India’s tryst with tribunalization and transfer of judicial power to regulatory bodies

Namit Saxena & Devashish Chauhan

6 Sep 2014 2:18 PM GMT

  • India’s tryst with tribunalization and transfer of judicial power to regulatory bodies

    IntroductionThe liberal economic approach undertaken in 1991 inserted into the Indian political governing system, elements of both democracy and oligarchy. Montesquieu identified three essential organs of a government: legislature, executive and the judiciary. The democratic branch in our system is represented by legislature (bureaucracy as its subordinate) and executive, while the...


    The liberal economic approach undertaken in 1991 inserted into the Indian political governing system, elements of both democracy and oligarchy. Montesquieu identified three essential organs of a government: legislature, executive and the judiciary. The democratic branch in our system is represented by legislature (bureaucracy as its subordinate) and executive, while the judiciary represents the oligarchy. The constitution as the grund norm and a political document lays down the doctrine of separation of powers in Article 50. However, since independence right from the Bela Banerjee’s case there has been a conflict over true guardianship of the constitution between the political branch claiming to represent the direct will of the people (popular will) and the judiciary which claims to be the enforcement agency and represent the rational and logical will of the people (general will). The Doctrine of separation of powers as part of the unalterable basic structure of our constitution demarcates a thin line of division between these organs. Although this thin line is flexible, yet a necessary corollary which can be conclusively drawn is that the three organs must function independently, no one should encroach upon other’s liberty and functions of one cannot be transferred to the other if not as per the constitutional will.

    The standard formula used in this conflict has been that the legislature enacts statute books or provisions which the judiciary finds ultra vires or against constitutional scheme and erases. The legislature then by way of an amendment tries to incorporate similar statute books or provisions again. With the advent of globalization and market expansion, the democratic branch learnt a different pattern and started injecting autonomous quasi-judicial regulatory bodies into the governance structure. Judicial power was and as it ought to be, concentrated in the hands of judiciary. The legislature aimed at transferring this judicial power to bodies which are directly under executive’s control. The 42nd amendment largely made the attempt for the first time.The then Prime Minister being furious at independence of judiciary was adamant to cut its powers. Major changes were made to Art 226 & 227 and the concept of creating quasi judicial tribunals was introduced.The amendment was based on the recommendations of the Swaran Singh Committee. The Statement of Objects and Reasons witted –

    “A Constitution to be living must be growing. If the impediments to the growth of the constitution are not removed, the constitution will suffer a virtual atrophy. The question of amending the Constitution for removing the difficulties which have arisen in achieving the objective of socio-economic revolution, which would end poverty and ignorance and disease and inequality of opportunity, has been engaging the active mention of Government and the public for some year’s now ”

    The next government although made strong efforts to restore the position and the Supreme Court in Minerva Mills case  held few provisions of the amendment unconstitutional but somewhere in the aftermath, Articles 323A & 323B stayed. These two articles inserted by Sec 46 of the amendment, adding Part XIVA in the constitution empower the parliament to enact laws providing for adjudication of disputes by tribunals under the disguise of the need to ensure speedy disposal of cases. The intention was to create a parallel justice system which was outside the purview of the High Courts. And this, as it may be put, lead to tribunalisation in the country taking away judicial power from the repository of the general will to the legislature.

    Few interesting questions thus arise - Does this tribunalization violate constitutional culture in the country by over regulatory capture of judicial power or such autonomous bodies are necessary to foster efficiency in the administration? Is it necessary to have specialized tribunals for different disputes to supplant (read not supplement)legal framework to inspire confidence of the people in speedy redressal of their grievances? Is transfer of judicial power permissible under the constitution? And whether for healthy democratic traditions, is it not necessary to channelize dispute resolving bodies under judiciary & not policitize it?

    Tribunalization and regulatory bodies in India

    Since the enactment of the Administrative Tribunals Act, 1985, parliament has systematically taken away important judicial functions of the High Courts and civil courts and transferred them to quasi-judicial bodies under its supervision. The wide and necessary powers guaranteed reasonably to the High Courts have therefore been curbed to a huge extent by transferring adjudicatory powers to such tribunals under the executive.

    In S. P. Sampath Kumar, the Supreme Court directed the carrying out of certain measures with a view to ensuring the functioning of the Administrative Tribunals along constitutionally sound principles. The changes were brought about in the Act by an amending Act (Act 19 of 1986). Jurisdiction of the Supreme Court under article 32 was restored. Constitutional validity of the Act was finally upheld in S. P. Sampath Kumar subject, of course, to certain amendments relating to the form and content of the Administrative Tribunals. The suggested amendments were carried out by another amending Act (Act 51 of 1987).

