National Stock Exchange Of India Ltd vs Central Information Commission & Ors

$~
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 30 March 2026
Pronounced on: 01 July 2026
+ LPA 315/2010
NATIONAL STOCK EXCHANGE
OF INDIA LTD .....Appellant
Through: Mr. Jayant Mehta, Sr. Adv. Mr.
Pranav Sarthi, Ms. Prachi Dhingra, Mr.
Ishan Agrawal, Mr. Gandharv Garg, Ms.
Jasleen Oberoi, Mr. Anshit Aggarwal, Ms.
Mansvini Jain, Mr. Udit Bajpai, Advs.
versus
CENTRAL INFORMATION
COMMISSION & ORS .....Respondents
Through: Mr. Ashish Aggarwal, Mr. O.P
Faizi, Mr Anand Aggarwal, Ms Darshana
Aggarwal, Ms. Nishtha Verma, Ms. Lisha
Arora, Ms. Tanya Jain, Mr. Himanshu
Singh, Ms. Ishita, Ms Anjali, Advs for R3
Mr. B.S. Shukla, CGSC with Mr. Dashmesh
Tripathi, Advs. for UOI
CORAM:
HON'BLE MR. JUSTICE C. HARI SHANKAR
HON'BLE MR. JUSTICE OM PRAKASH SHUKLA
JUDGMENT
% 01.07.2026
C. HARI SHANKAR, J.
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Facilitative Index to the Judgment
S. No. Subject Para Nos
1 A Issue involved 1 – 3
2 B The provision under consideration 4
3 C The Impugned Judgment 5-6
4 D Rival Contentions 7-19
5 I Submissions of Mr. Jayant Mehta 7-18
6 II Submissions of learned Counsel for the
respondent
19
7 E Analysis 20-54
8 F Summarizing Our Findings 55
9 G Conclusion 56-57
A. Issue involved
1. A pure question of law arises for consideration before us in the
present appeal, which is whether the National Stock Exchange of
1
India is a “public authority” within the meaning of Section 2(h) of the
2
Right to Information Act, 2005 .
2. A learned Single Judge of this Court has, by judgment dated 15
April 2010, answered the issue in the affirmative. The NSEI is in
appeal.
3. We have heard Mr. Jayant Mehta, learned Senior Counsel
appearing for the NSEI, Mr. Ashish Aggarwal, learned Counsel for the
3
Securities and Exchange Board of India and Mr. B.S. Shukla, learned
CGSC for the Union of India.
1
“NSEI”, hereinafter
2
“RTI Act”, hereinafter
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B. The provision under consideration
4. Section 2(h) of the RTI Act reads thus:
“ 2. Definitions . – In this Act, unless the context otherwise
requires:
*
(h) ‘public authority' means any authority or body or
institution of self-government established or constituted-
(a) by or under the Constitution;
(b) by any other law made by Parliament;
(c) by any other law made by State Legislature;
(d) by notification issued or order made by the
appropriate Government,
and includes any –
(i) body owned, controlled or substantially
financed;
(ii) non-government organisation substantially
financed, directly or indirectly by funds provided by
the appropriate Government:”
C. The impugned judgment
5. The impugned judgment has vivisected Section 2(h) and
clinically analysed the various ingredients of the clause, word by word
and phrase by phrase. The reasoning of the learned Single Judge
would be best understood if it is itemized:
(i) Relying on the judgment of a learned Single Judge of this
4
Court in Indian Olympic Association v. Veeresh Malik , it is
observed, at the outset, that the second “inclusive” part of
3
“SEBI”, hereinafter
4
ILR (2010) 4 Del 1, hereinafter “ IOA ”
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Section 2(h), with clauses (i) and (ii), is not conditioned by the
first part of the definition. The “body” envisaged in clause (i)
5
of the second part, and the Non Government Organisation
envisaged in clause (ii) of the second part of Section 2(h) do
not, therefore, have to be “established by or under any
notification or order made by the appropriate government”. IOA
also explained the principle of “substantial financing” as
employed in both clause (i) and (ii) of the second part of
Section 2(h) by holding that the expression was not to be
understood as majority financing or to be assessed by working
out the percentage of financing in relation to the total budget of
the organisation. IOA further held that it was not necessary for
the NGO, covered by Clause (ii), to perform public duties. All
that was required was that the object of funding had to be the
felt need of a section of the public or for securing larger societal
goals.
(ii) It was obvious that Section 2(h) had given a broad
meaning to the expression “public authority”. The idea was to
make information available to citizens in respect of
organisations which benefited from, or utilized, substantial
public funds. Private organizations which enjoyed the benefit of
direct or indirect substantial funding from the Government
would also be “public authorities”.
(iii) The learned Single Judge, thereafter, adverts to the
5
“NGO”, hereinafter
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expressions employed in the first part of Section 2(h).
(iv) The judgment first examines the ambit of the expression
“authority”. Webster’s Comprehensive Dictionary defined
“authority” as a “person or persons in whom government or
command is vested”. Ramanatha Aiyar, in his Advanced Law
Lexicon, defined “authority” as a person or persons, in a body,
which exercised a power of command. The expression
“authority” had also been examined by the Supreme Court in
6
Rajasthan State Electricity Board v. Mohan Lal , which
defined “authority” as covering all bodies covered by a statute
in which powers were conferred to carry out governmental or
quasi-governmental functions. In the context of Article 12 of
the Constitution of India, the judgment in Rajasthan State
Electricity Board also made reference to the earlier decision of
7
the Supreme Court in Ujjam Bai v. State of Uttar Pradesh ,
which covered, in the ambit of the expression “authority”, every
type of authority set up under a statute for administering laws
enacted by the Parliament or the State, including authorities
vested with the duty to make decisions to implement those laws.
In the context of Articles 12 and 226 of the Constitution of
India, the expression “authority” was accorded a wider meaning
by the Supreme Court in Praga Tools Corporation v C.A.
8 9
Imanual . In Ajay Hasia v Khalid Mujib Sehravardi , the
Supreme Court held that the expression “authority” would also
6
( 1967) 3 SCR 377
7
AIR 1962 SC 1621
8
(1969) 1 SCC 585
9
(1981) 1 SCC 722
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include a corporation through whose instrumentality or agency
the State carried out its functions.
(v) Section 2(h)(d) expanded the definition of “public
authority” to include an authority which was established or
constituted by a Notification or order of the appropriate
Government.
10
(vi) In Binny Ltd v. V. Sadasivan , the Supreme Court had
held, inter alia , that stock exchanges performed public
functions. The relevant passage from Binny read thus:
“Public functions need not be the exclusive domain of the
State. Charities, self-regulatory organisations and other
nominally private institutions (such as universities, the
Stock Exchange , Lloyd's of London, churches) may in
reality also perform some types of public function. As Sir
John Donaldson, M.R. urged, it is important for the courts
to 'recognise the realities of executive power' and not allow
'their vision to be clouded by the subtlety and sometimes
complexity of the way in which it can be exerted'. Non-
governmental bodies such as these are just as capable of
abusing their powers as is Government.”
(Emphasis supplied)
(vii) The interpretation of the various expressions contained in
Section 2(h) had to be undertaken keeping in mind the purpose
of the RTI Act, which was to ensure transparency, openness and
accountability of authorities, by giving citizens the right to ask
for and get information. The Act effectuated and provided a
statutory and enforceable legal right to enforce the right to
information, which was ingrained in Article 19(1)(a) of the
10
( 2005) 6 SCC 657
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Constitution of India. The expression “authority” had, therefore,
to be understood in the light of these objectives and para 40 of
the judgment of the Constitution Bench of the Supreme Court in
Pradeep Kumar Biswas v. Indian Institute of Chemical
11
Biology , which read thus :
“40. The picture that ultimately emerges is that the tests
formulated in Ajay Hasia are not a rigid set of principles so
that if a body falls within any one of them it must, ex
hypothesi , be considered to be a State within the meaning of
Article 12. The question in each case would be – whether in
the light of the cumulative facts as established, the body is
financially, functionally and administratively dominated by
or under the control of the Government. Such control must
be particular to the body in question and must be pervasive.
If this is found then the body is a State within Article 12.
On the other hand, when the control is merely regulatory
whether under statute or otherwise, it would not serve to
make the body a State.”
