CIC pulls up finmin, Sebi for aiding IFCI bid to beat RTI Act

UTI Claim Of Not Being Public Authority Also Draws Flak From Commission
Girish Kuber MUMBAI

THE Central Information Commission (CIC) has slammed the government and two public sector units, the Industrial Finance Corporation of India (IFCI) and the Unit Trust of India (UTI), for refusing to part information under the RTI Act. The CIC has not only rejected IFCI’s claim that it’s not a ‘public authority’ but has also slammed the Union finance ministry and the Securities and Exchange Board of India (Sebi) for shielding it.
In an order on August 9, a copy of which is with ET, CIC has criticised the finance ministry for certifying that IFCI doesn’t come under the RTI Act. It also has criticised the market regulator Sebi for buying the finance ministry’s argument without examining it.
“It’s incorrect for the ministry to issue such certificates,” the CIC has said and asked the ministries and government departments to “refrain from such actions as they are not competent to do so”.
The issue pertains to bonds issued by the IFCI in the form of promissory notes worth Rs 800 crore way back in 1996. The IFCI decided to exercise the call option in 2003 and had asked bondholders to surrender their papers on or before November 6, 2003. The IFCI promised to issue cheques by the first week of December 2003.
But the payment did not reach to all investors promptly. VT Gokhale from Dombivli, just outside Mumbai, received the cheque after more than a few years and they were only paid after a prolonged battle with the concerned authorities.
Incensed by the treatment meted out to him, Mr Gokhale felt that many other bondholders would have also received similar treatment from IFCI. He decided to take up the issue with Sebi. “The bond issue yielded Rs 1,237.06 crore for IFCI. There must be a large number of investors with a substantial cumulative interest involved. I decided to fight for their cause,” Mr Gokhale said.
He sought information about the total number of bondholders, the total outgo on interest and datewise payment details. The market watchdog upheld the IFCI’s contention that it’s not a public authority and as such doesn’t come under the purview of the Right to Information Act 2005. To substantiate its claim, the IFCI also submitted a certificate from the ministry of finance.
“It was unfortunate that the market regulator didn’t stand by for the common investor and helped IFCI avoid giving information,” Mr Gokhale said and challenged the Sebi decision and the finance ministry’s act before the CIC. He pointed out to CIC that the IFCI is a listed body and comes under the Sebi jurisdiction. “The Sebi as a market regulator can access the information sought,” notes the petition.
The CIC in its order categorically stated that the IFCI is a public authority and as such comes under the purview of the RTI Act. The order notes that “the certificates given by government ministries and departments about an organisation being or not being a public authority have no validity”. The CIC also castigated Sebi for accepting the finance ministry’s version on IFCI’s status. Sebi was required to examine the IFCI’s claim thoroughly and should not have uncritically accepted its argument, the CIC opined.
The CIC also assailed a similar stance taken by UTI. The UTI claimed that UTI Mutual Fund, UTI Trustee Company and UTI Asset Management Company are not “public authority” and are not bound to give information under the RTI Act.

PUBLIC DEFENDER

CIC has criticised the ministry for certifying that IFCI doesn't come under the RTI Act

It has pulled up Sebi for buying the ministry's argument without examining it

UTI claimed that UTI Mutual Fund, UTI Trustee Company and UTI Asset Management Company are not public authority

CIC has said that certificates given by ministries and government departments about an organisation being or not being a public authority have no validity.
Publication: Economic Times Delhi; Date:2007 Sep 03; Section:Economy; Page Number 18