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Thursday, 15 April 2010

RTI Act governs stock exchanges : HC

Allowing public scrutiny of the functioning of stock market, the Delhi high Court today held that stock exchanges are public authorities and are bound to disclose information under Right To Information (RTI) Act. The court dismissed the plea of National Stock Exchange and Jaipur Stock Exchange which submitted that they cannot be forced to reveal information to public under the transparency law as they are autonomous bodies incorporated under Company Act and not controlled by the government.
Justice Sanjeev Khanna dismissed the petition of the stock exchanges and upheld the decision of the Central Information Commission which had declared stock exchange as a public authority.

The CIC had in 2007 held that stock exchanges are "quasi" governmental bodies which are bound to disclose information to the public under the Right to Information Act. "A stock exchange being a quasi governmental body working under the statute and exercising statutory powers has to be held to be a public authority under the Act," the Commission had said while directing the NSE to put in place a mechanism for the purpose. NSE had then approached the Delhi High Court. Interestingly, market regulator Sebi had opposed NSE stand and favored to bring stock exchanges under the purview of the Act. Challenging the CIC order, NSE had contended that bourses did not come within the definition of the state and cannot come under the purview of RTI Act.

"Information under RTI can be sought only against the government or its agencies and not against a company. NSE is a company incorporated under the Companies Act," the stock exchange had contended. "Organisations which come within the ambit of RTI Act should be constituted, controlled and substantially funded by the central or the state government. Stock exchanges do not fit in the definition and their board of directors are not appointed by the government," it had said.

The CIC had directed NSE and Jaipur Stock Exchange to put in place mechanism to comply with RTI rules on a plea of investors who approached the Commission after the exchanges refused to reveal information under the Act.

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