Sanchayita Lahkar

The High Court of Judicature at Bombay Division Bench of Justice M.S. Sonak and Justice Jitendra Jain held that disclosure of information relating to rejected candidates for the role of Public Interest Directors (PIDs) and certain annual inspection reports of stock exchanges by the Securities and Exchange Board of India (SEBI) cannot be allowed without first complying with the procedural safeguards under Section 11 of the Right to Information Act, 2005. The Court set aside the Central Information Commission's (CIC) order dated 27 December 2022 to the extent it directed such disclosure, remanding the matter back to SEBI's Chief Public Information Officer (CPIO) for fresh consideration in accordance with law.

The Court upheld the CIC’s rejection of disclosure for several queries and declined to interfere with its order on others, stating that the information either lacked clarity or was validly withheld on grounds recognized under the RTI Act. The Court clarified that while transparency is a statutory objective, it must be balanced with individual privacy, fiduciary confidentiality, and procedural fairness to third parties under Section 11.

Also Read: Preventive Detention Must Not Circumvent Ordinary Criminal Law | Order Set Aside As State Failed To Show Threat To Public Order : Supreme Court

The writ petitions arose from the order passed by the Central Information Commission (CIC) on 27 December 2022, which had partially allowed an RTI application dated 18 June 2021 filed by Mr. Subhash Chandra Agarwal. The application had been filed with the Chief Public Information Officer (CPIO) of SEBI seeking nine categories of information.

The SEBI challenged the CIC’s order by instituting Writ Petition Nos. 10909 and 10910 of 2023, seeking to set aside the directions issued in relation to queries 1, 3, 4, and 5. Conversely, Mr. Agarwal filed Writ Petition Nos. 10887 and 10888 of 2023 challenging the CIC’s refusal to direct complete disclosure of the information sought in his RTI application. The petitions were heard together and disposed of by a common judgment.

Mr. Agarwal’s application sought the following information:

1. Policies and guidelines relating to SEBI's role in appointing Public Interest Directors (PIDs) on boards of Market Infrastructure Institutions (MIIs) including BSE, NSE, MCX, and MCX Clearing Corporation Limited.

2. File notings and correspondence relating to framing such policies.

3. File notings and documents concerning SEBI’s approval for PID appointments between 01 January 2019 and 15 June 2021.

4. Copies of annual inspection reports of BSE from 2017–18 to 2019–20.

5. Copies of annual inspection reports of NSE from 2014–15 to 2017–18.

6. Inspection of all records and documents relating to the above queries.

7. Web-links if any, for the above queries.

8. Any other related information.

9. File notings regarding movement of the RTI application.

The SEBI submitted that apart from Query 1, the rest of the information was either exempt under Section 8 of the RTI Act or too vague to be processed effectively. SEBI contended that:

• Information sought under Queries 2 and 3 was held in a fiduciary capacity and also constituted personal information.

• Annual inspection reports under Queries 4 and 5 were commercially sensitive and contained third-party information relating to stock exchanges.

• Queries 6 to 9 were vague and lacked sufficient clarity for processing.

The CIC directed SEBI to provide web links for Query 1, which neither party challenged. For Query 2, the CIC upheld SEBI’s invocation of the fiduciary exemption under Section 8(1)(e). In respect of Query 3, the CIC applied Section 10 of the RTI Act and directed SEBI to furnish a list of selected and rejected PID candidates after redacting sensitive personal information. Regarding Queries 4 and 5, the CIC directed SEBI to provide concluding comments of annual inspections, citing public interest.

The Bombay Stock Exchange (BSE), National Stock Exchange (NSE), and Multi Commodity Exchange (MCX) were impleaded as parties as the requested information concerned them. Senior advocates representing the exchanges and SEBI argued that such disclosures, if made, would compromise sensitive financial data and violate fiduciary relationships and privacy rights.

The respondents further contended that the CIC failed to apply the mandatory procedural requirements under Section 11 of the RTI Act while directing the disclosure of information pertaining to third parties. SEBI and the exchanges asserted that no opportunity was given to such third parties to present their objections to the proposed disclosure.

