'Beneficiaries Of State Largesse' : Karnataka High Court Holds Bangalore Turf Club, Mysore Race Club As Public Authorities Under RTI Act

A single bench of Justice P.B. Bajanthri, while refusing to interfere with the order passed by the Karnataka Information Commission against the companies said "In the present case, State Largesse has been extended to the petitioners under lease deeds. Therefore, they are holding lease lands on behalf of the people and are accountable to the people. If these material information is taken into consideration, one has to draw inference that petitioners do fall under the definition of 'public authority' under Act, 2005."

The companies had challenged the orders passed in the year 2013 and 2015 by the KIC on the petitions filed by DR. Kodur Venkatesh and Umapathi.S.

Petitioners Argued:

Senior Advocate S.S. Nagananda appearing for BTCL would not qualify as 'public authority' within the meaning of Section 2(h) of Act, 2005. State Government does not have any kind of say in the functioning of petitioner-company."

He relied on the Memorandum and Articles of Association of BTCL and pointed out that BTCL is registered under the Companies Act, 1956 (1 of 1956). In the Memorandum of Association of BTCL, clause 31 relates to the 'Committee'; clause 32.a) stipulates that three Stewards and one Committee Member shall be nominated in each financial year by the Government of Karnataka. In view of these facts and circumstances, petitioner does not fit into the ingredients stated under Section 2(h) to identify BTCL as a 'public authority'.

While Counsel Kamalacharan S R appearing for MRCL submitted that as defined under Section 2(20) of the Companies Act, 2013, petitioner-MRCL is a "Company" and Section 2(27) relates to "Control" that is required to be taken into consideration for the purpose of determining whether petitioner/MRCL would fall under the definition of 'public authority' or not, since the State Government has no control over the MRCL. Consequently, the ingredients under Section 2(h) of Act, 2005 has not been addressed by the KIC, in its order dated 16.09.2013.

State Information Commissioner opposed the petition:

Opposing the petitions counsel G B Sharath Gowda appearing for the information commission pointed that there is no infirmity in the order of the KIC. He relied on the Apex Court decision in the case of D.A.V. COLLEGE TRUST AND MANAGEMENT SOCIETY AND OTHERS vs DIRECTOR OFPUBLIC INSTRUCTIONS AND OTHERS, to determine that petitioners - BTCL would fall under the definition of 'public authority'.

The court has in the case interpreted Section 2(h) - 'public authority' by taking into consideration that 'body owned, controlled or substantially financed'; non-Government organization substantially financed, directly or indirectly by funds provided by the appropriate Government.

Gowda said "In the present case, KIC in its order of 2015 has taken note of the fact that the Government gave concession to the BTCL while leasing the landed property at para.10. Petitioner was put into lease of the Government land at concessional rate and not with reference to market rate. In fact, Comptroller and Auditor General of India (hereinafter referred to as 'CAG' for short) had raised certain objections in giving concession to the petitioner/BTCL which was also taken note of by the KIC.

The court said:

Justice Bajantari examined the lease agreements of BTCL and MRCL and said "Perusal of the aforesaid information, it is evident that petitioners have availed concession of lease amount. If one takes note of the market value as on the date of various lease deeds, it is evident that a larger chunk of monetary gains has favoured the petitioners from the State Largesse."

It added "Each of the petitioners are beneficiaries of State Largesse at a concessional rate as is evident from the records and findings given by the KIC in its orders."

The court rejected the contention of the petitioners that there is no participation on behalf of the Government in respect of running the petitioners company/organization. To which the court referring to the Articles of Association of the company said "If there is no Government control, then what made the petitioners to appoint Stewards from the Government of Karnataka, is not forthcoming from the Memorandum and Articles of Association of the petitioners."

Relying on the judgment in the case of DAV, the court said "No-doubt each of the petitioners were not controlled by the Government of Karnataka in any manner. At the same time Section 2(h) of Act, 2005 are to be read independently from Section 2(h)(a) to (d)and (i) and (ii). If part of (d) and (i) and (ii) ingredients are taken into consideration, petitioners would fall under the definition of 'public authority', since, monetarily each of the petitioners were beneficiary as their lease deeds revealed that they have been given substantial financial aid/concession."

The court also noted that non-government organizations who benefited directly or indirectly by funds provided by the appropriate Government would fall under ''public authority'' under Section 2(h) of Act, 2005. Since 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 like a sports club, this in itself could be substantial financing.

The court opined that 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.

It said "Information reveals that respective petitioners have been provided lease land at throw away price as is evident from the aforesaid amount in crores. BTCL - petitioner was given concession of Rs.524.70 crores and MRCL was given Rs.105.88 crores, instead of Rs.525.62 crores and Rs.105.96 crores. If the market value of the land is taken on a particular date, in that event huge indirect financial aid has been provided by the State to the petitioners."

It concluded by saying "In view of the above analysis of factual aspects of the matter and dictum of law, petitioners have not made out a case so as to interfere with the impugned KIC orders."

Case Details:

Case Title: BANGALORE TURF CLUB LIMITED And STATE INFORMATION COMMISSIONER.

Case No: WRIT PETITION NO.18449/2015

Date of Order: 13TH DAY OF JANUARY, 2021

Coram: JUSTICE P.B. BAJANTHRI

Appearance: Senior Advocate S.S. NAGANANDA, a/w SRIRANGA S., JUST LAW, FOR PETITIONER.

Advocate KAMALACHARAN S.R. & Advocate PRADEEP SAWKAR for petitioners.

Advocate G.B. SHARATH GOWDA FOR R1

S. UMAPATHI party in person.

Click Here To Download Order

[Read Order]