Central Information Commission

Room No. 303, 2nd Floor, August Kranti Bhawan

Bhikaji Cama Place, New Delhi-110066
F.No.CIC/SM/A/2012/000196
Present:
Appellant

Shri Arun Kumar Agrawal,

Respondents

1. Dr. Anil K. Sharma, CPIO,

SEBI
2. M/s Reliance Industries Limited
through
Shri Amit Sibal, Sr. Advocate.

Shri Ritin Rai, Advocate on behalf of

12 entities.

Date of Hearing

2nd and 3rd July, 2014

Date of decision

28th November, 2014

ORDER

This case was heard on 2nd and 3rd July, 2014 in pursuance of the
directions dated 14.03.2014 of the Honble 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 14.09.2011 to the CPIO of the Securities and Exchange
Board of India (SEBI) established under section 3 of the Securities and
Exchange Board of India Act, 1992 (the SEBI Act) seeking certain information
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under the Right to Information Act, 2005 (the Act). The points on which
information was sought are as follows:1.
Inspection report in respect of the entities involved with RIL in the
short sale of shares of Reliance Petroleum in November, 2007;
2.

Report of the Inquiry Officer in respect of point 1 above;

3.
The various applications of consent order/terms offered by RIL and
the entities involved charged under Prohibition of Fraudulent and Unfair
Trade Practices Regulations;
4.

All the file notings mentioned at 1, 2 and 3 above;

5.
Entire papers in the file and file notings relating to the declining of
the requests filed by RIL and other entities for the consent orders and for
considering request for composition of offences under the Prohibition of
Fraudulent and Unfair Trade Practices Regulations; and
6.
Entire papers in the file and file notings relating to the latest
pending requests filed by RIL and other entities for the consent orders
and for considering request for composition of offences under the
Prohibition of Fraudulent and Unfair Trade Practices Regulations.
4.
The CPIO vide his reply dated 7.10.2011 informed the appellant in
respect of points 1 and 4, that quasi-judicial proceedings were in progress and
there was no final order yet, and hence the information was exempt under
section 8(1)(h) and 8(1)(d) of the Act. About point no. 2, the CPIO informed that
the information sought was not available with SEBI. About point nos. 3, 5 and 6,
the information was denied, being exempt under section 8(1)(e) of the Act.
5.
The appellants first appeal dated 22.10.2011 was disposed of by an
order dated 22.11.2011. Regarding point nos. 1 and 4 of the RTI application the
appellate authority agreed with the CPIO that the disclosure of the documents is
exempt under section 8(1)(d) and 8(1)(h) of the Act. It was also observed that
the appellant had not brought up any public interest argument to the fore under
section 8(2) of the Act. As regards point no. 2, the matter was remanded to the
CPIO for de novo consideration. As regards point nos. 3 and 6, it was held that
the information requested for is exempt under section 8(1)(d) and 8(1)(e).
6.
In his second appeal dated 12.01.2012 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)

he was not pressing point no. 2 of his RTI request;

(b)

on 1.1.2013, the SEBI revealed the names of the companies whose

consent applications have been rejected along with the Reliance
Industries;

(c)

the claim of RIL to be third party under section 19(4) of the Act is not
sustainable;

(d)

the SEBI has also investigated the price manipulations and price rigging
and the investigation was not confined to insider/fraudulent trading only
and that the investigations were also conducted for allegation of cheating
of investors on a large scale;

(e)

the investors need to be informed about the amount of profit made by the
12 entities who were alleged to be working for personal gains and acting
as agents of RIL. The disclosure of information would indicate that
Rs.2000 crores of money minus the amount to compensate the investors
will accrue to the public exchequer;

(f)

the CPIO has wrongly claimed exemption under section 8(1)(h) of the Act.
The proceedings are complete. Even if the investigation is pending, the
disclosure of information would not, in any way, impede the process of
the inquiry/investigation. He relied upon the judgement dated
30.11.
2009 of the High Court of Delhi in W.P.(C) No. 7930/2009 Addl.
Commissioner of Police (Crime) vs CIC and dated 03.06.2011 in W.P.(C)
No. 295/2011 B.S. Mathur vs PIO, Delhi High Court, respectively;

(g)

the CPIO has not properly examined the contents of the information
requested for. Once the investigation report is submitted, the subsequent
action or decision on that report is not exempt under section 8(1)(h) as
the action being taken cannot be considered as a process of
investigation. Even if some information is to be withheld, provisions of
section 10 of the Act should have been applied by the CPIO;

(h)

the clause 8(1)(d) is not attracted in the matter specially when insider
trading is involved. Clause 8(1)(e) also does not apply as there cannot
be fiduciary relationship between a violator of law and the regulator. SEBI
is expected to protect the investors and not to protect the interest of the
RIL.

(i)

the 12 entities are not investors. Illegal money has been used;

(j)

the investigation is based on the documents and the information is

available in a computer;

(k)

the Act being a special Act will apply to the exclusion of other Acts.

(l)

he was not relying on the allegation of conspiracy made earlier by him in

the matter.

8.

