laws, such as, the Stamp Act, the FDI Policy/FEMA Regulations, tenancy laws, restructuring of companies with LLPs, etc. In this last part, let us look at some such laws and the issues arising therein in respect to an LLP.

2. Stamp Act :

2.1 To incorporate an LLP, the Partners need to execute an LLP Agreement. This Agreement would lay down the respective capital contributions, whether they would be in the form of cash or property, etc. One of the main unresolved issues in relation to an LLP is what would be the stamp duty on such an Agreement ? Stamp Duty is a State subject and hence, the law in this respect would depend upon the State in which the registered office is situated. For the purposes of our discussion, let us consider the Bombay Stamp Act, 1958, which is applicable in the State of Maharashtra.

2.2 The Bombay Stamp Act, 1958 (‘the Act’), which is applicable to the State of Maharashtra, levies stamp duty u/s.3 of the Act. The relevant portion of S. 3 reads as follows :

“3. Instrument chargeable with duty :

Subject to the provisions of this Act and the exemptions contained in Schedule I, the following instruments shall be chargeable with duty of the amount indicated in Schedule I as the proper duty therefor respectively, that is to say :

(a) every instrument mentioned in Schedule I, which is executed in the State . . . . . .;

(b) every instrument mentioned in Schedule I, which . . . . . . , is executed out of the State, relates to any property situate, or to any matter or thing done or to be done in this State and is received in this State :

Provided that a copy or extract, whether certified to be a true copy or not and whether a facsimile image or otherwise of the original instrument on which stamp duty is chargeable under the provisions of this section, shall be chargeable with full stamp duty indicated in the Schedule I if the proper duty payable on such original instrument is not paid”

From the analysis of s. 3, the following points emerge :

(a) Stamp duty is leviable on an instrument and not on a transaction.

(b) Stamp duty is leviable only on those instruments which are mentioned in Schedule I to the Act.

(c) Stamp duty is leviable on the instrument if it is executed in the State of Maharashtra or on the instrument which, though executed outside the State of Maharashtra, relates to any property situate, or to any matter or thing done or to be done in the State and is received in the State. Hence, for example, even if an LLP Agreement is executed outside the State of Maharashtra but if registered office of the LLP is located in Maharashtra, and the instrument of partnership is received in Maharashtra, then it would be subject to stamp duty under the Act.

(d) The charge of stamp duty is subject to the provisions of this Act and the exemptions contained in Schedule I.

Currently, there is no express provision in the Act for levying stamp duty on an LLP Agreement. Under the Act, the term ‘instrument’ is defined to include, amongst other things, every document by which any right or liability is, or purports to be created, transferred, limited, extended, extinguished or recorded. Stamp duty is always on an instrument and not on a transaction. The LLP Agreement would determine the contribution of capital, distribution of profits, ownership and transfer of property, rights and duties of partner, etc. Therefore, an LLP Agreement would come under the definition of an ‘instrument’ and attract Stamp Duty.

2.3 Let us consider some of the possible Articles of Schedule I to the Bombay Stamp Act under which the LLP Agreement could be stamped.

(a) Conveyance :

Article 25 deals with duty as on a Conveyance. The term Conveyance is defined (as is relevant to this discussion) u/s.2(g) of the Act to include, a conveyance on sale, every instrument by which property or any estate/interest in property is transferred to or vested in any other person inter vivos. Thus, a conveyance includes every transfer of property between two or more persons except those transfers which are covered by other Articles, e.g., lease, leave and licence, gift, etc. It would not be correct to say that an LLP Agreement is a conveyance of property from the partner to the LLP. Hence, in my view, an LLP Agreement should not be stamped with duty as on a conveyance. However, the Legislature can, by an amendment to the Stamp Act, extend the same rate as a conveyance to the introduction of property other than cash as capital contribution of the LLP.

(b) Instrument of Partnership :

Another Article is Article 47 which deals with the duty as on an Instrument of Partnership. Article 47 of Schedule I specifically provides for levy of stamp duty on partnership and the relevant article is reproduced below :

“47. Partnership :

The term ‘instrument of partnership’ and the term ‘partnership’ have not been defined in the Act. Hence, the term ‘partnership’ would have to be understood as defined in the Indian Partnership Act, 1932. At present, an LLP Agreement cannot be covered under Article 47 of the Bombay Stamp Act, 1958 since it expressly deals with a partnership firm and an LLP is not a partnership firm.

(c) Agreement :

Till the time an express amendment is made, the LLP Agreement may be covered under Article 5(h)(A)(iv) of the Bombay Stamp Act which provides as under :

“Agreement or its records or memorandum of an agreement

Thus, in my view, till such time as an express amendment is made to the Act, an LLP Agreement should attract duty @ 0.1% if the value of the capital contribution is less than Rs.I0 lakhs and @ 0.2% in all other cases.

In case the LLP Agreement does not have any monetary value then the duty would be under Article S(h)(B) at Rs.200.

3. Foreign Investment in an LLP

3.1 The next important issue which arises is that can a foreigner /NRI invest in an LLP ? S. 7 of the LLP Act provides that at least one of the Designated Partners of an LLP should be a resident in India. This term is defined to mean a person who stayed in India in the preceding one year for more than 182 days. Thus, the LLP Act itself recognises that a partner of an LLP can be a non-resident.

3.2 However, the Foreign Exchange Management Act, 1999 and the Regulations issued thereunder do not deal with the investment by a person resident outside India (PROI) in the capital of an LLP. FEMA 20/2000 or the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 provide for the Foreign Direct Investment Scheme. Para 1(1) of Schedule I to these Regulations enables a PROI to invest, on a repatriable basis, in the shares or convertible debentures issued by an Indian company. However, these Regulations do not enable a PROI to invest in the capital of an Indian LLP.

3.3 The Foreign Exchange Management (Investment in Firm or Proprietary Concern in India) Regulations, 2000 enable an NRI/PIO to invest in the capital of a partnership firm or a proprietary concern in India. R.3 of these Regulations empowers the RBI to permit, on application, any PROI to invest in the capital. of a firm, proprietary concern, AOP in India. However, these Regulations also do not enable a PROI to invest in the capital of an Indian LLP.

3.4 Till such time as the RBI amends the FEMA Regulations, it would be difficult for foreign investors to invest in LLPs. LLPs are a very tax-efficient way of structuring investments, especially in the infrastructure sector, such as in roads, highways, ports, etc. In sectors where the concept of multiple layers of SPVs, Holding Companies, JV Companies, etc., is prevalent, the use of LLPs can minimise the tax leakages. Hence, it is high time for the Government to amend the FEMA to facilitate the investment by PROIs in LLPs.

4. Foreign Investment by an LLP

4.1 FEMA 120/2004 or the Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2004 provide for the Direct Investment Outside India by an Indian party. Under s.2(v) of the FEMA, an LLP would be a person resident in India since it is a body corporate registered or incorporated in India.

4.2 These Regulations permit an Indian party to make an overseas investment in a JV or a subsidiary abroad. R.2(k) defines an Indian party to mean a company or a body created under an Act of the Parliament or a partnership firm registered under the Indian Partnership Act, 1932. An LLP is neither of these three entities. Further, the Regulations also permit Registered Trusts, Societies, unregistered partnership firms, sole proprietary concerns and individuals rendering professional services, etc., to acquire shares in a foreign entity or to set up JV/ WOS under certain situations. However, there is no provision to facilitate the overseas direct investment by an LLP. Hence, till such time as these Regulations are amended an LLP cannot make an overseas investment.

4.3 One wonders why, when the Ministry of Company Affairs is so upbeat about LLPs, it has not aggressively pursued these amendments with the RBI?

(To be continued)

BCAJ Admin

PART C: Information on & Around

In the issue of June, 2013 in this column, it was reported that as a consequence of 97th Amendment to the Constitution the Co-operative Societies become Public Authorities and get covered under RTI. Recently the Supreme Court passed a judgment as noted below, which has given impression that SC has held that Co-op. Societies are not so covered. Mr. Vijay Kumbhar has now analysed the judgment as under:

Co operative societies not out of ambit of RTI

The manner and timing of reporting regarding Supreme Court’s (SC) judgement (CIVIL APPEAL NO. 9017 OF 2013) about co-operative sugar factories (CS) is amazing. In many news papers they have published date of judgement as 15th October. Actually it was given on 7th October. At least people concerned with RTI knew about it but it was not discussed thoroughly. On 9th of October Anna Hazare and Medha Patkar alleged about Rs. 10,000 crore scam in the sale of the co-operative sugar factories purchased by the political leaders across parties in Maharashtra. After that, a lot of news items appeared in the media. That stunned the government as well as cooperative mafias .Then suddenly news appeared in the media “Cooperatives out of bounds of RTI, rules Supreme Court”.

If read carefully it is clear that SC has only decided about who should provide the information, and it has made it clear that Registrar of Cooperatives (RoC) is duty bound to provide the information irrespective of whether CS is substantially financed or not. Before one draws any conclusion let us study some of the paragraphs of the said judgement. In para 12 SC says, we are in these appeals concerned only with the cooperative societies registered or deemed to be registered under the Co-operative Societies Act, which are not owned, controlled or substantially financed by the State or Central Government or formed, established or constituted by law made by Parliament or State Legislature

It is very evident from the above para that this judgement is not applicable to only societies mentioned above. Then how one can say that due to SC judgement all societies have come out of RTI ambit.

In para 52, SC says Registrar of Cooperative Societies functioning under the Cooperative Societies Act is a public authority within the meaning of Section 2(h) of the Act. As a public authority, Registrar of Co-operative Societies has been conferred with lot of statutory powers under the respective Act under which he is functioning. He is also duty bound to comply with the obligations under the RTI Act and furnish information to a citizen under the RTI Act.

Information which he is expected to provide is the information enumerated in Section 2(f) of the RTI Act subject to the limitations provided under Section 8 of the Act. Registrar can also, to the extent law permits, gather information from a Society, on which he has supervisory or administrative control under the Cooperative Societies Act. Consequently, apart from the information as is available to him, under Section 2(f), he can also gather that information from the Society, to the extent permitted by law. Registrar is also not obliged to disclose that information if those information fall under Section 8(1)(j) of the Act. No provision has been brought to our knowledge indicating that, under the Cooperative Societies Act, a Registrar can call for the details of the bank accounts maintained by the citizens or members in a cooperative bank. Only that information which a Registrar of Cooperative Societies can have access under the Cooperative Societies Act from a Society could be said to be the information which is “held” or “under the control of public authority”. Even that information, Registrar, as already indicated, is not legally obliged to provide if that information falls under the exempted category mentioned in Section 8(j) of the Act.

Apart from the Registrar of Co-operative Societies, there may be other public authorities who can access information from a Cooperative Bank of a private account maintained by a member of Society under law, in the event of which, in a given situation, the society will have to part with that information. But the demand should have statutory backing.

It is clear from above para that whatever information the register has and can gather from cooperative societies, he/she is duty bound to furnish it to applicant under RTI act , irrespective of whether society is substantially financed or not. The only binding on the register is to take into consideration section 8 of the RTI act. However that burden was already there. In para 53, SC says, ‘Consequently, an information which has been sought for relates to personal information, the disclosure of which has no relationship to any public activity or interest or which would cause unwarranted invasion of the privacy of the individual, the Registrar of Cooperative Societies, even if he has information, is not bound to furnish the same to an applicant, unless he is satisfied that the larger public interest justifies the disclosure of such information, that too, for reasons to be recorded in writing’. From reading of above para it is well clear that SC has said that even if information is personal one if there is larger public interest RoC may provide that to applicant.

In para 40 SC says The burden to show that a body is owned, controlled or substantially financed or that a non-government organization is substantially financed directly or indirectly by the funds provided by the appropriate Government, is on the applicant who seeks information or the appropriate Government and can be examined by the State Public Information Officer, State Chief Information Commission, Central Public Information Officer etc., when the question comes up for consideration. A body or NGO is also free to establish that it is not owned, controlled or substantially financed directly or indirectly by the appropriate Government.

In para 41 SC says Powers have been conferred on the Central Information Commissioner or the State Information Commissioner under Section 18 of the Act to inquire into any complaint received from any person and the reason for the refusal to access to any information requested from a body owned, controlled or substantially financed, or a non-government organisation substantially financed directly or indirectly by the funds provided by the appropriate Government.

From reading para 40 and 41 together one can easily draw the conclusion that if Cooperative society or NGO body is owned, controlled or substantially financed then PIO, Information Commission have powers to decide over that. In other words if they come to conclusion that concerned CS or NGO is owned, controlled or substantially financed directly or indirectly by the funds provided by the appropriate Government they can declare such organisation a public authority. Otherwise registrar of cooperatives is duty bound to furnish the information. 240 (2013) 45-B BCAJ In other words Supreme Court in its recent judgment has only decided about who should provide the information under RTI Act , is it Registrar of co operative societies or direct societies and also answered that RoC is duty bound to supply the information in case CS is not substantially financed or ask society to appoint PIO if satisfied.

Against above opinion based on analysis made by Shri Vijay Kumbhar, some hold the view otherwise. Finantail Express (dated 23.10.2013) has reported as under: Cooperative societies including coop banks will not fall within the definition of ‘public authority’ for purposes of the Right to Information Act, and hence the Registrar of Cooperative Societies is not liable to provide information to the general public under this law, the Supreme Court has held in the case, Thalappalam Service Cop Bank Ltd vs state of Kerala.

It said that the powers exercised by the Registrar and others under the Cooperative Societies Act are “only regulatory or supervisory” and will not amount to dominating or interfering with the management or affairs of the society so as to control it. Besides, “the societies are not statutory bodies and are not performing any public functions and will not come within the expression ‘sate’ within the meaning under Article 12 of the Constitution of India,” it added.

Recognizing that the right to privacy was a sacrosanct facet of Article 21 of the Constitution, the apex court said that if the information relates to personal information, the disclosure of which has no relationship to any public activity or interest or which would cause unwarranted invasion of the privacy of the individual, the Registrar, even if he has got that information, is not bound to furnish the same to an applicant, unless he is satisfied that the larger public interest justifies the disclosure of such information, that too, for reasons to be recorded in writing.

In this case, various coop societies had challenged the full Bench of the Kerala High Court’s judgment that upheld the state government’s circular and brought coops within the RTI ambit. The state government claimed the circular to be in the larger public interest so as to promote transparency and accountability in the working of every co-operative society in Kerala.

BCAJ Admin

PART D: Good Governance

Pavan Varma, an author and a former diplomat and corruption adviser to the Bihar Chief Minister wrote in the Times of India on Sunday 18th March 2013, under the title, “A Republic in Crisis” Excerpts thereof: There is an uncomfortable fact which we are unwilling to confront. And that is that our young republic is facing a systemic crisis.

This crisis is not about an individual. It is not about any one party. It is not about one international economic showdown. And, it is not a crisis which will be necessarily resolved by the next general elections, or the ones after that. The crisis that we are in is that two fundamental pillars of our republic, governance and democracy, which should be complimentary, have become antithetical to each other. This was not a situation envisaged by our Constitution makers. Their presumption was that democratic election would throw up a party, or a combination of parties, which on the basis of a stable majority would govern effectively in order to give back to the people what they had promised.

Governance and democracy must be complimentary to each other. There could be better solutions to the one I have proposed. But the blunt truth is that we must find a solution. We cannot afford to lose any more time. The people of India will not wait anymore.

levitra

BCAJ Admin

PART C: Information on & Around

BMC & RTI:

If all goes as planned, there will be no need to put an RTI application to get information about the Brihanmumbai Municipal Corporation (BMC) as the civic body, in a year’s time, plans to digitise each and every document and put it up on their website for all to see. Not a small feat as they have over 80 Crore papers to be displayed online.

“All these documents are important and they are so old that even turning pages can damage them. If we want to preserve these documents, getting them digitised is the only way,” said a senior civic official. “Once the digitisation is done, there will be no need to submit a right to information (RTI) application for obtaining information regarding the BMC,” said Sitaram Kunte, Municipal Commissioner.

Nagpur SIC:

On Saturday 16th March, Times of India reported: SIC heard three appeals and levied a fine of only Rs. 18,000 in all the last six months and so on. The State Information Commission (SIC) bench in Nagpur seems to be doing everything to blunt the Right to Information (RTI) Act, 2005, a legislation that has empowered common people against the system. Next day on Sunday, 17th March, Times of India issued clarification as under:

The state information commissioner, Bhaskar Patil, has pointed out that the headline ‘Nagpur info chief clears 3 of 1,849 pleas in 6 months’ is incorrect. He stated that the SIC had heard and disposed of 1,978 appeals and complaints from June to December last year, out of which it levied monetary fine in three cases. The SIC had also recommended ‘disciplinary action’ on 41 cases out of 1,849 second appeals and 485 complaints. The error is regretted.

Corruption and RTI:

The Central Vigilance Commission (CVC) has slammed the Department of Revenue in the Ministry of Finance and two of its key organs – the Central Bureau of Direct Taxes (CBDT) and the Central Board of Excise and Customs (CBEC) – for shielding its allegedly corrupt senior officials.

In response to an RTI application filed by Economic Times, CVC has revealed the minutes of all annual review meetings held by it in 2012 with Central Vigilance Officers (CVOs) of various government sectors. The minutes of such meeting held on 27th July, 2012, with CVOs of the Revenue and Transport Sector reveal that CVC came down hard on the Department of Revenue, CBDT and CBEC for going slow against corruption. The minutes clearly state that CVC Pradeep Thakur said at the meeting that there is a “perceptible tendency” in the Department of Revenue of “trying to protect particularly senior officers” in the organisation. CVC asked Shashi Shekhar, the additional secretary (revenue) and CVO of Department of Revenue, to make concerted efforts to liquidate the pendency of corruption complaints, saying the commission was concerned over the inordinate delay in implementation of its advice for action.

Shielding top officers is a phenomenon in CBDT too, the minutes indicate. “CVC expressed its concern at the inordinate delays being caused by CBDT in finalising regular department action cases, implementation of CVC’s advice and in grant of sanction for prosecution. CVC stated that such delay indicated reluctance of the administration in taking action against senior officials and such delays, especially in grant of sanction for prosecution, are completely unacceptable. CVC also expressed its displeasure at the arbitrary fashion in which adjudicating officers are passing the orders while deciding cases of higher revenue implications,” the minutes say. CVC was similarly anguished about the large number of pendency of action against allegedly corrupt officials in CBDT, saying Supreme Court has recently made it mandatory for prosecution sanction to be granted within three months and officers intentionally delaying the same to be held accountable.

As per the CVC annual report for 2011, CBDT and CBEC were still to take action against a total of 474 corrupt officers against whom CVC advised action over six months ago. 330 such cases were pending in CBEC while 144 cases were pending in CBDT. In comparison, CBEC took action only against 69 of its officers last year while CBDT acted against just eight officers.

levitra

BCAJ Admin

PART B: RTI Act, 2005

Excerpts from Mrs. Aruna Roy’s letter to RTI Users: The importance of a National Compaign for people’s Right to Information (NCPRI):

“As we proceed into the eighth year of the use of the RTI we need to look – not only at the shortcomings which we always do-but at our immense gains. Not so much to compliment ourselves as to strengthen our resolve to carry on with millions of our struggles that its use has spawned. The RTI has forced the re-distribution of power, demanded participatory decision-making and specific accountability. It has legitimised questioning as a part of decision-making. It has questioned representative democracy and pushed the system to acknowledge, though reluctantly, that it has an obligation to the sovereign citizen.

Sometimes, one has the good fortune to be a part of campaign for an issue that has a seminal impact on the lives of people. In all our collective dreams we define a space where equality will be an accepted norm and justice accessible. We have all thought and expressed the desire of a corruption-free India, where arbitrary use of power can be questioned and addressed. The Right to Information Act has addressed and facilitated the realisation of some of these dreams.

There was to begin with the unstated understanding that even confronting corruption needed an equal emphasis on the arbitrary use of power. In other words, RTI was fundamental to a democracy, and democracy, in order to stay alive with its principles intact, needed the RTI.

Once the law was made, the NCPRI accomplished a basic objective and many of its constituent members withdrew to the background. Many users, groups and organisations have grown. All of us continue to be amazed at the number of users, and the thousands of ways in which the law has empowered people to access food, shelter and justice, individually and collectively.It has been and continues to be a revelation of the ingenuity of the concerned citizen-user. An acid test of any legislation is its continued use even after meeting with road blocks and deliberate attacks, in this case even on our lives. RTI has addressed that challenge with persistence and diligence. We always said the devil lies in the details. The RTI users have continued to pursue and conquer these devils! The RTI empowers the citizen, or citizens, as the case may be, to challenge and question the State as part of their regular life, activities and campaigns.

Individual users all over the country have already revolutionised the interaction with the State with their imaginative use of the RTI. If we manage to work together, our collective work may have a great impact on India’s ethical future. It may force the system to keep its constitutional promises and forever change the face of governance in this country. It is true that India is not one of the easiest countries to live in, nor one of the most efficient bureaucracies to deal with. Yet, we live and must claim our rights as citizens and continually challenge unethical action, from the individual to all of its citizens and in every aspect through which the constitution guarantees our sovereignty.”

levitra

BCAJ Admin

Company Law

Companies Bill is passed:

The New Companies Bill with 29 chapters, 470
sections and 7 schedules, was passed by the Lok Sabha on December 18,
2012 and then transmitted to the Rajya Sabha for concurrence. The Rajya
Sabha made 9 amendments to the Bill before passing it on August 8th,
2013. Thereafter the Lok Sabha has agreed to the amendments made by the
Rajya Sabha to the Companies Bill 2012. The Bill was awaiting
Presidential assent.

The highlights of the Companies Bill 2012 as passed
by the Rajya Sabha can be seen at

http://www.icsi.edu/WebModules/Linksofweeks/ Cos%20bill%20highlights.pdf

levitra

BCAJ Admin

Ethics and u

Gross negligence – Clause 7 of Part I of Second Schedule (contd.)

Series 4

Shrikrishna (S) – My dear Arjuna, you are looking very tired today. It seems the 30th September fever is on.

Arjuna (A)– I have lost my sleep! Anything can happen, our profession is so vulnerable!

S – I agree. Your Institute’s motto is ya esha suptesju jagarti – You have to be constantly awake.

A – That refers to mental awakening, but I have even lost physical sleep.

S – Why? You only need to be diligent—and vigilant. Is it that difficult?

A – In the last few meetings, you have been telling me about due diligence and gross negligence. But what exactly should one do? Tell me specific things…

S – In the eleventh chapter of the Geeta, I showed you my ‘vishwa-roop’ – no end to the forms in which I manifest myself. I mean the forms in which I appear before you. In the same way, there cannot be an exhaustive list of instances of negligence!

A – I understand that, but today I heard a story— so alarming, I don’t know whether it is negligence or misfortune! It is beyond imagination.

S – What did you hear?

A – What to tell you. The story is like a nightmare!

S – Arjuna. In this month of September, you don’t have much time. So, be quick. What happened?

A – My friend was the auditor of a company for six years. He left the audit 3 years back. Big Company. Turnover 600 crores!

S – What was its business?

A – It had some mines in Bihar. Suddenly, he received a complaint filed by a bank.

S – What was it about?

A – That big company had turned into an NPA. And the auditor was being made a scapegoat.

S – This is very common. It is strange that the auditor is blamed for such things, as if the company’s performance depends on the auditor! But that auditor must have committed some blunder.

A – Actually, the company’s corporate office was in Mumbai; the auditor says he used to do 100% audit.

S – But did he ever visit the business site?

A – Of course! During six years, he visited the mines on two to three occasions.

S – Then what is the problem? Why did he give up the audit?

A – There was some issue about his fees.

S – Ok. But what is the problem? He has to simply show how he conducted the audit. He has to show working papers, audit programme, noting, management representation, etc.

A – All that, he has done. He has taken everything on record. Stock statements, bank statements, bank’s certificates, copies of other important documents.

S – Then he need not worry. If the business has failed, what can he do?

A – Actually, the management was thinking of an IPO!

S – Very good. At least common investors will be saved.

A – But the real story is that there was a CBI raid on the company. The auditor was also summoned, and interrogated.

S – This is also common. But the auditor has to answer it without fear if he has done the job properly.

A – The shocking revelation was that the company did not have any real business at all! Everything was fake and fabricated. Bank statements, correspondence, banks certificates, contracts, licences, bills, invoices, vouchers and practically all records were false!

S – But what about those mines?

A – God alone knows. They showed some mines. What does an auditor understand about mines? When we go for stock taking, we are really not capable of understanding anything. It is a futile exercise. Even about machinery, what do we know?

