What’s the role of tribunals?

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SummaryThe new Companies Act has made certain provisions which differ from what the Supreme Court has prescribed

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

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