Appellate Tribunals have often been the subject of debate in financial and business circles. One often hears bureaucrats, regulatory officials, and select commentators suggest that tribunals that interfere with regulators should not exist. This column disagrees.
The case for oversight over regulators is very clear. Regulatory accountability and provision of at least one appeal to persons affected by actions of the regulator is a fundamental feature of any civil society. Today, regulators across the board are vested with a range of powers to curtail the freedom of action of members in society. Such powers are indeed important.
Our regulators need to have the best ammunition in their arsenal to react, and respond to developments in society. However, just as business and financial regulators need to be empowered, there arises an equal need to legislate for oversight over the regulator. Today, Parliament has legislated for appellate tribunals to oversee the functioning of regulators in the capital markets, insurance sector, telecommunications, and even environmental regulations, but somehow has not legislated for oversight of the RBIs regulatory functions.
The need for tribunals has been stark since it is crucial to ensure that judicial minds, whose only job ought to be consideration of appeals from specific regulators, are applied without distraction.
Tribunals are courts for all practical purposes, and their special purpose is to adjudicate matters relating to a specific area of regulation. The law entails a certain qualification requirement for their members and a certain seniority level for judicial members.
Therefore, they are specialized quasi-judicial bodies that play the role of oversight over the regulators, acting as courts do, without being fettered by complicated and technical procedures that courts have to follow. The actions of tribunals are also not without a check and balance. Decisions of appellate tribunals can always be challenged by way of appeals provided for in the laws that create them.
Regulators themselves face the same issues that any public institution such as tribunals would face. They too tend to lose institutional memory with people moving within and without the regulatory organisation. Personal attitudes of individual officers and societal comment influence regulatory decisions.
The RBI has started increasing the size of penalties it imposes one cannot say that the RBI is not mindful of the perception of its actions, in comparison, being gentle slaps on the wrist. It is to ensure checks and balance on the exercise of such wide-ranging powers that there is a clear need for a tribunal.
Somasekhar Sundaresan (The author is a partner of JSA, Advocates & Solicitors. The views expressed herein are his own)