Challenge to Tribunal Reforms Ordinance 2021 and Finance Act 2017 provisions: Live Updates from Supreme Court

A Supreme Court Bench led by Justice L Nageswara Rao is hearing a plea challenging Sections 12 and 13 of the Tribunal Reforms (Rationalisation and Conditions of Service) Ordinance, 2021 and Sections 184 and 186(2) of the Finance Act, 2017 as amended..The plea by Madras Bar Association states the challenged provisions are in "contravention of the principles of separation of powers, independence of the judiciary (both being part of the basic structure of our Constitution)..Live updates feature here..Senior Advocate Arvind Datar to begin arguments for petitioners today. The bench had earlier indicated that the hearing needs to wrap up today.Senior Advocate Arvind Datar: Union has stated that the ordinance is within the legislative domain. Out of all tribunals they have committed NCLT and no justification why tribunal of 68 members has been kept out.Datar: We thought the dust would have settled post November, 2020, judgment but that is not the case..Datar: We are dealing with the first proviso to 184 which is about the age limit. This is a direct attempt to override your lordships statement that for a judicial member 10 years experience is sufficient..Justice Hemant Gupta: 10 years experience is not done away with so age can always be fixed Datar: There is no minimum age for NCLT. Fixation was 45 years Justice Gupta: there is, for NCLT it is 50 years.Justice Gupta: I am reading Section 4(1)(3) Datar: yes 50 years it is, but for Income tax appellate tribunal it is 10 years experience and even CSAT. Stand of AG Venugopal is if 10 years is there then an advocate of 33 years age can become a member.Justice Gupta: This was not challenged when heard before the Justice Sikri led bench.Justice Ravindra Bhat: since there are so many compilations, which one are you referring to? Datar: Its volume II. To answer Justice Gupta's questions, in the second NCLT case , we had challenged the composition of selection committee and contempt powers.Justice Gupta: If an argument was to be raised on a point at a particular time then it is called as a good law.Datar: I don't think there is an estoppel here. Since the point was not raised the bench did not lay down a order on this. If 50 year limit is valid then this case cant stand.Datar: Now instead of 25 year practice, a 50 year limit has been imposed. But then this overrides your earlier decision. In 2017 rules it was a 10 year practice. .Justice Gupta: In 2020 advocates were excluded in all laws since 25 years was not a part of rules.Justice Gupta: In 2020 lawyers were not eligible but with our orders we made it eligible Justice Bhat: in 7 tribunals they were allowed like CSAT etc Justice Gupta: okay Justice Bhat: in 17 tribunals there were no limit or exclusion.Datar: In 2017 for ITAT and CSAT advocates with 10 years of experience was eligible. SC held that this 25 years will be an impediment to get younger lawyers and reappointments was subject to selection and not assured. Will any CA leave his 30 years practice?.Datar: Leaving your practice and becoming a judge of a high court is a sacrifice and a conscious decision since one cannot practice again. The second provision of 184 relates to housing..Datar: When a chairperson or member takes a house then they will be compensated. Most of the tribunals apart from armed forces etc are in class X cities..Datar: So if HC judge heads a tribunal in Mumbai or Delhi then HRA will be 60,000 per month. People are choosing a judge from Delhi to head judge in Delhi to avoid this. Hence you made it 1 Lakh plus..Datar: Centre filed an affidavit seeking modification in the judgment laying down parameters of the HRA. They asked it to be made twice the HRA of the central govt employee. Every cabinet secretary gets a house. So one hand you put them at par and not provide housing.Datar: As per the AG report, the housing will only be provided in Delhi. Justice Bhat: is 60,000 taxable? Datar: yes. are we creating tribunals or trying to defeat it.Datar: Earlier the rule was you give three nominees and one is chosen and now two nominees are there then one is chosen. Union says if IB report is negative then other one is selected. This is not a L1, L2 Tender Justice Rao: we said one can be waitlisted.Datar: What if only one judge agrees? Justice Rao: You should have put all of this into one volume.Datar: Question is this section needs to be struck down since its a direct attempt to overrule your judgement, when a search and selection committee is constituted by CJI then there can be no picking and choosing from names by the committee..Datar: Appointment had to happen in 3 months but now they say preferably in 3 months. Late Narsimha Rao had said "not taking a decision is also a decision.".Datar: Its not as if executive is not there. there are two secretaries and 2 judges. Justice Gupta: either we make it a condition precedent that antecdents are checked before names are sent to the CJI headed committee.Datar: if a SC judge has to head a committee, will you nominate two supreme court judges? if