2019 (9) TMI 1351 - SC - Indian Laws

NGOs substantially funded by government are 'public authorities' under RTI Act; SC emphasizes transparency and accountability

The Supreme Court held that NGOs substantially financed by the government are considered 'public authorities' under Section 2(h) of the Right to ... Public authority under Section 2(h) of the Right to Information Act, 2005 - inclusive clause: bodies owned, controlled or substantially financed - inclusive clause: non-governmental organisations substantially financed - purposive construction of statute - meaning of 'substantially financed' - distinction between 'means' and 'includes' in definition clausesPublic authority under Section 2(h) of the Right to Information Act, 2005 - inclusive clause: non-governmental organisations substantially financed - Non governmental organisations substantially financed, directly or indirectly, by funds provided by the appropriate government are public authorities within the meaning of Section 2(h) of the Act. - HELD THAT: - The Court examined the two part structure of Section 2(h): a restrictive first part dealing with authorities, bodies or institutions of self government established or constituted under specified modes (Clauses (a)-(d)), and an inclusive second part which expressly adds (i) bodies owned, controlled or substantially financed and (ii) NGOs substantially financed by the appropriate Government. The words 'and includes any' operate to expand the definition beyond Clauses (a)-(d). A purposive construction consistent with the Objects and Reasons supports including NGOs substantially financed by government funds within the definition of 'public authority'. The Court rejected the contention that the opening phrase 'of self government' limits the entire definition to self governing bodies. The Court therefore held that an NGO substantially financed, directly or indirectly, by the appropriate Government is amenable to the obligations of a public authority under the Act. [Paras 16, 17, 18, 22]An NGO substantially financed, directly or indirectly, by the appropriate Government is a public authority under Section 2(h) of the RTI Act.Distinction between 'means' and 'includes' in definition clauses - purposive construction of statute - The opening part of Section 2(h) is an exhaustive enumeration of authorities constituted by the specified modes, while the subsequent 'includes' clause intentionally adds further categories; the section must be construed purposively to effectuate the Act's object. - HELD THAT: - The Court analysed earlier authorities on the use of 'means' and 'includes' and concluded that the first part of Section 2(h), which uses 'means', provides a complete description of those categories established by the Constitution, Parliament, State Legislature or notification. The later use of 'includes' introduces additional categories (sub clauses (i) and (ii)). Applying rules of purposive construction, the Court held that this reading avoids rendering the inclusive sub clauses redundant and accords with the transparency objectives of the Act. [Paras 10, 15, 16, 20, 22]Section 2(h) comprises an exhaustive listing of constitutionally or statutorily constituted authorities plus an inclusive addition; the inclusive sub clauses are to be given effect by purposive construction.Meaning of 'substantially financed' - questions of fact in determining substantial finance - What constitutes 'substantially financed' is a question of fact determined case by case; no rigid percentage threshold applies and both direct and indirect forms of financing are relevant. - HELD THAT: - Relying on prior exposition, the Court explained that 'substantial' denotes materiality or significance rather than a fixed numerical benchmark. Substantial financing may be direct or indirect (for example, land allotment at concessional rates), and the assessment must consider whether the entity can function effectively without government funds. Examples were given to illustrate that percentage alone is not decisive: a small entity receiving a 50% grant may not be substantially financed, whereas a large grant constituting less than 50% may be material. Thus, the determination of substantial financing depends on the nature, value and effect of the government support on the entity's functioning. [Paras 25, 26, 27, 28, 29]Determination of 'substantially financed' is factual, with both direct and indirect government support and dependence on such support being relevant; no fixed numeric rule is prescribed.Application of Section 2(h) to specific institutions - D.A.V. College Trust and its constituent colleges/school (as identified) are public authorities under Section 2(h) because they are substantially financed by the appropriate government. - HELD THAT: - Having examined the financial material, the Court found that the State's grants constituted a substantial source of funding for the colleges and school: grants constituted a large portion of annual expenditure and the State bore 95% of teaching and non teaching salaries. Subsequent years showed even larger grants. The Court concluded that the institutions' functioning depended materially on these funds and therefore they fall within sub clause (i)/(ii) as public authorities under the Act. [Paras 31, 32, 33, 34, 35]The D.A.V. institutions identified in Civil Appeal No. 9828 of 2013 are substantially financed by government and are public authorities under the RTI Act.Questions of fact in