The Bombay High Court has reaffirmed that the Securities and Exchange Board of India (SEBI) must comply with the mandatory procedure outlined in Section 11 of the Right to Information (RTI) Act, 2005, before disclosing any information concerning third parties.
This significant decision came from a Division Bench consisting of Justices M.S. Sonak and Jitendra Jain. The ruling addressed several writ petitions that stemmed from an RTI application filed by transparency activist Subhash Chandra Agarwal. He sought detailed information regarding SEBI’s process of appointing Public Interest Directors (PIDs) and annual inspection reports related to institutions such as BSE, NSE, MCX, and MCX Clearing Corporation.
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SEBI challenged the Central Information Commission’s (CIC) partial order that directed the disclosure of some of the requested information. Meanwhile, Mr. Agarwal filed separate petitions demanding complete access to the withheld data.
The Court partly upheld SEBI’s denial of information under Section 8(1)(e) of the RTI Act, which protects data held in a fiduciary capacity. It found several of Mr. Agarwal’s queries vague and overbroad.
“Their privacy concerns cannot be disregarded without giving them an opportunity to oppose such disclosures, if they so choose. The provisions in Section 11, which are mandatory, cannot be avoided or bypassed in such situations,”
— Bombay High Court Bench
Key Observations and Findings
The Court clarified that stock exchanges like NSE and BSE qualify as “third parties” under Section 2(n) of the RTI Act. Consequently, any information supplied by them in confidence to SEBI cannot be shared unilaterally.
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Further, the Court made a clear distinction between regulatory bodies like SEBI and RBI, stating that decisions from cases involving the Reserve Bank of India (such as Jayantilal N. Mistry) may not apply wholesale to SEBI’s regulatory relationship with stock exchanges.
“In any event, the annual general reports, based upon information furnished by the various stock exchanges, can be said to constitute information related to third parties,”
— Bombay High Court
The Court also highlighted the importance of adhering to natural justice principles by ensuring that affected third parties receive an opportunity to object before their information is disclosed.
Case Title:
Securities and Exchange Board of India v. Central Information Commissioner & Ors.
(Bombay High Court, Writ Petition Nos. 10909, 10910, 10887, and 10888 of 2023)