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Tribunals bracing up for Pangs of Merger

TIOL - COB( WEB) - 550
APRIL 20, 2017

By Shailendra Kumar, Founder Editor

THE Union of India is a compulsive litigant. And this fact has been publicly acknowledged by several Law Ministers, including the sitting one, on more than one occasion. Interestingly, such an administrative-legal behaviour may be attributed to be one of the key factors which led to 'bacterial' multiplication of Tribunals in the country. With the Parliament legislating over new areas of business and commerce, a new Tribunal was necessarily born. For instance, when the Competition Act was legislated in 2002, the Appellate Tribunal was also set up. Similarly, when the TRAI was created, TDSAT was viewed as a logical creation.

Then came the Apex Court's castigation, followed by the suggestion to vest nodal control authority for all the Tribunals in the Ministry of Law. And the case was the famous L Chandra Kumar vs Union of India (2002-TIOL-159-SC-CB). The Constitution Bench also flayed the practice of filing appeals directly in the Supreme Court from some of the Tribunals. In yet another case in 2010, the Apex Court again observed that Tribunals should not be under the administrative control of all those Ministries against which they are required to pass orders. The Parliamentary Standing Committee had recommended that all Tribunals should be brought under a National Tribunal Commission. In fact, the Apex Court, again in 2016, directed the Law Commission to look into the raison d'etre of Tribunals in the changed dispensation of justice delivery system.

Then came the response from the Head of the present Executive in power. While addressing the Chief Justices and the chief Ministers about two years back, the Prime Minister, Mr Narendra Modi, said: "I want all seniors in the Supreme Court to contemplate if tribunals are actually helping in improving functioning of judiciary as a lot of budget goes waste in tribunals and we need to rectify that in a positive way.”

In this backdrop, when the Union Finance Minister, Mr Arun Jaitley, began lip-synching with the content in Para 128 of his Budget Speech, it did not surprise me. It was in the offing for a long time! He read: "Over the years, the number of tribunals have multiplied with overlapping functions. We propose to rationalise the number of tribunals and merge tribunals wherever appropriate." And to keep his words, while getting his Bill passed, he came up with more details proposing the specifics of merger, based on the recommendations of the Inter-Ministerial Committee. No doubt, experts had applied their mind before concretising their recommendations but the Elders in the Rajya Sabha did not want to be given an unpalatable treatment. Their key objection was the proposed amendments in dozens of non-revenue laws through the Money Bill route. Though one may feel inclined to see merit in their objection but the Modi Government is genuinely worried over the obstructionist approach of the Opposition which may derail its legislation-led reform agenda. That is why it found it more apposite to provide the Finance Bill leeway to amendments in all those Acts which had led to commissioning of independent Tribunals.

Moving away from the political plane, one needs to examine the merit in the proposed reform agenda which may be implemented in two or three phases. In the First Phase, the two-pronged approach of the Government has been to reduce the number of Tribunals based on the principle of near-harmony in their functions and uniformity in the service conditions of the Tribunals' Presidents, Vice-Presidents and Members. To begin with, the Government has selected all such Tribunals where the pendencies have dwindled and their Members have become unwanted liability on the Consolidated Fund of India.

So, the proposed merger of Highway Tribunal with the Airport Appellate Tribunal; Railway Rate Tribunal with the Railway Claims Tribunal; The Copyright Board with the IPR Board; EPF Tribunal with the Industrial Dispute Tribunal and Tribunal for Foreign Exchange with SAFEMA. All these proposed mergers look harmonious and efficacious. The only notable exception could be the merger of functions of the COMPAT with the NCLT. Given the fact that the Competition Act is a new piece of legislation for the Indian economy, the initial discomfort of adjusting to a new set of market conditions has resulted in serious disputes. And the COMPAT hands are indeed full. If it is merged with the NCLT, it may create administrative harmony but not in terms of creation of a brand new legal jurisprudence. Similarly, the transfer of Cyber Tribunal and Airports Economic Regulatory Authority Appellate Tribunal cases to the TDSAT may create some initial hitches.

Industry experts and the professionals fear that all such mergers may lead to further pendency of cases for the merging tribunal. And their fear is not unfounded unless the Government comes out with a clear plan to set up additional benches manned by industry-specific technical Members. Since technical knowledge of the working of an industry is key to settling a dispute and that was also the reason for hiring them in the Tribunals, it would be desirable not to dilute the knowledge-level of the Benches. Since the Tribunals are generally the highest fact-finding bodies, they have historically been allowed to be manned by technical and judicial members. So far as the questions of law go, the High Courts are the right forums.

In this background, what the Government is going to achieve is to find work for the quasi-judicial apparatuses and also contain the present trend of permitting mushrooming growth of such bodies under new legislations. One may also tend to see a 'Reverse Trend' for the judicial bureaucracy which is no different from the administrative bureaucracy. Every genre of bureaucracy has an inherent proclivity to multiply and expand itself. That is how we can see the total number of Tribunals going beyond 40. So, this is indeed a positive sign whereby the Union of India is trying to make it slimmer and more efficient. I wish similar efforts are made even for the Civil Services where a good number of Services have fallen in disuse with the efflux of time but the Governments at the Centre have generously been lending them additional cylinders of oxygen to demonstrate its nature of selective charity!

Secondly, it is very important that all these merged forums must be provided with good quality infrastructure which should also include access to knowledge database and modern technology. If not Lutyenised space like other dignitaries at the Centre, adequate space should be provided for the Members' chambers, Departmental Representatives, professionals and also the public at large, including the industry.

Let me now turn my attention to the second component of the proposed reform - uniform service conditions. Apart from offering three months salary as part of the severance package, the Govt is going to increase the retirement age of Presidents to 70 and 67 for others. It is also going to appoint the Members of as many as 19 Tribunals for a fixed tenure of FIVE years. Renewal of employment agreement is going to be offered but not before their performance is strictly scrutinised against certain tangible parameters. This has come as a shock to many professionals associations which find that no professional with established credentials and elegant streams of income would prefer to risk joining the Bench for a short period of five years. In such a case, all such posts of Members (Technical) or Accountant Member in the case of ITAT, would be filled up by none other than Departmental officers. And institutions like the ITAT which was born in 1941, would become an extension of the Income Tax bureaucracy. This would further lead to deterioration in the quality of its performance which may be attributed to dilution in the qualification of its Members - Since not many CITs were keen to join the Tribunal, the Govt allowed the Addl CITs to become Members.

No doubt, all such fears and trepidations are not without substance. The Government is going to set up a new National Tribunal for the GST and it does need to ensure that the quality of people coupled with high qualification indices should not be compromised if the forum of Tribunal is going to command confidence and the faith of justice seekers. Since there is no substitute to tribunalisation of justice, it is important that its dignity is not compromised for lack of good quality applicants. After all, it is the human capital that earns and brings reputation to an institution by its hardwork and certainly not the large number.