(viii) Proceeding, next, to the expression “institution of self-
government”, the impugned judgment relies on the definition of
“institution” as contained in Black’s Law Dictionary and
Ramanatha Aiyar’s Law Lexicon, both of which identified the
expression as meaning an organization or establishment,
organised or established for some specific purpose. The
expression “self-government” referred to the nature of activities
being performed by the institution and encompassed
independent, autonomous or self-managed or governed
organizations which were allowed, permitted or were
performing governmental or public functions. An “institution of
self-government” did not necessarily require pervasive or deep
11
(2002) 5 SCC 111
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governmental control. Any institution which was performing
public functions and was created for discharging public or
statutory duties, as distinguished from private functions, would
be an institution of self-government.
(ix) The expression “body” was wide and would, if allowed
its full scope, encompass any conceivable organization with
more than two persons. The words “authority” and “institution
of self-government” were included in the expression “body”.
Unless a purposive interpretation was given to the expression
“body”, the expression would include every organization or
concern of more than two persons which may have been
performing purely private functions. However, every private
body could not be treated as a public authority. Accordingly, the
expression “body” had to be read down in view of the
legislative intention and language of Section 2(h), including the
second part thereof. The word “body” was required to
complement the expression “authority” and “institution of self-
government” and had to be read with clause (i) of the second
part of Section 2(h). The expression could not be understood by
applying the noscitur a sociis principle.
(x) Para 60 of the judgment of the learned Single Judge in
IOA ruled that clause (i) of the second part of Section 2(h)
applied to all bodies which were owned, controlled or
substantially financed by the Government. Bodies and NGOs,
which fell within the second part of Section 2(h), were not
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required to satisfy conditions (a) to (d) of the first part thereof.
(xi) The expressions “owned”, “controlled” and “substantially
funded” were to be read disjunctively. Satisfaction of any one
of these three criteria would suffice for clause (i) of the second
part of Section 2(h) to apply. The activity and functions
undertaken by the body were immaterial.
(xii) Reverting to the first part of Section 2(h), the words
“established” and “constituted” were required to be interpreted
in the context in which they were used. The word “establish”
was defined in Webster’s Third New International Dictionary as
“to found or base squarely, to make firm or stable, to bring into
existence, create, make start, originate” and in the Shorter
Oxford English Dictionary as “to ratify, confirm, settle, to
found”, to create”. Bouvier’s Law Dictionary (Third Edition)
gave five meanings to the expression “establish”, namely “(i) to
settle firmly to fix unalterably, to establish justice; (ii) to make
or form: as to establish a uniform rule of naturalization; (iii) to
found, to create, to regulate: as, Congress shall have power to
establish post officers; (iv) to found, recognize, confirm or
admit: as, Congress shall make no law respecting an
establishment of religion; and (v) to create, to ratify, or confirm,
as We, the people, etc., do ordain and establish the
Constitution". Thus, the expression “establish” did not merely
refer to the initial foundation of the organization or institution
but included its creation, confirmation and recognition.
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(xiii) The word “constituted” was wider than the word
“established”. It would also include subsequent acts which
conferred, on the organization or body, a special status so as to
render it an “authority” or “institution of self-government”
within the meaning of the first part of Section 2(h). This
principle would apply even in respect of private institutions or
bodies which were initially formed by acts of private persons.
(xiv) Proceeding, next, to the expression “by or under”, the
expression “by” was narrower than the expression “by or
under” and the expression “under” was wider than the
expression “by”. The expression “by” implied direct
establishment and constitution of the authority, body or
institution of self-government, as a result of legislation,
notification or order, whereas “under” included establishment or
Constitution under the authority or power conferred on a body
by enactment, notification or order. Section 2(h)(d) did not
envisage any specific type or nature of the order or information
in question.
(xv) It was difficult to conceive of any authority or institution
of self-government which could be established or constituted by
a mode or manner other than those envisaged in clauses (a) to
(d) of the first part of Section 2(h).
(xvi) Proceeding, next, to the second part of Section 2(h), the
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expression “appropriate government” stood defined in Section
12
2(a) of the RTI Act.
(xvii) The aspect of whether the NSEI was or was not a “public
authority” had, therefore, to be examined and assessed in the
light of the aforenoted understanding of the various expressions
contained in Section 2(h).
(xviii)NSEI was a limited company, incorporated on 27
November 1992. The Memorandum and Articles of
13
Associations of NSEI stated that its object was to facilitate,
promote, assess, regulate and manage, in public interest,
dealings in securities of all kind as defined in the Securities
14
(Contracts) Regulations Act, 1956 , and to provide advanced
and modern facilities for trading, clearing and settlement of
securities in a transparent, fair and open manner.
(xix) Given the objects of the NSEI, which was for
establishing stock exchanges, it was necessary for NSEI to be
15
registered and/or recognized under Section 4 of the SCRA.
12
( a ) “appropriate Government” means in relation to a public authority which is established, constituted,
owned, controlled or substantially financed by funds provided directly or indirectly—
( i ) by the Central Government or the Union Territory administration, the Central
Government;
( ii ) by the State Government, the State Government;
13
“the MOA” hereinafter
14
“SCRA”, hereinafter
15
4. Grant of recognition to stock exchanges .—
(1) If the Central Government is satisfied, after making such inquiry as may be necessary in
this behalf and after obtaining such further information, if any, as it may require—
( a ) that the rules and bye-laws of a stock exchange applying for registration are in
conformity with such conditions as may be prescribed with a view to ensure fair dealing
and to protect investors;
( b ) that the stock exchange is willing to comply with any other conditions
(including conditions as to the number of members) which the Central Government, after
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Registration or recognition of the stock exchange under Section
4(3) resulted in the stock exchange being constituted and
established as an “authority” or “institution of self-
government”. In the case of the NSEI, the requisite Order under
Section 4(3) stood issued by the SEBI, recognizing the NSEI as
a stock exchange. NSEI thereby became an “authority” or
“institution of self-government” within the meaning of the first
part of Section 2(h) of the RTI Act.
(xx) The NSEI had sought to contend that the order issued by
the SEBI under Section 4(3) of the SCRA was not a notification
or an order issued by the appropriate Government as required
by Section 2(h)(d). This argument was unacceptable, as, under
Section 4, the order of registration or recognition was required
to be passed by the Central Government. The Central
consultation with the governing body of the stock exchange and having regard to the area
served by the stock exchange and its standing and the nature of the securities dealt with
by it, may impose for the purpose of carrying out the objects of this Act; and
( c ) that it would be in the interest of the trade and also in the public interest to grant
recognition to the stock exchange;
it may grant recognition to the stock exchange subject to the conditions imposed upon it as
aforesaid and in such form as may be prescribed.
(2) The conditions which the Central Government may prescribe under clause ( a ) of sub-
section (1) for the grant of recognition to the stock exchanges may include, among other matters,
conditions relating to—
( i ) the qualifications for membership of stock exchanges;
( ii ) the manner in which contracts shall be entered into and enforced as between
members;
( iii ) the representation of the Central Government on each of the stock exchanges by
such number of persons not exceeding three as the Central Government may nominate in
this behalf; and
( iv ) the maintenance of accounts of members and their audit by chartered
accountants whenever such audit is required by the Central Government.
(3) Every grant of recognition to a stock exchange under this section shall be published in the
Gazette of India and also in the Official Gazette of the State in which the principal office as of the
stock exchange is situate, and such recognition shall have effect as from the date of its publication
in the Gazette of India.
(4) No application for the grant of recognition shall be refused except after giving an
opportunity to the stock exchange concerned to be heard in the matter; and the reasons for such
refusal shall be communicated to the stock exchange in writing.
(5) No rules of a recognised stock exchange relating to any of the matters specified in sub-
section (2) of Section 3 shall be amended except with the approval of the Central Government.
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Government had delegated this power to the SEBI under
16
Section 29A of the SCRA. In issuing the order of registration
or recognition, therefore, the SEBI acted as a delegatee of the
Central Government. The order was, therefore, deemed to be
regarded as an order issued by the Central Government under
Section 4(3). The recognition of the Stock Exchange by virtue
of such order had, therefore, to be treated as an act of the
Central Government for the purposes of the applicability of the
first part of Section 2(h).
(xxi) Thus, the NSEI qualified as a “public authority” under
the first part of Section 2(h).
