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What is the Tribunals Reforms Bill, 2021?

13 min read

By K. Manoggnya Reddy

Published on: August 14,2021 14:05 IST

What are tribunals?

The definition of Tribunals cannot be found in any legislation but in numerous judgements, the judiciary has clarified that there is a clear distinction between tribunals and courts.

Tribunals are authorities that are quasi-judicial in nature that are set up especially by the act of parliament to fulfill the purpose of smooth and speedy delivery of justice which would then lessen the burden on other regular judiciary bodies.

The tribunals run contradicting to the high courts, are far below on the level of formality, cost-effective and also time-saving. They were introduced in the 42nd Amendment Act according to the recommendations from the ‘Swaran Singh Committee’.

In this Amendment Part XIV – A was introduced to the constitution, which deals with ‘Tribunals’ under two articles, respectively:

  • Article 323A

“323A. Administrative tribunals.- (1) Parliament may, by law, provide for the adjudication or trial by administrative tribunals of disputes and complaints with respect to recruitment and conditions of service of persons appointed to public services and posts in connection with the affairs of the Union or of any State or of any local or other authority within the territory of India or under the control of the Government of India or of any corporation owned or controlled by the Government.”

Article 323A as stated above deals with Administrative Tribunals. These are institutions that are quasi-judicial in nature that are established for the purpose of dispute resolution relating to recruitment and services of public servants.

  • Article 323B

“323B. Tribunals for other matters.- (1) The appropriate Legislature may, by law, provide for the adjudication or trial by tribunals of any disputes, complaints, or offences with respect to all or any of the matters specified in clause (2) with respect to which such Legislature has power to make laws.”

Article 323B is for the tribunals formed under other subjects such as Taxation, Elections to parliament, Rent and tenancy rights, etc.

What were the problems faced by tribunals before the introduction of the Bill?

The tribunals generally operate accordingly under the parent ministries. Over the years, appeals have been handled by various tribunals and courts on limited grounds, with some of them making it a far call for some litigants to afford the prohibitive costs for the purpose of litigation making it a fairytale to pursue justice and just accept injustice.

But, after a period of time, cases relating to many Tribunals have been referred to the Writ Jurisdiction side once the parties fail to resolve the issues through proper remedy. This practice has been regarded as very inefficient and has resulted in accumulation of pendency of cases.

In many instances most scholars or critics started sharing their opinions on improving the functioning of tribunals effectively under specific enactments, such as, a merged composite legislation which would bring all the existing Acts under one Code, which would enable Tribunals to function efficiently and independently.

It would also help in exploring more areas of the Justice Delivery System at an affordable cost and a quick pace. Right around this time the ministry of finance decided to introduce a specially formed Tribunal reform Bill 2021, in Lok Sabha, on August 02, 2021, by the Finance Minister, Ms. Nirmala Sitharaman, which was passed on Aug 03, 2021, in spite of a lot of opposition against it, in the demand of furthermore discussion regarding the bill.

Now with what amendments has this reform Bill been introduced. For what purpose has this Bill been introduced? What and why was the ordinance introduced prior to the Bill promulgated?

What was the Tribunals Reforms (Rationalization and Conditions of Service) Ordinance, 2021?

The amendments proposed in the Ordinance, 2021 were that the legislation would seek to rationalize and improve the operations of various tribunals and authorities and provide for a mechanism to appeal to the Commercial Court or the high courts, without having to go through the tribunals as the case may suggest.

Few of the highlights of the ordinance are:

  • The Bill dissolves certain appellate bodies and transfers its functions to other judicial bodies. It also sets a four-year term for the chairperson and members of the Tribunals.
  • The Bill would limit the chairperson’s age to 70 years old and 67 years for the rest of the members.

Key Issues analyzed from the bill:

  • The term of office of a Supreme Court judge is lower than the minimum five years that the court has directed.
  • The apex court has also noted that the age requirement of 50 years for members may discourage young talents.
  • Abolishing Tribunals could increase the disposal time of new cases for there are still a load of judgements to be delivered by the high court.

