GS2-Regulatory Bodies of India Rajath

8/13/2019 GS2-Regulatory Bodies of India Rajath

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STATUTORY, REGULATORY AND VARIOUS QUASI-JUDICIAL BODIES

Regulatory bodies in India

Security exchange board of India (current head:U.K.Sinha)

Established in current form under SEBI act,1992

The Board shall consist of the following members, namely:

Chairman

2 members from officials of the Finance Ministry

one member from RBI

five other members (at least three shall be whole-time

members) to be appointed by the Central Government.

Manages Capital markets in India.Its functions include:

Regulating work of stock exchanges and other securities markets

Promoting development of markets and investor knowledge

Preventing insider trading in securities Creating regulations on issues related to securities or capital.

It can by its powers

conduct inquiries into functioning of companies listed in stock markets

Call for evidence from any bank or corporation or board as part of its

investigation

Suspend the selling of any stock or selling by or to a person suspected in

fraudulent practices.

It can also regulate collective investment schemes that are not under other acts like chit

fund act,cooperative societies,insurance or PF etc

Forward markets commission(Current head(interim): Ramesh Abhishek )

Established by Forward Contracts (Regulation) Act 1952.

Regulates forward markets.

It has powers to:

To keep forward markets under observation

To collect information regarding goods traded and submit reports and

recommendations to GOI on Forward markets

To conduct inspection of accounts of associations as necessary.

From 2013,It is under MoF.


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What is commodity market and spot/forward/future trading?

1. A commodities exchange can be the location for trade in the commodities themselves or

in forward and/or futures contracts relating to those commodities.

2. When a buyer and seller transact in a commodity, with the former making a payment

against delivery of the said commodity by the latter, the trade is in the nature of a spot

trade. A forward trade is when a potential seller contracts with a buyer to deliver and

accept payment for a certain quantity of a commodity at a specified price on a specified

date in the future.

3. Forward contracts, however, are cumbersome. They require intending sellers of specific

quantities of specific quality at specified times to find the appropriate number of buyers.

This entails costs of search and inspection. Further, since there is no centralised market

or exchange where the contract is drawn up, prices tend to vary and there is uncertainty

about delivery. It is for this reason that futures contracts were evolved.

4. Futures contracts differ from forward contracts in important respects. Futures contracts

are standardised contracts to buy or sell a standard quantity of a standard quality of a

commodity. These are traded in exchanges, through brokers, with no need for the buyer

and seller to meet and negotiate. An important feature is that a contract need not be

settled by actual delivery.5. In futures market actual delivery of goods takes place only in a very few cases. It can be

matched by an offsetting contract taken by the buyer or seller, and the two can be

squared at any point at some gain or loss. The administration of the exchange

guarantees that contracts will be settled, and requires traders to pay up margins to cover

ongoing losses, if any, to secure the viability of the exchange.

6. Current futures markets include Multi Commodity Exchange, Mumbai National

Commodity and Derivatives Exchange, Mumbai ,National Multi Commodity Exchange,

Ahmedabad etc Commodities traded include: Food grains,Oil seeds,metals,spices,crude

oil etc

Why are commodity futures trading allowed? By normal methods, Farmers get low prices during harvest season for their produce due

to excess supply.Later in the lean season prices rise but farmers cannot get the benefits.

Similarly consumers have to pay excess prices in the lean season

Futures trading balances this scenario.It also provides guidance to farmers on what to

cultivate and they can plan accordingly.


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NSEL Scam

NSEL is a company promoted by Financial technologies group.

NSEL was meant to be a spot exchange and therefore unlike a futures exchange had to

combine a trading platform with facilities such as warehousing and inspection because

all contracts that were being reported on the exchange were expected to be backed with

actual supplies of the commodity concerned.These were required to be stored in thewarehouses of the exchange and the trades were to be settled with delivery of the

commodity. Sellers deliver their produce to the warehouses of the exchange, which

checks for quality and issues a warehouse receipt. This receipt is then posted on the

electronic exchange allowing buyers to make bids. Having won a bid they obtain the

warehouse receipt that is exchanged for the commodity at a warehouse located close to

them.

