Shri Ashok Jain, New Delhi v. Securities & Exchange Board Of India, Mumbai Public Authority.

1. Shri Ashok Jain, the appellant, while stating that the regulator, Forward Market Commission (FMC), had ordered forensic audit of CPR Commodities Services Pvt Ltd, Delhi, sought the details of action taken on this forensic audit report and the file notings and related correspondence with MCX and Member — CPR Commodities Services Pvt Ltd in connection with the forensic audit. He also asked for the forensic audit report along with recommendations made to MCX by Chairman and Director (Vig), Dr Atul Verma, of FMC in connection with the forensic audit report.

2. The CPIO intimated that the information sought by the appellant was held by SEBI in fiduciary capacity as it was internal to the functioning of the regulator. Moreover, it was strategic for the regulator and involved commercial confidence and, therefore, he denied information u/s 81a, d and (e) of the RTI Act. Not convinced with the CPIO's response, the appellant approached the first appellate authority stating that the forensic audit was ordered for two codes, KB32 and KB34 and other related accounts due to indulgence of the broker in cheating and fraud and violation of rules of Forward Contract Regulation Act. He quoted the Supreme Order dated 16.12.2015 stating that denying vital information in RTI on frivolous grounds of fiduciary relationship was totally misconceived. The FAA held that SEBI being a regulatory authority for securities markets, gets various information including business details, financials of the companies which are in the nature of commercial confidence of such companies, and any disclosure such information may adversely impact their competitive position. Such information was also required by it for ensuring a level playing field among market participants. Therefore, it was strategic in nature. He upheld the CPIO's decision and the exemptions taken by the CPIO in the matter. Not satisfied with the FAA's adjudication of his appeal, the appellant came in appeal before the Commission reiterating the points made in the first appeal and requesting the Commission to supply the information demanded by him.

3. The matter was heard by the Commission. The appellant stated that he had filed a complaint and got a forensic audit carried out in case of his and his wife's account. Both of them held separate accounts and therefore, he required file notings regarding the action taken against the broker. He added that the forensic audit report was prepared by the FMC which merged with SEBI on 28.9.2015 In the written submission received from the appellant, he stated that the pendency of court case or plea of fiduciary capacity taken by the respondents was totally misconceived. The court case was filed in 2012 while the forensic audit of broker, M/s CPR Commodities Services Pvt Ltd, Delhi was ordered by FMC in 2014. Therefore, it has no bearing on the case. The court case is an appeal u/s 34 of Arbitration Act between him and the broker of CPR Commodities Services Pvt Ltd. The forensic audit was conducted on the order of regulator, FMC, presently merged with SEBI, by an external agency, Price Waterhouse Coopers Pvt Ltd (PWC), Mumbai. The MCX had been made a party by the High Court. Stating this, he requested for direction to SEBI to supply the information sought by him.

4. The respondents stated that CPR Commodities Services Pvt Ltd was a commodity broker registered with MCX Ltd. Shri Ashok Kumar Jain and Smt Meena Jain, the complainants, made a complaint to MCX against CPR Commodities regarding unfair dealing, unauthorized transactions, creation of fake email ids and forgery of signatures. The CPR Commodities also made a counter claim of approximately approximately Rs. 6.3 crore against the complainants, Shri Ashok Kumar Jain and Smt Meena Jain alleging that the cheques issued by them against the outstanding amounts were dishonoured due to insufficient funds or due to stop payments instructions by the complainants. The Arbitral Tribunal passed two awards in the dispute in favour of CPR Commodities Services Pvt Ltd. The award was challenged by both, the complainants as well as the CPR Commodities. The latter filed a complaint against the complainants who also did the same later on. The FMC had ordered a forensic audit of the CPR Commodities through PWC Ltd and based on that the erstwhile FMC had ordered to suspend the CPR Commodities. But as the matter was sub-judice, the disciplinary action committee (DAC) did not recommend suspension of CPR Commodities. Deferring the suspension of CPR Commodities was based on forensic audit. The forensic audit report was prepared by gathering information and inputs from various parties which may contain commercial information and information relating to analysis of various alerts and triggers leading to the examination of trading activities of the entities involved. Besides, the source of information may also form a part of the report. The forensic audit is one of the tools available to SEBI to prevent or take action for any fraud or prevention of any unfair trade practices. Processing of alerts and information received from various resources, if revealed, may give an inkling to the strategic issues involved in the matter and may even forewarn the violators and enable them to look for ways and means to protect themselves against SEBI's efforts to prevent fraud, etc. They added that the information sought was strategic and confidential in nature and its provision would compromise the interest of the securities' market and may in turn affect the economic interest of the country.

5. The Commission accepts the submissions of the respondents regarding the strategic nature and confidentiality of the forensic audit report. In view of this, the information cannot be provided in terms of section 8(1)(a) of the RTI Act, 2005. The Commission upholds the decision of the respondents. The appeal is disposed of.