(xxii) NSEI also qualified as a “public authority” under the
second part of Section 2(h), as it was a body controlled by the
Central Government. The submission of NSEI that
governmental control over the NSEI was merely regulatory and
not deep and pervasive was not acceptable, in view of the
judgment of the Division Bench of this Court in Delhi Stock
17
Exchange v. K C Sharma , which held, albeit in the context of
18
whether the Delhi Stock Exchange was a State within the
meaning of Article 12 of the Constitution of India, that the
Central Government exercised deep and pervasive control over
the DSE. This judgment stood affirmed by the Supreme Court
16
29-A. Power to delegate .—The Central Government may, by order published in the Official Gazette,
direct that the powers except the power under Section 30 exercisable by it under any provision of this Act
shall, in relation to such matters and subject to such conditions, if any, as may be specified in the order, be
exercisable also by the Securities and Exchange Board of India or the Reserve Bank of India constituted
under Section 3 of the Reserve Bank of India Act, 1934.
17
93 (2002) DLT 233
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19
in K.C. Sharma v Delhi Stock Exchange .
6. Thus, the learned Single Judge has held, in the impugned
judgment, that, whether viewed through the lens of the first part or the
second part of Section 2(h), NSEI qualified as a “public authority” and
was, therefore, amenable to the RTI Act.
D. Rival contentions
I. Submissions of Mr. Jayant Mehta
7. Arguing for the NSEI and contesting the impugned judgment,
Mr. Mehta submits that, after the rendition of the impugned judgment,
the law stands settled by the Supreme Court in Thalappalam Service
20
Cooperative Bank Limited v. State of Kerala . Thalappalam ,
submits Mr. Mehta, identified six categories of institutions as falling
within the definition of “public authority” in Section 2(h) of the RTI
Act, in paras 31 and 32, which read thus:
“31. Section 2(h) exhausts the categories mentioned therein. The
former part of Section 2(h) deals with:
(1) an authority or body or institution of self-
government established by or under the Constitution,
(2) an authority or body or institution of self-
government established or constituted by any other law
made by Parliament,
(3) an authority or body or institution of self-
government established or constituted by any other law
made by the State Legislature, and
(4) an authority or body or institution of self-
government established or constituted by notification
18
“DSE” hereinafter
19
(2005) 4 SCC 4
20
(2013) 16 SCC 82
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issued or order made by the appropriate Government.
32. The Societies, with which we are concerned, admittedly, do
not fall in the abovementioned categories, because none of them is
either a body or institution of self-government, established or
constituted under the Constitution, by law made by Parliament, by
law made by the State Legislature or by way of a notification
issued or made by the appropriate Government. Let us now
examine whether they fall in the latter part of Section 2(h) of the
Act, which embraces within its fold:
(5) a body owned, controlled or substantially financed,
directly or indirectly by funds provided by the appropriate
Government,
(6) non-governmental organisations substantially
financed directly or indirectly by funds provided by the
appropriate Government.”
Mr. Mehta submits that the NSEI does not fall within any of the six
categories of institutions identified in paras 31 and 32 of Thalappalam
as being “public authorities”. He also draws attention to paras 30, 52
and 53 of Thalappalam which hold that, as the definition of “public
authority” in Section 2(h) uses the expression “means” and “includes”,
it has to be read exhaustively, and could not be subjected to a liberal
or purposive interpretation.
8. Adverting to the second part of Section 2(h), Mr. Mehta submits
that the body or the NGO which would fall under the “includes” part
of Section 2(h) had necessarily to be funded by the appropriate
government. Financial support of the appropriate government is,
therefore, he submits, the sine qua non for the second part of Section
2(h) to apply.
9. The learned Single Judge, submits Mr. Mehta, erred in relying
on decisions rendered in the context of the definition of “state” under
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Article 12 of the Constitution of India, to arrive at his findings. He
submits that decisions on the aspect of the expression “state” in
Article 12 of the Constitution of India are inapplicable while
interpreting the expression “public authority” as defined in Section
2(h) of the RTI Act. He relies, for this purpose, on paras 21 and 24 of
Thalappalam, paras 11, 18 and 19 of Air Force Sports Complex v. Lt.
21
Gen. S.S. Dahiya , para 15 of Indian Railway Welfare Organisation
22
v. D.M. Gautam and paras 17 and 19 of IFCI Ltd v. Ravinder
23
Balwani .
10. Mr. Mehta submits that the learned Single Judge also erred in
relying on the judgment of the Supreme Court in Binny to hold that
stock exchanges performed public functions. He submits that this
aspect is entirely irrelevant while examining whether a stock exchange
would fall within the ambit of Section 2(h) of the RTI Act. Section
2(h), he submits, does not treat the function performed by the
institution as a criterion on the basis of which it could be decided
whether it was a public authority.
11. Similarly, submits Mr. Mehta, the reliance, by the learned
Single Judge, on the judgment of this Court in K.C. Sharma is also
misplaced, as K.C. Sharma was a service dispute, in the context of
which this Court ruled on whether the DSE was a “state” under Article
12 of the Constitution of India. There was no consideration, in that
decision, of whether the DSE was a “public authority” under the RTI
21
2024 SCC OnLine Del 6905
22
2010 SCC OnLine Del 1795
23
(2010) 175 DLT 84
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Act.
12. Mr. Mehta submits that the NSEI is not owned, controlled or
substantially financed, directly or indirectly, by the appropriate
government. It is recognised and regulated by the SEBI, as a
delegated authority of the Central Government under the provisions of
the SCRA and The Securities and Exchange Board of India Act,
24
1992 . He submits that the learned Single Judge has erroneously
conflated the aspect of “control” with recognition and regulation. The
legislature, he submits, has employed the expression “control”
consciously, instead of “recognition” or “regulation”.
13. Paras 44 and 45 of Thalappalam , submits Mr. Mehta,
interpreted the expression “control” in Section 2(h) as meaning
substantial control over the affairs, day to day functioning, policy and
decision making of the concerned body. Para 19 of Air Force Sports
Complex further holds that “control”, in the context of Section 2(h)
has to go beyond mere regulatory or supervisory oversight. In this
context, Mr. Mehta places further reliance on para 19 of People
25
Welfare Society v. State Information Commissioner and Ors. , para
9 of Dr. Panjab Rao Deshmukh, Urban Co-Operative Bank Ltd v.
26
State Information Commissioner , paras 9(3) and 9(6) of S. Shobha
27
v. Muthoot Finance Ltd. , para 32 of Federal Bank Ltd. v. Sagar
28
Thomas and Ors. and para 40 of Pradeep Kumar Biswas .
24
“the SEBI Act” hereinafter
25
2024 SCC Online Bom 716
26
2009 SCC OnLine Bom 50
27
2025 SCC OnLine SC 177
28
(2003) 10 SCC 733
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14. Adverting to the various provisions in the SCRA and the SEBI
Act by which the SEBI or the Central Government regulate and
supervise stock exchanges, Mr. Mehta submits that such regulation
and supervision would not amount to control over the management
and affairs, or the day to day functioning of the stock exchange. If
regulatory control of stock exchanges was to be treated as sufficient
for converting a privately incorporated stock exchange into a “public
authority” under the RTI Act, all similarly placed private entities such
as commercial banks, mutual funds, insurance companies,
depositories, non banking financial corporations etc. would all become
“public authorities” as they were subject to regulatory control by
sectoral regulators. Such an interpretation would be absurd and would
defeat the scope and objective of the RTI Act. It could not, therefore,
be said that the NSEI was controlled by the appropriate government or
even by the SEBI.
15. Further, not being a body constituted or established by the
Constitution, an act of Parliament or the State Legislature, clauses (a)
(c) of the first part of Section 2(h) would not apply.
16. Mr. Mehta also disputes the interpretation, by the learned Single
Judge, of the expression “established or constituted” as encompassing
mere regulation of an institution, after it has come into existence, by a
subsequent statutory regulatory mechanism. He submits that there is a
difference between a body created by a statute and a body which, after
having come into existence independent of any statute, is regulated in
accordance with the provisions of the statute, for which purpose he
places reliance on para 18 of Thalappalam . He also relies on para 21
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of the judgment of the Supreme Court in Dalco Engineering Pvt. Ltd.
29
v. Satish Prabhakar , in which the expression “established” was
understood as bringing something into existence as opposed to merely
being governed by the provisions of a statute after the body had come
into existence. Inasmuch as the NSEI was incorporated as a private
company on 27 November 1992 under the Companies Act, and was
not established or constituted by any government notification, but had
merely been recognised by the SEBI under Section 4(3) of the SCRA
as a stock exchange, it could not be regarded as having been
established or constituted by a notification of the Central Government.
