BCAJ | Bombay Chartered Accountant Journal

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.

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.

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.”

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.

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

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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

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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.

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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.

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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.”

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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

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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.

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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.

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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”.

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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.

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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.

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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).

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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.

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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.

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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

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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.

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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]

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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.

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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)

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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?”

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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.

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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]

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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”.

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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.

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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.]

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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.

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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

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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.“

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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.”

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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.

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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.”

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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.

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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’.

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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.

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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.

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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.

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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.”

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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.

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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.

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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

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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 !

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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.

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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))]

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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.

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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.

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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}]

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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

Part A : ORDERS OF the COURTS

Section 20(1) of the RTI Act: Penalties
Section 20(1) provides for penalty on Public Information Officer (PIO). Sub- section (1) provides six types by default –

PIO
— refuses to receive an application for information,
— does not furnish information within the time provided under the Act,
— malafidely denies the request for information,
— knowingly gives incorrect, incomplete or misleading information,
— destroys information which is the subject of the request,
— obstructs in any manner in furnishing the information.

If any of the above is committed without any reasonable cause it is provided that the Commission shall impose a penalty on PIO at Rs.250 per day but not exceeding Rs.25,000 .

Issue that has been raised from time to time is whether word ‘shall’ makes impositionof penalty mandatory or ‘shall’ here means ‘may’ and it is optional for CIC to levy or not to levy the penalty.

On 11th April, 2011, CIC Shailesh Gandhi has ruled as under in the case of complainant Mr. Attar Singh v. PIO, Vivekananda College:

The RTI application was furnished on 04-02-2010. The information was provided on 08-04-2011 after the decision of CIC.

After the hearing in the matter of penalty, CIC writes:

If without reasonable cause, information is not furnished within the time specified under sub-section (1) of section 7, the Commission is duty- bound to levy a penalty at the rate of Rs. 250 each day till the information is furnished. Once the Commission decides that there was no reasonable cause for delay, it has to impose the penalty at the rate specified in section 20(1) of the RTI Act and the law gives no discretion in the matter. The burden of proving that denial of information by the PIO was justified and reasonable is clearly on the PIO as per section 19(5) of the RTI Act.

Decision:
As per the provisions of section 20(1) of the RTI Act 2005, the Commission finds this a fit case for levying penalty on Mr. Rajender Kumar Wadhwa, PIO & Administrative Officer. Since the delay in providing the information has been over 100 days, the Commission is passing an order penalising Mr. Rajender Kumar Wadhwa Rs.25000 which is the maximum penalty under the Act.

The Chairman, Vivekananda College is directed to recover the amount of Rs.25000 from the salary of Mr. Rajender Kumar Wadhwa and remit the same by a demand draft or a Banker’s Cheque in the name of the Pay & Accounts Officer, CAT, payable at New Delhi and send the same to Shri Pankaj K. P. Shreyaskar, Joint Registrar and Deputy Secretary of the Central Information Commission, 2nd Floor, August Kranti Bhawan, New Delhi-110066. The amount may be deducted at the rate of Rs.5000 per month every month from the salary of Mr. Rajender Kumar Wadhwa and remitted by the tenth of every month starting from May 2011. The total amount of Rs.25000 will be remitted by 10th September, 2011.

[Mr. Attar Singh v. PIO, Vivekanand College, University of Delhi. Decision No. CIC/SG/C/2010/000502/11484- Penalty]

Section 2(h): Public Authority
Madras High Court (Madurai bench) in a judgment delivered on 06-07-2010 has extensively discussed the words ‘includes’ and ‘substantially financed’ as they appear in section 2(h) which defines ‘Public Authority’.

R. Sivaprakasam sought xerox of the day book pertaining to a receipt of Rs.3, 00,000 received by Karanthai Tamil Sangam (Sangam). Same was denied to him. Subsequently, in response to RTI application made District Registrar, Thanjavur directed Sangam to furnish xerox of the day book as above. This direction is put to challenge in the writ petition.

Sangam submitted that information sought is not ‘information’ as defined u/s2(f), Sangam is not a public authority as defined u/s2(h) and in any case information sought is exempt u/s 8.

Hereunder, I am confining only to the part of the judgment deciding on applicability of section 2(h).

In one earlier judgment the Madras High Court had held as under:

The word ‘substantial’ is not defined in the Act. For the word ‘substantial’ it is not possible to lay down any clear and specific definition. It must be a relative one, however, ‘substantial’ means real or actual as opposed to trivial. ‘Substantial’ also means practicable as far as possible, hence the word ‘substantial’ not to be construed as higher percentage of the estimated amount or otherwise.

The Court then reproduced certain paras (NOs.15 to18, 21&23) from the said judgment as under:

“15. If we look at the definition of section 2(h), it is clear that the appellant-company does not come under the provisions of section 2h(a), (b), (c) or (d), but thereafter section 2(h)(d) of the definition clause uses the word ‘includes’. It is well known that when the word ‘includes’ is used in an interpretation clause, it is used to enlarge the meaning of the words and phrases occurring in the body of the statute. Reference in this connection can be made to G. P. Singh’s ‘Principles of Statutory Interpretation’ in the 10th edition of the said treatise, the learned author formulated that when the word defined is declared to ‘include; such and such, ‘the definition is prima facie extensive’ (page 175 of the book). In support of the aforesaid formulation, the learned authority has referred to a number of decisions. The latest decision referred to in support of the aforesaid proposition was rendered in the case of Associated Indem Mechanical P. Ltd. v. W. B. Small Industries Development Corporation ltd., AIR 2007 SC 788 of the report, the learned judges held as follows:

“10. The definition of premises in section 2(c) uses the word ‘includes’ at two places.It is well settled that the word ‘include’ is generally used in interpretation clauses in order to enlarge the meaning of the words or phrases occurring in the body of the statute; and when it is so used those words of phrases must be construed as Comprehending, not only such things, as they signify according to their natural import, but also those things which the interpretation clause declares that they shall include [see Dadaji al ias Dina v. Sukhadeobabu AIR 1980 1 SCR 1135, Reserve Bank of India v. Peerless General Finance and Investment Co. Ltd. AIR (1987) 2 SCR 1 and Mahalakshmi Oil Mills v. State of A.P. AIR 1989 SC 335: (1989) SCC 164.”]

16. Therefore, obviously the definition of bodies referred to in Section 2(h)(d)(i) of the RTI Act would receive a liberal interpretation, and here the words which fall for interpretation are the words ‘controlled or substantially financed directly or indirectly by funds provided by the appropriate Government.’

17. We are here concerned with the interpretation of the definition clause in the RTI Act. The Act has been enacted ‘in order to promote transparency and accountability in the working of every public authority’. In the Preamble to the Act, it is made clear that ‘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’. From the Preamble to the Act it is clear that revelation of information may cause conflict with the other public interest including efficient operations of the Governments, but the Act has been enacted to harmonise these conflicting interests while preserving the paramountcy of the democratic ideal.

18. The RTI Act thus attempts to inculcate openness in our democratic republic. It has to be accepted that one of the salience of openness in democracy is an access to information about the functioning of the public authorities.

21. The RTI Act is virtually enacted to give effect to citizen’s right to know. Citizen’s right to know has been construed by the Hon’ble Supreme Court a

BCAJ Admin

PART A : Decision of the H.C.

Section 24 of the RTI Act

In the BCAS of July 2011, the Government’s Notification dated 09.06.2011 was reported under which the Central Board of Investigation (CBI) was exempted from the purview of the RTI Act (the Act) by including the CBI in the Second Schedule to the Act.

Above notification was challenged by a PIL before the High Court of Madras on the ground that it is ultra vires Article 14 of the Constitution of India.

According to the petitioner, in the light of the various scams, the country has become rudderless in the war on corruption and at this juncture, the Government instead of becoming more transparent has become reactionary by resorting to Section 24 of the Act by granting blanket exemption to the CBI. The petitioner further contended that respondents had over looked the first proviso to Section 24(1) of the Act under which information pertaining to allegations of corruption and human rights violation cannot be exempted under Section 24 of the Act. Further, Section 24 exempts only intelligence and security agencies and CBI which is an investigating agency cannot be granted a blanket exemption. It was also contended that the plea that investigative data requires confidentiality has been adequately taken care of in Section 8(1) (g) and (h) of the Act. It wass further submitted that Section 24(3) of the Act mandates that every notification issued under Section 24(2) shall be laid before each house of Parliament, and failure to do so renders the exemption null and void. It was the case of the petitioner that the exemption is bound to create chaos as several writ petitions will be filed challenging the orders passed by the Central Information Commission in their decisions against the CBI, since the CIC has no power to set aside the notification.

In reply, Union of India filed the counter affidavit inter alia contending that the exemption to the CBI under Section 24 is not a blanket exemption inasmuch as it is subject to the provisos to Section 24 of the Act. The exemption was granted after the Government received representation from the CBI stating that difficulty was being faced by it in its working and the legal opinion was received that opined that the CBI qualifies as a security and intelligence organisation under Section 24 of the Act.

The judgment of the High Court dismissing the writ petition runs into 21 printed pages and is very interesting. However, I herewith reproduce only the concluding part of it.

“We find no justifiable reasons to depart from such findings which appear to have been arrived at after considering all material placed before the Government, taken note of by the Committee of Secretaries and other authorities prior to issuance of the impugned Notification. Admittedly, there is no allegation with regard to the decision making process or that there was any arbitrariness in the procedure adopted so as to offend Article 14 of the Constitution. It is submitted by the learned Additional Solicitor General appearing for the first respondent that Notification has been placed before both Houses of Parliament and would be taken up for consideration in the ensuing Session.

In view of the above, we hold that the impugned Notification is neither ultra vires section 24 of the RTI Act nor violative of the provisions of the Constitution of India.

In the result the Writ Petition fails and same is dismissed. No costs, Consequently, connected Miscellaneous Petition is closed.”

[S. Vijaya lakshmi vs. Union of India & another w.p. 14788 of 2011 & M.A.1 of 2011 dated 09.09.2011.- Reported in RTI R1 (2012) 106-126]

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Company Law

1. Amendment to Companies ( Corporate Social Responsibility Policy) Rules

The Ministry of Corporate Affairs has notified the following amendment on 12th September, 2014 in the Companies (Corporate Social Responsibility Policy) Rules 2014. In Rule 4, in sub-Rule (6) after the words “but such expenditure” the words and comma “including expenditure on administrative overheads” shall be inserted. Consequently, the clarification (iv) in General Circular No. 21 of 2014 dated 18-06-2014 stands omitted.

2. Clarification regarding Accounting Standard – AS 10 – Capitalisation of Cost

The Ministry of Corporate Affairs has vide General Circular No. 35/2014, dated 27-08-2014, clarified issues with respect to the capitalisation of borrowing costs in Competitive Bid power projects:

1) As per Accounting Standards AS-10 & AS-16 issued by ICAI in consultation with ASB, borrowing and other costs incurred during extended delay in commencement of commercial production after the plant is otherwise ready, should not be capitalised as it does not increase the worth of the fixed assets.

2) As per AS 16, capitalisation of some part of the project which is capable of being used while construction continues for the other units should be capitalised once that part is ready for commercial production

3) it is further clarified that AS-10 & AS-16 are applicable irrespective of whether the power projects are ‘Cost Plus Projects’ or ‘Competitive Bid Projects.’

3. National Advisory Committee

The Ministry of Corporate Affairs has vide circular dated 18th September, 2014 constituted an Advisory Committee to be called the National Advisory Committee on Accounting Standards, consisting of the Mr. Amarjit Chopra, Dr. A. S. Durga Prasad, Shri R. Sridharan and CA K. Raghu and others, to advise the Central Government on the formulation and laying down of accounting policies and accounting standards for adoption by companies or class of companies under the said Act.

The Chairperson and members shall hold office for a period of one year from the date of publication of this notification in the Official Gazette or till the constitution of National Financial Reporting Authority u/s. 132 of the Companies Act, 2013 whichever is earlier. 4. U seful Life Of Asset The Ministry of Corporate Affairs has vide notification dated 29th August, 2014, substituted the following in Schedule II of Companies Act 2013 – Part A Para 3 (i), substituted;

(i) The useful life of an asset shall not ordinarily be different from the useful life specified in Part C and the residual value of an asset shall not be more than 5% of the original cost.
Provided that where a Company adopts a useful life different from what is specialised in Part C or uses a residual value different from the limit specified above, the financial statements shall disclose the difference and the justification supported by technical advice.’

In Part C under the heading Noted – the para 4 shall be substituted by:

4(a) Useful life specified in Part C of the Schedule is for the whole asset and where cost of a part of the asset is significant to total cost of the asset and useful life of that part is different from the useful life of the remaining asset, useful life of that significant part shall be determined separately.

(b) The requirement under sub-paragraph (a) shall be voluntary in respect of financial year commencing on or after 01-04-2014 and mandatory for financial years commencing after 01-04-2015.

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PART C: Information on & Around

• Misuse of plot near Mantralaya on Madame Cama Road:

An investigation using the Right to Information Act by Mumbai Mirror has found out that the 19 ministerial bungalows situated on Madame Cama Road in Mumbai, next to the New Administrative Building of Mantralaya, are illegal.

The 5-acre plot had originally been earmarked for a public garden and, in 1979, the government had even promised that the bungalows would be demolished and the plot handed over to BMC for developing the garden.

This, however, was never done. The ministerial bungalows were constructed in the 1950s and are being maintained by the Public Works Department. When Mirror sought an explanation from PWD Minister Chhagan Bhujbal, he said, “It’s a very old case. I do not remember much.”

Several prominent citizens have opined that the government must hand over the plot for the garden. Among them, architect P. K. Das, whose firm had once prepared a plan for the makeover of Nariman Point, said, “In the Development Plan for Mumbai, the land is reserved for a garden and is meant for public use. This has been taken over and built upon. The ministers’ bungalows and sheds housing PWD offices must be cleared and the land utilised for its reserved purpose. There is a comprehensive redevelopment plan for this plot by the MMRDA, which was cleared by the state’s empowered committee which is headed by the chief secretary.”

The area’s citizens group is all for a garden. Atul Kumar of the Churchgate Nariman Point Residents Association said, “The city is starved of green spaces. The government must do away with these bungalows and develop a garden on the plot.”

• Eastern Freeway:

The third phase of the Eastern Freeway up to Ghatkoper, which is thrown open to motorists in April, has witnessed a 23% increase in cost ever since work started in 2007.

“The project’s cost rose from Rs. 847 crore to Rs. 1,106 crore because of delay in rehabilitation of project-affected people and slow execution of work,” RTI activist Anil Galgali said.

Galgali had sought information about the Eastern Freeway project from the MMRDA. The work on the stretch between Chhatrapati Shivaji Maharaj Vastu Sangrahalaya to Anik Junction was scheduled to be completed by 18th January, 2011 after the work order was issued in January 2008. “There was a delay of 29 months in executing this phase of the project,” Galgali added.

• RTI & Housing Society in Mumbai:

At a special general body meeting on Sunday 30- 03-2014, of the Salsette Catholic Society in Bandra, it expelled a member for harassment through the RTI Act.

54 of the 73 members present voted in favour of the motion to expel Leslie Almeida. Earlier, Almeida had not replied to a showcause notice issued by the society that said it would allow him to present his side. But at the meeting, the members did not give Almeida an opportunity to speak as they constantly interrupted him. The committee, however, made a 90-minute presentation on why he should be expelled.

Father Michael Goveas, parish priest at St Andrew’s Church, suggested an inquiry be set up to prove the allegations against Almeida. The society’s secretary, Cornel Gonsalves, said the society had been dragged into a personal dispute, and has been harassed with hundreds of RTI applications.

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BCAJ Admin

PART B: RTI Act, 2005

• RTI Humour:

Chinese scientists gave environmentalism boost by inventing a printer that uses water instead of ink on rewritable paper This printer might trigger interest in India for an entirely different reason. Given the babus’ reluctance to allow the spirit of RTI legislation to prevail, they could use this invention in their line of work. What can an RTI petition achieve when the reply comes with blank pages?

• Sad story of RTI:

RTI Activist from Pune, Vihar Durve, Sought information from DoPT about the names & addresses of RTI Activists murdered/injured/harassed/assaulted etc. during 2005 to 2013. The information received is shocking. The number of persons affected as above in more than 8 years is as high as 151. The individuals murdered are 23, which includes Maharashtra 6, Gujarat 4 and 13 from other 9 States.

In 2014 also, the number of persons Killed/ Committed Suicide in Maharashtra as per my information is 2.

• Western India RTI Convention

Western India RTI Convention

Few RTI activists met in Mumbai last month to consider the proposal to organise such Convention in Mumbai. All the activists endorsed the proposal.

The BCAS Foundation (of Bombay Chartered accountants’ Society) offered to become a platinum sponsor by contributing at least 50% of the cost of organising the Convention to be incurred.

The Department of Civic and Social Justice of Dr. Ambedkar Center for Social Justice, University of Mumbai offered to host the convention at its campus premises and to provide many other complimentary facilities. Accordingly, we, the RTI activists of MUMBAI, are pleased to hold a twoday convention in MUMBAI, the dates fixed are 7th & 8th June.

We invite RTI Activists from Maharashtra, Gujarat & Goa and other States to join and be a part of this historic event.

The Convention Convener is Bhaskar Prabhu of the Mahiti Adhikar Manch. Shailesh Gandhi is the guide, Ms. Aruna Roy shall inaugurate the convention and be with us for both the days. Anyone Interested may join as delegate. For Registration form and other details please mail to: mahitiadhikarmanch@gmail.com or narayanvarma2011@ gmail.com

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PART A: ORDERS OF CIC & the court

• Appeal –Section 19(3) of the RTI Act:

The Appellant through an RTI application dated 19-12-2012 sought certain information regarding a notification dated 15-09-2011 by which Bharat Petroleum Corporation Ltd, public authority had invited the applications for dealership within the range of 2 kilometer of Bhaniyawala NH 72. The application made included queries such as how many applications have been received for the dealership; to provide name, address and telephone numbers of applicants; when was the site inspection conducted; to provide the name, strength and designation of the officers who were part of the Inspection Committee, to provide a copy of Inspection report and so on.

