Supreme Court clarifies “Public Authority” under RTI Act for Substantially Financed NGOs: DAV College Trust vs. Director of Public Instructions (2019)

Introduction

Date of the Judgment: September 17, 2019
Citation: (2019) INSC 893
Judges: Deepak Gupta, J. and Aniruddha Bose, J.
Can an organization that is not directly a government body be considered a “public authority” if it receives significant government funding? The Supreme Court of India tackled this question, focusing on the interpretation of Section 2(h) of the Right to Information Act, 2005. The core issue was whether non-governmental organizations (NGOs) that are substantially financed by the government fall under the definition of “public authority,” making them subject to the transparency and accountability requirements of the Act. The judgment was delivered by a bench of Justices Deepak Gupta and Aniruddha Bose.

Case Background

The appellants in this case are various colleges and schools managed by the D.A.V. College Trust and Management Society. They contended that they should not be classified as “public authorities” under the Right to Information Act, 2005, arguing that the Act was intended to cover only governmental bodies and their instrumentalities. The appellants asserted that they do not fall under the categories of bodies established by or under the Constitution, by any law made by Parliament, by any law made by the State Legislature, or by a notification issued by the appropriate Government. They also argued that they are not substantially financed by the government.

Timeline

Course of Proceedings

The High Court judgments in the cases other than Civil Appeal No. 9828 of 2013 did not fully consider the aspect of substantial financing as explained by the Supreme Court. The Supreme Court noted this and remitted those cases back to the High Court for fresh consideration.

Legal Framework

The core of this case revolves around the interpretation of Section 2(h) of the Right to Information Act, 2005, which defines “public authority.” The section reads:

“(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;”

The Supreme Court also discussed the interpretation of the terms “means” and “includes” in statutory definitions, relying on previous judgments such as *P. Kasilingam v. P.S.G. College of Technology & Ors.* [(1995) Supp 2 SCC 348], *Bharat Coop. Bank (Mumbai) Ltd. v. Coop. Bank Employees Union* [(2007) 4 SCC 685], and *Delhi Development Authority v. Bhola Nath Sharma (Dead) by L.Rs. and Ors.* [(2011) 2 SCC 54]. The Court clarified that when a definition uses “means,” it is exhaustive, while “includes” expands the scope. When both are used, the categories are exhaustive.

Arguments

The appellants argued that:

• 
  The Right to Information Act, 2005, was intended to cover only government bodies and their instrumentalities, not private organizations like the appellant colleges and schools.
• 
  The term “public authority” should be strictly interpreted to include only those bodies established under the Constitution, by laws of Parliament or State Legislatures, or by a notification issued by the appropriate Government.
• 
  The appellant colleges and schools are not substantially financed by the government, as they do not receive more than 50% of their funding from the government.

The respondents argued that:

• 
  The definition of “public authority” in Section 2(h) includes not only bodies established by law but also those that are substantially financed by the government, whether directly or indirectly.
• 
  The appellant colleges and schools receive substantial financial assistance from the government, including grants and salary payments for teaching and non-teaching staff.

The Supreme Court clarified that the words “self-government” apply to institutions and bodies, not to authorities. The Court also stated that the inclusive part of Section 2(h), which uses the words “and includes any,” expands the definition to include bodies and NGOs substantially financed by the government, in addition to the four categories mentioned in clauses (a) to (d).

Issues Framed by the Supreme Court

The primary issue before the Supreme Court was:

1. Whether non-governmental organisations substantially financed by the appropriate government fall within the ambit of ‘public authority’ under Section 2(h) of the Right to Information Act, 2005.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following authorities:

✓ *Thalappalam Service Cooperative Bank Ltd. and Ors. v. State of Kerala and Ors.* [(2013) 16 SCC 82] – Supreme Court of India: This case discussed the interpretation of Section 2(h) of the Right to Information Act, 2005, and the meaning of “means and includes.” The Court in this case held that Section 2(h) exhausts the categories mentioned therein and that the former part of Section 2(h) deals with authorities, bodies, or institutions of self-government established by or under the Constitution, by law made by Parliament, by law made by the State Legislature, or by notification issued by the appropriate Government. It also held that the latter part of Section 2(h) includes a body owned, controlled, or substantially financed, directly or indirectly, by funds provided by the appropriate Government and non-governmental organizations substantially financed, directly or indirectly, by funds provided by the appropriate Government.

