Whether Directions To Amend Tribunal Rules Are Akin To Directing Parliament To Legislate? Supreme Court Asks In Madras Bar Association Case

The bench of Justices L. Nageswara Rao, Hemant Gupta and Ravindra Bhat was hearing the Madras Bar Association's challenge to the Tribunals Reforms (Rationalization and Conditions of Service) Ordinance 2021. By its judgment of November 27, 2020, on the challenge to the government's 2020 Tribunal Rules, the Court had issued certain directions to the Union of India to suitably amend the Rules. This was followed by the impugned Ordinance of 2021 introducing a minimum age limit of 50 years for appointment as Tribunal Members; fixing their term as 4 years as against the 5 required by the SC; re-introducing the idea of a panel of two names being recommended by the Search Cum Selection Committee (SCSC); diluting the SC direction by saying that the Central Government should make appointments "preferably within 3 months"; etc. It was the contention of the Madras Bar Association that the Ordinance was in violation of the direction of the Court. Further, the issue was of the introduction of sub-section (11) of section 184 of the Finance Act, which provided that notwithstanding any judgments, the members of the tribunal shall have a tenure of 4 years or uptil the age of 67 (70 in the case of the chairman), whichever is earlier. Even for all appointments made between May 26, 2017 and the notified date of the Ordinance of April 4, regardless of the tenure under the parents Acts and Rules, the maximum term of 5 years has been stipulated. It has been contended that it was an attempt to legislatively overrule the successive judgments of the Supreme Court right from Sampath Kumar (1986) as to how tribunals should be constituted.

On Thursday, AG K. K. Venugopal had argued that it is open to the Parliament, being a co-equal organ of the State, to override any conditions provided by the Court- The AG had indicated the scope of courts in interfering with matters of policy- "Your Lordships may not issue directions to the Legislature directly or indirectly", he had contended.

When senior advocate Arvind Datar was making his rejoinder submissions for the petitioner-organisation, Justice Gupta asked him, "In the writ petition filed to challenge the 2020 Rules, what was the relief claimed?"

"To quash the notification (of the Rules)", replied Mr. Datar.

"So If the notification is quashed, then all other directions which are given by this court in the case of 2020 are in the realm of directions to legislate in a particular manner. The question is Whether such directions can be issued and whether, in the process, the Parliament is denuded of its power to make law", observed Justice Gupta.

"Did we give any direction to legislate? Rules are not the legislation...", remarked Justice Rao.

"By our judgment, we had given the direction to amend the Rules in accordance with our judgement. Rules are also a part of, a form of legislation", said Justice Gupta.

"Certain parts of Sampath Kumar also issue directions...", remarked Justice Bhat.

In Sampath Kumar, the vires of the 1985 Administrative Tribunals Act was challenged. It was contended that the exclusion of the jurisdiction of the High Court under Arts. 226 and 227 in service matters specified under the Act was unconstitutional and void, and that the composition of the Tribunal and the qualifications and the mode of appointment of Chairman, Vice-Chairman and Members was outside the scope of the power conferred on Parliament under Art. 323-A. Besides, the Constitution bench had observed that in so far as the Act prescribes the tenure of 5 years for the Chairperson and Members of the Tribunal, requiring them to retire at the end of it, is too short and that it is neither convenient to the appointees nor expedient to the scheme. "When amendments to the Act are undertaken, this aspect of the matter deserves to be considered", the Court had said.

"In Sampath Kumar, they only said that certain provisions (of the 1985 Act) are violative of the Constitution and they should be struck down. But, there was no direction to make law. The court only said if you make a law in accordance with the directions, it will be a good law. Here, we have struck down the condition of age, we have struck down the condition of panel. Only to this extent, the judgement would be binding on the Union and not to the other matters which were not the not the subject of striking down", said Justice Gupta.

"Sampath Kumar dealt with the Administrative Tribunals Act. The Act itself provided a term of 5 years subject to reappointment", it was noted.

In response, Mr. Datar advanced, "Chief Justice P. N. Bhagwati had said that it would take the person being appointed 2 years to only understand the service law and the functioning of the Tribunal. So they said that 5 years should be the minimum. It was a direction by Your Lordships that the tribunal members must have 5 years. Justice Bhagwati said this in the context of a 323A tribunal"

"It is very easy to demolish a building. Your Lordships could have easily said, 'The 2020 Rules go. Make fresh Rules'. But instead Your Lordships asked the union to do something here, do something there", continued Mr. Datar.

"There is a decision in R. Gandhi's case (2010). The Supreme Court upheld the Madras High Court judgement that the creation of the NCLT/NCLAT and vesting in them the powers and jurisdiction of the High Court as regards company law matters is constitutional. The Supreme Court only said that 'We declare that Parts 1B and 1C of the 1956 Companies Act as presently structured, are unconstitutional for the reasons stated in the preceding para. However, Parts IB and IC of the Act, may be made operational by making suitable amendments, as indicated above, in addition to what the Union Government has already agreed in pursuance of the impugned order of the High Court'", observed Justice Gupta.

