TaxTMI 
TaxTMI 
2026 (7) TMI 2017
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....for the respondent 19 7 E Analysis 20-54 8 F Summarizing Our Findings 55 9 G Conclusion 56-57 A. Issue involved 1. A pure question of law arises for consideration before us in the present appeal, which is whether the National Stock Exchange of India ["NSEI", hereinafter] is a "public authority" within the meaning of Section 2(h) of the Right to Information Act, 2005 ["RTI Act", hereinafter]. 2. A learned Single Judge of this Court has, by judgment dated 15 April 2010, answered the issue in the affirmative. The NSEI is in appeal. 3. We have heard Mr. Jayant Mehta, learned Senior Counsel appearing for the NSEI, Mr. Ashish Aggarwal, learned Counsel for the Securities and Exchange Board of India ["SEBI", hereinafter] and Mr. B.S. Shukla, learned CGSC for the Union of India. B. The provision under consideration 4. Section 2(h) of the RTI Act reads thus: "2. Definitions. - In this Act, unless the context otherwise requires: ***** (h) 'public authority' means any authority or body or institution of self-government established or constituted- (a) by or under the Constitution; (b) b....
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.... judgment first examines the ambit of the expression "authority". Webster's Comprehensive Dictionary defined "authority" as a "person or persons in whom government or command is vested". Ramanatha Aiyar, in his Advanced Law Lexicon, defined "authority" as a person or persons, in a body, which exercised a power of command. The expression "authority" had also been examined by the Supreme Court in Rajasthan State Electricity Board v. Mohan Lal [(1967) 3 SCR 377], which defined "authority" as covering all bodies covered by a statute in which powers were conferred to carry out governmental or quasi-governmental functions. In the context of Article 12 of the Constitution of India, the judgment in Rajasthan State Electricity Board also made reference to the earlier decision of the Supreme Court in Ujjam Bai v. State of Uttar Pradesh [AIR 1962 SC 1621], which covered, in the ambit of the expression "authority", every type of authority set up under a statute for administering laws enacted by the Parliament or the State, including authorities vested with the duty to make decisions to implement those laws. In the context of Articles 12 and 226 of the Constitution of India, the expression ....
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....le 12. The question in each case would be - whether in the light of the cumulative facts as established, the body is financially, functionally and administratively dominated by or under the control of the Government. Such control must be particular to the body in question and must be pervasive. If this is found then the body is a State within Article 12. On the other hand, when the control is merely regulatory whether under statute or otherwise, it would not serve to make the body a State." (viii) Proceeding, next, to the expression "institution of self- government", the impugned judgment relies on the definition of "institution" as contained in Black's Law Dictionary and Ramanatha Aiyar's Law Lexicon, both of which identified the expression as meaning an organization or establishment, organised or established for some specific purpose. The expression "self-government" referred to the nature of activities being performed by the institution and encompassed independent, autonomous or self-managed or governed organizations which were allowed, permitted or were performing governmental or public functions. An "institution of self-government" did not necessarily require ....
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....e expression "establish", namely "(i) to settle firmly to fix unalterably, to establish justice; (ii) to make or form: as to establish a uniform rule of naturalization; (iii) to found, to create, to regulate: as, Congress shall have power to establish post officers; (iv) to found, recognize, confirm or admit: as, Congress shall make no law respecting an establishment of religion; and (v) to create, to ratify, or confirm, as We, the people, etc., do ordain and establish the Constitution". Thus, the expression "establish" did not merely refer to the initial foundation of the organization or institution but included its creation, confirmation and recognition. (xiii) The word "constituted" was wider than the word "established". It would also include subsequent acts which conferred, on the organization or body, a special status so as to render it an "authority" or "institution of self-government" within the meaning of the first part of Section 2(h). This principle would apply even in respect of private institutions or bodies which were initially formed by acts of private persons. (xiv) Proceeding, next, to the expression "by or under", the expression "by" was narrower ....