a high court judge is selected then IB report need not be perused as in look prahari case. So why should IB report be asked for in the tribunals.Justice Gupta: Appointments are not only for High court judges. There are other members of the bar also who are appointed. Solution could be having an IB report before hand sending it to the search and selection committee.Justice Bhat: What Justice Gupta is saying has merit so that there is a preliminary screening before sending the names.Justice Rao: even before we shortlist names for the committee the IB asked to conduct checks. When we shortlisted members of TDSAT, two weeks was given to IB to do check. This is from a practical experience of heading a committee.Justice Rao: If we pass an order then there will be another ordinance Senior Adv Datar: Madras Bar Association is always there (all laugh) .Datar: This section (184 (7) ) is giving executive last say in the quasi-judicial body and against the separation of powers..Datar: now I move to Section 184 (11). It comes into effect from 26.5.2017..Datar: This is with restrospective effect Justice Rao: you are saying its in consequence from 2017? Datar: yes, the curious result is it is not clear which judgment it overrules of 2017. it has a non obstante clause..Justice Rao: You say when 184(11) is in existence to 2017 then all orders passed in kudrat sandhu case was as if 184(11) is in existence? Datar: Yes. if (11) was in force from May 2017 then it says chairman cant be more than 70 and hold office for max 4 years in 2017 itself.Justice Rao: this proviso speaks of term being not more than 5 years Justice Bhat: this is what the original provision also says Justice Bhat : 184(1) stands substituted only from 2021 and thus they also get subsumed by directs in Roger Mathew etc.Datar: 184 which came in 2017, notification said three years. 184 (1) has been upheld by Roger Mathew. 184(11) then brings a cap of four years. There is no notified date in 2017 at all. notified date came in 2020 Justice Gupta: that's what retrospective effect is.Justice Rao: notified date is here in accordance 2020 law Justice Gupta: no, that is the 2021 ordinance date Datar: you have a law in 2017 to overrule a judgment that is coming in 2020. which judgment are you overruling in 2017?.Datar: Now the point is our constitution does not recognise that a law is brought in to overrule a future judgment Justice Gupta: retrospective legislation in tax matters is like this and it is done so Datar: it is done in such a case. retrospective act is with validating act.Datar: In 2017 no member could be appointed for more than 4 years. Justice Gupta: Because of this Kudrat Sandhu case and Madras Bar Association judgment has been knocked out due to the retrospective effect. This is what Union will say.Justice Bhat: 1983 judgment of this court says can a factual scenario be removed which is part of a judgment. this subsection attaches it at the original provision and sought to preserve what was done. Thus it deems to be in effect from 2017.Datar: even if its valid it has to be struck down since it removes the basis of your judgment and overrules it. No body questions the legislative power to remove the basis of a judgment. Basis should be removed in such a way that the judgement is not overruled.Justice Rao: One is permissible legislative overruling and one is impermissible legislative overruling. make submissions on both Datar: permissible overruling is a misnomer since only basis is removed and there can be no legislative overruling ever .Datar: Could this have overruled the constitution bench judgment in Roger Mathews Justice Gupta: there is a fallacy in your argument. we cannot turn the clock backDatar: you have to sit on a time machine and go back to 2017 and check the law then.Datar: please check Kudrat Sandhu order Justice Gupta: We had rejected AG's statement on Maratha reservation case dealing with Article 342. AG: I wanted it to be upheld, that was Centre's submission Justice Gupta: I stand corrected.Datar: All these orders passed in 2018 is when law in statute books say that term should be 4 years. Restrospective amendment cannot be effect here. if retrospective effect is upheld then all appointments fro ITAT members etc will be for 5 years and not 4 years.Datar: Now coming to permissible retrospective effect. Retrospective is permissible and has been done in tax matters. Your judgment said 5 years, Roger Mathew says 5 years, can it be made 4 years?.Datar: This is not permissible. right from sampath kumar to roger mathew 5 years was held as minimum. This is impermissible..Datar: A court's decision must always bind unless the principles on which it is delivered is not justified and the decision is not capable of being implemented. best example is the Vodafone case. Section 9 of the IT Act taxed the non residents..Datar: Having a judges in majority or having a minimum tenure of judges it is basic structure of the tribunal nd their independence and this cannot be tampered with..Justice Bhat: on the company law there was another constitution bench judgment , there was R Gandhi and then Madras