The CPIO furnished the information sought but the appellant was dissatisfied with the information supplied to him by the CPIO.

In the appeal before the CIC, the appellant not only requested that the full information sought be provided to him but also sought some additional information like, yardstick being followed for giving dealership in respect of highways; a copy of objection raised by the Site Inspection Committee in respect of yardstick etc.

During the hearing, the Respondents pointed out that the Appellant in his present appeal before the Commission has sought additional information which he had not sought in his original RTI application. At that stage, he is not allowed to seek information other than sought in his RTI application.

The Commission ruled:
“The Commission agrees with the Respondents that the information now sought by the Appellant in the present appeal did not form part of his original RTI application. Therefore, the Commission is not in a position to allow the disclosure of the information which had not even been sought by the appellant in his RTI application. An information seeker cannot be allowed to expand the scope of his RTI enquiry at appeal stage. No disclosure can, therefore, be directed to be made in the present appeal of the Appellant. The Appellant, however, may file a fresh RTI application, if he so desires.”

[Harish Prasad Divedi vs. Bharat Petroleum Corporation Ltd. Appeal No CIC/LS/A/2013/001477-SS decided on 28-01-2014: (RTIR I (2014)132(CIC)]

• Section 7(9) of the RTI Act:

Section 7(9) of the Right to Information Act reads as under:

7(9) An information shall ordinarily be provided in the form in which it is sought unless it would disproportionately divert the resources of the public authority or would be detrimental to the safety or preservation of the record in question.

In the writ petition, the petitioner sought expeditious disposal of petitioner’s appeal under the Right to Information Act, 2005 as well as a direction to respondents to pay amount of ` 3,01,000/- as compensation. Petitioner had also prayed for a direction to take disciplinary action against respondent No.1.

The petitioner had sought the information under 23 different items. The petitioner stated that he is a financier who gives advances to various contactors working with Director General, Deference estates.

The Court held:
“Keeping in view the width and amplitude of the information sought by the petitioner, it is apparent that the prayers in the writ petition are nothing short of an abuse of process of law and motivated if not an attempt to intimidate the respondent.”

“In the opinion of this Court, the primary duty of the officials of Ministry of Defence is to protect the sovereignty and integrity of India. If the limited manpower and resources of the Directorate General, Defence Estates as well as the Cantonment Board are devoted to address such meaningless queries, this Court is of the opinion that the entire office of the Directorate General, Defence Estates and Cantonment Board would come to stand still.” The court then reproduced the relevant Paragraph, from the Supreme Court decision in CBSE vs. Aditya Bandopadhyay, [(2011) 8 SCC 497].

Then it quoted para 39 of the Supreme Court decision in ICAI vs. Shaunak H. Satya, [(2011) 8 SCC 781], as under:

39. “We however agree that it is necessary to make a distinction in regard to information intended to bring transparency, to improve accountability and to reduce corruption, falling u/s. 4(1) (b) and (c) and other information which may not have a bearing on accountability or reducing corruption. The competent authorities under the RTI Act will have to maintain a proper balance so that while achieving transparency, the demand for information does not reach unmanageable proportions affecting other public interests, which include efficient operation of public authorities and the Government, preservation of confidentiality of sensitive information and optimum use of limited fiscal resources.”

Consequently, the Court deemed it appropriate to refuse to exercise its Writ Jurisdiction, and the petition was dismissed. This Court was also of the view that “misuse of the RTI Act has to be appropriately dealt with, otherwise the public would lose faith and confidence in this sunshine Act. A beneficent Statute, when made a tool for mischief and abuse must be checked in accordance with law.”

[Shail Sahni vs.Sanjeev Kumar and Ors. W.P. (C) 845/2014 decided by the High Court of Delhi on 05-02-2014. (RTIR I (2014) 220 (Delhi)]

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Company Law

1. Companies (Amendment) Act 2015

The Ministry of Law and Justice (Legislative Department) has on 26th May 2015 issued the Companies (Amendment) Act 2015. Further vide notification dated 29th May 2015 provisions of the Companies (Amendment) Act 2015 other than those stated in paragraph (d) and (e) below which are yet to be notified shall come into force from 29th May 2015. Some of the important amendments include:

a) Insertion of Clause 76A – Punishment for contravention of Section 73 or Section 76 relating to acceptance of Deposits:—

“76A. Where a company accepts or invites or allows or causes any other person to accept or invite on its behalf any deposit in contravention of the manner or the conditions prescribed under section 73 or section 76 or rules made thereunder or if a company fails to repay the deposit or part thereof or any interest due thereon within the time specified under section 73 or section 76 or rules made thereunder or such further time as may be allowed by the Tribunal under section 73,— (a) the company shall, in addition to the payment of the amount of deposit or part thereof and the interest due, be punishable with fine which shall not be less than one crore rupees but which may extend to ten crore rupees; and (b) every officer of the company who is in default shall be punishable with imprisonment which may extend to seven years or with fine which shall not be less than twenty-five lakh rupees but which may extend to two crore rupees, or with both: Provided that if it is proved that the officer of the company who is in default, has contravened such provisions knowingly or willfully with the intention to deceive the company or its shareholders or depositors or creditors or tax authorities, he shall be liable for action under section 447.”.

b) Insertion of 4th Proviso to Section 123(1) pertaining to declaration of Dividends:-

“Provided also that no company shall declare dividend unless carried over previous losses and depreciation not provided in previous year or years are set off against profit of the company for the current year.”

c) Insertion of Clause (ca) to Clause 134(3) (c ) for reporting of frauds:

“(ca) details in respect of frauds reported by auditors under sub-section (12) of Section 143 other than those which are reportable to the Central Government;”

d) Section 143 (12) is to be substituted with:

“(12) Notwithstanding anything contained in this section, if an auditor of a company in the course of the performance of his duties as auditor, has reason to believe that an offence of fraud involving such amount or amounts as may be prescribed, is being or has been committed in the company by its officers or employees, the auditor shall report the matter to the Central Government within such time and in such manner as may be prescribed:

Provided that in case of a fraud involving lesser than the specified amount, the auditor shall report the matter to the audit committee constituted under section 177 or to the Board in other cases within such time and in such manner as may be prescribed:

Provided further that the companies, whose auditors have reported frauds under this sub-section to the audit committee or the Board but not reported to the Central Government, shall disclose the details about such frauds in the Board’s report in such manner as may be prescribed.”

e) Proviso to Section 177 (4) (iv) is to be inserted:

“Provided that the Audit Committee may make omnibus approval for related party transactions proposed to be entered into by the company subject to such conditions as may be prescribed;”.

The Amendment Act can be accessed at http://www. mca.gov.in/Ministry/pdf/AmendmentAct_2015.pdf and the notification can be accessed at http://www. mca.gov.in/Ministry/pdf/Notification_31052015.pdf

2. Copies of resolution passed u/s 117 (3) (g) are not open for inspection

The Ministry of Corporate Affairs has vide Notification dated 29th May 2015, inserted the following proviso to the Companies ( Registration Offices and Fees ) Rules 2014, to Rule 15:

“Provided that no person shall be entitled under section 399 to inspect or obtain copies of resolutions referred to in clause (g) of sub-section (3) of section 117 of the Act.”

Notification can be accessed at http://www.mca.gov. in/Ministry/pdf/Rules_31052015_5.pdf

3. Companies ( Incorporation ) Second Amendment Rules 2015

The Ministry of Corporate Affairs has notified further amendments to the Companies (Incorporation) Rules 2014 on 29th May 2015 as follows:

a) In Rule 12, the following proviso is inserted:

“Provided that in case pursuing of any of the objects of a Company requires registration or approval from sectorial regulators like Reserve Bank of India, Securities and Exchange Board, registration or approval, as the case may be, from such regulator shall be obtained by the Company before pursuing such objects and a declaration in this behalf shall be submitted at the stage off incorporation of the Company. “

b) Rule 24 pertaining to the Declaration at the time of commencement of business or exercising its borrowing powers to be filed by a director in Form No.INC.21 along with the fee is omitted

c) Form INC-13 pertaining to the Memorandum of Association and Form INC-16 for License under Section 8(1) of the Companies Act, 2013 have been modified

Full notification can be accessed at http://www.mca. gov.in/Ministry/pdf/Rules_31052015_3.pdf

4. Companies (Declaration and Payment of Dividend) Second Amendment Rules, 2015.

As per the Amendment dated 29th May 2015, the Rule 3, sub Rule – 5 to the Companies (Declaration and Payment of Dividend) Rules 2015 which pertains to “No company shall declare dividend unless carried over previous losses and depreciation not provided in previous year are set off against profit of the company of the current year the loss or depreciation, whichever is less, in previous years is set off against the profit of the company for the year for which dividend is declared or paid.” – is omitted.

Full notification can be accessed at http://www.mca.gov.in/Ministry/pdf/Rules_31052015_2.pdf

5. Clarification on repayment of deposits accepted by the companies before the commencement of the Companies Act, 2013 under section 74 of the said Act

Vide General Circular No 09/2015, the Ministry of Corporate Affairs has clarified regarding processing of the deposits related complaints received from investors under section 74 of the Companies Act, 2013 (the said Act) in respect of defaults made by companies in repayment of deposits accepted by them before the commencement of the said Act i.e. before 1st April, 2014 and filing of prosecutions against defaulting companies by the Registrars of Companies/Regional Directors. As per the notification, a depositor is free to file an application under section 73(4) of the said Act, with the Company Law Board if the company fails to make repayment of deposits accepted by it. Further the company may also file application under section 74(2) of the said Act with the Company Law Board seeking extension of time in making the repayment of deposits accepted by it before the commencement of the provisions of the said Act.

Further, attention is also drawn to Explanation appearing below Rule 19 of the Companies (Acceptance of Deposits) Rules, 2014 which clarifies the conditions subject to which a company would be deemed to have complied with the requirements laid down in Section 74(1)(b) of the Companies Act, 2013 Companies can repay deposits accepted prior to 1st April, 2014 in accordance with terms and conditions for which the deposits had been accepted.

It is also clarified that there is no bar on the Registrar of Companies for filing of prosecution against a com- pany if such company fails to make repayment of de- posits accepted by it under the provisions of the Com- panies Act, 1956 or Companies Act, 2013, subject to the contents of para 3 above.

Full circular can be accessed at http://www.mca.gov. in/Ministry/pdf/General_Circular_9-2015.pdf

6. Exemptions for Section 8 Companies with Charitable Objects etc

Notification dated 5th June 2015, directs that certain provisions of the Companies Act, 2013, shall not apply or shall apply with exceptions/modifications:

Exemption from Application of certain Provisions to Section 8 Companies

Provision
of the act

Pertains to

Exceptions,
Modifications and Adaptations

Section 2(24)

Definition of Company Secretary

shall not apply.

Section 2(68)

Private Company

The requirement of having minimum paid-up share
capital shall not apply.

Section 2(71)

Public
Company

The
requirement of having minimum paid-up share capital shall not apply.

Section 96(2)

Annual
General Meetings

After the
proviso and before the explanation, the following proviso shall be inserted,
namely:-

Provided
further that the time, date and place of each annual general meeting are
decided upon before-hand by the board of directors having regard to the
direc- tions, if any, given in this regard by the company in its general
meeting.

Section
101 (1)

Notice
of Meeting

For
the words “twenty one days”, the words “fourteen days” shall be substituted.

Section
118

Minutes of
general Body Meetings, Board meeting etc

The section
shall not apply as a whole except that minutes may be recorded within thirty
days of the conclusion of every meeting in case of companies where the articles of
association provide for
confirmation of minutes by circulation.

Section
136(1)

Right of member to copies
of

audited
financial statements

for
the words “twenty one days”, the words “fourteen days” shall be substituted.

Section 149 (1)
– the first

proviso to
sub-section (1)

To appoint
more than fifteen directors after passing a special resolution

shall
not apply

Provision
of the act

Pertains to

Exceptions,
Modifications and Adaptations

Sub-sections (4), (5), (6),

(7), (8),
(9), (10), (11),

clause (i)
of sub-section

(12) and
sub-section (13) of section 149

For Board
of Directors of Company

Shall
not apply.

Section 150

Selection
of Independent

Shall
not apply

Proviso to
sub-section (5) of section 152

Explanatory
statement for appoint- ment of Independent Director

Shall
not apply

Section 160
for Director- ship

Right of
persons other than the retiring Directors to stand

Shall not
apply to companies whose articles provide for election of directors by ballot

Section 165 (1)

Number
of Directorships

Shall
not apply

Section 173(1)

Meetings
of Board

Shall apply
only to the extent that the Board of Directors, of such Companies shall hold
at least one meeting within every six calendar months.

Section 174(1)

Quorum
for Board Meetings

In
sub-section (1) – for the words “one-third of its total strength or two
directors, whichever is higher”, the words “either eight members or twenty five
per cent of its total strength whichever is
less” shall be substituted;

(b) the following proviso shall be inserted, namely:-

“Provided
that the quorum shall not be less than two members”.

section 177 (2)

Audit
Committee

The
words “with independent directors forming a majority” shall be omitted.

Section 178.

Nomination
and Remuneration Committee and Stakeholders Relationship Committee.

Shall
not apply

Section 179.

Powers
of Board

Matters
referred to in clauses (d), (e) and (f) of sub-section (3) may be decided by
the Board by circulation instead of at a meeting.

Section 184 (2)

Disclosure
of interest by Director.

Shall apply
only if the transaction with reference to section 188 on the basis of terms
and conditions of the contract or arrangement exceeds one lakh rupees.

7. Exemptions to Private Companies
Notification dated 5th June 2015 in the interest of pub- lic directed that certain provisions of the Companies

Act 2013 shall not apply or shall apply with such ex- ceptions, modifications and adaptations as follows:

Provision of Companies act 2013

Pertains to

Exceptions,
Modifications and Adaptations

Section 2(76) (viii)

Related party definition

i.e (vii)
any person on whose advice, directions or instructions a director or manager
is accustomed to act – Shall not apply with respect to Section 188

Section 43 and 47

Kinds of
Share Capital and Voting Rights

Shall not apply where MOA and AOA of private
company so provides

Section
62(1) (a) (i) and 62(2)

Further
Issue of Share Capital

shall apply
with following modifications:-

In clause
(a), in sub-clause (i), the following proviso shall be inserted, namely:-
Provided that notwithstanding anything contained in this sub-clause and sub-
section (2) of this section, in case ninety per cent of the members of a
private company have given their consent in writing or in electronic mode,
the periods lesser than
those specified in the said sub-clause or sub-section shall apply.

Section
62(1) (b)

Issue of
share capital under ESOP to employees

In clause
(b), for the words “special resolution”, the words “ordinary resolution”
shall be substituted

Provision of Companies act 2013

Pertains to

Exceptions,
Modifications and Adaptations

Section 67

Restrictions

on purchase by company or giving of loans by it for purchase
of its shares

Shall not apply to private companies –

(a)in whose share
capital no other
body corporate has invested any
money;

(b)if the borrowings of such a company from banks or financial institutions or anybody corporate is less than
twice its paid
up share capital
or fifty crore rupees,
whichever is lower; and

(c)
such a company is not in default in repayment of such
borrowings subsist- ing at the time of making transactions under this section

Section
73(2) clause

(a) to (e)

Prohibition of

Shall not
apply to a private company which accepts from its members monies not
exceeding one hundred per cent.

Acceptance
of Deposits from Public

of
aggregate of the paid up share capital and free reserves, and such company shall
file the details
of monies so accepted to the Registrar in such manner as may be specified

Section 117(3) (g)

Resolutions
passed in pursu- ance of sub-section (3) of section 179 wrt Powers of the
Board of Directors

Shall not Apply

Section 141(3) (g)

Limit on
the number of audits per partner

Shall apply with the modification that the words
“other than one person com– panies,
dormant companies, small companies and private companies having paid-up share
capital less than one hundred crore rupees” shall be inserted after the words
“twenty companies”

Section 160

Rights of persons other than retiring Directors to stand for
Directorship

Shall not Apply

Section 162

Appointment
of Directors to be voted individually

Shall not apply

Section 180

Restrictions
on Powers of Board

Shall not apply

Section 184(2)

Disclosure
of Interest by Director

Shall apply
with the exception that the interested director may participate in such
meeting after disclosure of his interest.

Section 185

Loan to Director, etc

Shall not apply to a private company –

(a)in whose
share capital no other body corporate has invested any money;

(b)if the borrowings of such a company from banks or financial institutions or any body corporate is less than
twice of its
paid up share
capital or fifty
crore rupees whichever is lower; and

(c)
such a company has no default in repayment of such
borrowings subsist- ing at the time of making transactions under this section

Section 188
(1) second proviso

Voting by related party

Shall not apply

Section 196 (4) and (5)

Appointment
of managing Director, Whole time Director or Manager

Shall not apply

The private companies, while complying with such ex- ceptions, modifications and adaptations, of the aforesaid Table, shall ensure that the interests of the shareholders are protected.

8. Exemptions to Nidhi Companies

Notification dated 5th June 2015 has directed that certain provisions of the Companies Act 2013 shall not apply or shall apply with certain exceptions, modifications and ad- aptations to Government Companies. The Government companies, while complying with such exceptions, modi- fications and adaptations, shall ensure that the interests of’ their shareholders are protected.

BCAJ Admin

PART C: Information on & Around

CAG SEEKS RTI ACCESS TO GOVT FILES::

The Comptroller and Auditor General (CAG) of India wants the Centre to grant to Right to information (RTI ) powers as it has been facing problems in securing details relevant to its audits of government finances and decision- making.

CAG Shashikant Sharma has written a letter of finance minister Arun Jaitley demanding that the federal auditor be given RTI powers to access information and a penal provision be included in the existing CAG’s Duties and Powers Act (DPC Act) to make it mandatory for furnishing of information in a time bound manner.

