Srishti Rustagi v. Securities and Exchange Board of India

1. Present Letters Patent appeal has been filed assailing the order dated 24.12.2024 passed by the learned Single Judge whereby the writ petition bearing W.P.(C) 17928/2024 filed by the appellant was dismissed. The appellant is also seeking a direction to respondent no.1/SEBI to provide copy of the speaking order regarding part disposal of the complaint of the appellant being SEBIE/TN21/0000913/1 as well as the status and details of the investigation on the website/portal. She further seeks a direction to respondent no.1 to complete the investigation in a time bound manner.

2. The facts in brief are that a complaint was filed by the appellant on 09.09.2021 seeking a detailed and thorough investigation in the matter of Offer for Sale (OFS) of equity shares of respondent no.3 company. Vide email dated 28.09.2021 sent by SEBI SCORES, the appellant was informed about part disposal of her complaint and also forwarding of the complaint with regard to allegations of insider trading to the concerned department for necessary action. Thereafter, various emails were sent by the appellant to respondent no.1/SEBI seeking status regarding the ongoing investigation with respect to her complaint, however to no avail.

3. On 29.03.2022, the appellant filed an application under the Right to Information Act, 2005 to the Central Public Information Officer (hereinafter referred to as ‘CPIO’), SEBI seeking the following information:- “Information regarding the status about the ongoing internal investigation as per the order dated 28.09.2021 passed by the Hon’ble SEBI tribunal in complaint no. SEBIE/TN21/0000913/1 as the applicant through her counsel has already addressed severally reminder email dated: (a) 18.12.2021 (b) 03/02/2022 (c) 21/02/2022 (d) 05/03/2022 (e) 22/03/2022”

4. The query was responded to by the CPIO vide letter dated 26.04.2022. Dissatisfied by such response, the appellant preferred an appeal before the First Appellate Authority which was dismissed vide order dated 15.09.2023. The second appeal filed by the appellant too was dismissed vide order dated 09.09.2024 observing that the status of the complaint as sought for has already been furnished to the appellant.

5. Aggrieved by the said decision, the appellant was constrained to invoke the writ jurisdiction of this Court. Vide impugned order dated 24.12.2024, the learned Single Judge dismissed the underlying writ petition filed by the appellant, holding that (i) the information regarding the status of her complaint was duly provided to her; and (ii) the information regarding internal investigation is exempted under Section 8(1)(h) of the RTI Act. Aggrieved thereof, the present appeal has been filed.

6. Heard the learned counsel for the respective parties and perused the records.

7. From the records, we find that the appellant had filed a complaint with SEBI on the SCORES portal in relation to an allegation that in allocation of OFS of respondent no.3/WABCO India Ltd., a major chunk of shares under OFS was allocated to related parties. By the order dated 28.09.2021, the SEBI SCORES portal informed the appellant that after investigation, it was observed that 97% of the total allocation of OFS was to domestic mutual funds and that the data does not corroborate with the allegations in the complaint. With respect to the allegation of insider trading, the complaint was forwarded to the concerned division for their information and necessary action. It is in respect of this part of the complaint that the appellant filed an RTI query on 29.03.2022. The CPIO of SEBI vide RTI reply dated 26.04.2022 conveyed that the information received through complaints is treated as market intelligence and the information so received is analysed and if found necessary, further action is taken. It was also conveyed that any regulatory actions, if taken, are published on the SEBI website. Dissatisfied with the said reply, the appellant filed the first appeal bearing Appeal no.5785/2023 which was disposed of by the First Appellate Authority observing that all the complaints lodged in the SCORES portal and the related correspondence and action history can be accessed online on the said portal under the tab ‘View Complaint Status’. The First Appellate Authority noted that the inputs and alerts received by SEBI may or may not result in further action and that such examination or investigation may or may not establish the suspected violations or lead to enforcement actions. Predicated thereon, it was noted that maintenance of confidentiality of examination/investigation is of paramount importance since reports of the same may result in unwarranted speculation or concern in the market or may affect evidence collection during the examination/investigation or may even result in unnecessary harm to third parties. It was thus concluded that there was no deficiency in the original response by the CPIO and resultantly, the appeal was dismissed.

