[This is a guest post by Shubhansh Thakur.]
In a judgement dated 14 July 2021, the Supreme Court (“SC”) in Madras Bar Association v. Union of India struck down certain provisions of the Tribunal Reforms (Rationalisation and Conditions of Service) Ordinance, 2021(“Ordinance”) by a majority of 2:1. Nageshwar Rao, J, authored the leading opinion to which Justice R. Bhat expressed his concurrence in a separate opinion. On the other hand, Justice Hemant Gupta authored his partially dissenting opinion.
The petition was filed by the Madras Bar Association (“MBA”) under Article 32; however, the grounds of challenge were not restricted to Fundamental Rights under Part III, giving rise to the issue of maintainability (Maintainability Issue). Among other grounds, the Ordinance was argued to violate the Constitution’s basic features such as Independence of judiciary and separation of powers. Additionally, the Ordinance was also attacked on the ground of violating the previous directions of the court relating to tribunal appointment and conditions of service.
Initially, the author will lay down the background of the dispute as it played a pivotal role in shaping the court’s decision. In this part, the author will analyse the maintainability issue while leaving other challenges for the next part.
THE CHEQUERED HISTORY
As highlighted, since one of the grounds of challenge was concerning previous court directions, it is pertinent to take note of those directions and analyse them to the limited extent of their relevance to the case at hand.
Several provisions of the erstwhile Companies Act relating to the formation of tribunals were assailed before the Madras High Court (“HC”) in MBA-I. The challenges were ultimately carried forward in appeal before the SC. The SC upheld the power of Parliament to transfer judicial functions from the courts to the tribunals. However, it declared Part I-C and I-D of the impugned Act unconstitutional and issued directions for making certain amendments before the provisions could be brought into force. Interestingly, the Union of India (UOI) agreed to make suitable changes before the HC, leading the SC to direct:
“However, Parts I-B and I-C of the Act, may be made operational by making suitable amendments, as indicated above, in addition to what the Union Government has already agreed to in pursuance of the impugned order of the High Court.”
The use of the words like “may be made operational” and “as indicated” leads us to believe that the SC merely issued some directory guidelines for the UOI to cure the defects. However, there is nothing to indicate that the court envisaged them as binding before fresh legislation is brought. Interestingly, the UOI had also agreed to make specific changes in the Companies Act. The effect of this agreement will be analysed while dealing with the subsequent challenges; however, for the time being, it is sufficient to point out that such consent should not bind or estop the government.
Among various other directions, it was provided that the tenure of the members to be appointed should be increased from three years to five or seven years, along with reappointment if deemed appropriate by the committee responsible for recommending the names to the scheduled tribunals. With the retirement age of 65 years, the SC believed that such a short tenure of three years was tailored to make these tribunals a retirement haven for HC judges who retire at the age of 62 years. However, considerably longer time would be required for legal practitioners before they could acquire expertise in dispute adjudication, and three years’ tenure would prove insufficient.
The SC also pointed out that the competence of the person to be appointed is different from suitability. For suitability, experience, maturity, and status are required in addition to experience for the post.
The Companies Act, 2013, replaced the erstwhile Companies Act of 1956, which came to be challenged in MBA-II. However, several of the provisions that were declared unconstitutional were either copied verbatim or, in essence, in the new Act. It is unnecessary to deal with the issues separately apart from noticing that the court struck down several provisions because they were copied verbatim in the new Act without substantial changes. Additionally, the court was motivated by concerns around the independence of the judiciary in striking down the sections, but not solely on the ground that the sections failed to comply with its previous directions (See ¶27,28,30,31.3, 33). The fact of the matter is that the statutory enactment failed to remove the defect mentioned and further undermined the independence of the judiciary and separation of powers.
Interestingly, section 413 of the same Act, which provided that a person who has not completed 50 years was ineligible for appointment in the tribunals under the Companies Act, remained unchallenged as it stood.
After that, in Rojer Mathew v. South India Bank, among several other challenges, the Tribunal, Appellate Tribunal and Other Authorities (Qualifications, Experience and Other Conditions of Service of Members) Rules, 2017 were assailed by the petitioner. The rules were struck down in their entirety, as they took away the judicial control in tribunal appointments and compromised the independence of tribunals. One rule provided for different ages of superannuation for chairman, vice-chairman, and members. This rule was struck down as violative of the parent Act, which sought uniformity in the tribunal appointment (¶175.2).
The rule prescribing a uniform tenure of appointment for the advocates elevated as members of the tribunals and retired HC or SC judges was also struck down because it sought to create equality among the unequal (¶175.1). It was also held that the short tenure of three years would deter practicing advocates from accepting the appointment in tribunals, as they would have to give up their practice for a meagre tenure of three years. It led the court to direct that tenure of five to seven years must be considered with a chance of reappointment. (¶172). It was also reiterated that MBA-I recommended a more extended period for appointment based on these principles. After the rules were struck in their entirety, the following interim relief was granted:
“We, as an interim order, direct that appointments to the Tribunal/Appellate Tribunal and the terms and conditions of appointment shall be in terms of the respective statutes before the enactment of the Finance Bill, 2017. However, liberty is granted to the Union of India to seek modification of this order after they have framed fresh rules in accordance with the majority judgment. However, in case any additional benefits concerning the salaries and emoluments have been granted under the Finance Act, they shall not be withdrawn and will be continued. These would equally apply to all new Members.“
It is clear from the reading of the above direction that the court never intended these interim directions to attain finality; instead, they merely wanted the interim directions to continue as long as there is inaction on the part of UOI and to keep the tribunals operational. The court merely fettered the power for withdrawing the financial benefits and nothing more.
