Delhi High Court Holds NSE Is Public Authority Under RTI Act, Upholds 2010 Ruling

The Delhi High Court on Wednesday upheld a 2010 ruling declaring the National Stock Exchange (NSE) a public authority under the Right to Information Act.

It held that the exchange must be regarded as having been established or, at the very least, constituted by an order of the Central Government because governmental recognition is required for a stock exchange to function and the recognition order is issued by the Securities and Exchange Board of India (SEBI) as the Central Government's delegate.

A division bench of Justices C. Hari Shankar and Om Prakash Shukla dismissed NSE's appeal against the April 15, 2010 judgment of a Single Judge. The Single Judge had held that the exchange is amenable to the RTI Act.

"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 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.", the court held.

The appeal arose from the Single Judge's judgment declaring NSE a public authority under the RTI Act.

NSE argued that although it was incorporated as a private company on November 27, 1992 and was later recognised by SEBI as a stock exchange, it was neither established nor constituted by the Government. It therefore contended that it did not fall within the definition of a public authority under the RTI Act.

The court rejected that contention. It endorsed the Single Judge's finding that NSE is an "authority" within the meaning of the first part of Section 2(h) of the RTI Act. The bench therefore found it unnecessary to examine whether the exchange also qualifies as an institution of self-government.

"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”.", the court ruled.

The court also held that a stock exchange cannot legally function without governmental recognition. It ruled that the recognition order issued by SEBI is deemed to be an order of the Central Government because the regulator exercises delegated powers under the Securities Contracts (Regulation) Act.

NSE had also argued that the earlier decision in Delhi Stock Exchange v. K.C. Sharma was distinguishable because it arose from a service dispute. The bench rejected the submission. It held that the finding on deep and pervasive governmental control did not depend on the nature of the dispute and, since the same statutory framework governs NSE, applied equally in the present case.

The court consequently dismissed the appeal. It affirmed the Single Judge's ruling declaring the National Stock Exchange a public authority under the RTI Act.

For Appellant: Senior Advocate Jayant Mehta with Advocates Pranav Sarthi, Prachi Dhingra, Ishan Agrawal, Gandharv Garg, Jasleen Oberoi, Anshit Aggarwal, Mansvini Jain, Udit Bajpai, Advocates

For Respondent: Advocates Ashish Aggarwal, O.P Faizi, Anand Aggarwal, Darshana Aggarwal, Nishtha Verma, Lisha Arora, Tanya Jain, Himanshu Singh, Ishita, Anjali, Advocates, B.S. Shukla, CGSC with Dashmesh Tripathi