Tribunalisation and the Threat to Judicial Independence: the Tribunals Reforms Act 2021

The condition: equal efficacy

Facts. S.P. Sampath Kumar v. Union of India, AIR 1987 SC 386, arose from a challenge to the Administrative Tribunals Act 1985. Article 323A permitted Parliament to provide for adjudication by administrative tribunals of service disputes, and clause (2)(d) envisaged excluding the jurisdiction of all courts except the Supreme Court under Article 136. Section 6(1)(c) of the Act allowed a person who had for at least two years held the post of Secretary to the Government of India to be appointed Chairman.

Held. Judicial review is a basic and essential feature of the Constitution and no law passed by Parliament in exercise of its constituent power can abrogate or take it away. It is nevertheless within Parliament's competence to substitute for the High Court another institutional mechanism for judicial review, without violating the basic structure, provided it is no less efficacious than the High Court. Since it is the High Court that is being supplanted, the office of Chairman must for practical purposes be equated with that of the Chief Justice of a High Court, and judicial discipline generated by experience and training is a necessary qualification. A person who had merely held the post of Secretary to the Government of India, with no legal or judicial experience, would not inspire confidence in the public mind and would render the tribunal a much less effective mechanism than the High Court. Section 6(1)(c) was struck down.

Why it matters. It supplied the constitutional standard: not that tribunals are forbidden, but that a tribunal which replaces a court must be as good as the court. Every later case applies that standard to qualifications, tenure and composition.

The limit: the High Courts cannot be excluded

Facts. L. Chandra Kumar v. Union of India, AIR 1997 SC 1125, was heard by seven judges, on whether clause (2)(d) of Article 323A, clause (3)(d) of Article 323B and section 28 of the Administrative Tribunals Act 1985 with the corresponding clauses elsewhere could validly exclude the jurisdiction of the High Courts, and on the position of tribunals in the hierarchy.

Held. Those clauses are unconstitutional so far as they exclude the jurisdiction of the High Courts under Articles 226 and 227 and of the Supreme Court under Article 32, that jurisdiction being part of the inviolable basic structure. Tribunals may perform only a supplemental role. They are competent to test the constitutional validity of statutory provisions and rules, but all their decisions are subject to scrutiny before a Division Bench of the High Court within whose jurisdiction they fall, and they act as courts of first instance, so litigants may not approach the High Courts directly. Where a question involving the interpretation of a statutory provision in relation to the Constitution arises before a single Member Bench, the proviso to section 5(6) requires reference to a Bench of at least two Members, one of whom must be a Judicial Member.

Why it matters here. It answers the independence objection in part: however a tribunal is composed, the High Court remains above it, and that cannot be legislated away.

The confrontation of 2021

Facts. Madras Bar Association v. Union of India, decided on 14 July 2021, concerned the Tribunals Reforms (Rationalisation and Conditions of Service) Ordinance 2021, promulgated on 4 April 2021, which amended section 184 of the Finance Act 2017. The amendments introduced a minimum age of fifty years for appointment as Chairperson or Member, a term of four years, and a requirement that the Search-cum-Selection Committee recommend a panel of two names. This was the seventh judgment in the line. The Court also recorded the pendency before various tribunals, one of which had 25,571 cases outstanding.

Held. At paragraph 46: the first and second provisos to section 184(1) of the Finance Act 2017, introduced by section 12 of the Ordinance, are void and inoperative; section 184(7) is void and inoperative; and section 184(11)(i) and (ii) are void and unconstitutional. Consequently the earlier declaration prevails, so that the term of a Chairperson is five years or until the age of seventy, and of a Member five years or until sixty-seven, whichever is earlier. The retrospectivity given to the proviso to section 184(11) was upheld, but without affecting appointments made up to 4 April 2021 or the tenures of incumbents appointed under the Court's orders in the meantime. The Court added that the volume of pendency shows the substantial judicial functions tribunals carry out and that appointments should be expedited, and that interdiction by the Court is not a conflict with parliamentary or executive wisdom but part of the discourse between the three branches.

Why it matters. It is the immediate background to the Act named in the syllabus, and what happened next is the point of this chapter.

