Guest Post: The Supreme Court’s judgment granting suo motu powers to the NGT

[This is a guest post by Swapnil Tripathi.]

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Earlier last month, the Hon’ble Supreme Court of India in Municipal Corporation of Greater Mumbai v. Ankita Singh & Ors., C.A. 12122 of 2018, examined the question whether the National Green Tribunal (‘NGT’) has the power to exercise suo motu  jurisdiction while exercising its functions under the National Green Tribunal Act, 2010 (‘Act’).

They two key arguments against the proposition were, (a) the Act is applicable to disputes and necessarily refers to a lis between two parties, which is necessitated by an applicant/claimant; and (b) lack of the power of judicial review by the NGT shows that it is not the same as writ Courts. The Court ultimately held that the NGT should have suo motu powers primarily because of its special role and also because the Parliament intended to vest it with such powers.

The Court reached this conclusion by adopting a purposive interpretation. In this post, I shall argue that the Court’s conclusion is incorrect. I shall critique the judgment on two grounds i.e., (a) the Court erroneously applied a purposive construction rather than the golden rule of interpretation; and (b) even a purposive construction of the Act would show that the Parliament did not intend for the NGT to have suo motu powers.

Erroneous Application of a Purposive Construction

The principle of purposive construction means that while ascertaining the meaning of a provision, the Court should adopt an interpretation which serves the purpose behind the provision. However, it is trite law that a purposive interpretation only comes into play when the literal rule or golden rule leads to absurdity or defeats the purpose of the provision. (Shailesh Dhairyawan v. Mohan Balkrishna Lulla, (2016) 3 SCC 619 at par. 33).

A perusal of Section 14 or 18 of the Act (both deal with the jurisdiction of the Tribunal and who may approach it), makes it crystal clear that an application is a must before the Tribunal can exercise its jurisdiction.

For instance, Section 14 (3) reads, ‘No application for adjudication of dispute under this section shall be entertained by the Tribunal unless it is made within a period of six months from the date on which the cause of action for such dispute first arose…’  

Reaching a conclusion that an application is only one of the methods of exercising its jurisdiction (suo motu being the other) would be absurd. The Section discusses the jurisdiction of the Tribunal and  mentions the limitation for the application so made, which shows that an application is a must. Further, if one is to assume that the Parliament was desirous of clothing NGT with suo motu powers and Section 14(3) is not exhaustive of the modes of invoking those powers, then these suo motu powers will be without any limitation whatsoever. Such an interpretation is again absurd and allows the Tribunal untrammelled powers akin to a Constitutional Court, which could not have been the intention of the Parliament.

Similarly, Section 18 which specifically deals with who may approach the Tribunal nowhere mentions the existence of suo motu powers. The provision is worded extremely expansively and has rules of standing akin to Public Interest Litigation petitions (‘PIL’). This exclusion by the Parliament is a clear indication that NGT lacks suo motu powers.  The Court reaches an opposite conclusion and argues that omission of clear words ‘that an application is necessary to trigger the NGT into action’ shows that it can be triggered suo motu. I believe this is an incorrect interpretation because by adopting this approach one can clothe a Tribunal with massive powers, only because the Parliament did not use specific words excluding a power.

In fact, Section 18(1) also mentions that every application is to be accompanied with certain particulars, which logically means that an application is a must in the first place. 

Arguendo: Parliament did not intend for suo motu powers-

Despite the golden rule hinting against suo motu powers, I am cognisant that the Court’s approach on golden v. purposive construction has been inconsistent. For instance, in S. Harcharan Singh v. S. Sajjan Singh, (1985) 1 SCC 370 the Court had observed,

‘36. The conflict between giving a literal interpretation or a purposive interpretation to a statute or a provision in a statute is perennial. It can be settled only if the draftsman gives a long-winded explanation in drafting the law but this would result in an awkward draft that might well turn out to be unintelligible. The interpreter has, therefore, to consider not only the text of the law but the context in which the law was enacted and the social context in which the law should be interpreted.’

This conflict was evident in the recent decision of Abhiram Singh v. CD Commachen, wherein the majority (writing through Lokur J.,) adopted a purposive construction whereas the minority led by Chandrachud J., adopted the golden rule. Chandrachud J., had observed (rightly in my opinion) “The legislature has carefully drafted Section 123(3) to reach out to a particular corrupt practice, which is even more evident when the ambit of Section 123(3A) is contrasted with Section 123(3). One cannot be read into the other nor can the text of Section 123(3) be widened on the basis of a purposive interpretation. To widen Section 123(3) would be to do violence to its provisions and to re-write the text.”

In the present judgment, the Court adopts an approach in favour of a purposive construction. Although it concedes that there is adequate clarity in the phraseology of Section 14 (see paragraph 15.1), it ends up looking at the intention of the Act and its provisions. In my opinion, even if we look at the intention of the Parliament we shall reach the same conclusion i.e., against suo motu powers.

First, the Court misinterprets the history and purpose behind NGT’s creation. It cites the 186^th Law Commission Report (‘Law Commission Report’) and the Statement of Objects and Reason of the Act, to argue that the Parliament intended to vest suo motu powers in the NGT.  This conclusion is based primarily on the ground that NGT was supposed to be a forum that can competently deal with complex issues of environment and also reduce the burden of the Supreme Court and High Court and hence, should have similar powers.

In fact, at paragraph 17.1 the Court observes, “As can be seen, the Parliament intended to confer wide jurisdiction on the NGT so that it can deal with the multitude of issues relating to the environment which were being dealt with by the High Courts under Article 226 of the Constitution or by the Supreme Court under Article 32 of the Constitution.”

And at 22.4 it observes, “Many of these cases transferred to NGT, emanated in the superior courts and it would be appropriate thus to ‘assume’ similar powers to initiate suo moto proceedings should also be available with the NGT’”.

