Tribunals Reforms Ordinance : Supreme Court Strikes Down Provisions Fixing Term Of Members As 4 Years

The Madras Bar Association filed the writ petition in the Supreme Court challenging the Tribunals Reforms (Rationalization and Conditions of Service) Ordinance 2021, to the extent it amends Sections 184 and 186 of the Finance Act 2017.

Sections 184 and 186 of the Finance Act 2017 give Central Government rule-making power in relation to the mode of appointment, terms of service, allowances of members etc., of various Tribunals.

 The majority also held the following conditions laid down by the Tribunals Ordinance 2021 through its amendment to the Finance Act 2017 as unconstitutional :

• The provisions fixing minimum age limit for appointment as tribunal members as 50 years struck being contrary to the direction in earlier cases that advocates with minimum experience of 10 years should be made eligible.
  
• The provision prescribing that the Search cum Selection Committee will recommend two names for each post struck down being contrary to the direction in previous judgments that the committee should only recommend one name for each post.
• The provision prescribing that the Union Government should make appointments "preferably within three months" of recommendation by the Search-cum-Selection committee struck down as the earlier judgment in Madras Bar Association Case had issued a mandatory direction that the appointments should be made within 3 months of recommendation by the Search-cum-Selection Committee.
  
  

Justice Rao concluded his judgment by saying :

"...the first proviso and the second proviso,read with the third proviso, to Section 184 overriding the judgment of this Court in MBA-III in respect of fixing 50years as minimum age for appointment and payment of HRA,Section 184(7) relating to recommendation of two names for each post by the SCSC and further, requiring the decision to be taken by the Government preferably within three months are declared to be unconstitutional. Section 184(11)prescribing tenure of four years is contrary to the principles of separation of powers, independence of judiciary, rule oflaw and Article 14 of the Constitution of India. Though, we have upheld the proviso to Section 184(11), the appointments made to the CESTAT pursuant to the interim orders passed by this Court shall be governed by the relevant statute and the rules framed thereunder that existed prior to26.05.2017. We have already taken notice of the notification dated 30.06.21 by way of which Rule 15 of the 2020 Rules dealing with HRA has been amended in conformity with our directions in MBA-II".

Justice Bhat concluded his judgment as :

(i) The first proviso to Section 184(1) of the Finance Act, 2017, introduced by Section 12 of the Tribunals Reforms (Rationalisation and Conditions of Service)Ordinance, 2021 is hereby declared void and inoperative. Similarly, the second proviso to Section 184(1) of the Finance Act, 2017, introduced by Section 12 of the Tribunals Reforms (Rationalisation and Conditions of Service) Ordinance, 2021 is held to be void and inoperative.

(ii)Section 184(7) of the Finance Act, 2017, introduced by of the Finance Act,2017 introduced by Section 12 of the Tribunals Reforms (Rationalisation and Conditions of Service) Ordinance, 2021 is hereby declared void and inoperative.

(iii) Section 184(11)(i) and (ii) introduced by Section 12 of the Tribunals(Reforms Rationalisation and Conditions of Service) Ordinance, 2021 are hereby declared as void and unconstitutional.

(iv)Consequently, the declaration of this Court in para 53(iv) of MBA-III shall prevail and the term of Chairperson of a Tribunal shall be five years or till she or he attains the age of 70 years, whichever is earlier and the term of Member of aTribunal shall be five years or till she or he attains the age of 67 years, whichever is earlier.

(v)The retrospectivity given to the proviso to Section 184(11) – introduced by Section 12 of the Tribunals (Reforms Rationalisation and Conditions of Service)Ordinance, 2021 is hereby upheld; however, without in any manner affecting the appointments made to the post of Chairperson or members of various Tribunals,upto 04.04.2021. In other words, the retrospectivity of the provision shall not in any manner affect the tenures of the incumbents appointed as a consequence of this Court's various orders during the interregnum period.

3. The Supreme Court had directed to give 5-year tenure to Chairpersons and Members of Tribunals. 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. However, the Ordinance fixes their term as 4 years.

4. 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.

5. The Supreme Court had 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".

6. The Supreme Court had given a 5-year term after confirming all appointments made after 26.11.2017. The Ordinance reduces this term to 4 years, overriding the judgment. Thus the conditions of service of existing members have been varied to their detriment, and denying their legitimate expectation.

Terming these provisions as amounting to "legislative overruling", the Association says in the petition that "in the Indian constitutional scheme, judgements passed by the Courts cannot be directly overruled through legislation".

It is highlighted that the Supreme Court issued the directions to ensure greater autonomy and independence for the Tribunals and to make sure that they function more effectively. However, the Ordinance seeks to undermine the Supreme Court judgment in letter and spirit.

"...the Petitioner herein submits that Section 12 and 13 of the 2021 Ordinance and Section 184 and 186(2) of the Finance Act, 2017 (as amended by the 2021 Ordinance) ought to be struck down for being violative of Articles 14 and 21 for being arbitrary and unreasonable, against the principles of Separation of Powers and Independence of the Judiciary, and in contravention of previous decisions of this Hon'ble Court", the plea reads.

Seeks establishment of National Tribunal Commission

In the Madras Bar Association case(2020), the Supreme Court had directed the Central Government to constitute a National Tribunals Commission, which was supposed to 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.

The petitioner bemoans that the Centre has not taken any steps in that direction despite the passage of 4 months after the judgment.

Therefore, the Association seeks a further direction to constitute the National Tribunals Commission in a time-bound manner.

The Ordinance had also abolished nine appellate tribunals such as the Film Certification Appellate Tribunal, IPAB etc, and had transferred their appellate functions to the High Courts. Those provisions are not challenged in the plea of Madras Bar Association, which confines its challenge only to the changes made to the Finance Act 2017.

The petition has been drafted by Advocates Rahul Unnikrishnan, TVS Raghavendra Sreyas and Naveen Hegde and settled by Senior Advocate Arvind P Datar.

Also Read - Tribunals Reforms Ordinance : Certain Points Of Concern