✓ *P. Kasilingam v. P.S.G. College of Technology & Ors.* [(1995) Supp 2 SCC 348] – Supreme Court of India: This case explained the difference between the use of the words “means” and “includes” in a definition clause, stating that “means” indicates a hard-and-fast definition, while “includes” enlarges the meaning of the expression. The court also held that the words “means and includes” indicate an exhaustive explanation of the meaning.

✓ *Bharat Coop. Bank (Mumbai) Ltd. v. Coop. Bank Employees Union* [(2007) 4 SCC 685] – Supreme Court of India: This case followed the principles laid down in *P. Kasilingam* regarding the interpretation of “means and includes.”

✓ *Delhi Development Authority v. Bhola Nath Sharma (Dead) by L.Rs. and Ors.* [(2011) 2 SCC 54] – Supreme Court of India: This case also followed the principles laid down in *P. Kasilingam* regarding the interpretation of “means and includes.”

✓ *New India Assurance Company Ltd. v. Nusli Neville Wadia and Anr.* [(2008) 3 SCC 279] – Supreme Court of India: This case discussed the principle of purposive construction of a statute, stating that the court must place itself in the chair of the reasonable legislator and interpret the statute to fulfill its object.

✓ *Abhiram Singh v. C.D. Commachen (Dead) by L.Rs. and Ors.* [(2017) 2 SCC 629] – Supreme Court of India: This case emphasized the need for a pragmatic view in interpreting welfare legislations to ensure that the benefit reaches the masses.

✓ Aharon Barak, *Purposive Interpretation in Law*, (2007) at pg.87: This treatise was referred to explain the concept of purposive interpretation and how the interpreter should assume that the legislature is composed of reasonable people seeking to achieve reasonable goals.

Judgment

The Supreme Court held that the colleges and schools run by the D.A.V. College Trust and Management Society are “public authorities” within the meaning of Section 2(h) of the Right to Information Act, 2005, because they are substantially financed by the government. The Court noted that these institutions receive significant grants and that 95% of the salary of the teaching and non-teaching staff is borne by the State Government.

In the other cases, the Court found that the High Court had not fully considered the aspect of substantial financing. Therefore, these cases were remitted to the High Court for a fresh determination on whether the institutions are substantially financed by the government, keeping in mind the principles laid down in this judgment.

How each authority was viewed by the Court?

• *Thalappalam Service Cooperative Bank Ltd.* [(2013) 16 SCC 82]: The Court relied on this case to interpret Section 2(h) of the RTI Act and to clarify that the definition of “public authority” includes both the categories of bodies established by law and those substantially financed by the government.
• *P. Kasilingam v. P.S.G. College of Technology & Ors.* [(1995) Supp 2 SCC 348]: The Court used this case to explain the interpretation of “means” and “includes” in statutory definitions, emphasizing that the definition is exhaustive and includes both categories of authorities and substantially financed bodies and NGOs.
• *Bharat Coop. Bank (Mumbai) Ltd.* [(2007) 4 SCC 685] and *Delhi Development Authority v. Bhola Nath Sharma* [(2011) 2 SCC 54]: These cases were followed to reiterate the principles laid down in *P. Kasilingam* regarding the interpretation of “means and includes.”
• *New India Assurance Company Ltd.* [(2008) 3 SCC 279]: The Court cited this case to discuss the principle of purposive construction of a statute, stating that the court must interpret the statute to fulfill its object.
• *Abhiram Singh v. C.D. Commachen* [(2017) 2 SCC 629]: This case was referred to emphasize the need for a pragmatic view in interpreting welfare legislations.
• Aharon Barak’s *Purposive Interpretation in Law*: This treatise was referred to explain the concept of purposive interpretation.