What led to the Promulgation of the ordinance?

After being challenged in the apex court certain provisions of the amendment made by the Ordinance were declared as being unconstitutional by the Supreme Court. The provisions was an amendment made to the Finance Act, 2017.

Amendment to Article 184 which discussed the provisions regarding the qualifications and appointment of the member and also the chairperson were declared inoperative.

Due to these procedural issues, the Bill could not be passed during the Budget Session of Parliament. Therefore, the President promulgated the Tribunals Reforms (Rationalisation and Conditions of Service) Ordinance 2021 in April 2021.

What was the controversy in the case of Madras Bar Association Vs Union of India And Another[1]?

The Madras bar Association (petitioner) filed a writ petition in the Supreme Court for the declaration that Article 12 of the Tribunal Reforms (Rationalization and Conditions of Service) Ordinance 2021 and the amendments made by the ordinance to Sec 184 of the Finance Act, 2017 are beyond its power and are conflicting with Articles 14,21 and 50 of the Indian Constitution.

It was also stated that along with being conflicting to articles in the Constitution; even the principles of separation of powers, independence of judiciary, and the supremacy of the legislative branch were contrary with many principles put into effect in many previous cases.

The Issues raised in the petitions includes these following provisions-

  • Eligibility based on the age

One of the first provisions to Article 184(1) states that a person below the age of fifty years shall not be eligible for the appointment as a Chairperson or a Member.

The second proviso states that the same pay and benefits shall be given to the members and chairpersons of the boards and agencies.

“184. (1) The Central Government may, by notification, make rules to provide for the qualifications, appointment, salaries and allowances, resignation, removal and the other conditions of service of the Chairperson and Members of the Tribunal as specified in the Eighth Schedule: Provided that a person who has not completed the age of fifty years shall not be eligible for appointment as a Chairperson or Member:”

  • Notwithstanding any judicial intervention

Article 184(7) of the Constitution states that the selection committee may recommend two names for appointment as chairperson or member and the Central Government will decide within 3 months from the day the recommendation was given with no consideration or involvement of any court of law in the form of judgement, order or decree.

“Notwithstanding anything contained in any judgment, order or decree of any court or in any law for the time being in force, the Committee shall recommend a panel of two names for appointment to the post of Chairperson or Member, as the case may be, and the Central Government shall take a decision on the recommendations of the Committee preferably within three months from the date on which the Committee makes its recommendations to the Government.”

  • Term of office

As per Section 184(11) of the Central Government Act, the term of office of the chairperson and members of a tribunal is four years. And the age of retirement mentioned is 70 and 65 years respectively for the chairperson and the members.

If the age of retirement is greater than the specified term of office, then the appointment order must specify the age of retirement as set out in it, with a maximum term of 5 years.

“Notwithstanding anything contained in any judgment, order, or decree of any court or any law for the time being in force, –– (i) the Chairperson of a Tribunal shall hold office for a term of four years or till he attains the age of seventy years, whichever is earlier; (ii) the Member of a Tribunal shall hold office for a term of four years or till he attains the age of sixty seven years, whichever is earlier:”

How did the ordinance make amendments to the Finance Act, 2017?

The Bill proposes to streamline tribunals and seek to eliminate certain authorities, which add to the already lengthy list of litigation without any particular benefit to the public. This is how the ordinance was passed amending the major provisions of the Finance Act, 2017.

The Finance Act, 2017, was brought into force from 3-31-2017. It provided for the financial proposals for the year 2017-18 to come into effect. It dealt with various sections (183 to 189) Those included the conditions of service of chairpersons and members of various appellate tribunals and other authorities.

What did the Supreme Court observe from these aspects?

  • Issue 1

The Bill and the ordinance specify that the chairperson and members of the board of directors shall serve a four-year term. However, the Supreme Court noted that the term of office should not be four years.

And also stated that these specifications are in violation of the basic principles such as separation of powers, judicial independence, rule of law and equality before law.

