Information regarding the short sale of shares of Reliance Petroleum was sought - CIC: process of investigation against the RIL initiated by the SEBI is still continuing & disclosure at this stage would impede the said process
20 Jan, 2015ORDER
This case was heard on 11th August, 2014 in pursuance of the directions dated 14.03.2014 of the Hon’ble High Court of Delhi in W.P. (C) No. 4637/2013 – Reliance Industries Limited vs CPIO, SEBI and Ors.
2. As decided during the hearing in this matter on 30.04.2014, a notice was also issued to the advocate (Shri Ritin Rai) representing 12 entities which were alleged to be collaborating with the Reliance Industries Ltd. (RIL) in the short sale of shares of Reliance Petroleum in November, 2007.
3. The brief facts are that Shri Arun Kumar Agrawal, the appellant, submitted an application dated 17.01.2012 to the CPIO of the Securities and Exchange Board of India (the SEBI) established under section 3 of the Securities and Exchange Board of India Act, 1992 (the SEBI Act) seeking certain information under the Right to Information Act, 2005 (the Act). The points on which information was sought are as follows:-
1. The name and addresses of the entities (name of individuals, partners, directors and major shareholders if companies) involved in the short sale of shares of Reliance Petroleum in Nov 2007 on which information was requested vide my application dated 14/09/2011; and 2. The name of the brokers through whom the short sales deal was routed.
4. The CPIO in his reply dated 07.02.2012 informed the appellant that quasi-judicial proceedings were in progress and there was no final order yet and that the disclosure would harm the commercial interests and competitive position of the parties involved in the matter; and hence, the information was exempt under section 8(1)(d) Notwithstanding anything contained in this Act, there shall be no obligation to give any citizen, information including commercial confidence, trade secrets or intellectual property, the disclosure of which would harm the competitive position of a third party, unless the competent authority is satisfied that larger public interest warrants the disclosure of such information; and 8(1)(h) Notwithstanding anything contained in this Act, there shall be no obligation to give any citizen, information which would impede the process of investigation or apprehension or prosecution of offenders; Notwithstanding anything contained in this Act, there shall be no obligation to give any citizen, information which would impede the process of investigation or apprehension or prosecution of offenders; Notwithstanding anything contained in this Act, there shall be no obligation to give any citizen, information which would impede the process of investigation or apprehension or prosecution of offenders; Notwithstanding anything contained in this Act, there shall be no obligation to give any citizen, information which would impede the process of investigation or apprehension or prosecution of offenders; of the Act.
5. The appellant’s first appeal dated 18.02.2012 was dismissed by order dated 15.03.2012 as the first appellate authority did not find any reason to interfere with the decision of the CPIO.
6 In his second appeal dated 14.06.2012, the appellant submitted that the same is in public interest and that the information requested for may be provided in public interest under sub-section (2) of section 8 of the Act.
7. During the hearing, the appellant submitted that –
(a) no show cause notice was pending and no inquiry was in progress as claimed by the SEBI;
(b) the CPIO as well as First Appellate Authority did not deal with the provisions of section 8(2) Notwithstanding anything in the Official Secrets Act, 1923 (19 of 1923) nor any of the exemptions permissible in accordance with sub-section (1), a public authority may allow access to information, if public interest in disclosure outweighs the harm to the protected interests. Notwithstanding anything in the Official Secrets Act, 1923 (19 of 1923) nor any of the exemptions permissible in accordance with sub-section (1), a public authority may allow access to information, if public interest in disclosure outweighs the harm to the protected interests. Notwithstanding anything in the Official Secrets Act, 1923 (19 of 1923) nor any of the exemptions permissible in accordance with sub-section (1), a public authority may allow access to information, if public interest in disclosure outweighs the harm to the protected interests. Notwithstanding anything in the Official Secrets Act, 1923 (19 of 1923) nor any of the exemptions permissible in accordance with sub-section (1), a public authority may allow access to information, if public interest in disclosure outweighs the harm to the protected interests. Notwithstanding anything in the Official Secrets Act, 1923 (19 of 1923) nor any of the exemptions permissible in accordance with sub-section (1), a public authority may allow access to information, if public interest in disclosure outweighs the harm to the protected interests. of the Act;
(c) the broker manipulated the price and there has been no investigation for seven years;
(d) as the names of the entities involved in the short sale of shares of Reliance Petroleum in 2007 have been revealed, the name of the broker should also be revealed;
(e) the information requested must be disclosed in public interest even if any investigation is pending; and
(f) he relied upon his written submissions filed in the matter.