Both these conclusions are incorrect. The Statement of Objects and Reasons of the Law Commission Report clearly states that the reason behind creating the NGT was two-fold i.e., (a) to reduce the pressure and burden on the Constitutional Courts and (b) to create a Tribunal equipped with experts, which can better deal with complex environmental law issues (these are reflected in the Statement of Objects and Reasons of the Act as well). The Report envisaged this body to have the same powers as a Civil Court and not Constitutional Courts. In fact, the Report cautions against giving the Tribunal powers of judicial review exercised by Constitutional Courts and writes in favour of powers of a Civil Court (page 165). These observations clearly indicate that the NGT was not to have the same powers as Constitutional Courts on environmental matters.

The Court erroneously reads paragraph 4 of Statement of Objects and Reasons of the Act to argue for a broad  mandate for the NGT. The paragraph discusses the narrow mandate of the National Environment Tribunal (NGT’s predecessor) in the context of its limited relief as the NET could only provide relief against damages arising out of accidents occurring while handling hazardous substances. The NGT’s mandate was definitely broader than the National Environment Tribunal but that was only in context of the reliefs it could grant and subject matter of cases it could entertain.  

In fact, the Report is silent on suo motu powers and only mentions that the jurisdiction of the NGT should be akin to the PIL jurisdiction of the Constitutional Courts. While discussing the need for regional Benches for the NGT, the Report observes ‘The alternative suggestion for having a single appellate Court at Delhi over the statutory authorities has not appealed to us inasmuch as practically no person or groups of persons residing in any local area who are aggrieved by orders of these authorities will be able to come all the way to Delhi to raise their grievances.’

The stress on the need for accessibility of litigants who approach the Tribunal, shows that the Law Commission and Parliament never envisaged/intended the removal of standing altogether. In other words, they never envisaged suo motu powers for the Tribunal.

Concluding Remarks:

The Court cites various other provisions and tries reading them expansively to clothe NGT with suo motu powers. This is made evident on paragraph 16.4 wherein the Court observes, ‘By choosing to employ a phrase of wide import, i.e. secure the ends of justice, the legislature has nudged towards a liberal interpretation. Securing justice is a term of wide amplitude and does not simply mean adjudicating disputes between two rival entities.’

The term ‘ends of justice’ finds a mention in several procedural and substantive statutes namely Code of Criminal Procedure and Code of Civil Procedure but that does not mean that Civil Courts and Criminal Courts are vested with suo motu powers akin to Constitutional Courts. In my humble opinion, this over expansive interpretation by the Court seems to be a case of the Court clothing the NGT with suo motu powers rather than the Parliament intending to do so.

Guest Post: The Supreme Court’s Tribunals Judgment – I

[This is a guest post by Shubhansh Thakur.]

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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.

MBA-I

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.

MBA-II

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.

Rojer Mathew

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.

MBA-III

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.

ANALYSIS

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.

Guest Post: Concerns Around the Tribunals Reform Ordinance

[This is a guest post by Shubhansh Thakur.]

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Tribunals were introduced into our justice dispensation system with the expectation to ease the burden of the traditional courts by bestowing upon them the jurisdiction to deal with certain specified matters. Certainly, it turns out that they have attained a prominent place in the adjudication of statutory rights and liabilities. The genesis of these tribunals can be traced to Articles 323A and 323B, where the former provides for the establishment of administrative tribunals as the parliament may by law provide, while the latter authorises the establishment of other tribunals falling within the subject matter specified in the second clause. The legislature has, in the exercise of its authority, established numerous tribunals to date for adjudication of several subject matter-specific disputes and correspondingly made convoluted attempts to encroach upon the independent functioning of these tribunals. One such attempt of the legislature will form the subject matter of this post: the recently promulgated “The Tribunals Reforms (Rationalisation and Conditions of Service) Ordinance, 2021” (“Ordinance”) amending the Finance Act,2017 (“Act”).

The Ordinance among other things has amended Section 184 of the Act dealing with the qualification and appointment of Chairperson and other members of the tribunal. To give a broad overview, the said section is the result of various directions rendered by the Supreme Court (“SC”) in the course of thwarting legislative attempts to retain control over the appointment for tribunals. On an overt reading of the amended section, the legislature seems to follow what has been laid by the SC but the detailed scrutiny indicates to the contrary. Here, I shall delve upon those details to highlight the dichotomy.

Initially, I shall set the background by discussing the major decisions of the court which have culminated in the Ordinance. Against this backdrop, I will argue that the Ordinance does little to solve the already existing issues, and creates scope for the creation of new ones. The Ordinance as a whole shows the need for the SC to revisit its theory of “the casting vote to CJI” as a sole means to ensure judicial dominance. The Ordinance violates several directions of the SC, but I shall restrict myself to the composition of the committee responsible for making appointments to tribunals and its impact on the primacy of the judiciary.

BACKGROUND

Before moving on to the substantive parts of the Ordinance, it is necessary to take a bird’s-eye view of the long-drawn litigation around appointments to these tribunals. The controversy erupted from the case of S.P. Sampath Kumar v. Union of India, where the ‘Administrative Tribunals Act, 1985’ was challenged. The court struck down Sec.6(1)(c) of the impugned Act, which made civil servants eligible for appointment as Chairman in these tribunals. The court saw these tribunals as complete substitutes for the HCs and thus viewed the chairman as akin to a High Court (“HC”) judge and held that such posts must be acquired by a person of proven competence with experience in the legal background, like retired HC judges. The court believed public trust and confidence would be breached if civil servants without any legal experience in fair adjudication would be left to decide the disputes. Another provision conferring exclusive discretion with the government for appointments to tribunals was also held to be unconstitutional for the reason that the government cannot have an unfettered discretion in appointing members to tribunals which are akin to HC. The court recommended alternative approaches to overcome executive control i.e. either to consult the CJI before making an appointment to these tribunals (and no appointment should be made over his/her disagreement unless for cogent reasons), or to form a high powered committee headed by the CJI, or another SC judge, or an HC judge as a nominee of the CJI, to select appointees. 

Thereafter, in L. Chandra Kumar v. Union of India, the appointment of administrative members to tribunals was challenged for their non-expertise in fair adjudication. The court annulled those challenges and noted that blanket removal of such members would strike at the very idea behind the establishment of tribunals, which were envisioned as specialised bodies where trained administrators with grass-root experience will pool in their subject-specific knowledge with the judicial members (“JM”) to reach a fair and reasoned decision. The court, by overruling the view in Sampath Kumar, held these tribunals to be supplemental to the existing HC rather than acting as their substitutes. Moreover, the decisions of the tribunals were held to be reviewable by a division bench of the HC (¶93). The court also believed that a committee headed by the CJI would ensure the recommendation of competent administrative members.

