Fault lines in India’s regulatory state

Regulators must rebuild walls separating lawmaking, enforcement, and adjudication

- M S SAHOO & SUMIT AGRAWAL

The discourse on the separation of powers in India has traditionally centred on the legislature, executive, and judiciary within the constitutional framework.

The sharper challenge today, however, lies beyond this classical trinity, in the proliferating world of regulatory bodies. Regulators operate as mini-states within their domains, simultaneously exercising quasi-legislative, executive, and quasi-judicial powers.

In practice, this often means that the same individual or division within a regulatory agency may perform multiple roles — lawmaker, investigator, and adjudicator — with blurred procedural boundaries. The Supreme Court, in Clariant International Ltd & Anrvs Sebi (2004), observed that the regulator not only frames regulations but also administers them and adjudicates their contraventions. It cautioned that the integration of these powers within the same body “may raise several public law concerns in future.”

There is a growing recognition of the need to separate executive and quasi-judicial functions, ensuring that the individuals tasked with establishing facts are different from those empowered to impose penalties. In Vishal Tiwarivs Union of India (2024), the Supreme Court directed the Securities and Exchange Board of India (Sebi) to maintain a separation between its quasi-judicial and executive arms. A comparable institutional design exists in competition law, where the office of the Director General (Investigation) functions independently of the Competition Commission of India. Many regulators follow the convention that matters emanating from the domain of one whole-time member ate adjudicated by another.