Page 21 - Banking Finance June 2019

LEGAL UPDATE

LEGAL

Trade union is opera- SC warns RBI: Can't deny info on bank audits under RTI

tional creditor under IBC The Supreme Court said the Reserve Bank of India had committed contempt of
court by coming out with a disclosure policy
"A trade union represents its mem-
that allowed departments to withhold cer-
bers who are
tain information related to banks under the
workers, to
Right to Information Act. The policy, it said,
whom dues
was contrary to an earlier court ruling that
may be
had ordered disclosure of such information.
owed by the
em pl oye r, Observing that the "Respondents, in our
which are certainly debts owed for opinion, have committed contempt of this
services rendered by each individual Court by exempting disclosure of material that was directed to be given by this
workman," the Supreme Court Court", the bench of Justices L Nageswara Rao and M R Shah, however, stopped
stated while declaring that a trade
short of initiating further proceedings and gave the RBI one last chance to pro-
union could be said to be an opera-
vide the information.
tional creditor for purposes of the
It asked the banking regulator to withdraw the disclosure policy insofar as it
Insolvency and Bankruptcy Code.
contradicted the court's judgment dated December 16, 2015.
The court overruled the order of the
The order came on a clutch of contempt petitions. One of the petitioners had
National Company Law Appellate Tri-
filed an application under the RTI Act on December 18, 2015, seeking informa-
bunal (NCLAT) in the appeal case, JK
Jute Mill Mazdoor Morcha vs JK Jute tion relating to inspection reports of ICICI Bank, Axis Bank, HDFC Bank and State
Mills. The trade union of the closed Bank of India since April 1, 2011.
mills had issued a demand notice on The petitioner had also sought information relating to the Sahara Group of Com-
behalf of roughly 3,000 workers un-
panies and Bank of Rajasthan. The RBI had refused to provide the information
der Section 8 of the Code for out-
stating that "the disclosure was not in economic interest of the State, and would
standing dues to workers.
adversely affect the competitive position of the third party".
It was resisted by the company lead-
In its order, the bench said, "Though we could have taken a serious view of the
ing to a petition in the National Com-
Respondents continuing to violate the directions issued by this Court, we give
pany Law Tribunal, which held that
them a last opportunity to withdraw the disclosure policy insofar as it contains
a trade union was not covered as an
exemptions which are contrary to the directions issued by this Court.
operational creditor. An appeal was
dismissed by the NCLAT, stating that The Respondents are duty-bound to furnish all information relating to inspec-
each worker may file an individual tion reports and other material apart from the material that was exempted in
application before the NCLT. para 77 of the judgment," the bench said.

BANKING FINANCE | JUNE | 2019 | 21