S – Strange. Really intelligent, what massive planning!

A – I feel banks should have known this earlier. If there are no business transactions through a bank, they should know immediately. Yet they keep on renewing the facilities.

S – Actually, that underlines the importance of third-party evidence. Middle-level audit firms avoid writing directly to debtors, bankers, suppliers, and other concerned parties. They don’t verify records of other laws—like VAT, excise, labour laws.

A – But a fraudster can produce any fabricated documents.

S – Leave this extreme case alone. The fact remains that third party evidence can reveal so many things that are important for audit.

A – The moral of the story is that we should suspect everything. There is no use acting merely as a watchdog. We should becomebloodhounds only.

S – Times have changed. Bad elements are becoming stronger. Proportion of truth in every walk of like is reducing. This calls for ‘professional scepticism’ —don’t act too much in good faith.

A – The story is a real eye-opener. We must train our staff, try to follow all that we learnt in audit books, be more assertive with clients.

S – You said it! Ganesh festival is approaching. The Lord will save you only if you are alert and diligent. God bless you.

Om Shanti !

The above dialogue between Shri Krishna and Arjuna is a continuation of earlier dialogues published in BCA Journals of May 2013 and June 2013. It deals with the terminologies ‘gross negligence’ and ‘lack of due diligence’ used in Clause (7) of Part I of Second Schedule. This is the most important and serious charge of misconduct. Discussion on this clause will continue.

levitra

BCAJ Admin

PART C: Information on & Around

RTI and Consumer Protection Act:

The Pune District Consumer Disputes Redressal Forum (Consumer Court) has ordered an educational institution to pay compensation to an RTI applicant, a former employee of the institute, for delay in providing him information he had sought to buttress a case he had filed in the Bombay High Court.

The consumer forum ordered the Information Officer and the principal of Deccan Education Society’s Technical Institute to pay Rs.15,000 to Haribhau Kakade for not providing the information despite a state information commission order to do so. The institute argued that Kakade was not a ‘consumer’ as per the definition in the Consumer Protection Act. The Court panel of president of the forum Anjali Deshmukh and member S. K. Kapse disagreed and relied on a National Consumer Rights Commission order that stated, “In our view, therefore the State Commission was wrong while holding that once the complainant had availed the remedy against which appeal was provided, he could not maintain a complaint under the Consumer Protection Act.” The Consumer Court stated that although it cannot direct the institute to make the documents available to Kakade, it can order the institute to pay a compensation for mental and physical agony faced by him. The Court ordered the institute to pay Rs. 15,000 as compensation and Rs.1,000 as litigation cost. (As reported on 9-12-2011 in Indian Express)

MMRDA for furnishing certain information

Information comes at a price, but Thane resident Omprakash Sharma learnt that the cost could be prohibitive when the information concerns public issues and is to be given by a public body like the Mumbai Metropolitan Region Development Authority (MMRDA).

The state-run agency has told Sharma to pay Rs. 50,000 for copies of a study report on transportation strategies in Thane and Raigad districts.

The Right to Information (RTI) Act activist had on November 14 filed an application with the MMRDA, inquiring if the agency had conducted any surveys on the monorail or metro in the Mumbai Metropolitan Region (MMR) area. Sharma offered to pay for the study report.

MMRDA promptly replied to the query on November 26, stating that a comprehensive transportation study for the region was carried out by the agency along with M/s. Lea Associates, and the study report was ready by 2008. Another report, on the proposed master plan for a monorail in Thane and Raigad, was also prepared and is with the MMRDA.

However, Sharma was asked to pay up Rs.50,000 for securing these reports as they are said to be ‘priced reports’. “It shows how innovative they could be in keeping away citizens and activists who seek information using the RTI Act”, Sharma said.

He added that the report is now MMRDA property and ideally it should follow the RTI Rules, which state that the information seeker be charged Rs.2 for every copy which is photocopied.

“Alternatively, the agency could charge me Rs.50 for transmitting the report on a floppy or disc” Sharma said.

Statement on RTI in Rajya Sabha:

Minister of personnel, public grievances and pensions, V. Narayanasamy replied in the affirmative on a query in the Rajya Sabha regarding concerns raised by Ministers on the RTI Act affecting the Government’s functioning.

When asked about bureaucrats expressing apprehension about putting their view on controversial issues because of the Act, the Minister said:

“Some concerns have been expressed that the improper use of RTI Act and indiscriminate and impracticable demands for disclosure of sundry information unrelated to transparency and accountability in the functioning of public authorities may adversely affect the efficiency of administration.”

On a separate question, he said the Central Information Commission has a pendency of 20,232 cases as on 1st September.

Non-refund of deposits by the college:

In the elation of securing admission to a college of their choice, students often forget to check that the miscellaneous fees and deposits paid to the institution are actually refundable. These deposits are taken by the institute as cover in the event of any breakages or damage to the facility caused by the student. And these deposits are refundable after completion of the course, however a majority of students are unware that they are entitled to the refund. A former student of Ramniranjan Jhunjunwala (RJ) College in Ghatkoper approached the management to claim the refundable deposit. Surprisingly, his request to the college administrators was met with uncooperativeness. Fed up with the tactics of management, the ex-student who was made to run from pillar to post to recover his security deposit exposed the college through an RTI query.

In August this year, Singh sought information through an RTI, querying why the management is not refunding the student’s money. But the management refrained from giving him a reply. On 1st, October, Singh then appealed to a higher authority in the college. A week later, the college replied that the management had refunded money to all those students, who have asked for a refund. The authorities also presented a list of 14,000 students who had paid deposits to the college. However, more than 30% of the students did not receive their dues, which means that the college had pocketed approximately Rs.45 lakh in the last 10 years.

“It’s shocking and shameful for our educational system that the college is not interested in refunding the money. The college should be investigated and action should be taken against those guilty of misappropriation,” said Singh.

Following the RTI revelation, on 23rd November, Singh wrote (copy with MID DAY) to the Education Minister, State Education Minister, Governor and the Vice-Chancellor of Mumbai University to look into the matter.

levitra

BCAJ Admin

PART B: RTI act , 2005

Confidentially can’t hide Information: SC strengthening the arms of the Right to Information Act in a manner that thwarts the Government’s procedural antics to stall information regarding corruption and human rights violations by investigation agencies under the garb of confidentiality, the Supreme Court has ruled that a Notification issued by a State for that purpose in mind can’t be made effective from retrospective date.

In a significant judgment on Monday, the Apex Court held that the Notifications under the RTI Act cannot apply retrospectively. It means, information in response to an RTI query can’t be denied merely because a Notification has been issued after the date of application.

The right of an aggrieved applicant must be decided on the basis of the law as it stood on the date when the request is made. “Such a right cannot be defeated on the basis of a Notification if issued subsequently at a time when the controversy about the RTI is pending before the Court,” a Bench of Justices Asok Kumar Ganguly and Gyan Sudha Misra ruled while disposing of an appeal filed by a resident of Manipur, Wahangbam Joykumar, who had moved the State in February, 2007 under RTI seeking information regarding the magisterial enquiries initiated by the State from 1980 to 2006.

The Government denied this information on the basis of Notification issued in 2007.

Allowing Joykumar’s appeal, the Bench asked him to seek the requisite information now as it directed the State to provide him the information.

Stressing the importance of the RTI Act, the Apex Court said its preamble would show that it “is based on the concept of an open society. Way back in 1975, the Apex Court had underscored the need of an ‘open government’ and observed that “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”.

It had also said that people are entitled to know the particulars of every public transaction in all its bearing. The right to know 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 transaction which can rate, have no repercussion on public security”.

It also warned saying that “to cover with veil of secrecy, the common routine business, is not in the interest of public. Such secrecy can seldom be legitimately desired”.

levitra

BCAJ Admin

Ethics and u

Dear friends,

I hope you did not read my last month’s article. If you have read it, please try to forget it. Henceforth, we are going to listen to the dialogue between CA — Arjuna and Bhagawan Shrikrishna on the Code of Ethics (COE) of our Institute of Chartered Accountants of India — (ICAI).

Is it a coincidence that our ICAI Head Office is situated on ‘Indraprastha Marg’ — the capital of Pandavas? Anyway, CA Arjuna and Shrikrishna are present on the battlefield. War is yet to commence!

What a great idea! — Even the wars in those times were fought by following the rules of ethics! — Start at sunrise, close at sunset, not to harm women and children, not to attack anyone who is without a weapon; and above all, seek blessings from seniors even from the enemy side! — Poetic indeed — but at that time, a reality.

The dialogue begins: CA Arjuna

(A) — Hell with this profession! And that meaningless Code of Ethics (COE)! Lord Shrikrishna

(S) — What happened? Why are you so upset?

A — Last time, I was not willing to fight. You pushed me into the war. But then this COE ties my hands. I can’t freely accept audits, I cannot advertise, I cannot do any other thing! How can I fight now?

S — Who says? Have you read COE?

A — Yes. Of course! I read it 20 years ago for my exam.

S — Oh! You still remember it?

A — Not fully. I only remember that while auditing, I have to obtain an NOC, and I cannot advertise.

S — Only that much? Then why are you making such a fuss of it? Only a couple of restrictions!

A — But nowadays many of my friends are receiving love-letters from the Institute.

S — Do you remember, at that time it was called Code of Conduct; and now it is Code of Ethics?

A — The same nonsense. Only the name has changed. Unnecessary burden! Times are changing so fast — and they are sticking to those old so-called ethics!

S — Are you aware your CA Act of 1949 was amended in 2006?

A — What difference does it make to me? We elect the Council members and they harass us. I hate going for voting.

S — But do you know what the motto of the Institute is? What a CA really stands for?

A — Don’t tell me that. There is an eagle there and something scribbled in Sanskrit. Who cares to know it!

S — It is ‘Ya Esha Supteshu Jagarti’ — He who is awake when the others are asleep.

A — Yes. We are slogging round the clock, and our clients are relaxing and enjoying. Very apt motto! No wonder, I am suffering from insomnia! And on top of it this burden of Ethics.

S — No dear. You are in the slumber — only playing with numbers. You have forgotten your role. That’s what also happened in Mahabharata war. Ethics is not your burden. It is your shield. That is why you Pandavas succeeded.

A — Ah! Don’t give me the sermon. How can the restrictions imposed on me become my shield? Who will remember all those rules of ethics? Such a long list of dozens of items!

S — No. You are mistaken. Really speaking there are only 3 rules, which your Guru told you when you completed your education.

A — Yes. Something he told from Taittireeya Upanishad. S — Satyam Vada — Always speak the truth.
— Dharmam Chara — Follow the Religion — that means not the worship — or pooja path — But your duties. That time, duties as a Kshatriya (warrior); now as a CA — professional. — And third — Swadhyayat Ma Viramah — Never give up studies.

A — I know. That is that CPE! That is the only place where I can sleep in the auditorium.

S — Why? — Do you attend it or send your proxy?

A — But then, in that war, you gave us some ‘practical tips’ to circumvent the truth. Why these double standards?

S — No. That was not bypassing the truth; but temporarily masking it — Eventually to uphold the Truth — and Dharma.

A — I am again confused. Next time, explain to me all those nasty restrictions one by one — and tell me how it is a shield. Let us take a break. Om Shanti.

levitra

BCAJ Admin

Ethics and u

Shrikrishna (S) – Arjunji, you are smiling. Khush Dikh Rahe ho!

Arjun (A) – Yes. Scrutinies are under control. MVAT audit is on 15th January. So December is a little relaxed.

S – I Know. You will start VAT audits only after 10th January – at 11th hour, and then expect further extension.

A – Can’t help it. Articles now go on leave from December itself for May exam!

S – Such a long leave? But what about Council’s rule about maximum leave?

A – That is only on paper. Articles always dictate their terms.

S – Anyway. But there must be something else behind your happy mood. Any plans for festival season?
A – Yes. Good news is that one of my client’s bank loan of Rs. 5 crores has been sanctioned !

S – So what?

A – He has agreed to pay me fees of 3% of the loan. I had also insisted on it, so there will be good collection.

S – Hey! Talk softly. Somebody will hear.

A – I am taking my family on a long holiday. Wait. I will just call my office to raise an invoice. Sanction letter is in my hand. I should get fees as soon as the loan is disbursed.

S – If bill is not raised, please hold it. For God’s sake, don’t mention this to anyone and never ever mention it in the bill.

A – Why? What is wrong about it? I have slogged for the sanction. I spent so much time on preparing the project report; visited the bank so many times; had so many meetings. 3% is absolutely reasonable.

S – O dear. Please don’t do such foolish acts. A – I don’t understand. You only preached Karmayog in Geeta. I have performed Karma. I must get the fruit. It is my rightful reward.

S – Do you always charge like this? Based on the result of your work?

A – Of course! Now see, for client’s refunds, you know how many times we need to visit tax offices? It is common to charge 10% of refunds.

S – Before talking of 10%, please spend two minutes to read clause (10) of Part I of the First Schedule. Very simple.

A – What do you mean? Should we not charge?

S – You should always charge. But not linked with loan amount or refund amount. Are you a broker?

A – Then how should we charge?

S – It should be based on your inputs in terms of time, paper work done, expense incurred, representation skills, seniority, experience and such factors.

A – But why? Client is benefited after all. What is wrong if he pays based on the benefit?

S – That is precisely what I preached in Geeta. Karmayog is – Just do your duty sincerely. You have no right in the reward in this manner.

A – You are confusing me. You mean, we should do social work in the profession?

S – No dear. I only mean you should not be attached to the fruit. If your percentage theory is accepted, will you not charge any fees if loan is not sanctioned? Or refund is not received?

A – This, I had never thought about. But clients don’t pay unless the client gets a beneficial result.

S – See, a doctor will charge you even if you are not cured; even if surgery is not successful. Why? Because rendering service is in his hands and not the result. His fees are quoted before the operation and he does not increase it when operation is successful; nor reduces it even if treatment fails.

A – But I am told lawyers charge on the result of the case especially in Western countries. S – Don’t quote these examples. It is not a standard of ethical behaviour. A – But what is the logic?

S – If your reward is dependent on results, you are likely to make many compromises; resort to unscrupulous means. You may try to give result by hook or by crook. Not necessarily by professional approach.

A – You said it is acting like a mere broker. I see a point in what you are saying.

S – It may impair your independence. Your dignity and grace will be lost. In fact, you will lose respect in the eyes of clients.

A – It will be like a gamble. Either a big fee or a big zero! And the result is never in our hands. Anything may happen between the cup and the lip. All efforts then go waste. That’s what you to mean to say.

S – Same is the case with assignments of investigation. You cannot say that fees will be a percentage of quantum of discrepancy or fraud detected; or on any other findings as such.

A – Yes. I agree. If nothing is found, that does not mean we should not get any fees. After all, we have worked diligently. Result is always uncertain. But tell me, is it always a misconduct? There could be situations where we need to charge based on some result.

S – Yes. Council has thought of this. See clause 192 of your Regulations.

A – What is that?

S – Basically, it is in respect of assignments where the Government decides the structure of fees. For example, a Liquidator’s fees may be based on realisation of assets or disbursement of assets; or audit of a cooperative society where fee is decided on the basis of capital or net profits; or that of a valuer under direct taxes.

A – I have seen some of my colleagues even entering into a regular written agreement for fees on a percentage basis. I must caution them.

S – Yes dear. Remember, yours is a profession; not a business. And certainly not a broking business or commission agency.

A – Thanks for opening my eyes in time. Your advice is always ‘invaluable’; and you also should not charge me a percentage of it! Indeed, You Are Bhagwan! Om Shanti This is based on Clause 10 of Part I of First Schedule and Regulation 192 Clause (10) – charges or offers to charge, accepts or offers to accept in respect of any professional employment, fees which are based on a percentage of profits or which are contingent upon the findings, or results of such employment, except as permitted under any regulation made under this Act; Regulation 192 – Restriction on fees No Chartered Accountant in practice shall charge or offer to charge, accept or offer to accept, in respect of any professional work, fees which are based on a percentage of profits, or which are contingent upon the findings, or results of such work:

Provided that:

(a) in the case of a receiver or a liquidator, the fees may be based on a percentage of the realisation or disbursement of the assets;

(b) in the case of an auditor of a co-operative society, the fees may be based on a percentage of the paid up capital or the working capital or the gross or net income or profits; and

(c) in the case of a valuer for the purposes of direct taxes and duties, the fees may be based on a percentage of the value of the property valued.

levitra

BCAJ Admin

Ethics and u

Shrikrishna (S) Arjun, Congrats. You got possession of new flat. When are you shifting?

Arjun (A) I will shift in two or three weeks. That way I got possession in March itself. But children’s exams were there.

S – Ok. But it is far away from the city. That area has just started developing. A – Yes. But it is a spacious flat. That way, in Mahabharata, we had stayed even in exile. I don’t mind staying away from city.

S – There also, rates may be too high. How did you manage the funds? You are always crying that there is not much earning in the profession.

A – It is true. You can’t earn much unless you compromise on principles. Anyway, I took housing loan. Then I also took some gold loan against Subhadra’s ornaments. But now the gold rates have fallen. They may demand additional security. Still there was a shortfall. Then I borrowed some amounts from 2-3 clients. 5 to 10 lakh each.

S – Very good. But how will you repay all these loans? EMI will be pretty high.

A – See, I am giving my old flat on leave and licence. That rental will come. And clients I will adjust against their audit fees. As it is, they never pay my fees in time.

S – Oh! You do their audit?

A – Yes. How can I repay loans in lakhs from their meagre tax fees? Even audit fees are not very high. But there are 3-4 concerns in each group. So somehow I will make it.

S – But how can you do their audit?

A – Why? What happened? Why can’t I do their audits? They are not my relatives. After you told me once, I gave up the audits of Bhima’s business.

S – Oh dear Arjuna, you cannot be the auditor when you are indebted to a client. There are the Council’s guidelines.

A – When did the Council issue these guidelines?

S – They were very old. But on 8th of August, 2008, the Council issued them afresh.

A – What do they say?

S – They cover many topics. Chapter X says you cannot accept appointment as auditor of a concern if you are indebted to it for more than Rs.10,000/-.

A – Oh My God! Then I will shift these loans to my partner’s name, and show that I borrowed from my partner! So simple!

S – No Arjuna. Even your partner cannot be a borrower of that concern.

A – Just Rs.10,000/-? Such a ridiculous limit!

S – Council’s limit is Rs.10,000/-. But in Companies Act, it was just Rs.1,000/-. They may increase it in the new Law.

A – Then, what I will do is that I will ask my friend to sign these audits. Actual work I will do myself. He will just sign.

S – Is he close to you?

A – Of course! He is a guarantor to my loan.

S – Then he also cannot accept the audit. If you are guarantor to a borrower of a concern, then also you can’t accept that audit.

A – This is too much!

S – See, if you are in debt or under obligation of someone, you are likely to compromise with your duties as an auditor. You may tend to accommodate him.

A – Then I will get another friend to sign it. He has given his property as a collateral security for my loan.

S – Again a problem! An auditor to be independent, should not have provided any security for any loan given by that concern to any third person.

A – Two of the concerns are private limited companies. You mean, the limit is then just Rs.1,000/-?

S – Yes. Then the limits fixed in the relevant statute will apply.

A – O God! Serious problem! These clients are so useless. They are thoroughly disorganised. They don’t maintain their accounts properly. I have to literally spoon feed them! Their record is in a complete mess! Somehow, I have been signing. But I cannot expose it to a stranger.

S – Arjun; you are cursing a client who has lent you money when you needed it.

A – That’s true. But he is thoroughly indisciplined. I have always overlooked the blunders in his accounts and accommodated him.

S – Shall I ask you one thing? Do you keep your own accounts properly? And up-to-date?

A – Ah! But I adjust it myself at the year end, while filing my return.

S – Then remember. Chapter V of the Council guidelines says a practicing CA shall maintain and keep proper books of account! – Cashbook, ledger, etc. It is a disgrace to you that the Council had to issue such a guideline. Please introspect my dear! Are you disciplined yourself?

A – Let it be. Tell me about that indebtedness again. I have taken a housing loan from the Dadar branch of a bank. I am getting the audit of Thane branch of the same bank. Then what is the position?

S – Still you can’t accept. The bank as a whole is one concern. You are a borrower of the Bank; and which branch you are auditing is immaterial.

A – Oh. This is very harsh!

S – This is to ensure auditor’s independence. And remember, it is not restricted to mere statutory audit but covers all audits.

A – Actually, I am giving my old flat on leave and license basis to a bank and I will be taking a security deposit of Rs. 1 lakh. I think, that should not be a problem. It is not a loan as such. Can I then do that bank’s audit?

S – No dear. The word used is indebtedness. Security deposit is also a debt.

A – I must caution my friends. I am sure, they are not aware of all this. Tell me, can we take advance fees? It is a dream for a CA; as they don’t pay until the next year’s audit starts. But hypothetically —

S – Taking advance fees is also indebtedness.

A – Hey Bhagwan, good that you made me aware well in time. I am really indebted to you.

The above dialogue is with reference to Chapter V and Chapter X of the Council General Guidelines, 2008 Issued On 8th August, 2008 which read as under:-

Chapter V: Maintenance of books of account :

A member of the Institute in practice or the firm of Chartered Accountants of which he is a partner, shall maintain and keep in respect of his/its professional practice, proper books of account including the following:-

(i) a Cash Book

(ii) a Ledger Chapter X: Appointment of an auditor when he is indebted to a concern.

A member of the Institute in practice or a partner of a firm in practice or a firm shall not accept appointment as auditor of a concern while indebted to the concern or given any guarantee or provided any security in connection with the indebtedness of any third person to the concern, for limits fixed in the statute and in other cases for amount exceeding Rs.10,000/-.

Further, readers may also refer pages 313 to 323 of ICAI’s publication on Code of Ethics, January 2009 edition (reprinted in May 2009).

levitra

BCAJ Admin

PART d: Good Governance

Audacity of Ideas in the age of Resentment:

Thank the ancient Greeks for giving us the idea. Two thousand and six Hundred years on, trust the modern Greeks for showing the world how to mess up the idea of democracy. Today the “bailout” nation of the Eurozone is up for sale. literally: The cash-starved government is even selling state buildings; and the Emir of Qatar is buying six islands off Ithaca. Amidst the doom, the neo-Nazi party that promises salvation calls itself Golden Dawn. Greece is just one example of how the best form of governance is capable of offering the worst scenario of freedom to a people.

Narendra Modi (Gujarat Chief Minister) on governance:

“Democracy should not just be a five-year contract given to a leader by way of votes. It must be a participative process in which people work with the government to ensure better governance and greater development.”

Government is file, governance is life; Government is all about power, governance is about empowerment.

levitra

BCAJ Admin

PART B: RTI Act, 2005

Review petition made by Ms. Aruna Roy and Mr. Shailesh Gandhi in the matter of Order of the Supreme Court in Namit Sharma’s case.

The judgment in Namit Sharma’s case had had resulted in stopping the functioning of five State Information Commissions.

Now the Supreme Court has passed the following order:

O R D E R I.A.NO. 6 in R.P.(C) No. 2309 of 2012

This is an application for stay of the operation of the judgment dated 13th September, 2012 passed in Writ Petition (C) No. 210 of 2012 titled Namit Sharma vs. Union of India reported as 2013 (1) SCC 745 during the pendency of the Review Petition (C) No. 2309 of 2012 titled Union of India vs. Namit Sharma. We have heard learned counsel for the parties and we are not inclined to stay the operation of the entire judgment in Namit Sharma vs. Union of India but we direct that the following directions in sub-paras 108.8 and 108.9 quoted here-in-below shall remain stayed during the pendency of the Review Petition (C) No. 2309 of 2012.

108.8 The Information Commissions at the respective levels shall henceforth work in Benches of two members each. One of them being a ‘judicial member’, while the other an ‘expert member’. The judicial member should be a person RP(C) 2309/2012 etc. 3 possessing a degree in law, having a judicially trained mind and experience in performing judicial functions. A law officer or a lawyer may also be eligible provided he is a person who has practiced law at least for a period of twenty years as on the date of the advertisement. Such lawyer should also have experience in social work. We are of the considered view that the competent authority should prefer a person who is or has been a Judge of the High Court for appointment as Information Commissioners. Chief Information Commissioner at the Centre or State level shall only be a person who is or has been a Chief Justice of the High Court or a Judge of the Supreme Court of India.

108.9 The appointment of the judicial members to any of these posts shall be made ‘in consultation’ with the Chief Justice of India and Chief Justices of the High Courts of the respective States, as the case may be”.