    In 1997, a seven-Judge Bench of the Supreme Court in L. Chandra Kumar held that clause 2 (d) of article 323A and clause 3(d) of article 323B, to the extent they empower Parliament to exclude the jurisdiction of the High Courts and the Supreme Court under articles 226/227 and 32 of the Constitution, are unconstitutional. Section 28 of the Act and the “exclusion of jurisdiction” clauses in all other legislations enacted under the aegis of articles 323A and 323B were, to the same extent, held to be unconstitutional. The Court held that the jurisdiction conferred upon the High Courts under articles 226/227 and upon the Supreme Court under article 32 of the Constitution is part of the inviolable basic structure of our Constitution. The court also effectively overruled alternate institutional mechanism theory of Sampath Kumar. All decisions of the Administrative Tribunals were also held to be subject to scrutiny before a Division Bench of the High Court within whose jurisdiction the Tribunal concerned falls. Law Commission in its 215th report sought reference of this judgment to a larger bench for fresh look.

    However, tribunals in India (then British India) had begun with the setting up of the Income Tax Appellate Tribunal (ITAT) in 1941 which was followed by creation of sales tax tribunals in several states. These tax tribunals were deliberately kept outside the judiciary. The company law board (CLB) began functioning in 1991 on the same pattern. When the CLB was formed, its rules were made in a way that only civil servants could man the board. InV Balachandran v UOI [ (1993) 76 Comp Cas 67 (Mad)]  these rules were challenged and partly struck down but creation of a quasi-judicial tribunal was upheld.Subsequently, Debt Recovery Tribunals (DRT) were set up reasoning that there were too many cases pending before civil courts and banks had to wait for a long time to recover their money. The constitutional validity of these tribunals was upheld in UOI v Delhi High Court Bar Association. These DRT’s have been admittedly a miserable failure and SARFESI Act was required to be introduced to enable banks to attach assets of defaulters without adopting a purely judicial process. In State of Karnataka v. Vishwabharati Housing Building Coop. Society, competence of the parliament to establish consumer forums with hierarchy in the form of district forum, state forum and national commission was challenged. It was contended that Parliament cannot establish a hierarchy of courts parallel to district courts, high courts and the Supreme Court in absence of a suitable amendment under Article 368 of the Constitution of India and that parliament by recourse to Art 323A & 323B cannot establish forums which are substitute to civil courts including the High Courts. The court referred to Art 246(2) and held that there is no doubt about legislative competence of the Parliament to provide for creation of special courts and tribunals. The Competition Act, 2002 before the amendment provided adjudication by the Competition Commission of India without any provision for an appellate body. It was challenged in BrahmoDutt v. Union of India as violative of the principle of separation of powers and the Government undertook to amend it. Further, the National Company Law Tribunal (NCLT), National Company Appellate Law Tribunal (NCLAT), National Tax Tribunal (NTT) and Intellectual Property Appellate Board (IPAB) were brought into the legal parlance. The constitutional validity of NCLT was challenged in the Madras High Court by the Madras Bas Association. The High Court struck down several provisions of the Act but did not strike down the NCLT itself. The matter then knocked the doors of the Supreme Court which fortunately did not stay the operation of the decision of the High Court and halted recruitment of members of NCLT & NCALT till final disposal. In the meanwhile, National Tax Tribunal (NTT) was introduced which also sought immediate transfer of all substantial questions of law cases to be transferred to it from all High Courts. The constitutional validity of NTT was challenged before Madras, Bombay, Orissa and other high courts and all cases were collectively transferred to the Supreme Court. The challenge to both these tribunals was taken up together by the Supreme Court and the matter was referred to a 5 judge bench. The 5 judge bench in Madras Bar Association v UOI delinked the matters. A constitution bench of the court has heard the challenge to validity of NTT and reserved the judgment, while the challenge to NCLT is still pending.

    The rationale given for creating tribunals is often given to foresee judiciary overburdened with huge backlog of cases and the need for speacialization. The hidden and untraced reason however is that such tribunals act as an excellent source of post retirement employment for chosen bureaucrats and judges with special attachment with the ruling establishment.When the NTT was mooted, it was stringly opposed by the parliamentary committee. In the past Wanchoo Committee and the Chokshi Committee had strongly recommended that tax tribunals should be carved out in form of dedicated benches of High Courts already existing. Above all not a single suggestion made by the Constitution Bench of the Supreme Court in UOI v R. Gandhi has been implemented till date.

    Reference should at this juncture be also made to cases arising from the United States and other commonwealth countries in lieu that attempts to take away inherent jurisdiction of the civil courts has been struck down at various intervals. In Canada a green tribunal was constituted to decide rent control cases which was struck down by the Canadian Supreme Court as unconstitutional holding that where the dispute was primarily civil in nature, the case has to be heard only by the established judiciary and not by quasi judicial tribunals [Residential Tenancies (1981) 123 DLR (3d) 554]. In US, the Supreme Court struck down the bankruptcy tribunal pointing out the dangers of creating tribunals that encroached into the established functions of the judiciary [Northern Pipeline Construction Co. v Marathan Pipeline Co. 73 Led 2d 675]. Similarly in Privy Council [Hinds v Queen (1976) 1 All ER 533

    ] and Australian High Court [Harry Brandy v Human Rights and Equal Opportunity Commission (1995) 183 CLR 245] held that any attempt to take away judicial power to vest it into quasi judicial tribunals was not permissible.

