Do limited companies come under RTI Act?

The author in this article discusses whether limited companies come within the purview of RTI Act. It further discusses that it allows Indian citizens to request information that can be brought to a public domain, allowing for more transparency in various fields. The information is sought from central or state offices of the government.
Estimated Reading Time: 10 minutes

Introduction

First, let’s understand what RTI means. RTI stands for Right to Information. It allows Indian citizens to request information that can be brought to a public domain. Allowing for more transparency in various fields. The information is sought from central or state offices of the government. Before the advent of the RTI Act, 2005, multiple laws protected such information from going to a public domain. The initiative was a move to counter corrupt practices and bring about a concern for transparency in the system.

Even though the act is in good faith, the reach of the act is vast but with that reach, it has a certain complexity attached to it. These complexities do not allow for an individual from the general public to become aware of their rights to certain things. One such complexity is whether limited companies fall under RTI.

RTI: Concept, Requirement, and Implementation

Before the act was even in consideration, the Indian judiciary was on point with the requirement of an RTI Act. The SC in S.P Gupta v. Union of India[1]held that “under a democratic set up, the people have right to know about the functioning of the Government” and again in Prabhu Dutt v. Union of India[2]held that “the right to know news and information regarding administration of the Government is included in the freedom of press”. The first effort by the Indian government to improve accountability was the Freedom of Information Act, 2002. It prevented the disclosure of official data and information through the use of special laws. This inhibited the information from going into the public domain. Although a law with good intentions, it didn’t help spread transparency and accountability. It was only after the 2005 Act was enacted did the information sought became easily available.

RTI is used as a tool for spreading information regarding the various functions of the government and other institutions to curb the spread of corruption and promote transparency in all sectors. Delays and improper implementation of government schemes can now be questioned as to the information if requested has to be in the public domain. Since the inception of the Act, RTI has helped in improving governance, accountability of the government over its actions, transparency, participation & reducing corruption, and intentional delays in the implementation of government schemes and policies. In light of these factors, laws such as the Official Secrets Act of 1923 have been relaxed to allow for RTI.

RTI mandates that every authority under RTI is liable to send the information asked for under RTI in 30 days from when the RTI is applied. Information sought should not be sensitive for national security, personal or related to national defense.

Public Authority under RTI act

One of the most controversial areas of the RTI Act, 2005 has been the definition of a ‘public authority’. Back in 2013 CIC went on to declare political parties as public authorities under the RTI Act,[3] since then the issue of public authorities has been on the rise. The central government further proposed to amend the section to exclude political parties. [4] With the act empowering the citizens to access information under the control of ‘Public authorities’,[5] RTI Act creates a legal framework to make good this right by defining public authorities,[6] allowing citizens to ask public authorities for information,[7] and imposing penalties on officials of public authorities for failing to disclose ‘information’ defined in Section 2(f).

The question of “who is a public Authority?” becomes a critical one. Recently, the PM cares fund was declared as free from the ambit of RTI applications, and hence information sought would not be available. This created and stirred many controversies. Consequently, as a result of such decisions, such incidents it is important to know what does the term “public Authority” really means. Section 2(h)[8]of the act possesses an ambiguous question. Authorities and institutions such as schools, colleges, etc., which are widely considered to be private entities have been put under the RTI Act. In M.P Varghese v. Mahatma Gandhi University,[9]Kerala HC held that “those organizations which are receiving the financial aid from the State are under the ambit of the public authority. The word State is defined under Article 12 of the Constitution in relation to the enforcement of fundamental rights through courts, whereas the RTI Act is intended at achieving the object of providing an effective framework for effectuating the right to information recognized under Article 19 of Constitution of India”.

One solution is to look at the act and analyze the section of the act. The first part of the section defines authorities formed under the constitution of India, established by laws and legislatures (such as RBI, SEBI, etc.) and the government notified authorities.