The federal auditor has issued a note on how information denial has been causing the problems.

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PART B: RTI Act, 2005

THE WHISTLE BLOWERS PRO TECTION ACT, 2011:

The above Act received the assent of the President on the 9th May, 2014. The objectives of the Act are noted here under:

AN ACT to establish a mechanism to receive complaints relating to disclosure on any allegation of corruption or willful misuse of power or willful misuse of discretion against any public servant and to inquire or cause an inquiry into such disclosure and to provide adequate safeguards against victimisation of the person making such complaint and for matters connected therewith and incidental thereto.

Please note that in mentioning year 2011 in the title is not my or printing mistake. The fact is that the Bill was introduced in the Parliament in 2011. It took 4 years to finally become an Act. It may also be noted that though it is now an Act, it is not in operation because no rules and regulations are notified per section 27 of the Act. The said section reads:

” 27. The Competent Authority may, with previous approval of the Central Government or the State Government, as the case may be, by notification in the official Gazette, make regulations not inconsistent with the provisions of the Act and the rules made there under to provide for all matters for which provision is expedient for the purposes of giving effect to the provisions of this Act.”

It may also be noted that both the central and state Governments are authorised to make rules, The State Government is authorised to make regulations also.

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PART A: Decision Of CIC

Section 19 (1) of the RTI ACT:
Vide an RTI application dated 15-05-2012 the appellant sought information on thirteen issues as contained in his RTI Application.

The first appeal was filed on 13-08-2012. As the desired information was not provided by the CPIO vide Order dated 14-08-2012, First Appellate Authority held that the Order of the CPIO is modification to this extent that the information pertaining to the undersigned is already available in public domain at SI. No. 183 of the Civil List, 2012.

Decision
It is to be seen here that the appellant, vide his RTI Application dated 15-05-2012, sought some information from the respondents on 13 issues. During the hearing of the appeal it was submitted by Sh. Harinder Dhingra, appellant that he had not been provided the required information on any issues of his RTI application dated 15- 05-2012. However, it was rebutted by the respondents by stating that the required information, as sought for, was provided to the appellant vide their letter dated 06-07- 2012. It was further submitted by the appellant that his First Appeal was decided by the same officer, in respect of whom, the information was sought and it is against the Law.

Being aggrieved by the aforesaid response, First Appeal was filed by the appellant on 13-07-2012 before the FAA (Sh. Arun Kumar Addl, Commissioner (IGI) Airport, T-3 New Delhi 37), who vide his order dated 14-08-2012, upheld the decision of CPIO. Hence, a Second Appeal was preferred before this Commission.

On careful perusal of the record, it was revealed that the appellant sought some information in respect of Sh. Arun Kumar, Addl. Commission (ING), who decided the First Appeal. It has also been corroborated by the Sh. Arun Kumar, Asstt. Commissioner & CPIO, Sh. Dalveer Solanki, Asstt. Commissioner & CPIO, present before the Commission for making the submissions on behalf of the respondents, in the case.

It is a well settled position in the eyes of Law that there should be no judge of his own cause. This is one of the principles of natural justice and no one should violate the same.

Even the Hon. Judges of the High Court & Supreme Court take care of this Rule while deciding the cases. In the present case, it is now admitted fact that the person against whom the information was sought became a First Appellate Authority and decided his own case i.e. as to whether information in respect of himself is to be provided or not to the appellant.

Thus, the First Appellate Authority (Sh. Arun Kumar) violated the principles of natural justice. It is immaterial whether he has decided the case rightly or wrongly.

In view of the above, the order passed by FAA is not legally tenable and deserves to be quashed and set aside. Therefore, it is quashed accordingly. Thus, the case is remanded back to the respondents with a direction to put up the case to another FAA (to be nominated by the head of the department in case Sh. Arun Kumar is still acting as FAA ) for its disposal in accordance to the provisions of Law, within 30 days from the date of receipt of this order under intimation to this Commission.

(Harinder Dhingra vs. O/o the Addl. Commissioner of Custom, IGI Airport, Terminal 3, New Delhi, File No. CIC/ SS/A/2012/003238/KY decided on 02-04-2014. Citation: RTIR II (2014) 238 (CIC)

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Company Law

Full Version of the Circulars/Notifications can be accessed at http://www.mca.gov.in

1. Company Law Settlement Scheme, 2014
The
Ministry of Corporate Affairs, vide General Circular No. 34/2014 dated
12-08-2014, has launched the Company Law Settlement Scheme, 2014
(CLSS-2014), to enable companies who have failed to file annual
statutory documents (Annual Return and Financial Statements) an
opportunity to file them and enable them:

1. To make their default good by filing belated documents at a reduced additional fee of 25% of actual fees.

2. Avoid penal action, especially disqualification of the Directors u/s. 164(2) of Companies Act, 2013.

3.
I nactive companies can get their companies declared as ‘dormant
Company’ u/s. 455 of the Act by completing the filing at reduced penalty
and get themselves declared as ‘Dormant Company’ by filing e-form MSC- 1
at 25% of the fee for the form or apply for strike off by filing e-form
FTE at 25% of fee payable.

4. Grants immunity from prosecution
for delayed filing. Under the Companies Act, 2013 the quantum of
punishment has been enhanced for repeated defaults in section 451.

The Scheme is in force from 15th August, 2014 to 15th October, 2014.

CLSS shall not apply to the filing of belated documents other than the following:

1. Form 20B-Form for filing annual return by a company having share capital.

2. F orm 21A-Particulars of Annual Return for the company not having share capital.

3. F orm 23AC, 23ACA, 23AC-XBRL and 23ACA-XBRLForms for filing Balance Sheet and Profit & Loss account.

4. Form 66-Form for submission of Compliance Certificate with the Registrar.

5. F orm 23B-Form for intimation for Appointment of Auditors.

Further, CLSS shall not apply in the following cases:
1.
Companies against which action for striking off the name under s/s. (5)
of section 560 of Companies Act, 1956 has already been initiated by the
Registrar of Companies; or

2. Where any application has already
been filed by the companies for action of striking off name from the
Register of Companies; or

3. Where applications have been filed for obtaining Dormant status under section 455 of the Companies Act, 2013;

4. Vanishing companies.

Companies
need to file an application in the e-Form CLSS 2014 to seek immunity
for filing belated documents. After granting the immunity, the Registrar
concerned shall withdraw the prosecution(s) pending, if any, before the
concerned court.

2. Clarification With Regard Section 139 (5) and 139 (7) of Companies Act, 2013

The
Ministry of Corporate Affairs has vide General Circular No. 33/2014
dated 31st July, 2014 issued clarification regarding appointment of
Auditors to deemed Government Companies as no specific provisions of
deemed Government Companies are included in the New Act. It is clarified
that the new Act does not alter the position with regard to audit of
such deemed government Companies through C & AG and thus such
companies are covered under s/s. (5) and (7) of section 139 of the new
act.

Further, the Shareholders Agreement and the Articles of
Association envisaging control, are to be taken into account to decide
whether an individual Company other than those refereed above is covered
under the provisions of s/s. (5) and (7) of section 139 of the Act.
Also, clarified that where a newly incorporated Company requires the
appointment of Auditor by the C & AG, it is the primary
responsibility of the Company to inform the same to the C & AG and
to share such intimation to the relevant Government so that the
Government can also send a suitable request to the C & AG.

3. Clarification On Transitional Period For Resolutions Passed Under Companies Act, 1956

The
Ministry of Corporate Affairs has vide General Circular No. 32/2014
dated 23rd July, 2014, clarified that resolution approved or passed by
Companies under the relevant applicable provisions of the old Act during
the period 1st September, 2013 to 31st March, 2014, can be implemented,
in accordance with the Old Act, notwithstanding the repeal of the
relevant provision subject to the conditions:

(a) that the implementation of the resolution actually commenced before 1st April, 2014; and
(b)
that this transitional arrangement will be available upto expiry of one
year from the passing of the resolution or 6 months from the
commencement of the corresponding provision in the New Act whichever is
later.

It is also clarified that any amendment to the resolution must be in accordance with the relevant provision of the New Act.

4. Companies (Meetings of Board and its Powers) Rules, 2014

The
Ministry of Corporate Affairs has vide notification dated 14th August,
2014, issued the Companies (Meetings of Board and its Powers) Second
Amendment Rules, 2014, in exercise of the powers conferred u/s. 173,
175, 177, 178, 179, 184, 185, 186, 187, 188, 189 and section 191 read
with section 469 of the Companies Act, 2013 (18 of 2013), which shall
come into force on the date of their publication in the Official
Gazette.

In the Companies (Meetings of Board and its Powers) Rules, 2014:

(1)
in Rule 3, in sub-Rule (6), the words and commas,“which shall be in
India,” shall be omitted whereby the scheduled venue of the Board
meeting through video conferencing or audio visual will be the place
where the recording takes place.

(2) (a) in Rule 4, (a) in sub-Rule (1), for the brackets, figure and word “(1) The,” the word “The” shall be substituted;

(b)
in Clause (iv), for the words “consideration of accounts,” the words
“consideration of financial statement including consolidated financial
statement, if any, to be approved by the Board under s/s. (1) of section
134 of the Act” shall be substituted, i.e, Audit Committee meetings for
consideration of accounts is to now read, the Audit Committee Meetings
for consideration of any financial statement including Consolidated
Financial Statement cannot be done through video conferencing.

(3) in Rule 15, for sub-Rule (3), the following sub-Rule shall be substituted, namely:-

“(3)
For the purposes of first proviso to s/s. (1) of section 188, except
with the prior approval of the company by a special resolution, a
company shall not enter into a transaction or transactions, where the
transaction or transactions to be entered into, –

a. as
contracts or arrangements with respect to clauses (a) to (e) of s/s. (1)
of section 188, with criteria as mentioned below –

i) sale,
purchase or supply of any goods or materials, directly or through
appointment of agent, exceeding ten per cent. of the turnover of the
company or rupees one hundred crore, whichever is lower, as mentioned in
Clause (a) and Clause (e) respectively of s/s. (1) of section 188;
ii)
selling or otherwise disposing of or buying property of any kind,
directly or through appointment of agent, exceeding ten per cent. of net
worth of the company or rupees one hundred crore, whichever is lower,
as mentioned in Clause (b) and Clause (e) respectively of s/s. (1) of
section 188;
iii) leasing of property of any kind exceeding ten per cent. of the net worth of the company or ten per cent. of
turnover of the company or rupees one hundred crore, whichever is
lower, as mentioned in Clause (c) of s/s. (1) of section 188;

iv) availing or rendering of any services, directly or through appointment of agent, exceeding ten per cent. of the turnover of the company or rupees fifty crore, whichever is lower, as mentioned in Clause (d) and Clause (e) respectively of s/s. (1) of section 188:

Explanation- It is hereby clarified that the limits specified in sub-Clauses (i) to (iv) shall apply for transaction or transactions to be entered into either individually or taken together with the previous transactions during a financial year.

b. is for appointment to any office or place of profit in the company, its subsidiary company or associate com- pany at a monthly remuneration exceeding two and half lakh rupees as mentioned in Clause (f) of s/s. (1) of section 188; or

c. is for remuneration for underwriting the subscription of any securities or derivatives thereof, of the company exceeding one per cent of the net worth as mentioned in Clause (g) of s/s. (1) of section 188.

Explanation.-

(1) the turnover or net Worth referred in the above sub- rules shall be computed on the basis of the audited Financial Statement of the preceding financial year.

(2) in case of a wholly-owned subsidiary, the special reso- lution passed by the holding company shall be suf- ficient for the purpose of entering into the transactions between the wholly owned subsidiary and the holding company.

(3)   the explanatory statement to be annexed to the notice of a general meeting convened pursuant to section 101 shall contain the following particulars, namely:-
a.   name of the related party;
b.   name of the director or key managerial personnel who is related, if any;
c.   nature of relationship;
d.   nature, material terms, monetary value and particulars of the contract or arrangement;
e.   any other information relevant or important   for the members to take a decision on the proposed resolution.”

5. Second amendment to Companies (Management and administration) rules, 2014

The ministry of Corporate affairs has on 24th july, 2014 vide Gsr 537(e) amended the Companies (manage- ment and administration) rules, 2014 by insertion of the following:

i.   in rule 9 after sub-rule (3) – “provided that nothing contained in this rule shall apply in relation to a trust which is created, to set up a mutual fund or Venture Capital fund or such other fund as may be approved by SEBI.”
ii.   and in rule 13 the words “either value or volume of the shares “shall be and the explanation shall be omitted.
iii.   In Rule 23 (1) for the words “not less than five lakhs rupees,” the words “not more than five lakh rupees” substituted.
iv.   In rule 27, in sub-rule (1) and in the explanation, for the word “shall”, the word “may” shall be substituted.

6. Addition to Schedule VII – of Companies act, 2013

The Central Government vide Notification dated 6th August, 2014, Gsr 568 (e) has made the following amendment to schedule Vii pertaining to Corporate social responsibility:

insertion of
“(xi) slum area development.

Explanation – for the purposes of this item, ‘slum area’ shall mean any area declared as such by the Central Government or any state Government or any other Com- petent authority under any law for the time being in force.”

7. ‘Class of Companies “ for the purposes of Section 203 (1) of the Companies act, 2013

Vide Notification No. S O 1913(E) the Ministry of Corpo- rate Affairs has on 25th July, 2014 it has notified that public Companies having :

a)   paid up Capital of Rs. 100 crores or more; and
b)   annual turnover of Rs. 1,000 crores or more; and
c)   which are engaged in multiple businesses; and
d)   have appointed Chief Executive Officer for each such business shall be the ‘class of Companies’ for the purposes of section 203 (1) of the Companies act, 2013 which pertains to appointment of Key managerial personnel.

8. Companies (removal of Difficulties) Sixth Order, 2014

The ministry of Corporate affairs has vide s o 1894 (e) dated 24th july, 2014, issued the Companies (removal of Difficulties) Sixth Order, 2014. To overcome the difficulties arising, and resultant disharmonious interpretation of Clause 76 of section 2 pertaining to related party, due to absence of the word ‘relative’ in clause (iv), the Central Government has issued the said order and amended section 2 as follows:

“In Clause (76) in sub-Clause (iv) after the word ‘manager’ the word ‘or his relative’ shall be inserted.”

BCAJ Admin

Part A Decision of CIC

TEP: Order of Information Commissioner Mr. Basant Seth:

Decision Notice:
A coordinate bench of this Commission in its order dated 18/06/2013 (File No. CIC/RM/A/2012/000926 Sh. Ved Prakash Doda vs. ITO) has held as under:

“6. It has been the stand of the Commission that in respect of a tax evasion petition, once the investigation is completed, the appellant should be informed the broad results of the investigation, without disclosing any details. The appellant has a right to know as to whether the information provided by him was found to be true or false.

7. The Commission accordingly directs the CPIO to provide to the appellant, if investigation has been completed, the broad outcome of the investigation without divulging any details, within ten days from date of receipt of the order.” Following the ratio of above cited decision, the Commission directs the CPIO to respond to the RT I application and disclose the broad outcome of the TEP without divulging any details, to the appellant after the assessment is completed.

The appeal is disposed of accordingly.

[CIC/RM /A/2014/001153/BS/8839 of 15.10.2015 in the matter of Md. Masoom Afzal vs. CPIO/ACIT, HO (Tech), Income Tax Department, Patna]

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Company Law

1. The Companies (Acceptance of Deposits) Second Amendment Rules, 2015

The
Ministry of Corporate Affairs has vide notification dated 15th
September 2015 amended the Companies (Acceptance of Deposits) Rules,
2014. In rule 2, in subrule (1), in clause (c), for sub-clause (viii),
the following is substituted :

“(viii) any amount received from a
person who, at the time of the receipt of the amount, was a director of
the company or a relative of the director of the private company:

Provided
that the director of the company or relative of the director of the
private company, as the case may be, from whom money is received,
furnishes to the company at the time of giving the money, a declaration
in writing to the effect that the amount is not being given out of funds
acquired by him by borrowing or accepting loans or deposits from others
and the company shall disclose the details of money so accepted in the
Board’s report;”.

In rule 3, for the words “paid-up share
capital and free reserves”, wherever they occur, the words “paid-up
share capital, free reserves and securities premium account” shall be
substituted;”

2. Companies (Filing of documents and forms in XBRL ) Rules, 2015

The
Ministry of Corporate Affairs has vide notification dated 9th September
2015 issued the Companies (Filing of Documents and Forms in Extensible
Business Reporting Language) Rules, 2015. As per the said rules, all
listed Companies and their Indian subsidiaries or Companies having a
paid up capital of Rs.5 crore or Companies having turnover of Rs. 100
crore and above or Companies which were covered under the Companies
(Filing of Documents and Forms in Extensible Business Reporting
Language) Rules 2011 shall file the financial statements with the
Central Government using the XBRL taxonomy for the financial years
commencing 1st April 2014.

The rules further specify that
companies that are required to file the cost audit report and other
documents with the Central Government shall do so using the XBRL
taxonomy for the financial years commencing 1st April 2014.

3. Companies (Management and Administration) Amendment Rules, 2015

The
Ministry of Corporate Affairs has vide notification dated 28th August
2015 issued the Companies (Management and Administration) Amendment
Rules, 2015. As per the amendment, Rule 23 which pertains to special
notice to be given to the Company, the words “not more than five lakh
rupees” is substituted by the words “not less than five lakh rupees”.

The contents of Form MGT-7 for the Annual Return of the Company have been modified.

4. Companies (Accounts) Second Amendment Rules 2015

The
Ministry of Corporate Affairs has vide notification dated 4th September
2015 issued the Companies (Accounts) Second Amendment Rules 2015.

Following clauses have been inserted:

Rule 2 ( 1) (da)
‘Indian Accounting Standards “means the Indian Accounting Standards
referred to in rule 3 and Annexure to the Companies (Indian Accounting
Standards) Rules 2015

Rule 4A : Forms and items contained in the Financial Statements :
The financial statements shall be in the form specified in Schedule III
to the Act and comply with Accounting Standards or Indian Accounting
Standards as applicable. Provided that the items contained in the
financial statements shall be prepared in accordance with the
definitions and other requirements specified in the Accounting Standards
or the Indian Accounting Standards as the case may be.