In 2010, part I-C and I-D of the Companies Act,1956 were challenged in the case of Union of India v. R. Gandhi (“R Gandhi”). The impugned parts authorised the transfer of cases from several courts to tribunals arising out of the Companies Act. The SC repelled those challenges and upheld the competence of the legislature to transfer the matters from courts to tribunals and to prescribe the eligibility criteria for appointees. However, such eligibility criteria were held to be alterable by the courts as a part of judicial review to make them comply with the independence of tribunals. The court also altered the composition of the committee responsible for appointments in tribunals due to the absence of members from judicial wing. The government was directed to include two members from the judiciary, consisting of CJI or his nominee, and any other SC or HC judge to be nominated by CJI, apart from two members from the executive wing. In the case of Madras Bar Assn. v. Union of India (“NTT case”), the aforementioned principles were reiterated to quash the formation of the National Tax Tribunal to substitute the HC, without having the salient features of a HC (¶128). 

Then came the recent case of Rojer Mathew v. South Indian Bank (“Rojer Mathew”), wherein the provisions contained under Section 184 of the Act (which has been now amended) and rules framed thereunder were challenged on the ground of excessive delegation and as being contradictory to the previous directions of SC. The SC upheld Sec. 184 but the committee responsible for recommending appointees to these tribunals was overruled since the role of the judiciary in the committee was absent except for virtual representation. The court directed the government to include members from judiciary on the lines of the Gandhi Case. The court by relying upon the fourth judges’ case also observed:

“We are in complete agreement with the analogy elucidated by the Constitution Bench in Fourth Judges case [SC Advocates-on-Record Assn. v. Union of India, (2016) 5 SCC 1] for compulsory need for exclusion of control of the executive over quasi-judicial bodies of tribunals discharging responsibilities akin to courts.”

This exclusion of executive control as per the fourth judges case is a means to preserve the independence of judiciary (¶921). The primacy of the judiciary in appointment includes two elements i.e. initiation and finalisation of the names to be appointed (¶1071 of fourth judges case). The primacy is rendered to the judiciary because (or so these judgments argue) it is best suited to judge the competence of the appointees in comparison to the government, which is certainly not better qualified or equipped to do so. It is for this reasoning that the government cannot reject the names recommended by judiciary (¶692) for appointments in HC and SC. Applying these principles, the role of judiciary in tribunal appointment should also be as imperative as in judicial appointments, especially when the SC has acquiesced to the principles in fourth judges case. This premise will be used subsequently while dealing with the Ordinance.

ANALYSIS

Vexatious Provisions

Sec. 184 (3) of the Ordinance lays down the composition of the Search-cum-Selection Committee (“Committee”), which will recommend the names to the government for appointments to be made in the Tribunals mentioned in the Eighth Schedule of the Act. This Committee will consist of (i) CJI or any other judge of the SC nominated by CJI, as the Chairperson with a Casting Vote; (ii) two Secretaries, to be nominated by the government; (iii) one other member who will vary depending upon the Tribunal and post concerned. Such a member for the appointment of a new chairperson will be the outgoing chairperson of the Tribunal while in cases of an existing chairperson seeking re-appointment, a retired HC or SC judge is to be nominated by the CJI. Moreover, if the appointments relate to the Industrial Tribunal, Debt Recovery Tribunal or in a case where the chairperson to be appointed is not a retired judge of an HC or SC (usually a technical member) or for any other notified tribunal, the fourth member in the committee will necessarily be a retired HC or SC judge, to be nominated by the CJI. All the aforementioned members of the committee will have voting power. Additionally, the Committee will also have a Secretary from the concerned department or ministry, under which the Tribunal has been constituted, who will act as a convenor, without voting authority. 

Broadly speaking, the Committee will include the CJI or her nominee as the sole representative of the judiciary, while others include outgoing members of the tribunal or the retired judge of SC or HC along with a couple of representatives from the executive wing. While the composition per se may not appear to be troublesome, it becomes so when seen in conjunction with other provisions of the Ordinance. One such provision is Sec.184(8) which grants immunity to appointments from being declared invalid merely due to the absence of a member or a vacancy in the Committee (“vacancy provision”). 

Thus, applying the principles of the Fourth Judges’ case as accepted in Rojer Mathew, primacy must be rendered to the opinion of the judiciary (which includes initiation and finalisation of names). Since the Committee has a sole representative from the judiciary, its role is pervasive and imperative. Any appointment made in defiance to the opinion of such a representative will defy primacy to the opinion of the judiciary, which cannot withstand constitutional scrutiny. It is also essential to point out that the appointees also include technical members, who are usually retired Civil Servants and whose competency can be best judged by the government and not the judiciary. The government can certainly recommend the person to be appointed, however, that advice will have to be approved by the representative of the judiciary before the name can be initiated and mulled in the committee.

However, there can be two situations where the role of CJI/its nominee is at the risk of being undermined due to vacancy provision. The two situations have been discussed below:

Situation I– When the CJI/its nominee due to some contingency could not attend the committee meeting and a name has been recommended for appointment.

At the outset, it is essential to point out that the subsections do not prescribe a valid quorum for a committee meeting; instead, immunity is granted via vacancy provision to appointments made in the absence of members. However, while the Committee is free to frame its procedure, this power cannot be extended for prescribing a valid quorum for the meeting as the same would stand to nullify the effect of the vacancy provision. In other words, such a rule of procedure, if framed, would be ultra vires the parent legislation and hence invalid.

Thus, a valid quorum in the absence of a rule/provision fixing the quorum will be governed by the case of Ishwar Chandra v. Satyanarain. The SC, in this case, has held that a meeting of a committee will be valid as long as the majority of the members are present in the meeting. This majority has been interpreted to mean the majority of the members possessing voting power, which in the scenario under discussion adds to 3 [i.e. half of total plus one (4/2+1)].