8. Dr. Anil Kumar Sharma, CPIO, SEBI submitted that –
(a) he is relying upon the reply of the CPIO and the order of the first appellate authority;
(b) the SEBI has been vested with powers to initiate multiple proceedings/processes against the entities/persons for violations of various provisions of the SEBI Act. The competent authority in this regard can take a view to initiate such proceedings under various provisions of the SEBI Act;
(c) during the process of investigation and the related proceedings under the SEBI Act, a variety of information including information relating to commercial and business interests, documents involving strategic information, are submitted by the entities/persons against whom investigation is conducted by the SEBI. Disclosure of the investigation report or other information/documents obtained during investigation may hamper a level playing field for the entities and may cause irreparable damage to the reputation of the entities/persons. Such disclosure may further adversely affect the competitive position of the entities. Disclosure of information about names of persons in respect of the pending investigation process would impede the process of investigation, therefore, the same is exempt under clauses (d) and (h) of sub-section (1) of section 8 of the Act;
(d) mere submission of the investigation report to the competent authority does not imply a completion of the investigation process. The proceedings initiated under the SEBI Act have to be concluded by the passing of an order by the competent authority. Further proceedings under the provisions of the SEBI Act are in progress and the matter has not reached its conclusion;
(e) the term “investigation” appearing in section 8 (1)(h) has to be broadly interpreted; and (f) Section 8(1)(h) Notwithstanding anything contained in this Act, there shall be no obligation to give any citizen, information which would impede the process of investigation or apprehension or prosecution of offenders; Notwithstanding anything contained in this Act, there shall be no obligation to give any citizen, information which would impede the process of investigation or apprehension or prosecution of offenders; Notwithstanding anything contained in this Act, there shall be no obligation to give any citizen, information which would impede the process of investigation or apprehension or prosecution of offenders; Notwithstanding anything contained in this Act, there shall be no obligation to give any citizen, information which would impede the process of investigation or apprehension or prosecution of offenders; provides an absolute exemption from disclosure of information and the provision of public interest is not applicable in related matters. Even otherwise section 8(2) Notwithstanding anything in the Official Secrets Act, 1923 (19 of 1923) nor any of the exemptions permissible in accordance with sub-section (1), a public authority may allow access to information, if public interest in disclosure outweighs the harm to the protected interests. Notwithstanding anything in the Official Secrets Act, 1923 (19 of 1923) nor any of the exemptions permissible in accordance with sub-section (1), a public authority may allow access to information, if public interest in disclosure outweighs the harm to the protected interests. Notwithstanding anything in the Official Secrets Act, 1923 (19 of 1923) nor any of the exemptions permissible in accordance with sub-section (1), a public authority may allow access to information, if public interest in disclosure outweighs the harm to the protected interests. Notwithstanding anything in the Official Secrets Act, 1923 (19 of 1923) nor any of the exemptions permissible in accordance with sub-section (1), a public authority may allow access to information, if public interest in disclosure outweighs the harm to the protected interests. Notwithstanding anything in the Official Secrets Act, 1923 (19 of 1923) nor any of the exemptions permissible in accordance with sub-section (1), a public authority may allow access to information, if public interest in disclosure outweighs the harm to the protected interests. provides absolute power to a public authority to consider whether the public interest in disclosure outweighs the harm to the protected interest. It is not a case where information should be disclosed in public interest.
