In an epochal judgment that will strengthen transparency in India’s financial industry, the Delhi High Court Friday said the National Stock Exchange (NSE) is a public entity that is obliged to disclose information under the Right to Information (RTI) Act.
A Division Bench of Justices C. Hari Shankar and Om Prakash Shukla dismissed the NSE's appeal and upheld a 2010 judgment by then Justice Sanjiv Khanna, ending a legal battle that had been ongoing for over a decade.
What the Court Ruled
The High Court reaffirmed that although the NSE was incorporated as a private company under the Companies Act, it performs public functions after being recognised as a stock exchange under the Securities Contracts (Regulation) Act, 1956.
The court agreed with the earlier finding that the recognition obtained by the Central Government (and later delegated to the Securities and Exchange Board of India (SEBI)) makes the NSE an institution performing public duties.
The 2010 judgment also stated that the NSE is a body substantially controlled by the Central Government, and hence was a “public authority” under Section 2(h) of the RTI Act.
Why NSE challenged the order?
The National Stock Exchange argued that it is a private corporate entity incorporated under the Companies Act and therefore cannot be treated as a government body or compelled to disclose information under the RTI Act.
The exchange said it is independent and not owned or controlled by the government.
Following the 2010 single-judge ruling, a Division Bench had stayed the judgment on May 4, 2010, allowing the NSE to continue operating outside the RTI framework while the appeal was pending.
With Wednesday’s decision that has now been rejected, that challenge is out of the picture.
What the Verdict Means
Because of being a public authority, NSE will now be required to respond to RTI applications and disclose information unless it falls under exemptions provided under the RTI Act.
The decision will enhance transparency and accountability in the Indian stock market as the NSE is very much in charge of stock market trading and is the major player behind that.
The judgment will also influence how other market institutions and self-regulatory organisations are viewed under India’s transparency laws.
Who Appeared in Court
The NSE was represented by Senior Advocate Jayant Mehta, along with a team of advocates.
The RTI applicant was represented by advocates led by Ashish Aggarwal, while the Union of India was represented by Central Government Standing Counsel B.S. Shukla and Dashmesh Tripathi.
The judgment is an important step forward for RTI Act interpretation and shows that the public scrutiny of public institutions with their core public functions can be done more thoroughly irrespective of their corporate structure.