Dr. Anil Kumar Sharma, CPIO, SEBI submitted that

(a)

he is relying upon the reply of the CPIO and the

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. Such information/documents
filed with the SEBI are fiduciary in nature. 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, the same
is, therefore, exempt u/s 8(1)(d) and 8(1)(e) 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, relying upon the orders of the Commission in (i) case no.
CIC/DS/A/2013/000138/MP - Shri Narender Bansal vs Oriental Insurance
Co. Ltd., dated 13.01.2014 (ii) case no. CIC/AT/A/ 2007/00234 K.S.
Prasad vs Amarjit Singh, CPIO, SEBI, dated 11.12.2007 and (iii) case
no.CIC/AT/A/2007/007, 10 and 11 Shankar Sharma vs Director of
Income Tax and CPIO dated 10.07.2007.
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order of the first

(f)

the SEBI, with the approval of its Chairman, had issued guidelines for
consent orders and for considering request for composition of offences
vide circular dated 20.04.2007. As per the guidelines, all information
submitted and discussions in pursuance of the consent orders shall be in
a fiduciary capacity and may not be released to the public, as it would
prejudice the functioning of SEBI and the interest of the party. Therefore,
the information provided by any entity applying to certain proceedings
through consent means is exempt from disclosure under section 8(1)(e)
of the Act. In this regard, he relied on the orders of the Commission in (i)
case no. CIC/SM/A/2011/001497 - Kishan Lal Mittal vs SEBI, dated
09.07.2012 and (ii) case no. CIC/AT/A/2010/001052-SM - Mahendra
Singh vs CPIO, SEBI, dated 25.08.2011 in which it was held that the
background papers including the file noting leading to the consent orders
should not be disclosed in the public domain, not only because these
would contain information in the nature of commercial confidence but also
because SEBI receives such information in confidence and trust. The
provisions of both sub-sections (1) (d) and (1) (e) of section 8 of the Act
would apply to such information;

(g)

Section 8(1)(h) 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) 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)

the appellant wants information in the public interest under section 8(2) of
the Act as there has been alleged conspiracy between the RIL and the 12
entities. This allegation as well as the allegation about mala fide in
denying extension to the then Chairman, SEBI is baseless. He relied on
judgement dated 01.11.2013 of the Supreme Court in W.P.(C) no. 374 of
2012 filed by the appellant - Arun Kumar Agrawal vs Union of India & Ors.
reported in (2014) 2 SCC 609. The Honble Court had held that denial of
extension to the then Chairman, SEBI cannot be considered mala fide;

(b)

as the SEBI has issued a show cause notice to RIL, the matter is pending
adjudication. Therefore, inspection report 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;
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(c)

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 impair governments ability to obtain necessary information in
future or to cause substantial harm to competitive position of person from
whom information is obtained. Reliance was placed on the order dated
23.3.2012 of the High Court of Delhi in LPA no. 900/2010 - Bharat
Sanchar Nigam Limited vs Shri Chander Sekhar. Therefore, exemption
under section 8(1)(d) and section 8(1)(e) of the Act applies to this case;

(d)

the right to negotiation and settle in confidence is fundamental. The

settlements proceedings are confidential. He referred to the observations
of the Supreme Court in judgement dated 11.09.2012 Sahara India
Real Estate Corporation Limited vs SEBI reported in (2012) 10 SCC 603
(730). If the information is disclosed, it will strike down the policy of the
SEBI to negotiate;

(e)

the Act may not be allowed to be used to intrude into the domain of
another quasi-judicial authority, the SEBI, in this case. He relied upon
order dated 13.03.2009 of this Commission in the matter of Sandeep K.
Vakharia case no. CIC/AT/A/2008/01373;

(f)

SEBI has not passed any order under the SEBI Act that the information in
question may be disclosed to any person;

(g)

as the appellant has failed to establish any case of public interest as per
section 8(2) of the Act, the appeal may be dismissed as without merit.

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);

(d)

this is not a case of public interest as there has been no conspiracy by

RIL with senior officials of the Government, the SEBI officials and the
officials of the 11 entities as alleged. The consent order circular is a
document as per SEBI Act;

(e)

paragraph 22 of the consent order circular clearly states that all

information submitted and discussions in pursuance of the consent order
shall be in a fiduciary capacity and may not be released to the public, as
it would prejudice SEBI and/or the party. Therefore, information provided
by any party seeking a consent order is clearly held under a fiduciary
capacity and exempt from disclosure under section 8(1)(e) of the Act. It is
for the regulator/SEBI to decide whether the information so obtained
should be disclosed or not. He relied upon order dated 09.07.2012 in the
matter of Kishan Lal Mittal vs CPIO, SEBI case no.
CIC/SM/A/2011/001497;

(f)

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. It is 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. After getting a report of the
inquiry, the SEBI is required to pass an appropriate speaking order. The
7

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) 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) 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) 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
8

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 concrete and tangible case of
public interest has been made out by the appellant which may be described as
overriding the protected interest. We are not convinced with the arguments of
the appellant that the disclosure of the desired information would be in public
interest. We also 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 view of above, 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

Authenticated true copy.

(Dr. M.K. Sharma)
Registrar