We further direct that wherever Chief Information Commissioner is of the opinion that intricate questions of law will have to be decided in a matter coming before the Information Commissioners, he will ensure that the matter is heard by a Bench of which at least one member has knowledge and experience in the field of Law.

We make it clear that subject to orders that may be finally passed after hearing the Review Petitions, the competent authority will continue to fill up the vacant posts of Information Commissioners in accordance with the Act and in accordance with the judgment in RP(C) 2309/2012 etc. W.P.(C) No. 210 of 2012 except sub-paras 108.8 and 108.9 which we have stayed. This is to ensure that functioning of the Information Commissioners in accordance with the Act and the Judgment is not affected during the pendency of the Review Petitions. We further make it clear that the Chief Commissioners already functioning will continue to function until the disposal of the Review Petitions. I.A.No. 6 is ordered accordingly.

levitra

BCAJ Admin

PART D: Good Governance

• I am lucky to have made my money. After a certain point in time, money cannot make a difference in your life. I feel that it’s not even called charity, it’s about accountability and the responsibility to society.

—PNC Menon (Founder, Sobha Developers)

• At the root of poor governance is our lethargy for change, whether it is in the implementation of schemes or adherence to values. I do not have to remind you how grievously hurt the nation was when a young woman, the symbol of an aspiring nation, lost her life in the brutal assault in India in December last year. As I had said earlier, I repeat and I do believe that it is time to reset our moral compass. The police and investigative organisations can play a crucial role in creating conditions that could engender changes. An alert police force and investigative agency can ensure that no crime goes unpunished. It is important to ensure speedy and thorough investigation of allegations. The prosecution should also be speedy so that the guilty are punished without delay. This would enhance the deterrent value of punishment. It would improve responsiveness, one of the most important features of good governance.

— Pranab Mukharjee, The President

levitra

BCAJ Admin

PART C: Information on & Around

Due to some technical problems, the said opinion is not being published here. Same is posted on the website of BCAS www.bcasonline.org and PGDT rtiforyou.info

RTI in action or inaction?

2007-08

2011-12

Total registered public authorities

1,597

2,314

Submitted returns

1,382

1,593

Requests pending from last year

23K

4.3L

Received in year

2.6L

6.6L

Total

2.9L

10.9L

Disposal %

Rejection %

7.2

8.3

Surprisingly, only 29 ministries/departments out of 66 are providing complete information to the Central Information Commissioner (CIC) on how they handle RTI queries. Out of 2,314 public authorities registered with the CIC some 721 are defaulters – they don’t give information about their response to queries. In 2007-08, a total of 2.6 lakh queries were received. This jumped to 6.6 lakh in 2011-12. But what is revealing is that in 2011-12 over 4.3 lakh queries were carried over from the previous year. The rate of disposal has dipped from 86% in 2006-07 to about 68% in 2011-12.

Illegal new construction in Parel, Mumbai

Uncertainty looming over the fate of illegally constructed buildings such as the apartments at the Campa Cola Compound in Worli and building collapses across the city, it is Parel’s turn to tell another grim tale of real estate malpractices.

Documents obtained under RTI by Mahesh Vengulkar, include various incriminating documents about the structure.

The building is very old and was purchased for Rs. 3 crore by a builder some years ago. “Under the guise of carrying out repairs to the dilapidated structure, an unauthorised fourth floor was added to it and individual flats are being sold in the market for around Rs. 7 crore each,” alleged Vengulkar.

Out of 22 under-construction flats on the illegal fourth floor, added Vengulkar, eight flats are allegedly complete and occupied. “The builder owes the government over Rs. 43 crore as Property Tax as per notices put up on the building last December. We are demanding a fresh structural audit from the Brihanmumbai Municipal Corporation (BMC) and are sure that the building will be deemed unfit for habitation and its occupants will be rendered homeless,” said Vengulkar.

He added that it was surprising how the builder constructed an illegal floor and flats in spite of numerous complaints made over the years.

CBSE flouts RTI Act:

The decision by the Central Board of Secondary Education (CBSE) to charge Rs. 500 to release photocopy of Optic Magnetic Reader (OME) sheet, answer key and calculation sheet of students who appeared for the Joint Entrance Examination (Main) 2013 is the violation of RTI Act.

As for the violation of the RTI Act, the CBSE has asked students who have already applied for answer keys through the RTI to reapply by paying Rs. 500. The RTI Act stipulates that only Rs. 10 can be charged for application and an additional Rs. 2 for photocopying.

BCAJ Admin

PART B: RTI Act, 2005

Landmark development for RTI application:

The Government of India has announced that Online RTI facility is to be extended to all central ministries. Indian citizens will now be able to seek information from all central ministries by filing their RTI applications Online.

The Government has launched an exclusive portal – https://rtionline.gov.in- for this purpose, initiating this facility currently only for the questions asked from the Ministry of Personnel. All other central ministries will be covered under it within a month.

“This portal, developed by NIC*, is a facility for Indian citizens to online file RTI applications and first appeals and also to make online payment of RTI fees”, said a note issued by the Department of Personnel and Training (DoPT).”

*NIC: National Infotech Centre

It said, “The prescribed fees can be paid through Internet banking of State Bank of India and its associate banks as well as by credit or debit cards of Visa or Master, through the payment gateway of SBI linked to this site”.

The entire website is prepared in such a way that the system would provide online reply to all RTI applications. This facility is, however, presently not proposed to be extended for field offices or subordinate offices.

The Right to Information Act, which was enacted in 2005, mandates timely response (within 30 days) to citizens’ requests for government information. The information seeker has to pay a fee of Rs. 10 for getting the information.

“Arrangements have been made to provide training to the RTI nodal officers, RTI Cell officials and the NIC or information technology personnel attached with the ministries and departments within the next two to three weeks”, said the DoPT.

Giving details of the guidelines for the information seeker, the department said that the text of the application that can be uploaded at the prescribed column (on the website) was, at present, limited to 500 words only. “In case an application contains more than 500 words, then it can be uploaded as an attachment”, it said.

In case additional fee is required, covering the cost for providing information, the CPIO will intimate the applicant about the same through the portal. The first appeals filed through the website will also reach electronically to the ‘Nodal Officer’ of the DoPT, who would transmit the appeals to the concerned First Appellate Authority (FAA).

RTI and Co-operative Societies:

97th Amendment to the Constitution

Said amendment w.e.f. 15-02-2012 amends 3 articles:

1. In Article 19 (article of fundamental rights) the term “Co-operative societies” is added in clause (1)(c) thereof.

2. Article 43-B is inserted:

It reads: Promotion of co-operative societies – The State shall endeavour to promote voluntary formation, autonomous functioning, democratic control and professional management of cooperative societies.

3. Part IX B is inserted:

It provides certain guidance on State Bye-laws of Co-operative Society.

The amendment 3 above has been struck down by the High Court of Gujarat. The final para of the order reads as under:

“We, therefore, allow this Public Interest Litigation by declaring that the Constitution [97th amendment] Act, 2011/ inserting part IXB containing Articles 243ZH to 243ZT is ultra vires the Constitution of India for not taking recourse to Article 368(2) of the Constitution providing for ratification by the majority of the State Legislatures. This order, however, will not affect other parts of the Constitution [97th amendment] Act, 2011. In facts and circumstances, there will be no order as to costs.”

We, many RTI activists, are of the opinion that by virtue of “Co-operative Societies” having been inserted in Article 19 of the Constitution as part of 19(1)(c), they become body of self-government established or constituted by or under the Constitution u/s. 2(h) of the RTI Act.

Bombay Chartered Accountants’ Society referred the matter to one Senior Advocate who has given opinion that co-op societies become a Public Authority as defined under 2(h) of the RTI Act.

levitra

BCAJ Admin

PART A: Orders of CIC

Appeal:

The appellant before the Commission complained that FAA did not give him the opportunity of hearing by which he could have explained the nature of information sought.

Decision Note:

“The Commission directs the CPIO to furnish the information to the appellant, free of cost, within 15 days from the date of receipt of this Order.

As regards the appellant’s submissions that he was not given an opportunity of personal hearing by the FAA, it is needless to say that rendering an opportunity of hearing to the parties is a fundamental principle of jurisprudence. It is conducive to fairness and transparency and accords with the principles of natural justice. An opportunity of hearing to the parties also brings greater clarity to the adjudicating authorities. This Commission always gives an opportunity of hearing to the parties but this does not appear to be usually done by the FAAs, as probably there are practical difficulties therein, partly arising out of the number of appeals involved and partly due to the limited time frame in which the matters are required to be decided. In view of this, we would only like to suggest that the FAA should, as far as possible, give the appellant, including the third party, if any, an opportunity of hearing specially if he so requests, without forgetting that the essence of the RTI Act is to provide complete, correct and timely information to the appellant.”

[Pradeep A. Ingole vs. CPIO, Department of Posts, Navi Mumbai Division, Panvel: Decided on 03-04- 2013. Citation RTIR II (2013) 55]

Fiduciary Relationship (Section 8(1)(e) of the RTI Act):

The appellant before the Commission submitted that the sudden fall in the share prices of the ICICI Bank had been widely reported and he wanted to know about the entire matter, by inspecting the records generated by the SEBI in the course of its investigation. He could not understand why the CPIO has not allowed him to inspect the records. In response, the respondent submitted that the press release issued by the SEBI contained whatever details about the entire matter that could have been disclosed without breaching the confidentiality of the information received from various other entities including stock exchanges and, thus, he justified the response of the CPIO.

CIC in his Order stated:

“We have carefully considered the facts of the case. Admittedly, the newspapers had widely reported about the fall in the share price of the ICICI Bank. As the respondent informed us, the Bank itself had also complained to the SEBI following which a preliminary enquiry had been made. Even if the substance of the enquiry has already been placed in the public domain through a press release, we do not see any particular reason why the rest of the records and documents received/generated by the SEBI in this regard should not be disclosed to the public. The ICICI bank is a major financial institution in the country. A sudden fall in its share price, for whatever reason, has wide implications for the general public and also for millions of investors. Ordinarily, all such information should be placed in the public domain so that people know for sure why this had happened and what implications it would have for the investors. Needless to say, there cannot be a better public interest than this. Therefore, we do not find much merit in the decision of the CPIO to invoke the exemption provision contained in s/s. 1(e) of section 8 of the Right to Information (RTI) Act. Even in that s/s., it is very clearly stated that such information can still be disclosed if a larger public interest will be served by that.”

“Keeping all this in view, we are of the opinion that the Appellant should be allowed to inspect all the relevant records relating to this particular case. We direct the CPIO to invite the Appellant on any mutually convenient date within 15 days of receiving this order and to show him the records and documents, including file noting and correspondence, relating to this matter. Needless to say, if these records and documents contain any commercial confidence of any third party entity, the CPIO shall take steps to serve/mask those records and documents before allowing any inspection.”

[Dr. Terence Stephen Nazareth vs. CPIO, SEBI, Bandra (E), Mumbai: 400 051: Decided on 20-03-21013: Citation: RTIR II (2013)24]

Personal Information – Section 8(1)(j) of RTI Act:

Vide RTI dated 27-06-2011, the appellant had sought EOU Balance Sheet and P/L account details of M/s. Natural Remedies for the period 2004-2010.

CPIO vide letter dated 15-07-2011 informed the appellant that as the information related to a third party their views were sought. The third party objected to the disclosure of the information, as it would affect the competitive and commercial nature of the business of the Company and that litigation was pending between the Company and the applicant before the High Court of Karnataka. The information was denied u/s. 8(1)(e) of the RTI Act.

CIC in the order stated:

“Submissions made by the appellant and public authority were heard. The CPIO submitted that the documents sought by the appellant i.e. the balance sheet and profit and loss statement are part of Income Tax returns which have been held to be exempt from disclosure by the Supreme Court in the case of Girish Ramchandra Deshpande. The appellant submitted that the CPIO has not followed procedures and that the information sought by him was in larger public interest. In response to a query from the Commission, the appellant submitted that he was involved in litigation with the said company.”

“The Hon’ble Supreme Court in the case of Girish Ramchandra Deshpande vs. CIC, [RTIR IV (2012) 2016 (SC)], has held that Income Tax Returns are personal information exempt from disclosure u/s. 8(1)(j) of the RTI Act, unless a larger public interest is involved. In the light of the decision of the Hon’ble Supreme Court, the Commission concurs with the decision of the CPIO/AA.”

[Kartikey Agarwal vs. DCIO, Circle 12(2) and Addl. CIT, Range – 12, Bamgore: Decided on 01-04-2013: Citation RTIR II (2013) 57]

levitra

BCAJ Admin

Company Law

82. Modification to the Name Availability Guidelines

The Ministry of Corporate Affairs has vide General Circular No. 12/2013 dated 28th June 2013 modified the Name Availability Guidelines for Registration of electoral Trusts as Companies u/s. 25 of Companies Act 1956 as under:

“If it includes the words indicative of separate type of business constitution or legal person or any connotation thereof, the same shall not be allowed for e.g. Cooperative Society, trust, LLP, Partnership, Society, proprietor, HUF, Firm, INC, PLC, GmBH, SA, PTE, Sdn, AG etc.

Explanation ; i) name including phrase ‘electoral Trust’ may be allowed for registration of Companies to be formed u/s. 25 of the Companies Act 1956 under electoral Trusts Schemes, 2013 as notified by CBDT.

2. The Company to be formed u/s. 25 should be a new Company and should comply with Section 293-A of the Act i.e., which contains the prohibitions and restrictions regarding political contributions. The name application should be alongwith an affidavit to the effect that the name obtained shall only be used for the purpose of registration of Companies under electoral Trust Scheme as notified by the CBDT.”

83. Annual filings time limit

The Annual Filings for the year ended 31.03.2013 including the XBRL filing needs to be done within the time limit specified.

levitra

BCAJ Admin

PART D: good governance

• It is in the supervisory neglect of routine tasks that the seeds of poor governance lie. Any supervisory authority must come together with supervisory responsibility. For example, chief commissioners of income tax should, by this principle, have authority- and therefore the corresponding responsibility- to deploy their subordinate commissioners as they find fit. As things stand, though, it is the central taxes board and the minister concerned who exercise this authority. Yet, if the officers are then discovered to be negligent in their new posts, the board or minister are not held even remotely answerable. On the other hand, since chief commissioners do not decide the commissioners’ deployment, they can claim helplessness.

• Poor governance arises essentially from corrupt practices and negligence or dereliction in official conduct. Both can be tackled, if supervisory responsibility is effective.

(From the article under the title “India’s bureaucracy works in feudal matrix. Little wonder corruption and poor governance flourish in our country”, by Anil Dhar, a freelancer)

levitra

BCAJ Admin

PART C: Information on & Around

• Information on Emergency:

1) Believe it or not, the government has claimed that it does not have any documents pertaining to the Emergency period. Neither the Prime Minister’s office nor the home ministry have given any response to RTI activist Manoranjan Roy who sought Information on the Emergency.

2) Earlier, V Narayanasamy, minister of state in the PMO, had acknowledged that official records on the Emergency are “not available in the PMO”. “A thorough search was made to retrieve and trace records of correspondence between the then PM and the President of India relating to proclamation of emergency. However, no such records were found in the PMO,” Narayanasamy said. The Central Information Commission (CIC) had then sought an investigation into the matter and said the government must “ensure that these records are retrieved or traced, wherever they might be, and should be preserved appropriately for citizens so that they can access them.”

Two years on, the reply to Roy’s query reveals that the documents are still missing. The home ministry has blamed the National Archives of India saying that it is the “repository of non-current records”. But the archives department officials say otherwise. A member of archival advisory board of the National Archives of India, on the condition of anonymity, said, “While the ministries are bound to transfer all records for archival, no records on the emergency were transferred to us for safe-keeping.”

• Mumbai Cricket Association (MCA) ground:

On the recommendation by NCP supremo Sharad Pawar, BMC handed over 39,950 sq.m. plot to the MCA to promote cricket without observing rules connected with such allotment of land. This information was obtained by Anjali Damania of AAP through the RTI route.

Damania alleges that rules did not allow for the plot to be developed. The BMC was supposed to give only operational rights to MCA. So, how could the MCA raise Rs.270 crore by way of membership fees on a BMC plot?”

levitra

BCAJ Admin

PART B: RTI Act, 2005

• This feature in BCAJ is to report on matters connected with RTI. However, in this issue 1 report on “The Rajasthan Right In Hearing Act, 2012” (RRHA) which received the assent of the Governor on 21-05-2012. This is relevant to the RTI Act. Under this Act, duties are cast on the Public Hearing officer (similar to the Public Information officer under the RTI Act). Section 4(5) provides: The Public Hearing Officer on receipt of a complaint u.s/s. (1) shall, within the stipulated time limit, provide an opportunity of hearing to the complainant and after hearing the complainant, decide the complaint either by accepting it or by referring it to an authority competent to grant the benefit or relief sought for or by suggesting an alternative benefit or relief available under any other law, policy, order, programme or scheme or by rejecting it for the reasons to be recorded in writing and shall communicate his decision on the complaint to the complainant within the stipulated time limit. Section 5(3) provides: Every public authority shall be responsible for the development, improvement, modernisation and reform in redressal of grievance system including redressal of grievance through information technology.

Section 7: Penalty provisions read:

(1) Where the second appellate authority is of the opinion that the Public Hearing Officer has failed to provide an opportunity of hearing within the stipulated time limit without sufficient and reasonable cause, it may impose on him a penalty which shall not be less than five hundred rupees but which shall not exceed five thousand rupees:

Provided that before imposing any penalty under this s/s., the person on whom penalty is proposed to be imposed shall be given a reasonable opportunity of being heard.

(2) The penalty imposed by the second appellate authority u.s/s. (1) shall be recoverable from the salary of the Public Hearing Officer.

(3) The second appellate authority, if it is satisfied that the Public Hearing Officer or the first appellate authority has failed to discharge the duties assigned to him under this Act, without assigning sufficient and reasonable cause, may recommend action against him under the service rules applicable to him.

The Rajasthan Right of Hearing Rules are enacted on 09-06-2013 some of the rules are:

Rule 11: No fee shall be payable along with complaint, memo of first appeal or second appeal and revision application per Rule 11.

Rule 20 provides for Establishment of Information & Facilitation Centre: It reads (1) The State Government may establish Information and Facilitation Centre which may include establishment of customer care centers, call centers, help desks and people’s support centers or any other e-mitra, Rajiv Gandhi Seva Kendra or other institutions authorised to act as Information and Facilitation Center.

(2) If the complaint is received by any Information and Facilitation Centre authorised for receiving complaints, the In-charge of the Information and Facilitation Centre shall transfer the same immediately to the Public Hearing Officer concerned and the time taken in such transfer shall not be counted in the stiputed time limit.

(3) The unique registration number given on complaint and action taken on complaint or transfer of complaint may also be made online for efficient and effective hearing of grievance of the people.

(4) A State wide net work may be developed by the State Government to receive, register and monitor the complaints.

This RRHA is very powerful Act, similar to the RTI Act. To note that it is only for complaints against Authorities in the State of Rajasthan. It is hoped that other states legislate similar law.

It may also be noted that the Central Government has introduced the Bill under the title:

THE RIGHT OF CITIZENS FOR TIME BOUND DELIVERY OF GOODS AND SERVICES AND REDRESSAL OF THEIR GRIEVANCES BILL, 2011

Unfortunately it is not enacted yet even though introduced in 2011 as we know that parliament does not function much due to political disputes between parties. Once such an Act is enacted, the great relief will be available to the citizens and it would be a supplement to the RTI Act. I reproduce clauses 3 & 4 of the Bill:

3. Subject to the provisions of this Act, every individual citizen shall have the right to time bound delivery of goods and provision for services and redressal of grievances.

4. (1) Every public authority shall publish, within six months of the commencement of this Act, a Citizens Charter specifying therein all the category of goods supplied and services rendered by it, the time within which such goods shall be supplied or services rendered.

(2) Without prejudice to the generality of the provisions contained in s/s. (1), the Citizens Charter shall provide all or any of the following matters, namely:-

(a) the details of all the goods supplied and services rendered by the public authority and the name of person or agency through which such goods are supplied or services rendered and timings during which such services are supplied or services rendered;

(b) the conditions under which a person becomes entitled for goods or services, and the class of persons who are entitled to receive such goods and avail services;
(c) the quantitative and tangible parameters (including weight, size, frequency) of the goods and services available to the public;

(d) complaint redressal mechanism including the time within which the complaint be disposed of and the officer of the public authority to whom such complaint may be made;

(e) the name and addresses of individuals responsible for the delivery of goods or rendering of services mentioned in (a) above;

(f) any other functions, obligations, responsibility or duty the public authority is required or reasonably expected to provide;

(g) any other information relevant to delivery of goods or provision of services or such other information as may be prescribed.

(3) The appropriate Government may, by notification, make rules in relation to citizens’ charter and grievance redressal.

Let us hope that this bill becomes the Act in the coming session of Parliament starting in August 2013.

• July issue of BCAJ reported the three-member decision of CIC ruling that political parties are covered under the RTI Act. They were given six weeks time to appoint PIO, FAA etc. None of the six political parties have complied with this order.

It is now reported that Government shall overturn CIC’s order. The Bill amending the RTI Act shall be moved in the coming monsoon session. It shall provide in the definition of public authority [section 2(h) of the RTI Act] that it will not include any political party registered under the Representation of the People Act. RTI Activists all over the country has mailed to the President of India that he should not give assent to such bill.

levitra

BCAJ Admin

PART A: Orders of CIC

Section 7 (1) of the RTI Act:

• The appellant sought huge information from the postal Department, Bangalore about:

1. The total number of account holders in postal savings viz. saving bank, MIS, PPF etc. at the respective post offices in Bangalore Urban Area during the financial years 2009–2010 & 2010–2011 respectively.

2. The monthly turnover/collections at the above post offices during the financial years 2009–2010 & 2010–2011.

CPIO replied and stated that the information requested by the appellant is not being compiled at the central level and was scattered in 187 sub-post offices and if they had undertaken this work it would have disproportionately diverted the resources of the public authority – Whether the CPIO should collect and compile the information, which is not available in his office, from other subordinate offices and furnish the same to the applicant? – the Commission held that a CPIO is expected to provide the information available with him and he is not required to collect and compile the information on the demand of a requester nor he is expected to create a fresh one merely because someone has asked for it.

Decision notice
The main issue raised by the appellant is whether the CPIO should collect and compile the information, which is not available in his office, from other subordinate offices and furnish the same to the applicant. On this issue the Commission has already observed, vide Decision No. 216/IC(A)2006. File No. CIC/MA/A2006/00608 dated 31-08-2006, as under:-

“Transparency in functioning of public authorities is expected to be ensured through the exercise of right to know, so that a citizen can scrutinise the fairness and objectivity of every public action. This objective cannot be achieved unless the information that is created and generated by public bodies is disclosed in the form in which it exists with them. Therefore, information is to be provided in the form in which it is sought, u/s. 7(9) of the Act. and, if it does not exist in the form in which it is asked for and provided to the applicant, there is no way that proper scrutiny of public action could be made to determine any deviations from the established practices or accepted policies”.

Thus, a CPIO is expected to provide the information available with him. He is not required to collect and compile the information on the demand of requester nor is he expected to create a fresh one merely because someone has asked for it. Because, such attempts would not allow for scrutiny of public action to detect and determine the nature and extent of deviation from the accepted policies. In view of the forgoing, the CPIO’s representative’s submissions are upheld in so far as they relate to the collecting and compiling of data from 187 sub-post offices.

The Commission, however, agrees with the appellant’s argument regarding non-supply of information by the CPIO requested in query 2 of his RTI application dated 21-10-2011. The CPIO should either have sought the assistance of his counterpart in the office of the Director of Accounts (Postal) Bangalore or transferred this part of the RTI application to him for supply of information. Accordingly, the CPIO is directed to furnish the information (requested in query 2) to the appellant within 15 days from the date of receipt of this order. It is, however, clarified that the information as available on record with the Director of Accounts (Postal) should be provided and there is no need to collect and/or compile any data.

[S.C. Chopra vs. Department of posts, Karnataka Circle, Bangalore: Appeal No. CIC/BS/A/2012/000481/2393 dated 02-05-2013]

• The appellant sought following information from PIO of EPF Appellate Tribunal, New Delhi:

1. Provide details of case history with all relevant case papers, photocopies of all documents submitted, citations referred to by the Appellant and the Respondent in the above referred case/appeal.

2. Details of applicable penalty payable by the Institution concerned for the default as decided and levied by the Appellant Tribunal.

3. Details of exemption in penalty and relief, if granted in the matter.

4. Details as to, can the appellant tribunal in case of double default exempt penalty or grant any relief to the appellant/institution.