The Tribunals Reforms Act 2021

The Act was passed and received assent in August 2021, four weeks after that judgment. Two features of it are examinable and both can be read off the Act itself.

It abolished nine appellate tribunals

The Act's structure is unusual and worth describing, because a student who expects a short Act is surprised.

• Sections 1 and 2: short title, commencement and definitions. Section 1(2) provides that the Act shall be deemed to have come into force on the 4th day of April 2021, which is the date of the Ordinance, so the Act operates retrospectively.
• Sections 3 to 7: the substantive provisions on qualifications, appointment, removal, term of office, eligibility for re-appointment and salary.
• Sections 8 to 30: twenty-three sections, each amending one other Act, arranged in a chapter per Act: the Industrial Disputes Act 1947, the Cinematograph Act 1952, the Copyright Act 1957, the Income-tax Act 1961, the Customs Act 1962, the Patents Act 1970, the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act 1976, the Administrative Tribunals Act 1985, the Railway Claims Tribunal Act 1987, the Securities and Exchange Board of India Act 1992, the Recovery of Debts and Bankruptcy Act 1993, the Airports Authority of India Act 1994, the Telecom Regulatory Authority of India Act 1997, the Trade Marks Act 1999, the Geographical Indications of Goods Act 1999, the Protection of Plant Varieties and Farmers' Rights Act 2001 and others.
• Sections 31 to 35: power to amend the Schedule, laying of rules before Parliament, transitional provisions, power to remove difficulties, and repeal and saving.

That structure is the mechanism of abolition. The Act does not contain a section saying "the following tribunals are abolished". It abolishes them by amending each parent Act to delete the appellate tribunal and transfer its jurisdiction to a High Court or another body. The Film Certification Appellate Tribunal, the Intellectual Property Appellate Board and the Airports Appellate Tribunal are among those that went this way, their work returning to the High Courts and the commercial courts. So a reader who wants to know which tribunals were abolished must read sections 8 to 30, not a list.

It re-enacted what had just been struck down

This is the heart of the chapter, and both provisions can be quoted.

Section 3(1) opens: "Notwithstanding anything contained in any judgment, order or decree of any court, or in any law for the time being in force, the Central Government may, by notification in the Official Gazette, make rules to provide for the qualifications, appointment, salaries and allowances, resignation, removal and other conditions of service of the Chairperson and Member of a Tribunal", and its proviso states that "a person who has not completed the age of fifty years shall not be eligible for appointment as a Chairperson or Member".

Section 5 likewise opens "Notwithstanding anything contained in any judgment, order or decree of any court, or in any law for the time being in force", and provides that the Chairperson shall hold office for four years or until the age of seventy, and a Member for four years or until sixty-seven, whichever is earlier.

Compare those with the operative order of 14 July 2021, which had declared the minimum age and the four year term void and had held that the term should be five years. The Act reinstates both, and announces in its own opening words that it does so notwithstanding any judgment of any court.

Section 3(3) does contain a safeguard worth crediting in a balanced answer: the Search-cum-Selection Committee is chaired by the Chief Justice of India or a Judge of the Supreme Court nominated by him, and in the case of a State Administrative Tribunal by the Chief Justice of the High Court of the State. Judicial participation in selection is therefore secured by the Act, even while tenure and age are not.

Is that constitutional?

The question every examiner wants engaged, and the honest answer has three parts.

1. A legislature may enact a fresh law after a judgment, provided it removes the basis of the decision rather than merely overruling it. Legislative overruling of a judgment by declaring it ineffective, without altering the legal foundation, offends the separation of powers, which is what Indira Nehru Gandhi v. Raj Narain, AIR 1975 SC 2299, decided in a different setting.
2. The reasoning of the 2021 judgment was constitutional, not merely statutory. It rested on the independence of tribunals as an aspect of the basic structure, applying the equal efficacy standard of S.P. Sampath Kumar v. Union of India, AIR 1987 SC 386. A provision re-enacting exactly what was held void on that ground faces the same objection.
3. The High Courts remain available in any event. Whatever happens to tenure and qualifications, L. Chandra Kumar v. Union of India, AIR 1997 SC 1125, guarantees that a tribunal's decision can be taken to a Division Bench of the High Court, which is the outer limit of any tribunalisation.

