2025 (9) TMI 1168 - HC - SEBI

Appeal dismissed; disclosure of ongoing SEBI investigation withheld under Section 8(1)(h) to protect evidence and markets

Srishti Rustagi Versus Securities And Exchange Board Of India (Sebi) & Ors.

The HC dismissed the appeal, upholding the CPIO and First Appellate Authority's decision that disclosure of information relating to an ongoing SEBI ... Allegations of insider trading to the concerned department for necessary action - complaint filled with SEBI on the SCORES portal - disclosure of information relating to ongoing examination/investigation falls within the exemption of Section 8(1)(h) of the Right to Information Act, 2005 - Seeking a direction to respondent no.1/SEBI to provide copy of the speaking order regarding part disposal of the complaint of the appellant as well as the status and details of the investigation on the website/portal - seeks direction to respondent no.1 to complete the investigation in a time bound manner - HELD THAT:- First Appellate Authority noted that the inputs and alerts received by SEBI may or may not result in further action and that such examination or investigation may or may not establish the suspected violations or lead to enforcement actions. Predicated thereon, it was noted that maintenance of confidentiality of examination/investigation is of paramount importance since reports of the same may result in unwarranted speculation or concern in the market or may affect evidence collection during the examination/investigation or may even result in unnecessary harm to third parties. It was thus concluded that there was no deficiency in the original response by the CPIO and resultantly, the appeal was dismissed. The observations of the authorities under the RTI Act are clear in so far as the status of the complaint is concerned which is available on the SCORES portal. With respect to the ongoing investigation, if at all, the statutory authorities have also given reasons as to why and under what circumstances the disclosure of such information may impede the investigation process in terms of Section 8(1)(h) of the RTI Act and also the fact that such disclosure may not only affect confidentiality of examination/investigation but may also affect evidence collection and result in unnecessary harm to third parties. In our opinion, these reasons cumulatively are sufficient not to disclose the information sought by the appellant. It is also relevant to note that the appellant only sought status of her complaint and not the nature of investigations which, according to the statutory authorities, is already on the SCORES portal. As observed above, apart from the status of the complaint, the nature of investigations even if sought by the appellant stands exempted in view of the aforesaid background facts and thus cannot be disclosed. Thus, we do not find any reasons to interdict the impugned order dated 24.12.2024 - Appeal dismissed. ISSUES PRESENTED AND CONSIDERED 1. Whether the information regarding the status of a complaint filed on the regulator's SCORES portal was duly provided such that statutory remedies under the RTI Act were exhausted. 2. Whether disclosure of information relating to ongoing examination/investigation falls within the exemption of Section 8(1)(h) of the Right to Information Act, 2005. 3. Whether judicial interference was warranted against the orders of the First Appellate Authority and the Central Information Commission in respect of the RTI response and the claimed exemptions. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Sufficiency of information provided on status of the complaint Legal framework: The RTI Act confers a right to access information held by public authorities; appellant sought status of a complaint registered on the SCORES portal and received responses from the CPIO, the First Appellate Authority and the Central Information Commission indicating that status information and action-history are accessible on the SCORES portal. Precedent Treatment: The administrative authorities (First Appellate Authority and CIC) were relied upon and their findings were affirmed by the Court. No contrary judicial precedent was invoked or overruled in the judgment. Interpretation and reasoning: The records showed that the SCORES portal and the CPIO's letter dated 26.04.2022 provided the appellant with the status of her complaint; the First Appellate Authority specifically noted the availability of complaint correspondence and action history under the portal's 'View Complaint Status' tab and that regulatory actions, if taken, are published on the regulator's website. The Court accepted these factual and legal findings as demonstrating that the information sought (status of the complaint) was furnished. Ratio vs. Obiter: Ratio - where a public authority demonstrates that the requested information (status of a registered complaint) is available through the authority's portal and was communicated to the requester, courts should not intervene. Obiter - peripheral commentary that inputs and alerts may or may not result in