The Legal Affair: New Delhi: Sunday,
September 21, 2025.
Introduction:
In the case of Srishti Rustagi v. Securities and Exchange Board of India (SEBI) [LPA 306/2025], the Delhi High Court, through a division bench comprising Chief Justice D.K. Upadhyaya and Justice Tushar Rao Gedela, reaffirmed that information pertaining to internal investigations conducted by SEBI falls under the exemption clause of the Right to Information Act, 2005. The matter originated when the appellant, Srishti Rustagi, filed a complaint against a company alleging disproportionate allocation of shares to related parties and possible insider trading activities. SEBI, upon examining the allegations, conducted an internal investigation but later denied disclosure of the investigation details under the RTI Act, citing Section 8(1)(h), which exempts disclosure of information that may impede the process of investigation or prosecution. Dissatisfied with this denial, the appellant sought relief from the courts. A single bench dismissed her plea, and on appeal, the division bench upheld the single bench’s reasoning, ruling in favor of SEBI. The judgment reinforced the principle that transparency under RTI cannot extend to sensitive investigative information where disclosure may compromise the process or harm third-party interests.
Arguments of the Appellant:
The appellant, represented by Advocate Raghavendra Mohan Bajaj, argued that SEBI, being a statutory authority, was bound to uphold transparency and accountability, especially in matters that directly affect public shareholders and investor confidence. She contended that withholding information regarding SEBI’s internal probe amounted to denial of her fundamental right to information under the RTI Act, 2005. She further asserted that since SEBI had already concluded its investigation, there was no justification to withhold information on the grounds of impeding investigation. The appellant maintained that SEBI’s refusal contradicted the spirit of transparency enshrined in the RTI Act, particularly when allegations concerned insider trading and unfair allocation of shares. According to her, public disclosure of such findings was necessary not only for her but also for the wider community of shareholders and potential investors, as it would uphold market fairness and ensure accountability of corporate actors. She also argued that Section 8(1)(h) of the RTI Act should be applied sparingly and only in situations where an investigation was ongoing, not when the matter had been concluded. Hence, in her view, SEBI’s blanket denial was excessive and against the statutory mandate of ensuring transparency.
Arguments of the Respondent (SEBI):
The respondents, represented by Senior Advocate Mr. Venugopal along with a team of lawyers including Mr. Ashish Aggarwal and Mr. Rahul Malik, firmly opposed the appellant’s plea. SEBI contended that its internal investigation involved sensitive data and confidential records, the disclosure of which could significantly impact ongoing processes and future enforcement actions. They argued that the exemption under Section 8(1)(h) of the RTI Act was squarely applicable, as disclosure of information could impede not only the present investigation but also affect evidence collection, compromise regulatory strategy, and potentially prejudice third-party rights. SEBI emphasized that the RTI Act balances the right to information with the need to protect sensitive matters where disclosure could obstruct enforcement proceedings. They further clarified that in the present case, certain aspects of the complaint, such as insider trading, had been forwarded to the relevant divisions for necessary action, and thus investigations were not fully closed. Premature disclosure, according to SEBI, would jeopardize evidence-gathering processes and cause unwarranted damage to the reputation of third parties who might later be found not guilty of any wrongdoing. SEBI also stressed that maintaining confidentiality in its internal functioning was essential to preserve the integrity of regulatory investigations, thereby protecting investors and markets in the long term.
Court’s Judgment:
The division bench of the Delhi High Court upheld SEBI’s stance and dismissed the appellant’s plea. The Court carefully examined the reasons cited by SEBI for withholding information and concluded that they were both reasonable and legally sustainable. The bench reiterated that Section 8(1)(h) of the RTI Act serves as an important safeguard, ensuring that the disclosure of sensitive information does not undermine or obstruct investigative and regulatory processes. The judges emphasized that the right to information, though fundamental in ensuring transparency, is not absolute and must be balanced against larger public interests, including the fair and effective functioning of statutory regulatory bodies like SEBI. The Court noted that disclosure of SEBI’s internal investigative findings could indeed impede further investigations, compromise evidence-gathering mechanisms, and potentially harm third parties who are not directly before the Court. Importantly, the bench rejected the appellant’s contention that the investigation had been concluded. It observed that certain aspects of the complaint, such as insider trading, had been forwarded for further action, and hence the process was still ongoing. The Court found that SEBI had rightly invoked the exemption under Section 8(1)(h) of the RTI Act, 2005. In conclusion, the bench upheld the single bench order that declined to interfere with SEBI’s decision and dismissed the appeal. By doing so, the Delhi High Court reinforced the principle that the scope of RTI does not extend to internal probes of regulatory bodies where disclosure may compromise ongoing or future investigations. This judgment highlighted the judiciary’s recognition of the delicate balance between transparency and the necessity of confidentiality in regulatory mechanisms, especially in the context of financial markets where premature disclosure could have far-reaching implications.