8. Being aggrieved by the order dated 15.09.2023 of the First Appellate Authority, the appellant preferred a Second Appeal before the Central Information Commissioner (CIC) who by the order dated 09.09.2024 dismissed the said appeal. The Second Appellate Authority while adverting to the order passed by the First Appellate Authority also agreed that the CPIO had provided appropriate reply to the appellant and that the status of the complaint as sought for was also furnished.

9. This order of the Second Appellate Authority was challenged by the appellant by way of filing the underlying writ petition which too was dismissed by the learned Single Judge vide order dated 24.12.2024.

10. It would be apposite to extract the relevant portion of the impugned order dated 24.12.2024 which reads thus: “6. Counsel for the Petitioner contends that the basis of denial of the information as being exempted under Section 8(1)(h) of the RTI Act is unreasonable and against the principles of law. The order of the Commission observing that the reply was as per the RTI Act is against the spirit of the statute which is to promote transparency of information.

7. The Court has considered the afore-noted contentions but remains unpersuaded. The information sought by the Petitioner regarding the status of her complaint was duly provided as has been noted in the impugned order to the following effect: “The respondent while defending their case inter alia submitted that a response to the RT/ application had been furnished to the appellant vide their letter dated 26.04.2022, wherein, status of the appellant's complaint had been furnished as sought for. He further submitted that any regulations action, if taken, are published at the SEBI website and the link of the same had been provided to the appellant. A written submission of the respondent is reproduced as under:- “The appellant, in her application dated April OJ, 2023, inter alia, sought the Information regarding the status about the ongoing internal investigation as per the order dated September 28, 2021, passed by the SEBI in complaint no. SEBIE/TN21/0000913/1. It may be noted that all the complaints which are lodged in the SCORES system, the related correspondence, Action History etc., can be accessed online on SCORES portal under the tab "View Complaint Status" by providing the complaint registration number and password, which is allotted at the time of registering the complaint. With regard to appellant's complaint regarding allegations of insider trading, any input received is treated as market intelligence. Further, it may also be noted that SEBI conducts examinations and investigations confidentially in a holistic manner and if found necessary, further action will be taken. In view of the same, disclosure of details related to the matter may impede the process and is therefore exempt from disclosure in terms of Section 8(1)(h) of the RTI Act, 2005. However, post investigation, whenever violations are established, appropriate enforcement actions are taken under the provisions of the SEBI Act, 1992 and Regulations framed thereunder which culminate in the issuance of Orders. These Orders are available in public domain and can be accessed from SEBI website: www.sebi.gov.in under the heading Enforcement Orders.”

8. The Commission after adverting to the facts and circumstances of the case, hearing both parties and perusal of records, observes that the CPIO has provided an appropriate reply to the RTI Application as per the provisions of the RTI Act vide letter dated 26.04.2022. The Perusal of records further reveals that the status of the complaint as sought for has been furnished by the respondent. In view of the above, the Commission finds no scope of intervention in the matter. Accordingly, the appeal is dismissed.”

11. The observations of the authorities under the RTI Act are clear in so far as the status of the complaint is concerned which is available on the SCORES portal. With respect to the ongoing investigation, if at all, the statutory authorities have also given reasons as to why and under what circumstances the disclosure of such information may impede the investigation process in terms of Section 8(1)(h) of the RTI Act and also the fact that such disclosure may not only affect confidentiality of examination/investigation but may also affect evidence collection and result in unnecessary harm to third parties. In our opinion, these reasons cumulatively are sufficient not to disclose the information sought by the appellant. It is also relevant to note that the appellant only sought status of her complaint and not the nature of investigations which, according to the statutory authorities, is already on the SCORES portal. As observed above, apart from the status of the complaint, the nature of investigations even if sought by the appellant stands exempted in view of the aforesaid background facts and thus cannot be disclosed.

12. Having noted the aforesaid narration of facts and the observations noted by the statutory authorities under the Right to Information Act, 2005 coupled with the findings of the learned Single Judge that the information sought is exempted under Section 8(1)(h) of the RTI Act, 2005, we do not find any reasons to interdict the impugned order dated 24.12.2024.

13. In view of the aforesaid, the present appeal is dismissed along with pending applications, if any, however without any order as to costs.