On the other hand, Mr. Agarwal’s counsel argued that SEBI, being a regulatory authority, must maintain transparency and that disclosure of such records was in larger public interest. He referred to Supreme Court judgments in Reserve Bank of India v. Jayantilal N. Mistry and CPIO v. Subhash Chandra Agarwal, where it was held that regulators like the RBI must disclose inspection reports and other documents in the public domain. He denied that the information sought constituted personal information or trade secrets.

"We are satisfied that this information is mainly contained in the Securities Contracts (Regulation) Act 1956 and Rules 1957 and the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations 2018. Such information is thus available in the public domain."

Regarding Query 2, the Court recorded: "Nevertheless, such information can be said to have been held in fiduciary capacity by the SEBI. Because this would include information supplied by candidates to be considered for appointment as PIDs in good faith and candour, trusting that confidentiality would be maintained."

On Query 3, the Court stated: "The CIC’s order is vulnerable to the extent it directs the supply of a list of rejected candidates, even though such rejected candidates would be third parties as defined under Section 2(n) of the RTI Act."

"If information regarding the rejected candidates, including their names, is to be disclosed, the third-party procedure prescribed under Section 11 must be followed."

"Their privacy concerns cannot be disregarded without giving them an opportunity to oppose such disclosures, if they so choose."

In addressing the inspection reports under Queries 4 and 5, the Court noted:

"The annual inspection reports would include information about stock exchanges, such as BSE and NSE."

"Such information can be said to constitute information related to third parties. Therefore, without following the provisions of Section 11 of the RTI Act, there was no question of directing even the limited disclosures that have been made."

On vague queries such as 6 to 9, the Court observed: "We agree with Mr Bhatt that furnishing such vague information may not be possible. While there may be no exemption as such provided in such situations, it is expected of an applicant to seek information with a sufficient degree of precision and clarity."

The Court discussed the Supreme Court’s interpretation of Sections 8 and 11 in the CPIO v. Subhash Chandra Agarwal decision, quoting extensively and affirming: "Sections 8 and 11 must be read in conjunction with each other... information sought that falls under the category of ‘personal information’ within the meaning of clause (j) of Section 8(1) is also ‘third party information’ within the ambit of Section 11."

The Court also distinguished between selection of PIDs and competitive examinations: "Once again, this is not a case of selection through a competitive examination or by a departmental promotion committee... Typically, professionals and experts from the field are considered and evaluated."

"They may not want these matters to be made public. Their privacy concerns cannot be disregarded without giving them an opportunity to oppose such disclosures, if they so choose."

The Court issued the following binding directions:

Also Read: Karnataka High Court Quashes Property Tax Demand On Industrial Units | Gram Panchayats Lack Jurisdiction Without State Notification | KIADB’s Exclusive Control Over Industrial Areas Upheld

"The CIC’s impugned order in so far as Query Nos. 1, 2, 6, 7, 8 and 9 is not interfered with."

"The CIC’s impugned order regarding Query Nos. 3, 4 and 5 is set aside, and the matter is remanded to the CPIO for fresh consideration of the Petitioners’ request for information on these queries, but after following the provisions of Section 11 of the RTI Act."

"There shall be no order for costs in these Petitions."

"All concerned must act on an authenticated copy of this order."

Advocates Representing the Parties:

For the Petitioners: Mr. J. J. Bhatt, Senior Advocate, with Ms. Shivani Kumbhojkar and Mr. Omprakash Jha, for The Law Point

For the Respondents: Mr. Ashish Venugopal with Ms. Mitravinda Chunduru and Mr. Valentine Mascarenhas for RHP Partners; Mr. Sunip Sen, Senior Advocate, with Mr. Akshay Vani and Mr. Sunilkumar Pillai for MLS Vani & Associates; Mr. Zerick Dastur with Ms. Archana Uppulliri for Zerick Dastur Advocates; Mr. Pesi Modi, Senior Advocate, with Ms. Kalpana Desai, Mr. Ritvik Kulkarni, and Ms. Kanika Sharma for Khaitan & Co.

Case Title: Securities and Exchange Board of India v. Central Information Commissioner & Ors.

Neutral Citation: 2025: BHC-AS:28136-DB

Case Number: WP Nos. 10909, 10910, 10887, and 10888 of 2023

Bench: Justice M.S. Sonak and Justice Jitendra Jain