Bringing NGOs under RTI ambit: Supreme Court judgment could have ensured legal certainty | Comment

While focusing on transparency in all public transactions, I have realized that most individuals and institutions happily promote transparency for others but are very reluctant to apply it to themselves.

The key principle adopted in India’s Right to Information Act (RTI) Act, 2005, is that citizens own the government and hence all the information with government belongs to them. Also when the government gives substantial funding to any private organization, they have a right to get information from them. This is the key principle, which was first adopted, in rural Rajasthan by Mazdoor Kisan Shakti Sangathan (MKSS), which gave the slogan “Hamara Paisa, Hamara Hisab.”

With this in mind the RTI Act defined a term ‘public authority’ to whom the RTI Act applies and defined it in Section 2 (h) of the Act:

2(h): “Public authority” means any authority or body or institution of self-government established or constituted –

(a) by or under the Constitution;

(b) by any other law made by Parliament;

(c) by any other law made by State Legislature;

(d) by notification issued or order made by the appropriate Government,

and includes any –

(i) body owned, controlled or substantially financed;

(ii) non- government organisation substantially financed, directly or indirectly by funds provided by the appropriate Government”

To most citizens and adjudicating authorities, it was clear that ‘any body’ or non-government organization which was substantially funded by government was covered by RTI as per the law. The words were absolutely clear. But DAV College Trust chose to claim that a public authority must necessarily meet the definition given in sub-clauses (a), (b), or (c). It insisted that at the very least it should be created by a specific notification issued by the government (d). They chose to claim that sub-clauses (i) and (ii) were superfluous and that substantial funding by itself was not adequate to be classified as a public authority.

The Supreme Court has clearly looked at the earlier rulings on the meaning of the word ‘and includes’ and given finality to this by ruling that any private body would be covered if it is substantially financed, directly or indirectly by funds provided by the appropriate government.

The court has ruled categorically:

“17. We have no doubt in our mind that the bodies and NGOs mentioned in subclauses (i) and (ii) in the second part of the definition are in addition to the four categories mentioned in clauses(a) to (d). Clauses (a) to (d) cover only those bodies etc., which have been established or constituted in the four manners prescribed therein. By adding an inclusive clause in the definition, Parliament intended to add two more categories, the first being in sub-clause (i), which relates to bodies, which are owned, controlled or substantially financed by the appropriate Government. These can be bodies, which may not have been constituted by or under the Constitution, by an Act of Parliament or State Legislature or by a notification. Any body which is owned, controlled or substantially financed by the Government would be a public authority.”

There is some confusion about what constitutes ‘substantial finance’ since the law does not define this term. DAV College, which was getting a few crores from the government as grants each year claimed that this could not qualify as ‘substantial finance.’ Various adjudicators have given a wide variety of interpretations to what constitutes substantial finance. Some of them had ruled that finance should be more than 50 per cent.

The Supreme Court has brought some clarity to this by stating:

26. In our view, ‘substantial’ means a large portion. It does not necessarily have to mean a major portion or more than 50%. No hard and fast rule can be laid down in this regard. Substantial financing can be both direct or indirect. To give an example, if land in a city is given free of cost or on heavy discount to hospitals, educational institutions or such other body, this in itself could also be substantial financing. The very establishment of such an institution, if it is dependent on the largesse of the State in getting the land at a cheap price, would mean that it is substantially financed. Merely because the financial contribution of the State comes down during the actual funding, will not by itself mean that the indirect finance given is not to be taken into consideration. The value of the land will have to be evaluated not only on the date of allotment but even on the date when the question arises as to whether the said body or NGO is substantially financed.

“27. Whether an NGO or body is substantially financed by the government is a question of fact which has to be determined on the facts of each case. There may be cases where the finance is more than 50% but still may not be called substantially financed. Supposing a small NGO which has a total capital of Rs.10,000 gets a grant of Rs.5,000 from the Government, though this grant may be 50%, it cannot be termed to be a substantial contribution. On the other hand, if a body or an NGO gets hundreds of crores of rupees as a grant but that amount is less than 50%, the same can still be termed to be substantially financed.”

 This decision by the Supreme Court lays down clearly that all institutions or bodies which get substantial funding from the government are public authorities and hence are covered by the RTI Act. It also clearly establishes that ‘substantial finance’ need not be over 50 percent and that the value of land received free or at subsidized rates must be taken into account to consider ‘substantial finance.’ It has also laid down that the value of the land must be calculated on the date when it is being evaluated whether the institution is a public authority.

One wonders whether it would have been useful if the Supreme Court had made it easier to decide what constitutes ‘substantial finance’. That would have laid a framework, which could have been followed by all and could have led to legal certainty. Without legal certainty how can citizens and official follow laws?


(The author is a former Central Information Commissioner)

Read the Supreme Court’s order

 CIC order 1

CIC order 2