In the case of Srishti Rustagi v. Securities and Exchange Board of India (SEBI) [LPA 306/2025], the Delhi High Court, through a division bench comprising Chief Justice D.K. Upadhyaya and Justice Tushar Rao Gedela, reaffirmed that information pertaining to internal investigations conducted by SEBI falls under the exemption clause of the Right to Information Act, 2005. The matter originated when the appellant, Srishti Rustagi, filed a complaint against a company alleging disproportionate allocation of shares to related parties and possible insider trading activities. SEBI, upon examining the allegations, conducted an internal investigation but later denied disclosure of the investigation details under the RTI Act, citing Section 8(1)(h), which exempts disclosure of information that may impede the process of investigation or prosecution. Dissatisfied with this denial, the appellant sought relief from the courts. A single bench dismissed her plea, and on appeal, the division bench upheld the single bench’s reasoning, ruling in favor of SEBI. The judgment reinforced the principle that transparency under RTI cannot extend to sensitive investigative information where disclosure may compromise the process or harm third-party interests.
Arguments of the Appellant:
The appellant, represented by Advocate Raghavendra Mohan Bajaj, argued that SEBI, being a statutory authority, was bound to uphold transparency and accountability, especially in matters that directly affect public shareholders and investor confidence. She contended that withholding information regarding SEBI’s internal probe amounted to denial of her fundamental right to information under the RTI Act, 2005. She further asserted that since SEBI had already concluded its investigation, there was no justification to withhold information on the grounds of impeding investigation. The appellant maintained that SEBI’s refusal contradicted the spirit of transparency enshrined in the RTI Act, particularly when allegations concerned insider trading and unfair allocation of shares. According to her, public disclosure of such findings was necessary not only for her but also for the wider community of shareholders and potential investors, as it would uphold market fairness and ensure accountability of corporate actors. She also argued that Section 8(1)(h) of the RTI Act should be applied sparingly and only in situations where an investigation was ongoing, not when the matter had been concluded. Hence, in her view, SEBI’s blanket denial was excessive and against the statutory mandate of ensuring transparency.
Arguments of the Respondent (SEBI):
The respondents, represented by Senior Advocate Mr. Venugopal along with a team of lawyers including Mr. Ashish Aggarwal and Mr. Rahul Malik, firmly opposed the appellant’s plea. SEBI contended that its internal investigation involved sensitive data and confidential records, the disclosure of which could significantly impact ongoing processes and future enforcement actions. They argued that the exemption under Section 8(1)(h) of the RTI Act was squarely applicable, as disclosure of information could impede not only the present investigation but also affect evidence collection, compromise regulatory strategy, and potentially prejudice third-party rights. SEBI emphasized that the RTI Act balances the right to information with the need to protect sensitive matters where disclosure could obstruct enforcement proceedings. They further clarified that in the present case, certain aspects of the complaint, such as insider trading, had been forwarded to the relevant divisions for necessary action, and thus investigations were not fully closed. Premature disclosure, according to SEBI, would jeopardize evidence-gathering processes and cause unwarranted damage to the reputation of third parties who might later be found not guilty of any wrongdoing. SEBI also stressed that maintaining confidentiality in its internal functioning was essential to preserve the integrity of regulatory investigations, thereby protecting investors and markets in the long term.
Court’s Judgment:
The division bench of the Delhi High Court upheld SEBI’s stance and dismissed the appellant’s plea. The Court carefully examined the reasons cited by SEBI for withholding information and concluded that they were both reasonable and legally sustainable. The bench reiterated that Section 8(1)(h) of the RTI Act serves as an important safeguard, ensuring that the disclosure of sensitive information does not undermine or obstruct investigative and regulatory processes. The judges emphasized that the right to information, though fundamental in ensuring transparency, is not absolute and must be balanced against larger public interests, including the fair and effective functioning of statutory regulatory bodies like SEBI. The Court noted that disclosure of SEBI’s internal investigative findings could indeed impede further investigations, compromise evidence-gathering mechanisms, and potentially harm third parties who are not directly before the Court. Importantly, the bench rejected the appellant’s contention that the investigation had been concluded. It observed that certain aspects of the complaint, such as insider trading, had been forwarded for further action, and hence the process was still ongoing. The Court found that SEBI had rightly invoked the exemption under Section 8(1)(h) of the RTI Act, 2005. In conclusion, the bench upheld the single bench order that declined to interfere with SEBI’s decision and dismissed the appeal. By doing so, the Delhi High Court reinforced the principle that the scope of RTI does not extend to internal probes of regulatory bodies where disclosure may compromise ongoing or future investigations. This judgment highlighted the judiciary’s recognition of the delicate balance between transparency and the necessity of confidentiality in regulatory mechanisms, especially in the context of financial markets where premature disclosure could have far-reaching implications.
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