9. On behalf of RIL, Shri Amit Sibal, advocate, submitted that –
(a) this appeal has a bearing and is interlinked with appeal No. CIC/SM/A/2012/000196 filed by the appellant, orders in which have been reserved by this Commission. The orders passed in that matter will apply to this case;
(b) the appellant wants information in the public interest under section 8(2) Notwithstanding anything in the Official Secrets Act, 1923 (19 of 1923) nor any of the exemptions permissible in accordance with sub-section (1), a public authority may allow access to information, if public interest in disclosure outweighs the harm to the protected interests. Notwithstanding anything in the Official Secrets Act, 1923 (19 of 1923) nor any of the exemptions permissible in accordance with sub-section (1), a public authority may allow access to information, if public interest in disclosure outweighs the harm to the protected interests. Notwithstanding anything in the Official Secrets Act, 1923 (19 of 1923) nor any of the exemptions permissible in accordance with sub-section (1), a public authority may allow access to information, if public interest in disclosure outweighs the harm to the protected interests. Notwithstanding anything in the Official Secrets Act, 1923 (19 of 1923) nor any of the exemptions permissible in accordance with sub-section (1), a public authority may allow access to information, if public interest in disclosure outweighs the harm to the protected interests. Notwithstanding anything in the Official Secrets Act, 1923 (19 of 1923) nor any of the exemptions permissible in accordance with sub-section (1), a public authority may allow access to information, if public interest in disclosure outweighs the harm to the protected interests. of the Act as there has been alleged conspiracy between the RIL and the 12 entities;
(c) as the SEBI has issued a show cause notice to RIL, the matter is pending adjudication. Therefore, any information about the entities involved in the matter is exempt under section 8(1) (h) of the Act. He relied upon orders of the Commission in the matters of K.S. Prasad and Shankar Sharma referred to above and order dated 15.10.2007 in case no. CIC/AT/A/2007/00822 – Sanjeev Goyal vs M.D. Singh, Commissioner of Customs and CPIO;
(d) the disclosure of the desired information will affect the efficient operation of SEBI and the confidentiality of sensitive information will not be preserved. He relied on the judgement dated 02.09.2011 of the Supreme Court in C.A. no. 7571 of 2011 – Institute of Chartered Accountants of India vs Shaunak H. Satya & Ors. If the information is disclosed, it is likely to cause substantial harm to competitive position of person from whom information is obtained;
(e) SEBI has not passed any order under the SEBI Act that the information in question may be disclosed to any person;
(f) as the appellant has failed to establish any case of public interest as per section 8(2) Notwithstanding anything in the Official Secrets Act, 1923 (19 of 1923) nor any of the exemptions permissible in accordance with sub-section (1), a public authority may allow access to information, if public interest in disclosure outweighs the harm to the protected interests. Notwithstanding anything in the Official Secrets Act, 1923 (19 of 1923) nor any of the exemptions permissible in accordance with sub-section (1), a public authority may allow access to information, if public interest in disclosure outweighs the harm to the protected interests. Notwithstanding anything in the Official Secrets Act, 1923 (19 of 1923) nor any of the exemptions permissible in accordance with sub-section (1), a public authority may allow access to information, if public interest in disclosure outweighs the harm to the protected interests. Notwithstanding anything in the Official Secrets Act, 1923 (19 of 1923) nor any of the exemptions permissible in accordance with sub-section (1), a public authority may allow access to information, if public interest in disclosure outweighs the harm to the protected interests. Notwithstanding anything in the Official Secrets Act, 1923 (19 of 1923) nor any of the exemptions permissible in accordance with sub-section (1), a public authority may allow access to information, if public interest in disclosure outweighs the harm to the protected interests. of the Act, the appeal may be dismissed as without merit; and
(g) this appeal has a bearing on appeal No. CIC/SM/A/2012/000196 filed by the appellant, orders in which have been reserved by this Commission. The orders passed in that matter will apply to this case.
