Reserve Bank cannot deny information sought under Right to Information Act, 2005 #indianlaws

RTI Act is enacted to empower the common people, the test to determine limits of Section 8 of RTI Act is whether giving information to the general public would be detrimental to the economic interests of the country? Supreme Court observed that the Public Information Officers (PIO) under the guise of one of the exceptions given under Section 8 of RTI Act, cannot evade from the general public,the rightful information that they are entitled to.The Legislature’s intent was to make available to the general public such information which had been obtained by the public authorities from the private body. Had it been the case where only information related to public authorities was to be provided, the Legislature would not have included the word “private body”.

RBI does not place itself in a fiduciary relationship with the Financial institutions because, the reports of the inspections, statements of the bank, information related to the business obtained by the RBI are not under the pretext of confidence or trust. It is supposed to uphold public interest and not the interest of individual banks. RBI has a statutory duty to uphold the interest of the public at large, the depositors, the country’s economy and the banking sector. Thus, RBI ought to act with transparency and not hide information that might embarrass individual banks.

Supreme Court in one of recent whether all the information sought for under the Right to Information Act, 2005 can be denied by the Reserve Bank of India and other Banks to the public at large on the ground of economic interest, commercial confidence, fiduciary relationship with other Bank on the one hand and the public interest on the other.

RBI contended that it performs various regulatory and supervisory functions under country’s banking system and various information collected and retained by it are confidential in nature and they may also be sensitive to economic stability of the country and information as desired in the instant matters, may also adversely impact public confidence in the bank having serious implication on financial stability. Further, the specific stand of RBI was that the information sought for is exempted under Section 8(1) (a), (d) and (e) of the Right to Information Act, 2005 and as the regulator and supervisor of the banking system, the RBI has discretion in the disclosure of such information in public interest.

Another contention of RBI was that it is having fiduciary relationship with the other banks and that there is no reason to disclose such information as no larger public interest warrants such disclosure.

It was observed by the Court that the scope of the fiduciary relationship consists of the following rules:

  1. No Conflict rule- A fiduciary must not place himself in a position where his own interests conflicts with that of his customer or the beneficiary. There must be “real sensible possibility of conflict.
  2. No profit rule- a fiduciary must not profit from his position at the expense of his customer, the beneficiary;
  3. Undivided loyalty rule- a fiduciary owes undivided loyalty to the beneficiary, not to place himself in a position where his duty towards one person conflicts with a duty that he owes to another customer. A consequence of this duty is that a fiduciary must make available to a customer all the information that is relevant to the customer’s affairs
  4. Duty of confidentiality- a fiduciary must only use information obtained in confidence and must not use it for his own advantage, or for the benefit of another person.

It was held by the Court that the RBI does not place itself in a fiduciary relationship with the Financial institutions (though, in word it puts itself to be in that position) because, the reports of the inspections, statements of the bank, information related to the business obtained by the RBI are not under the pretext of confidence or trust. In this case neither the RBI nor the Banks act in the interest of each other. By attaching an additional “fiduciary” label to the statutory duty, the Regulatory authorities have intentionally or unintentionally created an in terrorem effect.

RBI is a statutory body set up by the RBI Act as India’s Central Bank. It is a statutory regulatory authority to oversee the functioning of the banks and the country’s banking sector. It has several other far-reaching statutory powers. It is supposed to uphold public interest and not the interest of individual banks. RBI is clearly not in any fiduciary relationship with any bank and having no legal duty to maximize the benefit of any public sector or private sector bank, and thus there is no relationship of ‘trust’ between them. RBI has a statutory duty to uphold the interest of the public at large, the depositors, the country’s economy and the banking sector. Thus, RBI ought to act with transparency and not hide information that might embarrass individual banks.

RBI was accordingly held to be duty bound to comply with the provisions of the RTI Act and disclose the information sought by the applicants in the instant matters.

The exemption contained in Section 8(1)(e) applies to exceptional cases and only with regard to certain pieces of information, for which disclosure is unwarranted or undesirable. If information is available with a regulatory agency not in fiduciary relationship, there is no reason to withhold the disclosure of the same. However, where information is required by mandate of law to be provided to an authority, it cannot be said that such information is being provided in a fiduciary relationship.

Since, RTI Act is enacted to empower the common people, the test to determine limits of Section 8 of RTI Act is whether giving information to the general public would be detrimental to the economic interests of the country? To what extent the public should be allowed to get information? Court made an observation that the Public Information Officers (PIO) under the guise of one of the exceptions given under Section 8 of RTI Act has evaded the general public from getting their hands on the rightful information that they are entitled to.

RTI Act under Section 2(f) clearly provides that the inspection reports, documents etc. fall under the purview of “Information” which is obtained by the public authority (RBI) from a private body. The Legislature’s intent was to make available to the general public such information which had been obtained by the public authorities from the private body. Had it been the case where only information related to public authorities was to be provided, the Legislature would not have included the word “private body”.

RBI was accordingly held to be liable to provide information regarding inspection report and other documents to the general public.

[Reserve Bank of India vs. Jayantilal N. Mistry]

(SC, 16.12.2015)