SC-2010-fiduciary relationship

CENTRAL PUBLIC INFORMATION OFFICER, SUPREME COURT OF INDIA VERSUS SUBHASH CHANDRA AGARWAL , CIVIL APPEAL NO. 10044 OF 2010 IN THE SUPREME COURT OF INDIA 1.    FACTS
9.    The case involves three appeals which arose from separate orders denying access to information under the RTI Act. Through the first of the appeals, respondent sought the complete correspondence of the Chief Justice of India regarding an alleged attempt to influence a judicial decision. The second appeal involved an RTI application request to furnish a copy of documents available with the Supreme Court. This included a correspondence between the relevant constitutional authorities relating to the appointment of various Supreme Court judges. The third appeal involved an RTI application seeking information on a declaration made by judges to the Chief Justice of the Supreme Court and the Chief Justices in the States regarding the assets held by them, their spouses or any person dependent on them.
2.    DECISION OVERVIEW
FIDUCIARY RELATIONSHIP
10.    To understand the meaning of fiduciary relationship under section 8(1)(e), the Court referred to Aditya Bandopadhyay case. The court in the case had observed that the expression is used in its normal and well-recognised sense, that is, to refer to persons who act in a fiduciary capacity, with reference to a specific beneficiary or beneficiaries who are to be expected to be protected or benefited by the actions of the fiduciary. [p. 41] The Court concluded that the exemption under section 8(1)(e) of the RTI Act does not apply to beneficiaries regarding whom the fiduciary holds information.

11.    Thereafter, the Court referred to the RBI case, in which the court highlighted four principles required to classify a relationship as a fiduciary relationship. These are: (1) no conflict rule; (2) no profit rule; (3) undivided loyalty rule, and; (4) duty of confidentiality. The court observed that the fiduciary relationship casts positive obligations on the fiduciary and requires it to protect the interests of the beneficiary. Accordingly, obligations of the fiduciary are stricter than non-fiduciary relationships and the judicial scrutiny is higher.

12.    The Court held that the relationship between the Chief Justice and judges is not generally that of a fiduciary and a beneficiary. However, it is not an absolute rule as in certain situations and acts, a fiduciary relationship may arise. Whether or not such a relationship arises in a particular situation would have to be dealt with based on the tests and parameters expressed above.
MEANING OF PUBLIC INTEREST
13.    The Court observed that the public interest test often applied in the right to information legislation to balance right to access and protection of the conflicting right to deny access. Section 8(1)(j) and Section 11 also require balancing of competing public interests. The Court noted that the test prescribed in Section 8(1)(j) is broader than the one in Section 11, as the latter requires comparison between disclosure of information relating to a third person or information supplied and treated as confidential by the third party and possible harm or injury to the third party on disclosure, which would include all kinds of possible harm and injury to the third party on disclosure.
14.    For the purpose of understanding public interest in the context of the RTI Act, the Court relied on a Supreme Court judgment (Bihar Public Service Commission v. Saiyed Hussain Abbas Rizwi and Another, (2012) 13 SCC 61) for it to mean the general welfare of the public warranting the disclosure and the protection applicable, in which the public as a whole has a stake. Differentiating between information in public interest and information which is of interest to the public, the Court held that the public interest test in the context of the RTI Act would mean reflecting upon the object and purpose behind the right to information, the right to privacy and consequences of invasion, and breach of confidentiality and possible harm and injury that would be caused to the third party, with reference to particular information and the person.
15.    The Court also observed that the Act does not specify factors which should be taken into consideration for determining public interest. To determine these factors, the Court referred to an article published in the Oxford University Commonwealth Law Journal (Freedom of Information and the Public Interest: the Commonwealth experience). The article determined that there are certain factors which weigh in favor of disclosure (accountability of officials, openness in the expenditure of public funds, the performance by a public authority of its regulatory functions, public health and safety, etc.), some against (the likelihood of damage to security or international relations, the likelihood of damage to the integrity or viability of decision-making processes, etc.), and lastly those which are irrelevant (the information might be misunderstood, embarrassing, that the requested information is overly technical in nature, etc.).
16.    The last aspect in the public interest test which the Court suggested may factor in is the motive and purpose for making the request for information. In the words of the Court:
Clearly, motive and purpose for making the request for information is irrelevant, and being extraneous cannot be a ground for refusing the information. However, this is not to state that motive and purpose may not be relevant factor while applying the public interest test in case of qualified exemptions governed by the public interest test Similarly, in other cases, public interest may weigh in favour of the disclosure when the information sought may be of special interest or special significance to the applicant. It could equally be a negative factor when the motive and purpose is vexatious or it is a case of clear abuse of law. [p. 79]

NEED FOR REASONED ORDER
17.    When rendering a decision, the Public Information Officers must clearly state their reasoning. Accordingly, the Court held:
The delicate balance requires identification of public interest behind each exemption and then cumulatively weighing the public interest in accepting or maintaining the exemption(s) to deny information in a particular case against the public interest in disclosure in that particular case. Further, under Section 11(1), reference is made to the possible harm and injury to the third party which will also have to be factored in when determining disclosure of confidential information relating to the third parties. [p. 78]
Fiduciary Relationship under Section 8(1)(e) of the
RTI Act
32. Clause (e) to Section 8(1) of the RTI Act states that information
made available to a person in his fiduciary relationship shall not be
disclosed unless the competent authority is satisfied that the
Civil Appeal No. 10044 of 2010 & Ors. Page 40 of 108
larger public interest warrants the disclosure of such information.