Else, all statutorily recognised bodies, including public trusts,
registered societies, ordinary companies under the Companies Act,
stock brokers, insurers, mutual funds etc., would all be public
authorities. For the proposition that mere recognition under a statute
does not result in a body becoming a “public authority” under Section
2(h) of the RTI Act, Mr. Mehta places reliance on para 17(ii) of the
judgment of the High Court of Jammu and Kashmir in Tyndale Biscoe
30
School and Ors v. Union Territory of J & K and Ors. and para 40
of the judgment of the High Court of Bombay in Archbishop
Patriarch of Goa, Daman & Diu, Represented in this Act v. State
31
Information Commission & Ors. .
17. Mr. Mehta finally submits that there was no ownership or
substantial financing, by the Central Government, of the NSEI and
that, therefore, the NSEI could not qualify as a “public authority” on
29
(2010) 4 SCC 378
30
2022 SCC Online J&K 300
31
2023 SCC Online Bom 1694
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that score either.
18. In these circumstances, Mr. Mehta submits that the impugned
judgment is patently erroneous and is contrary to the law later
declared by the Supreme Court in Thalappalam and deserves,
therefore, to be set aside.
II. Submissions of learned Counsel for the respondents
19. Learned Counsel for the respondents underscored the limited
32
scope of Letters Patent Appeal jurisdiction and submit that, within
that limited scope, the interpretation, placed by the learned Single
Judge on Section 2(h) of the RTI Act does not call for any
interference.
E. Analysis
20. We do not find this to be a case warranting interference in
appeal.
21. Paras 31 and 32 of Thalappalam clearly identify six categories
of institutions which would qualify as “public authorities” under
Section 2(h) of the RTI Act. They are
(i) authorities, bodies or institutions of self-government
established by or under the Constitution,
(ii) authorities, bodies or institutions of self-government
established or constituted by any other law made by Parliament,
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(iii) authorities, bodies or institutions of self-government
established or constituted by any other law made by the State
Legislature,
(iv) authorities, bodies or institutions of self-government
established or constituted by notification issued or order made
by the appropriate Government,
(v) bodies owned, controlled or substantially financed,
directly or indirectly by funds provided by the appropriate
Government, and
(vi) NGOs substantially financed directly or indirectly by
funds provided by the appropriate Government.
22. The learned Single Judge has, in the impugned judgment, held
that the NSEI qualifies as a “public authority” under categories (iii)
and (iv).
23. We agree.
24. First, addressing the issue of whether the NSEI is a “public
authority” falling within category (iv) of the six categories of bodies
or institutions identified by Thalappalam .
25. In order to qualify as a “public authority” in category (iv),the
body in question has to be owned, controlled or substantially financed
by the appropriate Government.
32
“LPA” hereinafter
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26. Inasmuch as the words “owned”, “controlled” and
“substantially financed” are separated by the conjunction “or”, we are
in agreement with the learned Single Judge that they had to be read
disjunctively. In other words, if the body is owned by the appropriate
Government, controlled by the appropriate Government or
substantially financed by the appropriate Government, it would
qualify as a “public authority”.
27. The learned Single Judge holds, in the impugned judgment, that
the NSEI is controlled by the appropriate Government, and we agree.
28. Thalappalam holds that “control”, for the purposes of the
second part of Section 2(h), implies deep and pervasive control. This
is clear from the opening sentence in para 20 of the judgment which,
we may note, dealt with a cooperative society and is, therefore,
factually clearly distinct from the case before us:
“20. The societies are, of course, subject to the control of the
statutory authorities like Registrar, Joint Registrar, the
Government, etc. but it cannot be said that the State exercises any
direct or indirect control over the affairs of the society which is
deep and all pervasive.”
29. The learned Single Judge holds that the aspect of whether there
is deep and pervasive governmental control over the NSEI stands
concluded by the judgment of the Division Bench of this Court in
K.C. Sharma , which stands affirmed by the Supreme Court in appeal.
Mr. Mehta has sought to wish away this decision on the sole ground
that it was a service matter. We cannot accept this as a ground to
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distinguish the judgment. The issue of whether there exists deep and
pervasive Governmental control over the NSEI is agnostic of the
nature of the lis before the Court. It cannot be sought to be contended
that there is deep and pervasive governmental control over the NSEI
for service matters, but not for any other purpose. Every factual
33
distinction does not erode the precedential value of a judgment.
30. We agree with the learned Single Judge, therefore, that the issue
of the extent of governmental control over the NSEI stands concluded
by the judgment of the Division Bench of this Court in K.C. Sharma,
especially as there is a specific affirmation thereof, by the Supreme
Court.
31. We may reproduce, in this context, the relevant passages from
the judgment of the Division Bench of this Court in K.C. Sharma ,
which also stand quoted by the learned Single Judge in the impugned
judgment:
“15. The fact is the Delhi Stock Exchange is a company
incorporated under the Companies Act. It is not created under a
statute. According to the appellant, Delhi Stock Exchange would
not come within the purview of expression “other authorities”
contained in Article 12 of the Constitution of India, having regard
to its salient features which are as under.
16. The salient features of the Delhi Stock Exchange as stated
by the petitioner are as under:
(i) Delhi Stock Exchange is incorporated under the
Companies Act. It is not created by any statute.
(ii) The entire capital of the Delhi Stock Exchange
33
Refer Mumbai Kamgar Sabha v. Abdulbhai Faizullabhai, (1976) 3 SCC 832, State of Orissa v.
Sudhansu Sekhar Misra, 1967 SCC OnLine SC 17
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comes from the members and not from the
Government/Government agencies.
(iii) The Delhi Stock Exchange receives no financial
assistance from the Government/Government agencies.
(iv) The source of revenue/finance of the Delhi Stock
Exchange is mainly from listing fees received from the
listed companies.
(v) The Delhi Stock Exchange has its own budget for
which it does not require the approval of the Ministry of
Finance or any other Government agency.
(vi) There is no control of the Government over the
expenses of the Delhi Stock Exchange.
(vii) The profits of the Delhi Stock Exchange, if any, are
not appropriated by the Government. Rather the
Government has no control over it.
(viii) The Delhi Stock Exchange does not have any
monopoly status.
(ix) The overall management of affairs of the Delhi
Stock Exchange is vested in the Board of Directors.
(x) The Board of Directors of Delhi Stock Exchange
comprises of seventeen members. The constitution of the
Board of Directors is as follows:
(a) Eight Directors elected from amongst the
members.
(b) Three Directors appointed by the Central
Government or the Securities and Exchange Board
of India.
(c) Five public representatives are nominated by
the Securities and Exchange Board of India as
Directors. These public representatives are from
amongst the persons of integrity having necessary
professional competence and experience to the areas
related to Securities market.
(d) Executive Director appointed by Board of
Directors, subject to prior approval of SEBI.
17. Whereas the respondents, on the other hand, would contend
that the Delhi Stock Exchange is an instrumentality of the State
within the meaning of Article 12 of the Constitution of India. The
respondents contend that the Central Government/SEBI has a deep
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and pervasive control over the affairs of the Stock Exchange. It
was contended that they have very important functions to perform
which have a direct nexus with the development of the economy
inasmuch as people's savings are required to be and can be
harmonized only through the Stock Exchange. It was pointed out
that a small shareholder needing money can transfer his shares
only through Stock Exchange and as such, having regard to the
provisions contained in Securities Contract and Regulation Act,
1956 (hereinafter referred to as “the 1956 Act), the Stock
Exchanges are required to build confidence in the small investors.
It was further submitted that although it does not have any
statutory monopoly, it has a de facto monopoly.
18. Let us consider as to whether the control of the Central
Government/SEBI in terms of the provisions of the 1956 Act, is so
deep and pervasive so as to bring it within the authority contained
in Article 12 of the Constitution of India.
19. The 1956 Act was enacted to prevent undesirable
transactions in securities by regulating the business of dealing
therein by providing for certain other matters connected therewith.
Stock Exchange has been defined in Section 2(j) to mean “any
body of individuals, whether incorporated or not, constituted for
the purpose of assisting, regulating or controlling the business of
buying, selling or dealing in securities.” Section 3 provides for an
application for recognition of stock exchanges. Section 4
empowers the Central Government to grant recognition to stock
exchanges subject to the conditions imposed upon it upon
satisfying itself that it ulfils the criteria thereof. Sub-section (2)
of Section 4 lays down the conditions “for the grant of recognition
to the Stock Exchange may include, among other matters,
conditions relating to—
(i) the qualifications for membership of Stock
Exchanges;
(ii) the manner in which contracts shall be entered into
and enforced as between members;
(iii) the representation of the Central Government on
each of the Stock Exchanges by such number of persons
not exceeding three as the Central Government may
nominate in this behalf; and
(iv) the maintenance of accounts of members and their
audit by chartered accountants whenever such audit is
required by the Central Government.”
