Judiciary loses control over tribunal appointments

The National Democratic Alliance (NDA)-led government has published a list of 22 rules in pursuant to the provisions of the Finance Act wherein they will now appoint chairpersons to the tribunals. According to the June 1 notification, the secretary of the ministry under which the tribunal is constituted will lead the search committee that will appoint the chairperson.

As per this notification, though chairpersons must have significant legal background, or in certain cases must be retired judges of the higher judiciary, the judiciary will have a very limited role in the selection for these posts.

The selection panel -- comprising of at least four members, will have only one member with a judicial background (Chief Justice of India or his nominee), and the rest will be government personnel, or their nominees.

However, in some cases a vast majority won't have any role for judiciary. 

Significantly, if the Union is of the opinion that it is necessary or expedient to do so, it has given itself the power to relax any of the provisions of the rules with respect to class or category of persons. The Union will also be the final arbitrator is there is any confusion in the interpretation of the rules.  

The new rules have thus ensured that the Supreme Court will no longer play a leading role in selecting members and chairpersons on various tribunals that are largely made up of retired judges from the higher judiciary. The issue wherein the Centre has given itself sweeping powers raises a serious question of conflict of interest as it happens to be the largest litigant in India and the tribunals are often dealing with cases where its interests are involved.

According to provisions of the Finance Act, 2017, eight of the 19 tribunals have been scrapped and merged with existing ones. The impugned Part XIV of the Act also seeks to summarily remove all members of the abolished tribunals from service. It says the Centre will now make rules, delegating powers to govern issues like the appointment and removal of tribunal members and chairpersons. 

Speaking to DNA, former Chief Justice of India RM Lodha said that the appointments of the tribunal must come across as impartial and independent. “The government is one half of the parties contesting various cases in courts. So obviously, if the litigant appoints the adjudicator, then the decision making is seen to have been partial.” 

“Tribunals have immense power over high-value transactions and it is important that they remain impartial,” he said. Tribunals act as a parallel mechanism to the judiciary and have powers to exclusively decide on various statutes. They are seen as quasi-judicial bodies that settle disputes. 

 In 2014, the former CJI headed a Constitution bench that struck down the National Tax Tribunal (NTT) Act and declared it unconstitutional. In a concurring judgement, Justice RF Nariman ruled the law to be unconstitutional on grounds of separation of powers between the judiciary and the executive and the other points being of judicial independence. 

Another SC judgment — L Chandra Kumar versus Union of India — ruled that the judiciary must be consulted before any appointments are made on the tribunals.

There are at least two petitions — one in the Supreme Court and the other in the Madras High Court — that challenge the relevant provisions in the Finance Act. 

Criticising this development, senior advocate Arvind Datar also said the tribunals will not have any independence left. “Except the Chairperson of the National Company Law Appellate Tribunal (NCLAT), who can be removed by the Supreme Court, all other chairpersons can now be removed by the executive,” he said. Datar said that though the tribunals must be judge-heavy, they are peppered by government officers. 

Advocate Kudrat Sandhu has filed a Public Interest Litigation (PIL) seeking an order restraining the NDA government from enforcing the relevant provisions of the Finance Act. Sandhu has also requested the top court to issue a mandamus requiring the Centre to put necessary mechanisms in place to maintain the independence of the judiciary and effective functioning of the tribunals. 

In her petition, Sandhu points out that apart from undermining the independence of the judiciary, the Finance Act incorporates a clause which ensures that the executive’s role in the selection of the chairpersons will be unfettered by the existing statutory provisions that safeguard the independence of the judiciary. “The executive can thus repeal, modify or dilute such salutary provisions at their arbitrary whim.” 

The petition further reads that the sudden wholesale removal of the chairpersons and members of the tribunals through a “subverted Parliamentary procedure”, the executive is sending a strong message. 

If the tribunals fear for their very survival, their independence aside, the cases pending before them will also be jeopardised, it says.    

In his petition in the Madras High Court, Datar has specifically attacked Rules 7 and 8, which provide that retired judges of the High Courts and the Supreme Court, who are appointed to tribunals, can be removed by the Central government after a departmental inquiry.