"There is no direction to make amendments. The clauses are struck down and it is only said that if you want to make it operational, make amendments. This is in contradiction of the directions issued by us", noted Justice Gupta.

"So without saying 'We direct', we have directed?", remarked Justice Bhat.

"What this court has said has either been assimilated or, after change, has been accepted- there was the issue of the tenure of the Director Generals of Police, the other issue was of the selection of the CVC. Why? Because they inject fairness and bring into play Article 14 and transparency", added Justice Bhat.

Mr. Datar's rejoinder

Mr. Datar advanced that he is not saying that there is something wrong with a tenure of 4 years, but he insisted, that there should be a factual basis for the same also, like the Supreme Court has successively from Sampath Kumar to R. Gandhi to Roger Mathews to the 2020 judgment has offered for the tenure of 5 years.

"The Parliament does not give reasons. It will not give reasons as to why they are making it 4", said Justice Gupta.

"Why is the Statement of Objects and Reasons there then?", replied Mr. Datar.

"That is to introduce the law, they are not giving justification for their policy decision. The justification is for introducing the Act and not for each clause", noted Justice Gupta.

"Every time I challenge a statutory provision in the court of law, why does the department file a counter affidavit justifying its provisions?", asked Mr. Datar.

"There would be deliberations at the level of the bureaucracy, there would be file notings which would have led to this Ordinance also. They would have a justification of some sense, though the Parliament cannot answer. The difference between judicial function and Parliamentary function is that the Parliament is not expected to give reason. But there will always be some discussion on the files unless it is some kind of emergency legislation", said Justice Bhat.

"If 5 is good for the CAT and for the NCLT, why should other tribunals have 4? Tribunals form part of a class- this is an Article 14 argument . What is the rational differentia?", argued Mr. Datar.

"This argument can be used against you in a different context- as regards the minimum age requirement of 50 years for appointment to the tribunals (which has been introduced across the board and which has been challenged by the petitioner) and in the Housing Rent Allowance (which has been made equivalent to that of a secretary-level official of the government of India, as against the direction of the 2020 judgment for it to be Rs.1, 50, 000 for the chairperson and Rs. 1, 25, 000 for the other members). In R. Gandhi, the argument of the Union was that we will make 50 the minimum age for members of the NCLT/ NCLAT and that was incorporated in the Companies Act, 2013, even though in R. Gandhi, the 1956 Companies Act was challenged", observed Justice Gupta.

"For NCLT, 50 was there because it replaced the High Court directly, the High Court company courts jurisdiction from 1913 after hundred years!", explained Mr. Datar.

"The district judge is promoted to the High Court at 58-59, while the candidates elevated from bench come at 45-48. You can't say that because some people are coming in at 58-59, to recruit at 45 is wrong. The explanation by the attorney was that just 10 years' experience (as was directed in the 2020 judgment for advocates to be appointed to the tribunals) cannot be there as chartered accountants and other technical members would also want the same advantage. But three constitution benches have said don't make tribunals a haven for retired people and bring younger people", continued Mr. Datar.

"If you have younger members in the ITAT and the other specialised tribunals, by the age of 50-52, there is a chance for them to go to the High Court. Then the quality of judgements by experts is bound to be of a much superior kind", remarked Justice Bhat.

Continuing, Mr. Datar submitted, "90% of the statutes are upheld. It is very, very rarely that the law is struck down. When the Finance Act 2017 was passed, it is unfortunate that the Finance Bill did not contain Part 14 (as regards the Tribunal appointments, age, qualification, retirement, conditions of service) at all. The day the Finance Bill was to be introduced, it was added at the last minute and then it was passed. Tribunal appointments cannot be added to a money bill. That was the challenge. There was no application of wisdom of Parliament as the Act did not lay down any qualifications. The Act only said that the qualifications and conditions of service will be such as may be prescribed. It is not clear if these notifications were placed on the table of the Parliament and discussed in the Parliament"

"As regards notification, the law is very simple. As long as they are placed on the table of the Parliament, the presumption is they were discussed", said Justice Gupta.

"I am not saying that there was no discussion on it. all. Up to section 156, everything was discussed. But the tribunal portion was not", pressed Mr. Datar.

"This argument you could have raised in Roger Mathews (where the constitutionality of Part 14 of the Finance AcT, 2017 AND THE 2017 TRIBUNAL RULES WAS CHALLENGED). Now you can't raise it", said Justice Gupta.

"The AG said that three or five or seven of the judges cannot override 500 members of the Parliament it. The AG said Your Lordships are to keep your age of hands off. You can't say that this is the policy so you can't exercise judicial review. It is not the policy which is sacrosanct. All over the civilised world, it is the reasons behind the policy to which the deference is. Not even a single MP deliberated it for even half a minute", continued Mr. Datar.

"It was tabled and so you can't say that MPs have not applied their mind. You will be breaching the privilege of Parliament if you say this (Justice Gupta said in a lighter vein). If it was tabled, it is assumed that it would have been discussed", said Justice Gupta.