20. Recognition of the Stock Exchange under the section is
required to be published in the Gazette of India. The rules of the
recognized Stock Exchanges can be amended only upon approval
of the Central Government. Section 5 provides for withdrawal of
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recognition. Section 6 empowers the Central Government to call
for periodical returns or direct enquiries to be made. Section 7
provides for annual reports to be furnished to the Central
Government. Section 9 empowers the Stock Exchange to make bye-
laws. Section 10, however, also empowers the Central Government
to make or amend bye-laws of recognized Stock Exchange. Section
11 empowers the Central Government to supersede governing
body of a recognized Stock Exchange. Section 12 empowers the
Central Government to suspend business of recognized Stock
Exchanges. Section 13 empowers the Central Government to
declare contracts in notified areas illegal by notification in the
Official Gazette. Section 19 prohibits any person to organize or
assist in organizing or be a member of any Stock Exchange other
than a recognized Stock Exchange for the purpose of assisting in,
entering into or performing any contracts in securities. Section 21
provides that where securities are listed on the application of any
person in any recognized Stock Exchange, such person shall
comply with the conditions of the listing agreement with that Stock
Exchange. Under Section 22, an appeal is maintainable against an
order passed by the Stock Exchange to list securities of public
companies. Section 23 provides for penalties in relation to the
matters specified therein. Section 29 of the Act is in the following
terms:
“ Protection of action taken in good faith. —No suit,
prosecution or other legal proceeding whatsoever shall lie
in any Court against the governing body or any member,
office-bearer or servant of any recognized stock exchange
or against any person or persons appointed under Sub-
section (1) of Section 11 for anything which is in good faith
done or intended to be done in pursuance of this Act or of
any rules or bye-laws made thereunder.”
21. The provisions above-mentioned clearly go to show that not
only Stock Exchanges perform an important function, its control by
the Central Government/SEBI are deep and invasive . So invasive
is control of the SEBI that even the writ petitioner against the
impugned order preferred an appeal before SEBI and filed a
representation before SEBI which was entertained. The appellant
herein submitted itself to the jurisdiction of SEBI without any
demur whatsoever. The SEBI constituted an independent
Committee and despite pendency of the writ petition before this
Court arrived at its own finding. This also goes to show that not
only the Central Government but also a statutory authority
exercises deep and pervasive control over the Stock Exchange. It
may be that it does not receive any financial assistance. But
receiving the financial assistance is not the only criteria for
holding that an instrumentality of the State would come within the
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purview of the definition of “other authorities”.
*
24. The Stock Exchanges, although statutorily do not enjoy a
monopoly status, having regard to the provisions of the Act, as
noticed hereinbefore, it factually does so inasmuch as unless and
until a Stock Exchange is recognized by the Central Government in
terms of Section 4 of the Act, no other Stock Exchange can perform
the said function . The State had been taking on more and more
commercial activities and thus Courts have examined the purport
and ambit of activities of such bodies keeping in view a wider and
wider range of measures the executive and the Central Government
adopt. In Ramana Dayaram Shetty v. The International Airport
34
Authority of India , it was held:
“Today with tremendous expansion of welfare and social
service functions, increasing control of material and
economic resources and large-scale assumption of
industrial and commercial activities by the State, the power
of the executive Government to affect the lives of the
people is steadily growing. The attainment of socio-
economic justice being a conscious end of State policy,
there is a vast and inevitable increase in the frequency with
which ordinary citizens come into relationship of direct
encounter with State power-holders. This renders it
necessary to structure and restrict the power of the
executive Government so as to prevent its arbitrary
application or exercise.”
*
26. The functions of the appellant are such that it has also been
granted exemption from payment of Income-tax. Its functions are
so important that for granting withdrawal and supersession of
recognition, the orders are required to be published in the Official
Gazette which is not done in cases of private organizations.
*
29. Following are some of the important sections of SEBI Act
which support the assertion that Central Government has deep and
all pervasive close control on the functioning of all RSEs
(Recognised Stock Exchanges) :
(1) Preamble of the SEBI Act which inter alia reads,
34
(1979) 3 SCC 489
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“An Act to provide for the establishment of a Board to
protect the interest of investors in securities and to promote
the development of and to regulate the securities market
and for matters connected therewith or incidental thereto”.
(2) Section 11(1), which casts a duty upon SEBI to
protect the interest of the investors and promote the
development of and regulate the securities market.
(3) Section 11(2)(a), specifically casts a duty upon
SEBI to regulate, even the business (means regulation of
even day-to-day business) and that is why it is under this
section SEBI from time to time issues directions to RSEs
about the nature, type, extent and percentage of margin
money to be taken from the members of RSEs; Capital
Adequacy Norms to be observed by the said members;
nature, organization structure and duties of Market
Surveillance department etc.
(4) Section 11(2)(j) requires SEBI to perform such
functions and exercise such powers under SCRA, 1956,
which may be delegated to it by the Central Government.”
(Emphasis supplied)
35
32. The Supreme Court, in appeal , specifically approved the
finding, by the Division Bench of this Court, regarding amenability of
the DSE to Article 226 of the Constitution of India. In para 5 of its
judgment, the Supreme Court notes the first issue flagged by this
Court as arising for consideration, as being whether the DSE is
“State” under Article 12 of the Constitution and is, therefore,
amenable to writ jurisdiction. Thereafter, in para 6, the Supreme Court
notes:
“6. Answering Question 1, the Division Bench held that Delhi
Stock Exchange satisfied the conditions laid down by this Court
in Ramana Dayaram Shetty v. International Airport Authority of
India and therefore, the first respondent was “State” within the
meaning of Article 12 and amenable to the writ jurisdiction of the
35
K.C. Sharma v. Delhi Stock Exchange
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High Court.”
In para 13 of its judgment, the Supreme Court expressly approves the
finding, by the Division Bench of this Court, that the DSE is amenable
to writ jurisdiction, thus:
“13. We are in agreement with the conclusions of the Division
Bench that Respondent 1 is amenable to the writ jurisdiction , that
the termination of services of the appellant in purported exercise of
powers vested under para (4) of the letter of appointment dated 12-
11-1993 is illegal and that, in the facts and circumstances of the
case, the removal of the appellant from the service was both mala
fide and unjustified.”
(Emphasis supplied)
Thereby, the Supreme Court has lent its imprimatur to the
observations and findings of the Division Bench of this Court in K.C.
Sharma , reproduced supra .
33. Inasmuch as the said findings have been returned on an analysis
of the provisions of the SCRA and the SEBI Act, which also apply to
the NSEI, the findings would apply, mutatis mutandis , to the present
case.
34. Mr. Mehta sought to contend that K.C. Sharma could not be
applied, as the Supreme Court has, in Thalappalam , held that the tests
which apply for determining whether a body is an “other authority” or
“State” under Article 12 are not applicable while construing Section
2(h) of the RTI Act.
35. We have studied Thalappalam from the first para to the last,
but we find no such observation, much less any finding to that effect.
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36. Rather, in para 21 of Thalappalam , after dealing with the
earlier judgments of the Supreme Court in U.P. State Coop. Land
36
Development Bank Ltd v. Chandra Bhan Dubey , All India Sainik
37
Schools Employees’ Assn v. Sainik Schools Society and Vaish
38
Degree College v. Lakshmi Narain , Federal Bank Ltd and S.S.
39
Rana v. Registrar, Coop. Societies , all of which dealt with the issue
of whether the institution in question qualified as a “State” under
Article 12 of the Constitution of India , it is thus observed, in para 21:
“21. We have, on facts, found that the cooperative societies,
with which we are concerned in these appeals, will not fall within
the expression “State” or “instrumentalities of the State” within the
meaning of Article 12 of the Constitution and hence not subject to
all constitutional limitations as enshrined in Part III of the
Constitution. We may, however, come across situations where a
body or organisation though not a State or instrumentality of the
State, may still satisfy the definition of public authority within the
meaning of Section 2(h) of the Act, an aspect which we may
discuss in the later part of this judgment .”
(Emphasis supplied)
Not only does para 21 of the decision in Thalappalam defeat Mr.