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....tral Government. The order was, therefore, deemed to be regarded as an order issued by the Central Government under Section 4(3). The recognition of the Stock Exchange by virtue of such order had, therefore, to be treated as an act of the Central Government for the purposes of the applicability of the first part of Section 2(h). (xxi) Thus, the NSEI qualified as a "public authority" under the first part of Section 2(h). (xxii) NSEI also qualified as a "public authority" under the second part of Section 2(h), as it was a body controlled by the Central Government. The submission of NSEI that governmental control over the NSEI was merely regulatory and not deep and pervasive was not acceptable, in view of the judgment of the Division Bench of this Court in Delhi Stock Exchange v. K C Sharma [93 (2002) DLT 233], which held, albeit in the context of whether the Delhi Stock Exchange ["DSE" hereinafter] was a State within the meaning of Article 12 of the Constitution of India, that the Central Government exercised deep and pervasive control over the DSE. This judgment stood affirmed by the Supreme Court in K.C. Sharma v Delhi Stock Exchange [(2005)4 SCC 4]. 6. Thus, t....
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....paras 30, 52 and 53 of Thalappalam which hold that, as the definition of "public authority" in Section 2(h) uses the expression "means" and "includes", it has to be read exhaustively, and could not be subjected to a liberal or purposive interpretation. 8. Adverting to the second part of Section 2(h), Mr. Mehta submits that the body or the NGO which would fall under the "includes" part of Section 2(h) had necessarily to be funded by the appropriate government. Financial support of the appropriate government is, therefore, he submits, the sine qua non for the second part of Section 2(h) to apply. 9. The learned Single Judge, submits Mr. Mehta, erred in relying on decisions rendered in the context of the definition of "state" under Article 12 of the Constitution of India, to arrive at his findings. He submits that decisions on the aspect of the expression "state" in Article 12 of the Constitution of India are inapplicable while interpreting the expression "public authority" as defined in Section 2(h) of the RTI Act. He relies, for this purpose, on paras 21 and 24 of Thalappalam, paras 11, 18 and 19 of Air Force Sports Complex v. Lt. Gen. S.S. Dahiya [2024 SCC OnLine Del 6905], p....
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....t Finance Ltd. [2025 SCC OnLine SC 177], para 32 of Federal Bank Ltd. v. Sagar Thomas and Ors. [(2003) 10 SCC 733] and para 40 of Pradeep Kumar Biswas. 14. Adverting to the various provisions in the SCRA and the SEBI Act by which the SEBI or the Central Government regulate and supervise stock exchanges, Mr. Mehta submits that such regulation and supervision would not amount to control over the management and affairs, or the day to day functioning of the stock exchange. If regulatory control of stock exchanges was to be treated as sufficient for converting a privately incorporated stock exchange into a "public authority" under the RTI Act, all similarly placed private entities such as commercial banks, mutual funds, insurance companies, depositories, non banking financial corporations etc. would all become "public authorities" as they were subject to regulatory control by sectoral regulators. Such an interpretation would be absurd and would defeat the scope and objective of the RTI Act. It could not, therefore, be said that the NSEI was controlled by the appropriate government or even by the SEBI. 15. Further, not being a body constituted or established by the Constitution, an....
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....nt is patently erroneous and is contrary to the law later declared by the Supreme Court in Thalappalam and deserves, therefore, to be set aside. II. Submissions of learned Counsel for the respondents 19. Learned Counsel for the respondents underscored the limited scope of Letters Patent Appeal ["LPA" hereinafter] jurisdiction and submit that, within that limited scope, the interpretation, placed by the learned Single Judge on Section 2(h) of the RTI Act does not call for any interference. E. Analysis 20. We do not find this to be a case warranting interference in appeal. 21. Paras 31 and 32 of Thalappalam clearly identify six categories of institutions which would qualify as "public authorities" under Section 2(h) of the RTI Act. They are (i) authorities, bodies or institutions of self-government established by or under the Constitution, (ii) authorities, bodies or institutions of self-government established or constituted by any other law made by Parliament, (iii) authorities, bodies or institutions of self-government established or constituted by any other law made by the State Legislature, (iv) authorities, bodies or institution....
