Three companies own shares at the Central Laboratory & Associated services at ONGC Petro Additions Ltd (OPAL) - ONGC (49.36%), GAIL (India) Ltd. (49.21%) & Gujarat State Petroleum Corp Ltd. (1.43%) - CIC: OPAL is not a public authority under the RTI Act
15 Jun, 2016Facts
This matter, pertaining to an RTI application filed by the Appellant, seeking information on ten points regarding a tender for setting up of Central Laboratory & Associated services at ONGC Petro Additions Limited (OPAL), came up today. The CPIO had stated in his reply dated 17.9.2014 that the Respondents made efforts to collect the information from OPAL, but were informed by them that they (OPAL) do not fall within the purview of the RTI Act.
Hearing on 20.1.2016
2. Speaking on behalf of OPAL, Advocate Gaonkar stated that OPAL is a separate company set up under the Companies Act, 1956. Its shares are owned by three companies: ONGC (49.36%), GAIL (India) Ltd. (49.21%) and Gujarat State Petroleum Corporation Ltd. (1.43%). He further submitted that 85 to 90% of the financing of OPAL is done by obtaining loans from banks and it has an independent Board of Directors, though having some Directors from the three shareholding companies also. In support of his contention that OPAL is not a public authority, the Appellant cited the Commission’s decision No. CIC/AT/C/2007/00091 dated 15.2.2008.
3. Speaking on behalf of the Appellant, Advocate Shubham Paliwal stated that OPAL is a public authority since a majority of its shares are held by companies financed by the Government. In this connection, he referred to Section 2 (h) (i) of the RTI Act. He also cited a case of the Punjab & Haryana High Court, but was unable to provide its details.
4. This matter is adjourned to be heard again on 11 th March, 2016 at 2.00 p.m. at Room No. 305, 2nd Floor, August Kranti Bhawan, Bhikaji Cama Place, New Delhi110066. The Appellant, the Respondents and the third party (OPAL) may file their written submissions, if any, so as to reach the Commission by 26.2.2016. The party making written submissions to the Commission should ensure that a copy is made available to the remaining two parties before the next hearing on 11.3.2016.
Hearing on 11.3.2016
5. The matter came up again today. The Appellant had filed his written submissions dated 3.3.2016 that have been taken on record. The remaining two parties confirmed having received a copy of the same. The third party M/s ONGC Petro Additions Ltd. (OPAL) have also filed written submissions dated 26.2.2016. While the Respondents confirmed having received a copy of these submissions, Advocate Shubham Paliwal stated that the Appellant has not been provided a copy of the same. He prayed for provision to the Appellant of a copy of the submissions of M/s ONGC Petro Additions Ltd. (OPAL) and for adjournment of the matter to enable the Appellant to study the same. A copy of the submissions was handed over to Advocate Shubham Paliwal by the representatives of M/s ONGC Petro Additions Ltd. (OPAL) during the proceedings. The matter is adjourned to be heard again on 25 th April 2016 at 2.00 p.m . at Room No. 305, 2nd Floor, August Kranti Bhawan, Bhikaji Cama Place, New Delhi 110066. In case any of the parties makes any further written submissions to the Commission before the next hearing on 25.4.2016, it should ensure that a copy is made available to the remaining two parties.
Hearing on 18.5.2016
6. The matter came up again today. Speaking on behalf of the Appellant, Advocate Shubham Paliwal stated that the third party had referred to the CIC order No. CIC/AT/C/2007/00091 dated 15.2.2008 in support of their contention that they were not a public authority. However, in a subsequent order of the Commission (No. CIC/SG/C/2009/001193/5009 dated 5.10.2009), it was held that if a body received a minimum of Rs. 5 lakhs from an appropriate government and this amount constituted over 10% of its annual income, the body could be considered to be substantially funded for the purpose of the Right to Information Act and would be considered a public authority. Advocate Shubham stated that since OPAL has been set up with substantial funding from ONGC and GAIL India Ltd., it falls within the category of organizations substantially funded by an appropriate government. In response to our query, he stated that the Managing Director of OPAL is from ONGC (it would be noted that in an earlier submission, mentioned at paragraph 2 above, the representative of OPAL had stated that they have an independent Board of Directors, though having some directors from the three shareholding companies also.) In response to a further query from us, Advocate Paliwal stated that the tender, about which information has been sought, was floated by OPAL. He also stated that the Appellant received some information concerning this tender from EIL who, however, stated that they could not provide all the information as the relevant documents had been returned to OPAL.
