I would have been remiss in not writing about the court’s rationale in the very same judgement, in refusing to strike down as unconstitutional, a different section of the same law – Section 69-A, which enables issuance of directions by the government blocking public access to electronic content. This provision has poor variants across various sections in legislation governing the financial sector, in practice, rendering them similar to anti-terror laws.
Hence my column in Business Standard this Monday, pointing out how the safeguards found by the court to save Section 69-A as constitutional, are sorely lacking in legislation governing the financial sector.
The inter-play of securities regulations with human rights is gaining attention in jurisprudence globally. The subject has drawn the attention of the European Court of Human Rights, which I refer to in my the Business Standard column. That judgement is in French but for those who cannot comprehend French, the English press release provides an excellent summary.
Sir, I'm not quite sure how SEBI's order could impinge on freedom of speech and expression (though given the wide nature of power and importance of the financial sector in our lives today, I dont doubt such a situation could arise). I'd see it more in the context of a restriction on freedom to carry on business etc. for which the restrictions may be on grounds which are very different from those for 19(1)(a), as Nariman himself recognizes. Accordingly Id imagine the scope of SEBIs powers would also be subject to the same restrictions as any other law. I just feel that given the nature of the financial and securities markets, its very difficult to define these powers with certainty. High paid corporate lawyers are always around to come with brilliant structures to circumvent regulation after all.
🙂 It was never a suggestion that it is freedom of speech and expression that would be impinged by a financial sector regulator. It is obviously not the only liberty guaranteed in the Constitution with only reasonable restrictions being permitted to curtail them. You are right in identifying one of the liberties as being the right to carry on business, and the most important of course being the right to life under Article 21. Do look up the thinking of the European Court of Human Rights on this subject.
The question here is the scope of the section and the powers it confers on the State and whether the power ought to be subjected to being tempered by reason. Of course, the powers have to be subjected to the same restrictions in their use. And, indeed that would be so for Section 66-A too, which was the argument of the ASG in that case – that the section should not be outlawed since the actions of the State can in any case be subjected to review on a case to case basis.
If a power cannot be defined with any certainty, it should be regarded as arbitrary. This is quite a point of constitutional law, and much less a point about how much someone making a point is paid. That sentiment is exactly what is said in the last para of my Business Standard column.
Not being anonymous would help. Remember, Section 66-A is gone
🙂
Sir SS,
Superb Post.
Sir in the exercise of such discretionary powers, isn't there always a case of the fundamental rights limit being read into the provision? I felt that was why the SC actually read the restrictions into section 69A which was in the nature of an enabling provision while 66 was actually criminalising an act. The SEBI Act seems to be providing a power similar to 151 of the CPC. Wouldnt anything short of that tie their hands to a dangerous extent (theoretically and assuming them to be acting bona fide)? I completely agree on the procedural safeguards.
John, that is the whole point of judicial review of law to check if there is constitutional validity. The question is whether a provision can be regarded as being constitutionally valid merely because a court can strike down an action under that section in any case. Section 69-A also has criminal implications – if directions are not complied with. Same is the case with Section 11B of the SEBI Act.