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....hat it was a service matter. We cannot accept this as a ground to distinguish the judgment. The issue of whether there exists deep and pervasive Governmental control over the NSEI is agnostic of the nature of the lis before the Court. It cannot be sought to be contended that there is deep and pervasive governmental control over the NSEI for service matters, but not for any other purpose. Every factual distinction does not erode the precedential value of a judgment. [Refer Mumbai Kamgar Sabha v. Abdulbhai Faizullabhai, (1976) 3 SCC 832, State of Orissa v. Sudhansu Sekhar Misra, 1967 SCC OnLine SC 17] 30. We agree with the learned Single Judge, therefore, that the issue of the extent of governmental control over the NSEI stands concluded by the judgment of the Division Bench of this Court in K.C. Sharma, especially as there is a specific affirmation thereof, by the Supreme Court. 31. We may reproduce, in this context, the relevant passages from the judgment of the Division Bench of this Court in K.C. Sharma, which also stand quoted by the learned Single Judge in the impugned judgment: "15. The fact is the Delhi Stock Exchange is a company incorporated under the Compani....
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....at the Central Government/SEBI has a deep and pervasive control over the affairs of the Stock Exchange. It was contended that they have very important functions to perform which have a direct nexus with the development of the economy inasmuch as people's savings are required to be and can be harmonized only through the Stock Exchange. It was pointed out that a small shareholder needing money can transfer his shares only through Stock Exchange and as such, having regard to the provisions contained in Securities Contract and Regulation Act, 1956 (hereinafter referred to as "the 1956 Act), the Stock Exchanges are required to build confidence in the small investors. It was further submitted that although it does not have any statutory monopoly, it has a de facto monopoly. 18. Let us consider as to whether the control of the Central Government/SEBI in terms of the provisions of the 1956 Act, is so deep and pervasive so as to bring it within the authority contained in Article 12 of the Constitution of India. 19. The 1956 Act was enacted to prevent undesirable transactions in securities by regulating the business of dealing therein by providing for certain other matt....
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.... 21 provides that where securities are listed on the application of any person in any recognized Stock Exchange, such person shall comply with the conditions of the listing agreement with that Stock Exchange. Under Section 22, an appeal is maintainable against an order passed by the Stock Exchange to list securities of public companies. Section 23 provides for penalties in relation to the matters specified therein. Section 29 of the Act is in the following terms: "Protection of action taken in good faith .- No suit, prosecution or other legal proceeding whatsoever shall lie in any Court against the governing body or any member, office-bearer or servant of any recognized stock exchange or against any person or persons appointed under Sub- section (1) of Section 11 for anything which is in good faith done or intended to be done in pursuance of this Act or of any rules or bye-laws made thereunder." 21. The provisions above-mentioned clearly go to show that not only Stock Exchanges perform an important function, its control by the Central Government/SEBI are deep and invasive. So invasive is control of the SEBI that even the writ petitioner against the impugned order ....
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....shed in the Official Gazette which is not done in cases of private organizations. ***** 29. Following are some of the important sections of SEBI Act which support the assertion that Central Government has deep and all pervasive close control on the functioning of all RSEs (Recognised Stock Exchanges): (1) Preamble of the SEBI Act which inter alia reads, "An Act to provide for the establishment of a Board to protect the interest of investors in securities and to promote the development of and to regulate the securities market and for matters connected therewith or incidental thereto". (2) Section 11(1), which casts a duty upon SEBI to protect the interest of the investors and promote the development of and regulate the securities market. (3) Section 11(2)(a), specifically casts a duty upon SEBI to regulate, even the business (means regulation of even day-to-day business) and that is why it is under this section SEBI from time to time issues directions to RSEs about the nature, type, extent and percentage of margin money to be taken from the members of RSEs; Capital Adequacy Norms to be observed by the said members; nature, organi....
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....of the RTI Act. 35. We have studied Thalappalam from the first para to the last, but we find no such observation, much less any finding to that effect. 36. Rather, in para 21 of Thalappalam, after dealing with the earlier judgments of the Supreme Court in U.P. State Coop. Land Development Bank Ltd v. Chandra Bhan Dubey [(1999) 1 SCC 741], All India Sainik Schools Employees' Assn v. Sainik Schools Society [1989 Supp (1) SCC 205] and Vaish Degree College v. Lakshmi Narain [(1976)2 SCC 58], Federal Bank Ltd and S.S. Rana v. Registrar, Coop. Societies [(2006) 11 SCC 634], all of which dealt with the issue of whether the institution in question qualified as a "State" under Article 12 of the Constitution of India, it is thus observed, in para 21: "21. We have, on facts, found that the cooperative societies, with which we are concerned in these appeals, will not fall within the expression "State" or "instrumentalities of the State" within the meaning of Article 12 of the Constitution and hence not subject to all constitutional limitations as enshrined in Part III of the Constitution. We may, however, come across situations where a body or organisation though not a State....