The Ministry has also released the contents of the following forms

AOC – 4 [Earlier Forms 23 AC & 23 ACA] – Form for filing Financial Statements & other documents with the Registrar &

AOC – 4 CFS –
Form for filing Consolidated Financial Statements & other documents
with the Registrar, both to be filed with certification by CA/CS/CMA.

5. Alterations to Schedule III of Companies Act 2013

The
Ministry of Corporate Affairs has vide notification dated 4th September
2015 made the following alterations to Schedule III (General
Instructions for Preparation of Balance Sheet and Statement of Profit
and Loss Account) In Part I Balance sheet under the heading “Equity and
liabilities” for the term trade payables the following shall be
substituted:

Trade payables:

Total outstanding dues of micro enterprises and small enterprises.

Total outstanding dues of creditors other than micro enterprises and small enterprises.

Additional disclosures in Notes in relation to Micro, Small and Medium Enterprises have also been prescribed.

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Part B RTI Act, 2005

State CIC lauds civic chief’s circular on RTI red tapism:
Maharashtra’s Chief Information Commissioner Ratnakar Gaikwad has applauded a BMC circular issued by Civic Commissioner Ajoy Mehta, aimed at reducing red tape over the implementation of the Right to Information Act, and now wants the state government to issue the very same circular to all state departments.

The BMC circular talks of how citizens who seek information under the RT I Act are often summoned to inspect documents even when the information they seek is not voluminous, or when they have not asked for an inspection. The circular asks BMC officials not to do so. Instead, they have been instructed to send the information directly to applicants, they should count the number of pages asked for, and charge the applicant for the information per page.

When the information sought is voluminous and an RT I applicant is called for an inspection, the circular says, applicants should not merely be dumped with the information, but the documents should be indexed and the pages numbered so that it is easy for applicants to find the information they are looking for.
(Also see in the issue of August 2015: page 94, Inspection of Documents.)

Grant for online filing of RTI Applications:
States can get financial aid from the Centre to set up facilities for the online filing of applications under the Right to Information (RT I) Act and other initiatives aimed at simplification and promotion of the transparency law. Various Administrative Training Institutes (AT Is) working under the states can also get grant of a maximum of Rs.4 lakh for setting up a helpline in regional languages for answering queries of the general public under the RT I Act, the Department of Personnel and Training (DoPT) announced on Thursday. “The facility of filing RTI applications and appeals online through the RT I online web portal has been launched and is being implemented in all the ministries or departments of the Government of India situated in New Delhi.

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Part A Decision of CIC

RTI Stamps:

[CIC/SA/A/2015/000743 dated 24.07.2015; A. S. Berar vs. Dte of Education (East)]

In response to a RT I application, the Central Commission writes:

Neither the Act nor Rules state anywhere that the Public Authority should charge Rs.2 for writing a response or answering certain points under RT I, like ‘yes’ or ‘no’ or “information attached”. The Act does not provide for pricing the information or for collecting cost of searching the files or writing notes from them. Charging Rs.2 for the covering letter, or typing on paper, information collected from other files, is unheard of. These methods by the Public Authority will lead to delay or denial of the information.

The Commission also found that certain RT I sections are wasting paper in many ways. They write ‘letter is attached’, and that letter contains two sentences like ‘information sought is not available’. Such letter sent through three or four wings of the office reflect the office’s response and responsibility. At each stage, a file was built, letter was written after the file noting was approved and then posted.

In a response from the Ministry of Communications and IT Department of Posts on 18th October 2013 to a RTI petition filed by Mr. Subhash Chandra Agrawal, sent through the Ministry of Finance, it was stated: “As per costing exercises 2011-12, the operational cost of a postal order is Rs.37.45”. This means to realise IPO of Rs.6, the department has to spend Rs.37.45, besides wasting man-hours and stationery for writing the letter. The cost must have increased in 2015.

There are the commonsense points that PIO failed to notice.
(a) Postal order for less than Rs.10 is discontinued, thus asking for Rs.6 is meaningless.
(b) Even if IPO for Rs.10 is given to pay Rs.6, the public authority has to incur operational cost for IPO Rs.37.45 to transfer the cash.
(c) In writing a letter to appellant to demand Rs.10, the public authority has to spend at least one manhour.
(d) To post the letter, the IPO has to spend Rs.17 (for local speed post, Rs. 28 for non-local), or Rs. 22 (17 plus 5 Registered Post, for every next 20 grams or part of it Rs.5 additional), Rs. 27 (Registered Post-Acknowledgement Due).

Chief Information Commissioner Sri Satyananda Mishra in his order on 30.05.2012, in a second appeal filed by Subhash Chandra Agrawal cautioned the PIOs “It is not prudent to ask for Rs.2 per page in giving one page of information, because in the process, much more public money is lost in correspondence”. The IPOs for Rs.1, 2, 5, 7 were discontinued, but IPO of Rs. 10 is retained, perhaps for helping payment of Rs. 10 RT I fee. Because of non-availability of IPOs of smaller denominations, the applicants have to |pay more money than what is prescribed. For instance to pay Rs.12 copying charges, one has to take IPO of Rs.20.

In order to avoid all these complex and costly affairs, considering delay and wastage of money in collecting fee and charges, the Commission recommends to the Government of India, especially, the Department of Personnel & Training and the Department of Posts, to arrange exclusive stamps for RT I on the lines of Radio licensing stamps, which were used to collect the license fee decades ago. (a picture of those stamps is given below, * how these stamps were fixed in a license book for Radio can also be seen). It will be useful and easy to pay RT I fee or cost of copying if these RT I stamps are made in different denominations of Rs.2, 10, 50, and 100.

The Commission directs the respondent authority not to deny information on such trivial causes and not to waste public money in demanding small amounts. If charges to be paid are not worth the cost of typing and posting a letter etc., they should avoid it. The Commission directs the respondent authority to train the personnel in the RT I wing and sensitise them to understand the difference between fee, cost and value of letter or sheet containing information.

The Commission is also not convinced with the demand for refund of 6. Appellant is right in questioning the demand of a paltry amount as explained above, but Lt. Col. A. S. Berar should not have sought refund of Rs.6, because even in doing so, the Public Authority has to spend once again unnecessarily.

The respondent officer submitted that she would furnish the information after the remaining school responded to her forwarded letters. The Commission directs the respondent authority to furnish the information for the remaining 42 schools which might not take more than a page, without asking an IPO for Rs.2, within one month from the date of receipt of this order.

With the above observations, the appeal is disposed of. Mr. Subhash Chandra Agrawal commenting on the above judgement writes:

In a colorful pictorial CIC-verdict dated 24.07.2015 in appeal – number CIC/SA/A/2015/000743 wherein strongly reasoned recommendations citing RT I responses and earlier CIC-verdict are given for introducing RT I stamps in denominations of Rs.2, 10, 50 and 100 as the most convenient and enormous revenue-saving (of crores of rupees) mode for payment of RT I fees and other charges under the RT I Act.

CIC-verdict comes as a ready reckoner for concerned departments, namely Department of Posts and Department of Personnel & Training (DoPT) when it incorporates colorful photos of Radio and TV License fees stamps on lines of which RT I stamps can be issued.

With postal-orders below Rs.10 discontinued, there is no practical mode for making payments in fractions like Rs.2, 4, 6 and 8. High handling cost of Rs.37.45 to get RT I fees of Rs.10 is the other reason for suggesting RT I stamps.

Red-tapism and ‘jaisa hai chalne do’ bureaucratictheory has obstructed issuing of RT I stamps earlier also suggested in a full-bench CIC-verdict dated 27.08.2014 in appeal-number CIC/BS/C/2013/000149/LS when Department of Posts informed that Security Printing Presses at Nasik and Hyderabad expressed inability to print RT I stamps because of shortage of paper. At least now sincere and serious steps should be made for immediate introduction of RT I stamps.

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Part C Information on & Around

Judges’ Assets:
The Bombay high court has rejected a petition that sought details of assets of judges under the Right to Information Act.

A
division bench of Justice S. C. Dharmadhikari and Justice G.S.Kulkarni
pointed out that the applicability of the RT I Act on information that
is with the Chief Justice in his fiduciary capacity is pending before
the Supreme Court. The Court dismissed the petition filed by advocate
Mathews Nedumpara, challenging the orders of the public information
officer (PIO) and the appellate officer that the information could not
be furnished as the matter was subjudice before the Supreme Court.

PM’s foreign trips:
Prime
Minister Narendra Modi’s foreign trips cost the exchequer over Rs. 37
crore with his Australia trip proving to be the most expensive one.

Documents
accessed under RT I Act reveal that Indian missions in 16 countries
spent Rs.37.22 crore in one year. Modi visited 20 countries between June
2014 and June 2015.

Among the most expensive trips were those
to Australia, the US, Germany, Fiji and China while the cheapest trip
was Bhutan which cost Rs.41.33 lakh. In Australia, the mission spent
over Rs.5.60 crore on hotel stay for the PM and his delegation and
Rs.2.40 crore on hiring cars.

The PM’s trip to New York in
September 2014 resulted in a spending of Rs.9.16 lakh on hotel
accommodation for the SPG delegation and Rs.11.51 lakh for hotel rooms
for the PM, and official of the foreign ministry and the PMO. The
delegation stayed at the New York Palace Hotel.

Another Rs.39
lakh was spent on car rentals for the SPG delegation while Rs.3 lakh was
spent on Prasar Bharati for coverage of the PM’s visit. In Germany, the
embassy spent Rs.3.80 lakh on hotel accomodation, Rs.1.31 lakh on daily
allowances and Rs.19,405 on local travels.

RTI show on DD:
DD
programme “Janne Ka Haq” was the only TV show in India which for over
nine years was based solely on RT I and transparency related issues. Its
popularity was high, especially in rural areas and small towns. Most
institutions against whom RT I queries were posed were obviously
uncomfortable, since an ordinary individual could challenge the system.
Janne Ka Haq was suddenly discontinued a fortnight back before it could
complete its 10th anniversary in January next year. The order to cancel
the show reportedly came from the top.

Landmark Order of Chief SIC, Maharashtra:
In
a landmark order passed by the state information commission, all
offices of cabinet ministers and ministers of states will henceforth be
treated as public authorites. The order gives scope for more
transparency in these offices, by bringing the conduct of ministers and
their activities under the RT I ambit.

The order was passed by
state chief information commissioner Ratnakar Gaikwad on an application
made by Fort resident Govind Tupe. It directs the chief secretary to
appoint the required staff so that offices of ministers take RT I
applications. The order has to be complied with by October 31.

Chief secretary Swadheen Kshatriya said, “We will comply with the order.”

Tupe had submitted an application to the office of the social justice minister, which was not replied to.

After
the Act was implemented, barring the chief minister’s office, other
ministers’ offices gradually stopped accepting applications, saying they
should be sent to the department concerned and not the ministry. But in
such scenarios, unless the applicant categorically asked about a
particular detail regarding the minister/ministry, s/he wasn’t given
that information. And, with the ministers’ offices left out of the RT I
ambit, applicants would fail to get information that only the minister
and his/her ministry was in the know of. Now, recommendations made by
ministers, letters they write and other details, like their schedule is
expected to be made available.

“When political parties are under RT I, there is no reason why these people and their conduct can’t be included,” said Tupe.

“Recently,
some officers recommended by the Social justice minister were arrested
by the ACB. I wanted to know how many such recommendations were made and
to which departments. When I went to follow up on my application, the
minister’s staff refused to reply, saying his office is not under RTI.
So, neither could I get information, nor could I file the first appeal. I
then filed a complaint with the Commission.”

During the
hearing, the Commission stated, “Offices of ministers have been set up
by government…these perform several duties – receiving files from
various departments, applications from people and complaints from the
public, and correspond with authorities/offices…” “Sizeable staff is
also sanctioned by the government to these offices… They, therefore,
fall under the purview of section 2(h) (d) of the RT I Act, 2005.”

The Social justice minister’s private secretary has been asked to respond to Tupe’s application.

“There
is no doubt that ministers’ offices are public authority. They are
decision-making bodies and all their expenses, including ministers’
salary and perks, are taken care of by the government,” said RT I
activist Bhaskar Prabhu.

Education Minister Vinod Tawde:
The
state education board has rejected a Right to Information (RT I)
request about Education Minister Vinod Tawde’s mark sheets and
certificate because of political pressure, the NCP alleged.

NCP
spokesperson Nawab Malik claimed that Tawde had declared his educational
qualification as BE (electronics) from a bogus institute called
Dnyaneshwar Vidyapeeth. “It is believed that Tawde did not clear his Std
XII and hence an RT I query was made to clear doubts about his 10th and
12th standard education,” Malik alleged.

But the Maharashtra
State Board of Secondary and Higher Secondary Education rejected the
request after pressure from Tawde, Malik added.

Activist Anil Galgali had filed the application. In her reply, public information officer and joint secretary Ranjana Chaskar of the Mumbai Board said that documents such as mark sheets cannot be given to a “third person”.

Galgali appealed against the same, but divisional secretary C.Y. Chandekar also rejected his plea stating the same reason.

Malik said that if Tawde had nothing to hide, he should make public his Std X and XII mark sheets.

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Part B RTI Act, 2005

The Department of Personnel and Training (DoPT) – the nodal department for implementing The Right to Information Act, 2005 (RT I Act) in the Government of India has uploaded two important documents on its website.

1) The DoPT has issued reasonably detailed guidance for Public Information Officers (PIOs) to help them send better drafted replies to RT I applicants. Every PIO is now required to include in his/her reply- the office number given to the request, name and contact details of the PIO including email address, detailed reasons invoking the relevant provisions of access to information is denied, name and contact details of the appellate authority whom the applicant may approach with a grievance within 30 days of receipt of the reply. This advisory is an outcome of the consultation on the subject that the DoPT launched in March this year.

This guidance also includes instructions as to how certified copies may be issued under the RTI Act by the PIO on request. The PIO will have to endorse the copy as follows: “True copy of the document/record supplied under RTI Act”, sign the copy with date and affix his/her seal containing his name and name of the public authority. If the requestor seeks documents that are numerous, then the certification of the copies may be done by any other junior gazette officer, but the reply must be sent by the PIO.

This communication has been dispatched to all Ministries and Departments, Secretariats of Parliament, President’s Secretariat, Prime Minister’s Office, NITI Ayog, Election Commission, Comptroller and Auditor General and the Chief Secretaries of all States and Union Territories.

It is heartening to note that two issues about which clarity was required have been dealt with officially after 10 years of implementation of the RT I Act. Readers will remember that the issue of certified copies being sought by applicants under the RT I Act was discussed by the Kerala High Court in January 2014 in the John Numpeli (Junior) case. In this case the Court ruled that section 2(j) of the RT I Act does not take away the right of an individual to get certified copies under other laws such as the Indian Evidence Act, 1872 or the Code of Civil Procedure, 1908. Conversely, if an RTI applicant seeks certified copies under the RT I Act then the PIO must attest to the fact that the copies have been issued under the RT I Act.

A “genius” PIO in one of the northern Indian States had used the Kerala HC judgement recently, to deny certified copies to an RT I applicant. When a prominent RT I activist brought this case to my attention, I had sent him a copy of the judgement to help the RT I applicant. This episode reminded me of the saying in my native language crudely translated as follows- “what God proposes the priest disposes as he deems fit” (in Kannada – “devaru vara kottaru, pujari koda”)

Thankfully the DoPT has now issued this communication making it very clear as to how certified copies may be given under the RTI Act. Frankly, there is no conflict between section 76 of the Indian Evidence Act and section 2(j) of the RT I Act. In both laws, any person who has the right to inspect any public document/record, has the right to seek a certified copy from its custodian on payment of the relevant fees. Public authorities resistant to the idea of greater transparency in their working had created much confusion holding that certified copies can be given only under the Indian Evidence Act and not under the RT I Act. PIOs also pointed out that documents certified under the RTI Act could not be used as evidence in Courts. Thankfully, the Kerala High Court’s judgement and now the DoPT’s latest OM have brought closure to this controversy. PIOs henceforth must supply certified copies to RTI applicants on demand if the information is not covered by any exemption under the RTI Act. In my opinion, documents certified under the RTI Act can be used in Courts as evidence/exhibits by litigants.

I hope the General Administration Department in Jammu and Kashmir also takes this step to bring clarity about issuance of certified copies to RTI applicants under the J&K RTI Act, 2009.

2) The DoPT has also uploaded on its website its 2nd Compendium of Best Practices in implementing RT I across the country. There are several interesting initiatives documented in this compendium. I hope the DoPT will bring out a 3rd volume focusing more on how Government Departments and Ministries have brought about changes to their working due to RT I interventions of the citizenry. This is what many of us would like to hear when we celebrate the 10th anniversary of the RT I Act. Readers may go through the documentation of CHRI’s efforts to make transparency a reality at the grassroots level in the Panchayats of Gujarat in this Compendium.

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Ethics and You

Procedure of Enquiry (Continued) – Part IV

Arjun (A) — Oh My God! This heat is unbearable. And also this humidity.

Shrikrishna —Why don’t you go to some hill station? April must be a ‘cool’ month for you CAs.

A — Kaash, yeh sach hota!

S — Why? Isn’t the work load less now?

A
— Maybe, yes. No deadlines. But bank audits, service tax returns and
whatever nonsense tax assessments are completed in March, we need to
submit appeals, stay applications, and what not!

S — H ow was bank audit experience this year?

A—
T hat is a nightmare. Big branches to be completed in 4 to 5 days; with
just one or two assistants. Bank staff never co-operates. Bhagwaan ka
naam le ke hi sign karna padta hai.

S— I agree. Your profession is difficult.

A—
By the way, you have so far explained to me how a disciplinary case
starts. Apart from complaint, there could be suo moto ‘information’
cases as well. I have also understood upto the stage of ‘Prima facie
opinion’ and the types of punishments for various items of misconduct.

