Context: The Supreme Court on Wednesday by 2 :1 majority set aside the provisions in the Tribunals Reforms Ordinance 2021 which fixed the term of members of various tribunals as four years.

• The Tribunal Reforms (Rationalisation and Conditions of Service) Ordinance of 2021 had amended Section 184 of the Finance Act of 2017 to fix their tenures at four years. 
• But three-judge Bench of SC reversed the law and confirmed that Tribunal Chairpersons and Members would have a full five-year tenure.

Background

• The ruling came on an appeal by the Madras Bar Association, challenging the provisions of the Ordinance, 2021 to the extent it amends Sections 184 and 186 of the Finance Act 2017.
• Sections 184 and 186 of the Finance Act 2017 give Central Government rule-making power in relation to the mode of appointment, terms of service, allow.
• The Tribunals Reforms (Rationalisation and Conditions of Service) Ordinance, 2021 was to introduced to dissolve certain existing appellate bodies and transfers their functions (such as adjudication of appeals) to other existing judicial bodies.
• The provisions under the Tribunals Ordinance 2021 will not apply to appointments made prior to February 4, 2021 (the date when the Ordinance was notified).

Highlights of the verdict
Conditions laid down by the Tribunals Ordinance 2021 through its amendment to the Finance Act 2017:-

• The provisions fixing minimum age limit for appointment as tribunal members as 50 years struck being contrary to the direction in earlier cases that advocates with minimum experience of 10 years should be made eligible.
• The provision prescribing that the Search cum Selection Committee will recommend two names for each post struck down being contrary to the direction in previous judgments that the committee should only recommend one name for each post.
• The provision prescribing that the Union Government should make appointments "preferably within three months" of recommendation by the Search-cum-Selection committee.

On Judicial Independence

• The independence of an individual Judge, that is, decisional independence; and independence of the judiciary as an institution or an organ of the State, that is, functional independence, are the broad concepts of the principle of independence of the judiciary/ tribunal.
• Security of tenure and conditions of service are recognised as core components of independence of the judiciary.
• It is the freedom from interference and pressures which provides the judicial atmosphere where he can work with absolute commitment to the cause of justice and constitutional values.

Attorney General Stance

• Attorney General K.K. Venguopal had sought to justify the ordinance, saying “a judgment of a court can be overridden by the legislature”.
• “Service conditions of members of tribunals is a policy decision which should be left to the collective decision of the Parliament. 
• Legislative overruling is a permissible exercise as has been held in a number of judgments of this court,”.