Mehta’s contention that the issue of whether an institution is “State”
or an “other authority” under Article 12 of the Constitution is
irrelevant while examining whether the institution is a “public
authority” under Section 2(h) of the RTI Act; the concluding sentence
in para 21 of Thalappalam would indicate to the contrary.
36
(1999) 1 SCC 741
37
1989 Supp (1) SCC 205
38
(1976) 2 SCC 58
39
(2006) 11 SCC 634
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37. Para 21 of Thalappalam says that there may be situations in
which, even if the body is not a State under Article 12 , it may
nonetheless be a public authority under Section 2(h) of the RTI Act.
Meaning, thereby, that, if the body is a State/other authority under
Article 12, it would ordinarily be a public authority under Section
2(h), though there may be situations in which the body is a public
authority under Section 2(h) of the RTI Act, though it does not qualify
as a “State” under Article 12 . Thalappalam , therefore, in a sense,
says exactly the opposite of what Mr. Mehta contends.
38. We, therefore, do not agree with Mr. Mehta in his contention
that, in relying on the judgment of the Division Bench of this Court in
K.C. Sharma , the learned Single Judge erred. We agree with the
learned Single Judge that the aspect of whether there is deep and
pervasive government control over the NSEI stands concluded by the
said decision.
39. Once this aspect is understood, it is clear that the NSEI
qualifies as a “public authority” under clause (i) of the second part of
Section 2(h) of the RTI Act.
40. We also agree with the learned Single Judge that the NSEI
qualifies as a “public authority” even under the first part of Section
2(h).
41. Apropos the first part, the learned Single Judge holds that
(i) NSEI qualifies as an “authority or body”,
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(ii) the words “established or constituted”, especially the
word “constituted”, would include a case in which the body,
though established by a private party, required recognition for
functioning as a stock exchange, and
(iii) the order issued by the SEBI under Section 4(3) of the
SCRA, which was essential for NSEI to function, had to be
regarded as an order issued by the Central Government in view
of Section 29 of the SCRA.
42. The justification provided by the learned Single Judge, in the
impugned judgment, for each of these findings, is eloquent and
reasoned, and we see no cause to disturb the findings. Indeed, Mr.
Mehta, too, did not advance any submission which would suffice for
us to disagree with the learned Single Judge.
43. In holding that the NSEI is an “authority” within the meaning
of the first part of Section 2(h), the learned Single Judge has reasoned
thus:
“7. Webster's Comprehensive Dictionary (International
Edition) defines the term ‘authority’ as “the person or persons in
whom government or command is vested; often in the plural”.
Meaning to the word “authority” in Webster's Third New
International Dictionary is “a public administrative agency or
corporation having quasi-governmental powers and authorized to
administer a revenue-producing public enterprise”. Meaning of
‘authority’ given in The Law Lexicon P. Ramanatha Aiyar, Second
Edition-1997 is “a person or persons, or a body, exercising power
of command; generally in plural : as the civil and military
authorities”. In Rajasthan State Electricity Board v. Mohan Lal ,
the Supreme Court referred to the dictionary mean of the term
‘authority’ and observed;
“5. The meaning of the word “authority” given
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in Webster's Third New International Dictionary, which can
be applicable, is a public administrative agency or
corporation having quasi-governmental powers and
authorised to administer a revenue-producing public
enterprise. This dictionary meaning of the word “authority”
is clearly wide enough to include all bodies created by a
statute on which powers are conferred to carry out
governmental or quasi governmental functions. The
expression “other authorities” is wide enough to include
within it every authority created by a statute and
functioning within the territory of India, or under the
control of the Government of India; and we do not see any
reason to narrow down this meaning in the context in which
the words “other authorities” are used in Article 12 of
the Constitution.
6. In Smt Ujjam Bai v. State of Uttar Pradesh ,
Ayyangar, J., interpreting the words “other authorities” in
Article 12, held: “Again, Article 12 winds up the list of
authorities falling within the definition by referring to
“other authorities” within the territory of India which
cannot obviously be read as ejusdem generis with either the
Government and the Legislatures or local authorities. The
words are of wide amplitude and capable of comprehending
every authority created under a statute and functioning
within the territory of India or under the control of the
Government of India. There is no characterisation of the
nature of the ‘authority’ in this residuary clause and
consequently it must include every type of authority set up
under a statute for the purpose of administering laws
enacted by the Parliament or by the State including those
vested with the duty to make decisions in order to
implement those laws.” In K.S. Ramamurthy
40
Reddiar v. Chief Commissioner, Pondicherry , this Court,
dealing with Article 12, held: “Further, all local or other
authorities within the territory of India include all
authorities within the territory of India whether under the
control of the Government of India or the Governments of
various States and even autonomous authorities which may
not be under the control of the Government at all.” These
decisions of the Court support our view that the expression
“other authorities” in Article 12 will include all
constitutional or statutory authorities on whom powers are
conferred by law. It is not at all material that some of the
powers conferred may be for the purpose of carrying on
commercial activities. Under the Constitution, the State is
40
AIR 1963 SC 1464
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itself envisaged as having the right to carry on trade or
business as mentioned in Article 19(1)( g ). In Part IV, the
State has been given the same meaning as in Article 12 and
one of the Directive Principles laid down in Article 46 is
that the State shall promote with special care the
educational and economic interests of the weaker sections
of the people. The State, as defined in Article 12, is thus
comprehended to include bodies created for the purpose of
promoting the educational and economic interests of the
people. The State, as constituted by our Constitution, is
further specifically empowered under Article 298 to carry
on any trade or business.”
8. The term ‘authority’ has been a subject matter of judicial
decisions of the Supreme Court while examining
Articles 12 and 226 of the Constitution of India and has been given
wider meaning. The Supreme Court in Praga Tools
Corporation v. Shri C.A. Imanual , had observed:
“6. In our view the High Court was correct in holding
that the writ petition filed under Article 226 claiming
against the company mandamus or an order in the nature of
mandamus was misconceived and not maintainable. The
writ obviously was claimed against the company and not
against the conciliation officer in respect of any public or
statutory duty imposed on him by the Act as it was not be,
but the company who sought to implement the impugned
agreement. No doubt, Article 226 provides that every High
Court shall have power to issue to any person or authority
orders and writs including writs in the nature of habeas
corpus, mandamus etc. or any of them for the enforcement
of any of the rights conferred by Part III of
the Constitution and for any other purpose. But it is well
understood that a mandamus lies to secure the performance
of a public or statutory duty in the performance of which
the one who applies for it has a sufficient legal interest.
Thus, an application for mandamus will not lie for an order
of reinstatement to an office which is essentially of a
private character nor can such an application be maintained
to secure performance of obligations owed by a company
towards its workmen or to resolve any private dispute.
41
(See Sohan Lal v. Union of India ),
42
In Regina v. Industrial Court mandamus was refused
against the Industrial court though set up under the
Industrial courts Act, 1919 on the ground that the reference
41
AIR 1957 SC 529
42
(1965) 1 QB 377
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for arbitration made to it by a minister was not one under
the Act but a private reference. “This Court has never
exercised a general power” said Bruce, J.
43
in R. v. Lawisham Union “to enforce the performance of
their statutory duties by public bodies on the application of
anybody who chooses to apply for a mandamus. It has
always required that the applicant for a mandamus should
have a legal and a specific right to enforce the performance
of those duties”. Therefore, the condition precedent for the
issue of mandamus is that there is in one claiming it a legal
right to the performance of a legal duty by one against
whom it is sought. An order of mandamus is, in form, a
command directed to a person, corporation or an inferior
tribunal requiring him or them to do a particular thing
therein specified which appertains to his or their office and
is in the nature of a public duty. It is, however, not
necessary that the person or the authority on whom the
statutory duty is imposed need be a public official or an
official body. A mandamus can issue, for instance, to an
official of a society to compel him to carry out the terms of
the statute under or by which the society is constituted or
governed and also to companies or corporations to carry out
duties placed on them by the statutes authorising their
undertakings. A mandamus would also lie against a
company constituted by a statute for the purposes of
fulfilling public responsibilities. [Cf. Halsbury's Laws of
England, (3rd ed.), Vol. II, p. 52 and onwards].
7. The company being a non-statutory body and one
incorporated under the Companies Act there was neither a
statutory nor a public duty imposed on it by a statute in
respect of which enforcement could be sought by means of
a mandamus, nor was there in its workmen any
corresponding legal right for enforcement of any such
statutory or public duty. The High Court, therefore, was
right in holding that no writ petition for a mandamus or an
order in the nature of mandamus could lie against the
company.”