S— T oday, I wish to explain how the actual enquiry is conducted.

A— Y es, yes! I wanted to know that. It must be a dreadful experience.

S—
A ctually, it is not so frightful. It is not a police enquiry. It is a
plain fact finding exercise. No need to be nervous if you have acted
diligently.

A— But there are many mistakes that occur unknowingly. If they are exposed, it could be serious!

S—
Y es. It depends on the nature of offence. It is held in a conference
hall; not like a court where the judges sit on a raised platform.

A— So, it is across the table. Good.

S—
Y es. On one side of the table, the Members of the Board of Discipline
(BOD) or Disciplinary Committee (DC) sit. They are assisted by the
Secretariat. The complainant, his counsel, respondent and his counsel
sit in front of the BOD/DC on the other side of the table.

A— A nd how does it start?

S—
E verything is tape-recorded. Also, there is a stenographer. Everyone
has to speak into a mike. First of all, all parties are required to
identify themselves. Then, Complainant and Respondent are put on oath.

A— A re there witnesses?

S—
See, in the Misconduct Procedure Rules, for First Schedule Offence,
before BOD, there is no provision for witnesses. But for Second Schedule
items before DC, one can call witnesses.

A— Both the parties?

S— Y es. Not only the parties but even the Committee can call its witnesses.

A— Ohh!

S—
A fter this, the complainant is asked to explain his charges. Committee
asks him questions so as to define the exact charges. A— What next? S— R
espondent is asked whether he has understood the charges. He is asked
to state whether he pleads guilty or he wants to defend himself.

A— What is he expected to say?

S—
I f Respondent wants to accept his guilt, well and good. He has to say
so. If he wants to argue or defend, he can say accordingly.

A— T hen what happens?

S—
I f it is to be defended, the Respondent is allowed to speak and
explain his position. His counsel may also speak on his behalf.

A— D o they ask questions?

S—
O f course. Previously, it used to be formal like in a court. There was
examination, cross-examination and so on. However, cross examination is
permitted. Nowadays, they adopt a summary procedure.

A— What about witnesses?

S—
A s I told you, witnesses are called and examined. All parties can
question the witnesses. But one cannot ask leading questions except in a
cross-examination.

A— What about new evidences or new documents?

S—
See, Arjun. One must keep in mind that it is an enquiry into the
conduct of a member of the Institute. It is not a law suit – civil or
criminal. So ordinarily everything is entertained in a fair and
transparent manner. But complainant is not allowed to make a new charge
or allegation. One cannot enlarge the scope of the complaint.

A— What is the value of precedents?

S—
F rankly, in my opinion there is not much value to the precedents. Each
case is unique on its facts. There are so many shades of human
behaviour. Misconduct is to be viewed on the facts and in the
circumstances of each case.

A— I s it advisable to have a lawyer with us?

S—
I t depends. Sometimes, a respondent gets psychologically nervous. Many
times they cannot express themselves clearly and properly. So a
counsel’s presence does help.

A— But who can be a counsel?

S—
N ormally, any other member of your Institute; or a company secretary,
cost accountant or a lawyer is engaged as counsel. But lawyers need to
understand that a very legalistic approach does not help. It is a
fact-finding process.

A— Like what?

S— F or example,
while doing audit, you may take a view in respect of some provision of
company law or income tax. There, you may argue in a legalistic way. But
petty matters of procedures should not be given too much importance.
They allow you every reasonable opportunity to submit any documents,
information, explanation and so on. You are allowed to speak without any
pressure or tension.

A— H ow long does the hearing last?

S— R anging from half-an-hour to even 2 to 3 days! D epending upon the nature of allegation, number of witnesses and so on.

A— I need to know many more things about these proceedings. I will bring my friends also to listen to all this.

S—
R emember that all the proceedings are recorded and you get verbatim
minutes. These are called Notes of Hearing. One has to apply to the
Director Discipline to get these minutes.

Om Shanti !!!

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PART C: Information on & Around

BMC Loses Rs. 100 Crore:
The BMC may have lost around Rs.100 Crore because developers weren’t being charged extra taxes for water and sewage disposal at under construction sites.

Following an RT I query from a city based activist, municipal commissioner Sitaram Kunte has now ordered an enquiry. Officials began collecting the levy from builders three months ago, but they were supposed to start collections in June, 2012.

For most of the past two years, the BMC didn’t ask builders for these taxes, even though water was supplied for projects, according to responses to activist Anil Galagali’s RT I query. BMC sources said around Rs. 100 crore may have been lost because these taxes weren’t collected. Meanwhile, officials recently began recovering the charges from builders, and in three months have collected Rs.19.6 crore from ongoing projects.

Sheila Dikshit’s appointment as Governor:
Files moved at breakneck speed for the appointment of the former Delhi CM Sheila Dikshit as Kerala governor. In a bid to beat the election code of conduct, sitting Kerala governor Nikhil Kumar resigned, Karnataka governor HR Bharadwaj was handed interim charge and finally Dikshit appointed as Kumar’s successor all in the space of few hours on March 4. The code of conduct was to come into effect a day later.

The information disclosed by the home ministry was in response to an RTI plea filed by activist SC Agarwal. According to the documents made public, home minister Sushil Kumar Shine recommended appointment of Dikshit as Kerala governor following a one line resignation from Kumar. In his letter dated March 4 to President Pranab Mukherjee, Kumar said, “I resign as governor of Kerala with immediate effect.” He did not ascribe any reason for his resignation.

Not only was Kumar’s resignation accepted the same day but in the next few hours, President’s secretary Omita Paul shot off a letter and warrant to Bharadwaj asking him to take additional charge. A few hours later, Paul issued a warrant under the hand and seal of the president and a letter appointing Dikshit as Kerala Governor.

Thane Badlapur CR Stretch has Just two ambulances:
Central Railway (CR) authorities are under the spotlight for failing to provide basic transport facility to ferry the injured to the hospitals. Responding to a Right To Information (RT I) query by city advocate Suyash Pradhan about the availability of ambulance services outside each station on the CR line, the authorities said that private ambulances are parked round-the clock only at Thane and Dombivali stations between the Thane-Badlapur stretch. “At other stations, ambulances are on call basis and the list of private ambulances service providers is circulated to all stations to be summoned as and when required,” said senior divisional commercial manager Narendra Patil. “Commuters between Thane-Kalyan contribute in crores to the CR from the purchase of season tickets and monthly pass. The safety of the commuter should ideally be paramount. In the last one year alone 546 accidents were reported close to Kalyan station. The frequency of the fatalities due to commuters falling off trains between Diva and Thane is scary and there is a direct need to have a 24/7 ambulance outside these stations,” Said Pradhan.

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PART B: RTI Act, 2005

WESTERN INDIA RTI CONVENTION 2014 DECLARATION:

As citizens and activists committed to building a transparent and accountable democracy we have gathered together from more than 15 States and Union Territories across the country in the city of Mumbai to celebrate our victories, and to discuss and strategies to squarely face current challenges. In this Western India RT I Convention, we pledge our commitment to protect our constitutionally guaranteed fundamental rights and particularly emphasising the freedom of speech and expression which is the bed rock of a free and democratic society in the absence of which our right to information would lose much of its meaning and value. On this day the 8th of June, 2014, we express our solidarity with all RT I users, activists and their families who have suffered attacks on them and resolve to defend our right to access information and express our opinions without fear and pledge in particular to struggle to achieve our collective vision as follows-

WE, TH E PART ICIPANTS OF TH E WESTERN INDIA RT I CONVENTION, HEREBY DECLARE TH AT:

1. E ven after nine years of the enactment of the Right to Information Act (RT I Act), governments have failed to implement this law to our expectations. Governments must take immediate and effective steps to establish a regime of transparency at all levels of the administration.

2. It is a matter of great concern that even after nine years of the enactment of the RT I Act, several states and competent authorities have rules which are contrary to the letter and spirit of the RT I Act and curb people’s right to seek information in many ways. We demand that the governments and competent authorities work towards installing a uniform regime of Rules under the RT I Act across the country.

3. A large number of public authorities have failed in fulfilling their obligation to proactively provide information to people u/s. 4 of the RT I Act. All public authorities must urgently fulfill this responsibility. We demand that the Government of India, all state governments and public authorities immediately implement the guidelines framed by the Task Force on section 4 implementation set up by the DoPT in 2013, including the adoption of all the templates developed by the Task Force.

4. T he government must undertake steps to create awareness about the RT I Act among people, especially amongst the disadvantaged segments of society such as women, dalits, adivasis, all kinds of minorities and differently-abled persons. Even after more than nine years of enactment of the RT I law, awareness levels among people and a functional knowledge of the RT I Act, is low. A Peoples’ Monitoring Study of the RT I Regime In India, undertaken by RAAG, NCPRI and other groups, based on an analysis of 4000 RT I applications filed between 2005 and 2008, has found that only 6% of RTI applications were filed by women. RT I must be introduced in the educational curriculum to spread awareness amongst the youth.

5. A ll six national Political Parties must immediately comply with the June 2013 order of the Central Information Commission, which had declared them ‘public authorities’ under the RT I Act and therefore, must implement the provisions of the RT I Act, including section 4, also appoint public information officers and appellate authorities to dispose RT I applications and appeals received from the people. All other political parties registered with and recognised by the Election Commission of India must proactively take steps to implement the RTI Act within their offices.

6. T he Central and State Governments must ensure that the Whistle Blowers Protection Act (WBP Act), enacted in May 2014, is operationalised immediately. Model WBP Rules for implementing this law must be made in a transparent, consultative and participatory manner, to establish a comprehensive framework for protecting whistleblowers across the country. It is the moral responsibility of the Government to protect RT I activists and users who are attacked, and take swift legal action against those responsible for these attacks. Protection must be provided to their families and adequate compensation must be paid in such cases. It is also the obligation of governments and information commissions to ensure that, whenever an RT I applicant is attacked, the information that was being sought by him or her is put in the public domain on and any pending appeal followed up on a priority basis. All persons demanding transparency in public interest who are attacked must be treated as human rights defenders. Instances of murders, physical attacks on RT I users must be investigated and the accused prosecuted under the law in a timely manner.

7. We demand that Parliament immediately enact an effective grievance redress law which provides a timebound, decentralized and comprehensive framework across the country, for addressing day-to-day complaints of people about the non-delivery of rights and entitlements against public authorities based on best practices developed in various States and Union Territories across the country that are implementing similar laws.

8. In order to move from transparency to accountability, the government must ensure that the rules of the Lokpal and Lokayuktas Act, are framed in a transparent manner and the Lokpal is operationalised to function in an independent and empowered manner to tackle corruption. We also call upon our elected representatives in Parliament to enact all pending anti-corruption Bills in order to make India compliant with the provisions of the United Nations Convention against Corruption (UNCAC).

9. We are deeply concerned about the increasing influence of the corporate sector over governments in decision making processes relating to developmental issues. All public authorities must take immediate steps to ensure transparency in the functioning of private entities that utilise or control public resources or public assets or provide public services. Information about all public-private-partnership projects (PPPs) must be accessible under the RT I Act at every stage of the project. Explanations about cost inflation of PPP projects must be disclosed proactively in terms of section 4(1)(c) of the RT I Act. Further, the government must frame appropriate guidelines and rules to ensure a practical framework for accessing information about the private sector bodies u/s. 2(f) of the RT I Act.

[Out of 21 items, in the Declaration, 9 are reported herein above, balance will be reported in the next month’s article.]

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Company Law

1. Formation of High Level Committee For Corporate Social Responsibility:
The
Ministry of Corporate Affairs has vide General Circular No 1/2015 dated
3rd February 2015 constituted a High Level Committee to suggest
Measures for improved monitoring and implementation of Corporate Social
responsibility under Shri Anil Baijal.

2. Extension of Time for Filing Form for Appointment of Cost Auditor

The
Ministry of Corporate Affairs has vide General Circular no 2/2015 dated
11th February 2015 extended the time for filing of Notice of
Appointment of the Cost Auditor in Form CRA 2 without late fee till 31st
March 2015.

3. Companies (Indian Accounting Standards) Rules 2015:

The
Ministry of Corporate Affairs has vide Notification dated 16th February
2015 notified that Companies ( Indian Accounting Standards ) Rules 2015
which shall come into force by 1st April 2015 and will be applicable
for Companies specified therein for the year ending 31.03.2016.

4. Companies (Removal of Difficulties) Order, 2015 :

The Ministry of Corporate Affairs has passed the Companies (Removal of Difficulties) Order 2015 on 13th February 2015.

1 Section 2(85) which provides for the definition of “small Company” shall now read”

‘‘small company’’ means a company, other than a public company,—
(i)
paid-up share capital of which does not exceed fifty lakh rupees or
such higher amount as may be prescribed which shall not be more than
five crore rupees; and
(ii) turnover of which as per its last profit
and loss account does not exceed two crore rupees or such higher amount
as may be prescribed which shall not be more than twenty crore rupees:
Provided that nothing in this clause shall apply to— (A) a holding
company or a subsidiary company; (B) a company registered under section
8; or (C) a company or body corporate governed by any Special Act;

2
Section 186 which pertains to Loan and Invest ment by Company, the
following is to be added in sub section (11) in clause (b), after item
(iii):

“(iv) made by a banking company or an insurance company
or a housing finance company, making acquisition of securities in the
ordinary course of its business.

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Company Law

1. Amendment to Schedule VII of the Companies Act, 2013 pertaining to Activities to be undertaken under Corporate Social Responsibility.

The Ministry of Corporate affairs has vide Notification dated 24th October 2014 made the following amendment to the said Schedule:

(i) In item (i) after the words “and sanitation” the words “including contribution to the Swach Bharat Kosh set up by the Central Government for the promotion of sanitation” is inserted
(ii) In item (iv) after the words ”and water” the words including contribution to the Clean Ganga Fund set up by the Central Govt. for the rejuvenation of river Ganga “ is inserted.

2. Amendment to Companies ( Accounts) Rules 2014

The Ministry of Corporate Affairs has on 14th October 2014 issued a notification to amend the Companies (Accounts) Rules 2014, whereby:

The following proviso is inserted after the existing proviso ” Provided further that nothing in this rule shall apply in respect of the preparation of Consolidated Financial statement by an wholly-owned subsidiary, other than a wholly owned subsidiary whose immediate parent is a Company incorporated outside India.

Provided also that nothing contained in this rule shall, subject to any other law or regulation, apply for the financial year commencing from the 1st day of April 2014 and ending on the 31st March 2015, in case of a company which does not have a subsidiary or subsidiaries but has one or more associate companies or joint ventures or both, for the consolidation of financial statement in respect of associate companies or joint ventures or both, as the case may be.”

3. Clarification on matters relating to the Companies ( Cost Records and Audit ) Rules 2014.

The Ministry of Corporate Affairs has vide General Circular No. 42/2014 dated 12th November 2014 made clarification about Rules 5(1) and 6(2) of the Companies (Cost records and Audit) Rules 2014 pertaining to the maintenance of cost records and filing of the notice of appointment of Cost Auditor in Form CRA-2 since there has been a delay in the availability of the said form. The date of filing of the CRA-2 without penalty/late fee has been extended to 31st January 2015. Further, it is clarified that Companies that have filed the Form 23C for the year 2014-15, need not file the fresh CRA 2 for the financial year 2014-15.

4. Issue of Foreign Currency Convertible Bonds (FCCBs and Foreign Currency Bonds (FCBs) – Clarifications regarding applicability of provisions of Chapter III of the Companies Act, 2013

The Ministry of Corporate Affairs has issued clarifications vide Circular No. 43/2014 dated 13th November,2e 2014, for applicability of provisions of Chapter III of the Companies Act, 2013 (Act) to the issue of Foreign Currency Convertible Bonds (FCCBs) and Foreign Currency Bonds (FCBs) by Indian companies exclusively to persons resident outside India in accordance with applicable sectoral regulatory provisions, in consultation with Ministry of Finance and SEBI.

The issue of FCCBs and FCBs by companies is regulated by the Ministry of Finance’s regulations contained in Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipts Mechanism) Scheme, 1993 (Scheme) and Reserve Bank of India through its various directions/regulations. It is, accordingly, clarified that unless otherwise provided in the said Scheme or the directions/regulations issued by Reserve Bank of lndia, provisions of Chapter III of the Act shall not apply to an issue of a FCCB or FCB made exclusively to persons resident outside India in accordance with the above mentioned regulations.

5. Extension for Company Law Settlement Scheme 2014

The Ministry of Corporate Affairs has issued clarifications vide General Circular No. 44/2014, Dated: 14.11.2014, that it has further extended the COMPANY LAW SETTLEMENT SCHEME, 2014 (CLSS-2014) upto 31st December, 2014.

The Ministry has vide General Circular No. 41/2014, issued clarification u/s. 164(2) of the Companies Act 2013. It has clarified that disqualification of Directors pursuant to Clause 164(2) (a) of the Companies Act, 2013 will be applicable for only prospective defaults in case of Companies who have filed Balance Sheets and Annual Returns on or after 01.04.2014 but before the CLSS -2014 came into force i.e., 15.08.2014

6. Extension of time for holding Annual General Meeting (AGM) u/s. 96(1) of the Companies Act, 2013 – Companies registered in State of Jammu and Kashmir.

The Ministry of Corporate Affairs has issued clarifications vide Circular No. 45/2014 dated 18th November 2014, that in view of the exceptional circumstances, advised the Registrar of Companies Jammu & Kashmir to exercise the powers conferred on him under third proviso to section 96(1) of Companies Act 2013 to grant extension of time upto 31st December 2014 to those companies registered in the state of Jammu and Kashmir who could not hold their AGM’s (other than the first AGM0 within the stipulated time.

7. Right of persons other than retiring directors to stand for directorship – Refund of deposit u/s. 160 of the Companies Act, 2013 in certain cases.