The reform proposals

Two recurring proposals should be named.

A National Tribunals Commission, an independent body to handle the appointment, service conditions, oversight and administrative support of all tribunals, so that neither appointment nor infrastructure depends on the parent ministry. It has been urged repeatedly by the Supreme Court in this line of cases and has not been established.

A single nodal ministry for all tribunals, in place of each tribunal being tied to the department whose orders it reviews, which is the least that could be done to answer objection 5 above.

A worked example

Suppose a candidate, aged 46, with fifteen years at the Bar and recognised expertise in indirect tax, applies for appointment as a Judicial Member of an appellate tribunal.

• Is she eligible? Not under the proviso to section 3(1) of the Tribunals Reforms Act 2021, which requires the completion of fifty years of age.
• Was that requirement good law when the Act was passed? No. The same requirement, in the Ordinance, had been declared void on 14 July 2021 in Madras Bar Association v. Union of India.
• Can she challenge it? She may petition the High Court under Article 226 or the Supreme Court under Article 32, contending that the provision offends the independence of tribunals as settled in the line from S.P. Sampath Kumar v. Union of India, AIR 1987 SC 386, and that a non obstante clause cannot cure a constitutional defect.
• If she is appointed and the Government declines to re-appoint her after four years? That is the tenure objection in operation: a four year term with the possibility of re-appointment in the gift of the standing litigant is exactly what the independence argument is about.

Distinctions worth having straight

What it does NOT mean

It does not mean tribunals are unconstitutional. Articles 323A and 323B authorise them, and S.P. Sampath Kumar accepted them subject to equal efficacy.

It does not mean the 2021 Act is void. No decision to that effect is recorded in the sources this book is written from. What can be said is what the Act contains and what the judgment four weeks earlier had held.

It does not mean the Act abolished tribunals generally. It abolished nine appellate tribunals by amending their parent Acts and transferring their jurisdiction, principally to the High Courts and commercial courts.

It does not mean the Act is without safeguards. Section 3(3) puts the Chief Justice of India or a nominee Supreme Court Judge at the head of the Search-cum-Selection Committee.

Quick revision

1. Tribunalisation: the transfer of judicial work from courts to statutory tribunals.
2. Five structural objections: the appointing authority is the usual litigant; short tenure with re-appointment; administrative control by the parent ministry; composition allowing administrative members to outnumber judicial members; and attachment to the department whose orders are appealed. Article 50 stands behind all of them.
3. S.P. Sampath Kumar v. Union of India, AIR 1987 SC 386: judicial review is basic; a substituted mechanism must be no less efficacious than the High Court; section 6(1)(c) struck down.
4. L. Chandra Kumar v. Union of India, AIR 1997 SC 1125: Articles 226, 227 and 32 are part of the basic structure and cannot be excluded; tribunals are supplemental courts of first instance reviewable by a Division Bench.
5. Madras Bar Association v. Union of India, decided 14 July 2021: the minimum age of fifty, the four year term and the two name panel requirement introduced by the 2021 Ordinance were declared void; the term is five years, or seventy for a Chairperson and sixty-seven for a Member.
6. Tribunals Reforms Act 2021: 35 sections. Deemed in force from 4 April 2021. Sections 3 to 7 substantive; sections 8 to 30 amend twenty-three Acts, which is how nine appellate tribunals were abolished; sections 31 to 35 miscellaneous.
7. Section 3(1) proviso re-enacts the minimum age of fifty, and section 5 the four year term, each opening with a non obstante clause referring to any judgment of any court. Section 3(3) places the Chief Justice of India or a nominee at the head of the selection committee.
8. Reform proposals: a National Tribunals Commission, and a single nodal ministry.

