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Zerick Dastur of J. Sagar Associates discusses the importance of specialised tribunals and how these tribunals have not only released the burden on the regular courts but have also provided an effective mechanism for resolution of regulatory cases.
Business in India is regulated with multiple regulators acting within their respective domains. Specialized regulatory bodies have been established to carry out the duties and perform the functions entrusted to them by the Parliament. These regulators perform quasi judicial functions in addition to their administrative duties. They also have the power to make regulations consistent with the purposes of the parent statute.
The powers that may be exercised by the statutory regulators are spelled out within the statutes and are to be exercised within the confines of the limitations prescribed by the legislature. Similarly the delegated legislation framed by the relevant regulator has to be consistent with and within the scope of the statute under which the powers have been delegated to the regulatory body. Courts are quick to strike down the acts of a regulator which go beyond the powers conferred upon them by the Parliament and also any delegated legislation which exceeds the parent statute. In an effort to reduce the burden on courts and with the intent of establishing specialized bodies administering justice, statutory Tribunals have been set up to hear and dispose of appeals against the orders passed by the statutory regulators. This has resulted in a system of administrative adjudication with dedicated tribunals better suited to respond to the prevailing needs than the regular courts. It has also led to consistency and accountability in administrative action, where the acts of a regulator may be questioned before a specialized body. These Tribunals also review the decisions of the regulators from the perspective of procedural safeguards and compliance with the principles of natural justice while arriving at a decision.
For instance, the Securities Appellate Tribunal, which is the appellate body established under the Securities and Exchange Board of India, 1992 (“SEBI Act”) for hearing appeals against orders passed by the Securities and Exchange Board of India, the securities market regulator, has earned a reputation of being one of the finest in the country. Similarly, upon the notification of the substantive provisions of the Competition Act, 2002 (“Competition Act”), the Competition Appellate Tribunal has been engaged in hearing appeals against the orders of the Competition Commission of India, the anti trust regulator. Appeals from orders of the Securities Appellate Tribunal and the Competition Appellate Tribunal lie directly before the Supreme Court. The statutory Tribunals are not bound to strictly follow the rules of Civil Procedure but are guided by the principles of natural justice and have the flexibility to regulate their own procedure. One of the objects is to ensure speedy and effective disposal of cases brought before them.
Unfortunately, there are still certain sectors where an effective appellate mechanism is yet to be set up. For instance, unlike the SEBI Act and the Competition Act, the Insurance Regulatory and Development Authority Act, 1999 which established the Insurance Regulatory and Development Authority (“IRDA”), the insurance sector regulator whose object is to protect the interests of holders of insurance policies and to regulate and promote the orderly growth of insurance industry, does not provide for the establishment of an appellate Tribunal to preside over the decisions and orders passed by the IRDA. Presently, an appeal may be preferred from the orders of the IRDA to the Central Government in terms of the Insurance Act, 1938 in certain cases. However, any person including a regulated entity aggrieved by an order or decision of the IRDA has no access to a specialized independent appellate Tribunal.
The Government was considering setting up a common appellate authority for insurance and all instruments traded on the stock or commodity exchanges by making suitable statutory amendments. This proposal was sought to be made effective by making the Securities Appellate Tribunal, the umbrella financial markets appellate tribunal and expanding its jurisdiction to cover insurance and even pension products. However, effective steps in this direction are yet to be taken.
Statutory Tribunals have not only released the burden on the regular courts but have also provided an effective mechanism for resolution of regulatory cases. The system has resulted in an environment where there are effective checks on the exercise of powers by regulatory bodies. The Securities Appellate Tribunal has indeed been a great success in its field. One can hope that the Government initiates similar measures to provide for specialized appellate mechanism for other sectors like insurance.
Zerick Hosi Dastur is a Senior Associate at J. Sagar Associates, Advocates & Solicitors. His practice covers diverse areas of Corporate Commercial and Securities law and he is also a part of the firm’s Competition law practice.