Government decided to allow spot contracts to be settled with a lag ie 11 days.This

allowed NSEL to make futures trading though was technically a spot exchange.To make

matters worse,NSEL allowed settlement peiods of upto 36 days in some cases.

NSEL existed in a regulatory vacuum because since it was neither a forward

exchange(under FMC) or financial market(under SEBI & RBI)

The sales in NSEL were not backed by actual stocks and sellers were hoping that they

could acquire stocks when the time to settle came.

In july Consumer affairs ministry asked NSEL to immediately settle all contracts in

excess of 11 days (as it was illegal).This led to large scale default.

Competition Commission of India(current head:ashok chawla)

Established under competition act 2002

Functions:

To prevent practices having adverse effect on competition

to promote and sustain competition in the market to protect the interest of consumers and to ensure freedom of trade.

Examples of such steps that prevent competition are:

cartelisation in an industry such that it affects prices

Abuse of dominant position by a company on another

Acquire of control through shares by a person who controls another venture

which has similar products

CCI consists of one chairperson and 2-6 members appointed by

GOI

Insurance Regulatory and Development

Authority(chairman:T.S.VIJAYAN)

Insurance Regulatory and Development Authority Act,1999

10 members: chairman,5 full time and 4 part time members all appointed by GOI

Functions

To protect of the interests of the policy holders in matters concerning assigning

of policy, nomination by policyholders, insurable interest, settlement of insurance

claim, etc.


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To regulate investment of funds by insurance companies.

Control and regulation of the rates, advantages, terms and conditions that may

be offered by insurers in respect of general insurance business.

Recent events in insurance sector:

Insurance repository scheme:insurance repository system set up by IRDA will be the

first of its kind in the world. According to IRDA, the objective of creating an insurance repository is to provide

policyholders the facility to keep insurance policies in electronic form. It is also to

undertake changes, modifications and revisions in the insurance policy with

speed and accuracy in order to bring about efficiency, transparency and cost

reduction in the issuance and maintenance of insurance policies.

The repository will issue a unique code number to all policyholders, and their

policies will come under that number. It maintains the history of the policy details

such as claims, nominees, beneficiaries and other data.

The repositories are expected to bring down the management cost of each policy

from the present Rs.120 per policy to Rs.25 per annum.

5 companies have been given the status of insurance repositories

IRDA is in the process of revamping life insurance sector of the country and over 400

life policies of various companies are set to be revamped

Telecom Regulatory Authority of India(Current head:Rahul khullar ias)

Telecom Regulatory Authority of India Act, 1997

mission is to create and nurture conditions for growth of telecommunications in the

country

TRAI fixes tariffs that can be charged in various fields of telecommunication

Makes recommendations to GOI on issues like spectrum sale

By an amendment in 2000,the adjudicatory and disputes function of TRAI was passedonto TDSAT

Directorate General of Civil Aviation

HQ:Delhi,Regional airworthiness offices at 14 places in India

It investigates accidents and ensures safety of aircrafts by formulating safety

standards,licensing of aircrafts,aircraft staff,ATCs etc

Grossly understaffed,DGCA is under investigation by FAA which could result in

downgrading of safety grade of indian aviation.

DGCA will soon be replaced by civil aviation authority modelled on FAA of america.

Pension fund regulatory and development authority

PFRDA was set up in 2003 as the regulator of the pension sector especially the national

pension scheme

It got statutory backing with the passing of PFRDA bill in 2013

Note: NPS has on pan India basis close to 55 lakh subscribers and a corpus of Rs.35000 crore.

It is now open to general public along with Govt employees.