Bar judgment of 2015. Justice Rao: please let us know you are citing our decisions from 2010 onwards when you are dealing with finance act there are some rules.Justice Rao: these decisions which are constitutional in nature then can it be overruled? We have to go back to 2010. Please make submissions on that. Justice Gupta: our decisions are where we have struck down rules and where rules were not there and we passed directions.Justice Gupta: Tell us if Article 142 directions can be tinkered with or cannot be tinkered with. Search and selection ordinance is same but the other two are altered. That can be said judicial overruling But other 142 directions can be it be said judicial overruling.Justice Rao: Refer to Dickerson Vs United States. .Justice Rao: Issue that is before us on policy and how the government can pass a law overriding our directions..Datar: What Dickerson says there are miranda rights... it was held just as miranda was constitutional law, your judgments in roger mathew etc too lay down constitutional principle.J. Bhat: Classification is not challenged per see. if classification is corrected subsequent law can be valid. But on the other hand there is a declaratory provision. Unless you bring the constitutional link there in and separation of independence there cannot be a curing effect.Justice Rao: union says that there is a matter of policy Datar: when parliaments creates a tribunal there are certain limitations on the parliament too..Datar: Administration of justice is through tribunals. once tribunal is part of justice delivery system then your directions under 142 as in R Gandhi or Sampath Kumar but are DNA and building blocks of a tribunal..Datar: If it is made to four, then why not bring it to one or make it contractual. Justice Bhagwati had said how tribunals administer justice. very infrastructure of the tribunal is equally important..Justice Bhat: Why did this court have to bother themselves so that member of subordinate judiciary can access libraries etc. now we are dealin with person who has the power to hang someone. These tribunals also deal with huge matters..Datar: You say they are equivalent to secretaries and don't provide them facilities as secretaries..Datar: Tribunals are not functioning properly as members don't have proper housing. .Datar: Your directions are mandatory and cannot be avoided. Whole purpose is can a judge from another state come to Delhi and have same facilities to discharge his function. Either make housing mandatory like a secretary but we cant quibble over X city, Y City etc.Datar: NCLT, NCLAT, ITAT, etc are arteries of the country and this is very sad. .Datar reads the Virendra Singh Hooda judgment: it was held that judgment of the court cannot be changed. What is the logic of 4 years. if NCLT can have 5 years then why suddenly it is 4 just because you set a term of 5 years? .Datar: This is a issue of constitutional morality and which is now referred to seven judges. My final submission is question of Kudrat Sandhu orders is like a settlement with the board so that vacancies don't continue. Thus Madan Mohan Pathak judgment applies..Datar: Pathak says once judgment has been passed a legislative decision cannot be overruled..Datar: You had a passed the order on November that the matter is over in 3 months, and appointments are made. given the past record of consistent delay in following courts order there should be a mandamus .Datar: Constitution bench had taken note of the improper functioning of the tribunal. Your lordships may consider setting up a national tribunals commission.Datar: Sum of my submission, 4 years limit has to be struck down, housing at par with the secretary is improper and for 184(11) there is direct impermissible legislative overruling..Justice Rao: Please dont repeat whatr Mr Datar has argued Senior Advocate PS Patwalia: I am appearing for the CSAT members: Our ads are there in page 47 and 47. they are dated June. age of retirement is 62 years.Justice Gupta: Your argument is dependent on 184(11)? Patwalia: My point is there is an mandamus in my favour and that cannot be undone. a mandate given cannot be undone by the legislature.Patwalia: There is a clear mandate in my case that I can continue till 62. I am relying on Virender Hooda judgment. This cannot be undone. Even otherwise under 142 the mandate has been given. we two district judges gave our appointments to take this up and thus we should be saved.Datar: The appointments are under the CSTAT rules of 1987 not 2017.Senior Adv Mukul Rohatgi: Advertisment of CSTAT was June 2016. clause said date of retirement when the age will be 62. one of these four was a practicing AoR and he left the practice to join it and for last 5 years he does not know where he will go and he will not..Rohatgi: I am appearing for a ITAT Member Madhumita Roy..Rohatgi: She was shortlisted and could not be appointed as some records were misplaced by the department all others who applied with her were appointed prior to 2017. she approached CAT lost and approached HC and succeeded there. HC said she should be considered..Rohatgi: She was offered an