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....al Government in view of Section 29 of the SCRA. 42. The justification provided by the learned Single Judge, in the impugned judgment, for each of these findings, is eloquent and reasoned, and we see no cause to disturb the findings. Indeed, Mr. Mehta, too, did not advance any submission which would suffice for us to disagree with the learned Single Judge. 43. In holding that the NSEI is an "authority" within the meaning of the first part of Section 2(h), the learned Single Judge has reasoned thus: "7. Webster's Comprehensive Dictionary (International Edition) defines the term 'authority' as "the person or persons in whom government or command is vested; often in the plural". Meaning to the word "authority" in Webster's Third New International Dictionary is "a public administrative agency or corporation having quasi-governmental powers and authorized to administer a revenue-producing public enterprise". Meaning of 'authority' given in The Law Lexicon P. Ramanatha Aiyar, Second Edition-1997 is "a person or persons, or a body, exercising power of command; generally in plural : as the civil and military authorities". In Rajasthan State Electricit....
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....ssion "other authorities" in Article 12 will include all constitutional or statutory authorities on whom powers are conferred by law. It is not at all material that some of the powers conferred may be for the purpose of carrying on commercial activities. Under the Constitution, the State is itself envisaged as having the right to carry on trade or business as mentioned in Article 19(1)(g). In Part IV, the State has been given the same meaning as in Article 12 and one of the Directive Principles laid down in Article 46 is that the State shall promote with special care the educational and economic interests of the weaker sections of the people. The State, as defined in Article 12, is thus comprehended to include bodies created for the purpose of promoting the educational and economic interests of the people. The State, as constituted by our Constitution, is further specifically empowered under Article 298 to carry on any trade or business." 8. The term 'authority' has been a subject matter of judicial decisions of the Supreme Court while examining Articles 12 and 226 of the Constitution of India and has been given wider meaning. The Supreme Court in Praga Tools Corpo....
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....and is in the nature of a public duty. It is, however, not necessary that the person or the authority on whom the statutory duty is imposed need be a public official or an official body. A mandamus can issue, for instance, to an official of a society to compel him to carry out the terms of the statute under or by which the society is constituted or governed and also to companies or corporations to carry out duties placed on them by the statutes authorising their undertakings. A mandamus would also lie against a company constituted by a statute for the purposes of fulfilling public responsibilities. [Cf. Halsbury's Laws of England, (3rd ed.), Vol. II, p. 52 and onwards]. 7. The company being a non-statutory body and one incorporated under the Companies Act there was neither a statutory nor a public duty imposed on it by a statute in respect of which enforcement could be sought by means of a mandamus, nor was there in its workmen any corresponding legal right for enforcement of any such statutory or public duty. The High Court, therefore, was right in holding that no writ petition for a mandamus or an order in the nature of mandamus could lie against the company." ....
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....opriate government. Legislative enactment is not necessary and 'authority' under condition (d) of the section 2(h) can be established or constituted by an executive action. 'Authority' may be statutory or non statutory. Effect and relevance of conditions (a) to (d) has been examined later on. 11. In Ajay Hasia's case (supra), the Supreme Court quoted with approval the test laid down in International Airport Authority's case to decide whether an organization/body is an authority against whom a writ could be issued under Article 226 of the Constitution of India and it was observed :- "9. The tests for determining as to when a corporation can be said to be an instrumentality or agency of Government may now be culled out from the judgment in the International Airport Authority case. These tests are not conclusive or clinching, but they are merely indicative indicia which have to be used with care and caution, because while stressing the necessity of a wide meaning to be placed on the expression "other authorities", it must be realised that it should not be stretched so far as to bring in every autonomous body which has some nexus with the Gover....
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.... which is apparent from a chronological consideration of the authorities cited. 40. The picture that ultimately emerges is that the tests formulated in Ajay Hasia are not a rigid set of principles so that if a body falls within any one of them it must, ex hypothesis, be considered to be a State within the meaning of Article 12. The question in each case would be - whether in the light of the cumulative facts as established, the body is financially, functionally and administratively dominated by or under the control of the Government. Such control must be particular to the body in question and must be pervasive. If this is found then the body is a State within Article 12. On the other hand, when the control is merely regulatory whether under statute or otherwise, it would not serve to make the body a State." 13. More recently in Binny Limited v. V.V. Sadasivan, the Supreme Court has reiterated that Article 226 of the Constitution is couched in a way that even a Writ can be issued against a body which is discharging public function and the decision sought to be corrected or enforced must be in discharge of a public function. A body is performing a public function wh....