5. Whether the attachments enclosed qualify the institution concerned for any relief in penalty amount.

6. Status report of the case/appeal as of now.

The appellant’s contention before CIC was that PIO has not given information sought in the RTI Application. He stated that a fee of Rs. 118 has been wrongly charged from him for provision of information in violation of sections 7(3)(a) & 7(6) of the RTI Act and the documents supplied do not answer his queries. The CPIO’s representatives stated that they (‘Employees Provident Fund Appellant Tribunal’) are a judicial forum and as per their rules they are required to charge a fee of Rs.10 per page for supply of certified copies of decisions, however, they will refund the charges. As regards the appellant’s second contention that the documents supplied do not answer his queries, the CPIO’s representative argued that under the RTI Act the CPIO is required to provide the information/documents as available on record and is not expected to answer queries/provide interpretation(s)/clarification(s); he added that all the documents contained in the relevant file have already been forwarded to the appellant.

Decision notice
The RTI act does not cast on the public authority any obligation to answer queries in which a petitioner attempts to elicit answers to his questions. The Petitioner’s right extends only to seek information as defined in section 2(f) of the RTI Act either by pinpointing the file, document, paper or records etc. or by mentioning the type of information as may be available with the specified public authority. It is noted that in the matter at hand copies of all documents contained in the file have been provided and there is no further information/ document available which can be furnished.

As stated by the CPIO’s representative the fee of Rs. 118 should be refunded to the appellant within 7 days from the date receipt of this order.

[ Rashad Shaikh vs. PIO, EPF Tribunal New Delhi : Appeal No. CIC/BS/A/2012/00512/2409 dated 06.05.2013]

levitra

BCAJ Admin

PART d: GOOD GOVERNANCE

Shiv Nadar:

Shiv Nadar, chairman of HCL, states that India Inc is not doing enough at the philanthropy front.

Talking about “Shiv Nadar Foundation”, he says:

“I firmly believe that philanthropy is most effective and outcome-oriented when you ensure that your pledge actually gets spent. Disclosures further help build an environment of trust and transparency. Good governance is therefore not an added bonus; it is at the heart of what makes philanthropy successful. In its journey of two decades, we have operated on our core values of transparency and robust governance systems”.

levitra

BCAJ Admin

PART B: RTI Act, 2005

DoPT of Ministry of Personnel, Public Grievances & Pensions have recently issued one Office Memo as under:

Sub: Disclosure of personal information under the RTI Act:

The
Central Information Commission in one of its decisions (Sh. Manoj Arya
vs. CPIO, Cabinet Secretariat: CIC/SIRS/P/2013/000058 of 25.06.13) has
held that information about the complaints made against an officer of
the Government and any possible action the authorities might have taken
on those complaints, qualifies as personal information within the
meaning of provision of section 8 (1) (j) of the RTI Act, 2005.

The
Central Information Commission while deciding the said case has cited
the decision of Supreme Court of India in the matter of Girish R.
Deshpandevs. CIC and others (SLP (C) no. 27734/2012) in whichit was held
as under:-

“The performance of an employee/Officer in
anorganisation is primarily a matter between theemployee and the
employer and normally those aspects are governed by the service rules
which fall under the expression personal information, the disclosure of
which has no relationship to any public activity or public interest. On
the other hand, the disclosure of which could cause unwarranted invasion
of the privacy of that individual.” The Supreme Court further held that
such information could be disclosed only if it would serve a larger
public interest.

levitra

BCAJ Admin

Ethics and u

Eternal vigilance: (Cl. (7) of Part I of 2nd Schedule)

Shrikrishna (S) – Yes, My dear Arjun, how was your vacation? How was your Europe tour?

Arjun (A) – Well, my family had lot of fun there. It was quite smooth. But I was constantly worried.

S – Why?

A – So many things pending in office. Many articles on leave for exam. There were phone calls almost every two hours.

S – Oh! So sad! You mean to say, in your absence nobody can tackle the things here?

A – All are useless. Even the partners depend upon me for small decisions.

S – How many years are you in the profession now?

A – More than 25 years.

S – Still you have not built up a good organisation? Have you learnt to delegate work to juniors? Haven’t you established systems?

A – Off and on I try to; But the staff is not stable. They don’t want to learn. Qualified people are afraid of taking decisions. And about articles and trainees, the less said the better.

S – If such is the situation, how can you perform well even if you are here? CA Profession is essentially a team-work.

A – I feel, our profession is a continuous struggle. You never feel that you have settled down. Every now and then something new crops up.

S – But then, have you spared any time to train your staff and articles?

A – Where is the time to do all that? It is always a fire-fighting exercise. You should see our plight in September.

S – I know, you have to sign many audits.

A – This year, there is further fuel to fire.

S – Why? What is new this year?

A – All these years, we were just uploading the returns. Actual audit reports, we sign much later. Sometimes, even while doing next year audit. From this year, we need to upload the audit reports as well!

S – Oh! That means just as I told Bhagavad-Gita to you in Mahabharata, I need to spend a lot of time telling you about systems.

A – It is easy to preach all that philosophy. Same is the case with those Management trainers. Everything seems very sweet when they talk. But the worries come back as soon as the training session is over.

S – That only shows that you are not a professional. What I told in Geeta was not merely for that Mahabharata war. I told you that life itself is a continuous war. You need to equip yourself to fight it.

A – Tell me all those things after 30th September. Till then I have no time. I have to complete so many audits.

S – Arjun dear, precisely for that you need to work on systems. Otherwise, you will sign wrong balance sheets.

A – Who told you that the balance sheets we sign are correct? We only write that it is true and fair!

S – That is why there are so many disciplinary cases for negligence.

A – How to cope up with so much work? Everybody comes at the 11th hour.

S – That is why you need to plan. You need to be pro-active. You need to communicate and initiate things well in time. This is the appropriate time to plan the work to be completed in September.

A – I am told, they don’t take all the errors that seriously. They say even if there is some negligence, it does not matter. What is punished is only ‘gross negligence’! That means, there should be some blunder! A gross negligence?

S – You are mistaken. Now the trend is changing. In the year 2006, your CA Act was amended. Earlier, on the Second Schedule, Part one, Clause (7) mentioned only about gross negligence. But now, they have also added ‘lack of due diligence’.

A – My God! That makes it too wide! Many times, we just change the year and print the same audit report.

S – Due to computers, there is a cut and paste. Very dangerous!

A – I am told, there are many misconduct cases for errors even in charitable trusts’ balance sheet. I don’t understand how does it matter? There is no tax liability. It may be a small school.

S – This is a common misconception. You are so much obsessed with the thoughts of taxation! You believe, there is nothing beyond taxation. Remember, you cannot forget your role and duties as an auditor. Audited balance-sheet is used for many things other than tax. It is used for giving grants in aid. It may have implications in service tax. Or ever TDS to be done by trusts.

A – I remember one case where a member signed a trust’s balance-sheet. It was correct. But the cash book showed negative cash balance on a few days in between! Addition made in income tax was also deleted.

S – Still he was held guilty. There is obviously a lapse in the role as an auditor. Your signature loses credibility. Whether revenue or any person is affected or not is immaterial.

A – Then you better explain to me all these things next month. I should not wait till September.

S – Yes. This year is 150th birth anniversary of my beloved disciple – Swami Vivekananda. He appealed to the people to wake up and act. Same way, there is special awakening required among professionals. And now there are grave consequences under new Companies Bill.

A – I will follow your advice, O Lord!

The above dialogue is with reference to Clause (7) of Part I of Second Schedule, which reads as under :

A chartered accountant in practice shall be deemed to be guilty of professional misconduct, if he –

Clause (7): does not exercise due diligence, or is grossly negligent in the conduct of his professional duties.

[Note: This is the most important and serious charge of misconduct. Discussion on this clause may continue with few illustrations.]

levitra

BCAJ Admin

PART B: RTI Act, 2005

National Campaign for people’s Right to Information (NCPRI) held 4th RTI National Convention for four days (15th February to 18th February) at Hyderabad.

NCPRI was formed in 1996 and functions as an AOP till today. Prominent Individuals running the same are Ms. Aruna Roy, Mr. Nikhil Dey, Ms. Anjali Bharadwaj and others. NCPRI has played a key role in drafting the Central RTI Act of 2005. It holds convention every two years. On 15th and 16th February, the subjects of discussion were the future course of NCPRI-structure, decision making process, role of NCPRI etc. It then produced a summary, part of it reads:

Objectives

The National Campaign for people’s Right to Information (NCPRI) seeks to empower the people and to deepen democracy, through promoting people’s right to information. By using this right, it seeks to fight corruption and social apathy, to make governments and other institutions and agencies having an impact on public welfare, more humane and accountable to the people and to promote efficiency and frugality.

Values

The NCPRI is committed to support participatory just, secular and humane democracy.

Methods and Activities

The NCPRI endeavours to constantly engage and interact with the state and with other institutions and agencies. It campaigns for the enactment and use of right to information law that is effective and accessible to all. It also supports people’s efforts at developing the ability and motivation to use the right to information for addressing individual and social problems. It works at disseminating the RTI law and encourages and supports the development of materials related to transparency and governance, the raising of awareness about the fundamental value of information, the conduct of research and the setting up of information clearing houses. It seeks to further the cause of transparency by adopting other direct and indirect methods, including the filing of information requests, the fighting of legal cases and the holding of public hearing.

It also decided on its structure and also to democratise the same, details will be posted on www. bcasonline.org and www.pcgt.org.

On 17th February, delegates were divided in to 15 groups to discuss 15 topics for its activities and to draft Hyderabad Declaration on The Right to Information (Pattern similar to BCAS-RRC)

On 18th February, the final Hyderabad Declaration of the RTI was adopted at a public meeting which was also addressed by Mr. Vajahat Habbibullah (the first Central Chief Information Commissioner)

On the afternoon of 18th February, there was a visit to a NGO specialising on social audit to understand the process of social audit, a subject of great importance to build accountability and contain corruption.
It was a rewarding and satisfactory convention.

levitra

BCAJ Admin

PART d: Good Governance

Progress of Governance

Writing on Narendra Modi, Mr. Pavan Varma (former diplomat and currently adviser to the Bihar C.M.) writes-

And, finally—and this is something that touches the life of every Indian—of what good is governance if it revives communal strife thereby jeopardising the very project of governance?

From TISCO’s annual report under the title “Governance Systems”

Policies
A number of policies have been put into place to ensure that governance standards are met. They are based on zero tolerance towards corruption and unethical behaviour. These include:

• The Gift Policy
• Whistle Blower Policy
• Whistle Blower Reward Policy
• Vendors Whistle Blower policy
• Sexual Harassment Prevention and Redressal Guidelines

levitra

BCAJ Admin

PART C: Information on & Around

Pending cases at magistrate courts in Mumbai:

In 75 magistrate courts in Mumbai as on 01-04- 2013, pending cases as per reply received to the query made under RTI are 3.82 lakh. As on 31- 07-2013 number is 3.72 lakh. When classified it reveals that 8464 cases are pending for more than 20 years, 51074 pending more than 10 years and 67721 are pending since more than 5 years. Highest number of cases, (11953), are in 26th court, Borivali and lowest, (102) in 19th court, Esplanade.

Relief to sexual crime victims

Gopal Kansara has proved that RTI is potent weapon in the hands of humble citizens.

Acting on the 2011 Supreme Court directive to States to formulate a plan to provide relief and rehabilitate women who had been assaulted or raped, Kansara has used RTI to make sure the verdict is implemented. In the process, he has brought succor to a minor rape victim in his locality, a woman publicly molested in Guwahati and several trafficked children in Delhi.

“On January 2 this year, newspapers reported that a minor girl had been raped by a driver nearby. I wrote to the district collector seeking monetary relief for her,” said Kansara. As he got no response to his letter or fax, Kansara filed an RTI in February asking for a copy of the FIR, the medical report, action taken report and details of rehabilitation.

“After the RTI application, the collector wrote to the local authorities and Rajasthan chief minister. Soon Rs. 3 lakh was sanctioned for the girl and deposited in a bank,” he said.

He did something similar in the case of the public molestation of a 20-year-old girl outside a Guwahati pub by over a dozen men in mid-2012. “I did not know her, nor have I ever been to Assam. But I strongly felt I should do something. I filed an RTI application with the Assam government asking what relief had been given to her [as per the SC order]. Soon she was given Rs. 50,000 by the state government,” he added.

Since 2006, Kansara has filed more than 750 RTI applications on a range of issues and says he will continue to do so even though he has been threatened with murder several times. “The RTI has done what no other law in the country has done. It has made the common man a VIP. It has freed him from approaching local politicians every time for little things.”

Refund of Security Deposit etc. by Kelkar College:

RTI activists, Ranjit Mahanti in reply to his RTI application to Kelkar College, Mulund was informed that data he had sought would require much work and asked him if the activist will pay for the expense involved in compiling information sought. Mr Mahanti had sought information from the college about the practice in refunding security deposit taken from its students. College replied:

“We wish to inform you that information required by you about security deposits is extremely large work. It may require one year’s time. It is not possible for us to complete this during our routine work, for which we have to appoint two additional employees on contract basis. Kindly let us know whether you are ready to pay for the expenditure towards this work for information required by you.”

In this connection it is worth noting the judgment of S.C. in the case of Institute of Chartered Accountants vs. Shaunak H. Satya reported in A.I.R. 2011 S.C. 3336, [RTIR IV (2011) 82 (SC)]

“One of the objects of democracy is to bring about transparency of information to contain corruption and bring about accountability. But achieving this object does not mean that other equally important public interests including efficient functioning of the Government and public authorities, optimum use of limited fiscal resources, preservation of confidentiality of sensitive information, etc. are to be ignored or sacrificed.“

levitra

BCAJ Admin

PART D: Good Governance

Excerpts from the article of Makarand Paranjape:

Makarand Paranjape reported in Sunday Times of 3-2-2013:

“From this brief overview of the facts it is clear that the republic is not as intolerant as it is badly governed. This is a crisis not of tolerance but of governance. The political establishment had failed to uphold the Constitution and the rights that are guaranteed under it. Laws meant to safeguard the weak are often manipulated or twisted to bully or browbeat those who dare to speak inconvenient truths. The powers vacated or abused by an ineffective executive are only partially compensated for by an interventionist judiciary, an over-active press, or a popular uprising like Anna Hazare’s.”

Excerpts from the article of William Bissel reported in Sunday Times of 3-2-2013

“As Thomas Kuhn has said in The Structure of Scientific Revolutions, we are facing a challenge that is the result of paradigm shift where the evidence of the failure of our concepts of governance stare us in the face. And yet, in the avalanche of evidence that speaks of this failure, the system remains paralysed applying praradigms of governance that will no longer suffice.

So, how does the class of 2014 begin to put in place the foundations of a new system of governance?

I believe that such a system will have to be built on a new paradigm of measuring overall wellbeing using tools that allow government to create a holistic view of what the elements of wellbeing are: access to security (specially for women), clean air, safe drinking water, reliable sewage facilities, access to a good nutrition for all, schools that teach, colleges that skill.”

levitra

BCAJ Admin

PART B: RTI Act, 2005

When the Government announced that it will bring the bill in the Parliament to do away with the decision of CIC ruling that political parties are covered u/s 2(h) of the RTI Act (see BCAJ of July 2013) RTI Activists all over the country huddled together in a group and held the view that it is appropriate that political parties should be considered as “public authority”. Disregarding civil society’s strong objection as all political parties are in favour of exempting themselves from the RTI Act, Government tabled the bill in the Lok Sabha on 14-08-2013. Same reads as under:

BE it enacted by Parliament in the Sixty-fourth year of the Republic of India as follows: –

1. (1) This Act may be called the Right to Information (Amendment) Act, 2013 (2) It shall be deemed to have come into force on the 3rd day of June, 2013.

2. In section 2 of the Right to Information Act, 2005 (hereinafter referred to as the principal Act), in clause (h), the following Explanation shall be inserted, namely:-

‘Explanation- The expression “authority or body or institution of self-government established or constituted” by any law made by Parliament shall not include any association or body of individuals registered or recognised as political party under the Representation of the People Act, 1951.’

3. After section 31 of the principal Act, the following section shall be inserted, namely:-

“32. Notwithstanding anything contained in any judgment, decree or order of any court or commission, the provisions of this Act, as amended by the Right to Information (Amendment) Act, 2013, shall have effect and shall be deemed always to have effect, in the case of any association or body of individuals registered or recognised as political party under the Representation of the People Act, 1951 or any other law for the time being in force and the rules made or notifications issued thereunder.”

It is interesting to note that Prime Minister in his Independence Day speech on 15-08-2013 covered RTI as under:

“Through the Right to Information Act, the common man gets more information than ever before about the work of the government. This legislation is being used on a large scale at all levels. The Act frequently brings to light irregularities and corruption and opens the door for improvements. I am sure that the RTI will lead to further improvements in the way the government functions.”

Isn’t this a contradiction that in his speech he states “I am sure that the RTI will lead to further improvements in the way the government functions,” while by introducing the RTI Amendment Bill it excludes the way political parties function?

• In BCAJ of June 2013, it was reported that online RTI facility is created by the Government. The portal is a facility for Indian citizens to file RTI applications online and first appeals and also to make online payment of RTI fees. The facility was then made available only by a few ministries/ departments.

Now DoPT has extended facility of online filing of RTI Application and the first appeal to all ministries. Office Memorandum, dated 30-07-2013 reads as under:

Subject: Extension of RTI web portal for online filing of RTI application.

1. In continuation of this Department’s O.M. of even number dated 22-04-2013, it is intimated that the facility of RTI online web portal has been extended to 37 Ministries/ Departments of Government of India, so far (list enclosed). It is planned to extend this facility to all the remaining Ministries/Departments of Government of India by mid-August, 2013. This facility is presently not proposed to be extended for field offices/attached/subordinate offices.

2. It is again requested that training to all the CPIOs and First Appellate Authorities (FAAs) may be provided by the concerned Ministry/ Department, through the officials trained by DoPT/NIC. If required, further training can be provided by DoPT/NIC, on the request of the concerned Ministry/Department. User name/ password to all the CPIOs and FAAs are to be provided by RTI Nodal Officers of the concerned Ministry/Department. It is imperative that the RTI Nodal Officers update the details of the CPIOs/ FAAs in the system and issue user name and password to them at the earliest.

List of 37 ministries/departments include: –

1. DEPARTMENT OF ECONOMIC AFFAIRS

2. DEPARTMENT OF REVENUE

3. DEPARTMENT OF HEAVY INDUSTRY

4. MINISTRY OF SHIPPING

5. MINISTRY OF CORPORATE AFFAIRS

Full list & further details can be viewed on https:// rtionline.gov.in

• Mrs. Deepak Sandhu succeeds Shri Satyananda Mishra as Chief Information Commissioner at Central Information Commission.

levitra

BCAJ Admin

PART C: Information on & Around

CBI goes to the Delhi High Court:

Vide provisions of section 24, RTI Act does not apply to the intelligence and security organisations specified in the Second Schedule.

The Central Board of Investigation (CBI) has been added in the Second Schedule to the RTI Act w.e.f. 29-6-2011.

The matter was taken to the Madras High Court pleading that the CBI is not the intelligence and security organisation. But, it was lost.

Mr. C.J. Karira made an application to the CBI asking it to furnish information relating to the status of sanction for prosecution against government officials facing allegations of corruption between 2007 to 2011. Same was denied. He filed an appeal to CIC. He pointed out that the information which the CBI declined to reveal on his RTI plea has been disclosed by the ministry of personnel in a number of responses to Parliament members. Hence, it is disclosable under Proviso to s/s. 1 to section 24.

The 1st Proviso to section 24 reads as under: Provided that the information pertaining to the allegations of corruption and human rights violations shall not be excluded under this sub-section.

The Commission in its decision directed the CBI to disclose the status of sanction for prosecution against government officials facing allegations of corruption between 2007 to 2011.

The CBI has now approached the Delhi High Court seeking exemption under the RTI Act from disclosing information held by it on allegations of corruption. The Delhi High Court has stayed the CIC Order and has fixed the matter on 3rd April for further hearing.

Mumbai Police

On an average, 120 Mumbai police personnel have died while on duty every year since 2002, with 98% of them succumbing to various illnesses, including cardiac arrest, according to an RTI reply. Other causes of death included illnesses such as diabetes, hypertension and heart-related problems, among others.

“Due to long duty hours, a policemen cannot plan their days. They don’t get time to exercise. Moreover, when policemen are deployed at any place, they have to eat the food available there, which may be unhealthy,” Additional Commissioner of police (Crime) Niket Kaushik said.

Vice–Chancellor of Mumbai University:

A query filed by Mr. Anil Galgali an RTI activist under the RTI Act, revealed that the Mumbai University (MU) hired senior advocates to fight the cases challenging the VC’s job. The university had hired senior advocates, Rafique A. Dada – known for fighting tricky cases – Naushad Engineer and Sagar Talekar.

MU’s finance and accounts PIO A. R. Jadhav said the university had paid Rs. 4,10,900 to the three lawyers. MU legal adviser Ajit Karwande received a letter from advocate R. A. Rodrigus on 11th July, 2011, with bills that needed to be settled: professional charges of Dada (Rs. 3,30,900), Engineer (Rs. 45,000) and Talekar (Rs. 35,000).

Irrelevant Information:

Rejecting an RTI application filed by a Kandivali resident seeking information of the last 10 years on the appointment, transfer and retirement of Government employees in Maharashtra, Ratnakar Gaikwad (Chief SIC) wrote in the order:

“Applicants should not ask for detailed and irrelevant information as public information officers (PIOs), besides performing their statutory duties, are also engaged in the task of providing information to the people. In such circumstances, it would be appropriate if such information is sought which would bring in transparency and accountability in administration, halt corruption and is in public interest.”

levitra

BCAJ Admin

PART A: Orders of CIC

Political parties: Section 2(h) of the RTI Act:

Three-member-bench of CIC [Satyananda Mishra (Chief IC), Mrs. Annapurna Dixit (IC) & M. L. Sharma (IC)] passed an order dated 03-06-2013 in the case where the Respondents were six political parties:

1. Indian National Congress/All India Congress Committee (AICC);
2. Bhartiya Janata Party (BJP);
3. Communist Party of India (Marxist) (CPM);
4. Communist Party of India (CPI);
5. Nationalist Congress Party (NCP) and
6. Bahujan Samaj Party (BSP).

The main issues raised by the complainants were: Disclosure of accounts and funding of political parties.

Some political parties in response to RTI applications of complainants stated that they were not “public authority” and hence not covered under RTI.

Chief Information Commissioner noted that the matters in hand raised complex issues of law and hence constituted a full bench as noted above.

Before the Commission, the complainants made extensive submissions to contend that Political Parties fall under the ambit of section 2(h) of RTI Act.

Above submissions were supported by various arguments including

(i) That section 80 GGB of the Income-tax Act which provides that contribution made by an individual or a company to a Political Party is deductible from the total income of the assessee. This provision is exclusively applicable to the Political Parties and is suggestive of indirect financing of the Political Parties by the State.

(ii) After various RTI applications were filed with the Central Agencies, it was discovered that Political Parties enjoy a number of “facilities” provided to them by the government. This is a clear instance of being “financed indirectly by funds provided by the appropriate governments” which puts Political Parties squarely under the definition of ‘public authority’ as provided for in section 2(h)(d) (ii) of RTI Act.

(iii) If closely monitored and totalled, the total public funds spent on Political Parties would possibly amount to hundreds of crores.

In its decision, Commission quoted Harold Laski:

“The life of the democratic State is built upon the party-system and it is important at the outset to discuss the part played by party in the arrangement of affairs. Briefly, that part may be best described by saying that parties arrange the issues upon which people are to vote. It is obvious that in the confused welter of the modern State, there must be some selection of problems as more urgent than others. It is necessary to select them as urgent and to present solution of them which may be acceptable to the citizen-body. It is that task of selection, the party undertakes. It acts, in Mr. Lowell’s phrase, as the broker of ideas. From the mass of opinions, sentiments, beliefs, by which the electorate moves, it chooses out those it judges most likely to meet with general acceptance. It organises persons to advocate its own view of their meaning. It states that view as the issue upon which the voter has to make up his mind. Its power enables it to put forward for election candidates who are willing to identity themselves with its view. Since its opponents will do the same, the electorate, thereby, is enabled to vote as a mass and decision that would otherwise be chaotic, assumes some coherency and direction. What, at least, is certain, is that without parties there would be no means available to us of enlisting the popular decision in such a way as to secure solutions capable of being interpreted as politically satisfactory.”

