Jayantilal Mistry v. RBI

The Central Information Commission [‘CIC’] in the matter of Jayantilal Mistry v. CPIO, RBI [CIC/SM/A/2011/001487/SG/15434], gave a decision on November 1, 2011. The decision concerned the issue of whether the RBI was mandated to reveal details of audit reports conducted on certain co-operative banks. The decision made news after the CIC directed the RBI to make available the said information under the RTI Act. Mr. Shailesh Gandhi, the Information Commissioner, was kind enough to supply a copy of the order. I have analysed the case below. 

The controversial information sought pertaining to certain co-operative banks was the following: 

1. Last RBI investigation and audit report carried out by Mr. Santosh Kumar during 23/04/2010 to 06/05/2010 sent to Registrar of the co - operative of Gujarat, Gandhinagar on Makarpura Industrial Estate Co - Operative Bank Ltd. Reg No. 2808.

2. Inspection report for the past 20 years, carried out with the name of inspector on the above named bank and action taken report.

3. Reports on all co-operative banks that have gone into liquidation and action taken against all directors and managers for recovery of public funds, powers utilized by RBI and analysis, and procedures adopted.

Case History 

The Public Information Officer [‘PIO’] held that the information sought by the Appellant was of the nature that was held by the bank in a fiduciary capacity. Further, the PIO observed that the said information was obtained during the course of inspection of the bank and hence, cannot be given to outsiders. The PIO justified this decision on the touchstone that allowing this information to be disclosed could potentially harm the interest of the bank and banking systems. The specific exception clauses relied upon to exempt the information from disclosure were Sections 8(1)(a) and (e) of the RTI Act. The said provisions read:

“8.  (1) Notwithstanding anything contained in this Act, there shall be no obligation to give any citizen,—   

(a) information, disclosure of which would prejudicially affect the sovereignty and integrity of India, the security, strategic, scientific or economic interests of the State, relation with foreign State or lead to incitement of an offence; 

[…]

(e) information available to a person in his fiduciary relationship, unless the competent authority is satisfied that the larger public interest warrants the disclosure of such information.”

The First Appellate Authority [‘FAA’] agreed with the decision of the PIO with respect to the controversial information sought. The FAA also relied on the order of the CIC in R. R. Patel v. RBI CIC/MA/A/2006/00406 and 00150 dated 07/12/2006 to justify that the RBI could opt not to disclose information when it saw fit.  

The said matter case came to the CIC in appeal to the final order.  

Order of the CIC 

1. Application of the Section 8(1)(e): The CIC held that two requirements must be fulfilled to qualify a fiduciary relationship, as traditionally understood. Firstly, a person acting in fiduciary capacity is one who usually occupies a position of trust, therefore requiring him to act for the benefit of another within the scope of that relationship. The examples used of the same included a doctor and lawyer.  

Secondly, any information given in a fiduciary relationship must be given out of choice, as a client does in the case of a lawyer or chartered accountant.

Finally, in a fiduciary relationship, the information giver gives the information to the person acting in a fiduciary capacity for his own benefit. [See Central Board of Secondary Education & Anr. v. Aditya Bandopadhyay & Ors., [2011 (8) SCALE 645] for an exposition on the word ‘fiduciary’].

The CIC held that all relationships of trust would not qualify as ‘fiduciary’ in nature. Further, the information acquired by the RBI was under a statutory rule and not provided ‘voluntarily’ as is mandated in a fiduciary relationship.  

2. Application of the Section 8(1)(a): To refute the application of Section 8(1)(a) in the instant case, the CICI analysed the case R.R. Patel v. RBI. It observed that the full bench in the Patel case misapplied the observations of the Punjab & Haryana High Court in RBI v. Central Government Industrial Tribunal [(1959) ILLJ 539 P H]. The High Court had merely observed that the RBI, as an expert body, must oversee the best course of action to be taken in the economic interests of the nations. The Patel case wrongly extended this observation to the case of allowing the RBI to disclose information only when it saw fit to do so. The mistake was exacerbated by the fact that the High Court decision was passed much before the advent of the RTI Act and hence, could not have included the same within its ambit.  

On the merits of Section 8(1)(a) itself, the CIC held that it would be difficult to apply the said exemption to the instant case. Revealing the information sought may reveal the financial weaknesses of certain banks. The same would not however, cause an endemic lack of confidence in the banking system itself and thus, cause harm to the economic interests of the state. In the words of the CIC, to think so would be to underestimate the maturity of the very citizens who had given themselves the Constitution.

3. Powers of non-disclosure of RBI: The Patel case, after relying on the High Court judgment, opined that in light of the expertise of the RBI in its field, it was free to disclose any information as it saw fit. The CIC criticised this opinion by holding that this observation would remove the RBI from the ambit of the RTI Act altogether. Further, this faulty reasoning could be used as an argument to exclude all public functionaries performing specialised work from the scope of the RTI Act. This argument is perfectly logical, particularly in light of the spirit of the RTI Act that mandates only exceptions under Section 8 to govern cases of non-disclosure. While a body could rely on the judgment of an entity such as the RBI, the same was possible only on a case-by-case basis, as an exceptional circumstance.

4. The Value of the R.R. Patel case: The CIC diluted the precedence of the Patel order on the grounds that it amounted to a review of two other CIC orders. Seeing as the RTI Act did not specifically grant a power of review, the entire order of the CIC was thus, procedurally invalid. Thus, the CIC held the Patel order to be per incuriam.  

Finally, the CIC opined that the Patel order was mutually contradictory as at first, it held that the information sought could be denied from being disclosed. However, later it observed that such details were important for the public to be aware of. Thus, the RBI was advised to proactively disclose the same from time to time. The CIC held that the dichotomy in this observation amounted to an omission of reading Section 8(2): 

“Notwithstanding anything in the Official Secrets Act, 1923 nor any of the exemptions  permissible in accordance with sub-section (1), a public authority may allow access to information, if public interests in disclosure outweighs the harm to the protected interests.” 

Thus, if there was a public interest in disclosing the information, Section 8(2) would override any other exemption clauses that were relied on, to argue for non-disclosure. 

After making these observations, the CIC held that the information sought must be disclosed. This decision has wide ramifications for the RBI as a regulatory authority that monitors the functioning and health of subordinate banks and institutions. The decision would ensure that the public, which has an interest in knowing the health of the institutions that holds its funds, would always have a finger on the pulse of the banking system.  

[The Information Commissioner, Mr. Shailesh Gandhi, was kind enough to share a copy of the landmark order with us. You can find the order here.]

by Kartik Khanna (4th year, NUJS)