SEBI Holds Information in Fiduciary Capacity, Disclosure Without Third-Party Hearing Impermissible: Bombay High Court Partly Sets Aside CIC’s RTI Disclosure Orders

“Stock Exchange Inspection Reports Stand on Different Footing Than Banks—Jayantilal Mistry Not Automatically Applicable to SEBI”, Bombay High Court (Bench of Justice M.S. Sonak and Justice Jitendra Jain) delivered a significant judgment on the ambit of information disclosure under the Right to Information Act, 2005 (RTI), in the case of Securities and Exchange Board of India v. Central Information Commissioner & Others. The Court upheld SEBI’s fiduciary duty to confidentiality under Section 8(1)(e) of the RTI Act and emphasized mandatory compliance with third-party rights under Section 11 before disclosure. The judgment holds notable implications for regulatory transparency and the confidentiality of sensitive financial data, especially in the context of Public Interest Directors’ (PIDs) appointments and stock exchange inspection reports.

Mr. Subhash Chandra Agarwal, a noted RTI activist, had filed an application dated 18 June 2021 seeking nine categories of information from SEBI, including file notings on PID appointments, inspection reports of stock exchanges, and related documents. SEBI resisted disclosure citing various exemptions under Section 8 of the RTI Act, while the Central Information Commission (CIC), in its order dated 27 December 2022, partially directed disclosure of certain information, including lists of selected and rejected candidates and summaries of inspection findings.

SEBI challenged the CIC order through Writ Petitions No. 10909 and 10910 of 2023, arguing breach of fiduciary confidentiality and procedural lapses under Section 11 of RTI. Conversely, Mr. Agarwal filed Writ Petitions No. 10887 and 10888 of 2023, seeking wider disclosure, relying heavily on the landmark Supreme Court ruling in RBI v. Jayantilal N. Mistry (2016).

The Court decisively held:
“Information sought from SEBI concerning internal file notings, correspondence on PID appointments, and certain inspection reports are held in a fiduciary capacity under Section 8(1)(e) and cannot be disclosed without larger public interest being established.”

File Notings on Policy Framing—Fiduciary Exemption Upheld:

Addressing Query No. 2 regarding internal policy deliberations on PID appointments, the Court observed:
“Such information includes deliberations received by SEBI in confidence and materials supplied by candidates in trust. Disclosure without larger public interest offends the protection under Section 8(1)(e). We see no infirmity in the CIC’s rejection on this count.”

Disclosure of Rejected Candidates Without Hearing Impermissible:

On Query No. 3, regarding appointment approvals and rejected candidates for PIDs, the Court stressed the need for third-party procedural safeguards:
“Rejected candidates fall within the scope of ‘third party’ under Section 11 of the RTI Act. Disclosure of their names or documents cannot be directed without affording them an opportunity to object.”

The Court quashed the CIC’s direction to disclose the list of rejected candidates without Section 11 compliance and remanded the issue to SEBI’s CPIO.

Inspection Reports of Stock Exchanges—Jayantilal Mistry Distinction:

In a crucial observation on Query Nos. 4 and 5, the Court clarified the inapplicability of Jayantilal N. Mistry (which compelled disclosure of RBI’s bank inspection reports) to stock exchanges:
“The regulatory oversight of stock exchanges involves different sensitivities—market integrity, cybersecurity, price leaks—requiring confidentiality. There is no parity between RBI-bank and SEBI-stock exchange contexts.”

The Court emphasized:
“Annual inspection reports of BSE and NSE, containing sensitive market information, are third-party records. Disclosure without Section 11 safeguards is unsustainable.”

Vague Queries Deserve Rejection Under RTI Framework:

On Query Nos. 6 to 9—seeking general inspection of files and web-links—the Court upheld their rejection, noting:
“RTI Act envisages specificity in queries. Vague, omnibus requests risk disproportionate diversion of public resources and cannot be countenanced.”

Clarification on Public Interest Balancing:

The Court acknowledged the balancing of the public’s right to know under Article 19(1)(a) against the right to privacy under Article 21, noting the principles laid down in CPIO, Supreme Court v. Subhash Chandra Agarwal (2020) 5 SCC 481 and K.S. Puttaswamy v. Union of India (2017) 10 SCC 1.

Concluding the judgment, the Bench held:
“The CIC’s order is modified—disclosure of sensitive, fiduciary, and third-party information cannot be mandated without satisfying statutory conditions of public interest and procedural safeguards under the RTI Act.”

The High Court ordered:

• CIC order on Queries 1, 2, 6, 7, 8, and 9 remains undisturbed.

• CIC order on Queries 3, 4, and 5 set aside; matter remanded to SEBI’s CPIO for fresh adjudication following Section 11 third-party procedure.

This judgment reiterates a nuanced approach to RTI jurisprudence—ensuring transparency without compromising legitimate confidentiality and privacy interests. It prevents overbroad application of Jayantilal Mistry and highlights the special sensitivity attached to market infrastructure and financial regulation.

Date of Decision: 10 July 2025