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....public functions. Power of judicial review under Article 226 is designed to prevent cases of abuse of power and neglect of duty by a public authority. The Act ensures transparency, openness and accountability of the authorities by giving rights to citizens to ask for and get information. The Act effectuates and provides statutory and enforceable legal right to enforce the Right to Information ingrained and part of Article 19(1)(a) of the Constitution. The term 'authority' used in Section 2(h) of the Act has to be read in the light of the aforesaid tests and paragraph 40 of the judgment in the case of Pradeep Biswas (supra). Whether and when an 'authority' is a 'public authority' in view of conditions (a) to (d) in Section 2(h) of the Act has been examined later on." (Emphasis supplied) 44. We entirely agree, and wholeheartedly endorse the finding, of the learned Single Judge, that the NSEI is an "authority" within the meaning of the first part of Section 2(h) of the RTI Act. In that view of the matter, it is not necessary for us to examine whether the NSEI would also qualify as an "institution of self-government". 45. We may also note that as, in Bi....
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....ate : as, Congress shall have power to establish post officers; (4) to found, recognize, confirm or admit : as, Congress shall make no law respecting an establishment of religion; (5) to create, to ratify, or confirm, as We, the people, etc., do ordain and establish the Constitution". 20. Thus, it cannot be said that the only meaning of the word 'establish' is to be found in the sense in which an eleemosynary or another institution is founded. The word 'established' need not mean the initial foundation and it includes creation, confirmation or recognition. 21. The word 'constituted' is wider than the word 'established'. The word 'constituted' in section 2(h) of the Act not only refers to the first act/acts by which a body or organization is set up but a subsequent act or acts which will have the effect of conferring on an organization or a body, a special status and constitute a 'body' with status of an 'authority' or 'institution of a self-government' for the purpose of Section 2(h) of the Act. A private institution or a body may be incorporated or formed by acts of private persons but subsequent sta....
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....ferred to. It is a case where, without recognition by the SEBI, the NSEI could not function as a stock exchange at all. We are dealing, here, not with regulation, but with recognition. Section 4(3) of the SCRA does not "regulate" the functioning of stock exchanges; it requires recognition of the stock exchange by the government in order for it to function as a stock exchange. The very identity of the stock exchange as a stock exchange is, therefore, conditional upon recognition of the stock exchange under Section 4(3). Section 4(3) is not, therefore, mere "regulatory" provision, it is a prerequisite for a stock exchange to be able to discharge any of its functions. 50. The learned Single Judge has held that, in interpreting the expressions "established" and "constituted" in the first part of Section 2(h), the Court has to adopt a purposive, rather than a literal, construction. With the advancement of the law, the principle of purposive construction has replaced the principle of plain meaning as the golden rule for interpreting a statutory instrument. [Refer Shailesh Dhairyawan v. Mohan Balkrishna Lulla, (2016) 3 SCC 619, Richa Mishra v. State of Chhattisgarh, (2016) 4 SCC 179] I....
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.... under the second part of Section 2(h). (vi) Apropos the first part, the Single Judge holds that (a) NSEI qualifies as an "authority or body", (b) the words "established or constituted", especially the word "constituted", would include a case in which the body, though established by a private party, required recognition for functioning as a stock exchange, and (c) the order issued by the SEBI under Section 4(3) of the SCRA, which was essential for NSEI to function, had to be regarded as an order issued by the Central Government in view of Section 29 of the SCRA. (vii) We see no reason to differ. It has to be remembered that this is not a case in which the body was established as a private company and was regulated by statute later, which is what Thalappalam referred to, it is a case where, without recognition by the SEBI, the NSEI could not function as a stock exchange at all. (viii) Therefore, the NSEI also satisfies the first part of the definition of "Public authority". G. Conclusion 56. We affirm and uphold the judgment of the learned Single Judge. 57. The appeal is dismissed, with no orders as to costs. FOOTNOTE....