The Delhi High Court has held that the National Stock Exchange of India (NSE) is a ‘public authority’ within the meaning of Section 2(h) of the Right to Information Act, 2005, thereby making it amenable to the transparency obligations under the RTI Act. The Division Bench dismissed the NSE’s Letters Patent Appeal challenging a 2010 Single Judge decision that had reached the same conclusion.
The Bench of Justice C. Hari Shankar and Justice Om Prakash Shukla upheld the Single Judge’s ruling dated April 15, 2010, observing that the Exchange qualifies as a public authority under both the first and second limbs of Section 2(h) of the RTI Act. The appeal had raised a pure question of law on whether the NSE, despite being incorporated as a private company, falls within the statutory definition of a public authority.
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Rejecting the NSE’s contentions, the Court held that the Exchange is subject to deep and pervasive governmental control through the regulatory framework under the Securities Contracts (Regulation) Act, 1956 (SCRA) and the Securities and Exchange Board of India (SEBI). It relied extensively on the earlier decision in Delhi Stock Exchange v. K.C. Sharma, 93 (2002) DLT 233, affirmed by the Supreme Court, which recognised the extensive control exercised by the Central Government and SEBI over recognised stock exchanges.
The Court further held that the recognition granted to the NSE under Section 4(3) of the SCRA is not a mere regulatory formality. Since the power to recognise stock exchanges stands delegated by the Central Government to SEBI, the recognition order is deemed to be an order issued by the Central Government. Consequently, the NSE is an authority constituted by an order of the appropriate Government for the purposes of Section 2(h) of the RTI Act.
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The Division Bench rejected the NSE’s reliance on the Supreme Court’s decision in Thalappalam Service Cooperative Bank Ltd. v. State of Kerala, (2013) 16 SCC 82, observing that the judgment does not support the proposition that decisions rendered under Article 12 of the Constitution are irrelevant while interpreting “public authority” under the RTI Act. On the contrary, the Court held that a body found to be subject to deep and pervasive governmental control under Article 12 would ordinarily qualify as a public authority under Section 2(h), unless the statute indicates otherwise.
The Court said that
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“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.”
The Bench also disagreed with the argument that the NSE is merely regulated by SEBI and not controlled by the Government. It observed that the statutory scheme governing recognised stock exchanges including recognition, amendment of rules and bye-laws, nomination of directors, inspection, supersession of governing bodies and suspension of business demonstrates control that goes far beyond ordinary regulatory oversight.
Finding no infirmity in the reasoning adopted by the Single Judge, the Court concluded that the NSE satisfies the definition of a ‘public authority’ under the RTI Act and dismissed the appeal, affirming that information held by the Exchange is subject to disclosure in accordance with the Act.
