Context: Tribunal, Appellate Tribunal, and other Authorities (Qualifications, Experience and other Conditions of Service of Members) Rules, 2020 notified after SC verdict in November 2019 and issues related to it.

More in news:

• The Supreme Court in November 2019 passed a significant judgment on the functioning of Tribunals in the Country. 
• The Ministry of Finance in February 2020 has notified a new set of rules called the Tribunal, Appellate Tribunal, and other Authorities (Qualifications, Experience and other Conditions of Service of Members) Rules, 2020.

Tribunals in India:

• Tribunals were added in the Constitution by Constitution (Forty-second Amendment) Act, 1976 as Part XIV-A, which has only two articles viz. 323-A and 323-B.
  • Article 323-A deals with Administrative Tribunals.
  • Article 323-B deals with tribunals for other matters.
• Tribunal is a quasi-judicial institution that is set up to deal with problems such as resolving administrative or tax-related disputes. It performs a number of functions like adjudicating disputes, determining rights between contesting parties, making an administrative decision, reviewing an existing administrative decision and so forth.
• The Administrative Tribunals Act, 1985 provides for three types of tribunals:
  • The Central Government establishes an administrative tribunal called the Central Administrative Tribunal (CAT).
  • The Central Government may, upon receipt of a request in this behalf from any State Government, establish an administrative tribunal for such State employees.
  • Two or more States might ask for a joint tribunal, which is called the Joint Administrative Tribunal (JAT), which exercises powers of the administrative tribunals for such States.
• There are tribunals for settling various administrative and tax-related disputes, including Central Administrative Tribunal (CAT), Income Tax Appellate Tribunal (ITAT), Customs, Excise and Service Tax Appellate Tribunal (CESTAT), National Green Tribunal (NGT), Competition Appellate Tribunal (COMPAT) and Securities Appellate Tribunal (SAT), among others.

Issue in Focus:

• The Finance Act, 2017 had given the Centre the power to govern appointments, removal and service conditions of the members of judicial tribunals like National Green Tribunal, Income Tax Appellate Tribunal, National Company Law Appellate Tribunal. Pursuant to such powers, the Central Government went on to frame the Rules, which gave the Government overly broad powers as regards the appointment and service conditions of tribunal members.
• The petitioners had challenged the Finance Act, 2017, particularly Part XIV on various grounds. The Part XIV had repealed provisions relating to the administration of 26 Tribunals established under diverse central laws. Part XIV of the Act merges a number of tribunals, including the Copyright Board with the Intellectual Property Appellate Board (IPAB).
• The provisions were questioned on the ground that they gave more powers to the executive and interfered with the judicial independence of the panels.

Supreme Court Judgments:

Rojer Mathew v. South Indian Bank Ltd. & Ors., 2019:

• The Supreme Court in Rojer Mathew v. South Indian Bank Ltd. & Ors., 2019 struck down the Tribunal, Appellate Tribunal and other Authorities (Qualifications, Experience and other Conditions of Service of Members) Rules, 2017 framed under Section 184 of the Finance Act, 2017 on the grounds that they impinge on judicial independence and are contrary to the guidelines laid down in cases like RK Jain and Madras Bar Association.
• The Rules notified in 2017 have now been struck down by the Supreme Court and the Government has been directed to frame a fresh set of Rules.
• Some of the defects identified by the court in the rules (2017) include:
  • Search-cum-selection committee for tribunal personnel was composed predominantly of nominees of the Central Government. Such a lack of judicial dominance is in violation of separation of powers and in negation of judicial independence;
  • technical members have not been mandated any prior adjudicatory experience, this goes against the dicta of the Court in Madras Bar Association judgment
  • the role of judiciary in the procedure for removal of tribunal members has been completely taken away;
  • lack of uniform age of superannuation for different tribunal members and short tenure, paved way for increased executive interference;
  • Re-appointment of tribunal members will erode independence of the tribunal members and thus erode public faith in the system.