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Central Drugs Standard Control Organization

(Drugs control general: Dr.G.N.Singh)

National regulatory body for drugs and pharmaceuticals

Under ministry of health and family welfare India

Similar to FDA of USA

Controversies w.r.t CDSCO

Accused of failing to ensure standards in pharma sector regularly

Accused of in collusion with the drug industry especially after Ranbaxy was fined by

US.F.D.A. Multiple times.

In 2010 it was in controversy when it (along with ICMR) failed to ensure medical trials of

H.P.V vaccines by an organization on tribal girls in Andhra pradesh followed safety

standards and informed consent. In 2013 November it was made mandatory to video

record informed consent+in writing.

Electricity regulatory commissions

Formed under the electricity act,2003.There is a central ERC (CERC) and state ERCs

Issues licences to transmission licensee and traders in electricity

It performs a regulatory role in that they try to regulate tariffs,issue and enforce

standards wrt service quality in electricity sector

Advice central/state govts on matters like electricity policy tariff policy etc

Electricity ombudsmanare appointed by SERCs to address consumer grievances

against distributors

Pollution control boards

Central and state pcbs are constituted under the Water act 1974 and also derivespowers from air act and EPA.

CPCB coordinates activities of SPCBs.It has & zonal offices with HO at delhi

and 5 laboratories.

CPCB runs programs like national air quality monitoring program

PCBs have powers to advise the government on environmental issues,

investigate compliance of industries with regulations, close down defaulting industries,

evolve methods to treat waste, monitor water, air qualities etc.

Problems:

Political meddling in appointing chairmans of SPCBs

Minimum tenure of appointment of board members is 3 years according to

section 4 of water act. This is often violated.

Though the act says the person as chairman should be an expert in the field

people ranging from 10th standard pass to MLAs are appointed.

SPCBs are severely understaffed, do not meet regularly and the experts like

engineers taken on contract basis leave work due to work overload.


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Though new areas like municipal solid waste management, biomedical waste

and high-rise buildings have been brought under its ambit staff strengths remain

the same as that years back.

The Food Safety and Standards Authority of India (FSSAI)

Under food safety act 2006

Advises central and state governments on issues that are under its mandate Provides training programs for persons in the food industry

Frames regulations related to standards of food, accreditation of labs etc

Other regulatory bodies:

Body Ministry Act if any Remarks

Directorate Generalof Hydrocarbon

Under Ministry ofpetroleum andnatural gas

KG gas issue

Directorate Generalof Mines Safety

Ministry of labor Mines Act, 1952 occupational safety,health and welfare ofmine workers

Biodiversity authorityof india

NBA act 2002

Medical council IMC act 1956 MCI is dissolvednow.Will be replaced byNCHR if NCHR bill ispassed

Dental Council M/o Health & FamilyWelfare

The Dentists Act,1948

Will be replaced byNCHR if NCHR bill ispassed

The HomeopathyCentral Council

same as above The HomeopathyCentralCouncil Act, 1973

Same as above

Pharmacy Council same as above The Pharmacy Act,1948

Same as above

Indian NursingCouncil same as aboveThe Indian NursingCouncil Act, 1947

Same as above

The Indian MedicineCentral Council

same as above The Indian MedicineCentralCouncil Act, 1970

Same as above


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NCHR:National Commission for Human Resources for Health Bill, 2011

Quasi-judicial bodies

Bodies(eg:Tribunals) which are similar in power to courts in that they may exercise the

powers of adjudication, compensation, penalization etc w.r.t. to the field they workon/based on the law they derive power from. But their members may not be judges

necessarily.

They normally work on specific fields where expertise is required.

They are usually bound by rules of natural law. For example in India, National green

tribunal is not bound by indian evidence act while collecting evidence in a suit.(However

this is not always done and some tribunals do have to follow IEA.)

