The Tribunalisation in India and the Establishment of Tribunals

The notion of tribunalisation first appeared in India with the formation of the Income Tax Appellate Tribunal prior to the country’s independence. Following independence, there was a perceived need for administrative conflicts to be resolved with flexibility and quickness. The primary goal of tribunalisation was to give individuals with specialised and timely justice.

Part XIV-A of the Constitution was added with the 42nd Amendment, which included Article 323A and Article 323B, which provided for the establishment of tribunals to deal with administrative concerns and other issues.

The 42nd Constitutional Amendment is the source of Tribunalisation in our country. Whether the aim behind Tribunalisation was to reduce the burden of Courts or a tacit takeover of judicial functions by the executive? Is the question which needs to be pondered as these bodies were not meant to work under the Judiciary but under the executive. Also, there exists a conflict of interest as Tribunals are expected to pass orders against the ministers on whom they are dependent for amenities, salaries, infrastructure etc. E.g. Debt Recovery Tribunal & Debt Recovery Appellate Tribunal controlled by the Ministry of Finance, the Armed Forces Tribunal functioning under the Ministry of Defence and the Telecom Disputes Settlement and Appellate Tribunal under Ministry of Communications and Information Technology.

Timeline of cases

The Court reached different conclusions about the jurisdictional powers of the Tribunal established under Articles 323A and 323B in the landmark case of L. Chandra Kumar v. Union of India. The Supreme Court invalidated clauses 2(d) and 3(d) of Article 323A and 3(d) of Article 323B because they precluded the jurisdiction of the High Courts and the Supreme Court under Articles 226/227 and 32, respectively.

The Supreme Court determined that the tribunals established under Articles 323A and 323B would continue to be the courts of the first instance in the areas f3or which they were established. Litigants are not permitted to approach the High Courts directly by overlooking the tribunals constituted.

S.P Sampath Kumar v. Union of India

Facts: The constitutional validity of the Administrative Tribunals Act, 1985, was primarily challenged on the grounds that it excludes High Court jurisdiction over service matters under Articles 226 and 227, thereby destroying the concept of judicial review, which was an essential feature of the Indian Constitution.

Judgment: Through a five-judge bench, Except for Section 6(1)(c), the Court maintained the Act’s legality. The Court concluded that, while the Act barred the High Courts from exercising judicial review in service issues, it did not completely eliminate the notion of judicial review. The Supreme Court’s jurisdiction under Articles 32 and 136 are not affected by this Act and remains unaffected. As a result, there is still an authority where concerns of unfairness may be heard through judicial review. Only if an alternative effective institutional mechanism or authority is given may judicial review, which is part of the core framework of the Indian Constitution, be removed from a specific area.

Union of India v. R. Gandhi, President, Madras Bar Association

Facts: The National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) are unconstitutional on the following grounds:

Parliament lacks the power to delegate to any tribunal the judicial responsibilities that have long been handled by the High Courts.

Transferring the whole corporation jurisdiction of the High Court to the Tribunal is a violation of the doctrines of the Rule of Law, Separation of Powers, and Judiciary Independence.

The numerous sections of Parts 1B and 1C of the Companies Act are faulty and unconstitutional, violating constitutional principles of Rule of Law, Separation of Powers, and Judiciary Independence.

Judgment: The Court confirmed the legality of the NCLT and NCLAT in exercising the powers and jurisdiction of the High Court subject to appropriate modifications to the Companies Act, 1956, as amended in 2002. The Court went on to say that it cannot be presumed that establishing tribunals and transferring judicial powers inherently violate the rule of law, separation of powers, and the independence of the Judiciary because the Constitution allows both courts and tribunals to exercise judicial functions.

In 2017, regulations were issued for the qualifications and other conditions of employment of members of 19 Tribunals under Section 184 of the Finance Act, 2017. In Rojer Mathew v. South India Bank Ltd, a 5-judge Bench ruled that these rules are unconstitutional because (1) there is no judicial dominance in the search-cum-selection committee, (2) the qualifications required for a judicial and technical member lack judicial character, (3) there is a disparity in age of superannuation, (4) members have short tenures, and the government has the power to reappoint members after they retire.

In Madras Bar Association v. Union of India, the 2020 Rules were upheld on identical grounds (2020 SCC Online SC 962). This time, a three-judge bench directed the formation of a five-member committee, with the CJI or his nominee having casting vote authority. It was ordered that advocates with ten years of experience be appointed as judicial members of tribunals and that the retirement age be retained at 67 years.

 On 27 November 2020, the Supreme Court dealt with a petition filed by the Madras Bar Association, which called into question the validity of the Tribunal, the Tribunal of Appeals and the Rule of Procedure, 2020 (‘2020 Rules’). In this decision, especially, the Supreme Court ordered the amending of the rules for 2020 too, inter alia, (Madras Bar Association v. Union of India 2021)-

1. The Chairpersons, Vice-Chairpersons, and Tribunal Members shall serve for a five-year term.

2. They will be eligible for reappointment; 

3. Other members will serve until they reach the age of 67.

4. Advocates with at least ten years of experience shall be eligible for appointment as judicial members in the Tribunals and shall be eligible for reappointment. The Search-cum-Selection Committee will consider the Advocate’s bar experience and specialisation in the relevant fields of law.

The Government of India announced The Tribunals Reforms (Rationalisation and Conditions of Service) Ordinance, 2021, in April 2021, in response to this verdict. The Finance Act of 2017’s Sections 184 and 186(2) were amended by Sections 12 and 13 of this Ordinance. The Madras Bar Association has filed a new petition with the Supreme Court, arguing that these clauses are in violation of Articles 14, 21, and 50 of the Indian Constitution and so should be thrown down. These clauses, it noted, are also in violation of the Supreme Court’s above-mentioned directives concerning the 2020 Rules.

Judgment: The Honourable Apex Court noted that members of the Tribunal must serve for a period of four years under Section 184(11) of the Finance Act, 2017. This clause is in violation of the separation of powers, independence of the Judiciary, the rule of law, and Article 14 of the Indian Constitution.

The Supreme Court also ruled that the first and second provisos to Section 184 of the Finance Act, 2017, read with the third proviso, are unconstitutional because they override the Supreme Court’s judgement in Madras Bar Association v. Union of India & Anr (2020) SCC Online SC 962, which set a minimum age of 50 years for appointment and payment of HRA.

NCLT- Amended Rules,2020

The National Company Law Tribunal is a quasi-judicial body formed to rule over the registered companies in India and regulating companies. It has been established after dissolving the Company Law Board. 

The NCLT Amendment Rules, 2020, has been created to amend the existing NCLT Rules, 2016. Section 469(1) & 469(2) read with Section 230 of the Companies Act, 2013, the Central Government has made new rules by amending the National Company Law Tribunal, 2016. The new Rule 80A was inserted i.e. 80A-Application u/s 230: An Application u/s 230(12) may be made in Form NCLT-1 and shall be accompanied with such documents as are mentioned in Annexure B. The Rule 22, 22A is inserted, i.e. 22A-Sec 230(12): Application in cases of takeover offer of companies which are not listed & Fees required is Rs 5000.

Thus the most important change is the insertion of Rule 80(A), according to which an application in Form NCLT-1 shall be filed before the Tribunal by an aggrieved party in the event of any grievances with respect to the takeover offer of companies other than listed companies in such manner as may be prescribed and the Tribunal may, on the application, pass such order accordingly.

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