appointment on March 19, 2018 by which 2017 rules came into place and her appointment will relay back to 2013. Thus she lost 5 years. therefore I am only saying in your order which allows her to continue till 2023 should allow her to continue till 62.Justice Rao: we are not taking up individual IAs. please make submissions on law Rohatgi: there is no rationale for appointing ITAT members for 5 years when these rules have stood the test of time since 60 years..Rohatgi: This way the entire tribunal system is being emasculated Justice Bhat: that argument is not available as section 184 when originally enacted has been upheld and that part we cannot go back upon we like it or not .Rohatgi: If 5 years is upheld what is the logic of four years. I am trying to save the appointments which has been made. making 5 to 4 is completely arbitrary. even 5 years is arbitrary and can be challenged at an appropriate time..Senior Adv Gourab Banerji appears for an additional district judgeJustice Bhat: if you are a district judge then you are part of cadre. Did you have to submit a technical resignation. if you have taken deputation Banerji: I had 11 years of service left as ADJ.Justice Gupta: will you like to go back to the parent cadre Banerji: If its 5 years then I can.. .Judges point out examples how judges have returned back to parent cadres and has been appointed as high court judges again after heading a tribunal.Senior Adv Banerji: When it is admitted that there are individual cases which have been decided then why not this. In this application for clarification there is no legitimate expectation since the term was explicitly mentioned.Senior Adv Siddharth Luthra represents a member of CSTAT from Haryana: She could have continued till 62 but now cannot. Ministry writes and tells me I am governed by old rules..Senior Adv CS Vaidyanathan appears for a former CSTAT member: I was appointed at 60 and if you are to uphold section 184(11) then there is no reasoning for me to retire in 2 years and should be allowed to continue for 5 years Justice Rao: you supported the Attorney earlier.Vaidyanthan: Regarding law I have a serious doubt regarding the law laid down in US court will be applicable here. I don't know if a law can be laid down here which cannot be overruled. This aspect needs to be considered by a constitution bench.Justice Rao: If you are supporting the attorney general then make submissions after AG completes..Senior Adv Krishnan Venugopal: my primary issue is selection process was ordered to be completed in 3 months. On point of law, in sofar as 50 year rule is concerned it is prospective..Venugopal: I have five or six reasons why the first provision to section 184 is invalid. As per the recent shashidhar judgment by Justice Khanwilkar, principle is well settled..Venugopal: If its clarificatory then it becomes retrospective otherwise it has to be examined if statute is substitution. This is not a clarificatory provision as it is a brand new requirement and interferes with selection of ITAT members..Venugopal: In Section 184(11) it need not be a case that you follow a policy of non validation and curing. If you treat it as retrospective the effect will be every appointment made of members below 50 would be invalid..Venugopal: On mandamus Justice Ruma Pal had followed Justice Bhagwati's ruling. This is a pure case of nullifying the court's judgment without curing the defect..Attorney General For India, KK Venugopal begins submissions: Throughout discussion in the court regarding appointment of members etc are issues of policy and must be left to the wisdom of legislature, Judicial review of policy decisions is beyond jurisdiction of superior court.AG: A decision by the executive or legislature on what should be the chairperson of a tribunal are exclusively within the competence of the legislature and the executive. doctrine of separation of powers is not under judicial review unless it violates fundamental rights.AG: Legislation is pure within the parliamentary jurisdiction. A question has been raised by your lordship on Dickerson that this is the Miranda rule. A constitutional rule by mandamus would be a constitutional rule. Its like a brooding omnipresence.AG: If that is accepted then whatever points I have raised will not hold good..Justice Rao: Attorney you are aware that when there is any judgment whether by this SC or USA then there will be statements that there should not have this or that order. We are also criticised at some times for not protecting fundamental rights or laying down directions.AG: Constitutional morality is a principle that is very difficult to grapple with. Now it is as a principle of law which is as strong as the constitution itself. This also has been elevated on the principle on which laws can be set aside.Justice Bhat: Yes every co-equal branch of government has the right to interpret the constitution. But what is being asked is if what can be said to be is final.AG: Your lordship has the power to declare clauses void where it violates fundamental rights but frequently that the independence of judiciary is raked up. Independency of