10. On behalf of 12 entities, Shri Ritin Rai, advocate, submitted that –
(a) he represents 11 entities (of the 12 entities) as one entity viz. M/s Tech Software Pvt. Ltd. stands dissolved in terms of section 560 of the Companies Act, 1956;
(b) the orders of CPIO and the first appellate authority are reasoned and correct and he supports the stand of the SEBI;
(c) the show cause notice issued earlier to RIL has been withdrawn and a fresh show cause notice has been issued by the SEBI. The allegations are yet to be decided. The investigation is still in progress. Therefore, the information requested for is exempt being covered by section 8(1) (h) of the Act; and (d) the appeal is without merit and liable to be dismissed. The appellant has failed to disclose any public interest for disclosing the information requested for.
Discussion:
11. We have taken into account the submissions made by the parties during the hearing and have gone through the contents of the appeal and the written submissions of the parties.
12. The issue for consideration in the matter is whether there is any investigation being undertaken by SEBI involving RIL, which is to be taken into consideration on the question of disclosing information that is sought by the appellant. If the investigation is pending, then whether a case of public interest is made out to supersede the protected interests.
13. It will be useful to recognize that the SEBI, established under the SEBI Act is the enquiring institution, and the principal body to regulate the security market. The object of the SEBI is to regulate the securities market and maintain confidence in the investors. SEBI is the sole authority to decide what would be best in the interest of the investors and the public at large in respect of the securities market. Section 11C of the SEBI Act provides for passing orders/directions to investigate the affairs of intermediaries or persons associated with the securities market if the SEBI has reasonable grounds to believe that the transaction in securities is being dealt with in a manner detrimental to the investors or the securities market or any intermediary or any person associated with the securities market has violated any of the provisions of the SEBI Act. After getting a report of the inquiry, the SEBI is required to pass an appropriate speaking order. The competent authority may decide either to proceed or not to proceed against certain entities.
14. This Commission in its decision dated 10.7.2007 in Appeal No. CIC/AT/A/2007/0007, 10 & 11 (Shankar Sharma & Others Vs. DGIT) observed that the term ‘investigation’ used in section 8(1)(h) Notwithstanding anything contained in this Act, there shall be no obligation to give any citizen, information which would impede the process of investigation or apprehension or prosecution of offenders; Notwithstanding anything contained in this Act, there shall be no obligation to give any citizen, information which would impede the process of investigation or apprehension or prosecution of offenders; Notwithstanding anything contained in this Act, there shall be no obligation to give any citizen, information which would impede the process of investigation or apprehension or prosecution of offenders; Notwithstanding anything contained in this Act, there shall be no obligation to give any citizen, information which would impede the process of investigation or apprehension or prosecution of offenders; of the Act should be interpreted broadly and liberally and that no investigation could be said to be complete unless it has reached a point where the final decision on the basis of that decision is taken. This Commission In CIC/AT/A/2007/007/00234 – K.S. Prasad vs SEBI, observed that “…as soon as an investigation or an enquiry by a subordinate Enquiry Officer in Civil and Administrative matters comes to an end and, the investigation report is submitted to a higher authority, it cannot be said to be the end of investigation. ... which can be truly said to be concluded only with the decision by the competent authority.” This Commission in CIC/DS/A/2013/000138/MP – Narender Bansal vs Oriental Insurance Co. Ltd., has held that the investigation in the matter was complete but further action was under process, and hence it attracted section 8(1)(h) Notwithstanding anything contained in this Act, there shall be no obligation to give any citizen, information which would impede the process of investigation or apprehension or prosecution of offenders; Notwithstanding anything contained in this Act, there shall be no obligation to give any citizen, information which would impede the process of investigation or apprehension or prosecution of offenders; Notwithstanding anything contained in this Act, there shall be no obligation to give any citizen, information which would impede the process of investigation or apprehension or prosecution of offenders; Notwithstanding anything contained in this Act, there shall be no obligation to give any citizen, information which would impede the process of investigation or apprehension or prosecution of offenders; of the Act.