A conjoint reading of the aforementioned paragraphs goes on to show that a meeting can be held to be valid even in the absence of the CJI and the recommendation made in the meeting will remain unaffected due to vacancy provision.  In such a case, consultation with the CJI can be avoided altogether, let alone the aspect of primacy to her opinion.

Situation II– When the CJI has attended the meeting but does not agree to a particular proposal while other members do.

It would also not be an unlikely scenario to imagine that the CJI does not agree to a particular proposal for an appointment, while the other three members of the Committee may. In such a case, can the appointment be held to be valid? Unfortunately, based on the Ordinance, the answer is in the affirmative. In such a case, Casting Vote will do no good because it cannot be exercised unless there is a deadlock in the Committee concerning a particular proposal.

The primacy of the judiciary in these appointments cannot be ensured unless a particular proposal receives the concurrence of CJI along with the rest of the members. This is because she/he is the sole representative of the judiciary and best suited to judge the competence of the appointees for their effective and independent discharge of functions. The primacy will be completely vitiated when a name is recommended to the disagreement of CJI and Casting Vote does nothing to make up for such disagreement. 

Escaping the Constitutional Safeguards

The importance of consultation with the CJI (as a representative of the Judiciary) and its opinion can also be understood by drawing an analogy with the appointment process of traditional courts, which are sought to be replaced by Tribunals. The Committee is primarily responsible to recommend names for appointment in the Scheduled Tribunals. These Tribunals can be bifurcated into those which are established to replace the subordinate courts exercising original jurisdiction while others include Appellate Tribunals established to supplement the supervisory jurisdiction of HC. In both of these courts, a duty to consult the judiciary has been provided for before an appointment is made by the Governor or President, as the case may be. In appointment to subordinate courts, consultation has to take place with the HC (Art.233) while in the case of appointment to HC, consultation has to be made with the CJI and CJ of HC (Art.217). It is vital to mention that the advice tendered as a result of such consultation process is binding on the government (¶133 of Fourth Judges case). When the Tribunals sought to replace/supplement the traditional courts and perform their jobs (except which the Constitutional Courts have been specifically authorised to do), safeguards in appointment imbibed in the traditional set-up must also be carried forward to the Tribunals. Therefore, consultation with the judiciary cannot be compromised and the advice so tendered as a result of the consultation will have to be adhered to by the government. If this safeguard is not carried forward, the appointments to the Tribunals will provide an indirect route to the government for interfering in judicial appointments, something that the executive has been barred from doing. 

This, however, cannot be achieved with an Ordinance where a mere Casting Vote has been conferred to the CJI. Additionally, the incorporation of vacancy provision would certainly make non-consultation with the CJI in appointments a possibility, if not a certainty. 

Executive Discretion in Finalisation of Names

Apart from this, the government has also kept to itself the power to take a final call on the appointments to be made. This has been done by employing Sec.184(7), wherein the Committee is required to recommend a panel of two names for the government to choose from within three months. It is pertinent to point out that this section has been brought to overrule the judgement of Madras Bar Assn., wherein a rule of like nature has been quashed by the SC (¶53(iii)). The court had explicitly directed the government to limit the recommendation to a single name while keeping the other person waitlisted, to be recommended if the previously recommended name has not been approved by the Intelligence Bureau. The SC’s direction is also intending to preserve the primacy rendered to the opinion of the judiciary, of which finalisation of the name to be appointed is an integral part. The executive by this has made yet another attempt to impinge upon the task exclusively reserved for the judiciary. Hence, this provision violates the primacy of the judiciary in such appointments and abridges separation of power forming part of the basic structure of the Constitution, which cannot be abridged even in the cases of ordinary legislation. 

WHAT NEEDS TO BE CORRECTED

As reflected above, therefore, the conferment of Casting Vote alone will not ensure judicial dominance in line with the principles laid down in the Fourth Judges’ case. Rather, a veto must lie with the CJI to overturn the Committee’s decision, to make primacy to the opinion of the judiciary meaningful in such appointments. This veto power will at all times be guarded with judicial review, giving the aggrieved party a remedy for overturning it, when exercised arbitrarily. If this cannot be done, then the court must issue a writ of mandamus and direct the government to replace or supplement the vacancy provision with a proviso that a meeting cannot be valid unless the CJI is present in the meeting and an appointment in the absence and without the concurrence of the CJI shall be null and void. Apart from this, the court is expected to strike down the provision where the government has kept to itself the power to take a final call on the names to be appointed and reiterate its previous direction of limiting the recommendation by the Committee to a single name to exclude executive discretion in such appointments.

CONCLUSION

The court has to appreciate the distinction between the existence of an SC judge and an HC judge as against a retired member of the judiciary. The latter cannot be considered to be a representative of the judiciary, even if nominated by the CJI. The purpose is not merely judicial dominance, but primacy to the opinion of presently serving judiciary to ensure independence and competence of these members and the Tribunals as a whole. With these shortcomings in the present system and continuous reluctance on the part of the government to accept the already laid down directions, the time is ripe for the formation of the National Tribunal Commission (“NTC”) to oversee the administrative requirements and appointments to Tribunals. NTC has been discussed at length in Rojer Mathew(¶343), to liberate Tribunal appointments from executive menace. 

NTC will include- three serving judges of the SC along with two serving HC judges, all of them to be nominated by the CJI. The others include two members to be nominated by the government while two experts will be appointed by the government in consultation with the CJI. NTC is sufficiently safeguarded as against the present set-up because the judiciary will be represented by five serving judges in a nine-membered committee. The CJI will also have a role to play in the appointment of experts, leaving the executive representation to a meagre two in a nine-membered committee. Such a majority of the judicial members will ipso facto ensure effective consultation among judicial members and there will always be a couple of members from the judiciary to make its representation in any valid meeting. The government must distance itself from judicial appointments as their role is limited to serve as a system of checks and balances and not to drive and control the entire process. 

The Ordinance has already been challenged on several other grounds and one can only expect that the Apex court will reassess its Casting Vote theory and examine the impact of vacancy provision in its adjudication, in order to preserve the public trust in the judicial system.

