Regulatory capture

2016 CLC 1339 LAHORE-HIGH-COURT-LAHORE Judicial Precedent

Ss 9, 2(b) 2(c) & PreambleNational Textbook and Learning Materials Policy 2007, cl.2.2Interpretation of Punjab Curriculum and Textbook Board Act, 2015Selection, development and regulation of manuscripts for textbooksSelection and development of manuscripts by Punjab Curriculum and Textbook BoardRole and functions of Punjab Curriculum and Textbook Board ("Board")Regulatory captureScope

Contention of the petitioner, inter alia, was that the Punjab Curriculum and Textbook Board under Punjab Curriculum and Textbook Board Act, 2015 could not prepare manuscripts for textbooks on its own and the same were required to be invited through open competition as envisaged in the National Textbook and Learning Materials Policy and Plan of Action, 2007, and furthermore, that the regulator and the regulatee could not be the same

Validity

Punjab Curriculum and Textbook Board was admittedly a regulator charged with the responsibility of choosing between various manuscripts that may be submitted to it for approval pursuant to advertisement published by it as visualized in the National Textbook and Learning Materials Policy and Plan of Action, 2007 and the Provincial Government had not specifically denied having followed the said policy until recently and it had also not been denied by the Provincial Government that no policy in replacement of the National Textbook and Learning Materials Policy and Plan of Action, 2007 had been put in place

Perusal of Punjab Curriculum and Textbook Board Act, 2015 revealed that the Board did not fall within definition of a "person" or "agency" and in terms of S.2(d) of the Punjab Curriculum and Textbook Board Act, 2015, "agency" had been defined and in S.2(c) of the same, "Board" had been defined separately which indicated that the "Board" and "agency" were two different entities visualized by the Punjab Curriculum and Textbook Board Act, 2015

Board could not, therefore, act as an "agency" for the purpose of preparation and development of manuscripts for textbooks

Section 9 of Punjab Curriculum and Textbook Board Act, 2015 provided functions and powers of the Board wherein S.9(3) showed that much emphasis had been laid on preparation and execution of "schemes" pertaining to matters enumerated in said section and it may be stated that the Board had the power to prepare and execute schemes for manuscripts of textbooks and schedule or strategize for introduction of textbooks in various classes of an institution and S.9(3)(d) of the Punjab Curriculum and Textbook Board Act, 2015 empowered the Board to approve manuscripts of textbooks and supplementary material produced by a person or agency before the same were prescribed

Repeated use of the word "scheme" in opening line of S.9(3) of the Punjab Curriculum and Textbook Board Act, 2015 indicated an intent on the part of the legislature to limit the power of the Board as regulatory and supervisory body tasked to make detailed arrangements relating to supervision and administration of matters mentioned in S.9(3) of the Punjab Curriculum and Textbook Board Act, 2015

In absence of any express, distinct and independent power to prepare manuscripts, it was difficult to read such power into the language of the statute

Perusal of Punjab Curriculum and Textbook Board Act, 2015 created an impression that the Board was in the position of a regulator and policy maker to provide guidelines, develop, implement, evaluate, and update curricula; arrange for development, production and publication of textbooks and lay down specifications to regulate and control production, printing, publication and sale of textbooks; and not to engage in the process of development of manuscripts which had been left to be undertaken by persons or agencies other than the Board

Rationale behind the same was that having put in the position of regulator, the Board could not at the same time assume role of a regulatee and such course of action would clearly lead to conflict of interest, making Board a judge in its own cause, thereby rendering the entire process as non-transparent and placing other competitors who may have submitted manuscripts for approval at an obvious and unfair disadvantage, which could not be the intent of the law

High Court observed that work of development of manuscripts may be undertaken by any department, organization directorate or wing of the Government which fell within definition of the word "agency" and such work shall not be carried out by the Board itself, which shall exercise all other powers and functions as provided, inter alia, in S.9 of the Punjab Curriculum and Textbook Board Act, 2015 and manuscripts submitted by any person who had any nexus with the agency which had developed manuscripts shall not sit in the meeting of the Board if such person was a member of the Board Constitutional petition was disposed of, accordingly.

2015 SCMR 1739 SUPREME-COURT Judicial Precedent

Application of doctrine of regulatory captureScopeExercise of discretion by the regulatorScopeRegulator, discretion of

Doctrine of regulatory capture applied where a statutory body set up to regulate a group was then manned by the persons from that group to defeat regulation

Said doctrine would not apply where the regulated included the government because inevitably appointments to such regulatory bodies had to be made by the government, however that did not mean that the government could defeat the legislative intent by not appointing persons to such bodies or by making appointments of such persons who would act but only under its dictation

Power to appoint had to be exercised in a fair manner and the exercise of authority by the appointee had to be transparent, in the public interest and non-arbitrary

Government did not have an absolute discretion in the matter of such appointment

Even where legislative bodies conferred discretion on regulators without meaningful standards it was the duty of those on whom such discretion had been conferred to structure it

Regulators must develop standards to regulate their discretion, and must confine their discretion through principles and rules.