The Commission then notes:

The question before the Commission is whether INC/AICC, BJP, CPI(M), CPI, NCP and BSP can be held to be Public Authorities u/s. 2(h) of the RTI Act. The complainants have adduced the following three principal grounds to persuade the Commission to hold that the aforesaid Political Parties are Public Authorities, viz:-

(i) Indirect substantial financing by the Central Government;

(ii) Performance of public duty by the Political Parties; and

(iii) Constitutional/legal provisions vesting Political Parties with rights and liabilities

Substantial financing of Political Parties by the Central Govt.

After considering various basis of state financing political parties, the Commission concluded, we are of the considered opinion that Central Government has contributed significantly to the indirect financing of Political Parties in-question.

On the issue of “substantially financed” again it noted:

Large tracts of land in prime areas of Delhi have been placed at the disposal of the Political Parties in-question at exceptionally low rates. Besides, huge Government accommodations have been placed at the disposal of Political Parties at hugely cheap rates thereby bestowing financial benefits on them. The Income Tax exemptions granted and the free air time on AIR and Doordarshan at the time of elections also has substantially contributed to the financing of the Political Parties by the Central Government. We have, therefore, no hesitation in concluding that INC/AICC, BJP, CPI(M), CPI, NCP and BSP have been substantially financed by the Central Government and, therefore, they are held to be the public authorities u/s. 2(h) of the RTI Act.

Performance of Public Duty
Political Parties are the unique institution of the modern constitutional State. These are essentially political institutions and are non-governmental. Their uniqueness lies in the fact that inspite of being non-governmental, they come to wield or directly or indirectly influence exercise of governmental power. It would be odd to argue that transparency is good for all State organs but not so good for Political Parties, which, in reality, control all the vital organs of the State.

The people of India must know the source of expenditure incurred by Political Parties and by the candidates in the process of election. These judicial pronouncements unmistakably commend progressively higher level of transparency in the functioning of Political Parties in general and their funding in particular.

We may also add that the preamble to the Constitution of India aims at securing to all its citizens: JUSTICE, social, economic and political; LIBERTY of thought, expression, belief, faith and worship; and EQUALITY of status and of opportunity. Coincidentally, the preamble of the RTI Act also aims to promote these principles in the form of transparency and accountability in the working of the every public authority. It also aims to create an ‘informed citizenry’ and to contain corruption and to hold government and their instrumentalities accountable to the governed. Needless to say, Political Parties are important political institutions and can play a critical role in heralding transparency in public life. Political Parties continuously perform public functions which define parameters of governance and socio-economic development in the country.

In view of the nature of public functions performed by Political Parties, we conclude that Political Parties in question are Public Authorities u/s. 2(h) of the RTI Act.

Constitutional/legal provisions vesting Political Parties with rights and liabilities

The appellants have also contended that Political Parties have constitutional and legal rights and liabilities and therefore, need to be held to be Public Authorities. The argument runs thus. Political parties are required to be registered with the ECI u/s. 29A of R.P. Act, 1951-a Central Legislation. An association or body gets the status of a political party on its registration. ECI awards symbols to Political Parties under the Election Symbols (Reservation and Allotment) Order, 1968, only after registration. The ECI calls for details of expenses made by Political Parties in the elections. Contributions of the value of Rs. 20,000/- and above received from any person or a Company by a Political Party are required to be intimated to ECI u/s. 29C of the R.P. Act. ECI is vested with superintendence, direction and control of elections under Article 324 of the Constitution. ECI is also vested with the authority to suspend or withdraw recognition of a political party in certain contingencies. More importantly, Political Parties can recommend disqualification of Members of the House in certain contingencies under the Tenth Schedule. The contention is that the aforesaid constitutional/statutory powers of Political Parties bring them under the ambit of section 2(h).

We find the above submissions quite compelling and unerringly pointing towards their character as public authority.

It may be recalled that the INC/AICC and the BJP have made a bland assertion that they are not Public Authorities under the RTI Act. CPI(M) has disclosed some information to the Commission regarding allotment of land to it by the Central Government on certain terms and conditions but has not conceded that it is a Public Authority u/s. 2(h) of the RTI Act. The contentions of the above parties have to be rejected in the light of findings recorded herein above.

Based on above discussion, the Commission concluded:

In view of the above discussion, we hold that INC, BJP, CPM, CPI, NCP and BSP have been substantially financed by the Central Government u/s. 2(h) (ii) of the RTI Act. The criticality of the role being played by these Political Parties in our democratic set up and the nature of duties performed by them also point towards their public character, bringing them under the ambit of section 2(h). The constitutional and legal provisions discussed herein above also point towards their character as public authorities.

The Presidents, General/Secretaries of the Political Parties are hereby directed to designate CPIOs and the Appellate Authorities at their headquarters in 6 weeks time. The CPIOs so appointed will respond to the RTI applications extracted in this order in 4 weeks time. Besides, the Presidents/General Secretaries of the above mentioned Political Parties are also directed to comply with the provisions of section 4(1) (b) of the RTI Act by way of making voluntary disclosures on the subjects mentioned in the said clause.

[Complaints: (1) Shri Subhash Chandra Aggarwal (2) Shri Anil Bairwal vs. Respondents 6 Political Parties as noted above: CIC/SM/C/2011/00138 &000838 decided on 3rd June 2013]

Note: Many paragraphs as above are reproduction of the order.

BCAJ Admin

PART C: Information on & Around

Anna Hazare’s event at MMRDA ground, Mumbai by ‘India against Corruption’ (IAC)

IAC could not rent out the ground as it is not a registered trust. It then rented through Arvind Kejriwal’s NGO. Now through RTI query comes to light that MMRDA battled no similar compunctions in handing out discounts to the city Congress committee, also an unregistered body. In an RTI reply to Mumbai-based businessman Viren Shah, the MMRDA admits that in 2009, the Mumbai Regional Congress Committee (MRCC) was given concessions to hold political rallies on MMRDA ground twice. State BJP President Sudhir Mungantiwar said, “This is favouritism. Just because the Congress is the ruling party, doesn’t mean it can use the government machinery to favour its own, and that too during elections. If the Congress is given a concession, other parties should also be shown such considerations.”

RTI query by 10-year-old girl

Aishwarya Parashar of Lucknow stumped PMO officials with her query on when and by what orders was the title of ‘Father of the Nation’ conferred on Mahatma Gandhi. Asked what prompted her to file the RTI application on Gandhi and send it to the PMO, Aishwarya said how the term ‘Father of the Nation’ had always “somehow excited and interested” her after she read it in her social studies text book.

The PMO replied that they had no such record whatsoever and directed the query to the Ministry of Home Affairs, which then referred the case to the National Archives of India (NAI).

The NAI”s Assistant Director and CPIO Jayprabha Ravindran also had no answers to the poser by the Lucknow girl, and responded with an invite to Aishwarya asking her to visit the Archives to find for herself if there were any such relevant papers.

[It is in public knowledge that Subhash Chandra Bose gave the title of Father of the Nation to Mahatma. He, in his address on Singapore Radio on July 6, 1944 had addressed Gandhi as Father of the Nation. Thereafter on April 28, 1947 Sarojini Naidu referred Gandhi with the same title at a conference.]

[Note: I have just talked with the mother of Aishwarya in Lucknow, an RTI Activist congratulating her for this great story. It is rarely that a minor furnishes the query under RTI. In Mumbai the episode has appeared in atleast in 3 newspapers.]

A thought of the month

Many of the areas which have actually seen systemic reforms have also seen the disappearance of corruption.

levitra

BCAJ Admin

PART B: RTI act , 2005

Amendments to Maharashtra Right to Information Rules, 2005:

It is strange but true that Govt. of Maharashtra published in Gazette two notifications related to RTI dated 16-1-2012 and 31-1-2012 amending Maharashtra Right to Information Rules. The Govt. never informed citizens about it. It was only by chance, advocate Vinod Sampat saw that in March-end and communicated the same to all RTI activists.

All RTI activists are very much agitated. PCGT arranged a meeting with the Chief Minister (CM) where Mr. Julio Riberio, I and 7 other RTI activists invited by me met the CM on 10-4-2012. After 30 minutes dialogue, CM stated that he would look in to the matter. These notifications read as under:

The Maharashtra Right to Information (Amendment ) Rules , 2012, Dt. 16.1.2012

General Administration Department

Mantralaya, Mumbai 400032, dated the 16th January 2012

Notification

Maharashtra Right to Information Rules , 2005.

No. CRTI./2009/C.R.398/09/VI. – In exercise of the powers conferred by sub-sections (1) and (2) of section 27 of the Right to Information Act, 2005 (22 of 2005), the Government of Maharashtra is hereby pleased to make the following rules further to amend the Maharashtra Right to Information Rules, 2005, as follows, namely:-

1. These rules may be called the Maharashtra Right to Information (Amendment) Rules, 2012.

2. After rule 3 of the Maharashtra Right to Information Rules, 2005, the following rule shall be inserted, namely:-

“3A. Request relate only to single subject matter:- A request in writing for information under section 6 of the Act shall relate to one subject matter and it shall not ordinarily exceed one hundred and fifty words. If an applicant wishes to seek information on more than one subject matter, he shall make separate applications.

Provided that, in case the request made relates to more than one subject matter, the Public Information Officer may respond to the request relating to the first subject matter only and may advice the applicant to make a separate application for each of the other subject matters.’’

By order and in the name of the Governor of Maharashtra

Nandkumar Jantre
Secretary to Government

The Maharashtra Right to Information
(2nd Amendment ) Rules , 2012,
Dt. 13.1.2012

General Administration
Department

Mantralaya, Mumbai 400032, dated the 31st January 2012

Notification

Maharashtra Right to Information Rules , 2005.

No. CRTI. 2008/CR 356/VI. – In exercise of the powers conferred by sub-section 27 of the Right to Information Act, 2005 (22 of 2005), and of all other powers enabling in this behalf, the Government of Maharashtra is hereby pleased to make the following rules further to amend the Maharashtra Right to Information Rules, 2005, namely:-

(1) These rules may be called Maharastra Right to Information (2nd Amendment) Rule 2012

(2) After Rule 3A of the Maharastra Right to Information Rules, 2005, the following rules shall be added namely:

3B. Procedure for seeking inspection of records: If after having considered the application filed by the applicant for seeking inspection of record under the s.s (1) of section 6, the Public Information Officer find it appropriate, the applicant may be granted permission inspect of the record and if he grants such permission the Public Information Officer shall requisition the record desired by the applicant for perusal, from the concerned section of the Department and shall give the same to the applicant for inspection in his presence or in the presence of authorised representative, during the office hours. While inspecting such record, the applicant shall be allowed to use pencil only and the information desired by the applicant shall be noted by him by pencil only and if applicant bring any writing instruments other than pencil, he shall deposit the same with the Public Information Officer and thereafter, he shall be allowed to inspect the record. The applicant shall not make any marking on the record by the pencil he is allowed to use during inspection.

By order and in the name of the Governor of Maharashtra

Nandkumar Jantre
Secretary to Government

CIC feels RTI is dying in Maharashtra

Shailesh Gandhi, India’s feisty Central Information Commissioner and an early crusader for the Right To Information Act, believes that the RTI Act in Maharashtra is being pushed into a coma from where it may not be able to recover.

According to one version, pendency of cases pending as on 31-12-2011 is 22,000.

As per the report in Times of India acting State Information Commissioner Bhaskar Patil has stated ‘At the end of the 2011, about 1.07 lakh appeals were pending disposal’.

levitra

BCAJ Admin

PART D: Good Governance

How Does One Shame the Shameless in India

It took a horrific rape to expose our politicians. Suddenly the netas of Delhi were stripped naked. And there was no place to hide. Years of strutting around pompously and grand standing during one crisis after another, provided zero protection to these people as enraged citizenry took to the streets crying out for better governance, sickened by the apathy and abuse of power.

Excerpts from the Address of Narendra Modi:

“Development won today,” “There was thinking in our politics thatgood economics is bad politics. It was as if good governance did not suit on politics.”

He quickly added that the people of the country too needed good governance and economic development of the kind seen in Gujarat.

levitra

BCAJ Admin

PART C: Information on & Around

Pratibha Patil on Africa Trip

A month before she left office, the Centre spent a whopping Rs. 18.08 crore on the then president Pratibha Patil’s 10-day official visit to South Africa and Seychelles.

A reply to a RTI query has revealed that the Centre paid Rs. 16.38 crore to Air India for the special aircraft used for the two-nation trip from 29th April to 7th May last year.

The RTI reply revealed that an expenditure of Rs. 1.46 crore was incurred during her visit to the South African capital Pretoria, of which Rs. 71.82 lakh was spent on her local stay, Rs. 52.33 lakh on transportation and Rs. 22.12 lakh on other expenses. In Durban Rs. 23.55 lakh was spent on her visit, with Rs. 18 lakh going towards hotel stay and Rs. 5.27 lakh on transportation.

During her tenure at Rashtrapati Bhavan, Patil incurred expenses of Rs. 205 Crore on 12 trips to 22 countries.

School Principal

An RTI query filed by an activist might lead to the ouster of the current principal of a south Mumbai school. The reply to the RTI shows that the current principal of St Mary’s High School (ICSE) in Mazgaon is still at the post at 68 years of age while the state rules make it clear that school teaching staff and principal have to retire at the age of 58 years.

“I filed an RTI to check the status of 39 nonstate- board schools in the city, and found out that most are not following the rules as prescribed by the state education department,” said Nanasaheb Kute Patil, who filed the RTI query. The questions included whether the schools have all permissions prescribed by the government, annual fees demanded by them, age and qualification of teachers/principals, etc. “My aim is to make sure students don’t suffer because of school authorities,” he added. Following this, the south zone education department has sent a notice to the school asking them to remove the principal from his post.

Ajit Pawar

Ajit Pawar tendered his resignation on 25th September on moral grounds, after allegations of massive irregularities in irrigation projects in Vidharbha during his stint in previous cabinet as Water Resources minister. The governor accepted his resignation on 29th September.

From 30th September to 14th October, the state offered him facilities without any charge, according to the reply to an RTI application filed by Anil Galgali. A government resolution dated 12th October stated that after 14th October, Pawar was to be charged Rs. 5 a square foot if he wanted to avail of accommodation in the bungalow in Malabar Hill with an uninterrupted supply of all amenities – gas, water, power and telephone at state expenses. Officials from the general administration department said the rule/procedure was applicable on all cabinet ministers to allow them find new residences to ensure smooth transition from power.

But Galgali feels otherwise. “The high-voltage drama related to Pawar’s resignation was a well-planned political move,” he said. “If Pawar resigned from his ministerial post on moral grounds, then he should have shown the same morality and should have given back the Devgiri bungalow to the government. In the city’s slums, no one even gets a hut on rent for Rs. 5 a sq ft. If a government regulation (GR) states that outgoing ministers to be charged Rs. 5 a sq. ft for accommodation in a posh area like Malabar Hill, there is something fundamentally wrong and the GR must be amended.”

Security Firm

High-profile private security firm, NISA, with 45,000 guards on its payroll, has failed to file with Mumbai police with basic yet crucial details like how many of its personnel carry firearms. Yogesh Hilkar, a member of the NGO ‘Swabhiman’ run by Congress MLA Nitesh Narayan Rane, has uncovered these facts through a RTI plea.

“It is shocking that the company has not supplied details of all the armed men working with it. This is, potentially, a huge security threat,” when the Deputy Commissioner of Police, Headquarter (II) – who is responsible for maintaining a database of all the security agencies in the city and the Assistant Commissioner of Police from DN Nagar division, where NISA has its corporate office, have failed to furnish any details in this respect.

The company’s website (http://www.nisaeye.com/) notes that it is having 45,000 security personnel in its ranks, based at over 3,500 installations in India, and managed through about 45 branches.

It claims that it’s been administering security to some of the biggest names in the corporate world since 1973.

levitra

BCAJ Admin

PART B: RTI Act , 2005

The Government has decided to conduct a study on the implementation of the Right to Information Act to know the cost to the government in providing information to citizens under the UPA’s showpiece initiative and whether it has helped improve its “public perception about the extent of reduction in corruption”.

As per the RTI Act of 2005, only Rs. 10 fee is required to seek information from any public authority, but various government officials have complained of the huge cost they have to bear to divert resources and effort to answer RTI pleas.

The government has earlier got a study conducted from PricewaterhouseCoopers (PwC) in 2009 on the key issues and constraints in implementing the RTI Act. But, for the first time, the government is attempting to “calculate the cost to government in providing the formation under RTI”, as per the scope of work of the new study for which the Department of Personnel and Training has invited bids on 4th January. “To further strengthen the RTI regime, it has been decided to do a 360-degree study of the implementation of the RTI Act. The study will cover both states and the central government, across various sectors, and will cover public authorities at centre, state, district and panchayat level,” the bid document says. The scope of the study also involves assessing public perception about the extent of reduction in corruption. “Since the implementation of the Act there has been a significant and perceptible change in the level of transparency in the working of the governments at the Centre, state and the sub-state level,” the bid document claims. The scope of the study includes a study of trends in filing of RTI applications or appeals across the country. The government also wants an institution or organisation to study the use of the RTI Act by different types of applicants – in cases where applicant type is identifiable from the application. The study will assess the type of information sought and its classification into “personal information” sought by employees, procurement-related information sought “without any apparent objective/purpose” and general information sought without specificity across sections.

“The implementation of the provisions of the Act has to be studied from the perspective of both the demand and supply side. The approach to achieving the above is viewing RTI applications and their responses from the information seekers’ and providers’ angle,” the bid document says. The study will hence, determine the level of satisfaction among the people with functioning of the Act and the experience of public authorities at different levels in dealing with RTI applications and appeals, the document has mentioned.

[Extracts from ET dated 7-1-2013]

Good News for Mumbai RTI Applicants:

The office of the State Chief Information Commissioner will go paperless in less than a month. “If all goes well then our office will be paperless and we have developed a software for the purpose,” State Chief Information Commissioner, Ratnakar Gaikwad said.

Soon after his appointment in June, when Gaikwad visited the office of the Central Information Commissioner Shailesh Gandhi, he was surprised to see that there were no files on his table.

“I studied his working pattern and felt that it was possible to introduce a paperless office in Mumbai too,” he added. Gaikwad, who has set a target of disposing of 25 complaints/appeals daily, said no purpose will be served if information is not provided to an applicant as early as possible. “I am sure that we will be able to clear all the 2,098 appeals by March, 2013. Once the backlog is cleared, we will clear the appeals within 15days,” he said.

levitra

BCAJ Admin

PART D: good governance

E-governance:

E-governance equals good governance for the citizens of a country. The scale and ambition of the National e-Governance Plan (NeGP) is impressive. Some important projects that are at various stages of implementation include Passport Seva, India Post, income tax services, ESIC, setting up 2,50,000 common service centers (CSC) across 6,00,000 and more villages; the National Population Register (NPR) and the Unique Identification (UID) project. A state wide area network (SWAN) and state data centers (SDCs) are being set up to support the implementation of these and other projects. The government has also initiated ‘GI Cloud’ initiative to keep pace with technological advancements.

Making public services conveniently accessible to over 1.2 billion people in India spread across a vast geography is not an easy task, but is nonetheless vital for India’s continued growth. The success of e-governance initiatives is pegged in the timely implementation and smooth running. Technology is not a constant and it is important that policy guidelines and framework give scope for deployment of innovative IT infrastructure, like engineered system that can easily scale and adapt to the changing governance and public needs.

(Mr. Mahadeo P. Jaiswal in Transparency Review, Journal of Transparency Studies)

Ms Aruna Roy:

“The crisis in credibility today is at all levels of government. Effective implementation is as important as the legislations themselves. Our solutions do not lie in thoughts between one election and another but in addressing the lack of transparency and accountability in governance structures. My politics has always been to enhance the participation of people with in the democratic frameworks so that their voices are heard not just once in five years but every today.”

levitra

BCAJ Admin

PART C: Information on & Around

RTI AND & BMC:

The Brihanmumbai Municipal Corporation (BMC), the country’s largest civic body, has been fielding the most Right to Information (RTI) queries of any public institution across the state. Observers said this indicates the desire of Mumbai’s citizens to have greater participation in public affairs.

Following are the number of applications received by various P. As in Maharashtra and at BMC:

Year

State

BMC

2008

4.16L

46967

11.3%

2009

4.40L

59018

13.4%

2010

5.48L

72789

13.3%

2011

6.45L

90419

14.0%

2012

6.50L

plus*

1.02L

15.7%

*estimated

Activists said the BMC shouldn’t pride itself on getting such a high number of queries, as this indicates a lack of transparency. “This means that BMC has failed to put up information on its website suo moto. The BMC must understand that Mumbai is an active city, with greater citizens’ participation. So there are bound to be more RTI applications in the absence of data from the BMC,” said Shailesh Gandhi, former Central Information Commissioner and chairman of the Technical Advisory Committee (TAC) on RTI set up by the BMC.

Jinnah’s Speeches:

The Central Information Commission has asked the government to take a view on disclosure of two speeches made by Pakistan founder Mohammad Ali Jinnah during the pre-Independence era, which are in the archives of All India Radio and explain the reasons for withholding them if it intends to do so. Chief Information Commissioner Satyananda Mishra said more than 60 years after the country’s independence, the time has come when all concerned must decide what information relating to the pre-Independence period should be made available to public.

Mr. Robert Vadra:

The PMO has turned down an RTI request seeking records of an affidavit it filled in connection with the probe into the alleged land deals made by Congress chief Sonia Gandhi’s son-in-law Robert Vadra on grounds of “confidentiality”.

Nutan Thakur of Lucknow, through an RTI application, wanted to know all the file notings related to the PMO affidavit placed before the HC. She also wanted to know about the action taken after her petition was received. In its first reply in April, the PMO claimed that since the matter is sub-judice, records cannot be disclosed. Thakur then argued that such details can only be withheld when there is an explicit order from the court.

Later, in a reply on June 6, the PMO said, “The office, keeping in view the SC ruling, has sought exemption as the matter has been treated as confidential.”

It quoted a Supreme Court order which said that exception u/s. 8(1)(e) (of the RTI Act) is available not only in regard to information held by a public authority in a fiduciary capacity, but also to any information given or made available by a public authority to anyone else for being held in a fiduciary capacity.

BCAJ Admin

PART B: RTI Act, 2005

Maharashtra Government has drafted Information Commission (Appeal Procedure) Rules, 2012. Same are in internal circulation but RTI Activists have managed to get the copy thereof.

These rules are complicated and all RTI Activists (signed by 89 RTI Activists) have opposed them and have made out a detailed letter to the Chief Minister with copies to

1) Shri Jayant Banthia, Chief Secretary, Govt. of Maharashtra

2) Principal Secretary – General Administration Dept.

3) Principal Secretary – Law and Judiciary Dept.

There are 11 sub-rules. Presently, there are no separate rules for appeal procedure. The Maharashtra Right to Information Rules contain one clause for Appeal Procedure (sub-rule 5).

Sub-rule 4 of the draft rules is the most objectionable. The same reads as under:

“Accompaniments to memorandum of appeal: – Every memorandum of appeal made to the Commission shall be accompanied by the following documents namely:-

(i) copy of application made to the State Public Information Officer;
(ii) self-attested copies of the order, letter, documents, or correspondence received from the State Public Information Officer and the first appellate authority;
(iii) copy of the first appeal;
(iv) copy of order if any, given by the first appellate authority against which the appeal is being preferred;
(v) date-wise list (Index) of the documents referred to in the appeal;
(vi) affidavit in the format given in Annexure “B” affixed with Rs. 2 court fee stamp;
(vii) any other document, as deemed fit by the appellant.” Objections raised by RTI Activists read as under:

The affidavit as referred to in rule 4 requires the RTI appellant to include additional personal details e.g. “name of father/husband, age – yrs., service /business”. This rule is a blatant violation of Section 6(2) of RTI Act 2005, which states, “An applicant making request for information shall not be required to give… any other personal details except those that may be necessary for contacting him.” Also, this affidavit only burdens the RTI appellant (who is quite often a common man, and not an experienced RTI activist) with a meaningless, difficult and costly legal procedure. Change needed: Provision for affidavit should be deleted. In compliance with the RTI Act, no extra personal details must be asked, other than the ones needed to contact him.

levitra

BCAJ Admin

Company Law

Updates of Company Law from 15th April 2011 to 20th May 2011

The Ministry of Corporate Affairs as a part of the green initiative in Corporate Governance allowed paperless compliances by the companies. It has dispensed with physical sending of the Annual Report comprising of Balance Sheet, Profit and Loss Account, Director’s Report, Auditor’s Report to its members as required u/s.219 of the Act vide its General Circular No. 17/2011, dated 21- 4-2011. In lieu thereof it has clarified vide General Circular No. 18/2011, dated 29th April 2011, that the same are permitted to be sent by E-mail but subject to fulfilment of certain conditions.

