Whats the role of tribunals

Written by Indu Bhan | Indu Bhan | Updated: Jan 22 2014, 10:52am hrs
The much-awaited National Company Law Tribunal (NCLT), an overarching body aimed at avoiding multiplicity of litigations and also reducing delay in appeals, has again run into legal hurdle with the Madras Bar Association challenging its composition. It feels that the real reason for creating more tribunals is to generate more post-retirement opportunities for the bureaucracy and even high court judges.

If one has to bat for more tribunals, then the ground rules should be uniformly applicable to all tribunals. There is a merit in the argument that all tribunals should be under the control of the law ministry. It will ensure uniform service conditions, something not found when it comes to the proposed NCLT. Even though the Supreme Court, in the case UoI vs R Gandhi, had prescribed definite guidelines with regard to the constitution of the NCLT and the National Company Law Appellate Tribunal (NCLAT), Parliament while enacting the Companies Act, 2013, has not complied with the same and proceeded to enact sections which are contrary to these requirements.

While the apex court held that persons below the rank of a secretary or additional secretary should not be appointed as members of the NCLT as it is a substitute for the high court, the impugned provisions enable a joint secretary to be a technical member. It was held that a selection committee must consist of four members with the Chief Justice of India (CJI) having a casting vote. This was to give the judiciary primacy in the matters of selection. But Section 412 of the Act contemplates selection by a committee consisting of two judges and three secretaries, thereby giving primacy to the executive.

Despite the Madras High Court (2004) and Supreme Court (2010) emphasising on the need to insulate the tribunals from executive and political interference, these directions have been simply ignored and the tribunalisation of the judicial system continues unabated and unchecked. The amendment to the Companies Act, 1956, to set up the NCLT was rendered unconstitutional by the high court for several reasons. The high court observed that the issue is not whether judicial functions can be transferred from courts to tribunals. Rather the issue is whether judicial functions can be transferred to tribunals governed by persons who are not suitable or qualified or competent to discharge such judicial powers or whose independence is suspect.

A lifetime of experience in administration may make a member of the civil services a good and able administrator, but not a necessarily good, able and impartial adjudicator, the high court said.

Even the draft rules make chairperson and members of the tribunal subservient to the minister. Another common feature of these tribunals is inadequate infrastructure, supporting manpower and cramped courtrooms. Mooted as a one-stop-body for approval of mergers, wind-ups, corporate reorganisation, capital reduction, among other matters related to companies, the proposed NCLT will replace the Company Law Board, the Board for Industrial and Financial Reconstruction, and the Appellate Authority for Industrial and Financial Reconstruction.

After more than a decade of legal challenge, the NCLT, which now forms part of the new Companies Act 2013, finally made it to the statute book in 2013 after the Supreme Court in 2010 had affirmed Parliaments power to create a tribunal for administration of justice. But the question on creating more tribunals remains unresolved.

Setting up tribunals in India started before Independence with the setting up of the Income Tax Appellate Tribunal (ITAT) in 1941. The ITAT pattern of a two-member tribunal was followed by the creation of sales tax tribunals, the Company Law Board (CLB) in 1988 and the Debt Recovery Tribunal (DRT) and the Intellectual Property Appellate Board (IPAB) in 2003. Merits of the constitution of the NCLT and NCLAT cant be denied, provided it functions well in the eyes of law intended by the legislature. Problem arises at the level of implementation and execution front. It is important to ensure that specialised tribunals are not manned by civil servants. Certainly, there is still another chance for the judiciary to make things better. All eyes are set again on the Supreme Court which is hearing a case pertaining to the National Taxation Tribunal, created under Article 323B of the Constitution. Maybe the next constitutional bench will not miss any opportunity in clearly laying down the role of tribunals in the overall justice delivery system and also demarcate the areas to be covered by both the tribunals and the judiciary.