The concept of Separation of powers, which is an integral part of the Indian Constitution, was discussed by the Supreme Court. It was observed that the separation of powers is a basic structure of the country’s constitution. The Constitution has made no formal lines between the legislative, executive, and judiciary organs, which is nothing more than a consequence of the principle of equality enshrined in Articles 14 of the Constitution.

Which in turn suggests clearly that any breach of separation of power may amount to negation of right to equality. And that any legislation shall be declared as unconstitutional when it violates the separation of power.

The Supreme Court has held that the Independence of judiciary is a vital feature of a free society and is protected through certain constitutional guarantees.

After discussing Article 50 which provides separation of the judiciary from the executive, and Article 37 which states the State should apply the principles of the Constitution in its laws; the court came to a conclusion that freedom from interference and pressures is the key to the success of the judiciary.

It provides a judge with the freedom to work in a way that is consistent with the principles of justice and the Constitution.

The Supreme Court has held that short tenure of members of tribunals increases the Executive’s control over the judiciary. This is also discouraging meritorious individuals from applying for such positions.

The Supreme Court has noted that security of tenure and the conditions of service are important components of independence of the judiciary. The Supreme Court has also noted that the terms of office of chairperson and other members of the judiciary must be at least five years.

  • Issue 2

The Bill and Ordinance to transfer the functions of certain appellate bodies and courts to the High Court may increase the disposal time of cases. The statement of objects and reasons of the 2021 Bill states that the presence of tribunals has not led to faster adjudication in certain sectors, and they add considerable cost to the public treasury. However, the transfer of certain functions of an appellate body to the High Court may lead to a rise in the disposal time of cases, which already has high pendency in most High Courts.

This move defeats the purpose of setting up these tribunals, which was to reduce the burden on High courts.

It also raises concerns about the capacity of these courts and whether they should be expanded. The Supreme Court in 2019 considered if the concept of tribunals could increase the number of litigated cases, since the lack of adequate infrastructure or grants would make them too cumbersome.

The Finance Act, 2017 and the Bill that recognized several Tribunals, did not provide a Financial Memorandum that shows the resources required to carry out their provisions.

  • Issue 3

The Bill and the Ordinance require that persons who are at least 50 years old be appointed as members of a tribunal. This is contrary to the Supreme Court’s decisions and was struck down. The Supreme Court has reiterated its earlier statement that all members should be appointed at a young age.

In 2020, it had also stated that advocates with at least ten years of experience should be considered for appointment as judges. And that this requirement would limit such qualified persons from being members.

Judgement:

The first proviso and second provision read with the third proviso to Article 184(1) has been declared as unconstitutional since they were found in violation of doctrine of separation of powers, impermissible legislative override. Article 184 (7) was declared as unsustainable in law as it is an attempt to override the principle of law laid down by the Apex Court and simply permitting itself to negate the Supreme Court’s directions.

The Tribunals Reforms Bill, 2021

The Tribunals reforms Bill, 2021, was passed to replace The Tribunal Reforms (Rationalisation and the conditions of Service) Ordinance, 2021 which was promulgated in April 2021.

The Bill was introduced to ensure ‘uniform terms and conditions of the various members of the tribunal’ and also for the purpose of dissolving certain appellate tribunals and transfer some of their functions to other Courts. The proposals under the bill:

Abolition of certain Appellate Tribunals:

There is a total of five appellate tribunal which were proposed to be abolished whole functions then will be transferred to other judicial bodies as referred:

The to be abolished tribunals The respective Act/Acts The referred Judicial
Film Certification Appellate Tribunal The Cinematograph Act, 1952 High Court
Airports Appellate Tribunal The Airports Authority of India, 1994; and

The Control of National Highway Act, 2002.

For the disputes arising from improper disposal of property from unauthorized persons – Central Government

High Court – For disputes or appeals against the eviction officer.

Civil Court.

Authority For Advance Rulings Customs Act, 1962 Commercial Court
Intellectual Property Appellate Tribunal The Copyright Act, 1957;

The Trademarks Act, 1999; and The Geographical Indications of Goods Act, 1999.

