SEBI Investigation Details Exempt From RTI Disclosure Under S.8(1)(h) to Prevent Impeding Process: Delhi High Court - 2025-09-18

Delhi High Court Upholds SEBI's Refusal to Disclose Investigation Details Under RTI Act

New Delhi: The Delhi High Court has upheld the decision of the Securities and Exchange Board of India (SEBI) to withhold information regarding an ongoing investigation, ruling that such disclosures are exempt under Section 8(1)(h) of the Right to Information (RTI) Act, 2005. A Division Bench comprising the Hon’ble Chief Justice and Hon’ble Mr. Justice Tushar Rao Gedela dismissed an appeal filed by Srishti Rustagi, affirming that revealing details of an ongoing probe could impede the process and harm market integrity.

Background of the Case

The case originated from a complaint filed by Ms. Srishti Rustagi on September 9, 2021, on SEBI's SCORES portal. She alleged irregularities and potential insider trading in the Offer for Sale (OFS) of equity shares of WABCO India Ltd., claiming a significant portion was allocated to related parties.

On September 28, 2021, SEBI partially disposed of her complaint, stating that its initial analysis did not corroborate the allegations regarding share allocation. However, it forwarded the component related to insider trading to the concerned department for "necessary action."

Seeking an update, Ms. Rustagi filed an RTI application on March 29, 2022, requesting the status of the ongoing internal investigation. Her request was successively denied by SEBI’s Central Public Information Officer (CPIO), the First Appellate Authority (FAA), and the Central Information Commission (CIC), leading her to file a writ petition in the Delhi High Court, which was also dismissed by a Single Judge on December 24, 2024. This judgment was the subject of the present appeal.

Arguments of the Parties

Ms. Rustagi, the appellant, contended that the denial of information under Section 8(1)(h) of the RTI Act was unreasonable and contrary to the statute's objective of promoting transparency. She argued that she was entitled to know the status of the investigation stemming from her complaint.

SEBI, the respondent, maintained that such complaints are treated as "market intelligence" and are investigated confidentially. Disclosing details could impede the investigation, affect evidence collection, and cause unwarranted market speculation or harm to third parties. They asserted that any final regulatory actions or orders are made public on the SEBI website.

Court's Reasoning and Legal Principles

The Division Bench meticulously reviewed the procedural history and the reasoning provided by the RTI authorities and the learned Single Judge. The court's decision hinged on the interpretation and application of Section 8(1)(h) of the RTI Act, 2005 , which exempts the disclosure of "information which would impede the process of investigation or apprehension or prosecution of offenders."

The Bench extracted portions of the earlier orders, highlighting the consistent stand of the authorities. It was noted that the status of the complaint itself was accessible to the appellant on the SCORES portal. However, the internal details and nature of the investigation were justifiably withheld.

In its judgment, the court observed: "With respect to the ongoing investigation, if at all, the statutory authorities have also given reasons as to why and under what circumstances the disclosure of such information may impede the investigation process in terms of Section 8 (1)(h) of the RTI Act and also the fact that such disclosure may not only affect confidentiality of examination/investigation but may also affect evidence collection and result in unnecessary harm to third parties. In our opinion, these reasons cumulatively are sufficient not to disclose the information sought by the appellant."

The court emphasized that the rationale provided by SEBI—protecting the confidentiality and integrity of the investigative process—was sound and fell squarely within the exemption provided by the law.

Final Decision and Implications

Finding no reason to interfere with the Single Judge's order, the Division Bench dismissed the appeal.

The judgment reaffirms the principle that while the RTI Act is a tool for transparency, it is balanced by necessary exemptions to protect sensitive processes like regulatory investigations. It clarifies that for bodies like SEBI, maintaining confidentiality during a probe is paramount to prevent market disruption and ensure the effectiveness of the investigation. Complainants can view the formal status of their grievances on the designated portal, but the internal workings of the investigation remain shielded from public disclosure until a final order is passed.