9. In Ramana Dayaram Shetty v. The International Airport
Authority of India , the Supreme Court noticed that the power of
the executive Government to affect the lives of the people is
growing and there has been a tremendous expansion of welfare and
social service functions by the State. It was also noticed that this
has resulted in greater frequency with which ordinary citizens
come into association or encounter with the State policy holders.
43
(1897) 1 QB 498
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In Ajay Hasia v. Khalid Mujib Sehravardi , it was observed that
there would be considerable erosion of the efficiency of the
fundamental rights in case the term ‘authority’ is interpreted
narrowly by allowing the State to adopt stratagem of carrying out
their functions through instrumentality of agency of a corporation
and excluding the same. It was accordingly observed in paragraph
11 of the judgment as under:—
“11. We may point out that it is immaterial for this
purpose whether the corporation is created by a statute
or under a statute. The test is whether it is an
instrumentality or agency of the Government and not as to
how it is created. The inquiry has to be not as to how the
juristic person is born but why it has been brought into
existence. The corporation may be a statutory corporation
created by a statute or it may be a government Company or
a Company formed under the Companies Act, 1956 or it
may be a society registered under the Societies.
Registration Act, 1860 or any other similar statute.
Whatever be its genetical origin, it would be an “authority”
within the meaning of Article 12 if it is an instrumentality
or agency of the Government and that would have to be
decided on a proper assessment of the facts in the light of
the relevant factors. The concept of instrumentality or
agency of the Government is not limited to a corporation
created by a statute but is equally applicable to a Company
or society and in a given case it would have to be decided,
on a consideration of the relevant factors, whether the
Company or society is an instrumentality or agency of the
Government so as to come within the meaning of the
expression “authority” in Article 12.”
10. Section 2(h) of the Act does refer to the manner of
establishment or constitution in conditions (a) to (d) but condition
(d) expands the term to include establishment or constitution by a
notification or order by an appropriate government. Legislative
enactment is not necessary and ‘authority’ under condition (d) of
the section 2(h) can be established or constituted by an executive
action. ‘Authority’ may be statutory or non statutory. Effect and
relevance of conditions (a) to (d) has been examined later on.
11. In Ajay Hasia's case (supra) , the Supreme Court quoted
with approval the test laid down in International Airport
Authority's case to decide whether an organization/body is an
authority against whom a writ could be issued under Article 226 of
the Constitution of India and it was observed:—
“9. The tests for determining as to when a corporation
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can be said to be an instrumentality or agency of
Government may now be culled out from the judgment in
the International Airport Authority case. These tests are
not conclusive or clinching, but they are merely indicative
indicia which have to be used with care and caution,
because while stressing the necessity of a wide meaning to
be placed on the expression “other authorities”, it must be
realised that it should not be stretched so far as to bring in
every autonomous body which has some nexus with the
Government within the sweep of the expression. A wide
enlargement of the meaning must be tempered by a wise
limitation. We may summarise the relevant tests gathered
from the decision in the International Airport Authority as
follows:
“(1) One thing is clear that if the entire share
capital of the corporation is held by Government, it
would go a long way towards indicating that the
corporation is an instrumentality or agency of
Government.
(2) Where the financial assistance of the State is
so much as to meet almost entire expenditure of the
corporation, it would afford some indication of the
corporation being impregnated with Governmental
character.
(3) It may also be a relevant factor … whether
the corporation enjoys monopoly status which is
State conferred or State protected.
(4) Existence of deep and pervasive State
control may afford an indication that the corporation
is a State agency or instrumentality.
(5) If the functions of the corporation are of
public importance and closely related to
Governmental functions, it would be a relevant
factor in classifying the corporation as an
instrumentality or agency of Government.
(6) ‘Specifically, if a department of Government
is transferred to a corporation, it would be a strong
factor supportive of this inference’ of the
corporation being an instrumentality or agency of
Government.”
If on a consideration of these relevant factors it is found
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that the corporation is an instrumentality or agency of
Government, it would, as pointed out in the International
Airport Authority case, be an “authority” and, therefore,
‘State’ within the meaning of the expression in Article 12.”
12. Conflict between Sukhdev Singh v. Bhagatram Sardar
44 45
Singh Raghuvanshi and Sabhajit Tewary v. UOI , was
examined by seven Judges of the Supreme Court in the case
of Pradeep Kumar Biswas v. Indian Institute of Chemical
46
Biology . The majority judgment approved of the tests specified
in the case of Ajay Hasia and has observed as under:
“31. The tests to determine whether a body falls within
the definition of “State” in Article 12 laid down
in Ramana with the Constitution Bench imprimatur in Ajay
Hasia form the keystone of the subsequent jurisprudential
superstructure judicially crafted on the subject which is
apparent from a chronological consideration of the
authorities cited.
40. The picture that ultimately emerges is that the tests
formulated in Ajay Hasia are not a rigid set of principles so
that if a body falls within any one of them it must, ex
hypothesis, be considered to be a State within the meaning
of Article 12. The question in each case would be —
whether in the light of the cumulative facts as established,
the body is financially, functionally and administratively
dominated by or under the control of the Government. Such
control must be particular to the body in question and must
be pervasive. If this is found then the body is a State within
Article 12. On the other hand, when the control is merely
regulatory whether under statute or otherwise, it would not
serve to make the body a State.”
13. More recently in Binny Limited v. V.V. Sadasivan , the
Supreme Court has reiterated that Article 226 of the Constitution is
couched in a way that even a Writ can be issued against a body
which is discharging public function and the decision sought to be
corrected or enforced must be in discharge of a public function. A
body is performing a public function when it seeks to achieve
some collective benefit for the public or a section of the public and
is accepted by the public or that section of the public as having
authority to do so. Bodies, therefore, exercise public functions
when they intervene or participate in social or economic affairs of
44
(1975) 1 SCC 421
45
(1975) 1 SCC 485
46
(2002) 5 SCC 111
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public interest. In the said judgment, the Supreme Court quoted the
following passage on what are regarded as public functions from
De Smith, Woolf and Jowell in the book Judicial Review of
Administrative Action, Fifth Edition in Chapter 3, paras 0.24 and
0.25, which reads as under:—
“A body is performing a ‘public function’ when it seeks to
achieve some collective benefit for the public or a section
of the public and is accepted by the public or that section of
the public as having authority to do so. Bodies therefore
exercise public functions when they intervene or participate
in social or economic affairs in the public interest. This
may happen in a wide variety of ways. For instance, a body
is performing a public function when it provides ‘public
goods’ or other collective services, such as health care,
education and personal social services, from funds raised
by taxation. A body may perform public functions in the
form of adjudicatory services (such as those of the criminal
and civil courts and tribunal system). They also do so if
they regulate commercial and professional activities to
ensure compliance with proper standards. For all these
purposes, a range of legal and administrative techniques
may be deployed, including rule making, adjudication (and
other forms of dispute resolution); inspection; and
licensing.
Public functions need not be the exclusive domain of the
State. Charities, self-regulatory organisations and other
nominally private institutions (such as universities, the
Stock Exchange , Lloyd's of London, churches) may in
reality also perform some types of public function. As Sir
John Donaldson, M.R. urged, it is important for the courts
to ‘recognise the realities of executive power’ and not allow
‘their vision to be clouded by the subtlety and sometimes
complexity of the way in which it can be exerted’. Non-
governmental bodies such as these are just as capable of
abusing their powers as is Government.”
14. The aforesaid passage quoted above specifically holds that
stock exchanges perform public functions . Power of judicial review
under Article 226 is designed to prevent cases of abuse of power
and neglect of duty by a public authority. The Act ensures
transparency, openness and accountability of the authorities by
giving rights to citizens to ask for and get information. The Act
effectuates and provides statutory and enforceable legal right to
enforce the Right to Information ingrained and part of
Article 19(1)(a) of the Constitution. The term ‘authority’ used in
Section 2(h) of the Act has to be read in the light of the aforesaid
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tests and paragraph 40 of the judgment in the case of Pradeep
Biswas (supra). Whether and when an ‘authority’ is a ‘public
authority’ in view of conditions (a) to (d) in Section 2(h) of the Act
has been examined later on.”
(Emphasis supplied)
44. We entirely agree, and wholeheartedly endorse the finding, of
the learned Single Judge, that the NSEI is an “authority” within the
meaning of the first part of Section 2(h) of the RTI Act. In that view
of the matter, it is not necessary for us to examine whether the NSEI
would also qualify as an “institution of self-government”.