Guest Post: The (Un)Constitutionality of the Uttar Pradesh Education Tribunal Bill, 2019

[This is a guest post by Tanishk Goyal and Rishabh Narain Singh.]

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On 18^th June, 2019, the Uttar Pradesh State Legislature passed the Uttar Pradesh Education Service Tribunal Bill, 2019 (‘The Bill’) which proposed to establish an Education Tribunal, to hear and adjudicate upon service disputes related to higher education. The bill soon became the subject of controversy due to a multitude of reasons which, inter-alia, also included the proposed establishment of the Tribunal at Lucknow which was not agreeable to the lawyers practicing at Allahabad as well as Oudh.  The lawyers of the Allahabad High Court Bar Association (AHCBA’) and the Oudh Bar Association (‘OBA’) essentially assailed the bill due to their opposition to the seat of the Tribunal. On August 16, 2019, a Division bench of Allahabad High Court took suo motto cognizance of the matter in  ‘In Re: Dispute Relating to Place of Establishment of Adjudicatory Forum Like Specialized Tribunal etc.’ and passed an order asking the State to explain why the specialized education tribunal was proposed to be set up only at one place, Lucknow, ignoring the place of the “Jurisdictional High Court”. This order was challenged by the OBA before the Supreme Court which ultimately quashed the cognizance taken by the Division Bench of the Allahabad High Court.

While the Bill still awaits Presidential Assent required under Article 200 of the Constitution of India, it is pertinent to note that, notwithstanding the debate on the seat of the Tribunal, there still exist certain inherent unarticulated concerns regarding the Constitutional validity of the Bill. These concerns essentially include the lack of legislative competence of the State legislature to pass the bill, the bypassing of judicial review and power of superintendence under Articles 226 and 227 of the Constitution and the violation of the principles of independence of the Judiciary.

I. Legislative Competence

The State Legislature lacks competence under both Article 323-B and Entry 25 of List III to setup a Tribunal that bypasses or dilutes the writ jurisdiction of the High Court under Articles 226/227 of the Constitution. This has been illustrated forthwith.

Tribunals have a long-standing history in India. The 42nd Constitutional Amendment Act inserted Articles 323A and 323B which provide for establishment of Tribunals. The chief purpose of bringing in Tribunals, was to lessen the burden of the High Courts and to provide justice to the litigants in an expeditious and efficient manner. While Article 323-A is exclusively reserved for the Parliament which has the power to set up “Administrative Tribunals”, Article 323-B uses the word “appropriate legislature”, thus empowering both the Parliament and the State Legislature to set up tribunals on the matters mentioned in sub clause(2).

It is also acknowledged here that these Articles are only enabling provisions, and the Parliament or the State Legislature can also establish tribunals beyond them, for the administration of justice as long as they possess the legislative competence under the appropriate Entry in the Seventh Schedule. This has been reiterated by the Supreme Court, in multiple decisions. Illustratively, the Court, in the case of Union of India v. R Gandhi held that:

“80. The legislative competence of Parliament to provide for creation of courts and tribunals can be traced to Entries 77, 78, 79 and Entries 43, 44 read with Entry 95 of List I, Entry 11-A read with Entry 46 of List III of the Seventh Schedule. Referring to these articles, this Court in two cases, namely, Union of India v. Delhi High Court Bar Assn. [(2002) 4 SCC 275] and State of Karnataka v. Vishwabharathi House Building Coop. Society [(2003) 2 SCC 412] held that Articles 323-A and 323-B are enabling provisions which enable the setting up of tribunals contemplated therein; and that the said articles, however, cannot be interpreted to mean that they prohibited the legislature from establishing tribunals not covered by those articles, as long as there is legislative competence under the appropriate entry in the Seventh Schedule.” (emphasis supplied)

Moreover, the contention that Tribunals can be only be constituted with respect to matters mentioned in Articles 323-A and 323-B of the Constitution, was explicitly rejected by the Court in the same case, where it said that:

“83. […] It is [the petitioner’s] contention that the very fact that Articles 323-A and 323-B have been specifically enacted empowering the legislature concerned to make a law constituting tribunals in regard to the matters enumerated therein, demonstrated that tribunals cannot be constituted in respect of matters other than those mentioned in the said Articles 323-A and 323-B. The contention is not sound.

In light of this, while the words “education” and “service” find no mention in sub clause (2) of Article 323-B and there is no other matter mentioned therein which is analogous to education and service, the State may still be in a position to argue that it has exercised its powers under Item 25 of List III of the Constitution of India, which enumerates the following matters on which the State can make laws:-

“25. Education, including technical education, medical education and universities, subject to the provisions of Entries 63, 64, 65 and 66 of List I; vocational and technical training of labour.”

However, an eleven-judge bench of the Supreme Court in T.M.A Pai Foundation v. State Of Karnataka (‘T.M.A Pai’) limited the power of the State Legislature to set up educational tribunals for the adjudication on disputes relating to private educational institutions only. The observation of the Supreme Court is instructive, and deserves to be quoted in full:-

“64. In the case of educational institutions, however, we are of the opinion that requiring a teacher or a member of the staff to go to a civil court for the purpose of seeking redress is not in the interest of general education. Disputes between the management and the staff of educational institutions must be decided speedily, and without the excessive incurring of costs. It would, therefore, be appropriate that an educational Tribunal be set up in each district in a State, to enable the aggrieved teacher to file an appeal, unless there already exists such an educational tribunal in a State — the object being that the teacher should not suffer through the substantial costs that arise because of the location of the tribunal; if the tribunals are limited in number, they can hold circuit/camp sittings in different districts to achieve this objective. ” (emphasis supplied).

The above ruling of the Court was against the backdrop of the law settled by a seven-judge bench in the case of L Chandra Kumar v. Union of India which held that judicial review under Articles 226/227 and Article 32 forms a part of the basic structure of the Constitution. More specifically, it was held that the jurisdictional powers of the tribunal constituted under Articles 323A and 323B are subject to the powers of the High Court adumbrated in Articles 226/227 of the Constitution. The Supreme Court struck down clause 2(d) of Article 323A and clause 3(d) of Article 323B on the grounds that they excluded the jurisdiction of the High Courts and the Supreme Court under Article 226/227 and 32 respectively.

