Friday, April 29, 2011

Do private organisations come under the purview of RTI?

Do private organisations come under the purview of RTI?

MoneyLife Digital
April 06, 2011 11:46 AM Bookmark and Share
Vinita Deshmukh

While the RTI Act states that only those private organisations which have “substantial” funding from the government come under the purview of the RTI Act, in cases where these entities are in partnership with the government, it is possible to get necessary information. The Pune-Mumbai Expressway toll matter is a sterling example 

With municipal corporations, state and central governments increasingly opting for Public Private Partnerships (PPP), transparency could take a beating, as private organisations have been given an opportunity to duck under the Right to Information (RTI) Act. The Act says that only if private organisations are "substantially" funded then they come under the purview of public domain. Who's to decide what is "substantial funding"? And here's where private bodies take cover and refuse to give information.

A sterling case is that of the Ideal Road Builders (IRB), a private agency which collects toll fees from most of the highways in Maharashtra, including the Pune-Mumbai Expressway. It is impossible to procure information regarding the data of toll collection. However, in such cases, since their partnership is with a government body, the citizen can get access to such information from the government organisation.

Strangely, the Maharashtra State Road Development Corporation (MSRDC), the government body in this case which is mandated to monitor whether IRB is collecting toll honestly or is cheating people, itself has not monitored the revenues of the IRB, despite appointing an independent engineering consultant, STUP Consultants Pvt Ltd, headed by RY Deshpande. However, thanks to citizens demanding this information under RTI, the MSRDC was compelled to request the IRB to send the data of toll collection, year-wise. When this writer conducted inspection of files under Section 4, one of the officials confessed that they had only recently asked the IRB to supply information due to pressure of RTI queries, otherwise they had nothing to do with the information. The fact is that it is binding on the MSRDC to do proper auditing of the toll revenue collected by IRB and gauge whether it is usurping more profits than what it is supposed to get.

Similarly, Metros that are being "forced" upon citizens in several towns and cities across the country, without proper planning, are mostly constructed by the Delhi Metro Rail Corporation (DMRC). Here too, the DMRC is a private body and any query under RTI is denied. In the case of the Pune Metro, the DMRC has disastrously planned the metro and submitted a shoddy and superficial Detailed Project Report (DPR). Despite the project report not satisfying the Pune Municipal Corporation's (PMC) terms of reference and it not abiding by the central government guidelines while making the DPR, the PMC's general body and the administration has blindly passed the project. It now lies with the state government, which failed to allot finance for it in the current budget. The scandal of this Rs10,000-odd crore infrastructure that is going to add to the chaos of the already congested roads in Pune and become a heavy tax burden for citizens for many years, came to light due to the RTI invoked at the PMC. Thus, in private-public partnerships one can get access to public documents by putting a query to the 'public partner'.

However, as per a high court judgment, co-operative banks do not come under the RTI. A few years back, the Reserve Bank of India (RBI) declared that co-operative banks do not come under the purview of the RTI Act. At that time, the Gujarat State Cooperative Bank Ltd, which is an apex institute of co-operative banks, had sought the opinion of the RBI. The RBI stated that since co-operative banks come under the Co-operative Act of the respective states and not under any parliamentary statute, they are not public authorities as defined by the Act.

According to Shailesh Gandhi, central information commissioner, the Company Law gives significant rights to those who own 26% of the shares in a company. Perhaps this could be taken to define the criterion of "substantial finance".

"Subclause d(i) and (ii) together mean any non-government organisations which are substantially owned, controlled or financed directly or indirectly by the government would be covered. Thus aided schools and colleges are public authorities, as also any trusts or NGOs which have significant government nominees; or companies where the government either owns substantial stake, or has given substantial finance, are directly covered under the RTI Act. The substantial finance can take into account tax incentives, subsidies and other concessions as well.

Elaborating further, Mr Gandhi states, "There is some confusion about the words owned and substantial finance. This confusion is evident in the various decisions of the information commissions. Let us look at the words carefully. "Public authority" means any authority or body or institution of self-government established or constituted, … 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."

The finance could be either as investment, or towards expenses, or both. The way in which the words have been placed, indicates that perhaps (i) relates to investments and (ii) relates to the running expenses.

"Thus every institution which is owned by the government is clearly covered. By any norms, whenever over 50% of the investment in a body lies with any entity, it is said to be owned by that entity. Since bodies owned by government have been mentioned separately, the words 'controlled' and 'substantially financed' will have to be assigned some meaning not covered by ownership. Thus it is evident that the intention of Parliament is to extend the scope of the right to other organisations, which are not owned by it. No words in an Act can be considered to be superfluous, unless the contradiction is so much as to render a significant part meaningless, or it violates the preamble. Therefore, it becomes necessary to consider a situation where an entity may be controlled by the government without ownership or substantial finance. Such a situation exists when a charity commissioner or registrar of societies appoints an administrator to run the affairs of a trust or society, or a court liquidator takes over administration of some body.

Thus concludes Mr Gandhi: "It is therefore obvious that as per Section 2 (h) (i) 'a body …substantially financed' would be a body where the ownership may not lie with the government, nor the control. Hence, clearly the wording 'substantially financed' would have to be given meaning at less than 50% holding. Company law gives significant rights to those who own 26% of the shares in a company. Perhaps, this could be taken to define the criterion of 'substantially financed'. The finance could be as equity, or subsidies in land or concessions in taxation.

"Similarly some definition is required where the State provides money for the running expenses of an institution as covered under (ii). Presently, aided schools and colleges have all clearly been accepted as 'public authorities', though there appears to be no clarity in the matter of NGOs and other organisations which are receiving significant amounts of finance.

"The key approach and philosophy of the RTI Act appears to be that since the State acts on behalf of the citizens, wherever the State gives money, the citizen has a right to know. In my opinion, if the money given for the running expenses is over either 20% of the running expenses, or Rs1 crore, the body should be considered as receiving 'substantial finance' and is covered in the definition of a 'public authority'."

Putting up information in the public domain, especially where infrastructure is concerned, is very important in the case of roads. The Economic Survey of India estimates that over the next five years (the survey was of February 2008) the investment needs in physical infrastructure will be $500 billion, out of which the share of the private sector will be $150 billion-odd, which comes to over 30%.

It is time to know the truth, as the truth involves us all!

(Vinita Deshmukh is a senior editor, author and convener of Pune Metro Jagruti Abhiyaan. She can be reached at

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