The second part widens the scope as well as the confusion. Second part focuses on “ownership”&“funding”. This allows for more questions to be raised rather than answer a few. The problems that could be outlined from this are: (1) who & what constitutes ownership (2) what is meant by control (3) what is meant by substantially financed. Thus, both the parts of the section are open for interpretation and have caused a substantial stir in the legal system. The decision by Delhi HC in National Stock Exchange of India Limited v. Central Information Commission,[10] made it clear that a mere establishment is not enough to come under the ambit of the RTI Act. This meant that companies incorporated under a statue would also cease to be public authorities despite fulfilling a criterion for public authority.

Limited companies are excluded from the definition as per the Delhi HC. But a decision made in Sarbajit Roy v. Delhi Electricity Regulatory Commission,[11] held that “Central Information Commission also reaffirmed that privatised public utility companies continue to be within the RTI Act, notwithstanding their privatisation”.  This clears some confusion. This meant that private entities performing a “public function” will come under the RTI Act.

The core function of section 2(h) was to define public authorities, but if read with section 2(a), the limited companies not engaged in public welfare/function would not be bound by RTI, unless and until they are funded by the “appropriate public authority”. On further reading of the act, it becomes increasingly complex to understand the intention of the act. With Section 2(f) stating that “‘information’ means any material in any form, including records, documents, memos, e-mails, opinions, advices, press releases, circulars, orders, logbooks, contracts, reports, papers, samples, models, data material held in any electronic form and information relating to any private body which can be accessed by a public authority under any other law for the time being in force”[12] It becomes clear that information that the parliament, government, or any other “public authority” could ask for, would be available in the public domain and come under the act. This is supported by the proviso to section 8 (j) which states “information which cannot be denied to the Parliament or a State Legislature shall not be denied to any person.”[13] M.M. Ansari[14] has also reaffirmed this by stating “Applicants have every right to seek information on a private company even though it is in the private sector, if it reports to a government body”.

This allows the public to seek information through public authorities that the private companies have to report to. Other than this fact, publicly listed companies in the stock market also comeunder the ambit of RTI. SEBI has authorized certain guidelines for gathering information from such companies. In other words,information regarding a private company can only be obtained through its regulators. Such regulators can only give information that the company is bound to furnish. At the same time, not all this information can be shared with the applicant. The act, under Sections 8 and 9, exempts certain categories of information from disclosures.

Detailed Interpretation

As discussed above one of the most important parts is the first part of Section 2(h) which emphasizes the incorporation of an entity. If an entity is private or public is decided how it came to be in the first place.

The second thing is how it is funded. Is it funded through a host of private investors or is it aided by some public authority? A substantial amount of financial aid by a public authority allows for even a private entity to come under RTI.

As stated above, Private companies engaged in public activities would be obligated to share their information through RTI. This means that an entity’s activities can also determine whether they would be “public” under the RTI Act or not. [15]This certainly helps as certain hospitals and other authorities engaged in such activities would otherwise be free from the purview of RTI are now questionable under it.[16]

Furthermore, in Delhi Sikh Gurudwara Management Committee v. Mohinder Singh Matharu,[17] the Delhi High Court has stated that “entities falling within the first part of the definition from clauses (a) to (d) do not have to additionally be substantially financed or owned and controlled by the government”. With opposing views from different courts, there is no single authority that can be cited that has defined the section with complete precision. While some courts prefer to control[18] some courts have preferred to object to blind supervision by public authorities.[19]In terms of financing, even land allotment and subsidies come under financial aid.[20] Courts while having implied that quantum of aid helps in identifying and defining public authorities,[21] courts have refused to provide a fixed quantum of financial aid that can be taken into consideration.[22]

Regarding the problems stated above with the interpretation, the courts have come into consensus regarding the following points:

  1. If a private company is engaged in public affairs or deals with a public issue or is engaged in public welfare, would come under the ambit of “public authority” and hence individuals would be able to request for information.
  2. If a company is being funded or receiving any sort of financial assistance or even governmental supervision or control, RTI would apply to them.
  3. If a company reports to a “public authority”, it is possible to seek information from the said authority instead of the company itself.
  4. If the information sought through RTI can be given to the government, Parliament, then it can be given out in the public domain too.
  5. If the company is run in partnership with the government then, RTI application seeking information from the government partner is possible.
  6. If a company has listed its stock in the stock exchange or government has bought their stocks, then the company would be under the ambit of RTI.