High Court
The Plant Varieties Protection Appellate Tribunal The Patents Act, 1970. High Court

Amendments to the Finance Act

The Finance Act, 2017, merged various tribunals based on domain. It provided for the establishment of rules for composition of search-cum-shredding committees and the regarding the tribunal members’ qualification and also few terms and conditions of service have been altered.

The Bill now removes these provisions from the Finance Act, 2017. provisions from the selection committees and term of office are included in the Bill and a proposal to notify the terms and conditions of service of the members is on the Central Government.

Search-cum Selection Committee

As mentioned above the search-cum selection committee purpose is to recommend the appointment of the Chairperson and the Members of various tribunals. This committee shall consists of the members as accordingly provided in Article 3(3) of the bill:

  • The Chief Justice of India or a recommended Supreme court judge from him as the chairperson,
  • 2 central government Secretaries,
  • Outgoing chairperson (supreme court retired judge),
  • Secretary of the subsequent ministry in which the tribunal is constituted.

With separate search-cum selection committees for the State administrative tribunals under Section 3(d):

  • Chief justice of the high court of that state,
  • The chief secretary and the chairman of the public service commission of that state government,
  • Retired high court judge,
  • Principal secretary of the state general’s administrative department.

The central government must decide within three months after the recommendations of the selection committees as per Section 3(7) of the Bill which states:

“(7) Notwithstanding anything contained in any judgment, order or decree of any court, or in any law for the time being in force, the Search-cum-Selection Committee shall recommend a panel of two names for appointment to the post of Chairperson or Member, as the case may be, and the Central Government shall take a decision on the recommendations made by that Committee, preferably within three months from the date of such recommendation.”

Tenure and eligibility:

The Bill provides for a term of four years and a maximum of 67 years for members and 70 years for the chairpersons. It also states that a person may not be appointed if below the requirement of the age as 50 years as a chairperson or even a member.

As under Section 3(1):

“(1) 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 after taking into consideration the experience specialization in the relevant field and the provisions of this Act:

Provided that a person who has not completed the age of fifty years shall not be eligible for appointment as a Chairperson or Member.”

Are there any key issues with the Bill?

The Bill consists of the same flaws as the ‘The Tribunal Reforms (Rationalisation and the conditions of Service) Ordinance, 2021’ which was then promulgated by the president which it was supposedly replacing.

In the case of Madras Bar Association Vs Union of India, the supreme court has already struck down the amendments of provisions regarding the tenure and the age limit for the appointment of the members and chairpersons of the tribunals.

It clearly held that these provisions are against Article 14 of the Constitution along with being violative of principles – Separation of Powers and Judicial Independence.

But in spite of these the provisions of Section 3 of the Bill are exactly the same with no change in the age requirement and sub-Article even mentions the undoing of the judgements by the Apex court relating to the recommendations of the members.

Conclusion:

The Tribunals are usually set up to deal with issues related to disputes between different parties, and it resolves these issues through adjudicating disputes, reviews and resolves existing administrative decisions.

But because of the inefficient practices, functioning and unnecessarily intricate process of transfer of appeals or judgement of appeals turning out to be unfavourable to the public led to the non-fulfillment of the purpose of Tribunals.

In midst of these problems the Finance Ministry first introduced an Ordinance – which goes by the name – the Tribunals Reforms (Rationalisation and Conditions of Service) Ordinance 2021 in April 2021.

However, this ordinance was in turn promulgated because of lack of judicial consideration. Then the Ministry introduced the Tribunals Reforms Bill, 2021. And the Bill was successfully passed in the Lok Sabha on August 03, 2021.

References:

  • “Tribunals Reforms (Rationalisation And Conditions Of Service) Ordinance, 2021”. 164.100.47.4, 2021, 164.100.47.4
  • “THE TRIBUNALS REFORMS BILL, 2021”. 164.100.47.4, 2021, 64.100.47.4/
  • “Madras Bar Association Vs Union Of India & Another”. Main.Sci.Gov.In, 2021, main.sci.gov.inprsindia.org
  1. Madras Bar Association Vs Union of India, 2021 Latest Caselaw 273 SC, W.P.(C) No.-000502 / 2021