Judicial interventions in regulatory matters: Indian experience

1
Judicial interventions in regulatory matters
Indian experience

• S Sundar
• Distinguished Fellow
• Tata Energy Research Institute
• August 2002
• Dhaka

2
Rationale for regulation

• To provide a level playing field
• To regulate service providers including SOEs
• To bring in expertise
• To reduce transaction costs
• To protect consumer interest

3
Regulator vis-a-vis government

• Exercise powers and discharge functions earlier
  with government
• Process to be transparent and consultative
• Expertise in decision making
• Quick in response to stakeholders needs
• Accountable

4
Regulator vis-a-vis government (Contd..)

• Regulators deemed to be Civil Courts
• Enjoy certain powers under CrPC
• Can levy penalties
• Proceedings deemed to be judicial under IPC

5
Regulator vis-a-vis judiciary

• Judiciary generally deals with bipolar interests
  - regulators balance interests of multiple
  stakeholders
• Judicial process generally adversarial -
  regulatory process seeks to build consensus, to
  avoid litigation and influence behavioural
  changes
• Regulators can use alternative instruments

6
Regulator vis-a-vis judiciary (contd..)

• Judiciary applies law to facts - regulators
  implement legislation and public policy
• Judiciary reactive - regulators have to be
  proactive to address sector growth

7
Judicial intervention in regulatory decisions

• Government decisions on tariff etc. were
  administrative or policy decisions
• Could be reviewed by government itself - not
  appealable - subject only to writ jurisdiction
• Appeals against regulatory decisions provided for
  in law

8
Judicial intervention in regulatory decisions
(contd..)

• Regulatory accountability calls for review and
  appeals
• Issue is what should superior Courts look for
• abuse of powers or jurisdiction
• error of law or violation of natural justice
• unreasonableness OR
• merits or substance of the decision

9
Review jurisdiction

• Courts consistent in the view that review should
  only address questions of legality and
  reasonableness of tribunal decisions
• Court not concerned whether a policy is wise or
  foolish but only whether it is within the powers
  of the authority (G B Mahahan vs. Jalgaon
  Municipal Council)

10
Review jurisdiction (contd.)

• Principles laid down by SC as basis for review in
  Tata Cellular vs. Union of India
• Judicial restraint in administrative action
• Review should be of the manner in which decision
  was made
• Court does not have expertise to correct
  administrative decision
• Decisions often made qualitatively by experts
• Decision must be reasonable not malafide
• Quashing decisions may impose heavy
  administrative costs

11
Review jurisdiction (contd.)

• Regulatory decisions are also administrative
  decisions
• AP High Court in Bharat Kumar and others vs.
  Government of AP refused to go beyond the
  legality of APERCs order
• Upholding the order the SC observed that tariff
  function essentially a policy matter. Courts not
  to intervene, unless decision is malafide or
  arbitrary

12
Appellate jurisdiction

• Courts have drawn a distinction between review
  and appeals
• In appeals a Court can substitute its own
  decision for that of the tribunal

13
Appellate jurisdiction (contd.)

• Section 27 of the ERC Act and Section 18 of TRAI
  Act provide for appeals
• Grounds for appeal not specified in legislation
  except OER Act, 1995
• Section 39 of OER Act restricts appeals to
  questions of law

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Appellate jurisdiction (contd.)

• In CES Ltd. vs. WBERC, the WB High Court held
  Our scope of enquiry is not merely limited to
  law. It extends to facts, it extends to
  principles and it extends to policies too

15
Issue for discussion

• Even in appeals should Superior Courts go into
  merits and substance of regulatory decisions?
• Few appeals preferred against regulatory
  decisions
• Jurisprudence limited

16
Case for limited intervention as in review

• Deference to expertise
• Calendar pressure - no time limit as for TDSAT
• Commissions proceedings transparent with all
  stakeholders participating
• With wide mandate regulators need play in the
  joints

17
Conclusion

• Courts should restrict themselves to issues of
  law and jurisdiction - and remand back where
  there are errors of substance

18
Amend legislation?

• In the alternative amend regulatory legislation
  to restrict appeals to points of law as in OER
  Act
• Appellate Courts can exercise only such powers as
  are confided to it

19

• Regulatory risk should be mitigated and not
  replaced by judicial risk