Legal Notes by Arvind Datar: Tribunals Reforms Act, 2026

In Madras Bar Assn. v. Union of India, (2021) 7 SCC 369, the Supreme Court had directed the creation of a National Tribunal Commission (NTC). This suggestion was not new, as there have been repeated directions to bring all Tribunals under one nodal ministry, preferably the Ministry of Law, so that Tribunals are not treated as appendages of a particular Department.

In a welcome move, the Tribunal Reforms Act, 2026, now provides for a National Tribunal Commission that will consist of a Chairperson, two judicial members and two technical members. The Chairperson is to be a retired Supreme Court judge or a retired Chief Justice of a High Court.

The NTC has the responsibility to conduct the selection process through a search-cum-selection committee, review the performance of Tribunals, and oversee inquiries into the complaints against member.  The Act also requires the NTC to develop and maintain a National Tribunals Data Grid.

However, the Act does not bring all Tribunals under the Ministry of Law and Justice.  There is no explanation as to why the National Company Law Tribunal or the GST Tribunals are not covered by the new Act.

As is the current legislative practice, there is an extensive amount of delegated legislation. The qualification, method of selection, appointment, salaries and allowances, resignation, removal and other conditions of service, are to be “prescribed”.  

The Tribunals now cover almost all-important sectors: they deal with company law, tax, securities, telecom, electricity, environment, armed forces, consumer and industrial disputes.

The two most important requirements for an effective Tribunal system are the quality of members and the independence with which they function.  It is, therefore, more critical that the rules adequately answer these issues.  If the rules repeat the same pattern as earlier, there will be no improvement in the functioning of Tribunals.

The most regrettable feature of the new Act is that it has retained only a five-year term for a member.  At the end of the five years, a member has to offer himself for reappointment. Despite the assurances given by the Attorney-General in the past, it is not known if any re-appointment has been made. The period of five years is a serious disincentive for competent lawyers to apply for selection. No lawyer with the necessary domain expertise and having a reasonably good practice will leave his practice to become a member for five years. What is worse is that after the end of a five-year term, he cannot appear before that Tribunal again. Thus, if a company lawyer, becomes a member of the NCLT for a period of five years, he cannot ever practice company law because the jurisdiction of the civil courts stands excluded for almost all company matters.

Almost 40 years ago, the Supreme Court pointed out the need for a longer tenure. (SP Sampath Kumar v. Union of India, (1987) 1 SCC 124) Bhagwati J pointed out that a period of five years would be a disincentive for well-qualified members to accept the offer to join any Tribunal. Further, many members who are new to the subject will take at least two years to understand a particular branch of law, but will have to step down by the time they have become fully acquainted the legal issues that need consideration.

There should be a provision for automatic reappointment for a further term of five years, unless there are serious allegations of irregularity.  A Tribunal member who has developed expertise in his first term can leverage knowledge gained and can dispose of a higher number of cases in the succeeding term. If a Tribunal order is well written and has carefully considered the statutory provisions, it is bound to make the task of the High Courts and the Supreme Court much simpler. Therefore, there is a serious need to reconsider the five-year term and provide for automatic reappointment.  

It is unfathomable as to why there is insistence on the five-year term. The working of Tribunals for the last 20 years has demonstrated that a limited tenure has not attracted the right talent. The functioning of several Tribunals in several cases leaves much to be desired. Today, the Technical Members are mainly from the Indian Revenue Service or other civil services. On the judicial side, it is mostly retired district judges who apply. The limited tenure has seriously damaged the efficiency and reputation of most of the Tribunals. Unless there is a minimum term of 10 years in the important Tribunals, it will be impossible to have a proper Tribunal system. The old system of retired bureaucrats and retired judges being appointed will continue.

The other serious problem is the issue of housing. This problem was substantially solved by the Madras Bar Association judgment prescribing a housing allowance of Rs.1.5 lakhs, which has been very helpful for most members. It is hoped that this housing allowance continues. Merely providing housing allowances equivalent to Group A officers will seriously discourage good candidates from applying.  

Tribunals are meant to supplement the functioning of courts. They are expected to deal with issues that arise in specialised branches such as telecom, electricity, and so on. If a specialised tribunal has a Technical Member who is from the Revenue Service or a Judicial Member who is a retired district judge, then the Tribunal will inspire little confidence among the litigants as there is no domain expertise. The reason why the ITAT and the Customs and Excise Tribunal (CESTAT) were successful was because the members had excellent domain expertise and the quality of orders was of a high order.  Moreover, members continued till the age of 62.

The Madras Bar Association had to file repeated writ petitions with the sole aim of improving the functioning of the Tribunals. The formation of the NTC is a bold step in the right direction. All that is necessary to ensure better quality of members is to depart from the present system of the Tribunals attracting mainly post-retirement candidates.

Arvind Datar is a Senior Advocate of the Supreme Court of India.