Validity of Tribunals Reforms Act, 2021 | Judgement Summary

No new or unresolved questions in this matter

The Union had pushed the Court to refer the constitutionality of the 2021 Act to a larger bench. The Judgement stated that the Union provided no “cogent or compelling reasons” to refer the case. Further, it held that all substantial questions of law had been “examined in detail” in the Madras Bar Association 2010, 2014, 2015, 2020 and 2021 and Rojer Mathew v Union of India (2019) judgements. Any reference to a larger bench would thus result in “avoidable consumption of judicial time.” 

It further pointed out that deferring the case would prolong the state of uncertainty and persistent vacancies that currently plague tribunals across the country. Taking note of the staggering pendency across courts, it observed that the responsibility to reduce this burden rests equally upon the executive and legislature who must ensure that their powers are exercised with “due regard to constitutional principles and judicial precedent.”

Constitutional benchmarks are operative tests, not “abstract principles”

The Judgement identified three primary submissions provided by Attorney General R. Venktaramani. 

First, it held that there was no merit to the argument that “Parliament has discretion to ignore the decisions of this Court.” The Bench observed that the doctrine of constitutional supremacy was a part of the basic structure. It reiterated that Parliament is limited by the Constitution and the “Constitution is what the Court says it is.” The Judgement pointed out that any legislative attempt to “nullify or circumvent” binding decisions “not only exceeds Parliamentary authority but also violates the doctrine of constitutional supremacy itself”. 

The Bench held that when the Court identifies an underlying defect in the law and strikes it down as unconstitutional, the only valid legislative response would be to “engage with and remedy the constitutional violation” in question. 

The Judgement then addressed the scope of judicial authority to compel legislation in a particular manner and held that such action would undoubtedly be impermissible. However, it clarified that the Court’s inability to direct law-making does not translate to blind acceptance of the legislature’s actions. The Court observed that directing and reviewing legislation are distinct concepts. The former is forbidden but the latter is an indispensable part of maintaining constitutional supremacy. 

Responding to the Union’s description of separation of powers and judicial independence as “abstract principles”, the Judgement pointed out that this submission was already examined and “categorically rejected” in Madras Bar-5. It emphasised that tribunals perform functions that were traditionally within the domain of the courts and hence must be held to the same standards of independence and effective administration of justice. As the Court has evolved benchmarks for these standards over time, its decisions constitute an “operative test” for laws governing tribunals. 

The Judgement reminded that once a constitutional provision has been interpreted or expanded, that interpretation becomes binding upon all branches of government. 

It highlighted that by testing the law, the Court reinforced the constitutional legitimacy of the tribunal system. 

“Merely shifting the same content does not cure constitutional defects”

Comparing provisions of the 2021 Ordinance and the 2021 Act, the Judgement found several provisions reproduced verbatim. It noted that “what the 2021 Ordinance did through amendments to Section 184 of the Finance Act, 2017, the Impugned Act now does through Sections 3, 5, and 7.” It held that replicating provisions that have been declared unconstitutional does not cure the law but “consciously defies it.”

The Attorney General’s defence of the contested provisions were found to be a “verbatim reprise of arguments that have already been considered and rejected.” Consequently, the impugned Act was found to be “legislative override in the strictest sense” and the contested provisions (Sections 3, 4, 5, 6 and 7) were struck down. 

Appointments by the Union “totally inconsistent” with statement of the Attorney General

The Tribunals Rules, 2017 were struck down in Rojer Mathew and a new set of Rules were subsequently issued in 2020. These Rules included a provision enabling their retrospective effect to the date of commencement of the 2017 Rules. In Kudrat Sandhu v Union of India (2018), the Court passed interim directions for appointments made prior to the 2020 Rules. The Court had noted that these appointments would be governed by their parent Acts and Rules. This was consented to by the then Attorney General K.K. Venugopal. In Madras Bar-4, the provision for retrospective effect was struck down but in Madras Bar-5 the Court clarified that the 2020 Rules may have retrospective effect as long as the interim directions issued in Kudrat Sandhu were not interfered with. 

Two significant interlocutory applications were filed on behalf of members of the Income Tax Appellate Tribunal (ITAT) and Customs, Excise & Service Tax Appellate Tribunal (CESTAT). The applications pointed out that members selected in 2018 were officially appointed only in 2021 and thus subjected to provisions of the 2021 Act. 

The Judgement held that the ITAT appointment orders of 11 September 2021 and 1 October 2021 were inconsistent with previous statements of the Attorney General and thus should be governed by their old parent Acts and Rules. It clarified that the age of superannuation at ITAT and CESTAT for all selections made in 2018 shall be 62 for members and 65 for chairpersons.

The protection was further extended to all appointments made prior to the enactment of the 2021 Act. 

Establishment of a National Tribunals Commission

The Judgement acknowledged that “repeated judicial insistence” on the establishment of a National Tribunals Commission reflected the understanding that “piecemeal reforms cannot remedy systemic deficiencies.” It held that such a body was necessary to reinforce public confidence in the system and ensure judicial independence from executive control.

In conclusion, the Judgement quoted Dr. Ambedkar to note that the “form of the administration” is being made “inconsistent” with the spirit of the Constitution.

Justice K.V. Chandran penned a short concurring opinion, where he stated the Act was “old wine in a new bottle, the wine whets not the judicial palette, but the bottle merely dazzle.”