This essentially means, that under no circumstances,can the State Legislature exclude the writ jurisdiction of the High Court by the establishment of a Tribunal. Since private educational institutions do not qualify as “State” within the meaning of Article 12, they are not amenable to the writ jurisdiction of the High Court. Therefore, the establishment of an education tribunal for the adjudication of disputes of private educational institutions, does not exclude the writ jurisdiction of the High Courts under Articles 226/227 of the Constitution.

Unlike the case in T.M.A Pai, the Uttar Pradesh Bill does not contain the words “private schools and institutions” which essentially means that it is only meant for the Government Educational Institutions which qualify as ‘State’ within the meaning of Article 12, thereby making them amenable to the writ jurisdiction of the High Courts under 226/227 of the Constitution. Section 8 of the Bill nefariously attempts to bypass this writ jurisdiction of the High Court. To this effect, it reads as:-

“8.On and from the date from which any jurisdiction, powers and authority becomes exercisable under this Act by the Tribunal in relation to service matters of teachers and non teaching employees working in an educational institution, no court except the Supreme Court shall have or be entitled to exercise any jurisdiction, power or authority in relation to such service matters” (emphasis supplied).

This runs counter to the dictum of the apex Court in the case of L Chandra Kumar v. Union of India as mentioned above. It is pertinent to note here that the ruling in L Chandra Kumar also held Article 227 to be a part of the basic structure of the Constitution of India. This essentially means that the ruling is not limited only to the tribunals enacted under Article 323A and 323B but also extends to the tribunals which have been formed under Lists II and III and which come under the High Court’s power of superintendence by virtue of Article 227 of the Constitution, thus covering the U.P Education Tribunal in the present case.

More specifically, Section 8 of the U.P Bill bypasses judicial review of the decision of a statutory/quasi-judicial authority. In a recent judgement of the Supreme Court in M/S Embassy Property Developments Pvt Ltd v. State of Karnataka, a three-judge bench of the Supreme Court categorically held that the High Court can entertain a writ petition under Article 226 against an order of NCLT (a statutory/quasi-judicial authority) under an IBC proceeding. The court clarified that the decisions of statutory or quasi-judicial authorities can be only be corrected by way of judicial review of the administrative action.

Even under ‘special circumstances’, Section 10 of the Bill only allows an aggrieved party to invoke the ‘revision’ powers of the High Court on the ground that the matter involves a ‘question of law’. To this effect, Section 10(1) reads as:

“10. Any person  or authority aggrieved. by an order made. by the Tribunal, may, within 90 days from the date of order, apply to the High Court for revision of such order on the ground that the case involves any question of law.”

This provision essentially restricts the writ jurisdiction of the High Court under Articles 226/227 of the Constitution to a mere revisional jurisdiction which can only be invoked under special circumstances. A combined reading of Sections 8 and 10 therefore, amply illustrate the State’s attempts to clip the wings of the High Courts and willingly flout the basic structure of the Constitution.

While the bill needs to be scrutinised for what it says as mentioned above, it  needs a closer scrutiny for what it does not say. For instance, the bill is completely silent on the issue of having any statutory appeal against the decision of the Education Tribunal. This essentially translates to a situation where a litigant may only have a recourse to the ‘revisional’ jurisdiction of the High Court against an order of the Education Tribunal and that too, under special circumstances. This silence of the Bill is especially concerning, inasmuch as even the legislations establishing Education Tribunals for private educational institutions provide for a statutory appeal against any order/direction/judgement of the Tribunal before the High Court. (For example, See, The Jharkhand Education Tribunal Act, 2005, §16).

It was perhaps due to the foregoing reasons that the Governor of Uttar Pradesh in exercise of his powers under Article 200 referred the bill to the President, as it aims to curtail the power of the High Court. Article 200 essentially puts the Governor under an obligation to protect the wide powers of the High Courts from being divested by the legislature. To this effect, the proviso of Article 200 reads as:-

“Provided further that the Governor shall not assent to, but shall reserve for the consideration of the President, any Bill which in the opinion of the Governor would, if it became law, so derogate from the powers of the High Court as to endanger the position which that Court is by this Constitution designed to fill.”(emphasis supplied).

Having apprised the reader of the legislative incompetence of the State to enact the said Bill, we now move on to argue how the Bill grossly violates the principles of Independence of the Judiciary.

II. Judicial Independence

Another glaring flaw with this bill is regarding the composition of the education tribunal, as technical members exceeded the number of judicial members. Illustratively, Section 3(2) of the Bill provides for:

“[A] Chairperson, a Vice Chairperson (Judicial), a Vice Chairperson (Administrative) and such other Judicial and Administrative members not less than three in each category as may be determined by the State Government” (emphasis supplied)

Additionally, Section 3(3)(a) of the Bill lists out the qualifications required for the appointment as a chairperson. Essentially, it requires the appointee to either:

“(i) [have] been a Judge of a High Court; or

(ii) [have] for at least two years held the post of Vice Chairperson (Judicial); [or]

(iii) [have] been a member of the Indian Administrative Service and held the post of a Secretary to the Government of India  or any other post under the Central or State Government equivalent thereto, and [have] adequate experience in dispensation of justice.”

This provision may essentially create a situation where the Tribunal comprises three Judicial Members and four administrative members with the chairperson being an administrative member. Such a composition is not permissible under our constitutional scheme as it has the potential to put the judicial member(s) in minority, thus giving primacy to the executive.