action, which is an administrative reality rather than a legal rule. Conclusions: The Court concluded that the status of the complaint had been duly provided and there was no deficiency in the CPIO's response or in the appellate orders upholding it; accordingly no interference was warranted on this point. Issue 2 - Applicability of Section 8(1)(h) RTI Act to ongoing examination/investigation information Legal framework: Section 8(1)(h) exempts disclosure of information which would impede the process of investigation or prosecution of offences. The RTI framework permits refusal where disclosure would harm confidentiality of examinations/investigations, evidence collection, or cause unwarranted market speculation or harm to third parties. Precedent Treatment: The administrative authorities applied Section 8(1)(h) in refusing to disclose details of any ongoing internal examination/investigation; the Court accepted these applications of the statutory exemption. No judicial precedent was cited to distinguish or overrule the administrative interpretation. Interpretation and reasoning: The statutory authorities explained that inputs received are treated as market intelligence and that examinations/investigations are conducted confidentially; disclosure of details during an ongoing process could impede evidence collection, cause unwarranted market speculation, and harm third parties. The Court found these reasons cumulatively sufficient to justify non-disclosure under Section 8(1)(h). The Court also noted the distinction between status (provided) and nature/details of investigation (claimed to be exempt). Ratio vs. Obiter: Ratio - where disclosure of particulars of an ongoing regulatory examination or investigation would impede evidence collection, compromise confidentiality and create unwarranted market impact, Section 8(1)(h) permits refusal; administrative findings explaining these risks are adequate grounds for refusal absent contrary material. Obiter - the Court's acceptance that post-investigation enforcement orders are published and available in public domain is explanatory of administrative practice rather than a novel legal pronouncement. Conclusions: The Court concluded that details of any ongoing investigation are exempt from disclosure under Section 8(1)(h) and that the reasons given by the statutory authorities (risk to evidence collection, confidentiality, market speculation and third-party harm) justify non-disclosure in the present case. Issue 3 - Scope for judicial intervention against appellate orders under the RTI regime Legal framework: Judicial review of administrative determinations under the RTI Act is limited to scrutiny of legality, reasonableness and compliance with statutory norms. Courts interfere when there is material illegality, absence of factual basis, or misapplication of statutory provisions. Precedent Treatment: The Court did not overturn the findings of the First Appellate Authority or the Central Information Commission; instead it reviewed the record, the statutory responses, and the rationales provided by those authorities and found no ground for intervention. Interpretation and reasoning: The Court examined whether the CPIO's response addressed the information sought and whether the exemption under Section 8(1)(h) was reasonably applied. Finding that the status was furnished and that legitimate reasons were given for withholding investigation details, the Court held there was no scope for interference. The Court emphasized that confidentiality of examinations/investigations and the publication of concluded enforcement actions on the regulator's website mitigate the need for disclosure during the investigative process. Ratio vs. Obiter: Ratio - appellate administrative findings on availability of information and application of RTI exemptions withstand judicial review where they are supported by record reasons explaining how disclosure would impede investigation or cause harm; absent material error, courts should decline to interfere. Obiter - comments about the importance of confidentiality to avoid unwarranted market concern are explanatory and contextual. Conclusions: The Court dismissed the writ challenge to the appellate orders, holding that there was no legal or factual basis to set aside the administrative decisions and that the Court should not interdict those decisions in the absence of demonstrated illegality or unreasonable application of the RTI exemptions. Cross-references and synthesis The Court's conclusions on Issues 1 and 2 are interdependent: the availability and provision of complaint-status information on the SCORES portal (Issue 1) removed any procedural deficiency, while the legitimate application of Section 8(1)(h) (Issue 2) justified withholding investigatory details. Consequently, judicial intervention (Issue 3) was unwarranted. The administrative practice of publishing concluded enforcement orders on the regulator's website was noted as a post-investigation transparency mechanism that coexists with confidentiality during active investigations.