Delhi High Court
Indian Potash Limited & Ors. vs Union Of India & Ors. on 28 November, 2017
$~41
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 7878/2015 & CM 15758/2015
INDIAN POTASH LIMITED & ORS. ..... Petitioners
Through: Mr Manish Kaushik, Advocate.
versus
UNION OF INDIA & ORS. ..... Respondents
Through: Mr Vikas Mahajan, Mr Shyam
Sundar Rai, Advocate for UOI.
CORAM:
HON'BLE MR. JUSTICE VIBHU BAKHRU
ORDER
% 28.11.2017
VIBHU BAKHRU, J
1. The petitioners have filed the present petition, inter alia, impugning
the order dated 09.07.2015 (hereafter ‗the impugned order') passed by the
Central Information Commission (hereafter ‗CIC'), whereby the CIC has
held the petitioner no.1 (hereafter ‗the petitioner') to be a public authority
within the meaning of Section 2(h) of the Right to Information Act, 2005
(hereafter ‗the RTI Act').
2. Respondent nos.2 & 3 had filed applications dated 23.12.2010 and
28.05.2013 under the RTI Act seeking certain information from the
petitioner. Respondent no. 2 had sought the landed cost of Muriate of Potash
(MoP) imported by the petitioner during the period 01.03.2009 to
31.10.2010 and respondent no. 3 had sought information as to the quantity
of MoP purchased by two specified concerns from the petitioner during the
period December 2006 to March 2009. The petitioner declined to give the
information as sought for by the said respondents on the ground that the
petitioner was not a ‗public authority' under Section 2(h) of the RTI Act.
3. The only question to be addressed in the present petition is whether
the petitioner is a ‗public authority' as defined under Section 2(h) of the RTI
Act?
4. Briefly stated, the relevant facts - which remain uncontroverted -
necessary to address the controversy involved in the present petition are as
under:-
5. In 1955 three private companies jointly formed a consortium, for
import of potash salts in the interest of agriculture on the advice of the
Government of India, under the name and style of Indian Potash Supply
Agency Limited (IPSA), which was incorporated on 17.06.1955 under the
Companies Act, 1913. After the enactment of the Companies Act, 1956, the
petitioner company was incorporated under the said Act as Indian Potash
Limited.
6. At the material time, the shareholding of the petitioner was held by
three shareholders namely; M/s Shaw Wallace & Co Ltd., Parry & Co. Ltd.
and Mysore Fertilizer Co.
7. The learned counsel appearing for the petitioner states that the
petitioner company is a company in the private sector and is run in
accordance with its Articles of Association (AOA). The petitioners claim
that there is no direct or indirect funding of the petitioner by either the
Central or any State Government. Although, some of the petitioner's shares
are held by Public Sector entities, majority of the shares - about 70% - are
held by entities, which are not public authorities within the meaning of
section 2(h) of the RTI Act. Only about 12.67% equity is held by Public
Sector Enterprises. Thus, out of the total share capital of ₹14,29,86,000/-
about ₹1,81,16,327/- equity capital is held by the Public Sector entities.
8. The CIC analysed the shareholding pattern of the petitioner and
observed that 70.22% of the entire shareholding was held by the cooperative
sector which included certain cooperatives, namely; IFFCO, Gujarat State
Co-Op. Marketing Federation Ltd. and Vidharbha Co-Op. Marketing
Federation Ltd., which were not ‗public authorities' within the meaning of
Section 2(h) of the RTI Act. The CIC thus, excluded the shareholding of
these entities and concluded that the balance 25.77% of the shareholding
were with the Cooperatives, which were under the government control. The
CIC assumed that such entities were ‗public authorities' within the meaning
of Section 2(h) of the RTI Act. In addition, the CIC noted that 20.54% of
the issued as subscribed equity shares of the petitioner were held by five
Public Sector enterprises, namely; Madras Fertilizers Ltd., Steel Authority
of India Ltd., Rashtriya Chemicals and Fertilizers Ltd., Gujarat State
Fertilizers and Chemicals Ltd. and Fertilizers and chemicals Travancore Ltd.
9. Taking the aforesaid analysis of shareholding pattern into account, the
CIC held that 46.24% - 25.77% held by cooperative sector plus 20.54% held
by Public Sector - were funds directly or indirectly from the government
coffers or was public money. The CIC also referred to the decision of the
Karnataka High Court in the case of Mangalore SEZ Ltd. v. Karnataka
Information Commission & Ors: W.P.(C) 34095/2010, decided on
14.08.2012, whereby the Court had held that Mangalore SEZ Ltd. was a
public authority on the reasoning that 49.96% of its shares were held by
government organizations.
10. The CIC concluded that the petitioner was a public authority since
46.24% of the petitioner's shareholding was indirectly held by Central and
State Government and that would constitute substantial funding of the
petitioner. The CIC also held that the petitioner was enjoying monopoly
status and was, essentially, performing its functions for the benefit of the
public and therefore they assumed the character of a government function.
