Much to thank Kejriwal and Baijal for
When a vague and open veto power resides with an external authority, the effectiveness of its usage lies in the absence of confrontation. Only a litigious battle can put these arrangements to rest by bringing in a reasonable framework
The stand-off between the elected Delhi government and the unelected bureaucrat Lt Governor appointed by the Union government has seen a ceasefire for now. There are lessons to be learnt from this for the regulatory system that governs almost all the business and the economic activities in the country — ranging from financial markets to telecommunications to food.
The similarities are stark. The elected Delhi government owes its existence to the Constitution of India that was specifically amended to create the space it occupies. Regulators such as the Securities and Exchange Board of India (Sebi), the Insurance Regulatory and Development Authority of India (IRDAI) and the like owe their existence to special Acts of Parliament. The Lt Governor of Delhi has the functional power to formally take actions that the Delhi government decides upon ( much like how it is the President of India who signs a bill passed by Parliament into law by granting his assent). Every legislation that creates a regulatory authority has a provision that stipulates that the Union government has the power to issue directions on matters of policy to the regulatory authority, and the decision of the Union government is final on what constitutes a policy matter.
Now, picture Sebi or the IRDAI or for that matter the pension fund regulator making regulations to regulate a certain activity — say insider trading. Picture the Union government stepping in to say that since it has the power to issue directions of policy, it would direct that the regulations should not be brought into effect until the Union government is satisfied that the outcome it desires has been fully reflected, and that it would take time to decide on what is the outcome that it desires. It is not that such intervention does not potentially happen. Perhaps nothing would pass through the regulatory authority’s board of directors unless the government is satisfied with what is ultimately passed. But assuming it does not work this way, imagine the regulatory authority’s board of directors taking its role seriously and doing its statutory bidding, only to be told that it should not be doing what it wants to do.
That is the institutional checks-and-balances design that is in play across the nation. And it is very easy to subvert that process if the oversight measures meant for usage in exceptional circumstances, become the norm. The exception would then become the rule. In other words, what happened in Delhi in the stand- off between the Lt Governor and the state government is a stand-off that indeed can happen across the board, across the society and across the nation.
The position with judicial appointments is not dissimilar at all. The appointing authority is the government — the warrant appointing a high court judge or a Supreme Court judge is executed and signed by the President of India. After the collegium system came into existence (let’s leave out why and how it did, out of the discussion for now) it is the judges’ collegium that would pick the candidates for appointment and the President executes the warrant of appointment.
When a vague power to issue policy directions is in place, the takeover of an institution is complete. It can never stand to reason to ask the question: “Show me one instance where such power is used.” That such power is effectively put to use would in fact be evidenced by the absence of a public stand-off of the nature that the Republic just witnessed in New Delhi. The power to sack a duly elected state government under Article 356 of the Constitution has been the subject of intense jurisprudence that has evolved over the years. As has been the case with the power of the President to second-guess the actions of the council of ministers. Case law has led to a reasonable and sane working of constitutional restraint being read into the checks and balances. Presidents have sent back proposals to sack elected state governments to the Union government, but if reiterated by the elected Union government, Presidents have been told by case law, that they have to sign it.
Unless there is confrontation, case law will not emerge to breathe life into written words in the law. A confrontation between the Union government and a regulator came to the fore when the Telecom Regulatory Authority of India had running battles with the Union government. More recently, two regulators fought but the then finance minister first asked them to resolve their battle in a court of law instead of using the power to issue directions – later their respective laws were amended on the subject matter of the dispute.
When a vague and open veto power resides with an external authority, the effectiveness of its usage lies in the absence of confrontation. Since an external agent can officially ask you to bend, you would crawl beforehand, instead of risking being asked to bend. Only a litigious battle can put these arrangements to rest by bringing in a reasonable framework in which the conflicts can be avoided with institutional dignity intact for both agencies. There is much to thank Kejriwal and Baijal for.
The author is an advocate and independent counsel. Tweets @SomasekharS