Test yourself

1. What is meant by tribunalisation, and why is it said to threaten judicial independence? Tribunalisation is the process by which adjudicatory work formerly done by the ordinary courts has been transferred to specialised statutory tribunals. It is said to threaten judicial independence for five reasons: the executive, which is the usual litigant before these tribunals, appoints their members; tenure is short and re-appointment is possible, so a member's future depends on the goodwill of that litigant; the tribunal's staff, budget and accommodation are provided by the ministry whose decisions it reviews; administrative members without judicial training may sit in numbers equal to or greater than judicial members; and each tribunal is attached to its parent department. Article 50 directs the separation of the judiciary from the executive, and these features run against it.

2. Trace the case law on the independence of tribunals. In S.P. Sampath Kumar v. Union of India, AIR 1987 SC 386, the Court held that judicial review is a basic and essential feature which Parliament cannot abrogate, but that it may substitute an alternative institutional mechanism provided it is no less efficacious than the High Court, and struck down section 6(1)(c) of the Administrative Tribunals Act 1985, which would have allowed a Secretary to the Government of India without legal or judicial experience to be Chairman. In L. Chandra Kumar v. Union of India, AIR 1997 SC 1125, seven judges held that the jurisdiction of the High Courts under Articles 226 and 227 and of the Supreme Court under Article 32 is part of the inviolable basic structure and cannot be excluded, that tribunals are supplemental courts of first instance, and that their decisions are reviewable by a Division Bench of the High Court. In Madras Bar Association v. Union of India, decided on 14 July 2021, the seventh in that line, the Court declared void the minimum age of fifty, the four year term and the panel of two names introduced by the Tribunals Reforms (Rationalisation and Conditions of Service) Ordinance 2021, and held the term to be five years or seventy for a Chairperson and sixty-seven for a Member.

3. Describe the scheme of the Tribunals Reforms Act 2021. It has 35 sections and is deemed by section 1(2) to have come into force on 4 April 2021. Sections 3 to 7 contain the substantive provisions on qualifications and appointment, removal, term of office, eligibility for re-appointment and salary. Sections 8 to 30 are twenty-three sections, each amending one other Act, from the Industrial Disputes Act 1947 to the Protection of Plant Varieties and Farmers' Rights Act 2001, and it is through those amendments that nine appellate tribunals, including the Film Certification Appellate Tribunal and the Intellectual Property Appellate Board, were abolished and their jurisdiction transferred principally to the High Courts and commercial courts. Sections 31 to 35 deal with the power to amend the Schedule, the laying of rules, transitional provisions, the removal of difficulties and repeal and saving.

4. "The Tribunals Reforms Act 2021 re-enacted what the Supreme Court had struck down." Examine. The statement is supported by the text of the Act. On 14 July 2021 the Supreme Court in Madras Bar Association v. Union of India declared void the provisions of the 2021 Ordinance that imposed a minimum age of fifty years and a four year term. The Act, passed the following month, provides in the proviso to section 3(1) that a person who has not completed the age of fifty shall not be eligible for appointment, and in section 5 that the Chairperson shall hold office for four years or until seventy and a Member for four years or until sixty-seven. Both sections open with the words "Notwithstanding anything contained in any judgment, order or decree of any court". A legislature may validly enact a fresh law after a judgment if it removes the basis of the decision, but a provision that simply restates what was held unconstitutional, on reasoning about the independence of tribunals, faces the same constitutional objection. Whatever the outcome, the guarantee in L. Chandra Kumar v. Union of India, AIR 1997 SC 1125, that a tribunal's decision may be taken to a Division Bench of the High Court, remains.

5. What reforms have been proposed to protect the independence of tribunals? The principal proposal, urged repeatedly by the Supreme Court in this line of cases, is a National Tribunals Commission: an independent body responsible for the appointment of members, their service conditions, oversight and the administrative support of all tribunals, so that neither appointment nor infrastructure depends on the ministry whose orders the tribunal reviews. A second and more modest proposal is that all tribunals be placed under a single nodal ministry rather than each being attached to its parent department. The Tribunals Reforms Act 2021 does contain one safeguard in this direction: section 3(3) places the Chief Justice of India, or a Judge of the Supreme Court nominated by him, at the head of the Search-cum-Selection Committee, and the Chief Justice of the High Court at the head of the committee for a State Administrative Tribunal.