Court vs Tribunal — the dilemma

Replacing court jurisdiction with tribunals needs careful consideration

Kumkum Sen

The wisdom of introducing a fresh Companies Amendment Bill, 2001, months after the Companies Amendment Act, 2000 was notified, raises a question about the legislature’s foresight.Why could the requirements not have been anticipated when the Amendment Act was under a three-year gestation period? One major issue is the creation of the National Company Law Tribunal, totally excluding the jurisdiction of the existing judicial system in matters pertaining to the Companies Act. This throws open the entire gamut of the vast adjudicatory paraphernalia of administrative and/or other quasi judicial bodies and tribunals which exist outside the court system. The tribunal system is modelled on English administrative law. In England, they are not regarded as “appendages of the government department”, giving them a high degree of objectivity.

A tribunal is supposed to provide administrative adjudicating bodies in specialised areas, outside the court framework. The legislature decides on the issues to be taken up by tribunals. A tribunal is therefore meant to be specialised, objective and expeditious. In the Indian context, tribunals are largely manned by civil servants from the concerned administrative services. In certain instances, the chairperson and one or two members may be judicial persons, but by and large their members are from the department. This creates a concern in the mind of the litigant that the department’s involvement in policies and their implementation would be in conflict with the expected impartiality in an action between the department and the litigant. Among the existing tribunal and quasi judicial bodies, only a few such as the Income-tax Tribunal, are even close to the concept of a tribunal free from administrative control.

The term ‘tribunal’ is not formally defined but finds recognition in the interpretation of Article 136 of the Constitution by the Supreme Court. Some, such as the Income-tax Tribunal and the Railway Rates Tribunal, have been statutorily created. But in most cases, the areas of adjudication, their status and powers do not have any definitive criteria. By and large, an authority is regarded as a tribunal when it has the power to sit in public, compel attendance of witnesses and examine them on oath, follow fundamental rules of evidence and adhere to the principle of natural justice. There may be bodies which seek to follow a quasi judicial procedure but do not have the authority to adjudicate definitively. The position of a conciliation officer or arbitrator under Section 10A of the Industrial Disputes Act is such an instance.

The Supreme Court has varied its stand from time to time. In Rothas Industries Vs Its Union and Gujarat Steel Vs Its Mazdur Union, it ultimately held that the function of the body, its determinations and the way the rights of the disputing parties are affected were paramount for recognising its quasi judicial character. But status apart, the efficacy of a tribunal has to be considered on the touchstone of its purpose and effectiveness. Further, the track record of tribunals has to be given proper weightage before more are added to the burgeoning list.

The NCLT is now intended to combine the activities to be wound up (Board for Industrial and Financial Reconstruction/Appellate Authority for Industrial and Financial Reconstruction), the high court in the exercise of its company jurisdiction and the existing Company Law Board. To that extent, it is intended to be a single forum which would uniformly apply the provisions of the Indian Companies Act in relation to disputes.But yet another tribunal means that much more expenditure for creating and manning the establishment. Could not these good intentions been met by creating multiple benches of the high court in exercise of its company jurisdiction, where the judges have the benefit of exposure to all forms of commercial litigation? And fill up the vacancies in the high court before creating more high seats?

Also, does the creation of a tribunal necessarily mean expeditious disposal of cases? The BIFR. AAIFR, the existing Company Law Board have not been exactly exemplary in this regard. In fact, the listing of cases are inordinately delayed and matters are frequently adjourned for long dates. In any event, the Company Bench in the high courts have always been governed by the Company Court rules and not by the Code of Civil Procedure. The Company Court rules could have been tightened to create more than one bench and to provide for fast track procedures. More flexibility could have been provided in the existing system for the litigant, instead of creating yet another tribunal.

The debt recovery tribunals and the consumer dispute redressal fora are clear instances where the administrative machinery is virtually nonfunctional; to get even an inspected copy of a judicial order or daily list of cases is a major effort. The Delhi high court, for one, has the above information online. The legislature should take these aspects into account while considering the wisdom of replacing court jurisdiction with more tribunals.

Kumkum Sen is a practising corporate lawyer and a partner in Khaitan & Khaitan, a Delhi law firm