The Ministry of Corporate Affairs has vide General Circular No. 38/2014, dated 14th October 2014 issued the clarification that for Companies registered u/s. 8 of the Companies Act, 2013 (corresponding to section 25 of Companies Act, 1956), the manner in which the amount of deposit of Rs. 1 lakh received by them under sub-section (1) of section 160 of the Companies Act, 2013 (Act) is to be handled if the depositor fails to secure more than 25 % of the total valid votes. Since the law is silent in the matter, the Board of directors of a section 8 company is to decide as to whether the deposit made by or on behalf of the person failing to secure more than 25 % of the valid votes is to be forfeited or refunded

8. Amendment to the Companies( Audit and Auditors) Rules, 2014

The Ministry of Corporate Affairs has vide Notification dated 14th October 2014 amended the Companies (Audit and Auditors) Rules, 2014, by inserting after Rule 10, the following

“10A. For the purposes of Clause (i) of sub-section (3) of section 143, for the financial years commencing on or after 1st April, 2015, the report of the auditor shall state about existence of adequate internal financial controls system and its operating effectiveness: Provided that auditor of a company may voluntarily include the statement referred to in this rule for the financial year commencing on or after 1st April, 2014 and ending on or before 31st March, 2015.”

9. Clarification on matters relating to Consolidated Financial Statement.
The Ministry of Corporate Affairs has vide General Circular No. 39/2014 dated 14th October 2014 issued clarification on matters relating to manner of presentation of notes in Consolidated Financial Statements to be prepared under Schedule III to the Companies Act, 2013 (Act). It is clarified that Schedule III to the Act read with the applicable Accounting Standards does not envisage that a company while preparing its CFS merely repeats the disclosures made by it under stand-alone accounts being consolidated. In the CFS, the company would need to give all disclosures relevant for CFS only.

10. Change of Forms

E-form DIR-3C, replacing e-form DIN-3 has been introduced by MCA for filing. This form is for intimating DIN of Directors to ROCs. Some of the companies were facing issues in filing of the forms due to non-availability of signatory details of the Directors in MCA portal. In this regard, Companies which do not have any of their Directors/Signatory details registered in the MCA21 system and who are desirous of filing DIR-3 Form are advised to get atleast one authorised signatory registered by contacting the concerned Registrar of Companies. ROCs have been requested by the MCA to allow entry of details from their offices also.

b) Form ADT-1 (Information to the Registrar by Company for appointment of Auditor, erstwhile Form 23B) is available for filing w.e.f 20th Oct 2014. ADT-1 should not be filed as attachment to Form GNL-2.

11. Amendment to Company Law board (Fees on Applications and Petitions) Rules, 1991

In exercise of the powers conferred by section 642 read with sub-section (2) of section 637A of the Companies Act, 1956 (1 of 1956) and the removal of difficulty Orders issued by the Central Government u/s. 470 of the Companies Act, 2013, the Central Government has vide notifica- tion dated 3rd November 2014 amended the Company Law Board (Fees on Applications and Petitions) Rules, 1991 whereby in the Company Law Board (Fees on Applications and Petitions) Rules, 1991, in the Schedule, after serial number 33 the following shall be inserted, namely:

2(41) of the

Companies Act, 2013

Allowing
any period other than April to March as financial year.

5,000

58 and 59 of the

Companies Act, 2013

73(4) of the

Companies Act, 2013 read with
section 76

Rectification of register
of

members

500

74(2) of the

Companies Act, 2013

Directing
the company to pay the sum due or for any loss or damage incurred as a result
of such non-payment.

100

74(2) of the

Companies Act, 2013

Allow
further time as considered reasonable to the company to repay the deposit.

5,000

12. Companies (Central government’s) general Rules and Forms Amendment Rules, 2014

The Ministry of Corporate Affairs has vide Notification dated 7th November, 2014 made an amendment to the Companies (Central Government’s) General Rules and cations and Petitions) Rules, 1991, in the Schedule, after serial number 33 the following shall be inserted, namely:

Forms, 1956, whereby in Rule 12A, for the brackets and words “(Accounts) in the Department of Company Affairs”, the words “in the Ministry of Corporate Affairs” are substituted.

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PART C: Information on & Around

Compensation of Rs. 5 lakh:
The Maharashtra State Information Commission (SCIC) has awarded a compensation of a whopping Rs. 5 lakh to a right to information applicant. The compensation is to be paid by Maharashtra State Electricity Distribution Company Limited (MSEDCL) to Ambernath resident, Nitin Desai for the harassment meted out to him while providing information to him. The amount is the highest ever compensation given to an individual in the state as of now.

Earlier, a compensation of Rs. 1 lakh was given to a charitable trust by state chief information commission. In 2013, it became the highest ever compensation to be given till date. The Rs. 5 lakh compensation order was delivered on 30th October by the state information commissioner (konkan beach), Thanksi Thekkekara. The compensation was awarded after the applicant was first denied information and then given misleading information.

Desai had sought information on the transformer installed on his land. Around 300 sq. ft. of land was taken up to install the transformer and it could not be used. Desai sought information about the permission. The information was sought in 2012. However, MSEDCL’s public information officer (PIO) did not provide any information.

During the hearing, the PIO stated that verbal permission was taken from the applicant before using the land. The commissioner stated, as per rules, provision for verbal permission did not exist at all. During the hearing, a show cause notice was served on the PIO asking why a compensation of Rs. 20 lakh should not be provided to the applicant. During the hearing, the commission was of the view that Rs. 5 lakh compensation should be provided by public authority from its expenses and a report of the same should be given to the commission by 1st December, 2014. A fine of Rs. 25, 000 was also imposed on the PIO.

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PART A: Decision Of CIC

Section 5(4) of the RTI Act- Denial of Information:

[Shri Prithvi M. vs. ICAI, File No. CIC/SS/A/2013/001875/ KY, dated on 27.08.2014]

Decision:
“It would be seen here that the appellant, vide his RTI Application dated 08.02.2013, sought information from the respondents on three issues as contained therein. Respondents vide their response dated 08.03.2013, allegedly provided the required information to the appellant on all issues. Being aggrieved by the aforesaid response, FA was filed by the appellant on 26.03.2013 before the FAA, who vide order dated 25.04.2013, upheld the decision of CPIO. Hence, a Second Appeal before this Commission.

It is pertinent to mention here that the CPIO, vide his response dated 08.03.2013, provided the required information to the appellant against issue no. 1 only. Further, learned FAA, vide his order dated 25.04.2013, disposed of the FA by upholding the views of CPIO. However, it is to be seen here that required information against issues no. 2 & 3 were not provided on the ground of non-availability of the record in respondent’s office.

On being queried by the Commission, as to why the required information was not provided to the appellant against issues no. 2 & 3. On this very aspect, it is submitted by Smt. Seema Gerotra, Deputy Director & PIO, that the records are not available in PIO’s office. However, the relevant information pertaining to issues no. 2 & 3, is available in the office of CBDT.

In view of this, it is clear that the information sought by the appellant, against issue no. 2 & 3, is in existence in the Public Authority of her sister’s Branch i.e. CBDT. For this, PIO of ICAI could have easily invoked section 5(4) of the RTI Act 2005 for obtaining the required information. However, it could not be done by the PIO concerned for reasons best known to her.

The Commission heard the submissions made by respondents at length. The Commission also perused the case-file thoroughly; especially, nature of issues raised by the appellant in his RTI application dated 08.02.2013, respondent’s response dated 08.03.2013, FAA’s order dated 25.04.2013 and also the grounds of memorandum of second appeal.

By virtue of position above and in the circumstances of the case, the Commission is of the considered view that the respondents have failed to provide the required information to the appellant, even after lapse of eighteen months period. Thus, the respondents have, deliberately, defeated the very purpose of the RTI Act 2005 for which it was legislated by Parliament of India. As such, the Commission feels that appellant’s second appeal deserves to be allowed against issues no. 2 & 3 of the RTI application dated 08.02.2013. Therefore, it is allowed accordingly.

In view of the above, the respondents are hereby directed to provide the complete and categorical information, against issue no. 2 & 3 only, to the appellant, within 30 days from the date of receipt of this order under intimation to this Commission. If need be, Section 5(4) of the RTI Act 2005 be also invoked in the matter”.

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PART B: RTI Act, 2005

PEOPLE’S MONITORING OF THE RTI REGIME IN INDIA 2011-13:

In the last issue of BCAJ I had noted as under:

P.S. RTI Assessment and Advisory Group (RAAG) and Samya Center for Equity studies (SAMYA) have published in October 2014 the work titled “PEOPLE’S MONITORING OF THE RTI REGIME IN INDIA: 2011-13 running into 177 pages. Next issue, we will summarise the same. Look forward to it. Briefly looking into the contents of compilation, running into 177 pages of 11 chapters & 10 annexures, I plan to serialise it and cover 1 or 2 chapters in each issue.

This study is part of an ongoing series of studies on various aspects of the implementation of the RTI regime in India. The current study covers the period 2011-13.

Hereunder is the summary of the KEY FINDINGS and RECOMMENDATIONS before I summarise the chapters.

A. Improving awareness: There is poor awareness about the RTI Act, worse in rural areas than in urban areas. In only 36% of the rural focus group discussions (FGDs) and 38% of urban FGDs, was there even one participant who had heard of the RTI Act in the state headquarters, and in Delhi, 61% of the respondents interviewed through street corner interviews said that they had heard about the RTI Act.

B. Gender concerns: The participation of women in the RTI process, especially as applicants, has been minimal, with a national average of 8%. Many reasons can be attributed for this gender imbalance, but there is no scientific understanding of why so few women file RTI applications. If RTI means of empowerment, then there should be a special focus on ensuring that women are aware of the RTI Act and willing and able to use it.

C. The rural-urban divide: Only 14% of the applicants were from rural areas, even though over 70% of India’s population lives in rural areas. Though the sample might have a bias in favour of urban areas, even after adjusting for such a bias, the proportion is too small. Awareness levels about the RTI also seem low in rural areas.

D. Grievance redress mechanism: 80% of respondents in rural FGDs, and 95% in urban FGDs, said that they wanted to use the RTI Act in order to seek redress of their grievances. Analysis of RTI applications showed that at least 16% of the applicants were seeking information that was aimed at getting action on a complaint, getting a response from a public authority, or getting redress for a grievance.

E. Ineffectual first appellate process: Except for first appeals filed with the central government or Delhi government, there is less than 4% chance of getting any information by filing a first appeal.

F. Threats to applicants: Applicants, especially from the weaker segments of society, are often intimidated, threatened and even physically attacked when they go to submit an RTI application, or as a consequence of their submitting such an application.

G. Reducing the need to file RTI applications: Certain public authorities, especially those with extensive public dealing (like municipalities, land and building departments, police departments, etc.) receive a disproportionate share of RTI applications compared to other public authorities. In some cases, there is resentment among PIOs as they have to deal with a large number of RTI applications in addition to their normal work.

H. Proactive disclosure: Despite a very strong provision for proactive (suo motu) disclosure u/s. 4 of the RTI Act, there is poor compliance by public authorities. This forces applicants to file applications for information that should be available to them proactively, and consequently creates extra work for themselves, for the concerned public authorities, and for information commissions. 65% of the PA premises inspected did not have a board with the required proactive disclosures and 59% did not have any publications or other material available in their office which the public could inspect in order to access the information that should be proactively available.

I. Record Management: One major constraint faced by PIOs in providing information in a timely manner is the poor state of record management in most public authorities.

J. Training of PIOs: Nearly 45% of the PIOs have not received any training on the RTI Act. In fact, the PIOs interviewed identified lack of training as their number one constraint. A much larger proportion of non-PIO civil servants, who have to provide information to the PIOs or function as first appellate authorities, have not been oriented and trained towards facilitating the right to information.

K. Delays and pendency: There are huge and growing delays in the disposal of cases in many of the information commissions, with pendency of cases growing every month. At the current levels of pendency and rate of disposal, an appeal filed today with the Madhya Pradesh SIC would be taken up for consideration only after 6 years, while the West Bengal SIC would come to it after nearly 17 years! The main reasons behind the delays seem to be the paucity of commissioners in some of the commissions and the low productivity of some of the other commissioners, mainly due to inadequate support. The additional fact that there is no legally prescribed time limit for disposing second appeals not only allows ICs to be indifferent about delays but also prevents appellants from approaching the high court.

L. Enforcing orders: Often, orders of information commissions are not heeded to by the concerned public authority and even penalties that are imposed are not recovered. Many commissions do not have workable methods of monitoring whether their orders have been complied with; leave alone for ensuring that they are complied with.

M. Imposing penalties: A very small proportion of the penalties imposable under the RTI Act (less than 3.7% on the basis of our current estimate) are actually imposed by commissions. Though further research needs to be done on this aspect, preliminary data suggests that there is a correlation between the number of penalties imposed and both the willingness of PIOs to make information available, and the number of appeals and complaints that land up with information commissions.

N. Practicing transparency: Unfortunately, many of the information commissions do not themselves follow the requirements of section 4 of the RTI act. Most of their websites are outdated with very sparse details and much of the required information missing.

O. Independence of commissions: Many information commissioners feel that their dependence on the government for budgets, sanctions and staff seriously undermines their independence and autonomy, and inhabits their functioning.

P. Composition of commissions: The composition of information commissions across the country has a bias towards retired government servants. It is desirable to have a more balanced composition so that diverse expertise is represented in the commission.

Q. Rationalising rules: All states and union territory governments (a total of 34), all the high courts (23) and legislative assemblies (29), the central government, the Supreme Court and both houses of Parliament have a right to make their own rules. This can result in 90 different sets of rules in the country. In addition, the 28 information commissions also have their own procedures, as formulated by the appropriate governments, resulting in a total of 118 sets of rules relating to the RTI in India! Consequently, an applicant is confronted with the often insurmountable problem of first finding out the relevant rules and then attempting to comply with the application form, identity proof, or mode of fee payment requirement, which differ from state to state and are often virtually impossible to comply with.

R. Monitoring and advisory body: The mechanisms for monitoring the implantation of the RTI Act, and for receiving and assimilating feedback, are almost non- existent.

S. Information publication scheme: There is an Information Publication Scheme provided for in the statute in Australia and later adopted by UK too. In this scheme the Information Commission asks each agency to publish its own information on its functioning. The Commission guides the agency and approves the publication scheme.

T. Political parties and the RTI: Nepal has included the functioning of a political party and only NGO with full/part government funding in the agencies whose information can be accessed.

U. Selecting information commissioners: Process of appointment of information commissioners is comparatively more participatory and open in Canada and Scotland. Both countries go through a series of approvals by the Parliament of candidates who are com- petitively short-listed. The transparent process helps in legitimising the position to a much greater degree than appointments that are seen to come through de- liberations of the Prime Minister or government alone.

V. Implementing IC orders: The orders of the Information Commission are binding on the agency in UK. If necessary, it can issue what are known as enforcement notices which, if not implanted, are treated as contempt of court for the purpose of punishment.

W. Accountability to Parliament: Information Commissions in Canada and UK submit detailed annual reports of their activities to the Parliament. This makes them accountable to the Parliament and also helps in making their activities transparent and available for public scrutiny.

Above are 23 Key Findings. On each finding, the publica- tion gives their recommendations, which are not reproduced here. If any reader desires to have them, a soft copy would be forwarded to him/her.

Report of The Committee To evolve Model Format for RTI Replies:

The Committee constituted vide DoPT O/M/No. 10/1/2013-IR dated 16th October, 2014 to evolve a model format for giving information under the RTI Act, held its meeting on 29th October, 2014 at 11:30 a.m. After ex- amining in detail the provisions of the RTI Act, the ex- isting generally followed by the CPIOs in replying to RTI applications, the Committee has made the following observations:

X. There is neither any provision in the RTI Act or RTI Rules for a model/standard format of RTI applica- tion nor any provision for a model/standard format for reply to the RTI applications.

II. Presently, neither any standard practice nor any standard format is being used by the CPIOs in reply to the RTI applications.

In view of the above observations, the Committee has made the following recommendations:

a) There should not be a model/standard format for reply to the RTI application, as there is no such provision in the RTI Act or the RTI rules.

b) Moreover, keeping in view that there is no standard format for RTI applications, there could not be a standard format for their reply.

c) However, the following points can be uniformly ad- opted by the CPIOs while replying to the RTI applications:

i. The name, designation, official telephone no. and email id of the CPIOs should be clearly mentioned.

ii. In case the information requested for is denied, rea- sons for denial quoting the relevant sections of the RTI Act should be clearly mentioned.

iii. In case the information pertains to other public author- ity and the application is transferred u/s. 6(3) of the RTI Act, details of the public authority to whom the ap- plication is transferred should be given.

iv. In the concluding Para of the reply, it should be clearly mentioned that the First appellate Authority will reply within 30 days of receipt of reply of CPIO.

v. The name, designation, address, official telephone no. and e-mail id of the First Appellate Authority should also be clearly mentioned.

vi. Wherever the applicant has requested for certified copies of the documents or records, the CPIO should certify the documents or records by putting a seal of his name, designation and signing with date. Above the seal, the remarks that “documents/records pro- vided under the RTI Act” should be endorsed.

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Part C Information on & Around

Education Cess:
I had filed an RTI application on the subject of Education cess. Surprisingly, I received two replies – one: CPIO and under secretary; two: CPIO and Sr. Account Officer (LCS). Both give different figures

I am following it by writing to both of them to find out how the figures differ.

RTI quarrel between Arvind Kejriwal and Prashant Bhushan/ Yogendra Yadav:
One of the five conditions put forth by Prashant Bhushan and Yogendra Yadav before Arvind Kejriwal was the adoption of RTI. While Kejriwal said he had agreed to this demand, questions have been raised about why it had to be made at all as AAP has always been a vociferous advocate for all political parties to be brought under the ambit of the RTI Act.

Kejriwal, who made a mark as an RTI Activist before floating the party, asked Yadav why he made this demand as he had failed to implement it in Haryana for over a year while he had been the state convener.