In view of the above, the CIC concluded the petitioner to be a ‗public
authority' within the meaning of Section 2(h) of the RTI Act.
11. Before proceeding further, it would be relevant to refer to Section 2(h)
of the RTI Act, which defines the expression ―public authority‖. Section
2(h) of the RTI Act is set out below:-
―2. Definitions.- In this Act, unless the context otherwise
requires,-
xxxx xxxx xxxx xxxx
(h) 'public authority' means any authority or body or
institution of self-government established or constituted,--
(a) by or under the Constitution;
(b) by any other law made by Parliament;
(c) by any other law made by State Legislature;
(d) by notification issued or order made by the
appropriate Government, and includes any--
(i) body owned, controlled or substantially
financed;
(ii) non-Government Organisation
substantially financed, directly or indirectly by
funds provided by the appropriate
Government.‖
12. The aforesaid expression was considered by the Supreme Court in the
case of Thalappalam Service Cooperative Bank Ltd. and Others v. State of
Kerala and Others: (2013) 16 SCC 82, whereby the Supreme Court
explained as under:-
―30. The legislature, in its wisdom, while defining the
expression ―public authority‖ under Section 2(h),
intended to embrace only those categories, which are
specifically included, unless the context of the Act
otherwise requires. Section 2(h) has used the expressions
―means‖ and ―includes‖. When a word is defined to
―mean‖ something, the definition is prima facie
restrictive and where the word is defined to ―include‖
some other thing, the definition is prima facie extensive.
But when both the expressions ―means‖ and ―includes‖
are used, the categories mentioned there would exhaust
themselves. The meanings of the expressions ―means‖
and ―includes‖ have been explained by this Court in
DDA v. Bhola Nath Sharma (in paras 25 to 28). When
such expressions are used, they may afford an exhaustive
explanation of the meaning which for the purpose of the
Act, must invariably be attached to those words and
expressions.‖
13. In the present case, admittedly, the petitioner does not fall in the
categories under clauses (a), (b) or (c) of Section 2(h) of the RTI Act. Thus,
the only question that arises is whether the petitioner can be held to be
public authority within the meaning of clause 2(h)(d)(i) or 2(h)(d)(ii) of the
RTI Act. In other words, whether the petitioner is a body owned controlled
or substantially financed directly or indirectly by funds provided by the
appropriate government or is a Non-Government Organization (NGO)
substantially financed, directly or indirectly by funds provided by the
appropriate government.
14. In Thalappalam Service Cooperative Bank Ltd. (supra), the Supreme
Court had explained the meaning of the expression ―a body owned‖ which
reads as under:-
―35. A body owned by the appropriate Government clearly
falls under Section 2(h)(d)(i) of the RTI Act. A body
owned, means to have a good legal title to it having the
ultimate control over the affairs of that body, ownership
takes in its fold control, finance, etc. Further discussion
of this concept is unnecessary because, admittedly, the
societies in question are not owned by the appropriate
Government.‖
15. Insofar as the word ―controlled‖ used in clause 2(h)(d)(i) is
concerned, the Supreme Court had held as under:-
―44. We are of the opinion that when we test the meaning of
expression ―controlled‖ which figures in between the words
―body owned‖ and ―substantially financed‖, the control by the
appropriate Government must be a control of a substantial
nature. The mere ―supervision‖ or ―regulation‖ as such by a
statute or otherwise of a body would not make that body a
―public authority‖ within the meaning of Section 2(h)(d)(i) of
the RTI Act. In other words just like a body owned or body
substantially financed by the appropriate Government, the
control of the body by the appropriate Government would also
be substantial and not merely supervisory or regulatory. The
powers exercised by the Registrar of Cooperative Societies and
others under the Cooperative Societies Act are only regulatory
or supervisory in nature, which will not amount to dominating
or interfering with the management or affairs of the society so
as to be controlled. The management and control are statutorily
conferred on the Management Committee or the Board of
Directors of the Society by the respective Cooperative Societies
Act and not on the authorities under the Cooperative Societies
Act.
45. We are, therefore, of the view that the word ―controlled‖
used in Section 2(h)(d)(i) of the Act has to be understood in the
context in which it has been used vis-a-vis a body owned or
substantially financed by the appropriate government, that is,
the control of the body is of such a degree which amounts to
substantial control over the management and affairs of the
body.‖
16. The word ―appropriate government‖ is defined under Section 2(a) of
the RTI Act, which reads as under:
―2. Definitions.- In this Act, unless the context otherwise
requires,-
(a) ―appropriate government‖ means in relation to a public
authority which is established, constituted, owned,
controlled or substantially financed by funds provided
directly or indirectly-
(i) by the Central Government or the Union territory
administration, the Central Government;
(ii) by the State Government, the State Government.‖
17. From the facts as noticed above, it is clear that the petitioner is not
owned by either the Central Government or by any State Government. The
shareholding pattern of the petitioner as noticed by the CIC indicates that
about 70.22% of the petitioner's share capital is held by seventeen entities
from the co-operative sector. Further, five public sector companies own an
aggregate of 20.54% of the issued and subscribed shares capital of the
petitioner. In addition, there are several other entities, which are
unconnected with the government, that hold the balance shares. Admittedly,
none of the issued and subscribed shares of the petitioner shares are held by
either the Central or the State Government. The Articles of Association of
the petitioner also does not provide any power to the Central Government or
any State Government to exercise control over the affairs of the petitioner.