APPELLATE TRIBUNAL FOR ELECTRICITY

Formed under the electricity act,2003

Hears appeals by persons aggrieved by orders of penalisation under electricity act

Chairperson must be sitting/retd. judge of SC or HC.He is appointed by GOI in

consultation with CJI

Members may be is/or has been/is qualified to be HC judges or person with knowledge

of the field or secretary in MoF/M of infrastructure

Press council of india (chair:Justice.Markandey Katju)

Statutory independent regulating body set under PC Act(1965 and 1978)

Chairperson is represented by CJI

A quasi judicial body with 28 members 20 members from the press,5 from 2 houses of parliament and 1 each as nominee of

U.G.C.,Bar council of India and Sahitya Academy.

It has powers to censor newspapers if they are found to be in violation of journalistic

ethics and conduct.(eg: communal writings,breach of privacy etc)

It has the powers of a civil court under code of civil procedure 1908 while trying a suit.

Consumer Disputes Redressal Commissions

Set up in 1988 under consumer protection act 1986

Current head of NCDRC is Jus.D.K.Jain

They are established at district state and state levels

At the district level where cases upto Rs.2 million can be tried ,the commission consists

of

One person qualified to be/or is/has been a district judge

2 persons(1 women at least) with bachelors degree.

At the state level ,commission where cases upto Rs.10 million can be tried, consists of

One person or is/has been a HC judge


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At Least 2,with 1 woman member minimum, with required knowledge in

the field

At national level

One person or is/has been a SC judge

At least 4,with 1 woman minimum,of person with knowledge and

experience in the field The commissions have the power of a civil court w.r.t to the field and can take

procedures like examining witness on oath.

Telecom Disputes Settlement and Appellate Tribunal

In 2000,the adjudicatory and disputes function of TRAI was passed onto TDSAT

adjudicate any dispute between

between a licensor and a licensee;

between two or more service providers;

between a service provider and a group of consumers

consist of a Chairperson and not more than two Members appointed by GOI

Chair is, or has been, a Judge of the SC or HC

Member:Secretary to GOI or person of eminent knowledge

Intellectual property appellate board

3 jurisdictions:Trademarks, Patents and geographical indications.Cases with

regards to the above subjects are heard by this board.

HQ:Chennai .Current head:Justice K.N.Basha

All appeals pending in HCs w.r.t. 3 subjects above were transferred to IPAB once it was

constituted

Debt recovery tribunals Constituted under Section 3 of the Recovery of Debts Due to Banks and Financial

Institutions Act, 1993.

Aim of the DRTs was to receive claim applications from Banks and Financial Institutions

against their defaulting borrowers.

They are guided by natural justice and is not bound by Code of Civil Procedure 1908

With implementation of SARFAESI act DRTS now deal with both acts (SARFAESI and

Debt due to banks act)

Problems with DRTs and link with NPAs

Initially defaulters exploited loops in DRT act to delay justice administration

To counter the problems, a strict act called SARFAESI Act was formed.Though it lead to

better performance for a brief period, soon defaulters successfully started preventing

recovery under this act also

Close to43,000 casesinvolving a whopping Rs 1.43 lakh crore were pending with 33

debt recovery tribunals (DRTs)across the country at the end of FY13. This has added

to the woes of banks and financial institutions and asset reconstruction companies

looking to buy out these assets.


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The slowing down of DRTs is a reason for mounting NPAs in banking sector

Railway claims tribunal

Based on Railway Act 1989 which lays down substantive liability of the RailwayAdministration for loss, destruction, damage, deterioration or non-delivery of goods

entrusted to them for carriage and for death or injuries or loss to a passenger in a

railway accident or untoward incident

The tribunal has 21 benches at 18 major cities in the country

With its Benches in different parts of the country with Judicial and Technical Members, itl

provides much relief to the rail users and reduces burden of the civil courts.

National green tribunal act 2010 and NGT

Part of implementing promises at Rio conference 1992

NGT will act as appellate authority to persons aggrieved under the acts:

Water (Prevention and control of Pollution) Act 1974

Water (Prevention and Control of Pollution) Cess Act 1977

Forest (Conservation) Act 1980

Air (Prevention and Control Pollution) Act 1981,

Environment (Protection) Act 1986

Biological Diversity Act 2002.