“At this point it is also imperative for the party to do some soul searching. It cannot be denied that after making such a big deal about the CIC order in 2013, which said the six major national parties should be brought under RTI, AAP failed to implement it on itself,” said a party member.

Heart Attacks:
Data given out by BMC in response to an RTI query showed that 29,393 deaths due to heart attacks were registered in the city between March 2014 and March 2015. In the corresponding period of the previous year, 24, 603 Mumbaikars had succumbed to heart attacks.

The seriousness of the problem can be gauged from the fact that heart attacks account for a third of annual deaths in the city. For instance, 31% of the 93, 254 deaths recorded in Mumbai in 2014-15 were due to heart attacks. The other big killers are TB (19 each day) and cancer (18 a day).

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Part B RTI Act, 2005

PMO not disclosing foreign travel expenses: CIC panel

New Delhi, May 24 (Agencies): The PMO not disclosing information about expenses incurred on foreign visits of the Prime Minister notwithstanding, a CIC-constituted committee has recommended not only putting out such details proactively by all ministries but regular updating as well.

The committee of former Chief Information Commissioner A N Tiwari and Information Commissioner M. N. Ansari, constituted by the CIC gave its report on “Transparency Audit: Towards An Open and Accountable Government”.

It referred to the circular issued by the ministry dated September 11, 2012 where it asked all departments to proactively disclose expenses incurred on the foreign and domestic visits of their respective ministers.

“These disclosures should be updated once every quarter”, the committee said in its report asking the government to also disclose other details such as places visited and the institutions/individual interacted, period, number and the names of the members in the official delegation, mode of conveyance, travel expenses and source of funding and outcome of the visit.

It said a democratic government keen on empowering the people and delivering to them goods and services speedily and efficiently, cannot allow walls of secrecy to separate them from the very people they serve.

“Transparency brings the government closer to its people –a closeness which underpins good governance. In spite of repeated directions to the public authorities, the results on account of voluntary disclosures have been below par,” the committee observed.

It said quite large numbers of wholly avoidable RTI petitions by citizens for information, which should even otherwise be openly available, are still being filed.

“One cardinal aspect of the RTI i. e. Timely furnishing of quality information to the citizen, became difficult to be adhered to, while the cost for disclosing information, at well levels, kept increasing,” it said.

The Prime Minister’s Office has been refusing to disclose information related to expenses incurred on the abroad visits of Prime Minister Narendra Modi citing various excuses such as the records sought for being “vague”.

These refusals to part with the information are being made even though Central Information Commission, in an order,, had directed the Cabinet Secretariat to make public expenses incurred on the travel of ministers and VVIPs because of large public interest in the matter.

“We have been noticing a lot of public interest in the visit of such high dignitaries as the President, the Vice-President and the Prime Minister of India. Quite often, one comes across RTI applications seeking similar information about these visits,” Chief Information Commissioner Satyananda Mishra had said.

Following the orders of the CIC, the then Prime Minister Manmohan Singh had started the practice of making public on the official website details of expenses incurred on his visits as well as on the visits undertaken by the Ministers.

Even DoPT had issued the circular asking all ministries to proactively disclose these details.

Complying with the mandatory provisions of sou-motu disclosure under the transparency law, the PMO under Manmohan Singh has placed in public that a sum of over Rs. 642 crore was incurred on his air travels abroad between 2004 and 2013.

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Part A Decision of High Court

Disclosure of Income Tax Returns

Issue before the Hon. Court was whether income-tax returns of Ajit Pawar can be disclosed to the Petitioner, Mr. Shailesh Gandhi.

Mr. Gandhi’s attempt to get such IT return and balance sheets had failed before PIO, FAA & Central Information Commission (CIC), even though he pleaded for it stating:

“There is a larger public interest in disclosing this information to compare his affidavit given to the Election with his Income Tax returns”.

CIC referred to the judgement of the Apex court in Girish Ramchandra Deshpande’s case (see “Right o Information – a route to good Governance” published by PCGT and BCAS Foundation, Page 241) (2013, 1 Supreme Court Cases 212) holding that the details disclosed by a person in his Income Tax Returns is personal information which has been exempted from disclosure under clause (j) of section 8(1) of the said Act, unless it involved a larger public interest and the CPIO and or State Public Information Officer or the Appellate Authority is satisfied that the larger public interest justifies the disclosure of such information. The Central Information Commissioner had observed that in the present Appeal the Petitioner has not been able to prove any larger public interest with corroborative evidence and therefore upheld the decisions of the Central Public Information Officer and the First Appellate Authority and disposed of the said Second Appeal.

Mr. Gandhi’s counsel made numerous submissions to justify as to why such disclosure is not to be denied. The same included:

a) That the Judgement in Girish Ramchandra Deshpande’s case (supra) does not lay down any preposition of law and therefore cannot be applied.

b) That the disclosure of the information sought for by the Applicant would be in larger public interest which outweighs the breach of privacy if any of the Respondent No. 3.

c) That a Division Bench of this court in the case of Surup Singh Naik vs. State of Maharashtra had dealt with the proviso to Section 8(1) (j) and has held in the said case that the information which cannot be denied to the Parliament or the State Legislature cannot be denied to the citizen.

d) That the disclosure of the information is in larger public interest has been demonstrated by the Petitioner by making out a case in the Appeal namely that the same would amount to reducing corruption and increasing the faith in the elected representatives.

e) That it has been held in the matter of PUCL vs. Union of India as also in the matter of R. Rajgopal alias R. R. Gopal & Anr. vs. State of T. N. & Anr. and in case of ADR vs. PUCL that the public interest element involved in divulging information relating to public servants, MP’s and Ministers outweighs the right to privacy.

“Since the right to privacy has been recognized as a fundamental right to which a citizen is entitled to, therefore unless the condition mentioned in Section 8(1) (j) is justified, the information cannot be provided. Hence the burden on the Applicant is much more onerous than may be in a routine case. As indicated in the earlier part of this judgement the reason mentioned in the original application as supplemented by the grounds in the First Appeal hardly make out a case of public interest. Hence in the instant case, the said burden cannot said to have been discharged by the Petitioner. Hence, the finding of the First Appellate Authority as well as the CIC that the Petitioner has not made out any case for disclosure of the information on the ground of public interest cannot be faulted with.”

The Petitioner had sought to place reliance on the proviso to section 8(1) (j) of the said Act and had sought to contend that the authorities below have not considered the application of the Petitioner on the touchstone of the said Proviso.

The Court noted:
“In my view therefore, the proviso cannot be sought to be interpreted in the manner which the Learned Counsel for the Petitioner seeks to do. There is also a basic fallacy in the contention raised on behalf of the Petitioner. The Petitioner wants to proceed on the hypothesis that the information sought by him cannot be denied to the Parliament. In so far as the Parliament is concerned, the Parliament has its own rules of business and it therefore cannot be presumed that the information in respect of Income Tax Returns of a Member of Legislature would be sought. The same would undoubtedly be in the discretion of the Honorable Speaker. In the said context, it is also relevant to refer to section 75A of the Representation of the People Act under which every elected candidate for a House of Parliament has to furnish information relating to the movable and immovable property, his liabilities to any public financial institution, his liabilities to the Central Government or the State Government to the Chairman of the Council of States or the Speaker of the House of the People i.e. Loksabha or the Chairman of the Council of the State i.e. Rajyasabha. Hence there are adequate provisions in the Representation of the People Act under which the information sought is to be provided to the Parliament to the extent mentioned in the said provisions and therefore reliance cannot be placed on the proviso to section 8(1) (j) to contend that the exemption provided in the said section would not operate.”

For the reasons afore stated, the court held that the impugned order dated 15-5-2013 passed by the Central Information Commissioner, confirming the orders passed by the First Appellate Authority and the CPIO did not suffer from any illegality or infirmity.

Mr. Shailesh Gandhi’s reaction to above judgement:

” Key points which I feel the judgement has not addressed:

1. There is a proviso to the exemption in section 8(1) (j) which states: “Provided that the information, which cannot be denied to the Parliament or a State Legislature, shall not be denied to any person.” This proviso was accepted by a division bench of Bombay High Court in the Surup Singh Naik case where I had said that there is a perception that powerful people escape prison and spend their prison term in Hospital. The Court ordered the medical records should be given. In the Ajit Pawar case I had said: “There is a general belief that politicians and elected representatives are corrupt and amass wealth at the expense of the public. There is also a common belief that Income Tax authorities do not check that IT returns of those who are elected and their affidavits filed at the time of standing for elections. If this is true, citizens will act as monitors and help correct such practices. On the other hand if citizens’ apprehensions are not true, it would enhance the trust and respect for the elected representative, which is necessary for a healthy democracy. Besides it would also improve the Citizen’s trust in the Income Tax department.’ This has not been held to be in the larger public interest and the proviso has been treated as if it is irrelevant.

In the ADR-PUCL judgement, the Supreme Court has ordered that those who want to be public servants, – get elected, – must declare their wealth. If the affidavits match the IT returns what harm would come to them? The citizen’s right to know about his elected representative cannot become less after he has become a public servant.
2. In the Rajgopal judgement the Supreme Court has said that for matters of public record there can be no claim for privacy and the claim for privacy of a public servant is still lower.
3. Filing an ITR is a statutory duty and hence it is a public activity.
4. Since the ratio of the ADR-PUCL and Rajgopal judgement has not been dealt with in Girish Ramchandra Deshpande judgement, it is per incuriam.
5. The SC in Girish Deshpande judgement mentions section 8(1) (j) without the proviso.
6. I have given an explanation of the larger public interest and hence this would fulfill the conditions of the Deshpande order.
7. No reasoning has been given for the comments in the Deshpande order and it does not become precedent. It only says that the Court agrees with the CIC. The CIC order again refers to an earlier five member’s order in which the issue did not even concern a public servant.”

He further notes:

“I had felt that the Girish Ramchandra Deshpande judgement by the Supreme Court had constricted RTI by expanding the scope of Section 8(1) (j) far beyond the law. As expected it was rejected by the PIO, FAA and the CIC. I then approached Bombay High Court in a writ. I expected just a 5% chance of my contentions being accepted by the Court. The Court has dismissed my petition yesterday. I am thinking of challenging this decision before the Supreme Court.

The Girish Deshpande judgement is being used everywhere to deny most information regarding public servants which could expose wrongdoing, arbitrariness or corruption.

Yes, I feel the pain of not being able to reverse the Girish Ramchandra Deshpande judgement of the Supreme Court. I think the High Court has not given reasons for not accepting most of my contentions; they are just statements that it does not agree with me.”

[Shailesh Gandhi vs. CIC, CPIO and Shri Ajit Pawar: Writ Petition No. 8753 of 2013, judgement pronounced on 11.06.2015].

BCAJ Admin

Ethics and You

Procedure of Enquiry (Continued) – Part VI

Shrikrishna (S) —
Arjun, you are looking tired today. Actually, your deadline for
tax-returns is postponed to 31st August. Isn’t it?

Arjun (A) —Yes.

S — Then you should be relaxing. The CAs don’t take any tensions except at the11th hour!

A — Bhagawan, I am tired of these rains. It came after a long wait. And it is not stopping at all!.

S
— Ha!Ha!Ha! These are the blessings of Lord Varuna. You CAs are
expected to plan and phase out your work over the available period. But
you also accumulate and do it in only few days; And then complain of
pressure!

A — What you say is true. Anyway, you were to explain to me the final part of disciplinary proceedings.

S — Yes. Upto where we had come?

A
— A separate order is passed awarding the punishment. That is on a
fresh hearing given after the first report holding you guilty is issued.

S — Right! You are a brilliant ‘shishya’; and hence so dear to me.

A — Now tell me, once the order is received – say for one month’s suspension, do we have any remedy? Or it is final?

S — No, it is not final. You can prefer an appeal.

A — To the court?

S — There is an Appellate Authority constituted under your CA Act. It is presided over by a High Court judge.

A — Is he the single judge?

S — No, there are four other members. Two ex-Central Council Members and two Government nominees.

A — But how to go about it?

S
— There is a prescribed form. One has to pay a fee of Rs. 5,500/-.
Remember, it is to be submitted within 90 days from the date of receipt
of the order.

A — How do they decide?

S — The
proceedings are like that of your Income Tax Appellate Tribunal. Just as
in ITAT, even the IT Department is represented by a counsel, and here
also, there is a counsel from the side of Disciplinary Directorate.

A — Oh, my God! And what do they argue?

S
— See, the Respondent will try to plead ‘Not guilty’ or to lessen the
punishment. On the other hand, the DD will try to defend the order of
the BOD or DC.

A — That is alright. But can DD also prefer an appeal?

S — Yes. Section 22G states that the member aggrieved by the order of BOD/DC; or the DD can prefer an appeal.

A — And what about the complainant?

S — The section is silent about it. It is like prosecution of a criminal matter where the Government pursues the matter.

A — And where is the Appellate Authority located?

S
— Strictly, it is located at Delhi – in your ICAI’s Headquarters. But
occasionally, the hearings are held in cities like Mumbai.

A — And if AA’s verdict goes against us, what to do? Can we approach the High Court?

S — The CA Act does not contain any provision permitting you to approach the High Court; unlike in the Incometax Act.

A — That means, the AA is the end of it!

S — In a sense, yes. But you can always go in for a writ if you are so aggrieved.

A — OK. Now tell me, once such order is passed, the punishment is immediately effective?

S
— Not necessarily. Once the order of BOD/DC is received or the order of
AA is received, the DD after a few weeks may formally write to you
about reprimand or suspension.

A — And if it comes exactly around the time we sign maximum number of audits, then we are doomed!

S — Yes. And your name is published in your CA journal. That is a stigma.

A — After the suspension period is over, what is our status?

S
— You have to apply afresh for restoration of membership. And then your
seniority is lost. It is as if you were a new member. Back to square
one!

A — That means, it will matter in terms of getting bank audits, training articles and so on.

S
— But the real punishment is the mental agony and stress that you have
to carry from the date of receiving the complaint till the conclusion of
the proceedings.

A — But why do they disqualify us for bank and government audit even before we are held finally guilty? That is unjust.

S
— Actually, that is not your Council’s rule. It is the policy of C
& AG and RBI that they don’t want to allot audits to someone who is
held prima facie guilty.

A — Oh! And depriving of audit
assignments for so many years is also a punishment. I agree; that rather
than the prescribed punishments, the other consequences are much more
grave.

S — So, prevention is better than cure. Follow the code
scrupulously. Don’t resort to short-cuts, cultivate discipline and
professional habits.

A — He Bhagawan, please bless me so that I am not caught in this trap of disciplinary proceedings.

S — You are always Blessed, Arjun! Om shanti !!!!

Note:
This dialogue is based on the procedural rules contained in Chartered
Accountants (Procedure of Investigations of Professional and other
misconduct and conduct of cases) Rules, 2007 published in official
Gazette of India dated 28th February, 2007 (‘Enquiry Rules’).

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Ethics and u

(This is one more example of alleged negligence or lack of due diligence)

Shrikrishna (S) — Yes, My dear Partha, what happened to those digital signatures misplaced in your office?

Arjun (A) — Oh Lord, you are Great and kind hearted. I realised that you were testing my devotion towards you, my Lord. I had very anxious moments; but thanks to your mercy, those small pen-drives were located in some working files! God saved me!

S — But then, did you take precautions that we discussed?

A — Of course, yes. Immediately, I obtained necessary letters from all clients who left their tokens with us. I returned most of them to the respective clients. I don’t want any more headache!

S — Good. But then, why are you again looking so tense?

A — Hey Bhagwan! It’s another true story that has frightened me.

S — What is that?

A — My friend is a company secretary. Earlier, he was in a corporate job; but now on his own. He is in deep trouble!

S — Why? What happened to him?

A — He had a client. A small private limited company. The promoters-directors were only a couple. Husband & wife.

S — It is very common. I have seen it in many CAs. But they are not aware that this may be a serious misconduct in terms of clause (11) of First Schedule.

A — Yes. We had discussed it once. But here, they were lay-persons; not CAs or CS’s. Otherwise, I know that it would amount to engaging in other business without seeking permission from the Council.

S — Ok. Then what next?

A — They inducted one more person as a director who promised them to bring some business from abroad.

S — Good. Then?

A — He remained a director for a couple of years; but nothing materialised as promised by him.

S — Then there must be unpleasantness.

A — Yes. The company spent a sizeable amount on exploring the potentials as advised by him. He was drawing a remuneration too!

S — Wasteful!

A — The company had engaged a company secretary as an adviser. He was not involved in the company’s activities on a day-to-day basis. One fine morning, the couple informed him that the third director had tendered his resignation.

S — As expected!

A — Yes. And the CS was asked to complete the formalities of ROC. He advised them that a board meeting should be held. Now that the only continuing directors were husband and wife – staying together (!) – he showed the meeting of the same date and uploaded form No.32 – recording the resignation of the third director.

S — Very normal. But in the so called Board meeting, was that third director invited?

A — No. According to the CS, there was no need. He had resigned and it was pointless calling him. It was a formality that the other directors accept his resignation. Relations were not smooth; but the reality was obvious that he did not contribute anything to the business.

S — You mean that the resignation was a natural consequence of the situation.

A — Exactly. But now that third director has turned around and says that he had not resigned! The signature on the letter is not his! He alleges that it was forged.

S — Oh! The CS had obviously not attempted to verify the signature.

A — True. In practice, we have to proceed in good faith. Everytime we cannot afford to be suspicious. We never consider it necessary to verify signatures of our clients – like a banker does.

S — So now, it is a lesson! But tell me, was the signature at least similar to that in the company’s records?

A — That’s the unfortunate part. There is a variation. But all this is revealed now. At that point of time, when a respectable business-couple produces a letter, and asks to complete the formalities, should the company secretary disbelieve them?

S — True. But this is ‘kaliyug’! Good faith has no place in today’s era. And, from a professional, expectations are more. It is perhaps the ‘professional scepticism’ that gives credibility to a professional’s work.

A — Agreed. Our CAs are also uploading company law forms. This is an eye-opener to all of us.