Details available on:

http://www.mca.gov.in/Ministry/pdf/Circular_17- 2011_21apr2011.pdf and

http://www.mca.gov.in/Ministry/pdf/Circular_18- 2011_29apr2011.pdf

The Ministry of Corporate Affairs has vide General Circular No. 19/2011, dated 2-5-2011, informed that the portal has a facility that allows the Registrar of Companies to mark a company as ‘marked as having management dispute based on the complaints received by them. This creates an alert and documents filed on the portal are not approved and remain in the registry as work in progress till it is demarked by the Registrar. The matters in which the Registrar of Companies shall use this facility is available on:

http://www.mca.gov.in/Ministry/pdf/Circular_19- 2011_02may2011.pdf

The Ministry of Corporate Affairs has vide General Circular No. 20/2011, dated 2-5-2011 has intimated regarding the E-form 32 pertaining to the particulars of appointment of directors, etc., and changes therein pursuant to section 303(2) of the Companies Act — filing of conflicting return by contesting parties.

Details about this Circular are available on

http://www.mca.gov.in/Ministry/pdf/Circular_20-2011 _02may2011.pdf

The Ministry of Corporate Affairs has vide Circular No. 21/2011, dated 2nd May 2011 given approval to the National Securities Depository Limited (NSDL) and Central Depository Services (India) Ltd. (CDSL), subject to the condition that they obtain a certificate from Standardisation Testing and Quality Certification (STQC) Directorate, New Delhi for providing electronic platform for electronic voting under the Companies Act, 1956. For details refer:

http://www.mca.gov.in/Ministry/pdf/Circular_21-2011 _02may2011.pdf

The Ministry of Corporate Affairs vide Circular No. 2/11, dated 8-2-2011, had granted a general exemption u/s. 212(8) to companies for attaching the balance sheets of subsidiaries to their annual reports, provided conditions specified therein were satisfied. The Ministry has clarified the same will apply to unlisted companies also in order to ensure transparency in those cases where balance sheets are not attached. For details refer:

http://www.mca.gov.in/Ministry/pdf/Circular_22-2011 _02may2011.pdf

The Ministry of Corporate Affairs has issued a corrigendum to Circular No. 9/2011, dated 31-3-2011 pertaining to Filing of Balance Sheet and Profit and Loss Account in eXtensible Business Reporting Language (XBRL) The following shall be substituted and read as under:

“(i) all Companies listed in India and their subsidiaries, having paid up capital of Rs.5 crores and above or a turnover of Rs.100 crores or above, excluding Banking Companies, Insurance Companies, Power Companies, NBFC’s and overseas subsidiaries of these Companies.”

For details refer:

http://www.mca.gov.in/Ministry/pdf/Circular_25- 2011_12may2011.pdf

The Ministry of Corporate Affairs vide General Circular No. 24/2011, dated 11-5- 2011 has clarified that when the beneficiary of the loan/guarantee/security is a Public Limited Company, approval of the Central Government needs to be sought only if provisions of sub-sections (d) and (e) of section 295 are attracted. For details refer:

http://www.mca.gov.in/Ministry/pdf/Circular_24- 2011_12may2011.pdf

The Ministry of Corporate Affairs has vide Circular No. 23/2011, dated 3rd May 2011 clarified that the effective date of the Companies (Particulars of Employees) Amendment Rules, 2011, as all Directors Reports u/s. 217 approved by the Board on or after 1-4-2011 irrespective of the accounting year, to which they relate. The MCA vide GSR 289(E) dated 31-3-2011 had raised the limit of employee’s salary to be disclosed in the Directors’ Report u/s. 217 to Rs.60 lac for the year or at Rs.5.00 lac per month in case of part of the year. For details refer:

http://www.mca.gov.in/Ministry/pdf/Circular_25- 2011_12may2011.pdf

The Central Government vide Notification GSR (E), dated 11-5-2011 made the following amendment in the Companies (Accounting Standards) Rules, 2006 called the Companies (Accounting Standards) Amendment Rules 201. In the said rules, in the Annexure under the heading ‘B. ACCOUNTING STANDARDS’, in the sub-heading ‘Accounting Standards (AS) 11 relating to ‘the Effects of Changes in Foreign Exchange Rates’, in Paragraph 46, for the words and figures “46. In respect of accounting periods commencing on or after 7th December 2006 and ending on or before 31st March 2011,” the following shall be substituted namely:

“46. In respect of accounting periods commencing on or after 7th December 2006 and ending on or before 31st March 2012.”

For details refer:

http://www.mca.gov.in/Ministry/notification/pdf/ Notification_G.S.R._11may2011.pdf

Business rules and taxonomy for XBRL reporting — Ministry of Corporate Affairs has informed that it is in process of finalising business rules and taxonomy for XBRL reporting. Final taxonomy and business rules would be circulated by 20th May, 2011. Stakeholders and companies have been requested not to buy accounting software before final business rules so as to avoid any inconvenience.

The Ministry of Corporate Affairs has been informed that Form 61 for normalising a company should not be filed by a dormant company which is desirous of getting struck off under the Easy Exit Scheme (EES), 2011. Such company should file Form EES, 2011 only. In case any charges are pending, such company is also allowed to file Form 17 for satisfaction of the same. Form 61 for normalising a company should be filed by only those dormant companies which are desirous of getting back to active status by filing the due annual returns and balance sheets.

CORRIGENDUM [F.No. 5/7/2011-CL V], dated 1-5-2011 — In exercise of the powers conferred by sub-section (1) of section 637 of the Companies Act, 1956, regarding the Delegation by Central Government of its powers and functions u/s. 25 of the Companies Act, 1956, namely, pertaining to the power to grant approval to dispense with ‘Limited’ in name of charitable or other company, to the Registrar of Companies, the Central Government has notified that it shall come into force w.e.f. 1st May, 2011.

Provided further that the applications received by the Regional Directors u/s. 25 of the Companies Act, 1956 during the period 17th March, 2011 till 30th April, 2011 will be dealt by the concerned Regional Directors.

The Central Government vide Order dated F. No. 52/26/CAB-2010, dated 2nd May 2011 has directed all companies to which the following Cost Accounting Records Rules apply and those which have an aggregate value of networth exceeding Rs.5 crore or aggregate value of turnover from sale or supply of all products or activities exceeding Rs.20 crore or those companies having listed securities whether in India or outside India to have their cost accounting records for each financial year commencing on or after 1st April 2011, audited by a Cost Auditor:

1.   Cost Accounting Records (Bulk Drugs) Rules, 1974
2.   Cost Accounting Records (Formulations) Rules, 1988
3.   Cost Accounting Records (Fertilisers) Rules, 1993
4.   Cost Accounting Records (Sugar) Rules, 1997
5.   Cost Accounting Records (Industrial Alcohol) Rules, 1997
6.   Cost Accounting Records (Electrical Industry) Rules, 2001
7.   Cost Accounting Records (Petroleum Industry) Rules, 2002
8.   Cost Accounting Records (Telecommunications) Rules, 2002.

Further the companies need to follow the revised procedure for appointment of Cost Auditor as given in the General Circular No. 15/2011 [52/2/CAB -2011], dated 11th April 2011.

The Central Government vide Order dated F. No. 52/26/CAB-2010, dated 3rd May 2011 for has directed all companies to which any of the following Cost Accounting Records Rules apply and those which have an aggregate value of turnover from sale or supply of all products or activities exceeding Rs.100 crore or those companies having listed securities whether in India or outside India to have their cost accounting records for each financial year commencing on or after 1st April 2011, audited by a Cost Auditor for:

(a)   Cost Accounting Records (Cement) Rules, 1997
(b)   Cost Accounting Records (Tyres and Tubes) Rules, 1967
(c)   Cost Accounting Records (Steel Plant) Rules, 1990
(d)   Cost Accounting Records (Steel Tubes and Pipes) Rules, 1984
(e)   Cost Accounting Records (Paper) Rules, 1975
(f)   Cost Accounting Records (Insecticides) Rules, 1993.

Further the companies need to follow the revised procedure for appointment of Cost Auditor as given in the General Circular No. 15/2011 [52/2/CAB -2011], dated 11th April 2011.

Appointment of Cost Auditor — The Cost Audit Branch under the Ministry of Corporate Affairs has revised the procedure to be followed by companies to appoint Cost Auditors u/s. 233B of the Companies Act, 1956. As per the revised procedure, the audit committee will be the first point of reference for appointment of the Cost Auditors. The Company will electronically file an application in E-form 23C within 90 days of the Commencement of the finan-cial year with the Central Government for approval and the same will deemed to be approved, unless the contrary is heard within 30 days.

For details refer:

http://www.mca.gov.in/Ministry/mcaoffices/CAB_ Circular_15-2011_11Apr2011.pdf

Participation by shareholders in the Gen-eral Meetings through electronic mode: The Ministry of Corporate Affairs has vide General Circular No. 27/2011, dated 20th May 2011 has clarified that shareholders of a company may participate in a gen-eral meeting through electronic mode i.e., video conference facility so long as other terms and conditions mentioned in the Circular are fulfilled.

For details refer:

http://www.mca.gov.in/Ministry/pdf/Circular_27-2011 _20may2011.pdf

Participation by Directors in meetings of Board/ Committee of Directors through electronic mode: The Ministry of Corporate Affairs has vide General Circular No. 28/2011, dated 20th May 2011 has clarified that directors of a
company may participate in a meeting/committee of directors through electronic mode i.e., video conference facility so long as other terms and conditions mentioned in the Circular are fulfilled.

For details refer:

http://www.mca.gov.in/Ministry/pdf/Circular_28-2011 _20may2011.pdf

Issue of Certificate by Digital Signature: The Ministry of Corporate Affairs has vide General Circular No. 29/2011, dated 20th May 2011 has decided that all certificates and standard let-ters issued by the Registrar of Companies will be issued electronically under the electronic signature of the Registrar. For details refer:

http://www.mca.gov.in/Ministry/pdf/Circular_29-2011 _20may2011.pdf

BCAJ Admin

Ethics and u

Shrikrishna (S) – My dear Arjun, how was your Diwali? Enjoyed?

Arjuna (A) – Yeah, it was cool. M-Vat date was extended. So I could relax.

S – But whenever I called, you were always out of your office.

A – Actually, my friend is contesting our Council’s elections. He used to take me along for canvassing.

S – Did you go for voting?

A – No. On the same day, we had a family gettogether. And after all, what is the use of voting!

S – Why? You should be concerned about who sits in your Council.

A – Our Council members do nothing except selfpromotion. They hardly care for the profession.

S – But then, that was all the more reason why all of you should have voted. It means you are yourself not serious about the profession. And then, what is the point in cursing the Council members? And have you enquired as to what they do in the council? I know a few of them who really slog for the members at the cost of their own practice?

A – I know, one should always vote. But the way the candidates were canvassing, it was nauseating. The less said the better!

S – Anyway! A few of my friends have received your Diwali greetings. But they said they don’t know you directly. How did they come on your mailing list?

A – While canvassing for my friend’s election, I thought, why not tap a few strangers for business. I took a few addresses from Satyabhama bhabhi.

S – But it is not permitted to write to such strangers. Don’t you know?

A – Why? What is objectionable about it? Other wise. How can you reach the potential client?

S – It is a misconduct for a professional.

A – This is too much! Whatever we do, you point out some misconduct. I think we should become Sanyasis. See, this is what our Council does. Then why should we vote for them?

S – Arey wah! Brilliant argument! Full of selfcontradictions.

A – Last time you told me, I should not do any business other than my practice. Now in practice, you are saying I should not even send greetings. Then how can I promote my practice?

S – See, your quality of service is your sole advertisement. Nothing else. You should build up reputation by your quality, sincerity and integrity.

A – Too idealistic! Remember, we are presently in Kaliyuga and not in Satyayuga. Who will listen to such orthodox thinking? In foreign countries, all this is permitted.

S – Are you sure about it?

A – I mean I have heard about it.

S – There were pressures on the Council too. But your Council in its wisdom rightly took a decision not to permit any form of advertisement. Unabashed publicity will ultimately work to your own detriment.

A – How?

S – Then resourceful firms will resort to rampant marketing. Can you afford to match that kind of spending?

A – That they are already doing. My friends are working there. They are fed up with the business targets.

S – To have such targets in itself is rather unethical. How can there be monetary targets for a professional firm?

A – Tell me then, what else is prohibited?

S – Just read clause 6 of the First Schedule. You should not solicit clients or professional work by circular, advertisement or even personal communication.

A – What if somebody does it for me?

S – No. The prohibition is for both direct as well as indirect publicity. Also, there is Clause 5 of the First schedule. It says, you cannot secure any work through the services of any person who is not your employee or partner. You cannot use any means which are not open to a CA.

A – Then how will a new entrant get any assignment?

S – You can approach another CA and request him for assignments. That is permitted. So also, you can respond to the tenders or enquiries issued by the users of professional services.

A – But why such restrictions?

S – Only then you can command respect. You can then be independent. Otherwise, you will be viewed by the society as a businessman. Remember, your profession is not a business.

A – It is a very slow process to build up confidence and reputation. Today’s world is so fast.

S – I agree. But your services are of personal and intimate nature. A satisfied client is the best advertisement. Quality alone will attract and retain clients; and not any other gimmick.

A – You mean to say, we should not advertise at all?

S – Not exactly. Certain ads are permitted – like changes in your partnerships; or dissolution; change of address or change in telephone numbers. But these should be in the nature of announcements. A bare statement of facts. Discretion should be used as to in which locality the concerned newspaper or magazine is circulated.

A – What about small classified ads?

S – That is also allowed. But only in the journal or newsletter of the Institute. Through this, you can give information about your services and seek work or even employment. It should contain only basic details like your name, address, phone, fax number and e-mail address.

A – But can we apply for empanelments?

S – Yes. But you cannot enquire whether any organisation is maintaining a panel. So also, having empanelled, you cannot make roving enquiries with such organisations.

A – I had heard that we cannot even quote our fees.

S – No. You can always quote your fees on enquiries being received or respond to tenders.

A – Some guys were after me, to have my name in their yellow-page directory. I refused since I was not very sure. Moreover, it was very expensive.

S – You can have it in the Directories published by Public Bodies or Private Bodies. But there are certain guidelines. Firstly, there should not be any extraordinary payment. It can be in the specified groups also. But it should be in your own town or city. It should be in normal print – but neither in bold font nor in a separate box.

A – Interesting. You mean, it should not be conspicuous.

S – That’s right. It should be in alphabetical or logical order. Not very prominent. No unreasonable payment. And any CA of that locality should be permitted to have his name in it. It cannot be exclusive for a few selected group of CAs. It can also be in electronic media.

A – What if you publish a book or an article?

S – You can mention your name but not the name of your firm. Even in your CVs when you deliver lectures, reference to your firm’s name should be avoided.

A – We started this discussion from my greeting cards. Can I not even mention the designation ‘chartered accountant’?

S – You can. In greeting cards or on invitation cards for marriages, other ceremonies, inauguration of your office, and so on. But remember, it should be sent only to your clients, relatives and friends!

A – I see CAs appearing on TVs, what should they do? Is it not their advertisement?

S – They have to use restraint. The details about themselves or of their firms should not be given in a manner that highlights their professional attainments.

A – And what about websites?

S – Websites are permitted; but I don’t have time to tell you so much in detail. Why don’t you refer to the detailed guidelines of your Council? There are as many as 22 points – about website!

A – In many journals, I see questions being answered by CAs. I feel, that is also a form of advertisement.

S – Yes. It is permitted. It can be in journals or magazines or newspapers or websites or TV channels. But remember, they should not mention anything beyond the fact that the person answering is a chartered accountant. No mention of his contact address; or his professional achievements.

A – My God! So many points involved! But I agree that I would not go to a doctor or a lawyer without any personal reference or recommendation. Certainly not by advertisement. It is futile for a professional.

S – Good. So better concentrate on quality. Growth will follow. More greeting cards will never fetch your clients.

A – I agree; Bhagwan.

Om Shanti.

This is based on Clause nos (5) and (6) of First Schedule

Clause (5) – secure, either through the services of a person who is not an employee of such chartered accountant or who is not his partner or by means which are not open to a chartered accountant, any professional business:

Provided that nothing herein contained shall be construed as prohibiting any arrangement permitted in terms of items (2), (3) and (4) of this Part;

Clause (6) – solicits clients or professional work either directly or indirectly by circular, advertisement, personal communication or interview or by any other means:

Provided that nothing herein contained shall be construed as preventing or prohibiting –

(i) any chartered accountant from applying or requesting for or inviting or securing professional work from another chartered accountant in practice; or
(ii) a member from responding to tenders or enquiries issued by various users of professional services or organisations from time to time and securing professional work as a consequences.

Further, readers may also refer pages 135 to 153 of ICAI’s publication on Code of Ethics, January 2009 edition (reprinted in May 2009).

BCAJ Admin

Ethics and u

Gross negligence – Clause 7 of Part I of Second Schedule (contd.)

Series 5

Shrikrishna (S) –Arey Arjun, I am aware that this is the time of acute pressure of work for you. But why don’t you plan the work properly? Why such last minute rush every year?

Arjuna (A)– Hey Bhagwan! We are continuously into fire-fighting. There is no peaceful time at all! Every month, some deadline or the other. Our time-planning becomes a myth. The tax department also makes us dance to their tune any time.

S – Why? Don’t you have assistants? Why don’t you delegate some of the work?

A – Our trained articles always go on leave for exams exactly when we need them. Clients’ data is never ready when our staff is available.

S – Yours is a seasonal work due to common deadline for all tax-audits. So pressure is bound to be there. But in the Mahabharata War, it was fiercer. Death was constantly hovering around you. Still, you always looked fresh and cheerful.

A – True. But then, in that war, the fighting was only up to sunset. We could relax at nights. But in this war of tax-audits, we are fighting day and night.

S – But now everything is on computers. And there is e-filing. Then what is the problem?

A – This year, we need to upload our tax audit and other reports also. Upto last year, we were comfortable. After the returns were e-filed, we could peacefully complete the reports! Again, they are changing the forms and software every now and then. It is just chaotic!

S – You mean, fighting with a pen is more tiring than fighting with the bow and arrows. But, how do you ensure that the accounts you sign are alright?

A – Everything is Ram Bharose! Who has time to see all those things! Many of the audits we sign just like that! Now take these audits of other CA firms. All the partners of those firms are my good friends. Who has time to check their accounts? And it doesn’t look good also.

S – I remember, one Chartered Accountant signed another CA firm’s accounts in good faith like this. But unfortunately, in their scrutiny assessment, it was noticed that there was a small negative balance of cash on one day!

A – Oh God! Then what happened?

S – The tax officer simply forwarded it to your Institute as a case of negligence! Poor fellow suffered like anything.

A – But the regulation is too much. One friend of mine checked the accounts thoroughly. When that unit became NPA, the bank filed a complaint for negligence. It was revealed that he did not enquire about contingent liability. And there were many such liabilities of contingent nature. Taxation, labour litigations and what not!

S – Last time I told you, there is no end to the forms in which negligence takes place. Now, I am sure, all those company balance sheets you are signing now will carry a date of 31st August or 1st September. And I am also sure that in between, you must have sent e-mails about pending queries. That means you have created evidence of negligence against yourself!

A – No. You had once told me that a senior member of a very reputed firm was held guilty for such back-dating. So I take maximum care.

S – Good, another area of negligence is physical verification of fixed assets and stocks. Do you remember, in the Mahabharata, you used to take inventory of all weaponry—swords, bows, arrows, and also of horses, elephants, food grains and many other things. Are you doing it as an auditor?

A – We had studied all about stock-taking for the exam. In my friend’s enquiry of misconduct, there was no record at all of his ever visiting client’s office, or factory. No one from the auditor’s office ever went for stocks. And many items of machinery were not there. He used to just ‘rely on management’s certificate’.

S – I doubt whether he was obtaining any certificate. You people just mechanically mention in the report that you obtained certificates.

A – I agree. We are very much lax in taking the Management Representation Letter. I have heard stories of all such lapses being treated as misconduct.

S – Are you aware, nowadays, ROC’s inspection has been activated and there are many lapses in audit being reported? ROC is forwarding its observations directly to your Institute. And it is being treated as ‘information’ to initiate disciplinary proceedings.

A – Baap Re! I have heard many of my friends received notices from ROC’s office. They used to think that no one sees the audit reports of private limited companies. But what you say is alarming!

S – Another very important point—you people are under a sweet impression that if two directors sign the balance sheet, it is enough. But read section 215 of the Companies Act. It says what is necessary and important is the Board’s approval.

A – You had told me this once. But our friends sign in good faith, when even directors have not signed. And I know a case where the auditor signed it when only one director signed. Later on, the other director who was his brother, refused to sign the balance sheet. He wanted to take revenge on the CA since the CA had refused to take that director’s daughter as a ‘dummy’ article! So, one should never sign in good faith.

S – Quite strangely, many people argue that there was no mala fide intention. Remember, the Council is not concerned with your intentions but it wants to see whether you discharged the duties diligently. And quite often, those who claim to have clear conscience have a weak memory!

A – You started your philosophy again. Now I make a new year resolution from 1st October that I will prepare for next year’s audits right now!

S – That’s great! But let it not be the usual ‘New Year Resolution”!

Om Shanti !

levitra

BCAJ Admin

Company Law

1) Commencement of Companies Act 2013:

The Companies Bill, 2012, received the President’s assent on 29th August 2013 and became the Companies Act, 2013 (new Act). The new Act was published in the Official Gazette on 30th August 2013. The same can be accessed at www.egazette.nic.in/WriteReadData/20 13/E_27_2013_425.pdf

Different sections of the new Act will become effective on different dates as may be appointed by the Central Government by notification in the Official Gazette. On 12th September 2013, the Ministry of Corporate Affairs (MCA) issued a Notification for commencement of 98 sections of the new Act, making them effective from 12th September 2013, the details of which areavailable on the MCA website.

The Ministry of Corporate Affairs has vide Circular 16/2013 Dated 18th September 2013 clarified that with effect from 12-9-2013, the relevant sections of the Companies Act 1956 which correspond to the 98 sections of the Companies Act 2013 brought into effect from 12-09-2013 have ceased to have effect from that date. The Circular can be accessed at www.mac.gov.in/pdf/ General_Circular_16_2013.pdf

The Ministry of Corporate Affairs has vide Circular No. 15 dated 13th September 2013, clarified that:

a) Section 2 (68) the Registrar of Companies may register those Memorandum and Articles of Association received till 11-09-2013 as per the definition clause of the Private Company under the Companies Act 1956 without referring to the definition of Private Company under the “said Act”.
b) Section 102 – Companies which have issued notices of General Meeting on or after 12-09-2013, the statement to be annexed to the Notice shall comply with additional requirements as prescribed in Section 102 of the Companies Act 2013.
c) Section 133 – Till the Standards of Accounting or any addendum thereto are prescribed by the Central Government, the existing Accounting Standards as notified under Companies Act 1956 shall continue to apply.
d) Section 180 – For notices for General Meeting issued prior to 12-09-2013, matters requiring special resolution under section 180 of the Companies Act 2013 as against ordinary resolution required under Companies Act 1956 may be passed in accordance to the requirement of Companies Act 1956.

2) Companies Removal of Difficulties Order 2013

The Ministry of Corporate Affairs has vide its Companies (Removal of Difficulties) Order 2013 dated 20th September 2013, notified for the transfer of all matters, proceedings or cases to the Tribunal constituted under Chapter XXVII of the Companies Act 2013, that the Board or Company Law Administration shall exercise the powers of the Tribunal under sections 24, 58 and 59 of the Act namely – section 24: Power of Securities and Exchange Board to regulate issue and transfer of securities, etc., and sections 58 and 59 pertaining to share capital and debentures: Refusal of registration and appeal against refusal and rectification of register of members respectively. The order can be accessed at

3) Relaxation of Last Date and Additional Fee in Filing E-Form 23C for Appointment of Cost Auditor

Vide general Circular No. 14/2013 dated 3rd September 2013, the Ministry of Corporate Affairs has decide to extend the last date of filing and to relax the additional fess applicable on e-form 23C up to 31st October 2013 i.e., the form can be filed up to 31st October 2013 or within 90 days of the commencement of a company’s financial year to which the appointment relates, whichever is later.

