TMI Blog2009 (10) TMI 969X X X X Extracts X X X X X X X X Extracts X X X X ..... nt question of law of general public importance, it was decided that it should be heard and decided by a Full Bench. Hence, all these Complaints and Appeal Petitions were clubbed together and placed before the Full Bench so constituted. 3. The matter pertaining to Complaint Petition of Shri Cherian K. Simon (CIC/AT/C/2007/0216) and Appeal Petition of Shri Nisar Ahmed (CIC/AT/A/2007/ 0735) was partly heard by Full Bench on 25.4.2008. Similarly, matters relating to LIC Mutual Fund Asset Management Co. Limited were partly heard by the Full Bench on 17.10.2008. It was submitted that in a similar case, the High Court of Madras by its judgment dated 5th August, 2008 in Tamil Nadu Road Development Co. Ltd. Vs. Tamil Nadu Information Commission and Anr. (2008) 145 CompCas 248(Mad) has declared the Tamil Nadu Road Development Company Ltd as a Public Authority. Therefore, the same should apply to the respondent also. 4. These matters were again placed before the Full Bench along with other pending complaints and appeal petitions involving similar issues and heard on 17.4.2009. The following were present at the hearing: Appellants/Complainants: 1. S/Shri V. Shekhar Awasth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y one entity and that is Life Insurance Corporation of India which is the Appropriate Government in this case. 7. Appellant, Shri Nisar Ahmad Sheikh's submissions are summarized below: (i) LICHFL was incorporated by LIC of India which in turn was formed by an Act of Parliament. LIC of India is thus the parent organization of LICHFL hence it is logical that LICHFL also gets covered under the said Act. (ii) That both the companies, i.e. LICHFL and LIC of India, share the same Chairman Managing Director; (iii) That some percentage of staff revenue of LICHFL is shouldered by LIC of India; (iv) LICHFL is advertised as a product of LIC of India in official publications -- one of such publication is the New Year Diary. 8. Appellant, Shri Ahmad also produced a profile of LICHFL and, on the basis of that, has submitted as under: (i) LICHFL is one of the largest Housing Finance companies in India, incorporated on 19.6.1989 under the Companies Act, 1956; (ii) LICHFL was promoted by LIC of India and went public in 1994; (iii) it launched its maiden GDR issue in 2004. The GDRs are listed on the Luxembourg Stock Exchange; (iv) Authorized Capi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of LICHFL and directed the parties to attend the hearing on 7.2.2008 with all relevant documents. 13. Respondent LICHFL in their reply dated 8.8.2007 stated that the case of the complainant is not that the respondent is a Public Authority within the meaning of Sections 2(h)(a) to (d)(i) of the RTI Act but because the respondent LICHFL is a non-government body and has been substantially financed by funds provided by Appropriate Government, therefore, it is a Public Authority. LICHFL made the following submissions: (i) This Commission in Col. P.K. Garg vs. Care Homes Ltd' -Appeal No.523/ICPB/2007 - has categorically held that LICHFL is not a Public Authority since LIC does not hold more than 50 per cent share in it and since the matter has already been set at rest by the Commission, it cannot be re-agitated; (ii) The Ministry of Finance, Department of Economic Affairs, Insurance Division has already considered the matter and conveyed their decision vide No.M-18011/14/2007-INS-III dated 12.6.2007 that LICHFL being a company registered under the Companies Act, 1956, provisions of RTI Act are not applicable to it; (iii) The Cabinet Secretariat in its meeting held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... L who have access to the information sought by the applicant can transmit this information to the applicant. (ii) Whether LIC as Public Authority under the RTI Act has or can have access to information held by a private entity (i.e. LICHFL) and as to whether it is obliged to provide the same to the applicant. LIC of India in their letter affirmed that Life Insurance Corporation of India holds 39.04% of shares in LIC HFL. As per the Articles of the Association of LICHFL, LIC is entitled to appoint to the Board one third of the total number of Directors, so long as LIC holds at least 33% of the issued equity shares. As such, LIC does not have any controlling interest in the composition of the Board of the LICHFL, other than its own nominees. The LIC does not have any control over the functioning of the LICHFL except limited to the nominating officials to the Board of LICHFL and hence LIC directors on Board of LICHFL cannot transmit the information of LIC HFL to the applicant. The LIC submitted that under Section 2(j) of the Act, the information held by the public authority or held by the private entity which is under the control of public authority should be provided