Court should not interfere with SEBI policy merely because it thinks it has a better alternative: Supreme Court

Supreme Court says it cannot examine correctness of a policy framed by regulatory agency; courts may interfere only when it is found that the actions are arbitrary or violative of constitutional or statutory mandates, it says

A view of the Supreme Court. File | Photo Credit: The Hindu

The Supreme Court on Wednesday said that it could not examine the correctness, suitability, or appropriateness of a policy, especially when framed by a specialised regulatory agency in collaboration with experts.

A Bench headed by Chief Justice of India D.Y. Chandrachud said that the top court could not interfere merely because it thinks a better alternative is available.

These observations came in a judgment in the case on Hindenburg Research’s allegations against the Adani group, and were a result of the Bench’s examination of the scope of judicial review over SEBI’s regulatory domain.

Judicial precedents

Chief Justice Chandrachud said that the consistent line seen in judicial precedents was that courts should not act as appellate authorities on policies framed by a statutory regulator. “Courts may interfere only when it is found that the actions are arbitrary or violative of constitutional or statutory mandates,” the judgment observed.

The Bench referred to its past judgments in cases involving SEBI to show that the judiciary must “refrain from substituting its own wisdom over the actions of SEBI”.

The court, examining the role of independent regulatory bodies such as SEBI in public administration, upheld the primacy of India’s principal capital markets regulator as the forum to adjudicate violations of its regulations.