Adding another episode to its attempts to overhaul the Tribunal system in the country, the Union Government recently brought the Tribunals Reforms (Rationalization and Conditions of Service) Ordinance 2021.The Ordinance, promulgated by the President on April 5, follows the Rules made by the Centre in 2017 and 2020, which came under severe criticism from the Supreme Court. The 2017...
The Ordinance, promulgated by the President on April 5, follows the Rules made by the Centre in 2017 and 2020, which came under severe criticism from the Supreme Court. The 2017 Tribunal Rules were quashed by the Supreme Court in the 2019 case Rojer Mathew vs South Indian Bank Ltd and others on the ground that they affected judicial independence. The Centre then framed another set of Rules in February 2020, which was nothing but an old wine in a new bottle, as they suffered from the same deficiencies as in the 2017 Rules.
In November last year, the Supreme Court, finding several faults with the 2020 Tribunal Rules, issued a slew of directions to modify them in the case Madras Bar Association vs Union of India
Following that, the Centre introduced the Tribunals Reforms (Rationalization and Conditions of Service) Bill 2021 in the Parliament during the budget session. The bill, among other things, sought to make fundamental changes to Section 184 of the Finance Act 2017, which is the source of power for the Centre to make Rules relating to Tribunals and its members.
Since the bill could not get passed in the Parliament, the Centre has now brought it as law in the form of an Ordinance.
The Ordinance has already become a discussion point on account of its abolition of nine appellate tribunals, such as Film Certification Appellate Tribunal, IPAB etc., and transferring the appellate powers to High Courts. However, the primary focus of the present article is on certain issues relating to the amendments made to Section 184 Finance Act through Section 12 of the Ordinance.
Term of office of Chairperson and Members of Tribunals
The Ordinance amends Section 184 of the Finance Act 2017 to fix the term of offices of Chairperson and Members of the Tribunals.
It says :
- The Chairperson of a Tribunal shall hold office for a term of four years or till he attains the age of seventy years, whichever is earlier;
- The Member of a Tribunal shall hold office for a term of four years or till he attains the age of sixty-seven years, whichever is earlier.
The pre-amended Section 184 did not fix the tenure except saying that the Chairperson shall not hold office beyond 70 years and the members beyond 67 years. The tenure of the Tribunal members was earlier left to be decided by the Rules.
The tenure of four years fixed by the Ordinance is contrary to the directions issued by the Supreme Court in the Madras Bar Association case(2020). In this case, the Supreme Court had ordered that "the Chairpersons, Vice-Chairpersons and the members of the Tribunal shall hold office for a term of five years and shall be eligible for reappointment". This was subject to the age cap of 70 years for the Chairperson and 67 years for the Members.
This direction was issued by the Court holding that a short-tenure will discourage meritorious candidates. It was also observed that a short-tenure increases executive interference jeopardizing the independence of the Tribunals. In fact, similar observations were made in the Rojer Mathew case as well, with respect to the tenure of 3 years fixed by the 2017 Tribunal Rules. The 2020 Rules increased the term as 4 years, which was also held to be inadequate in the Madras Bar Association case.
"In the said judgment(Rojer Mathew) it was further observed that the Tribunals would function effectively and efficiently only when they are able to attract younger members who have a reasonable period of service. In spite of the above precedent, a tenure of three years was fixed for the members of Tribunal sin the 2017 Rules. While setting aside the 2017 Rules,this Court in Rojer Mathew(supra) held that a short period of service of three years is anti-merit as it would have the effect of discouraging meritorious candidates to accept the posts of judicial members in the Tribunals. In addition, this Court was also convinced that the short tenure of members increases interference by the executive jeopardizing the independence of judiciary", SC in Madras Bar Association case(2020)
Now, the same tenure of four years is incorporated into the parent statute, ignoring the clear and categorical direction of the Supreme Court for giving a term of five years for Tribunal Chairperson and Members.
The provision introduced by the Ordinance to fix the tenure as four years - Section 184(11) added in the Finance Act 2017 - reflects a brazen disregard to the judiciary as it seeks to override the Supreme Court judgment by stating that it will apply "Notwithstanding anything contained in any judgment, order, or decree of any court or any law for the time being in force".
