Day 1 Arguments

Tribunals and the Finance Act

March 27th 2019

A 5-Judge Constitutional Bench of the Supreme Court comprising CJI Ranjan Gogoi, NV Ramana, DY Chandrachud, Deepak Gupta and Sanjiv Khanna JJ is assessing the functioning of central tribunals. The Bench is hearing petitions seeking the implementation of earlier directions, requiring a nodal agency under the Ministry of Law and Justice to oversee the functioning of all central tribunals.


It is also hearing the petitions challenging the provisions in the Finance Act, 2017, that define the functioning of central tribunals. The challenge to the Act is premised on three primary grounds:

  1. It was wrongly passed as a Money Bill, in violation of Articles 107110 and 117 of the Constitution. In particular, Part XIV of the Act pertains to issues that do not qualify as purely fiscal.
  2. It violates a basic features of the Constitution, namely the independence of the judiciary.
  3. In conflicts with the five-judge Bench judgment in Madras Bar Assocation (SCI 2010).


In today’s hearing, Mr. Arvind Datar commenced arguments. He restricted himself to the issues that do not pertain to the Finance Act, 2017 — the setting up of a nodal agency for overseeing the administration of all central tribunals and the filling up of tribunal vacancies. Mr. Datar was appearing on behalf of the lead petitioner, the Madras Bar AssociationMr. Datar emphasised that before a solution for the better administration of central tribunals could be found, the Court must first define the role and organisation of tribunals and their status under the Constitution.


He began by informing the Court that there were a total of 93 tribunals, which could be divided into four categories: service, regular, notional and other. CJI Gogoi added that there were 36 major tribunals, of which 30 can be classified under 11 heads on the basis of subject matter. CJI also stated that there were 6 major tribunals that did not fit into the 11 heads and discharged very specific functions — he gave the Armed Forces Tribunal and the National Green Tribunal as examples.


Taking note of CJI Gogoi’s statement that most Tribunals were dysfunctional, Mr. Datar submitted that there was the need for putting in place a system which would ensure the independent and efficiently functioning tribunals. He cited L Chandra Kumar (1997) and R Gandhi (2010), where the Supreme Court had established that if a nodal agency is not set up to manage the administration of central tribunals, that then the Ministry of Law & Justice must oversee them. He submitted that the Central Government had failed to implement these directions.


Mr. Datar then went on to illustrate the problems that were hindering the proper functioning of tribunals in India. In addition to the lack of proper infrastructure and the pending vacancies, there was a lack of uniformity in the conditions of service. Further, given that the tribunals were to exercise the jurisdiction that was earlier in the domain of the High Courts or Civil Courts, there was an expectation of certain services and amenities that would be made available to persons being appointed to these tribunals. However, there were instances where the tribunals were set up, but there was no room to either house the courts or residences for members appointed to them. Mr. Datar cited the example of the National Green Tribunal, which is only functioning in Delhi, despite having benches across the country.


He further submitted that different tribunals were administered by different bodies, resulting in lack of both uniformity as well as independence. He gave an example of a tribunal that was hearing dispute regarding decisions made by a certain governmental department, even though the same department was financing the tribunal.


He argued that there was a clear need to up a National Tribunal Commission, which would have administrative control over all central tribunals to ensure uniformity of service. Further, he submitted that there was a need for procedural reform to ensure a clear separation between the tribunals and the department whose decisions were being dealt with before the former.


At this juncture, Chandrachud J pointed out that administrative staff were also a key element to ensure the independent functioning of tribunals. He said that the absence of a standard category of service for administrative staff resulted in a lack of control over the staff. Mr. Datar further supported this statement by referring to the Law Commission report on the functioning of Tribunals and the 74th Parliamentary Committee Report, both of which recommended the setting up of an umbrella organization for overseeing central tribunals.


At this point, CJI Gogoi interjected to state that there were no further directions that could be contemplated and the host of difficulties pointed out had resulted from a lack of implementation, be it the question of staffing, functioning or infrastructure.  He said that there was no use in passing direction after direction and leaving it to the Central Government, which was not making appointments despite persons being recommended. Mr. Datar suggested that in addition to the setting up of the National Tribunal Commission, the Court could undertake a tribunal by tribunal review, prioritizing those tribunals that were dealing with public issues.


Chandrachud J added that the Court could introduce a minimum bench strength of tribunals. He said that for disputes where this bench strength was not met, the jurisdiction of the High Court could be invoked. CJI Gogoi responded by emphasising that the whole purpose of the transfer of jurisdictions to tribunals, was to reduce the workload of the High Courts. He said there was no question of the latter taking on additional work.


Next, the Court sought the Attorney General to make submissions on behalf of the Central Government with regards to the two issues: pending vacancies in the 36 Central tribunals and the lack of a nodal agency to administer them. Attorney General KK Venugopal apprised the Court of how the government was taking steps to fill up vacancies in tribunals, such as issuing circulars, sending applications to the Supreme Court, anticipating future vacancies. With respect to the applications sent to the Supreme Court for the Debt Recovery Appellate Tribunal (DRAT), SAFEMA Tribunal and other Tribunals, CJI Gogoi summoned  Mr. PK Sharma, the Registrar dealing with the same. The Supreme Court sought details on the applications forwarded to the Court. CJI Gogoi was informed that the applications for the DRAT had only been received 3 days earlier.


On the issue of setting up a nodal agency, Mr. Venugopal submitted that the umbrella agency idea was being resisted by several departments that currently administer central tribunals. He referred to the counter affidavit that had been filed by the central government in November 2014. Further, he submitted that it was not plausible to have the the Ministry of Law & Justice oversee central tribunals, given that the Ministry was overworked and understaffed. He said that it could not undertake the responsibility of the 36 tribunals as well as their payments. He recommended the establishment of the National Tribunal Commission or a new department.


Taking the note of the submissions made by the Attorney General, CJI Gogoi observed that the directions in L Chandra Kumar ought to have been implemented in time to bring all central tribunals under the control of a single agency.  On the issue of vacancies, the Court directed the government to prioritize the issue and make appointments where recommendations have already been made.


The Court has granted the Central Government 2 weeks time to file an affidavit stating its opinion on the steps that will be undertaken to implement the previous orders of the Court with respect to tribunals. It has instructed the Government to prioritise the Central Administrative Tribunal, the Intellectual Property Appellate Board, the Armed Forces Tribunal, the National Green Tribunal and the Income Tax Appellate Tribunal. The Bench will pass appropriate orders once the affidavit has been filed by the government.


The Court will continue to hear the case tomorrow, March 28th 2019.