Tribunals: The Wrong Reform – Legal Notes by Arvind Datar
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Tribunals: The Wrong Reform – Legal Notes by Arvind Datar

Bar & Bench

The Finance Bill, 2017 surprisingly contained provisions for merging eight Tribunals into other existing Tribunals. For example, the Competition Appellate Tribunal will now be merged into the National Company Law Appellate Tribunal [NCLAT]. Consequently, appeals from orders passed by the Competition Commission of India will now be heard by the NCLAT.

While the taking over of the functions of the Railway Rates Tribunal by the Railway Claims Tribunal or the taking over of the Copyright Board is understandable, the merger of COMPAT with the NCLAT  is not a step in the right direction.

The principles governing competition law are completely different from company law. The proposed reduction in the number of Tribunals is only a minor reform and the larger issues that have plagued extensive tribunalization remain unaddressed. There is also no data on the disputes pending before the Tribunals which are being replaced and the pendency of cases in Tribunals which will hereafter discharge the additional burden.

NCLAT is already overburdened with work and it is unfortunate that appeals from COMPAT will now be heard by this Tribunal as well.

The other unfortunate aspect is that all these amendments took place by provisions in the Finance Bill, 2017. It is indeed strange that legislative provisions that do not have the remotest nexus to Money Bills were included in this Year’s Finance Bill. This also calls for deeper introspection as the increasing resort to non-finance legislative amendments as Money Bills may soon be challenged in the High Courts or the Supreme Court.

The proposed reduction in the number of Tribunals fails to address several major problems that have affected these quasi-judicial bodies.

(i) Independence: It has been repeatedly emphasized by the Supreme Court that all Tribunals must come under a separate nodal ministry and till then, they must function under the Law Ministry. Unfortunately, most Tribunals are treated as departments or adjuncts of the respective Ministries.

Apart from the provisions in the Financial Bill regarding replacement of certain Tribunals, equally disturbing are the provisions to delegate to the Central Government the power to regulate the process of appointments, removals and so on. This, apart from being vulnerable to constitutional challenge, further erodes the independence of the Tribunals and increases the control of the executive over Tribunals.

The unfortunate result would be that several outstanding High Court or Supreme Court Judges would be reluctant to preside over Tribunals which are subject to executive control.

(ii) Specialization: The idea behind starting several Tribunals is that they deal with specialized subjects which are outside the realm of the ordinary courts. For example, the Appellate Tribunal for Foreign Exchange or Cyber Appellate Tribunal are constituted to deal with highly specialized subjects. Since the very objective of Tribunals is to create post-retirement opportunities for civil servants and, incidentally, judges, there is no attempt to ensure any specialized knowledge or domain expertise in the law that a particular Tribunal is expected to govern.

Pic: Competition Appellate Tribunal in New Delhi
Pic: Competition Appellate Tribunal in New Delhi

For instance, competition law is a highly specialized branch and has several important principles that are peculiar to this branch. The members of COMPAT are appointed from the Revenue Department and the Chairman is a Supreme Court Judge. None of them have even a nodding acquaintance with competition law. The orders of far-reaching consequences are passed by generalist members who decide the cases that require extensive specialization.

(iii) Other issues: The 74th Report of the Rajya Sabha extensively examined the functioning of Tribunals and made several important suggestions. Para 31 of this report gives details of cases that are pending in various Tribunals. The maximum pendency as on December 31, 2014 was in the Central Administrative Tribunal, with 1,55,118 cases, whereas the least pendency was in the Cyber Appellate Tribunal, with 34 cases. The Parliamentary Committee Report also noted that several vacancies in many Tribunals had not been filled, rendering them dysfunctional.

With the closure of some Tribunals, it is perhaps the right time to completely overhaul the manner in which the Tribunals function in India. The Supreme Court has repeatedly expressed its displeasure about the manner in which the Tribunals are manned and the repeated failure to ensure their independence.

At present, there is no comprehensive list of all the Tribunals functioning under the Central and State Governments, the number of cases which are pending in these bodies, the manner in which the recruitment takes place and their respective service conditions. The system of appointing people only for five years at a time is deplorable and only ensures that persons close to retirement age are more likely to take up these positions.

The Parliamentary Committee rightly recommended that persons who are recruited as Tribunal members must continue till the age of superannuation with the possibility of being elevated to the High Court [in the case of judicial members].

In fine, it is suggested that the following steps may be urgently taken to ensure that Tribunals function independently and as an effective part of the justice delivery system:

(1) All Tribunals must function under the  Law Ministry and should be completely independent from their parent department. The Legatt Committee in the United Kingdom rightly pointed out that Tribunals must not only be independent, but must also be seen to be independent;

(2) The practice of selecting retired civil servants and judges is seriously flawed and needs to be replaced by members who join the Tribunals in their 40’s and then continue till the age of superannuation;

(3) The formation of a National Tribunal Commission, as recommended by the Parliamentary Committee in its 74th Report, must be implemented at the earliest. This full-time Commission can then select members of the Tribunals as against the present ad-hoc Selection Committees that are manned by sitting Supreme Court or High Court Judges and the secretaries of respective ministries;

(4) Alternatively, the creation of an independent Indian Tribunal Service needs to be examined. There was already a recommendation to create an Indian Judicial Service. This can be done by the Rajya Sabha under Article 312 of the Constitution. The members of the Indian Tribunal Service can then be deputed to specialized Tribunals. Judicial members can be treated as part of the quota for District Judges for further elevation to the High Courts;

(5) It can also be provided that members of other central government services like the Indian Revenue Service or the Indian Accounts and Audit Service are eligible to become members of the Indian Tribunal Service.

(6) With the advent of General Sales Tax [GST], GST Tribunals can be started, keeping the above principles in mind.

These or other reforms are urgently needed. In the UK, extensive reforms were made by the Tribunals, Courts and Enforcement Act, 2007, wherein a two-tier system of Tribunals was established under the overall control by the Lord Chancellor’s Department. The present system of shutting and running Tribunals without an overall plan or vision is seriously defective and cannot continue.

(*The writer is a Senior Advocate of the Madras High Court)

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