The expression fiduciary relationship was examined and
explained in Aditya Bandopadhyay (supra), in the following
words:
39. The term fiduciary refers to a person having a
duty to act for the benefit of another, showing good
faith and candour, where such other person reposes
trust and special confidence in the person owing or
discharging the duty. The term fiduciary relationship
is used to describe a situation or transaction where one
person (beneficiary) places complete confidence in
another person (fiduciary) in regard to his affairs,
business or transaction(s). The term also refers to a
person who holds a thing in trust for another
(beneficiary). The fiduciary is expected to act in
confidence and for the benefit and advantage of the
beneficiary, and use good faith and fairness in dealing
with the beneficiary or the things belonging to the
beneficiary. If the beneficiary has entrusted anything to
the fiduciary, to hold the thing in trust or to execute
certain acts in regard to or with reference to the
entrusted thing, the fiduciary has to act in confidence
and is expected not to disclose the thing or information
to any third party.
40. There are also certain relationships where both the
parties have to act in a fiduciary capacity treating the
other as the beneficiary. Examples of these are: a
partner vis--vis another partner and an employer vis-vis employee. An employee who comes into
possession of business or trade secrets or confidential
information relating to the employer in the course of his
employment, is expected to act as a fiduciary and
cannot disclose it to others. Similarly, if on the request
of the employer or official superior or the head of a
department, an employee furnishes his personal details
and information, to be retained in confidence, the
employer, the official superior or departmental head is
expected to hold such personal information in
confidence as a fiduciary, to be made use of or
Civil Appeal No. 10044 of 2010 & Ors. Page 41 of 108
disclosed only if the employees conduct or acts are
found to be prejudicial to the employer.
41. In a philosophical and very wide sense, examining
bodies can be said to act in a fiduciary capacity, with
reference to the students who participate in an
examination, as a Government does while governing
its citizens or as the present generation does with
reference to the future generation while preserving the
environment. But the words information available to a
person in his fiduciary relationship are used in Section
8(1)(e) of the RTI Act in its normal and well-recognised
sense, that is, to refer to persons who act in a fiduciary
capacity, with reference to a specific beneficiary or
beneficiaries who are to be expected to be protected or
benefited by the actions of the fiduciarya trustee with
reference to the beneficiary of the trust, a guardian with
reference to a minor/physically infirm/mentally
challenged, a parent with reference to a child, a lawyer
or a chartered accountant with reference to a client, a
doctor or nurse with reference to a patient, an agent
with reference to a principal, a partner with reference to
another partner, a director of a company with reference
to a shareholder, an executor with reference to a
legatee, a receiver with reference to the parties to a lis,
an employer with reference to the confidential
information relating to the employee, and an employee
with reference to business dealings/transaction of the
employer. We do not find that kind of fiduciary
relationship between the examining body and the
examinee, with reference to the evaluated answer
books, that come into the custody of the examining
body.
This Court held that the exemption under section 8(1)(e) of
the RTI Act does not apply to beneficiaries regarding whom the
fiduciary holds information. In other words, information available
with the public authority relating to beneficiaries cannot be
withheld from or denied to the beneficiaries themselves. A
Civil Appeal No. 10044 of 2010 & Ors. Page 42 of 108
fiduciary would, ergo, be duty-bound to make thorough disclosure
of all relevant facts of all transactions between them in a fiduciary
relationship to the beneficiary. In the facts of the said case, this
Court had to consider whether an examining body, the Central
Board of Secondary Education, held information in the form of
evaluated answer-books of the examinees in fiduciary capacity.
Answering in the negative, it was nevertheless observed that even
if the examining body is in a fiduciary relationship with an
examinee, it will be duty-bound to disclose the evaluated answerbooks to the examinee and at the same time, they owe a duty to
the examinee not to disclose the answer-books to anyone else,
that is, any third party. This observation is of significant
importance as it recognises that Section 8(1)(j), and as noticed
below - Section 11, encapsulates another right, that is the right to
protect privacy and confidentiality by barring the furnishing of
information to third parties except when the public interest as
prescribed so requires. In this way, the RTI Act complements both
the right to information and the right to privacy and confidentiality.