Bearing in mind the principles of Judicial Independence, a five-judge bench of the Supreme Court in Rojer Mathew v. South Indian Bank Ltd, while reiterating the need to secure the independence of judiciary, struck down the rules framed under the Finance Act, 2017 as they did not comply with directions issued in Union Of India v. R Gandhi. Borrowing from R Gandhi, a five judge bench, which reviewed the Constitutional validity of Parts I-B and I-C of The Companies Act, 1956 inserted by the Companies (2^nd Amendment) Act, 2002, held that:-

“48. if Tribunals are established in substitution of Courts, they must also possess independence, security and capacity. Additionally, with transfer of jurisdiction from a traditional Court to a Tribunal, it would be imperative to include members of the judiciary as presiding officers/members of the Tribunal. Technical members could only be in addition to judicial members and that also only when specialised knowledge or know-how is required. Any inclusion of technical members in the absence of any discernible requirement of specialisation would amount to dilution and encroachment upon the independence of the judiciary.” (emphasis supplied)

It is pertinent to note here that, in Union of India v. R Gandhi, the court found out that certain provisions of Company (Second Amendment) Act, 2002 suffered from unconstitutional “defects.” In an attempt to cure such defects, the Court suggested certain corrections which, inter-alia, included the following suggestion:- “xiii. Two-member Benches of the Tribunal should always have a judicial member. Whenever any larger or special Benches are constituted, the number of technical members shall not exceed the judicial members.” (emphasis supplied).

The composition of the GST Appellate Tribunal was also declared unconstitutional by the Madras High Court in the case of Revenue Bar Association v. Union Of India on similar grounds. In this case, the High Court dealt with the constitutional validity of Sections 109 and 110 of Chapter XVIII of the Central Goods and Service Tax (CGST) Act, which said that the Tribunal should have one judicial member and two technical members, each from the Centre and State, a composition which was held to be impermissible under our constitutional scheme.

Thus, from a perusal of the above cases, it is sufficiently clear that Technical/Administrative members cannot override the number of Judicial Members in a Tribunal. It is also clear that the Chairperson of the Tribunal should necessarily be a judicial member in order to safeguard the judiciary from excessive executive interference.

Tribunals create a unique situation where the State, being the biggest litigant or stakeholder in our judicial system, itself becomes a part of the adjudicating body. This strikes at the very root of judicial independence which becomes prone to being caught in the crosshairs of the legislative sniper. While we cannot disregard the aid and assistance of technical/administrative members, who with the help of their expertise and specialised knowledge facilitate the justice delivery process, we have to be cautious that their presence is not translated to their dominance in the Justice delivery system.

Conclusion

In light of the growing need to unload the burden of the superior courts, tribunalisation has been increasing at a breakneck pace. These Tribunals unarguably are an essential part of the justice delivery system and they require complete autonomy and independence while effectively discharging their onerous duties of dispensing justice. However, it is trite to mention that Tribunals have not yet achieved full independence and  despite the Court’s exhaustive directions issued in R. Gandhi, they increasingly continue to  undermine the Constitution.

As far as the U.P Bill is concerned, the following corrections may be required to make the Bill constitutionally permissible

• Section 3(2) should be amended to conclusively ensure that the number of administrative members do not exceed the number of judicial members.
• Section 3(3)(a) should be amended to ensure that the Chairperson is a judicial member only.
• Section 8 of the Bill should be amended to ensure that the writ jurisdiction of the Allahabad High Court under Articles 226/227 is not excluded.
• Section 10 of the bill should provide a statutory appeal to the Allahabad High Court against any order/direction/judgement of the Tribunal.

However, until the time the directions of the Court in R Gandhi are not complied with; or a Single Nodal Agency under the aegis of the Ministry of Law and Justice to monitor the working of Tribunals as suggested by the Law Commission of India in its 272^nd Report is not established, this responsibility to ‘cure’ the unconstitutional defects in Tribunals would have to remain with the Superior Courts of the country.

Guest Post: On the (Un)Constitutionlity of the Competition Commission – A Response

[This is a guest post by Rajat Maloo.]

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It has been previously argued on this forum (here and here) that the Competition Commission of India (CCI), in its current form is unconstitutional. The argument hinged on the contention that the CCI is a body with majorly judicial characteristics and functions apart from a few advisory and administrative functions. Thus, the composition and selection of members of the CCI, which is executive-dominant is unconstitutional as it violates the principle of separation of powers. Based on this, the previous posts criticise the Delhi HC’s judgement by arguing that CCI is a judicial body and it should not be characterised as an administrative body. In this piece, I argue that the CCI is in fact a regulatory body possessing a wide range of powers to facilitate its functioning, including inquisitorial, investigatory, administrative, advisory and judicial powers. I contend that first, the CCI is not a judicial body as it does not adjudicate disputes between parties; and second, judicial powers, if any, of the CCI are limited. While making my own case, I wish to respond to some of the arguments made in the previous posts, albeit, I do not analyse/support the Delhi HC’s judgement in detail.

The CCI is not a Judicial Body

The question of independence of judiciary and separation of powers in judicial tribunals is not a new one. The Supreme Court of India (SC) through numerous decisions over the years, including the recent decision in Rojer Mathew, has established that any tribunal performing judicial functions by replacing a court of law must be judicially dominant. This means that majority of members as well as majority of the selection committee of such members must be from the judiciary to ensure independence of judiciary and separation of powers. However, regulatory agencies, not just in India but also in other jurisdictions such as the US, are placed on a different footing as compared with tribunals performing judicial functions. This is because the powers and functions possessed by regulatory agencies are quite different from a judicial or quasi-judicial tribunal. In this part, I will respond to the argument that CCI is judicial in nature.

In brief, the CCI performs four major functions under the Competition Act, 2002–

1. Ex-post regulation of anti-competitive agreements – Section 3
2. Ex-post regulation of abuse of dominant position – Section 4
3. Ex-ante regulation of combinations – Sections 5 and 6
4. Competition advocacy and advisory functions – Section 49

Now, it is clear that powers under Section 49 are not judicial in nature. Hence, I shall focus on the CCI’s functions under Sections 3, 4, 5 and 6 of the Act.

Relying on the Cooper v. Wilson test, a judicial decision, in the very first place, presupposes a dispute between parties. However, the CCI’s functions do not include resolving or adjudicating disputes between parties. Under Sections 3 and 4, the CCI’s function is majorly investigatory and then punitive if there is a finding of contravention (Sections 27). Further, the ‘informant’ under Section 19 of the Act is not a party to the dispute before the CCI. The informant is merely a source of information for the CCI, upon which it may or may not conduct or order an enquiry. In fact, under Section 19 of the Act, the CCI can suo motu take up an enquiry or may initiate an enquiry on information provided by the Central or the State Governments. Any person or Government, merely by informing the CCI does not become a party to the dispute. This is also evident from the fact that any decision of the CCI is not in favour of or against any party as such. The CCI may go much beyond the information provided by the informant while inquiring into a matter and possesses wide inquisitorial powers. Thus, the very first rung of the test is not met as there is no adjudication of disputes between parties.