These are a few conclusions apart from the very obvious as mentioned in the RTI Act itself.So the conclusion that can be drawn is that on a broad basis limited companies would not come under the purview of the RTI Act and hence would be protected from disclosing any information. But courts and the act have had varied interpretations that have caused certain guidelines to exists on whether information from such companies is obtained by way of RTI.

Conclusion

RTI is a mechanism that has evolved over centuries to empower the public. In cases such as this, there needs to be more clarity over such laws. RTI promotes transparency, good governance, and accountability. To promote these things, the act itself needs to be much clearer to the general public on who is to be held accountable and for what. The legislation has brought the importance needed in the field of law. It has allowed the public to become aware of its power to question the government. It has given a new sense of devotion towards duty and tendency to adhere to the laws and norms amongst the public servants in discharge of their official duties as they have been made to realize under this act that any wilful breach of the laws and the duties they are supposed to perform will now invite punitive action against them under the provision of the RTI Act, 2005.[23]

There is sufficient clarity in the question “Do limited companies come under RTI act?”the answer is NO. But with innumerable circumstances that can change the answer, the people who are less educated or just the general public would not know this. RTI is a very basic human need and right and it needs to be safeguarded with better clarity. The very obvious loopholes in the act which can allow corruption among private companies need to be tackled.

Also read Can a Government Employee be a Director in a Private Company?


[1]   (1993) 4 SCC 441.

[2]   AIR 1982 SC 6.

[3]  CIC order No. CIC/SM/C/001386, dated June 3, 2013.

[4] Balaji, Reprieve for RTI as a bill to insulate parties is deferred, The Hindu, September 6, 2013, available at:

http://www.thehindu.com/news/national/rti-amendment-bill-referred-to-standing-committee-forelaborate-study/article5096990.ece.

[5]   Preamble to the RTI Act.

[6]  Section 2(h), RTI Act.

[7] Section 6, RTI Act.

[8] RTI Act, 2005.

[9]AIR 2007 Ker 230.

[10] WP (C) No. 4748 of 2007

[11]CIC/WB/A/2006/00011

[12]Section 2(f), RTI Act, 2005.

[13]Section 8 (j), RTI Act, 2005.

[14] Information commissioner at the Central Information Commission

[15] Kribhco vs. Ramesh Chandra Bawa W.P. (C) 6129/2007 and W.P.(C) 7770/2008,

[16] Sarbajit Roy v. Delhi Electricity Regulatory CommissionCIC/WB/A/2006/00011; National Stock Exchange of India Limited v. Central Information Commission, WP (C) No. 4748 of 2007.

[17] LPA No. 606 of 2010, LPA No. 607.

[18] Dr.PanjabraoDeshmukh Urban Co-operative Bank Ltd., Vidarbha Region v State Information Commissioner

AIR 2009 Bom 75; M.P.Varghese v. Mahatma Gandhi University AIR 2007 Ker 230; Krisha k Bharti Cooperative Ltd. v. Ramesh ChanderBawa W.P. (C) 6129/2007.

[19] A.C. Bhanunni v. The Commissioner, Hindu Religious and Charitable Endowments, WP(C) No. 30470 of 2008.

[20] Hindu Urban Cooperative Bank Ltd v. State Information Commission (2011)ILR 2 P&H 64.

[21] Principal, M.D. SanatanDharam Girls College v State Information Commissioner, AIR 2008 P&H 101; Committee of Management, Ismail Girls National Inter College v. the State of UP, AIR 2009 All 36; Indian Olympic Association v. Veeresh Malik W.P.(C) No. 876/2007.

[22] Professional Assistant for Development Action (PRADAN) v. The Jharkhand State Information Commission, W.P.(C) No. 4376 of 2009; D.A.V. College Trust v. Director Of Public Instruction AIR 2008 P & H 117.

[23] Jitendra Singh vs. the State of U.P., 2008 (2) AWC 2067 (All).

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