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 APERC’s 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

14. 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 • Commission’s 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