In a landmark ruling, the Delhi High Court on Wednesday held that the National Stock Exchange (NSE), India's largest stock exchange, is a "public authority" under Section 2(h) of the Right to Information (RTI) Act, bringing it within the ambit of the transparency law. The decision ended a 16-year-long legal battle. A division bench headed by Justice C. Hari Shankar and Justice Om Prakash Shukla upheld a 2010 ruling by a single bench of Justice Sanjiv Khanna, observing that the single judge's justification was "eloquent and reasoned" and that there was "no cause to disturb the findings." The order noted that "not only the Central Government but also a statutory authority exercises deep and pervasive control over the Stock Exchange." NSE had argued that it is a private entity, neither owned nor controlled by the government, and that regulatory oversight by the Securities and Exchange Board of India (SEBI) does not bring it under the RTI Act. Rejecting this, the court noted that although NSE was incorporated as a private company, it could not function as a stock exchange without recognition under Section 4 of the Securities Contracts (Regulation) Act, 1956 — a recognition granted by SEBI under powers delegated by the central government. The court held that ownership and financing are not the only tests under the law, relying on the earlier K.C. Sharma vs Delhi Stock Exchange ruling. Lawyers said the verdict would not lead courts to interfere with exchanges' commercial or policy decisions. Experts said it is likely to improve transparency in governance and regulatory functioning and strengthen investor confidence. The ruling comes as NSE awaits approval for what could be India's biggest IPO.
Delhi High Court declares NSE a public authority under RTI Act
The Delhi High Court has held that the National Stock Exchange (NSE) is a "public authority" under Section 2(h) of the RTI Act, bringing India's largest stock exchange within the transparency law after a 16-year legal battle. A division bench upheld a 2010 single-judge ruling, finding that the central government and a statutory authority (SEBI) exercise deep and pervasive control over the exchange, and that ownership and funding are not the only tests under the Act.
Key facts
- The Delhi High Court declared the National Stock Exchange (NSE) a public authority under Section 2(h) of the RTI Act.
- A division bench of Justice C. Hari Shankar and Justice Om Prakash Shukla upheld the 2010 single-bench ruling of Justice Sanjiv Khanna, ending a 16-year legal battle.
- The court held that the Central Government and a statutory authority (SEBI) exercise deep and pervasive control over the Stock Exchange.
- NSE cannot function without recognition under Section 4 of the Securities Contracts (Regulation) Act, 1956, granted by SEBI under powers delegated by the central government.
- The court ruled that ownership and financing are not the only tests of a public authority, relying on K.C. Sharma vs Delhi Stock Exchange.
- Experts said the ruling improves transparency in governance and could prompt RTI scrutiny of other market institutions.
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With reference to the Delhi High Court ruling on the National Stock Exchange (NSE) under the RTI Act, consider the following statements: 1. The Court held that the NSE is a "public authority" under Section 2(h) of the RTI Act. 2. The division bench upheld a 2010 ruling delivered by a single bench of Justice Sanjiv Khanna. 3. The Court held that ownership and financing are not the only tests of a public authority under the Act. Which of the statements given above is/are correct?
All three statements are correct. The Delhi High Court held that NSE is a "public authority" under Section 2(h) of the RTI Act. A division bench upheld the 2010 ruling of a single bench of Justice Sanjiv Khanna, and held that ownership and financing are not the only tests of a public authority under the law.
Source: Livemint
Frequently asked questions
Under which section of the RTI Act was NSE declared a public authority?
Under Section 2(h) of the RTI Act.
Which bench delivered the ruling?
A division bench headed by Justice C. Hari Shankar and Justice Om Prakash Shukla, upholding Justice Sanjiv Khanna's 2010 ruling.
What was NSE's main argument?
That it is a private entity neither owned nor controlled by the government, and that SEBI's regulatory oversight does not bring it under the RTI Act.
Why did the court reject NSE's argument?
Because NSE cannot function without recognition under Section 4 of the Securities Contracts (Regulation) Act, 1956, granted by SEBI under delegated central government powers, and ownership and financing are not the only tests.
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