Whether NGOs substantially financed by the government be covered under RTI Act?

Yesterday, in a major decision, the Supreme Court clarified which organisations are covered under the definition of a "public authority" as per section 2 (h) of the RTI Act, 2005. The Non Government Organisations (NGOs) receiving "substantial" finance from the government are answerable to a citizen under the Act.

Question before the Court

Whether non­-governmental organisations substantially financed by the appropriate government fall within the ambit of ‘public authority’ under Section 2 (h) of the RTI Act, 2005.

The Apex Court referred to:

1. The Objects & Reasons of the Act as per the Preamble to the RTI Act, 2005 were referred to­.
2. The Section 2(h) of the Act which reads as follows:­

“public authority” means any authority or body or institution of self­government established or constituted –

(a) by or under the Constitution;

(b) by any other law made by Parliament;

(c) by any other law made by State Legislature;

(d) by notification issued or order made by the appropriate Government,

and includes any –

1. body owned, controlled or substantially financed;
2. non­ Government organisation substantially financed, directly or indirectly by funds provided by the appropriate Government;”

3. Cases relied upon

•   Thalappalam Service Cooperative Bank Ltd. and Ors. v. State of Kerala and Ors.
•   P. Kasilingam v. P.S.G. College of Technology & Ors.
•   Bharat Coop. Bank (Mumbai) Ltd. v. Coop. Bank Employees Union
•   Delhi Development Authority v. Bhola Nath Sharma (Dead) by L.Rs. and Ors.
•   New India Assurance Company Ltd. v. Nusli Neville Wadia and Anr.
•   Barak’s treatise on Purposive Interpretation in Law.
•   Abhiram Singh v. C.D. Commachen (Dead) by L.Rs. and Ors.

Arguments by the Appellants

The appellants claimed that they are all colleges or associations running the colleges and /or schools and Non ­Governmental Organisations (NGOs) are not covered under the Act.

View of the Court

1. The word ‘means’ indicates that the definition is exhaustive and complete. It is a hard and fast definition and no other meaning can be given to it. On the other hand, the word ‘includes’ enlarges the scope of the expression. The word ‘includes’ is used to signify that beyond the meaning given in the definition clause, other matters may be included keeping in view the nature of the language and object of the provision. These can be bodies which may not have been constituted by or under the Constitution, by an Act of Parliament or State Legislature or by a notification. Any body which is owned, controlled or substantially financed by the Government, would be a pubic authority.
2. ‘Substantial’ means a large portion. It does not necessarily mean a major portion or more than 50 %. No hard and fast rule can be laid down in this regard. Substantial financing be both direct or indirect. To give an example, if a land in a city is given free of cost or on heavy discount to hospitals, educational institutions or such other body, this in itself would also be substantial financing. The very establishment of such an institution, if it is dependent on the largesse of the State in getting the land at a cheap price, would mean that it is substantially financed. Merely because financial contribution of the State comes down during the actual funding, will not by itself mean that the indirect finance given is not to be taken into consideration. The value of the land will have to be evaluated not only on the date of allotment but even on the date when the question arises as to whether the said body or NGO is substantially financed.
3. Whether an NGO or body is substantially financed by the government is a question of fact which has to be determined on the facts of each case. There may be cases where the finance is more than 50 % but still may not be called substantially financed. Supposing a small NGO which has a total capital of Rs.10,000/­ gets a grant of Rs. 5,000/­ from the Government, though this grant may be 50 %, it cannot be termed as substantial contribution. On the other hand, if a body or an NGO gets hundreds of crores of rupees as grant but amount is less than 50%, the same can still be termed to be substantially financed.
4. Another aspect for determining substantial finance is whether the body, authority or NGO can carry on its activities effectively without getting finance from the Government. If its functioning is dependent on the finances of the Government then there can be no manner of doubt that it has to be termed as substantially financed.
5. While interpreting the provisions of the Act and while deciding what is substantial finance, one has to keep in mind the provisions of the Act. This Act was enacted with the purpose of bringing transparency in public dealings and probity in public life.
6. If NGOs or other bodies get substantial finance from the Government, there is no reason why any citizen cannot ask for information to find out whether the money which has been to an NGO or any other body is being used for the requisite purpose or not.

Order

• The Court referred to the payments received by the school / college from the government and are observed that they are substantial payments and amounts to almost half of their expenditure and more than 95% of the expenditure as far as the teaching and other staff is concerned.
• These Colleges /Schools are substantially financed and are public authority within the meaning of the Section 2(h) of the Act. The Supreme Court ruled that each of the college / school is a public authority within the meaning of the Act. 

For a full reading of the judgment, please see below.