judiciary is not written in constitution..AG: This is something which has been deduced from the fact that judges can be removed only by impeachment, etc..AG: No constitution would permit to destroy the very creator of the powers. Independence of judiciary is a part of the basic structure. Your lordships cannot rake up this up now to strike down a statute and can be struck down only when it violates fundamental rights.AG: Or a statute can be struck down if it is beyond legislative competence Justice Rao: In KT Plantation case it was held that basic structure violation can be used to strike down a law.Justice Bhat: would it be right to say now that independence of judiciary is above the constitution and thus cannot be pinned down at the moment. Independence would be there from Article 14 too.Justice Rao: Justice Kapadia had held that rule of law, independence of judiciary and basic structure is connected. It needs to have a link between basic structure and the fundamental right..AG: If independence of judiciary goes to Article 14 then we have to see what exactly is being violated. Thomas Jefferson wrote that nothing in the constitution gives more power to judges to decide for executive than what executive has with itself to decide for executive.Justice Rao: you asked which facet of Article 14 would be basic structure. please take the 2010 judgment of the Madras Bar Association by Justice Raveendran. The very point has been dealt with:.2010 judgment of Union Of India vs R Gandhi, President Madras Bar Association is being referred to show the link between basic structure and Article 14 of the Constitution.AG: The point which has to be decided is the age limit, or the house can be given house equivalent to a secretary to a cabinet secretary. So we are seeing if these are linked to Article 14 J. Bhat: what we have to see is the pattern of legislation. One cannot look in isolation.Justice Bhat: what we have to keep in mind is creeping encroachment. we have to look at the justification as to why 5 years now and why was it 62 years earlier..Justice Bhat: what is the rationale for this. 2017 rules has nothing about age. we should know the rationale. was their functioning below par and that the officers were trouble makers at 45. or was it like I am parliament and I am doing this..AG: Five years was reduced to four with the right to reappointment maintained Justice Bhat: so we can ask you why to bring it down from 62 at all. this where the creeping thing comes into..AG: With reappointment, they can continue till 67 or 70 with benefits. In Sampath Kumar you said 5 then in the next judgment you said 3 years then you said 5 to 7 years and then you said 5 years. Which judgment should we follow?.AG: In these 4 years, they will get re-appointment. High court judges are only appointed at 45. but here for 33 years to 67 years how can a member continue without any check. This is all purely within the domain of the policy and executive.AG: If its an issue of policy then its a collective decision. These decisions also go to the standing committees. Its not something of a two hour or one hour argument and judgment being given by three judges. Its a question of an institution of 500 plus members.AG: Any proposal goes from under secretary to joint secretary and there are directors in between and then it goes to the ministry. Its not a one person decision..AG: Your lordships will have to respect this system and see it from the lens of the executive and parliament. .AG: We have filed a convenience compilation consisting of seven judgments. .AG reads the judgments list showing how Executive arena should not be breached.AG: One judgment is by Manohar Lal Sharma (laughs) AG: Mr Sharma is the only person who challenges such policy orders. .AG now reads the judgment on the parliament's ordinance making power and the power of the executive. AG: The executive is as much an interpreter of the constitution as the judiciary.AG: We have acted purely in accordance with law. Judicial review of legislation has been carefully dealt with..AG: There is collective thinking of the parliament and thus there is certainty involved Justice Bhat: question on right of re-appointment. In ITAT there is a system of ACR. If these tribunals has to be independent then ACR is to be with the chairperson and not the secretary.Justice Bhat: In the absence of a laid down criteria for reappointment then you can give preference if you find someone else. AG: Now we are giving them some fixed opening. We have done something in their interest..AG: Can i please continue tomorrow? Justice Rao to Justice Bhat: can we sit tomorrow for an hour? Justice Bhat: Okay.AG: In CBSE matter I will take 15 minutes Justice Rao: Then we will hear at 12 pm. Next there are no members in TDSAT at least the recommendations made a year ago should be processed. Please see that tribunal continues for sometime till appointments are made..AG: I think it will be extended. Bench rises.

Challenge to Tribunal Reforms Ordinance 2021 and Finance Act 2017 provisions: Live Updates from Supreme Court

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