The NGT has powers to regulate its own procedure and is not bound by Indian

Evidence Act 1872 or Code of Civil Procedure 1908

The NGT Act 2010 applies to civil cases and it excludes criminal offences.

There is no limit for the compensation that the green tribunal can award to the victims of

environmental degradation /damage Whoever fails to comply with the order or award of the tribunal shall be punishable with

imprisonment, which may extend to 3 years or with a fine, which may extend to Rs 10

crores. In case of companies, the penalty may extend to Rs 25 crores.

Appeal against NGT is filed SCI

NGT has a full time chairperson and max of 20 each judicial and technical members.

Information commissions

Constituted at central and state levels as per RTI act

Central information commission will consist of

Chief election commissioner

information commissioners not exceeding 10

The members of CIC is appointed by a committee of

Prime minister who is the chairperson

Leader of opposition

Union cabinet minister nominated by Prime minister

Members of information commission must not be MPs or MLAs and should be persons

of eminence and knowledge.


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State information commission members are elected by a committee of

Chief minister who is the chairperson

Leader of opposition

Union cabinet minister nominated by Chief minister

Information commissioners can only be removed on disciplinary grounds only by order of

president/governor after an inquiry by SCI finds him guilty. The commissions have the power of a civil court while trying a suit.

Interstate river water tribunals

Article 262 of the constitution refers to parliaments role in solving river water disputes

262. Adjudication of disputes relating to waters of inter State rivers or river valleys

(1) Parliament may by law provide for the adjudication of any dispute or

complaint with respect to the use, distribution or control of the waters of, or in,

any inter State river or river valley

(2) Notwithstanding anything in this Constitution, Parliament may by law provide

that neither the Supreme Court nor any other court shall exercise jurisdiction in

respect of any such dispute or complaint as is referred to in clause ( 1 )

Coordination between States

GOI thus made the Interstate River Water Disputes Act, 1956 which provides for

tribunals to solve river disputes in India

A tribunal is set up when one or more of the states make a complaint under section 3 of

the IRWD act

The Tribunal shall consist of a Chairman and two other members nominated in thisbehalf by the Chief Justice of India from among persons who at the time of suchnomination are Judges of the Supreme Court or of a High Court.

Every tribunal thus formed has the powers of a civil court.

Tribunals have been formed for krishna, kaveri, godavari, narmada etc

CAT,SAT,National/State commission for human rights can be termed also quasi-judicialbodies because of the powers bestowed(given in laxmikanth).Avoiding lokpal also.

Other tribunals

Tribunal Remarks

Income tax appellate tribunal constituted in 1941

Customs, Excise and Service Tax AppellateTribunal

Criticism of tribunals/quasi-judicial bodies (taken from an article in the hindu)

Tribunals are formed under article 323A and 323b of the constitution both inserted by the

famous 42nd amendment

The justification often for this is the need to settle cases fast.


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Article 247 of the constitution refers to provision of setting up additional courts under

jurisdiction of high courts. But this option is not used for setting up courts for matters that

need fast resolution and instead tribunals are set up.

The independence of judicial bodies like NGT has been questioned by law experts

By the principle of separation of powers members of executive (who are mostly

nominated by Govts as technical members of tribunals) should not be on board judicialbodies like tribunals.

Though SCI once asked govt of India to set up an independent agency to oversee

tribunals, this has not been done.

In Union of India vs. R. Gandhi (2010) SCI said that when the jurisdiction of an existing

court is transferred to a tribunal its members should be of rank, capacity and status as

equal to as possible to that of the court which was handling the matter till then.

SCI also said in the same case that the administrative support for the members of

tribunal must come from ministry of law and not form any other department. This is also

not observed raising questions on the independence and impartiality of tribunals.

However in spite of these criticisms it should be noted that many such bodies have done

commendable work in their field, like consumer courts or information commissions.

Rajath g krishnan

References:GOI sites

Times of india,the hindu

Documents

GS2-Regulatory Bodies of India Rajath