to the appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Fund is a company incorporated under the Companies Act and it commenced business on 29.4.1994 in the name and style of Jeevan Beema Sahyog Asset Management Company Limited. The name of the company was subsequently changed on 21.8.2006 to LIC Mutual Fund Asset Management Company Ltd. (ii) LIC Mutual Fund is set up with the objective to carry on the business as Investment Manager to LIC Mutual Fund and, therefore, cannot be termed either as Non-Government Organization or a Public Authority or an Appropriate Government . (iii) The Madras High Court held in Mrs. Annie Besant Vs. Government of Madras, (AIR 1918 Mad 1210) that Government denotes an established authority entitled and able to administer the public affairs of the country. (iv) The term Appropriate Government or State Government cannot be considered as identical at all times, because different Government, at different times, will constitute the Appropriate Government. This was held in G .C. Janardchanan Vs. Joseph, AIR 1958 Ker 169. (v) Section 80 of the Code of Civil Procedure is not applicable to LIC Mutual Fund Asset Management Company. As per Section 80, no suit shall be instituted agai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll comprise of independent directors. (xiv) No notification was issued or orders made by any Appropriate Government to declare the Respondent company as an entity to which the RTI Act is applicable. (xv) Respondent company is not a body owned, controlled or substantially financed by the fund provided by Appropriate Government. (xvi) Judgment of Madras High Court in Tamilnadu Road Development Company Ltd is not applicable in the present case 22. Respondents further submitted as under: (I) The share of LIC in LIC Mutual Fund Assets Management Co. Limited (LICMFAM) is not even 50% as is the case in Tamil Nadu Road Development Company Ltd which is a wholly owned subsidiary of TIDCO, whereas Life Insurance Corporation itself is not an Appropriate Government. (ii) In the case of LICMFAM, there are seven directors out of which two are nominated by the LC but the other five are independent directors from outside. No official from the Appropriate Government is on the Board of Directors of LICMFAM. As such, LICMFAM is not under the control of Appropriate Government whereas Tamil Nadu Road Development Company Ltd is under the control of the Appropriate Government i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vernment for issue of a notification declaring the eligibility of the proposed Mutual Fund for the various reliefs under the Income Tax Act. (vi) The Board of Trustees has to be constituted after the Trust is settled. The Board will obtain approval of LIC of India for appointment of Trustees to the Board of Trustees who will manage the LIC Mutual Fund. (vii) LIC of India shall have power to change the Trustees from time to time. (viii) The corpus of the Trust amounting to ₹ 10 lakhs shall be contributed by the LIC on such terms and conditions as may be set forth in the Trust Deed. (ix) A further sum not exceeding ₹ 25 crores shall be made available as initial contribution to the Trust by the Corporation carrying interest at 10% and redeemable at the discretion of the Trust. (x) The purpose of the LIC of India to float the Mutual Fund will be to mop up the additional savings from the public in rural and semi-urban areas and that LIC itself would be receiving considerable amount of insurance business from the Mutual Fund. (xi) LIC of India for the above purpose will provide to the Mutual Fund all suitable help and guidance which will include ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olders - they simply approve and it appears that they may have approval or veto powers, but no powers to propose a name. (iv) While the RTI Act of 2005 does not qualifies the term 'substantial control', even if it is presumed that Government owned companies have just 47.70% stake in the respondent, it should definitely be treated as substantial stake. More so, in the present case the collective shareholding under the category Promoter and Promoter Group in the Respondent company is 50.5369% as is clear from the data available on the website of the respondents. (v) The fact that 11 of the 12 Directors on Board of the respondent company have clear connection with one or the other Promoters (Annexure C6) - all of whom are clearly controlled by the Government - and the 12th Director too appears to have strong Government roots by virtue of his nomination on boards of other Government controlled organisations (though his detailed profile is not available), clearly suggests that the Government exercises control in appointing or nominating Directors on Board of the respondent company. (vi) The fact that all the directors resign exactly on the date of resignation or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ression