SC cuts NDA govt to size in matter of making appointments to tribunals

Even as the SC was questioning the reasons behind the Bill, the Bill became an enactment in August.

On another front, the government strategy is to make the tribunals toothless without making appointments to posts which have been vacant for years. There are nearly 240 vacancies in these tribunals.

Several PILs were filed in several High Courts. The SC has been admonishing the government on this matter for almost every month since March 2020. Ultimately, a year later, on September 7, the SC issued a strong reprimand and directed the government to make appointments before September 13.

Feeling the heat, the government has finally started appointing members to the National Company Law Appellate Tribunal. An order dated September 11 was reported on September 12 appointing 8 judicial members and 10 technical members with a term of five years or up to the age of 65, whichever is earlier.

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Centre’s way of controlling quasi-judicial bodies   

The NDA government has reduced the term of office and powers of various Commissioners (including Information Commissioners) chairmen and members of various tribunals. An authority supposed to give judgments dispassionately without fear cannot act independently if they cannot continue in their post for at least a term of five years.

The government is clearly trying to exert control over these quasi-judicial authorities to ensure they pass pro-government orders. The best way to do this is to reduce the term to three years from five years to dangle the carrot of a second term.

Moreover, for example, the Information Commissioner’s status has been reduced from the level of a Supreme Court judge to a joint secretary level and the term has been brought down to three years.

The government issued rules in 2019 under the Tribunals Act to reduce the term of the chairman from five to three years and lower the maximum age from 70 to 67 years. The Supreme Court (SC) struck down these rules as unconstitutional because it seriously affects the independence of the adjudicating body. The government then slightly altered the rules to allow the term of office to be extended to four years. That rule has also been challenged.

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Challenging the Centre

A PIL challenging the constitutionality of Part XIV of the Finance Act, 2017 and of the rules framed in consonance of section 184 of the Finance Act was filed before High Court, which ultimately reached the SC.

Part XIV of the Finance Act 2017 gives sweeping powers to the Union government to administer the tribunals, especially the conditions of service, mode of appointment, security of tenure and requisite qualifications of members and presiding officers of various tribunals.

Meanwhile, Section 184 of the Finance Act 2017 empowers the central government to provide rules for qualifications, appointment, term and conditions of service, salary and allowances etc., of the chairperson, vice-chairperson and members, etc., of the tribunal, appellate tribunal and other authorities. Section 186 gives power to make rules generally to carry out the provisions of this Part XIV.

The petitioners pointed out that Section 184 imposes a potential threat of misuse by the executive, and any violation by the executive of such powers threatens and poses a risk to the independence of the tribunals. They contended that the legislation must ensure certainty of the powers of the delegate and prayed the court to run the scrutiny of the policy and guidelines test to prevent future misuse of the provisions.

The SC was convinced about striking down the Rules under Section 184 of the Finance Act, 2017 in entirety, as being contrary to the parent enactment and the principles envisaged in the Constitution as interpreted by SC. The Central government was directed to re-formulate the Rules strictly in conformity and in accordance with the principles delineated by the apex court.

The SC issued a writ of mandamus to the Ministry of Law and Justice to carry out a ‘Judicial Impact Assessment’.

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The apex court directed the ministry to submit the result of the findings before the competent legislative authority. It further said, “the Central Government in consultation with the Law Commission of India or any other expert body shall re-visit the provisions of the statutes referable to the Finance Act, 2017 and place appropriate proposals before the Parliament for consideration of the need to remove direct appeals to the Supreme Court from orders of Tribunals. A decision in this regard by the Union of India shall be taken within six months”.

But the Union government was unstoppable and it made new rules as ‘Tribunal, Appellate Tribunal, and other Authorities (Qualifications, Experience and other Conditions of Service of Members) Rules, 2020.’ They retained all other rules only bending to fix the tenure at four years.

Then the Tribunal Reforms (Rationalization and Conditions of Service) Ordinance 2021 was promulgated, which has also been challenged.

How the Centre is emasculating the tribunals

First proviso to Section 184(1) says a person below the age of 50 years shall not be eligible for appointment as chairperson or member; and also the second proviso, read with the third proviso, stipulates that the allowances and benefits payable to chairpersons and members shall be the same as a Central government officer holding a post with the same pay as that of the chairpersons and members.

SC held this rule to be a direct affront to the SC judgement in the Madras Bar Association Case, because it breaches Article 14 and first proviso to Section 184(1) frustrates earlier SC judgment by an impermissible legislative override.

The Centre is also trying to hold all the cards in selecting candidates for the tribunal. Section 184(7) stipulates that the Selection Committee shall recommend a panel of two names for appointment to the post of chairperson or member and the Central government shall take a decision preferably within three months, notwithstanding any judgment, order or decree of any Court. This second proviso read with third proviso, was also held unconstitutional.

Section 184(11) provides that the term of office of the chairperson and member of a tribunal shall be four years. This was with retrospective effect from 26-5-2017.  The age of retirement of the chairperson and members is specified as 70 years and 67 years, respectively.

The SC noted that after the judgment was reserved on June 3, 2021, the Ministry of Finance amended the 2020 Rules and Rule 15 was totally substituted and an Explanatory Memorandum was added stating the amendment to Rule 15 of the 2020 Rules on HRA, shall be given retrospective operation with effect from 1-1-2021, to give effect to the judgment in Madras Bar Association case.

The SC declared that this amendment to Rule 15 is in conformity with the directions on the subject of HRA in Madras Bar Association case.

Section 184(7) stipulates that two or three names shall be recommended for each post, while SC held earlier that only one name shall be recommended. This provision was held unconstitutional because it leaves scope for executive influence violating the SC decision which is law under Article 141. This section is unsustainable in law as it has overridden the law by the SC. The Ordinance has amended this section, which was also violating the directions of Supreme Court.

While Section 184(11) prescribed the term of chairpersons as four years, after SC struck down the rule prescribing a three year term. This section of the ordinance was struck down again as it was also against the law laid down by the SC.

After the SC’s ultimatum on September 7 to make appointments before September 13, the Centre has however come down from its high horse to start filling up vacant posts in tribunals starting with the National Company Law Appellate Tribunal. This is clearly a good sign and has created a sense of relief in many quarters.

The writer is Dean & Professor, School of Law, Mahindra University, Hyderabad, and former Central Information Commissioner

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 in the country.