tag:blogger.com,1999:blog-19649274.post1899612933837446655..comments2024-03-27T17:16:12.789+05:30Comments on The Leap Blog: The curious case of the MCA: A live example that illuminates the Rajan critique of FSLRCAjay Shahhttp://www.blogger.com/profile/03835842741008200034noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-19649274.post-69383394712713912092014-06-25T13:17:30.424+05:302014-06-25T13:17:30.424+05:30Mr. Dutta
Thanks for the clarification. But the o...Mr. Dutta <br />Thanks for the clarification. But the objection to such overview stem for the fact that, by construct, any legislation will be incomplete since it cannot possibly foresee every nuance arising in the future. Therein the role of regulator in interpreting it comes into being. Now some of these interpretations will take into account the fall out with regards to macro prudential norms, regulatory treatment parity with overseas or domestic regulators etc. i.e. they may occasionally go beyond what is possibly implied in the legislation. Every regulator resorts to such creative interpretations of their power from time to time [look at Fed during the crisis which almost reached the limit of its so called emergency powers with regards to acceptance of 'quality' collateral during the crisis. ] . A lot of RBI actions actually stem from so called prudential concerns which prima facie may seem to be going against specific banks business models.My concern is second guessing of such actions by an Appellate tribunal with very little experience.<br />Regards and again thanks for your response.<br />NeelAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-19649274.post-77312276379373512152014-06-25T11:30:45.813+05:302014-06-25T11:30:45.813+05:30Sir
You have hit the nail on its head. MCA has be...Sir<br /><br />You have hit the nail on its head. MCA has been blatantly misusing its powers since long. I have a fear that NCLT would also do the same. Because NCLT has some executive powers also. It will refrain itself from taking a judicial review and confronting the MCA or sitting on judgement on its own actions.<br /><br />What is required is a Law Review and Reform Commission which should be able to review the vires of any delegated legislation sue-moto or an application by a citizen. It should also review the relevance of a Law after certain years of its existence.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-19649274.post-21840282494696862012014-06-25T00:22:06.048+05:302014-06-25T00:22:06.048+05:30The aspect of bringing upon appellate tribunals to...The aspect of bringing upon appellate tribunals to sit on judgement over subordinate legislation inclusive policy circulars would be retrogade and against principles of prudence and proactive risk assessment and management which needs to displayed by regulators, particularly in the present context of huge worry over the delays in the judicial and quasi judicial processes. Can you think of any developed country having such tribunals? There are other avenues of addressing the issues. While the concept theoretically appear okay, but I worry over the practicalities.<br />Rajesh SharmaAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-19649274.post-91918810415582818372014-06-24T19:36:59.327+05:302014-06-24T19:36:59.327+05:30Dear Neel,
Thanks for your comment.
I fully agr...Dear Neel,<br /><br />Thanks for your comment. <br /><br />I fully agree with you that the job of the Tribunal should not be to second guess the regulatory wisdom. And that is why a judge must not go into policy questions. This is a very well settled principle in law. That is why I cited the 1977 Lakers decision in the first place. <br /><br />My argument is that reviewing of a subordinate legislation does not require a judge to question the policy (and this is where I differ from Dr. Rajan's speech and give the MCA circulars example). All a judge needs to do is to check that in issuing the subordinate legislation the regulator has not gone beyond the powers given to it under the law by the Parliament (as MCA has done). <br /><br />Note that in the blog post I did not even go into the substance of any MCA circular. And still I managed to argue why MCA's circulars are illegal. Therefore, it is possible to legally challenge a subordinate legislation without even going into the substance (policy) of it. This is exactly what Justice Lawton meant when he compared a judge with a referee. Just as the referee does not substitute a player and start passing the ball himself, a judge also need not substitute the regulator in framing the policy. <br /><br />For this limited purpose, it is immaterial whether the law under review is a prudential regulation or a MCA circular. The concept of judicial review applies on MCA circulars as much as it would apply on any other subordinate legislative instrument of your choice. <br /><br />Hope this clarifies my stand. Pratik Dattanoreply@blogger.comtag:blogger.com,1999:blog-19649274.post-45086406061466069562014-06-24T15:53:22.848+05:302014-06-24T15:53:22.848+05:30Dear Sir
There are two aspects to any financial re...Dear Sir<br />There are two aspects to any financial regulation. The first relates to prudential issues and the second refers to conduct. Prudential part of the regulation is specifically afflicted by 'incomplete contracting', i.e. issues , which are not completely covered under any existing contract. In such issues second guessing of regulatory judgments can render the existing regulators 'paper tiger'.<br />2. I do not know enough about MCA's activities to comment on the same. But, it is interesting that illustration author chooses refer to MCA which per-se, cannot be deemed a financial regulator since no financial intermediary falls under its ambit. I can think of no overseas G-7 countries which allows regulatory pronouncements on prudential aspects to be second guessed by an appellate tribunal.<br />Regards<br />NeelAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-19649274.post-7527920934709357412014-06-24T14:19:59.717+05:302014-06-24T14:19:59.717+05:30A brilliant post indeed!
I hope the govt pays he...A brilliant post indeed!<br /><br /> I hope the govt pays heed and does in fact give the tribunals the power to adjudicate upon the vires of all the delegted legislations that the regulators come up with. In the mean time, I hope the issuance of circulars by the MCA when the new act does not allow them to do so is challeneged before the HCs or SC.Sagar Godbolehttps://www.blogger.com/profile/11714207716088241973noreply@blogger.com