15. In the present case, final orders are yet to be passed by the competent authority under the SEBI Act. Therefore, the process of investigation against the RIL is still pending before SEBI and it cannot be said the same has reached its conclusion. Hence, the requested information falls under exemption under section 8(1) (h) of the Act.
16. The Commission recognizes the perspective brought out on public interest in the course of the hearing. The appellant had underlined emphatically the dimensions of public interest overriding the protected interest, i.e. the protection given to the ‘fiduciary’ elements. However, the other side argued that the appellant is overstating the public interest without taking into account that the investigation is still going on. We have, therefore, to await the completion of this investigation. It will not be wise for the Commission to speculate as to what conclusions the SEBI will draw.
17. The main ground initially advanced by the appellant for disclosing the information under section 8(2) Notwithstanding anything in the Official Secrets Act, 1923 (19 of 1923) nor any of the exemptions permissible in accordance with sub-section (1), a public authority may allow access to information, if public interest in disclosure outweighs the harm to the protected interests. Notwithstanding anything in the Official Secrets Act, 1923 (19 of 1923) nor any of the exemptions permissible in accordance with sub-section (1), a public authority may allow access to information, if public interest in disclosure outweighs the harm to the protected interests. Notwithstanding anything in the Official Secrets Act, 1923 (19 of 1923) nor any of the exemptions permissible in accordance with sub-section (1), a public authority may allow access to information, if public interest in disclosure outweighs the harm to the protected interests. Notwithstanding anything in the Official Secrets Act, 1923 (19 of 1923) nor any of the exemptions permissible in accordance with sub-section (1), a public authority may allow access to information, if public interest in disclosure outweighs the harm to the protected interests. Notwithstanding anything in the Official Secrets Act, 1923 (19 of 1923) nor any of the exemptions permissible in accordance with sub-section (1), a public authority may allow access to information, if public interest in disclosure outweighs the harm to the protected interests. of the Act is that there has been a conspiracy between the RIL and other entities in short sale of shares and the investors have suffered losses, and that the general public must be informed about the unlawful means adopted by the RIL. The SEBI as well as the other parties are opposing the disclosure of information. The SEBI has underlined that with the issuance of a fresh show cause notice to the RIL, the proceedings under the SEBI Act is currently continuing, therefore, it may not be in the public interest at this stage to disclose the information. There is no adequate reason not to agree with the decision of the SEBI on the issue of providing information at this stage, keeping in view that the investigation is pending. It ought to be mentioned that disclosure of the information at this stage would impede the process of investigation.
18. In the light of the above discussion and in the circumstances of the case, we are of the view that the process of investigation against the RIL initiated by the SEBI is still continuing. Therefore, the disclosure of the requested information at this stage would impede the said process and defeat the purpose of the protection granted to such information. No tangible case of public interest has been made out by the appellant which is overriding the protected interests. We are not convinced with the arguments of the appellant that the disclosure of the desired information would be in the public interest. We do not find any legal flaw in the stand of SEBI that the requested information should not be disclosed at this stage.
Decision:
19. In the light of the above discussion, we do not find any reason to hold a view which is different from the Commission's view taken in case No.CIC/SM/A/2012/000196. We are not inclined to allow the disclosure of the requested information and dismiss the appeal.
(M.A. Khan Yusufi)
Information Commissioner
(Manjula Prasher)
Information Commissioner
(Vijai Sharma)
Information Commissioner
Citation: Shri Arun Kumar Agrawal v. SEBI, M/s Reliance Industries Limited in F.No.CIC/SM/A/2012/001020