7. Speaking on behalf of OPAL, Advocate Vishnu Sharma reiterated their earlier submissions and stated that a body set up by PSUs funded by the government cannot be regarded as a body funded by an appropriate government. He referred, in this connection, to the definition of “appropriate government” contained at Section 2 (a) of the RTI Act.
8. The Respondents did not make any submission.
9. We have considered the submissions made by the parties. The following observations made by the High Court of Delhi in its judgment dated 12.3.2015 in Hardicon Ltd. vs. Madan Lal [W.P.(C) 6946/ 2011] are germane to the aspect of substantial financing by the appropriate Government raised in this matter:
“14. The next question to be examined is whether the petitioner is substantially financed by the appropriate Government. In my view, this question must also be answered in the negative as there is no material to indicate that the petitioner has been indirectly funded by the appropriate Government. Undoubtedly, the Central Government has substantially funded the nationalized banks. However, it is equally true that the said banks have been funded to a significant extent by other shareholders. Concededly, the petitioner has been promoted by its shareholders as a commercial entity to render consultancy services on a commercial basis. The petitioner is, clearly, a joint commercial venture by several entities.
15. The CIC held that as 61.5% of equity of the petitioner was subscribed by government owned entities and the same would meet the criteria of substantial financing by an appropriate Government. I find it difficult to agree with the said conclusion. Admittedly, the Government whether it be State Government or Central Government has not provided any direct funding to the petitioner. The question whether the entity has been indirectly financed is to be determined on the facts of each case. In this case, there is no material to indicate any flow of funds from any government to the petitioner. In order to hold that an entity has been indirectly financed by an appropriate Government, first of all, it is necessary to find that the Central Government has parted with some funds for financing the authority/body; and secondly, the said funds have found their way to the authority/body in question. The link between the financing received by an entity and an appropriate Government must be clearly established.
16. In this case, there is no material to indicate that any of the funds received by the petitioner owed their source to either the Central Government or the State Government. The constituent shareholders of the petitioner are independent entities and whose source of funds are not limited to the Central Government/State Government. Although, substantial part of equity of nationalized banks is held by the Government, the sources of funds available to the bank are not limited to the Government alone. Banks receives substantial deposits as a part of their business. In addition, the banks also generate substantial income from their commercial activities. Such funds are also deployed by banks by lending and investing in other entries. Since the funds received by the petitioner by way of subscription to its equity cannot be traced to any Government. The conclusion that the government has indirectly provided substantial finance to the petitioner is not sustainable.”
As is clear from the above observations, in order to hold that an entity has been indirectly financed by an appropriate Government, first of all, it is necessary to find that the Central Government has parted with some funds for financing the authority / body; and secondly, the said funds have found their way to the authority / body in question. The link between the financing received by an entity and an appropriate Government must be clearly established. The High Court further observed in the above case that although substantial part of equity of nationalised banks is held by the Government, the sources of funds available to the bank are not limited to the Government alone. Banks receive substantial deposits as part of their business and also generate substantial income from their commercial activities. Such funds are also deployed by lending and investing in other entities. Further, since the funds received by Hardicon Ltd. by way of subscription to its equity could not be traced to any Government, the conclusion that the Government had indirectly provided substantial finance was not sustainable. 10. From the information obtained from the website of ONGC and GAIL India Ltd., it is seen that the shareholding of Government of India in these entities is 68.93% and 56.11% respectively. The remaining holding is of other PSUs, financial institutions, banks, institutional investors and others. Further, these entities also generate income from their commercial activities. Therefore, shareholding of over 98% by these organizations in OPAL does not qualify as substantial financing by the appropriate government within the scope of Section 2 (h) (d) (i) of the RTI Act. Further, even though the Managing Director and some other Directors of OPAL are from the above organizations, because of what is stated above regarding the shareholding of ONGC and GAIL India Ltd., their presence on the Board of Directors of OPAL cannot be regarded as substantial control by the appropriate government.
11. In view of the foregoing, we decide that OPAL is not a public authority under the RTI Act. The appeal is disposed of accordingly.
12. Copies of this order be given free of cost to the parties.
(Sharat Sabharwal)
Information Commissioner
Citation: Shri Rajesh Kumar v. Oil and Natural Gas Corporation Ltd. in File No. CIC/SH/A/2014/002890