4) Draft Rules under the Companies Act 2013

The Ministry of Corporate Affairs has made the draft Rules for 16 chapters under the Companies Act 2013, live for public comments in the 1st phase to be received by 8th October 2013 and those in the 2nd Phase by 19th October 2013. The stakeholders can use the platform at www.ncbfeedback.mca.gov.in/ for providing their suggestions and comments on the draft rules.

levitra

BCAJ Admin

PART A : Decision of the H.C.

The appellant, Mr. Arvind Kejriwal had questioned and challenged the interpretation of Section 11 of the RTI Act.

The Delhi High Court noted:

Section 11 of the Act has been given a marginal heading “third party information”. The term “third party” has been defined in section 2(n) of the Act to mean any other person including a “public authority” except the citizen who makes a request for information. Thus, a public authority which has the information or access to the information can be a third person. Section 8 of the Act provides exemption when information is not to be furnished or given. To interpret section 11, one has to keep in mind and also consider the exemptions provided in section 8(1) of the Act.

The core contention of the appellant is that the expression “relates to or has been supplied by a third party and has been treated as confidential by that third party” in section 11(1) of the Act should be read as “relates to and has been supplied by a third party and has been treated as confidential by the third party”. In other words, the word “or” used in section 11(1) should be read as “and”. In support of the said contention, it is submitted that purposive and not literal interpretation is required and if a restricted or narrow interpretation is given, then in all cases where information relates to third party, the Public Information Officer (“PIO” for short) would be required to issue notice to the third party or parties concerned. This may happen in most cases and it would make the Act unworkable. The appellant has pointed out instances like list of families below the poverty line, copy of contracts or bills, etc. between the public authorities and third parties, marks obtained in an exam, admissions or even information which is already in public domain would attract the procedure stipulated in section 11 unless the word “or” is read as “and”. It is submitted that in such cases, notices will have to be issued to third parties who may be spread all over India and this process itself may take days, if not months to be completed. Dealing with objections raised, in regards to the abovementioned procedure, would also make the Act tedious, result in procedural difficulties and delay furnishing of information and is therefore contrary to the legislative intent.

• The word “or” is normally disjunctive and the word “and” is conjunctive. However, there have been occasions when the Courts have interpreted and read them vice versa to give effect to the manifest intention of the Legislature as disclosed from the context. It is permissible to read word “or” as “and” and vice versa, if the legislative intent is clearly spelt out or some other part of the statute, requires such interpretation (See principles of Statutory Interpretation of G.P. Singh, 11th edition at page 455).

The Court then cited a number of Court decisions including the Supreme Court decisions in:

• People’s Union for Civil Liberties v. Union of India

• Central Board of Secondary Education v. Aditya Bandopadhyay.

The Court then noted and decided:

• Fair and just decision is the essence of natural justice. Issuance of notice and giving an opportunity to the third party serves a salutary purpose and ensures that there is a fair and just decision. In fact issue of notice to a third party may in cases curtail litigation and complications that may arise if information is furnished without hearing the third party concerned. Section 11 prescribes a fairly strict time schedule to ensure that the proceedings are not delayed.

• Thus, section 11(1) postulates two circumstances when the procedure has to be followed. Firstly when the information relates to a third party and can be prima facie regarded as confidential as it affects the right of privacy of the third party. The second situation is when information is provided and given by a third party to a public authority and prima facie the third party who has provided the information has treated and regarded the said information as confidential. The procedure given in section 11(1) applies to both the cases.

• The learned Single Judge in the impugned decision has dealt with and interpreted aspect of annual confidential reports and other factual aspects including the fact that inspection of several files has been allowed to the appellant and what the appellant is today seeking is merely the gradings. We would not like to comment on any of these aspects or issues as they were not specifically argued by either side. As noticed above, the matter has been remitted for fresh decision by the CIC. The observation made in the present appeal should not be construed as binding findings on any of the said aspects. We have interpreted section 11 of the Act and the observations made above are in that context. The appeals are accordingly disposed of.

[Arvind Kejriwal v. CPIO and Anr, Arvind Kejriwal v. Union of India: LPA Nos. 719/2010, 291 & 292/2011 decided on 30.09.2011 – (RTIR IV (2011) 368 (Delhi))]

levitra

BCAJ Admin

Laws and Business

Fraudulent Transfers

Introduction

When a person has a debt and is not paying, then the creditor can approach the Court for an attachment of debtor’s property. If the debtor were to transfer his property with an intent to defraud the creditor, then the creditor would be left without any source to recover his debts. This act of transferring the property on the part of the debtor is known as ‘fraudulent transfer’. Various laws have dealt with this subject of fraudulent transfer by giving it different terminologies, such as voluntary transfer, private alienation, etc. Let us look at some of the important laws dealing with the subject of fraudulent transfer. In this age where several agencies, such as the Enforcement Directorate, are contemplating attaching properties of businessmen/companies the subject of fraudulent transfers assumes importance.

Meaning of fraud
Since we are examining the concept of a fraudulent transfer, let us first understand the meaning of the term fraud. U/s.25 of the Indian Penal Code, 1860, a person is said to do a thing fraudulently if he does so with an intent to defraud and not otherwise. Hence, to prove a charge of fraud, mens rea or a culpable state of mind is a must. The term defraud has not been defined in the Code. However, its general meaning presupposes two elements, deceit or intention to deceive and an injury to someone. The Supreme Court in the case of Dr. Vimla v. Delhi Administration, 1963 SCR Supl. (2) 585, has held as follows:

“. . . . . . the two adverbs, ‘dishonestly’ and ‘fraudulently’ are used alternatively, indicating thereby that one excludes the other. That means they are not tautological and must be given different meanings . . . . . . . . The word ‘defraud’ includes an element of deceit. Deceit is not an ingredient of the definition of the word ‘dishonestly’, while it is an important ingredient of the definition of the word ‘fraudulently’. The former involves a pecuniary or economic gain or loss, while the latter by construction excludes that element. Further the juxtaposition of the two expressions ‘dishonestly’ and ‘fraudulently’ used in the various sections of the Code indicates their close affinity and therefore the definition of one may give colour to the other. To illustrate, in the definition of ‘dishonestly’, wrongful gain or wrongful loss is necessary enough. So too, if the expression ‘fraudulently’ were to be held to involve the element of injury to the person or persons deceived, it would be reasonable to assume that the injury should be something other than pecuniary or economic loss. Though almost always an advantage to one causes loss to another and vice versa, it need not necessarily be so. Should we hold that the concept of ‘fraud’ would include not only deceit but also some injury to the person deceived, it would be appropriate to hold by analogy drawn from the definition of ‘dishonestly’ that to satisfy the definition of ‘fraudulently’ it would be enough if there was a non-economic advantage to the deceiver or a non-economic loss to the deceived. Both need not co-exist. . . . . . ”

In S. P. Changalvaraya Naidu v. Jagannath, 1994 (1) SCC 1, it was held that a fraud is an act of deliberate deception with the design of securing something by taking unfair advantage of another. It is a deception in order to gain by another’s loss. It is a cheating intended to get an advantage. Fraud as is well known vitiates every solemn act. Fraud and justice never dwell together. Fraud is a conduct either by letter or words, which includes the other person or authority to take a definite determinative stand as a response to the conduct of the former either by word or letter. It is also well settled that misrepresentation itself amounts to fraud. Indeed, innocent misrepresentation may also give reason to claim relief against fraud. A fraudulent misrepresentation is called deceit and consists in leading a man into damage by willfully or recklessly causing him to believe and act on falsehood. It is a fraud in law if a party makes representations, which he knows to be false, and injury inures therefrom, although the motive from which the representations proceeded may not have been bad. An act of fraud on court is always viewed seriously. A collusion or conspiracy with a view to deprive the rights of the others in relation to a property would render the transaction void ab initio. Fraud and deception are synonymous.

Fraud is a conduct either by letter or word, which induces the other person or authority to take a definite determinative stand as a response to the conduct of the former either by word or letter — State of Andhra Pradesh v. T. Suryachandra Rao, Appeal (Civil) 4461 of 2005 (SC).

The Supreme Court in Ram Chandra Singh v. Savitri Devi, 2003 (8) SCC 319, held that it is well settled that misrepresentation itself amounts to fraud. Indeed, innocent misrepresentation may also give reason to claim relief against fraud. A fraudulent misrepresentation is called deceit and consists in leading a man into damage by willfully or recklessly causing him to believe and act on falsehood. It is a fraud in law if a party makes representations which he knows to be false, and injury ensues from the same, although the motive from which the representations proceeded may not have been bad. In an ‘action of deceit’ the plaintiff must prove actual fraud. Fraud is proved when it is shown that a false representation has been made knowingly, or without belief in its truth, or recklessly, without caring whether it be true or false.

In Ram Preeti Yadav v. U.P. Board of High School, JT 2003 (Supp. 1) SC 25 it was held that fraud is a conduct either by letter or word, which induces the other person, or authority to take a definite determinative stand as a response to the conduct of former either by word or letter. Although negligence is not fraud, but it can be evidence on fraud.

Civil Procedure Code The Civil Procedure Code, 1908 (‘the Code’) deals with the provisions relating to a Court decree and its execution. In case of a decree from a Court, the Court may require any person to pay any sum to the decree holder (or the plaintiff). In case the defendant fails to do so, the Court can, in execution of its decree, attach the movable and immovable properties of the defendant and recover the amount due by disposal of these assets. According to the CPC, an attachment prevents a private-transfer and no person can benefit from a subsequent transfer of the attached property.

Section 64 of the Code provides for such private alienation. Once a property has been attached, any private alienation of such property by private transfer or delivery and any payment to the judgment debtor of any debt, dividend, etc., contrary to such attachment shall be void as against all claims enforceable under the attachment. Section 64 applies whether the property stands in the name of the judgment debtor or any other person who is a name lender, i.e., benami property — Pradyut Shah, AIR 1979 Bom. 166. However, if the transfer is by an operation of law or pursuant to a Court order, then section 64 does not apply. For instance, a sale consequent to a later attachment would prevail even if there was an earlier attachment on the sale date — Rukmani v. Ram AIR, 1942 Nag. 36. It only covers private transfers, such as, voluntary sales, gifts, mortgages. It may be noted that the private transfers are not void ab initio, but only void as against all claims enforceable under the attachment. There is a difference of opinion amongst various Courts as to whether or not any private transfer after attachment but in pursuance of a contract of sale executed prior to attachment is covered by section 64. Various decisions have held that in order that an attachment renders a subsequent alienation as void u/s.64, the attachment must follow the due process laid down under the Code, e.g., Rules 41 to 57 of Order 21.

Indian Penal Code, 1860

Under the Indian Penal Code (IPC) if the following four conditions are satisfied:

(a) the accused removes, conceals, delivers the property or transfers it or causes to transfer it to someone;

(b) the above is done without adequate consideration;

(c) the intention of the accused was to prevent the distribution of that property among his creditors or some other person’s creditors; and

(d) he must act in a dishonest or fraudulent manner then the accused shall be punished with imprisonment of a term up to 2 years and/or fine.

Similarly, if a person fraudulently or dishonestly prevents any debt which is due to him from being made available to him for the payment of his debts, then the person shall be punished with imprisonment of a term up to 2 years and/ or fine. Thus, this provision seeks to prevent debtors from dodging their dues by preventing receipts from accruing to themselves.

A dishonest or fraudulent execution of an instrument which purports to transfer/charge any property and which contains any false statement with respect to the consideration for such transfer/ charge or to the beneficiaries of such transfer/charge is punishable with imprisonment of a term up to 2 years and/or fine. Benami conveyances would be covered within the scope of this provision.

A person who dishonestly or fraudulently conceals or removes property belonging to himself/ some other person or dishonestly releases any demand or claim to which he is entitled shall be punished with imprisonment of a term up to 2 years and/or fine.

We have already examined the meaning of the term fraud. Let us now see the meaning of the term ‘dishonestly’. Section 24 of the IPC defines ‘dishonesty’ as doing anything with the intention of causing wrongful gain to one person or wrongful loss to another person. Wrongful gain is defined as the gain by unlawful means of property to which the person gaining is not legally entitled. Conversely, wrongful loss means the loss by unlawful means of property to which the person losing it is legally entitled. A person wrongfully gains when he retains/acquires wrongfully. A person loses wrongfully when he is wrongfully kept out or deprived of property. Thus, in order to attract a charge of dishonesty, wrongful gain or loss is a must.

Presidency-Towns Insolvency Act

The Presidency-Towns Insolvency Act, 1909 deals with the law relating to insolvency as applicable in the cities of Mumbai, Chennai and Kolkata. Section 56 of this Act enunciates the doctrine of Fraudulent Preference. Every transfer by a debtor of his property, every payment made, every obligation incurred and every judicial proceeding taken or suffered by him is fraudulent and void against the Official Assignee, if all the following conditions are satisfied:

(i) at the time of the transaction, the debtor was unable to pay his debts

(ii) the transfer must be in favour of a creditor

(iii) the transfer must be with a view to give a preference to that creditor over other creditors

(iv) the creditor has in fact been preferred over other creditors

(v) the debtor must have entered into the transaction without any compulsion

(vi) the debtor must be adjudged insolvent on a petition presented within 3 months after the date of the transaction.

However, the rights of a bona fide person acquiring a title in good faith and for valuable consideration are not affected by the above doctrine.

Section 57 of the Act provides for the protection of bona fide transactions. Subject to the provisions relating to fraudulent preferences, in case of an insolvency, the following would not be affected:

(i) any payment by the insolvent to any of his creditors

(ii) any payment or delivery to the insolvent

(iii) any transfer for valuable consideration; or

(iv) any contract or dealing by or with the insolvent for valuable consideration.

However, the transaction should take place before the date of the order of adjudication and that person with whom such transaction takes place does not have notice of any insolvency petition.

Transfer of Property Act

The Transfer of Property Act, 1882 also deals with the concept of a fraudulent transfer. According to section 53, every transfer of immovable property made with the intent of defeating or defrauding the creditors of the transferor shall be voidable at the option of any creditor who is defeated or delayed. Thus, the following important conditions must be satisfied:

(i) The transfer must be of an immovable property. Unlike the previous two Acts, this section only applies to immovable property. What is an immovable property would be a matter of fact and unless it is a clear-cut case of classic land and building, it would have to be ascertained on a case-by-case basis.

(ii) Section 5 of this Act defines a transfer of property to mean any act by which a living person conveys present or future property to one or more other living persons. The expression living person has been defined to include a company, AOP and BOI.

(iii) The transfer must be made with an intention to delay or defraud one’s creditors. Hence, mens rea or a culpable state of mind on the part of the transferor must be demonstrated. Unless the same is proved, section 53 would not apply. Further, if the intention is to give preference to one creditor over another, then this section would not apply — Sharp v. Jackson, (1899) AC 19. The transfer must be to delay the creditors.

(iv) The transfer is not void ab initio. It only becomes voidable at the creditor’s option. If the creditor sues to avoid the transfer, then he must do so on behalf of all the creditors. The onus of proving that the transfer was made with an intent to delay or defeat creditors lies on the creditors — Daulat Ram v. Ghulam Fatima, (1926) 89 IC 953. However, once the fraud is established, then the onus of proving good faith shifts to the debtor — Amarchand v. Gokul, (1903) 5 Bom LR 142.

However, section 53 does not impair the rights of a buyer in good faith and for consideration. Hence, if a buyer has purchased immovable property without notice of the intention on the part of the debtor to delay his creditors and he has paid good consideration for the same, then his title is not impacted by section 53. This section is subject to the law of insolvency.

Companies Act

U/s.531 of the Companies Act, 1956, any transfer of property, whether movable or immovable, delivery of goods, payment, execution, etc., taken or done by or against a company within 6 months before the commencement of winding-up of a company, is invalid and is treated as a fraudulent preference of the creditors if the same would, in the case of an individual’s insolvency petition, be deemed to be a fraudulent preference. The preference is fraudulent when the substantial and dominant motive was to prefer one creditor or particular creditors — Mohandas v. Tikamdas, (1917) 37 IC 250. It is important to prove that both the transferor and transferee had a common intent to defraud creditors and if the transaction was made in good faith for valuable consideration then the same is not void — Official Liquidator v. MD, AP State Financial Corp., 115 Comp. Cases 284 (AP).

Similarly u/s.531A, such transfer made by a company is void against the liquidator if it is made within one year before the presentation of a winding- up petition. This however, excludes a transfer in its ordinary course of business or in favour of a purchaser in good faith and for valuable consideration. The person who has been fraudulently preferred would be subject to the same rights and liabilities as if he had personally agreed to become a surety for the company’s debt. The extent of his liability is equal to lesser of the mortgage or charge on the property or the value of his interest. The value of his interest is to be determined as on the date of the transaction which constitutes the fraudulent preference as if the interest was free of all encumbrances other than those to which the mortgage or charge for the company’s debt was then subject. This section even applies to transfers made by book entries — Jayanti Bai v. Popular Bank Ltd., 36 Comp. Cases (Ker.).

Income-tax Act

Section 281 of the Act provides that where during the pendency of any tax proceedings or after the completion of the same but before the service of a tax recovery notice, any assessee creates a charge or transfers any of his assets in favour of any other person, then such a charge/transfer would be void as against any tax claim. However, this section does not apply where the transfer is made for adequate consideration and without notice of any previous proceedings/tax demand or with the prior approval of the Assessing Officer. This section applies to any asset being land, building, machinery, plant, securities, bank deposits, provided the same are not stock-in-trade of the assessee. The Bombay High Court has, in the case of Twinstar Holdings Ltd. 260 ITR 6 (Bom.) held that where shares held as investment were converted into stock-in-trade and the only purpose of such conversion was to avoid attachment of the shares by the Department to recover tax, the transfer was void.

Conclusion

Although the legal position appears quiet straight-forward on this issue, its practical implementation is a different ballgame altogether. Whether or not a particular transfer is a fraudulent transfer is a matter of fact, circumstances and evidence. One would have to make a deep study of the evidence before arriving at any conclusion. For instance, whether a settlement by a person on a trust amounts to a fraudulent transfer or is an act of valid asset protection, needs to be carefully scrutinised.

BCAJ Admin

Ethics and u

Bhagwan Shrikrishna

(S) — Hey you Arjuna, why are you looking so weary? In that Mahabharata War, you were so brave! What’s the matter? Arjuna
(A) — That war was much simpler. Either kill or get killed. Now as a CA, I am dying every day.

S — Where is your bravery gone? Where is that old uprightness? Why are you so depressed?

A — I don’t get time for regular exercise. Just sitting before the computer whole day. My spine is bent like my bow!

S — Are you still having a spine? Err-sorry — a bow?

A — What do you mean? I wonder why people believe that CAs don’t have a spine! Anyway, you wanted to tell me something about ethics. Is it a long list?

S — No dear. Only a few rules of fair practice as a professional.

A — That reminds me. They say everything is fair in war. That made the war simpler. In practice, they expect us to be fair. True and fair! That is the difficulty. How can a thing be true as well as fair at the same time?

S — Yes I agree there are dilemmas. But in all fairness, one has to be true.

A — Actually, I left my bow and arrows and took up this pen. I separated from Bhima, Nakula and Sahadeva. Somehow, I was holding on to Dharma. But many situations compel me to go away even from Dharma. I feel insecure.

S — You are right. Remember, Dharma alone will protect you. Dharma is Yudhishthira — ‘yudhi’ means ‘in a war’. ‘Sthira’ means stable, unshaken. Dharma is nothing but ethics. That will make you stable in war-like situations.

A — Our Council does not allow us any freedom. It thrusts those meaningless ethics on us. Even a little deviation, and there is punishment. I have lost my independence.

S — Arjuna, independence is always very costly. Its cost is nothing but ‘eternal vigilance’. Independence does not mean freedom of behaviour.

A — Then what it is?

S — It is freedom from fear. Fearlessness comes not merely by sword but by shield. Ethics is that shield. It is not a burden.

A — But if I do something wrong in the interest of my client, why should the Council punish me? How does a small wrong matter?

S — Remember dear. If you compromise on your principles, a client may pay you money but will never give you respect. Not only that, but he will treat all CAs alike — amenable to temptation — and willing to compromise.

A — Oh, that will spoil the image of whole profession!

S — Precisely. The Council is more concerned with credibility of the profession. Therefore, the punishment to the wrongdoer. You remember, whenever Gopikas complained to my mother Yashoda, she used to scold me, beat me; and used to tie me up. Mother wants to uphold reputation of the child and also of the family.

A — But many times, complainants themselves are wrongdoers. They are even fraudsters. Why does our Council not do anything to them?

S — The Council is there to protect you and the profession. It just wants to see that its members behave properly. The Council is not so much concerned with the behavior of others.

A — This is not fair. So then the others go scotfree?

S — No. There are other forums to deal with such people. The Council only expects that you don’t become a party to the misdeeds.

A — But if nobody is adversely affected by my mistake, then how and why is the Council concerned? S — For example?

A — I certify incorrect accounts of a charitable trust, its income is exempt any way!

S — Do you mean tax is the sole purpose of certifying the accounts? I think the tax consultant in you is overpowering the auditor in you.

A — But then tell me who else is affected?

S — All the users of your accounts, Members, beneficiaries of the Trust, Regulators, Lenders . . . . .

A — See, if anybody suffers due to my wrong certificate, I will compensate him. Or what if he pardons me on his own? Then what’s the issue? Unnecessary harassment! Where is the loss then?

S — Loss of respect, my dear! Loss of credibility. The sole foundation of your profession is its credibility. Can you leave a thief merely because he compensates you for the theft? Was it the practice in your Pandava’s Kingdom?

A — No. If a wrongdoer is let off, he will do more wrong. And that would tarnish the king’s image if he lets of a thief.

S — Unfortunately, though Government today does not understand this, the Council is very much conscious about it. Moreover it is like Paap (Sin) and Punnya (Bliss). The debit cannot be adjusted against credit. You cannot undo misconduct by doing good. Good may or may not be rewarded; but bad is punished. Same like Adhyatma (Spiritualism).

A — Many times, there are mischievous complaints. There is dispute between two parties and the auditor is made a scapegoat! He is victimised only to exert pressure on other party.

S — That is precisely why your work should be perfect in absolute sense — regardless of whether it suits someone or not. See, you were asking about the Trust. There could be dispute among Trustees or among members. And you would become vulnerable!

A — And what if the complainant wants to withdraw the complaint later on?

S — See, this is a quasi-criminal proceeding. And so he cannot withdraw the complaint as a matter of right. That can be done only with the consent of the Board of Discipline or the Disciplinary Committee.

A — I think we were happy and at peace in the exile!

S — But man has destroyed jungles and has become junglee himself. Money has assumed supreme position. Society is looking upon you CAs to bring monetary discipline. But if you CAs prefer to be a part of the indiscipline, who will save the mankind ?

A — I am realising a little bit. You mean to say that we Pandavas should not become one like Kauravas!

S — You said it! Om Shanti! Important principles

The above dialogue between Arjuna and Shrikrishna is intended to bring out important principles in disciplinary proceedings. We can summarise the principles as follows :

1. The complainant need not come with clean hands. The Council is not concerned with, nor has jurisdiction over the complainant’s behaviour or conduct.

2. The fact whether the complainant or anybody else is aggrieved or has suffered any loss or not is of no consequence while holding a member guilty or otherwise.

3. It is of no avail even if the member compensates the complainant for any losses. It does not undo the misconduct.

4. Even if the complainant pardons the respondent member, or offers to withdraw the complaint, or does not pursue it, or remains absent at the hearing, the member is not automatically absolved. The Council steps into the shoes of the complainant and takes it to the logical conclusion.

5. Complaint, once lodged, cannot ordinarily be withdrawn except with the permission of the Board of Discipline or the Disciplinary Committee [Rule 6 of The Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of cases) Rules, 2007].

6. Misconduct includes both professional misconduct as well as ‘other misconduct’. The latter is too wide; and goes beyond the ‘Code’. — i.e., beyond the items listed in the Schedules. It implies a behaviour unbecoming of a professional.

levitra

BCAJ Admin

Laws and Business

Introduction

In the commercial and legal world, one often comes across a transaction being executed through a power-ofattorney. It is a means by which a person who is unable to be physically present to carry out a task or a transaction, does so through another person. While most of us may be conversant with the concept of a power-of-attorney, it would be interesting to note that there is a separate Act, i.e., the Powersof- Attorney Act, 1882 (Act), which governs the law relating to powers-of-attorney. In addition, certain other statutes also regulate the law in relation to powers-of-attorney. Let us have a brief overview of the law in this respect.