Madras Bar Association v. Union of India (2010):

• Constitution Bench in Madras Bar Association v. Union of India (2010) had held that though the legislature can legislate which disputes will be decided by courts and which disputes will be decided by tribunals, this is subject to constitutional limitations. The Bench held that such legislation cannot encroach upon the independence of the judiciary and must respect the principles of the rule of law and the separation of powers. It held that if tribunals are to be vested with judicial power hitherto vested in or exercised by courts, such tribunals should possess the independence, security and capacity associated with courts.
• In Madras Bar Association (2010), the Bench made observation on when tribunals can include technical non-judicial members. It stated that if a tribunal is intended to serve an area which requires specialised knowledge or expertise, technical members in addition to judicial members should be allowed. However, it emphasised that when a category of cases is transferred from the courts to the tribunals merely to either expedite cases, then there is no need for non-judicial technical member. It emphasised that in such non-technical tribunals, only members of the judiciary should be the Presiding Officers/Members. 

2020 Rules framed against SC Judgements:

• In the 2017 rules, as noted by the Court in Rojer Mathew, barring the National Company Law Appellate Tribunal (NCLAT), the selection committee for all other tribunals was made up either entirely from personnel within or nominated by the Central government or comprised a majority of personnel from the Central government. Now, in the 2020 rules, by default, all committees consist of a judge, the president/chairman/chairperson of the tribunal concerned and two secretaries to the Government of India.
• Under the 2020 rules, the inclusion of the president/chairman/chairperson of the tribunal as a member in the selection committee is directly against the previous SC Judgements. For instance, now, in the Income Tax Appellate Tribunal (ITAT), Customs Excise and Service Tax Appellate Tribunal (CESTAT), Central Administrative Tribunal (CAT), Debt Recovery Appellate Tribunal (DRAT), etc., a non-judicial member can become the president/chairman/chairperson, as the case may be. Therefore, when a non-judicial member becomes a member in the selection committee, the Supreme Court judge will be in minority, giving primacy to the executive, which is impermissible. In Madras Bar Association (2010), the Court explicitly held that only judges and advocates can be considered for appointment as judicial member of the tribunal and that persons from the Indian Legal Service cannot be considered for appointment as judicial member. 
• In the 2020 rules, the tenure of members has been increased from three years to four years, thereby blatantly violating the directions of the Supreme Court. In Madras Bar Association (2010), the Court had held that the term of office “shall be changed to a term of seven or five years”.

Way Forward:

• The common thread in the Madras Bar Association series and Rojer Mathew decisions is that judiciary must have an equal say in the appointment of members of the tribunals. To deny the executive an upper hand in appointing members to tribunals, the court ordered to have two judges of the Supreme Court to be a part of the four-member selection committee.
• Streamlining of functioning of tribunals:
  • Tribunals should be financially independent for its functioning; thus, finance ministry in consultation with the nodal ministry to directly allocate adequate funds for their day to day functioning
  • Financial Impact Assessment to be conducted – this will assess the financial needs of the tribunals and Finance Ministry will have to ensure sufficient resources are made available for the functioning
  • Tribunal members shall not be accorded a status equivalent to that of HC/SC judge
  • Legislature should consult Law Commission and revisit the provisions for direct statutory appeals to the Supreme Court from tribunals. Instead of appeal to SC, provisions may be provided for an appeal to a Division Bench of High Court, if at all required.
  • After assessing case loads and commonality of subject matter jurisdiction, Union to consider whether certain tribunals, having niche jurisdictions, require merging
• Justice Chandrachud suggested the following:

Creation of a National Tribunals Commission (NTC) to oversee, selection, appointment, salaries and service conditions of tribunal members. NTC will consist of 3 serving judges of Supreme Court nominated by the CJI, 2 serving Chief Justices/Judges of High Courts, 2 officers not below the level of Secretary to Governmentt and 2 independent.