Further, it moderates and regulates the conflict between the two
rights by applying the test of larger public interest or comparative
examination of public interest in disclosure of information with
possible harm and injury to the protected interests.
Civil Appeal No. 10044 of 2010 & Ors. Page 43 of 108
33. In Reserve Bank of India (supra) this Court had expounded upon
the expression fiduciary relationship used in clause (e) to subsection (1) of Section 8 of the RTI Act by referring to the definition
of fiduciary relationship in the Advanced Law Lexicon, 3rd Edition,
2005, which reads as under:
57. [...] Fiduciary relationship.  A relationship in
which one person is under a duty to act for the benefit
of the other on matters within the scope of the fiduciary
relationship. Fiduciary relationship usually arises in one
of the four situations: (1) when one person places trust
in the faithful integrity of another, who as a result gains
superiority or influence over the first, (2) when one
person assumes control and responsibility over
another, (3) when one person has a duty to act for or
give advice to another on matters falling within the
scope of the relationship, or (4) when there is a specific
relationship that has traditionally been recognised as
involving fiduciary duties, as with a lawyer and a client,
or a stockbroker and a customer.
Thereafter, the Court had outlined the contours of the
fiduciary relationship by listing out the governing principles which
read:
58. [...] (i) No conflict rule  A fiduciary must not place
himself in a position where his own interest conflicts
with that of his customer or the beneficiary. There must
be real sensible possibility of conflict.
(ii) No profit rule  A fiduciary must not profit from his
position at the expense of his customer, the
beneficiary.
(iii) Undivided loyalty rule  A fiduciary owes undivided
loyalty to the beneficiary, not to place himself in a
position where his duty towards one person conflicts
Civil Appeal No. 10044 of 2010 & Ors. Page 44 of 108
with a duty that he owes to another customer. A
consequence of this duty is that a fiduciary must make
available to a customer all the information that is
relevant to the customers affairs.
(iv) Duty of confidentiality  A fiduciary must only use
information obtained in confidence and must not use it
for his own advantage, or for the benefit of another
person.
34. Fiduciary relationships, regardless of whether they are formal,
informal, voluntary or involuntary, must satisfy the four conditions
for a relationship to classify as a fiduciary relationship. In each of
the four principles, the emphasis is on trust, reliance, the
fiduciarys superior power or dominant position and corresponding
dependence of the beneficiary on the fiduciary which imposes
responsibility on the fiduciary to act in good faith and for the
benefit of and to protect the beneficiary and not oneself. Section
8(1)(e) is a legal acceptance that there are ethical or moral
relationships or duties in relationships that create rights and
obligations, beyond contractual, routine or even special
relationships with standard and typical rights and obligations.
Contractual or non-fiduciary relationships could require that the
party should protect and promote the interest of the other and not
cause harm or damage, but the fiduciary relationship casts a
positive obligation and demands that the fiduciary should protect
the beneficiary and not promote personal self-interest. A
Civil Appeal No. 10044 of 2010 & Ors. Page 45 of 108
fiduciarys loyalty, duties and obligations are stricter than the
morals of the market place and it is not honesty alone, but the
punctilio of an honour which is the most sensitive standard of
behaviour which is applied {See  Opinion of Cardozo, J. in
Meinhard v. Salmon17}. Thus, the level of judicial scrutiny in cases
of fiduciary relationship is intense as the level of commitment and
loyalty expected is higher than non-fiduciary relationships.
Fiduciary relationship may arise because of the statute which
requires a fiduciary to act selflessly with integrity and fidelity and
the other party, that is the beneficiary, depends upon the wisdom
and confidence reposed in the fiduciary. A contractual, statutory
and possibly all relationships cover a broad field, but a fiduciary
relationship could exist, confined to a limited area or an act, as
relationships can have several facets. Thus, relationships can be
partly fiduciary and partly non-fiduciary with the former being
confined to a particular act or action which need not manifest itself
in entirety in the interaction and relationship between two parties.
What would distinguish non-fiduciary relationship from fiduciary
relationship or an act is the requirement of trust reposed, higher
standard of good faith and honesty required on the part of the
fiduciary with reference to a particular transaction(s) due to moral,
17 (1928) 164 N.E. 545, 546
Civil Appeal No. 10044 of 2010 & Ors. Page 46 of 108
personal or statutory responsibility of the fiduciary as compared to
the beneficiary, resulting in dependence of the beneficiary. This
may arise due to superior knowledge and training of the fiduciary
or the position he occupies.
35. Ordinarily the relationship between the Chief Justice and judges
would not be that of a fiduciary and a beneficiary. However, it is
not an absolute rule/code for in certain situations and acts,
fiduciary relationship may arise. Whether or not such a
relationship arises in a particular situation would have to be dealt
with on the tests and parameters enunciated above.