What weighed in the mind of the Court?

The Supreme Court emphasized the importance of transparency and accountability in public dealings, especially when government funds are involved. The Court focused on the purpose of the Right to Information Act, 2005, which is to ensure that citizens have access to information about how their money is being used. The Court reasoned that if NGOs or other bodies receive substantial finance from the government, there is no reason why citizens should not have the right to ask for information to find out whether their money is being used for the intended purpose.

The Court also considered the principle of purposive construction of a statute, placing itself in the chair of the reasonable legislator to interpret the statute in a manner that fulfills its object.

The Court rejected the argument that the term “self-government” applies to all three categories of authorities, bodies, and institutions, clarifying that it applies only to institutions and bodies.

The Court held that:

• 
  ‘Substantial’ does not necessarily mean a majority or more than 50%, but rather a considerable or material amount.
• 
  Substantial financing can be both direct and indirect.
• 
  If an organization’s functioning is dependent on government funding, it is considered substantially financed.

The Court quoted from the judgment:

“The words ‘and includes any’, in our considered view, expand the definition as compared to the first part. The second part of the definition is an inclusive clause which indicates the intention of the Legislature to cover bodies other than those mentioned in clauses (a) to (d) of Section 2(h).”

“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.”

“Another aspect for determining substantial finance is whether the body, authority or NGO can carry on its activities effectively without getting finance from the Government. If its functioning is dependent on the finances of the Government then there can be no manner of doubt that it has to be termed as substantially financed.”

Conclusion

The Supreme Court’s judgment in D.A.V. College Trust and Management Society & Ors. vs. Director of Public Instructions & Ors. is a significant step towards ensuring transparency and accountability in the functioning of non-governmental organizations that receive substantial government funding. By clarifying that such organizations fall within the ambit of “public authority” under the Right to Information Act, 2005, the Court has affirmed the right of citizens to access information about how their taxes are being utilized. This decision reinforces the principle that public funds should be subject to public scrutiny, irrespective of whether the entity managing those funds is a government body or an NGO.

Implications of the Judgment

The judgment has far-reaching implications for NGOs and other organizations that receive substantial financial assistance from the government. These organizations will now be required to be more transparent and accountable in their operations, as they will be subject to the provisions of the RTI Act. This includes providing information to the public upon request, which will enable citizens to scrutinize their activities and ensure that public funds are being used for the intended purposes.

The judgment also clarifies the scope of the RTI Act, making it more effective in promoting transparency in public affairs. By bringing substantially financed NGOs within the ambit of the Act, the Supreme Court has ensured that a significant portion of public spending is subject to public scrutiny, thereby strengthening the democratic process.

Key Takeaways

• 
  Definition of “Public Authority”: The definition of “public authority” under the Right to Information Act, 2005, includes not only bodies established by the Constitution or by laws made by Parliament or State Legislatures but also non-governmental organizations that are substantially financed by the government.
• 
  Interpretation of “Substantial Financing”: The term “substantial financing” does not necessarily mean that the government provides more than 50% of the organization’s funding. It includes any considerable or material amount of financing, whether direct or indirect. If an organization’s functioning depends on government funding, it is considered substantially financed.
• 
  Importance of Transparency and Accountability: The judgment emphasizes the importance of transparency and accountability in public dealings, especially when government funds are involved. The purpose of the RTI Act is to ensure that citizens have the right to access information about how their money is being used.
• 
  Interpretation of “Self-Government”: The term “self-government” in Section 2(h) of the RTI Act applies to institutions and bodies, not to authorities.
• 
  Exhaustive Definition: The definition of “public authority” in Section 2(h) is exhaustive, including both the categories of bodies established by law and those substantially financed by the government.