Supreme Court to examine plea for RTI exemption for public sector, private banks
According to the Supreme Court bench, the 2015 judgment in the Jayantilal N Mistry case “did not take into consideration the aspect of balancing the right to information and the right to privacy”, and thus, the court was duty-bound to give banks an opportunity to argue their case on merits.
Almost seven years after it sought to usher in utmost financial transparency in the banking system under the Right To Information (RTI) Act, the Supreme Court on Friday agreed to examine a joint plea by various public sector and private banks to be exempted from disclosing an array of financial information relating to non-performing assets (NPAs), losses from trading operations, show-cause notices, and penalties.
Opening the avenue for a reconsideration of the 2015 court ruling, a bench of justices BR Gavai and CT Ravikumar held that the bunch of petitions moved by the banks are legally maintainable since the only remedy available to the banks “for protection of the fundamental rights of their customers” and their right to privacy is to approach the Supreme Court.
According to the bench, the 2015 judgment in the Jayantilal N Mistry case “did not take into consideration the aspect of balancing the right to information and the right to privacy”, and thus, the court was duty-bound to give banks an opportunity to argue their case on merits.
“In view of the judgment of this court in Mistry’s case, RBI is entitled to issue directions to the petitioners/banks to disclose information even with regard to the individual customers of the bank. In effect, it may adversely affect the individuals’ fundamental right to privacy,” lamented the court, as it referred to the 2017 nine-judge bench verdict that declared privacy to be a fundamental right.
No doubt that the right to information is also a fundamental right, said the bench, emphasising that a sense of balance will have to achieved by the Supreme Court in a situation where two rights are found to be competing with each other.
The 2015 judgment opened up under the purview of the sunshine law a variety of financial information relating to banks that included details of wilful defaulters, inspection reports, as well as notices and fines imposed. At that time, the apex court dismissed objections that RBI held financial information about the banks in a fiduciary capacity, and made it clear that the banking regulator must act with transparency and not hide information that might embarrass the individual banks.
Subsequently, RBI came out with disclosure policies in 2016 and 2019 which endeavoured to dilute the impact of the court verdict. But after the court initiated contempt proceedings against RBI, the regulator rolled back the 2019 policy.
Subsequently, HDFC Bank and SBI filed applications for recall of the 2015 judgment. HDFC, along with Axis Bank, ICICI Bank and Yes bank, also filed a joint writ petition seeking a reconsideration of the 2015 judgment. SBI filed a separate petition.
The banks alleged violation of natural justice, and said they were not heard when the 2015 judgment made it mandatory for them to furnish crucial financial information under the RTI Act. They also cited the Supreme Court’s 2017 verdict on the right to privacy, complaining that the 2015 judgment, if implemented, would trample upon the privacy of several investors and entities.
It was also argued that public disclosure of information pertaining to commercial confidence, business strategies, internal system, risk management, gas, etc would not serve any larger public interest, but would adversely affect the competitive position of banks in a highly competitive private banking sector in our country. HDFC further contended that the RTI Act does not apply to private banks.
On the banks’ applications to recall the judgment, the court issued an interim order in December 2019 restraining RBI from disclosing inspection reports of the banks. After this, more banks, including Punjab National Bank, Bank of India, Uco Bank, Kotak Mahindra, and AU Small Finance Bank, queued up asking for the same relief. The central government too argued in favour of keeping the financial information out of the ambit of the RTI Act.
However, in April 2021, the top court dismissed the plea for a recall of the 2015 judgment, consequently reviving the obligation cast upon RBI and banks to provide information under the transparency law. At the same time, the court clarified that it is not ruling on the correctness of the 2015 judgment and the dismissal would not affect the rights of the applicants to seek other remedies available to them under the law.
After the dismissal of the recall applications, the banks pressed their petitions before the court where questions were raised if they could be allowed to seek correction of a judgment under Article 32 (writ jurisdiction) of the Supreme Court.
Rejecting the preliminary objection, the bench on Friday held: “If the court finds that the earlier judgment does not lay down a correct position of law, it is always permissible for this court to reconsider the same and if necessary, to refer it to a larger bench.” The court is expected to hear the banks’ plea on merit on October 18.
