Supreme Court on Pre-Legislative Consultation

This blog has previously
carried commentary on pre-legislative scrutiny on several occasions: see here,
here,
here
and here.
A few weeks ago, on May 11,
2016, the Supreme Court delivered a judgment in the case of Cellular Operators Association of India v. TRAI, popularly known as the ‘call drops’ case. The case has important
implications for pre-legislative scrutiny, especially pertaining to
sub-ordinate legislations. The impugned sub-ordinate legislation was the
Telecom Consumers Protection (Ninth Amendment) Regulations, 2015, which required that telecom service providers compensate consumers for call drops. The
constitutionality of the regulation was challenged before the Supreme Court (on
appeal from the Delhi High Court) on various grounds.
One of the grounds on
which the challenge succeeded was the violation the requirement under Section
11(4) of the Telecom Regulatory Authority of India Act, 1997 (TRAI Act), the principal
legislation. Section 11(4) states: “The Authority [TRAI] shall ensure
transparency
while exercising its powers and discharging its functions”.
It is important to
note that the Court at the outset states that ordinarily, a legislation (principal or sub-ordinate) is not
subject to the rules of natural justice. However, if the parent statute
explicitly provides for it, the sub-ordinate legislation must follow such rules
of natural justice. In this instance, since the parent statute provides for a ‘transparency’
requirement, it was held by the Court that the ordinary rule was not
applicable.
The term
transparency, however, has not been defined under the TRAI Act. Thus the Court refers
to other statutes and a number of case laws to determine the scope of the ‘transparency’
requirement:
  • The Court refers to
    Section 13(4) of the Airports Economic Regulatory Authority Act, 2008, which
    provides for three requirements under the ambit of transparency: holding due
    consultations with all stakeholders, allowing stakeholders to make their
    submissions, and fully documenting and explaining decisions. The English Court
    of Appeal case of R v. North and East
    Devon Health Authority
    is then cited, in order to determine the scope of
    the term ‘consultation’. The case holds that even the product of the consultation must be “conscientiously taken into
    account when the ultimate decision is taken”.
  • Thereafter the Court calls
    attention to the RTI Act, 2005 (including Section 4(1) where every public
    authority is to publish the procedure followed in its decision making
    processes) and connected judgments to emphasize the aspect of openness in
    governance (in the context of transparency).
  • Crucially, the Court
    also cites Section 553 of the US Administrative Procedure Act, which provides
    that notice of rules must be served beforehand and that after hearing comments
    a “concise general statement” of the basis and purpose of the rules shall be
    published. Next, the Corpus Juris Secundum is cited in order to discuss the
    requirements under the Administrative Procedure Act. The Corpus Juris Secundum
    explains that the general statement, in a reasoned manner, is expected to
    respond to and resolve significant problems raised by comments received
    . The Court
    rules that TRAI was expected to follow such procedure to fulfil the ‘transparency’
    requirement under the TRAI Act.

Since TRAI did not reasonably
respond to comments, such as those that pointed out that consumers themselves
were at fault for call drops, the regulation was struck down as ultra vires. What about those
sub-ordinate legislations that have no such ‘transparency’ requirements under
parent statutes? The Supreme Court recommends that the Parliament enact a
legislation on the lines of the US Administrative Procedure Act, binding all subordinate legislation.
It appears that the
Pre-Legislative Consultation Policy (PLCP) adopted by the Committee of
Secretaries in January 2014 escaped the attention of the Court. As per the
policy, all legislation, principal or sub-ordinate, must be subject to
pre-legislative scrutiny. Specifically, the policy requires prior publication
of the legislation, publication of an explanatory note and receipt of comments
on the draft legislation. The summary of comments and the response to the
comments is to be placed before the Cabinet and the relevant Parliament Standing
Committee. The policy also states that all new principal legislation must
provide for prior publication of sub-ordinate legislation. What is especially
important is that the policy applies to all
principal and sub-ordinate legislation. In other words, the PLCP applies
(a) irrespective of whether the principal legislation provides for prior
publication of sub-ordinate legislation and (b) even though ordinarily (as the
Supreme Court holds in the above case) legislation is not subject to rules of
natural justice. This progressive piece of policy ought to have been taken
notice of by the Supreme Court.
– Vasujith Ram

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