determining substantial finance - For the other appeals before the Court, whether the institutions are substantially financed was not finally determined and is remitted to the High Court for fresh fact finding and decision in accordance with the law laid down. - HELD THAT: - The Court observed that the High Court had not fully considered the question of substantial financing in the other matters. While holding that those bodies are NGOs within the non governmental description, the Court directed that the High Court determine, after affording both parties opportunity to file and contest documents, whether the institutions are substantially financed by the appropriate Government, applying the principles articulated in this judgment. [Paras 36, 37]Civil Appeals other than No. 9828/2013 are remitted to the High Court to determine, on the facts and in accordance with the Court's guidance, whether the institutions are substantially financed by the appropriate Government.Final Conclusion: The Court held that Section 2(h) of the RTI Act, by its inclusive sub clauses, brings within 'public authority' bodies owned, controlled or substantially financed by government and NGOs substantially financed by government; 'substantially financed' is a factual inquiry without a fixed numerical test and both direct and indirect support are relevant. Applying these principles, the D.A.V. institutions in Civil Appeal No. 9828/2013 were held to be public authorities; the question of substantial financing in the remaining appeals is remitted to the High Court for determination. Issues Involved:1. Whether non-governmental organizations (NGOs) substantially financed by the appropriate government fall within the ambit of 'public authority' under Section 2(h) of the Right to Information Act, 2005.Detailed Analysis:Issue 1: Definition of 'Public Authority' under Section 2(h) of the RTI Act:The core issue revolves around whether NGOs substantially financed by the government qualify as 'public authorities' under Section 2(h) of the Right to Information Act, 2005. The Act aims to ensure transparency and accountability by mandating public authorities to provide information to citizens. Section 2(h) defines 'public authority' as any authority or body established or constituted by the Constitution, by any law made by Parliament, by any law made by State Legislature, or by notification issued by the appropriate Government, and includes any body owned, controlled, or substantially financed, directly or indirectly, by funds provided by the appropriate Government, including NGOs.Issue 2: Interpretation of 'means' and 'includes':The judgment discusses the interpretation of the terms 'means' and 'includes' within the context of Section 2(h). It is emphasized that 'means' indicates an exhaustive definition, while 'includes' suggests an extension of the definition. The court clarifies that Section 2(h) uses both terms, implying that the categories mentioned are exhaustive but also expanded to include bodies owned, controlled, or substantially financed by the government, and NGOs substantially financed by the government.Issue 3: Applicability to NGOs:The appellants argued that NGOs should not be covered under the Act unless specifically notified. However, the court rejected this argument, stating that the inclusive clause in Section 2(h) clearly intends to cover NGOs substantially financed by the government, irrespective of whether they are notified or not. The court emphasized that the inclusive clause expands the definition beyond the four categories mentioned in the first part of Section 2(h).Issue 4: Substantial Financing:The court examined what constitutes 'substantial financing'. It clarified that 'substantial' does not necessarily mean a majority or more than 50% but signifies a considerable or essential portion of funding. The court provided examples, such as land given at a heavy discount, which could also be considered substantial financing. The determination of whether an NGO is substantially financed is a question of fact to be decided based on the specifics of each case.Issue 5: Case-Specific Analysis:The court analyzed specific cases to determine if the institutions in question were substantially financed by the government. For instance, in Civil Appeal No. 9828 of 2013, the court found that D.A.V. College Trust and Management Society, along with its colleges and schools, received substantial funding from the government, amounting to almost half of their expenditure and more than 95% of the expenditure for teaching and other staff. Therefore, these institutions were deemed public authorities under the Act.For other cases, the court noted that the aspect of substantial financing had not been fully considered by the High Court. These cases were remitted to the High Court for a detailed examination of whether the institutions were substantially financed, in light of the law laid down by the Supreme Court.Conclusion:The Supreme Court concluded that NGOs substantially financed by the government are public authorities under Section 2(h) of the Right to Information Act, 2005. The court emphasized the importance of transparency and accountability, stating that citizens have the right to know how their money is being used by NGOs or other bodies receiving substantial government funding. The judgment provides a detailed interpretation of 'substantial financing' and clarifies the inclusive nature of the definition of 'public authority' under the Act.