The central information commission (CIC), the apex body under the Right to Information (RTI) Act, 2005 has directed the Securities and Exchange Board of India (Sebi) to share the details of several entities that were involved in the Reliance Petroleum Insider trading case in 2007. The commission also directed the market regulator to give the details of file notings on the consent order.
The directions came on an appeal by Arun Kumar Agarwal, a Bangalore-based lawyer. Sebi Chief public information officer had refused to give these details to Agarwal on the grounds that quasi judicial proceedings are pending.
"Several entities have been identified by the Sebi, who were involved in the insider trading/short sale of shares of Reliance Petroleum in 2007. The details of these entities are still not in the public domain. After carefully considering the facts of the case and the submissions made before us, we are inclined to agree to the demand of the appellant that the disclosure of this information would serve a larger public interest," the commission said in an order dated November 6.
It added, "We direct the CPIO to provide the first two items of information to the appellant within 10 working days of receiving this order."
Explaining the rationale for this decision, CIC said, "If as a regulator, the Sebi took cognizance of allegations of any breach of law, rules or regulations by one or more entities for unlawful private gain, the information generated in the process of its investigation needs to be disclosed in the public domain. Such disclosure would keep the general public informed and educated about the risks they may confront in making investments in the market. It would also prevent many entities from adopting shortcuts to make profit through unlawful means. The argument that at the end of the quasijudicial proceedings, the charged entities may be found innocent cannot be an argument against disclosing the information."
This becomes especially important as the Sebi has also initiated consent order mechanism on the request of party involved and the breach and violations found in the investigation could be settled through a consent order thereby nullifying the likely penalty, which would have visited the party involved at the end of the quasi judicial proceedings, the order added.
Sebi had taken cognizance of certain allegations made regarding insider trading/short sale of shares of the Reliance Petroleum in 2007 involving Reliance Industries Ltd and had ordered investigation into these charges.
Based on the investigation report, some proceedings had also been initiated.
Simultaneously, on the request of the party concerned, consent order proceedings had been initiated. The matter has been pending a final decision in the matter for several years.
On the matter of the file noting and other related information relating to the issue of the circular in 2007 regarding the guidelines for the consent order mechanism, the commission said these cannot fall as such under any of the exemption provisions.
"In fact, transparency demands that the entire process of deliberation leading to the formulation of important policies like this one is disclosed up front in the public domain so that the people can find out why and how such important decisions have been taken. Since the consent order mechanism constitutes a very important decision for settling disputes between regulated entities and the Sebi, it is all the more necessary that the background for the formulation of the parameters of the mechanism as contained in the circular of 2007 is made public," it said.
The exemption provisions cited by the CPIO are simply not attracted to this item of information.
"Therefore, we also direct the CPIO to provide to the Appellant within 10 working days of receiving this order the photocopies of the relevant file noting and other available documents leading to the issue of the circular dated 20 April 2007 laying down the guidelines for consent orders and for composition of offences."