Substantially financed used under Section 2 (h)(d)(i) clearly indicates that a finance simpliciter is not enough for embracing such authority within the ambit of the expression Public Authority . The finance thus, is required to be substantial in amount and nature . Applying the principles of ejusdem generis it ought to be interpreted along with the expression owned and controlled . In other words, the finance has to be substantial enough to be capable of controlling and owning an authority. In other words, any finance which is not capable of exercising a right of ownership or has a capacity to control the management and/or the decision making process cannot be regarded to come within the scope of the expression Substantially financed . The facts as set out clearly shows that Respondent Company has not been Substantially financed by any Government directly or indirectly. (iv) It was further submitted that the expression directly or indirectly by funds provided by the appropriate Government also need to be given interpretation which is in harmony with the preceding part of the said sub section and the general theme of the Act. An indirect finance by the Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us, as on 31.12.2008, these Public Authorities contribute only ₹ 2,56,91,440 to a total share capital of ₹ 53,85,10,66. (v) Their equity shares are traded on the stock exchange and the Respondents do not have control on its sale and purchase in the marked. (vi) Respondent is a company for profits and not a company under Section 25 of the Companies Act, 1956. (vii) The entire shareholding of the respondent is held by private individual share holders, corporate bodies, foreign investors, Insurance Companies, Banks etc. Central or State Government is not a shareholder of the Respondent company. DECISION AND REASONS: 28. As has been stated above, the only issue that needs be determined in all these cases is as to whether the respondent organizations can be termed as Public Authorities within the meaning of Section 2(h) of the RTI Act. Before taking the case of each of the respondent organizations, it would be pertinent to reproduce section 2(h) of the RTI Act which defines the term Public Authority :- Section 2(h): public authority means any authority or body or institution of self- government established or constituted-- (a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nceded that the Chairman of the LIC is also the Chairman of LICHFL. 32. From the submissions made before us, it appears that the LICHFL was incorporated by LIC of India and both of them share the Chairman and Managing Director. The stake of LIC in the LICHFL is 40.497%. If the share of the LIC is aggregated with other Government Insurance Companies, the total stake in the shareholding of LICHFL comes to 45.918%. As per Article 133(1) of the Articles of Association of LICHFL, the LIC has the authority to appoint one of its Directors and Managing Director of LICHFL. 33. In view of this, it can be inferred that the control of LIC over LICHFL is explicit and effective. The very fact that Chairman of the LIC is also the Chairman of LICHFL further strengthened this inference. The appellant has also submitted that if the shareholding of other Banks is added to the total shareholding of the PSU, the total shareholding will exceed 80%. It is an admitted fact that the total shareholding of the PSU is 45% and this is sufficient enough to bring it within the definition of the term substantial finance . We may agree that the LICHFL is not owned by LIC of India as the total shareholding o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be given a liberal interpretation so that the authorities like the appellant company who are owned, controlled and substantially financed directly or indirectly by the Government come within the purview of the RTI Act. 37. In addition, in Tamil Nadu Newsprint Papers Ltd vs. State Information Commission, the Madras High Court has held that it is not necessary that the Government should be the majority shareholder of the Public Authority. The body or institution should be substantially financed by the Government and they should be controlled by the Government. Whether or not the government exercises such control or not is immaterial. In view of these observations, we have no doubt that the respondents are indeed and be declared a Public Authority within the meaning of Section 2(h) of the RTI Act. 38. As regards LIC Mutual Fund Assets Management Co. Limited, the respondents have submitted that the ratio of judgment in the case of Tamil Nadu Road Development Company is not applicable to LIC Mutual Fund since LIC Mutual Fund is an independent organization and not substantially financed by appropriate government. The submissions of the respondents fail to convince. The LIC of ..... 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