Meaning

The Act defines a power-of-attorney to include any instrument empowering a specified person to act for and in the name of the person executing it. Thus, there is an inclusive definition of the term. The following are the key features emanating from the definition:

(a) It is an instrument;
(b) The instrument must be executed by some person, known as the donor of the power;
(c) It must empower a person specified in the instrument, known as the donee of the power; and
(d) The donee must be empowered to act for and in the name of the donor.

The Bombay Stamp Act, 1958, defines a power-of-attorney includes any instrument empowering a specified person to act for and in the name of the person executing it and includes an instrument by which a person, not being a lawyer, is authorised to appear on behalf of any party in any proceeding before any Court, Tribunal or authority. However, it does not include a vakalatnama given to an advocate which is stamped with the court-fees.

Effect

Under section 2 of the Act, if the donee (holder of power-of-attorney), based on his discretion:

(a) executes any instrument or does any act;
(b) under his own name, signature and seal, if seal is required;
(c) but under the ambit of the authority conferred on him by the donor of the power-of-attorney; then such instrument or act would be treated in law as if it had been execution or done in the name, signature and seal of the donor. The legal effect of the power is that the acts of the donee, when done under proper authority, are treated as if they were done by the donor. This is an important provision of the Act, which gives legal sanctity to all acts done by a donee on behalf of the donor.

Thus, the position of the donee-donor is similar to that of an agent and his principal. A power-of-attorney’s origins may be traced to the legal maxim qui facit alium facit per se, i.e., what one can do directly he can also do through an agent. But one crucial difference as compared with an agent-principal relationship is that an agent must sign in the principal’s name while the power-of-attorney holder signs his own name.

The object of the aforesaid section and of the Act is to effectuate instruments executed by an agent, but not in accordance with the rule of the Contract Act. It does not confer on a person a right to act through an agent. It presupposes that the agent has the authority to act on behalf of the principal and protects acts done by him in exercise of that authority but in the agent’s own name — Rao Bahadur Ravulu Subba Rao v. CIT, 30 ITR 163 (SC).

In the case of Suraj Lamp & Industries P. Ltd. v. State of Haryana, (2012) 1 SCC 656, the Supreme Court has held that a power-of-attorney is not an instrument of transfer in regard to any right, title or interest in an immovable property. The power-of-attorney is creation of an agency whereby the grantor authorises the grantee to do the acts specified therein, on behalf of the grantor, which when executed will be binding on the grantor as if done by him. It is revocable or terminable at any time unless it is made irrevocable in a manner known to law. Even an irrevocable attorney does not have the effect of transferring title to the grantee.

In State of Rajasthan v. Basant Nehata, (2005) 12 SCC 77, the Apex Court held that a grant of power-of-attorney is essentially governed by the Contract Act. By reason of a deed of power-of-attorney, an agent is formally appointed to act for the principal in one transaction or a series of transactions or to manage the affairs of the principal generally conferring necessary authority upon another person. A deed of power-of-attorney is executed by the principal in favour of the agent. The agent derives a right to use his name and all acts, deeds and things done by him and subject to the limitations contained in the said deed, the same shall be read as if done by the donor. A power-of-attorney is, as is well known, a document of convenience.

Execution of a power-of-attorney in terms of the provisions of the Contract Act as also the Powers of- Attorney Act is valid. The donee in exercise of his power under such power-of-attorney only acts in place of the donor subject of course to the powers granted to him by reason thereof. He cannot use the power-of-attorney for his own benefit. He acts in a fiduciary capacity. Any act of infidelity or breach of trust is a matter between the donor and the donee and does not affect an outsider.

Revocation of a power

A power-of-attorney can be terminated or cancelled by the principal by revoking his authority or by the power-of-attorney holder renouncing his authority. A power-of-attorney is revoked by implication in the following circumstances:

(a) The donor expressly revokes all powers given by him;
(b) The donor dies;
(c) The donor becomes of unsound mind; or
(d) The donor becomes insolvent.

In any of the above situations, the power comes to an end. In Prahlad v. Laddevi, AIR 2007 Raj 166 it was held that a power comes to an end on the demise of the donor. Any acts done by the donee thereafter in pursuance of such a power are invalid.

However, if the donee not being aware of the above situations, does any act or makes any payment in good faith pursuant to the power-of-attorney, then he shall not be liable in respect of such payment or act. But any person interested in the money so paid shall continue to have a right against the recipient and he will have the remedy against the recipient as he would have had against the payer, if the payment had not been made by him.

According to the Indian Contract Act where the agent has himself an interest in the property which forms the subject matter of the agency, the agency cannot, in the absence of an express contract, be terminated to the prejudice of such interest. Thus, in cases where the power-of-attorney is coupled with interest it is irrevocable. For instance, A gives authority to B to sell A’s land, and to pay himself out of the proceeds, the debts due to him from A. This power cannot be revoked by A. In State of Rajasthan v. Basant Nehata, (2005) 12 SCC 77, the Apex Court held that except in cases where power-of-attorney is coupled with interest, it is revocable.

Evidence of power-of-attorney

Any power-of-attorney which has been verified by an affidavit, statutory declaration, notarisation, etc., and which has been deposited with a High Court or District Court shall be treated as sufficient evidence of the contents of the instrument.

The Indian Evidence Act, 1872 provides that any Court shall presume that every power-of-attorney executed before and authenticated by a Notary Public, Court, Judge, Magistrate, Indian Consul or Vice-Consul was so executed and authenticated. This is the reason why powers-of-attorney are notarised. The presumption about the authenticity is a mandatory provision. The Delhi High Court in the case of Kamala Rani v. Texamco Ltd., AIR 2007 Del. 147 has held that the onus lies on the other side to prove that the power-of-attorney is not genuine.

A donee of a power-of-attorney cannot give evidence in Court on behalf of the donor — Rajiv Gadkari v. Smt. Nilangi Gadkari, AIR 2010 (NOC) 538 (Bom.) 2010. The Patna High Court in the case of Rajmuni Devi v. Shyama Devi, (2007) 9 RC 309 (SC) has held that a power-of-attorney holder cannot depose on behalf of the donor, but can appear as a witness on behalf of the principal.

A power-of-attorney holder cannot depose and be cross-examined in Court on matters which only the principal is expected to have knowledge of — Janki V. Bhojwani v. IndusInd Bank Ltd., 2005 Vol. 107 Bom. LR 28 (SC).

Power-of-attorney of married woman

A married woman who is not a minor has powers, as if she were unmarried to appoint an attorney on her behalf.

Can a donee sign under Income-tax Act for donor?

If the Income-tax Act or the rules made thereunder specifically require the personal signature of the assessee, then the same cannot be delegated by way of a power-of-attorney. This is would be a circumcision of the field of operation of the Power-of-Attorney Act and such a curtailment of powers is not ultra vires — Rao Bahadur Ravulu Subba Rao v. CIT, 30 ITR 163 (SC). All that section 2 of the Act provides is that there can be a delegation of powers and the manner of doing so. However, if any other enactment requires a personal presence or signature, then the two Acts operate in separate fields. The Court laid down this principle under the 1922 Income-Tax Act in relation to signing an ap-plication for registration of a firm. The rules required the partner to personally sign the application. It may be noted that Rule 22(5) now expressly permits such an application to be signed by a power-of-attorney holder in the case of a person absent from India.

Stamp Duty

Under the Bombay Stamp Act, 1958, a power-of-attorney is liable to be stamped as follows:

(a) When executed for the sole purpose of registering documents — Rs.100. Most of the builders give a power-of-attorney in favour of their employees for registering the agreements for sale/flat ownership agreements with buyers.

(b) When authorising a person to act in a transaction — Rs.100.

(d) When any person other than cases covered by (c) above authorising to sell or transfer immovable property — the same duty as on a conveyance on the market value of the immovable property, e.g., 5% on the stamp duty ready-reckoner value. One of the ways to avoid payment of stamp duty was to give a power-of-attorney to a person authorising him to sell the property and receive consideration equal to the market value of the property for such a power. This method is very prevalent in Northern India. In 2008, the Bombay Stamp Act was amended to increase the duty on such a power from 1% to 5%. Thus, now such powers are at par with a conveyance of immovable property.

A power-of-attorney given to manage and sell an immovable property and hand over the consideration to the owner cannot be treated as a conveyance for consideration and hence, charged with stamp duty as on a conveyance — Suman Kumar Sinha v. State of Jharkhand, AIR 2009 Jharkand 53.

It is not necessary that every power-of-attorney ex-ecuted abroad must be presented before the Collector for adjudication of stamp duty. Only those powers which have been executed abroad and on which no stamp duty has been paid need to be adjudicated. If proper duty has already been paid, then nothing further needs to be done — Anitha Rajan v. Revenue Divisional Officer, AIR 2010 Kerala 153.

A power-of-attorney is to be compulsorily registered only if it creates an interest in immovable property and not otherwise — B. Maragathamani v. Member Secretary, Chennai Metropolitan Development, AIR 2010 Madras 61.

Transfer of property by power of attorney

A very popular mode of transferring immovable property in Northern India was by adopting a combination of a sale agreement, general power-of-attorney and a will. This facilitated the avoidance of a conveyance and thereby saving on stamp duty for the buyer. The modus operandi in such transactions was for the owner to receive the agreed consideration, deliver possession of the property to the purchaser and execute the following documents or variations thereof:

(a)    A sale agreement by the vendor in favour of the purchaser.
(b)    An irrevocable general power-of-attorney by the seller in favour of the purchaser authorising him to manage, deal with and dispose of the property without recourse to the seller.
(c)    A will bequeathing the property to the purchaser (as a safeguard against the consequences of death of the seller before the transfer is effected).

The Supreme Court had in the case of Suraj Lamp & Industries Pvt. Ltd. v. State of Haryana, (2009) 7 SCC 363 referred to the “ill effects of what is known as general power-of-attorney sales”.

In its latest decision in the case of Suraj Lamp & Industries P. Ltd. v. State of Haryana, (2012) 1 SCC 656, the Court has held that there cannot be a sale of immovable property by execution of a power-of-attorney, nor can there be a transfer by execution of an agreement of sale and a power-of-attorney and will. It held that these kinds of transactions were evolved to avoid prohibitions/conditions regarding certain transfers, to avoid payment of stamp duty and registration charges on deeds of conveyance, to avoid payment of capital gains on transfers, to invest black money’ and to avoid payment of ‘unearned increases’ due to Development Authorities on transfer.

It also held that the observations of the Delhi High Court, in Asha M. Jain v. Canara Bank, 94 (2001) DLT 841, that the “concept of power-of-attorney sales have been recognised as a mode of transaction” when dealing with transactions by way of sale agreement/ general power of attorney/will are unwarranted, unjustified and unintendedly misleading the general public into thinking that such transactions are some kind of a recognised or accepted mode of transfer and that it can be a valid substitute for a sale deed. Such decisions to the extent they recognise or accept transactions by way of by way of sale agreement/ general power-of-attorney/will as concluded transfers are not good law.

The Apex Court however, carved out a niche for genuine transactions where the owner of a property grants a power-of-attorney in favour of a family member or friend to manage or sell his property, as he is not able to manage the property or execute the sale, personally. It also held that a power-of-attorney holder may however execute a deed of conveyance in exercise of the power granted under the power-of-attorney and convey title on behalf of the grantor.

It only clamped down upon transactions, where a purchaser pays the full price, but instead of getting a deed of conveyance gets a sale agreement/general power-of-attorney/will as a mode of transfer, either at the instance of the vendor or at his own instance.

Registering a property under a power

The Sub-Registrar of Assurances permits a power-of-attorney holder to register an instrument on behalf of the donor. However, the power must first itself be registered before the Sub-Registrar. For this purpose the donor and the donee must both go to the Sub-Registrar. Further, the Sub-Registrar insists that both the donor and the donee sign the power before him.

Conclusion

To sum up, a simple power-of-attorney has been the subject matter of great controversy and litigations. Chartered Accountants would be well advised to consider whether the power-of-attorney relied upon by their clients is valid or not. When in doubt, they should consider obtaining an opinion. One is reminded of the quote by W. H. Auden which ended as follows:

“……There is always another story, there is more than meets the eye.”

BCAJ Admin

Direct Taxes

The Finance Bill 2011, received the Presidential Assent on 8-4-2011.

The Finance Bill 2011, received the Presidential Assent on 8th April, 2011.

Circular No. 1/2011 F. NO. 142/1/2011-SO(TPL), dated 6-4-2011 regarding Explanatory notes to the provisions of the Finance Act, 2010.

New tax return forms notified — Notification No. S.O. 693(E), dated 5-4-2011.

For the A.Y. 2011-12, the CBDT has notified new Income Tax Return Forms Sahaj for individual tax returns and Sugam for taxpayers falling under the presumptive taxation scheme as prescribed.

levitra

BCAJ Admin

Part A : ORDERS OF the COURTS

? Section 2(h): Public Authority Thirteen educational institutions had filed writ petitions in the Uttarakhand High Court. A common question of law was involved in all these petitions. All the petitioners before the Court were societies or schools run by societies. Each claimed that the school was entirely privately funded and since they are not ‘public authority’ as defined u/s.2(h) of the Right to Information Act, 2005 (the Act), cognizance cannot be taken against them by the State Information Commission, under the Act.

Their contention before the High Court was that they are neither covered under items (a) to (d) u/s.2(h), nor under the ‘include’ part of that clause (h) as they are not owned, controlled or substantially financed directly or indirectly by funds provided by the appropriate government. Hence they are not ‘public authority’!

It was their contention that in order to get covered under that ‘includes’ part of the clause (h) the society has to be one which is owned or controlled by the government and in any case that ‘control’ exercised by the government should be ‘deep and pervasive’ control inasmuch as the management committee of the school should be controlled by and large by government nominees or by government authorities.

The Court held that these institutions are not ‘public authorities’ as they are not owned or controlled or financed by the government. None of these petitioners owes its existence to a notification or order of the Government, therefore, so far as this part, as to whether the petitioners are ‘public authorities’ is concerned, the same stands settled and it is held that institutions, such as the petitioners are not ‘public authorities’ under the Right to Information Act.

The Court considered another aspect of these writ petitions, that is though the petitioners may not be a ‘public authority’ as defined u/s.2(h) of the Act, whether the education department of the government or any other government department, being a public authority, through its Information Officer or the Appellate Authority under the Act can compel the petitioners to furnish information, which is being sought from these public authorities. For example in case the Public Information Officer in the Department of Secondary Education of Government of Uttarakhand is requested for information which pertains to any of the petitioner schools, the question would be, whether the Public Information Officer of such a public authority can compel the petitioner to furnish this information to that public authority. The answer to this is also to be found in the Act itself. The petitioners here would fall under the category of the ‘third party.’

Section 11 of the Act deals with the subject of ‘Third party information’. The Court took the view that section 11 would apply where petitioners have already given certain information to a public authority, let us say the Department of Education or any other State department. In case the petitioners attach any confidentiality to such information, they must inform the public authority of their intentions. The public authority thereafter, whenever it wants to disclose such an information to any citizen, it must give a prior notice u/s.11(1) of the Act to the ‘third party’, which is the petitioners in the present case and u/s.11(1) of the Act, when this notice has been given, the petitioners shall have an opportunity to represent before the public authority. In case, the public authority still decides to go ahead and furnish such information u/s.11(3) of the Act, this decision must be communicated to the third party who then has a right to file an appeal against this decision u/s.19 of the Act read with section 11(4) and then a right to file a second appeal. Apart from this, the ‘third party’ also has a remedy to directly approach the State Information Commission u/s.18(1)(f) of the Act.

The Court also considered one more aspect, i.e., section 8(1)(j) which relates to personal information. The Court considered 2 situations: One when the information is already held by the public authority such as department of education. In such a case the Court held that provisions of section 11 must be complied with before the information held is provided to the citizen-applicant. Two, the information is not held by the public authority, e.g., department of education. In such case the Court asked: Can the Public Information Officer compel the petitioners to furnish certain information from the records of the petitioners’ office even though such information has not been furnished under any provisions of law by the petitioners before this public authority?

The answer to it, the Court stated would be in negative as it would be an invasion on the privacy of these institutes not being a public authority. Moreover, in case such ‘information’ is not already there with such public authority, it cannot be information ‘which is held’ by the public authority and therefore, it would not be covered under the definition of ‘right to information’ given u/s.2(j) of the Act.

Note: In the last part of this decision it is held that the information which is not on the records of the public authority is not ‘held’ and is hence not covered u/s.2(j) defining ‘right to information’. This part is in contrast to the decision of CIC reported in March 2011, BCAJ. I note that under the definition of ‘right to information’ u/s.2(j) what is covered is not only ‘held’ by but also ‘under the control of’ any public authority. I would imagine that Department of Secondary Education, Government of Uttarakhand has ‘a control’ over all the schools to get whatever information it needs. On that assumption, one needs to consider whether this part of the decision is correct or not.

[Asian Education Charitable Society & Ors. v. State of Uttarakhand & Ors., decided on 9-2-2010 {2010 (2) ID 552}]

Section 8(1)(g): Section 8(1)(g) reads as under: Section 8(1), Notwithstanding anything contained in this Act, there shall be no obligation to give any citizen:

(g) Information, the disclosure of which would endanger the life or physical safety of any person or identify the source of information or assistance given in confidence for law enforcement or security purposes;

The Jharkhand Public Service Commission, Ranchi (JPSC) filed a writ petition in the High Court of Jharkhand challenging the orders passed by the State Information Commission whereby it gave direction to JPSC to furnish the various information sought by the applicant.

The applicant had sought information regarding the names of the members of the interview board who selected candidates for the post of lecturers, etc.

The Commission directed JPSC to furnish the various information i.e., the names of the members of interview board, etc. to the applicant.

High Court of Jharkhand ruled as under:

“As regards the information regarding the names and identities of the members of the Interview Board, the same cannot possibly be furnished in view of the fact that confidentiality regarding the names and identities of the members of the Interview Board needs to be preserved.

Considering the facts and circumstances of the case and also in the light of the discussions made above, claim of the petitioner that the information sought for in respect of the names of the members of the Interview Board cannot be furnished since it would violate confidentiality, appears to be a reasonable objection.

[Jharkhand Public Service Commission v. State of Jharkhand and Others, decided on 19-5-2010. {RTI R1 (2011) 227}]

levitra

BCAJ Admin

Ethics and u

(Engaging in Other Business………)

Shrikrishna (S) – Arey Arjun, Why are you looking so tired? Your pressure of September is still not over?

Arjuna (A) – September is over; but not our pressure.

S – I am sure, the Dandiya was keeping you busy late night.

A – Kaash! CAs were that fortunate!

S – Why? What happened?

A – By 30th September, returns were e-filed. But now we are signing all balance-sheets and reports. Besides, I have to do so many things for this Diwali.

S – Why? For CAs, what is special about Diwali?

A – Diwali has nothing to do with my practice. But that other business of mine! That consumes lot of my time.

S – What business?

A – Don’t you know? We are into trading of construction material. We have a few agencies.

S – We means who?

A – My wives Droupadi and Subhadra. They are directors but I only have to manage everything. It is our family business.

S – What do you mean by family business? Was it started by your father Pandu Chacha?

A – No. I only started it. I am also a director in Bhima’s company. Bhima runs a gym.

S – And what do you do in your business?

A – Get orders, procure material, manage the workers, look after Government authorities – and what not!

S – Have you sought your Council’s permission?

A – What for? In my business, I am just shown as a manager. My wives are directors and I draw only remuneration. In Bhima’s company, I look after administration. Actually, Nakula and Sahadeva want me to become a partner in their firm. They are into share-trading.

S – For Dharma’s sake, please don’t do that! Council does not permit all this.

A – I have already thought of it. I will become partner in my HUF capacity. Simple!

S – When you were a student in Guru Dronacharya’s school, you were very brilliant and focused. You could see only one single eye of the fish! But now, I find that you are simultaneously looking at so many things – except your profession and its ethics!

A – Why? What’s wrong?

S – Firstly, remember, an HUF as such can never be a partner. Only an individual or a company can be partners. – either a natural person or a legal person.

A – But HUF is also a person.

S – You are not able to think of any law except the Income Tax Act. Partnership is governed by Partnership Act and not by tax laws.

A – But I have formed firms where same individual is partner in both capacities – that is himself and also as Karta. None else.

S – Anyway, that’s a separate topic. Council will not recognise any activity under socalled HUF, if it is not a genuinely ancestral business.

A – This is very unfair. If I am serving my clients well and they don’t have any complaints, why should the Council come in the way? How is it concerned?

S – See, the council has two major concerns. Firstly, your profession is very demanding. It requires continuous update of knowledge. Council feels that you should pay undivided attention to the profession.

A – Ah! I can manage all things simultaneously.

S – If that is so, why are you signing the hard copies of balance sheet now, after the returns are e-filed?

A – OK. What is the other point?

S – Remember; as a businessman, you are likely to invite lots of risks and liabilities. Due to the financial or other worries, you may often compromise on your principles. That is most dangerous. Your quality of work then suffers. Moreover, doing certain businesses may hamper the dignity of your profession. And under the guise of promoting your business, you may even advertise your profession. This is unfair and not desirable.

A – Yes, Sometimes I also lose my patience and don’t feel like attending office, if I have to execute orders and manage the funds for business. But then, I have heard that the Council allows us to become a director in a company.

S – You are right. You can even be a promoter; and also a director in a board-managed company. But you cannot be an executive director.

A – What do you mean by that?

S – You can be only a ‘Director Simplicitor’. You may attend board meetings, participate in discussions; but cannot be involved in execution.

A – Can I sign cheques?

S – Council says, ‘no’. You should not sign any documents, bills, contracts, letters and the like.

A – This is strange. But I know many CAs who have a private limited company with only two directors – only husband and wife.

S – Then they must be signing the balance sheet also! – That is also not looked at with favour by the Council. Unfortunately, nowhere it is defined as to what amounts to ‘engaging in a business’.

A – And many CA friends of mine are doing regular trading in shares.

S – Blissful ignorance! You said you draw remuneration as Manager.

A – Yes. I am showing it in my income. What’s wrong?

S – You have to seek permission from the Council for any employment – be it full time or part – time. Even college lecturers have to seek permission.

A – And then what happens?

S – See, there is a prescribed application form, Council examines how much time you are required to devote for the other occupation. What are your financial stakes, and so on.

A – You mean I should have obtained permission?

S – Yes, obviously. And then, you will be treated as in part time practice.

A – So what?

S – You cannot then do attest function – cannot sign balance sheets as auditor! And cannot keep articled trainees.

A – Oh my God!

S – There is a recent real story. Mr. A was a CA who did active business in a private limited company in which his friend B, an engineer was the other director. There were the only two of them. B’s son completed articleship with A and passed his CA.

A – Then?

S – There was a serious dispute and litigation between A and B, and ‘B’s son filed a complaint against his own ex-boss ‘A’ that he was an executive director.

A – How ungrateful! Complaint against his own Guru!

S – Yes, And the Guru was held guilty of professional misconduct!

A – For each and everything, one has to approach the Council?

S – No, Council has announced certain general permissions and certain items require special permission. That is Regulation 190A.

A – Now, what do I do?

S – Better withdraw your name from everywhere. Stop signing any documents of business at once. And don’t join Nakula and Sahadeva as a partner.

A – Then who will sign the balance sheet of Bhima’s company?

S – Better induct someone. It always happens – many CAs start business knowingly or unknowingly. They avoid taking permission. Afterwards, when they come to know the seriousness, they are afraid of approaching the Council.

A – Then, what should they do?

S – Either stop the other activity; or approach the Council. Better late than never. Voluntary application may prove your bonafides.

A – Bhagwan, I forgot to mention one small thing. I have an agency of LIC ; but it is in Subhadra’s name; and a sub-brokership in Droupadi’s name.

S – Do they really do it themselves? Do they really know the business?

A – No, I have their Power of Attorney to do everything.

S – Then better take your own insurance! Also enquire about professional indemnity insurance. Dear Arjun, I saved you many times in Mahabharata War; But with your Council, I wonder whether I will be able to help.

A – How can you say so? You are God – Omni potent and Omniscient.

S – True. But I save only honest and righteous people. Not those who compromise on ethics.

‘Om Shanti’.

NOTE :
The above dialogue is with reference to Clause 11 of the First Schedule which reads as under:

Clause (11) : engages in any business or occupation other than the profession of chartered accountants unless permitted by the Council so to engage:

Provided that nothing contained herein shall disentitle a chartered accountant from being a director of a Company, (not being a managing director or a whole time director), unless he or any of his partners is interested in such company as an auditor;

Further, readers may also refer pages 211 to 225 of ICAI’s publication on Code of Ethics, January 2009 edition (reprinted in May 2009)

BCAJ Admin

Journal

Resources

About

Reach Us

Audio Version