NOTE:
The above dialogue between Shri Krishna and Arjun is based on Clause (7) of Part I of Second Schedule which is reproduced below.

Clause (7) of Part I of Second Schedule states that a CA in practice shall be deemed to be guilty of professional misconduct, if he – “does not exercise due diligence, or is grossly negligent in the conduct of his professional duties”.

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PART C: Information on & Around

Information on Sheila Dikshit:
The CIC has directed the Delhi government to make public a 2008 Lokayukta order that indicted former chief minister Sheila Dikshit on charges of misuse of public funds. Lokayukta Manmohan Sarin’s order had charged Dikshit with using funds for publicity and printing photos on loan forms for Delhi Swarojgar Yojna. Sarin had sought then President Pratibha Patil’ permission to recover Rs. 11 crore for the misuse of funds, which was rejected. The CIC order came after activist S C Agarwal sought information on the issue.

Robert Vadra’s land deal in Haryana:
Gurgaon resident Dharamvir Yadav filed an RTI application in 2013, which revealed that separate building plans for both plots in May field Garden (N29 owned by Vadra and N30 by a private company) were approved in November 2010. But work on a single structure–the guesthouse– straddling both plots commenced in 2011. Yadav claims the building was completed by March 2014. After this, Satpal Thakran, another resident of the same township, filed an RT I query in May this year seeking more details on the plots, but these got stonewalled by authorities who cited Vadra’s request not to disclose details. The TO I is now in possession of correspondence between the Haryana Urban Development Authority, Municipal Corporation of Gurgaon and District Town Planner over Change of Land Use permissions and occupation certificates, which show how rules were bent at every stage.

The Times of India had reported on how RT I pleas to uncover details of a plot registered in the name of Vadra were stonewalled. ToI now has documents which prove that not only was a single structure built on two plots of land ( one owned by Vadra, the other private company), but also that a change of land permission from residential to commercial was sought only after the building was completed, both of which are in gross violation of the law.

Maharashtra State Police Transfer rules:
Under the state police transfer rules, officers cannot be transferred before they complete two years in one post unless under exceptional circumstances. But an RT I query shows that 147 of the 150 transfers this year, from January to September, were under “exceptional” circumstances. This was revealed following a query filed under RTI Act by former central information commissioner Shailesh Gandhi, who asked for information on the number of deputy superintendents of police and officers above being transferred before their tenure was over this year. The data provided showed that only three out of 150 transfers were according to the law.

The transfers have raised questions about political interference in state policing with senior officers often found queuing up at politicians’ offices to choose postings. Some of the “exceptional reasons” cited are health problems and the distance between home and work place.

The data provided by the state police headquarters under RTI Act shows that 33 officers were transferred in February and 91 in June, just two months after the Parliament elections. On 23rd August, more officers were shifted, and all fell under the “exceptional” category.

Papers on First chief CIC’s resignation:
The Central Information Commission, entrusted with monitoring of record-keeping in government bodies, has lost the records relating to the resignation of the first Chief Information Commissioner Wajahat Habibullah who headed the institution for nearly five years. In an RTI response, the transparency panel said the lost files related to Habibullah’s resignation are not readily traceable, raising questions about record-keeping in the CIC. “The concerned file containing the communication relating to then Chief Information Commissioner Wajahat Habibullah regarding his resignation are not readily traceable though efforts have been made. The information will be provided as an when available,” Sushil Kumar, Deputy Secretary at the CIC, said in response to RTI application filed by Commodore (retd) Lokesh Batra. Batra told PTI that around 20th October, 2009 Habibullah had resigned to join as Chief Information Commissioner of Jammu and Kashmir.

Ajit Pawar makes RTI application:
NCP leader Ajit Pawar made use of the Right to Information (RTI) Act to scrutinise a large number of files that former chief minister Prithviraj Chavan had cleared in just 15 days.

Pawar, who was Chavan’s deputy in the Congress-NCP government, said that he had already filed RTI queries over the files from the urban development department. “Files stuck for a long time were suddenly cleared in the past 15 days. What suddenly happened?” he said. “As an ordinary citizen, I have sought information about the decisions taken in the urban development department.” [Source – news items published in The Times of India]

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PART B: RTI Act, 2005

On 12-09-2014, RTI Foundation day, very interesting statistics are compiled by RTI Assessment & Analysis Group (RAAG) and National Concern for Peoples’ Right to Infor mation (NCPRI). Here under, I report some of them:

RTI Rules:
India has one Right to Information (RTI) Act but 118 separate sets of rules formulated independently by states, courts, information commissioners, Parliament and state assemblies that run a maze around the legislation.

The rules dictate varied fees, application format, number of words, type of identity proof required and mode of payment making the process of seeking information a complex one.

For instance, 34 states and union territories have prescribed application fee of Rs. 10. But cost of pursuing an RTI application could range between Rs. 50 to Rs. 100 excluding cost of information. Haryana charges Rs. 50 for all RTI applications while Arunachal Pradesh charges Rs. 50 for most applications but Rs. 500 for information related to bids, tenders or business contracts.

Only Andhra Pradesh has cut down on the fees—Rs. 10 for cities, free of cost for village level and Rs. 5 for subdistrict level. Sikkim charges Rs. 100 for both first and second appeal, while filing a first appeal in Madhya Pradesh costs Rs. 50 and a second appeal Rs. 100. While the central government has mandated Rs. 2 per photocopy, Chhatisgarh has limited the number to 50 pages while Arunachal charges Rs. 10.

To complicate things further, inspection of documents is allowed free of cost by some states for the first hour and then charges of Rs. 5 are levied in Tamil Nadu, Tripura, Sikkim and Uttarakhand. The cost of inspection of documents in Daman and Diu is Rs. 100 a day for a maximum of 3 hours and if the information sought is older by a decade or more, the public authority can charge an additional Rs. 25 an hour. States have also placed odd restrictions on the format of the application. In Karnataka, Bihar, Chhattisgarh and Maharashtra the length of the RTI application cannot exceed more than 150 words while the Centre has mandated a 500 word limit.

There are similar inconsistencies in rules related to proof of identity required by public authorities. While the RTI act does not mandate any proof of identity section 3 does say that only Indian citizens can use the law. This has led to states like Goa, Gujarat, Odisha, Sikkim insisting on identity proof of the applicant.

RTI users & where do they live:
Maharashtra Government’s notification:

On 17th October, the Maharashtra Government issued a notice directing all government departments not to part with information unless it is in “public interest.” “The notification violates the RTI Act and seems to be designed to promote corruption,”

(Author’s Note: Compare this with the judgement reported under part A in this issue. I believe that the notification is against the spirit of the RTI Act and is also illegal)

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Part C Information on & Around

Sushma Swaraj:
Documents procured under the RTI Act revealed
that the Shivraj Singh Chouhan government in Madhya Pradesh appointed
foreign minister Sushma Swaraj’s husband and daughter as government
lawyers.

“The government should make a clear policy for
appointment of counsels. It clearly reflects that the VIPs and their kin
are being benefited,” alleged Ajay Dubey of Transparency International,
which procured the documents.

Chargesheet in Mahatma’s killing:
The
Central Information Commission (CIC) has directed the home ministry to
make public the FIR and chargesheet filed by Delhi police on the
assassination of Mahatma Gandhi on 30th January, 1948.

The order
came after Odisha-based Hemanta Panda sought the information under the
RTI Act. Panda wanted a copy of the FIR and chargesheet among other
pieces of information including whether any autopsy was done as per law.
The ministry had forwarded the application to the National Archives of
India, director of Gandhi Smriti, where Gandhi spent his last days and
was assassinated. Gandhi Smriti and Darshan Samiti told him that “no
post mortem examination was performed as per the wishes of the family”.
Panda was also informed by Gandhi Smriti and Darshan Samiti that they
did not have any information related to the FIR and the subsequent
charge-sheet filed in relation to the assassination.

Lalit Modi Passport:
The
external affairs ministry has refused to answer an RTI application
containing seven questions about scandaltainted former IPL boss Lalit
Modi’s passport.

The first three questions included why External
Affairs Minister Sushma Swaraj did not advise Modi to apply for a
temporary travel document to the Indian High Commission in London; why
the minister did not insist on Modi’s return to India as a condition;
and who decided not to file an appeal in the Supreme Court against Delhi
High Court’s ruling setting aside cancellation of Modi’s passport and
whether the Enforcement Directorate (ED) at whose instance the passport
was cancelled, was consulted. Questions four to seven included a query
on whether the government has lodged any objections to UK for granting
residency permit to Modi; what steps the government has taken since the
issuance of fresh passport to him to enforce the ED summons; and the
government’s response to Modi’s “wild charge that his life will be in
danger if he returned to India.”

The RTI query, filed by one
Rayo from Haryana, was received by the ministry on 19th June when the
opposition was piling up pressure on Swaraj on the Lalitgate row. In its
26th June reply, the MEA said questions one to three do “not seem to
fall under the purview” of the RTI Act. About queries four to seven, the
ministry said that “no information is available with EAM’s office.”

The
External Affairs Ministry (EAM), however, said the application has been
“transferred” to its consular, passport and visa division as well as to
the finance and home ministries.

The EAM’s action drew stinging
criticism from the opposition, with the Congress calling it against the
“spirit” of RTI Act and the CPI (M) alleging the transparency law has
been “sabotaged” by the Modi government. “This is against the spirit of
the RTI ACT,” said senior Congress leader P. C. Chacko.

“In
fact, any private information need not be disclosed but there is a case
which is affecting even the security of the country also and person is
fugitive, who is an absconder, against whom there is an inquiry going
on…and when information is sought on that, it simply cannot be treated
as a private matter,” Chacko added.

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Part B RTI Act, 2005

Appeals against SIC orders:
The State Information Commission’s order has been upheld only in one out of the 84 appeals filed in the last decade by agencies whose documents were sought to be made public.

A query under the Right to Information (RTI ) Act has revealed that of the 84 appeals filed in the Bombay High Court and the Supreme Court between 2006 and so far in 2015, the SIC order was upheld only in one case.

RTI Activist Galgali had made the plea to find out what happens to orders once passed by the information chief for disclosure of documents. “Appeals against replies filed by the SIC have resulted in low success rate for the Commission in the last 10 years,” Galgali told ToI. Most matters went to the HC, while three are pending in the Supreme Court.

The agencies, which approached the Courts against SIC’s orders included the state home department, Mumbai University, Reliance Energy, BMC, and police department, said the activist.

Galgali had filed an RTI query with the Maharashtra State Information Commission seeking information about the cases in which agencies had gone to Court against orders seeking disclosure of documents or information. The SIC refused the information on the grounds that there was no such data available with it. The shocking reply prompted Galgali to file an appeal under RTI. Following his appeal, the SIC informed him that between 2006 and 2015, 84 cases went to Court and the SIC’s order was upheld only in one case. The other 83 either had the SIC order overturned or the matters are still pending.

Galgali said his query also revealed that in many cases, the SIC appeared not to take “much interest” in the court cases. So, the SIC’s orders were not properly defended.

Inspection of documents:
In a progressive move, Municipal Commissioner Ajoy Mehta has issued a circular on the implementation of the Right to Information Act that aims at reducing red tape in the civic body.

The circular points out that citizens applying for information under the RTI Act are often summoned by civic officials to inspect documents, even when they have not asked for an inspection or when the information they have asked for is not voluminous. The circular has discouraged the practice, and has asked public information officers (PIOs) to supply copies of documents after counting the number of pages requested and charging the applicant per page.

“In cases where the applicant has applied for inspection of the documents or the information he has requested is voluminous, an index of all the documents should be prepared before he is called for an inspection. Each page in the file must be numbered. Three dates & timings should be intimated to the applicant before he is called. If these dates are not convenient to the applicant, he should be asked to get in touch with the PIO” says the circular.

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Part A Decision of High Court

Supreme Court on disclosure of medical expenses of Judges
The Supreme Court has dismissed the CIC-verdict allowing disclosure of medical-expenses of individual judges. Significantly, it was specifically mentioned in the referred RTI petition that only consolidated annual amount of total medical expenses of an individual judge was required without any supporting documents like medical-bills which directly or indirectly could reveal the disease of the concerned judge. The Supreme Court verdict will have far-reaching consequence when other public authorities will also cite the Supreme Court verdict for not providing similar information about others.

It is noteworthy that an RTI response had revealed medical allowance claimed by a member of fourth Delhi Legislative Assembly Vipin Sharma till October 2013 was of Rs. 1,31,93,055. There are reports of large-scale misuse of medical-reimbursement by those entitled to claim from public-exchequers. In a country where commoners do not have even basic medical facilities, rules should be amended so that entitled ones may get free medical-facilities only in government hospitals and dispensaries may be at priority level. Another alternative can be government providing free medical facilities to entitled ones if they wish treatment at private institutions. It will prevent frauds in medical claims because insurance companies pass medical claims.

In the meanwhile, it is suggested that Union Government should immediately legislate for compulsorily putting all annual medical-reimbursements of individuals from public-exchequers on website. However, it may be made clear that only medical expenses may be in public domain without giving any right to citizens to ask for supporting documents of any kind. Earlier resistance was there even in disclosing travel-details as ‘personal’ details. But ultimately it had to be done through a circular from the Department of Personnel & Training (DoPT).

Note: The Supreme Court recently underscored the need to bring accountability and transparency in the functioning of political parties. The Supreme Court sought a response from the Centre and Election Commission on why they should not be brought within the ambit of Right to Information Act. A bench of Chief Justice H. L. Dattu and Justices Arun Mishra and Amitava Roy also issued notice to all six national parties – BJP, Congress, BSP, CPI, CPM and NCP – seeking their stand on why they should not be declared public authorities to be amenable to the transparency law. It granted them six weeks to file their replies.

However, when it comes to itself, the Supreme Court ruled that it is outside purview of RTI and exempted from providing information.

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PART C: Information on & Around

The PMO to Seek Modi’s Nod To Disclose ‘Riot’ Letters To Vajpayee:
The Prime Minister’s Office will take the nod of Gujarat government and chief minister Narendra Modi for releasing the correspondence exchanged with the then Prime Minister Atal Bihari Vajpayee after the post – Godhra Riots in 2002.

The information was earlier denied by the central public information officer of the PMO citing section 8 (1) (h) of the Right to Information Act, without giving any reasons, which exempts information that would impede the process of investigation or apprehension or prosecution of offenders.

The decision was overturned during the appeal before his senior Krishan Kumar, director Prime Minister’s Office, where the applicant had objected to the response of the CPIO saying he failed to give germane reasons behind denial of information.

The applicant had also underlined that the correspondence was 11 years old and was not likely to have an impact on the investigation, apprehension and prosecution of offenders. Upholding the reasons given by the applicant, the appellate authority directed the CPIO to provide additional details with regards to the case.

“As regards contention that the grounds for exemption claimed under section 8 (1) (h) are not tenable, CPIO is directed to obtain fresh inputs in this regards and provide the same to the applicant within 15 working days”, Krisnan Kumar, director and appellate authority had decided. In the last response to six and a half month old RTI application, Rizwi said after the appeal decision that the matter was referred to the office for fresh inputs.

“It is informed that third party (Gujarat Government and Modi in the present case) consultation under Section 11 (1) of the RTI Act is underway on a similar request and response regarding disclosure of information in this regard will be provided to you after due process as envisaged in section 11 of the Act is completed ,” he said.

Gadkari and I.T Department:

BJP has called an RTI reply from the income tax department, which said no investigation was pending against former party president Nitin Gadkari, as a “clean chit” to the leader.

The I.T. department, however, says its investigation in the matter of Purti Sugar and Power Ltd. is actually over and the matter is now at the stage of assessment.

Sources in the I.T. department said Gadkari was never the focus of investigation as he had a minority stake in the company. “The investigation was against Purti group which had received dubious investments through shell companies. Gadkari came in the limelight as he is the founder – promoter of the company”, said an I.T. officer. The RTI query, filed by one Sumit Dalal in February, asked the department,” Is any inquiry/investigation pending against Mr. Nitin Gadkari?” After initially refusing to reply, the Nagpur I.T. department, following an appeal, replied in April that no inquiry was pending against Gadkari in its Department.

Citing the RTI reply, BJP is called the case a political conspiracy to frame Gadkari at a time when he is about to be elected president of the party for a second term.

Spice jet Lies

1. Advertising professional Anil D’Souza writes “I was booked on Spice jet flight SG – 109 from Delhi to Mumbai on May 23 last year, which was scheduled for departure at 10:10 am. On reaching the airport at 8 am, a few of us were told that the flight had been advanced by five hours and that SMSes had been sent to the passengers informing the changes”.
“I was told by the airline staff that they couldn’t find my mobile phone number or e mail ID. I flew to Delhi on a Spice jet flight and received the information/updates through SMSes and e mails. Did they lose my contact details all of a sudden?” he asked.

2. D’Souza spent around Rs. 9,000 on an Indigo ticket to return to Mumbai. (The Spice jet flight costed him around Rs. 6,000) he was refunded Rs. 8,269.80 by the airline two months later. After the airline rejected his claim of additional compensation, he filed a query under the RTI Act and demanded to know the status of the flight in question from the DGCA.

3. ”Replying to the RTI query, the DGCA said that the flight SG – 109 had been cancelled on May 23. I was shocked at the airline’s blatant bluff and have initiated action in the consumer court. I will also initiate criminal proceedings against Spice jet”’ he said.

A senior Spice jet official said that the flight had indeed been advanced by five hours. “It was operated under a different flight number. Nevertheless, we will probe the matter,” the official said. D’Souza, however, insists that the airline had been lying to him for the past 10 months. “I wrote to Spice jet demanding an explanation and got a reply from the airline’s customer relations executive, who wrote that the flight in question had been rescheduled due to ‘operational reasons.’ He further said that as per the airline records, only travel agency/portal landline number were updated as flyers’ primary numbers”, D’Souza said. Determined to make the airline pay for the ‘lapse’, he said, “I will make sure the airline submits the proof of having contacted all the passengers booked on that flight. It is obvious that the flight didn’t take off.

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