SC stays CIC order declaring NSE a public authority under RTI Act

The Supreme Court stayed the CIC's 2007 order treating the NSE as a public authority under the RTI Act while agreeing to examine its challenge to the Delhi High Court ruling

The Supreme Court on Friday stayed the operation of a 2007 order of the Central Information Commission (CIC) that had declared the National Stock Exchange (NSE) a 'public authority' under the Right to Information (RTI) Act, while agreeing to examine the stock exchange's challenge to a recent Delhi High Court ruling concurring with this view.

 

A Bench of Justice Vikram Nath and Justice Sandeep Mehta issued notice on the NSE's appeal and granted interim relief.

 

"In the meantime, the execution and operation of the order passed by the Central Information Commissioner dated June 7, 2007, shall remain stayed," the apex court ordered.

 

The Bench, however, pointed out the growing significance of transparency in public institutions during the hearing.

 

"These are days of transparency," it remarked.

 

The judges also orally observed that the interim protection available to the NSE may not continue indefinitely.

 

"This shield is not going to stand for very long anyhow," it said.

 

In June 2007, a full Bench of the CIC held that recognised stock exchanges, including the NSE, qualified as 'public authorities' under Section 2(h) of the RTI Act, which defines who is a public authority.

 

The Commission had also directed the NSE and the Jaipur Stock Exchange to establish a mechanism for processing RTI applications.

 

The NSE challenged that decision before the Delhi High Court and secured an interim stay in July 2007.

 

In April 2010, a single judge of the High Court dismissed the challenge, holding that although the NSE was incorporated as a private company, its statutory recognition under the Securities Contracts (Regulation) Act, 1956 enabled it to discharge public functions.

 

The stock exchange then appealed before a Division Bench, which stayed the single-judge ruling in May 2010. That appeal remained pending for nearly 16 years before finally being dismissed earlier this month.

 

The Division Bench upheld the earlier ruling, finding that the NSE could not function as a recognised stock exchange without approval from the Securities and Exchange Board of India (Sebi).

 

Since that recognition is granted by Sebi as a delegate of the Central government, the High Court held that the exchange performs public functions and falls within the definition of a public authority under Section 2(h) of the RTI Act.

 

The High Court also concluded that the Central government exercises deep and pervasive control over the NSE, reinforcing its finding that the exchange is amenable to the RTI regime.

 

Before the Supreme Court, the NSE argued that it remains a private company with no government shareholding. It submitted that nearly 40 per cent of its shares are held by domestic investors, while foreign investors own around 27 per cent.

 

Relying on the Supreme Court's decision in Thalappalam Service Cooperative Bank Limited, the NSE contended that it does not satisfy the statutory tests under Section 2(h) for classification as a public authority.

 

After hearing the submissions, the Supreme Court stayed the CIC's 2007 order and sought responses on the NSE's appeal.