45. We may also note that as, in Binny , the Supreme Court has
endorsed the view, expressed by De Smith, Woolf and Jowell in their
book Judicial Review of Administrative Action, that a stock exchange
performs a public function (as is noted in the impugned judgment in
para 14), the submission, to the contrary, of Mr. Mehta, cannot be
accepted.
46. Apropos the ambit of the expressions “established” and
“constituted”, as employed in the first part of Section 2(h) of the RTI
Act, the impugned judgment holds, in para 18 to 21, thus:
“18. Learned counsel for the petitioner laid considerable
emphasis on the words “established” and “constituted” and the
requirements specified in (a) to (d) of part one of the Section 2(h).
It was stated that the term “established” means initial
establishment or creation of authority, body or institution of self-
government by or under the Constitution, by an enactment made
by the Parliament or State Legislature or by a notification or order
issued by the appropriate Government. The word “constituted” it
was submitted refers to constitution of a body with appointment of
members as in the Central Coordination Committee by a
notification under Section 3(1) Persons with Disability (Equal
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Opportunities, Protection of Rights and Full Participation) Act,
1995.
19. The words ‘established and constituted’ used in Section
2(h) of the Act have to be interpreted in the context in which the
said words have been used. In Webster's Third New International
Dictionary, it has been held that the word ‘establish’ has been
given a number of meanings, namely, to found or base squarely, to
make firm or stable, to bring into existence, create, make start,
originate. In Shorter Oxford English Dictionary, Third Edition, the
word ‘establish’ has been given in number of meanings, i.e., to
ratify, confirm, settle to found, to create. Founding is not the only
meaning of the word ‘establish’ and it includes creation also.
In Bouvier's Law Dictionary (Third Edition), Vol. I, it has been
said that the word ‘establish’ occurs frequently in the Constitution
of the United States and it is there used in different meanings; and
five such meanings have been given, namely -(1) “to settle firmly
to fix unalterably, to establish justice; (2) to make or form : as to
establish a uniform rule of naturalization; (3) to found, to create, to
regulate : as, Congress shall have power to establish post officers;
(4) to found, recognize, confirm or admit : as, Congress shall make
no law respecting an establishment of religion; (5) to create, to
ratify, or confirm, as We, the people, etc., do ordain and establish
the Constitution”.
20. Thus, it cannot be said that the only meaning of the word
‘establish’ is to be found in the sense in which an eleemosynary or
another institution is founded. The word ‘established’ need not
mean the initial foundation and it includes creation, confirmation
or recognition.
21. The word ‘constituted’ is wider than the word
‘established’. The word ‘constituted’ in section 2(h) of the Act not
only refers to the first act/acts by which a body or organization is
set up but a subsequent act or acts which will have the effect of
conferring on an organization or a body, a special status and
constitute a ‘body’ with status of an ‘authority’ or ‘institution of a
self-government’ for the purpose of Section 2(h) of the Act. A
private institution or a body may be incorporated or formed by
acts of private persons but subsequent statutory enactment or an
order or notification issued by the appropriate Government can
result in constitution and conferring upon the said body, status of
an ‘authority’ or an ‘institution of self-government’. For example,
a private or a public company upon incorporation may be a body
but not an ‘authority’ or institution of self government’ but
subsequently a enactment, order or notification can result in its
constitution as an ‘authority’ or ‘institution of self government’
which was not in existence till the enactment, notification or order
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was made. An organisation in existence can be ‘constituted’ or
‘established’ as an ‘authority’ or ‘institution of self government’
by a subsequent enactment or order/notification. A private
company upon its incorporation or registration does not become
an ‘authority or institution of self government’ as defined above
under section 2(h) of the Act, but by a subsequent enactment or
order/notification issued can become an ‘authority or institution of
self government’. Thus, subsequent enactment, order or
notification may have the effect of establishing or constituting an
‘authority or institution of self government’. The word
“constituted”, has to be liberally interpreted to include cases
where an organization or a body is already set up but by virtue of
a notification or order passed by appropriate Government or
statutory enactment is conferred and given status of an ‘authority’
or an ‘institution of self-government’. The words ‘established’ or
‘constituted’ have to be read in a manner so as to effectuate the
legislative intent in Section 2(h) of the Act .”
(Emphasis supplied)
47. Yet again, we entirely agree.
48. Mr. Mehta sought to contend that the words “established” and
“constituted” could not embrace an institution which was privately
established and the functioning of which was merely regulated by
some statutory provision. Such regulation, he submits, would not
suffice to hold that the institution was established or constituted by
any governmental notification or order.
49. In advancing this submission, Mr. Mehta fails to notice 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. We are dealing,
here, not with regulation, but with recognition. Section 4(3) of the
SCRA does not “regulate” the functioning of stock exchanges; it
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requires recognition of the stock exchange by the government in order
for it to function as a stock exchange. The very identity of the stock
exchange as a stock exchange is, therefore, conditional upon
recognition of the stock exchange under Section 4(3). Section 4(3) is
not, therefore, mere “regulatory” provision, it is a prerequisite for a
stock exchange to be able to discharge any of its functions.
50. The learned Single Judge has held that, in interpreting the
expressions “established” and “constituted” in the first part of Section
2(h), the Court has to adopt a purposive, rather than a literal,
construction. With the advancement of the law, the principle of
purposive construction has replaced the principle of plain meaning as
47
the golden rule for interpreting a statutory instrument. In view of the
fact that Section 4(3) requires governmental recognition for a stock
exchange to function as such, we agree with the learned Single Judge
that the stock exchange has to be regarded as having been
“established” or, at the very least, “constituted” by an order issued by
the Government.
51. The judgment in Dalco , cited by Mr. Mehta, was not dealing
with the RTI Act and cannot, therefore, apply.
52. We also agree with the learned Single Judge that, though the
order under Section 4(3) of the SCRA was issued by the SEBI, it has
to be treated as an order of the Central Government, as the SEBI was
acting, while issuing the order, as a delegatee of the Central
47
Refer Shailesh Dhairyawan v. Mohan Balkrishna Lulla, (2016) 3 SCC 619, Richa Mishra v. State of
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Government under Section 29 of the SCRA.
53. The second and third ingredients, of the three ingredients
identified in para 41 supra are also, therefore, satisfied.
54. The learned Single Judge is, therefore, correct in his view that
the NSEI would qualify as a “public authority” not only under the
second part, but also under the first part of Section 2(h) of the RTI
Act.
F. Summarizing our findings
55. We may briefly summarise, thus, the reasons for our conclusion
that the judgment of the learned Single Judge does not call for
interference:
(i) Thalappalam does not say, anywhere, that the
considerations for “other authority” or “state” in Article 12 of
the Constitution cannot be imported into Section 2(h) of the RTI
Act.
(ii) Rather, para 21 of Thalappalam says that there may be
situations in which, even if the body is not a State under Article
12 , it may nonetheless be a public authority under Section 2(h).
Meaning, thereby, that, if the body is a State/other authority
under Article 12, it would ordinarily be a public authority
Chhattisgarh, (2016) 4 SCC 179
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under Section 2(h) . Thalappalam , therefore, says exactly the
opposite of what Mr. Mehta contends.
(iii) Regarding the aspect of control, K.C. Sharma
expansively gives reasons for why the Central Government has
deep and pervasive control over the DSE. The applicability of
the ratio decidendi of K.C. Sharma is not affected by the fact
that the case is a service matter. It cannot be said that the
Central Government has deep and pervasive control over the
DSE for service matters, but not for other cases.
(iv) The aspect of “control” is, therefore, covered by K.C.
Sharma.
(v) NSEI is, therefore, a “public authority” under the second
part of Section 2(h).
(vi) Apropos the first part, the Single Judge holds that
(a) NSEI qualifies as an “authority or body”,
(b) the words “established or constituted”, especially
the word “constituted”, would include a case in which the
body, though established by a private party, required
recognition for functioning as a stock exchange, and
(c) the order issued by the SEBI under Section 4(3) of
the SCRA, which was essential for NSEI to function, had
to be regarded as an order issued by the Central
Government in view of Section 29 of the SCRA.
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(vii) We see no reason to differ. 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 .
(viii) Therefore, the NSEI also satisfies the first part of the
definition of “Public authority”.
G. Conclusion
56. We affirm and uphold the judgment of the learned Single Judge.
57. The appeal is dismissed, with no orders as to costs.
C. HARI SHANKAR, J.
OM PRAKASH SHUKLA, J.
JULY 01, 2026 /yg/aky
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