Breaking- NGOs 'Substantially Financed' By Government Amenable To RTI Act, Holds SC [Read Judgment]

In an important judgment delivered today, the Supreme Court has held that non-governmental organisations [NGO] substantially financed, whether directly or indirectly, by the appropriate government fall within the ambit of 'public authority' under Section 2(h) of the Right to Information Act, 2005.

The bench comprising Justice Deepak Gupta and Justice Aniruddha Bose, while considering appeals [D.A.V. College Trust And Management Society vs. Director Of Public Instructions] filed by colleges or associations running the colleges and/or schools, observed:

We have no doubt in our mind that the bodies and NGOs mentioned in sub¬clauses (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.

By specifically bringing NGOs it is obvious that the intention of the Parliament was to include these two categories mentioned in sub clauses (i) and (ii) in addition to the four categories mentioned in clauses (a) to (d). Therefore, we have no hesitation in holding that an NGO substantially financed, directly or indirectly, by funds provided by the appropriate government would be a public authority amenable to the provisions of the Act.

What is Substantial?

Interpreting the term 'substantial', the bench made these observations:

• '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 a 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 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.

The bench also observed that the question 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. It said:

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 15 50%, it cannot be termed to be substantial contribution. On the other hand, if a body or an NGO gets hundreds of crores of rupees as grant but that amount is less than 50%, the same can still be termed to be substantially financed.

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.

The bench further observed:

While interpreting the provisions of the Act and while deciding what is substantial finance one has to keep in mind the provisions of the Act. This Act was enacted with the purpose of bringing transparency in public dealings and probity in public life. If NGOs or other bodies get substantial finance from the Government, we find no reason why any citizen cannot ask for information to find out whether his/her money which has been given to an NGO or any other body is being used for the requisite purpose or not. 

Authority, Body Or Institution Of Self-Government Constituted By Notification Of Central/ State Government Would Be Public Authority

The bench also rejected the contention that unless a notification is issued notifying that an authority, body or institution of self-government is brought within the ambit of the RTI Act, no body or institution outside the ambit of clauses (a) to (c) of Section 2(h) can be deemed to be public authority. Any authority or body or institution of self-government, if established or constituted by a notification of the Central Government or a State Government, would be a public authority within the meaning of clause (d) of Section 2(h) of the Act, the bench held.

What is an NGO?

The bench observed:

NGO is not defined under the Act or any other statute as far as we are concerned. In fact, the term NGO appears to have been used for the first time describing an international body which is legally constituted but non-governmental in nature. It is created by natural or legal entities with no participation or representation by the Government. Even NGOs which are funded totally or partially by the Governments essentially maintain the NGO status by excluding Government representations in all their organisations. In some jurisprudence, they are also referred to as civil society organisations.

A society which may not be owned or controlled by the Government, may be an NGO but if it is substantially financed directly or indirectly by the government it would fall within the ambit of sub-clause (ii).

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