    In UK annually a million cases are decided by over 70 tribunals. The Franks Committee examined the functioning of tribunals which led to the Tribunals Act, 1948. It emphasized that tribunals should be independent, accessible, prompt, expert, informal and cheap. Sir Andrew Leggatt submitted a report to the Lord High Chancellor of Great Britain in March 2001. A cursory reading of this report shows the urgent need for repairing our tribunal system. Sir Leggatt’sreport emphasizes that tribunals must not only be independent but also seem to be independent. They should not be seen as departments of ministries or as part of the executive branch of government. Our tribunals suffer from this syndrome heavily. There is no uniform recruitment conditions for service, retirement age etc, throwing them at the mercy of the parent ministries for existence completely.

    Constitutional Punctuations

    While drafting the constitution, the federal structure adopted the Westminster model of governance with an independent judiciary. The basic funadamentals of having an independent judiciary connotes that it must be free from executive. On the diametrically opposite end, the bureaucracy selected by independent bodies on the basis of competitive exams is accountable only to political executive, leave apart any violation of law. However, the judiciary depends on the executive for infrastructure and implementation. It is this reason, of which the legislature is taking undue advantage of and drafting legislations curbing judicial power and transferring it to bureaucrats in form of tribunals. Rule of law, separation of powers, judicial review and independence of judiciary stand tall as four pillars of our constitutional democracy. In Indira Nehru Gandhi v. Raj Narain the Supreme Court stated that parliament cannot perform adjudicatory function and any dispute regarding election of the Prime Minister has to be cleared by the court or the tribunals established for the purpose because separation of powers was part of the basic structure of the constitution.

    At this outset, it is important to wit that not all tribunals are insulated to mainstream judiciary. Tribunals like Rent Control Tribunals, Motor Vehicles Tribunals, Labour Tribunals etc are part of the judiciary and are working better than the independent tribunals. What causes hiccups is those tribunals drifting judicial power away from the judiciary.


    Current Indian legal regime after borrowing various aspects of its richly woven tapestry from different legal systems has developed and adjusted itself according to the social, political and constitutional requirements of the country. Globalization, however, has resulted in fragmentation of the regulatory framework of the system. For a stable legal and constitutional climate, a well engineered coherence is necessary in this regulatory framework. It must not only comprise of healthy rules, but also of well drafted principles. These principles act as a necessary concomitant to provide structural identity to a legal system. If globalization aims at peaceful integration of territories, this reality has to be adhered to.

    Undeniably there has always been conflict between judiciary and the executive over true guardianship of the constitution. The role of judges in regulatory bodies and independent tribunals in some or the other way functions according to the flowing political wisdom in the system. However, considering legal development after independence, it is inevitable to have independent &free  judicial minds to ensure that the principles evolved and incorporated do not stand diluted with political fusion. Structural denotations of the Indian pattern of politically including members of judiciary and bureaucracy in regulatory bodies or tribunals is though beneficial in rendering more accountable decisions but a remote touch of political punctuations should not be overlooked. Bureaucracy and judiciary are definitely very cautious and conservative in their opinion but it can’t be denied that being discretionary political appointments they are completely not immune to prevalent political theories. Since retired eminent members of judiciary who devoted entire life to the service of this country play a significant role in constitution & functioning of these tribunals, is it necessary that the representatives of people should have a decisive role in their appointments? Should this role be confined to chosen political executives and not directly from the public? Being a representative parliamentary democracy, is only the people’s direct will supreme?

    The moot and a very debatable question, therefore arises – what should be done? The correct approach, subject to our limits of comprehension will be to stand with constitutional dictum of separation of powers and checks & balances to ensure the coherence. Legislative enactments demanding discretionary appointments of members in the regulatory framework, are slowly taking away the independence of judiciary. Transfer of judicial power in disguise cannot be permitted in our constitutional regime. This is the precise reason why the 42nd amendment was discarded and scrappedalmost from head to toe. Such a flow in the hands of executive will curb sanctity of judiciary and leave it handicapped. The logic given to reduce the burden from judiciary sounds incorrect in a way that the alternative solution of providing proper infrastructure to existing courts is efficaciously available.The tussle over guardianship of constitution in the realm of globalization and fragmented regulatory framework should remain accountable to constitutional vision and people’s direct will. If allowed, the National Tax Tribunal & NCLT will handicap judicial power of High Courts and transfer it to tribunals under total political and executive influence. It therefore is a very important constitutional exercise to check such witty violation of the basic structure. It also has to be realized that the prime objective of tribunals is to resolve disputes and not act as employment agencies for retired judges and bureaucrats. A strong alternate can be to use Article 224A in this context.

    Lets hope for the best. Fingers crossed.

    Namit Saxena & Devashish Chauhan are Advocates, Supreme Court of India

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