Government of India Volume I: Analysis and Recommendations

FUNCTIONS AND POWERS OF THE REGULATOR
Table of Recommendations 4.16 Approach to judicial review of regulatory actions
1. All functions including the quasi-judicial function of regulator should be subject to judicial review;
2. This review should be done through an appellate mechanism;
3. There should be a single dedicated appellate tribunal for the entire financial sector that will cover all financial
regulators;
4. The appellate tribunal will hear appeals against the decisions made by and the regulations framed by financial
regulators;
5. The appellate tribunal will be funded by an appropriate fee from all regulated entities; and
6. The appellate tribunal’s structure is clearly detailed out in the draft Code.
The Commission is of the opinion that while the entire Code for Civil Procedure, 1908
(CPC) need not be followed by the administrative law officers and members, the draft
Code provides the basic rubric of the procedure of judicial determination and appeals.
Therefore, it will be the responsibility of the board of the regulator to create appropriate
subsidiary legislation to establish the procedures to be followed for the discharge of
administrative law functions by the regulator.
4.3.3. Judicial review and appellate tribunals
The Commission recognises that actions taken by regulators can impose significant penalties
and burden on regulated entities. Therefore, the rule of law requires that a clear judicial
process be available to persons who seek to challenge regulatory actions. The needs
of a modern financial system require us to move beyond a system where appeals against
regulatory decisions can be made to an authority within the regulator or to the Government
to the creation of a specialised FSAT. The appellate framework envisaged by the
Commission is outlined in Table 4.16.
4.3.4. Structure of the appellate tribunal
As regards the structure and functioning of the FSAT, the Commission finds that there is
need for clearly demarcating and concentrating on two important functions:
1. Judicial functions of the tribunal, which require persons with qualification and experience in law
and finance; and
2. Administrative functions of the tribunal, which include service of documents, collecting evidence,
accepting written submissions, managing dates for hearings and arguments.
The judicial functions of the tribunal requires expertise in various fields of law and finance.
In order to satisfy the requirements of separation of powers envisaged in the Constitution,
the Commission recommends that the tribunal must remain under the control
of judicial officers. This is also consistent with the present structure of tribunals in India.
Table 4.17 summarises the recommendations of the Commission in relation to the judicial
functions of the appellate tribunal.
4.3.5. Functioning of the tribunal’s registry
The present systems of management of courts and tribunals often involve mandating
the chief judicial officer of the court or the senior-most judge to be responsible for the
administration of the tribunal or court. This can interfere with the person’s core appellate
functions by causing him or her to divert attention to administrative matters. In some
cases, this challenge has been addressed by appointing a separate registrar for the court
or tribunal.
The Commission recommends that the appellate tribunal should be supported by
an efficient registry which will be headed by a registrar having specialised management
FINANCIAL SECTOR LEGISLATIVE REFORMS COMMISSION 39