The rules were subsequently reframed and were assailed in MBA v. UOI (“MBA-III”). The rules excluded advocates from being considered as Judicial Members to certain tribunals, while for others, advocates having a minimum experience of 25 years were made eligible. The Attorney General, in his submissions, assured the bench that the advocates would be made eligible for all the tribunals provided they had the experience of 25 years at the bar (¶39). The SC, however, held that the experience at the bar should be nearly equivalent to that required for an HC judge, i.e., ten years. Thus, the rule was directed to be amended to make younger advocates eligible for appointments. It was held (without reference to authority) that “A younger lawyer, who may not be suitable to continue after one tenure (or is reluctant to continue), can still return, to the bar, than an older one, who may not be able to piece her life together again.” The argument seems to be ex-facie erroneous because a more experienced candidate is always valued more. In any case, the state cannot ensure that every person appointed as a member of the judiciary must have employment for a lifetime.
The rules regarding appointment and condition of tenure similar to the one provided for in the present Ordinance’s Sec.184(11) were also given the retrospective effect. The court held that the subordinate legislation could not be given retrospective effect as the parent statute did not authorise such retrospective application. Due to this, the following interim direction was issued:
“According to paragraph 224 of the judgment in Rojer Mathew (supra), the appointments to the Tribunals were directed to be in terms of the respective Acts and Rules which governed appointments to Tribunals prior to the enactment of the Finance Act, 2017. For the purpose of clarity, we hold that all appointments made prior to the 2020 Rules which came into force on 12.02.2020 shall be governed by the parent Acts and Rules. Any appointment made after the 2020 Rules have come into force shall be in accordance with the 2020 Rules subject to the modifications directed in the preceding paragraphs of this judgment”
In essence, the interim order of Rojer Mathew merged with the MBA-III with some clarification. In this context, it is essential to note that this case was unique where there was a dialogue between the bench and Attorney General(AG), where he agreed to make changes in the rules as per the court’s directions. (See ¶41,47)
Before moving ahead, the author wants to highlight certain aspects that emerge out of the reading of the judgments, which will be used subsequently in the analysis: in MBA-I and MBA-II, the UOI defended legislation, which requires the assent of the Houses of Parliament and of the President. However, In Rojer Mathew and MBA-III, the UOI acted in its executive authority, as it was defending the rules that it framed udnder the authority of the parent Act.
Regarding maintainability, Rao J and Gupta J do not seem to add much apart from holding that a statute can be challenged to violate the separation of powers and independence of the judiciary, which flow as a necessary concomitant of the rule of law. This concept emerges out of equality and Article 14. It is submitted that such observations seem to depict a rather vague and subjective approach where every and any violation can be related to the rule of law and equality clause to invoke the writ jurisdiction. If such an approach is taken to be the standard for admitting a writ petition under Article 32, then even a statutorily imposed duty’s violation would equally breach the rule of law, and the court must not hesitate to admit such a petition. The postulates of separation of power and independence of the judiciary have various constituents spreading across the entire Constitution. The court should only interfere in a matter under Article 32 when one of these constituents either flows directly from or is intrinsically connected to the text of Part III.
There is a specific power conferred to the Parliament to enlarge the SC’s jurisdiction (Art.138) and issue writs for purposes other than those mentioned in Article 32(Art. 139). Here the negative Act of the Parliament abstaining from making the law also results in the exercise of that power intended to keep the jurisdiction of the SC restricted. It is thus difficult to discern how the SC has taken itself to adjudicate such disputes that are loosely connected to rights under Part III or instead interpreted in such a manner to relate them to rights under Part III in the guise of acting as the protector of the Constitution. The court must attempt to develop a test that brings in more objectivity and uniformity in the entire process of admission of the writ petition.
When the reason to interfere is not intrinsically and closely connected to part-III rights, the SC must attempt to refrain from admitting the petition. Instead, it should grant the liberty to approach the HC under Article 226, which enjoys a similar status as SC, i.e., acting as a Constitutional court, but with a wider jurisdiction.
Justice Bhat’s judgment fills the gaps in the reasoning of Rao J, and Gupta J in the development of a viable test. At first, he seems to avoid the issue of maintainability, observing that:
“It is therefore, too late in the day to contend that infringement by a statute, of the concept of independence of the judiciary – a basic or essential feature of the constitution, which is manifested in its diverse provisions, cannot be attacked, as it is not evident in a specific Article of the Constitution.”
However, he later goes on to depict a close and intrinsic relationship between the provisions of the Ordinance and the right to approach the SC under Article 32, when he observes:
“Therefore, it is the “equal protection” of laws, guaranteed to all persons, through institutions that assure the same competence of its personnel, the same fair procedure, and the same independence of adjudicators as is available in existing courts, that stands directly implicated. Consequently, when this court scrutinizes any law or measure dealing with a new adjudicatory mechanism, it is through the equal protection of law clause under Article 14 of the Constitution.”
The reasoning reflects a viable test to confer jurisdiction. It is settled that the Parliament has the power to transfer disputes from courts to the tribunals. This exercise will have to carry forward the same standards as would have been available with the traditional set-up. In other words, the forum for adjudication may be made different by the Parliament, but similar protections pertaining to independence and impartiality, as were available in the traditional set-up, should be equally provided. This test shows how Article 14 is relevant to testing other articles of the Constitution relating to the appointment, independence of courts sought to be replaced or supplemented by the tribunals.
The next part will deal with and analyse the substantive challenges to the Ordinance in the context of the previous directions of the courts, as mentioned in this part.