Practice of Committee recommending panel of names reintroduced
Deprecating the practice of the search-cum-selection committee giving a panel of two names for all appointments, the Supreme Court had directed that the committee should only recommend one name for each post. However, the Ordinance has re-introduced the idea of a panel of two names being recommended by the Committee(Section 184(11) of Finance Act introduced by the Ordinance).
The Supreme Court had also given a peremptory direction that the Central Government should make appointments within 3 months of the recommendations being given by the Committee. The Ordinance dilutes it by saying that the Central Government should make appointments "preferably within 3 months"(Section 184(11) of Finance Act introduced by the Ordinance)
Court suggestions on selection committee incorporated
It is notable that the Ordinance has incorporated into the parent statute the suggestions made the Supreme Court regarding the composition of the search-cum-selection committee.
It also incorporates the Court direction that the recommendations made by the Search-cum-Selection Committee in matters of disciplinary actions shall be final and be implemented by the Central Government.
The Ordinance is silent about the other directions of the Court regarding the housing allowance to Tribunal Chairpersons and Members, appointment of advocates with ten years of practice as Tribunal members etc. It remains to be seen if such directions will be implemented by way of executive rules.
Also, an important direction issued by the Court for the constitution of a National Tribunals Commission - which shall act as an independent body to supervise the appointments and functioning of Tribunals, as well as to conduct disciplinary proceedings against members of Tribunals and to take care of administrative and infrastructural needs of the Tribunals - is yet to be implemented.
Abolition of appellate tribunals
The Ordinance has amended some other enactments to abolish the appellate tribunals under the Cinematograph Act, Copyright Act, Patents Act, Trademarks Act, Customs Act, Airport Authority Act, Control of National Highway Act, Geographical Indications Act, Protection of Plant Varieties and Farmers Protection Act.
The powers exercised by the appellate tribunals under these Acts will be now exercised by the High Courts. This move is expected to ensure more judicial independence. However, there is a point of concern. The High Courts are already reeling under mounting case arrears and rising vacancies. The Supreme Court has taken cognizance of this grave crisis which is looming over the High Courts. Appointment of specialized judges at High Court might also be needed to effectively the matters from tribunals. It is to be noted that the Ordinance gives High Courts appellate powers, which means that they have to go into questions of fact, unlike the present judicial review powers exercised by them under Article 226/227 of the Constitution over the Tribunals.
In this backdrop, a judicial impact assessment and widespread deliberations with stakeholders ought to have preceded the changes brought by the Ordinance.
This matter deserves serious study, and probably an examination by a Standing Committee of the Parliament. In the Rojer Mathew case, the Supreme Court had spoken about the need to carry out a 'judicial impact assessment' before the passing of a legislation which has the effect of increasing pending litigations. In Salem Advocate Bar Assn. (II) v. Union of India, 2005 (6) SCC 344, the Court observed that it is imperative for the Legislature to perform a Judicial Impact Assessment of the enactment passed to assess its ramifications on the judiciary.
"Further, there must be 'judicial impact assessment', as done in the United States, whenever any legislation is introduced either in Parliament or in the State Legislatures. The financial memorandum attached to each Bill must estimate not only the budgetary requirement of other staff but also the budgetary requirement for meeting the expenses of the additional cases that may arise out of the new Bill when it is passed by the legislature. The said budget must mention the number of civil and criminal cases likely to be generated by the new Act, how many courts are necessary, how many judges and staff are necessary and what is the infrastructure necessary. So far in the last fifty years such judicial impact assessment has never been made by any legislature or by Parliament in our country", SC in Salem Bar Association case
It is difficult to fathom the compelling circumstances which forced these drastic changes through the short-cut route of Ordinance, without waiting for any deliberations or assessments.
While we discuss these aspects, the elephant in the room must not be missed – the money bill issue relating to Section 184 of Finance Act.
The issue whether these changes relating to Tribunals could have been introduced through money bill(Finance Bill) – which enable the bill to circumvent the Rajya Sabha scrutiny – is now before a larger bench following the reference made by the Rojer Mathew decision.
A verdict on this substantial constitutional issue is awaited.
With Section 184 Finance Act- whose origin itself is suspect – undergoing another amendment through an Ordinance, the situation has become curious.
(Manu Sebastian is the Managing Editor of LiveLaw; he may be reached at manu@livelaw.in. He tweets at @manuvichar)