There is, thus, no material to indicate that either Central Government or any
State Government has good legal title to the petitioner or has ultimate
control over the affairs of the petitioner. The petitioner being a company
incorporated under the Companies Act, 1956 is a juristic entity and its
affairs have to be conducted in the manner as provided in the Articles of
Association. Thus, plainly, the petitioner cannot be termed as a body owned
by any appropriate government.
18. Insofar as the expression ―control‖ is concerned, the same has to be
understood - as explained by the Supreme Court in Thalappalam Service
Cooperative Bank Ltd. (supra) - as a body owned or substantially financed
by the appropriate government.
19. Thus, the only question that remains to be addressed is whether the
petitioner is substantially financed by the appropriate government so as to
lead to the conclusion that it is a public authority under Section 2(h)(d)(i) of
the RTI Act.
20. In Thalappalam Service Cooperative Bank Ltd. (supra), the Supreme
Court had clarified that:
―Merely providing subsidies, grants, exemptions, privileges,
etc. as such, cannot be said to be providing funding to a
substantial extent, unless the record shows that the funding was
so substantial to the body which practically runs by such
funding and but for such funding, it would struggle to exist.‖
21. In the facts of the present case, there is no material whatsoever to
indicate that either the Central Government or any State Government has
provided any finance to the petitioner. It may be true that 20.54% of the
shares are held by Public Sector Enterprises; however, that does not mean
that those shares have been subscribed by funds provided by the Central
Government or any State Government. Some of the Public Sector
Enterprises that hold shares in the petitioners are listed on stock exchanges
and their shares are freely traded. A significant portion of the shares of
these companies are also held by public at large and financial institutions.
The source of funding of Public Sector Enterprises is not limited only to
Central Government or State Governments. In addition, these Public Sector
Enterprises also have large reserves, which are generated by accumulating
undistributed profits. Thus, it would be incorrect to assume that the funds
utilized by Public Sector Enterprises to purchase the shares of the petitioner
owe their source to the funds provided by an appropriate government. It
would be a different matter if it was established that the Central/State
Government had provided the Public Sector Enterprises in question with
funds earmarked to be utilized for subscribing to the shares of the petitioner.
However, concededly, that is not the case here. There is also no material to
even indicate whether the shares of the petitioner were subscribed by the
Public Sector Entities directly or were purchased from other entites that had
subscribed to the shares intially.
22. This Court is unable to accept the view that merely because a minority
shareholding of the petitioner is subscribed by Public Sector Enterprises and
entities in the Co-operative sector, the same must be construed as
subscription funded by Central/State Government. And, as there is no other
material to indicate that the petitioner was funded by Central Government or
any State Government, the CIC's conclusion that the petitioner has been
substantially funded by an appropriate government and is thus a public
authority cannot be sustained.
23. The decision of the Karnataka High Court in Mangalore SEZ Ltd.
(supra) - which was relied upon by the CIC - was rendered prior to the
decision of the Supreme Court in Thalappalam Service Cooperative Bank
Ltd. (supra). In that case, the Karnataka High Court had held as under:
―5. In the matter on hand, as is clear from Annexure-B, about
50% of holding of the petitioner is from the Government
organisations viz., Oil and Natural Gas Corporation Limited,
Karnataka Industrial Area Development Board, ONGC
Mangalore Petro Chemicals Limited. The number of shares
held by these three organisations comes to about 49.96%. Oil
&Natural Gas Corporation Limited though is a company
incorporated under the Companies Act, the same is owned by
Government of India. Karnataka Industrial Area Development
Board is also a State Government Organisation. Since 49.96%
holding of the petitioner is by Governmental organisations,
having regard to the object sought to be achieved by the RTI
Act, in my considered opinion, the provision of Section 2(h)
has to be read to take within its sweep all funds provided by the
appropriate Government, either from its own bag or funds
which reach the authority through the appropriate Government
or with its concurrence or its clearance. Hence, in my view, the
petitioner company Mangalore SEZ Limited, Mangalore can be
classified as a ‗public authority' and non-Government
organisation which is substantially financed directly or
indirectly by funds provided by the appropriate Government.‖
24. It is apparent from the above that Karnataka High Court has
interpreted the provisions of Section 2(h) of the RTI Act in an expansive
manner. The said interpretation may no longer hold good in view of the
decision of the Supreme Court in Thalappalam Service Cooperative Bank
Ltd. (supra), which was rendered subsequently, wherein the Supreme Court
had held that Section 2(h) of the RTI Act is exhaustive.
25. In view of the above, the petition is allowed and the impugned order
is set aside.
VIBHU BAKHRU, J
NOVEMBER 28, 2017
MK