Moreover, any disputing party has a right to approach a Court of law or tribunal for adjudication of the dispute – be it of civil or criminal nature. The Court or tribunal is then expected to listen to both the parties, frame issues, assess evidence and pronounce a decision. A Court cannot in the very first hearing simply refuse to adjudicate upon a dispute merely on the basis that the petitioner is not able to make a prima facie case. However, the CCI has the power to not enquire into an information brought to it by an informant.

In fact, the legislature has very consciously not provided the CCI the power to adjudicate disputes – one such instance is awarding compensation to any informant. Such a matter entails or presupposes a dispute between two parties which is very well left for the Appellate Tribunal (judicially-dominant) to determine under Section 53N of the Act. Thus, the CCI does not adjudicate disputes between parties and the legislature has not required the CCI to do so.

In the alternative, even on the assumption that the CCI adjudicates disputes, the Cooper Test also requires that the parties to a dispute must be given a chance to put forth their case. However, according to the SC, an ‘informant’ is not even entitled to a hearing in case the CCI chooses not to go ahead with the enquiry (CCI v SAIL). This means that the CCI can reject the information provided by the informant for enquiry, without even giving the informant an opportunity of being heard. Thus, the legislature as well as the judiciary has not envisaged the CCI as a body to resolve or adjudicate disputes between parties.

Admittedly, the CCI has been given the powers under Section 27 of the Act to impose penalties on persons or enterprises found to be in violation of Sections 3 and 4. However, mere imposition of monetary penalties, based on an enquiry, does not suffice to characterise the body as a judicial body. Purely executive and other regulatory bodies such as the SEBI etc., have the power to impose penalties, which do not make them a judicial body. Moreover, any penalty imposed by the CCI is appealable to the Appellate Tribunal under Section 53A of the Act. Thus, mere power to impose penalties does not give the CCI a completely judicial characteristic.

Now, with regard to ex-ante combination review functions performed by the CCI – once again, it does not entail adjudication of a dispute. At least some form of adjudication of dispute is the very essential requirement for a body to be characterised as a judicial body. However, under Sections 5 and 6, the CCI only preforms regulatory functions to approve or reject potential combinations. In regulating combinations, there is no dispute as such which the CCI has to determine or no parties which come before the CCI for adjudication of a dispute. Merely by giving parties a notice or providing the combining parties an opportunity of hearing does not mean that the CCI is adjudicating a dispute.

Thus, the CCI does not adjudicate disputes and if at all, performs limited number of judicial functions which cannot suffice to characterise it as a completely judicial body.

Limited Judicial Nature

I will now argue that just because the CCI has the power to grant interim orders or other such orders provide it with only certain limited judicial powers and yet again, it does not mean that the CCI is majorly performing judicial functions. Essentially, the judicial powers of the CCI are quite limited and are not enough to give it the authority to function like a full-fledged judicial or quasi-judicial tribunal. For this, the whole functioning of the CCI will have to be examined. The previous post effectively summarises the procedure of enquiry conducted by the CCI regarding the Sections 3 and 4 matters:-

“…the procedure adopted by the CCI in conducting the inquiry under Section 19 is to be examined. The procedure is provided for under Section 26 of the Act. According to the said provision, upon receipt of information or reference, the CCI is required to form an opinion as to the existence of a prima facie case of contravention of the provisions of the Act. If it finds a prima facie case of contravention of the Act, it is required to direct the Director General to investigate the matter. If it finds no prima facie case of contravention of the provisions of the Act from the information provided, it is required to pass an order to that effect and close the matter. It is also required to send a copy of the order to the parties concerned.”

 

This initial procedure, not just the form but also the substance, is ma inquisitorial rather than judicial. As soon as the CCI receives information, it may order the Director General (DG) to enquire. On the basis of the findings of the enquiry, the CCI gives the Opposite Parties as well as the informant a chance to submit their arguments. However, it is to be noted that the case against an Opposite Party is not made by the informant (as should happen in any adversarial judicial proceeding which entails determination of a dispute) but through the enquiry conducted by the DG. This takes away the judicial nature of a court or a tribunal and indicates that the CCI is more of an inquisitorial body.

The CCI is also provided with a set of factors, on the analysis of which, it is required to come to its decision. Sections 19 and 20 use the word ‘shall’ before laying down the limited factors to determine violations under Section 3 or 4 or factors to regulate combinations. This indicates that the CCI is mandated to give due regard to these factors and must function within them. Such limitation on the scope of the CCI clearly show that it is expected to act as a regulatory body with only a few judicial powers.

In this regard, it is also notable that the CCI is established as a body corporate as per Section 7(2) of the Act. Unlike any Court of law or any judicial tribunal (such as the NCLT, for example), the CCI can be made a party to an appeal. The CCI will also have to defend its own decision on appeal before the Appellate Tribunal, any High Court or the SC. This position of law has also been crystallised by SC in CCI v SAIL wherein it was held that the CCI must be a necessary or proper party in appeals. This is vastly different from any Court of law, such as a Civil Court of first instance or a Criminal Court, or any tribunal. Although, judicial bodies may get their authority from statutes, they cannot be made a party or be required to defend their own decisions upon appeal. This shows that the legislature while establishing the CCI through the Act, has been very clear about the limited extent of judicial powers which the CCI can exercise. Having such limited powers, it cannot be said that the CCI is replacing a traditional court in any manner.

Hence, although it was argued by Dev that the CCI under Sections 27, 28 and 31 possesses enforcement powers, the overall functioning of the CCI is largely different from any judicial or quasi-judicial body.

Now, it may be argued that Section 61 of the Act excludes jurisdictions of civil courts and hence, the CCI replaces a Civil Court – which requires the dominance of judiciary in the selection process. However, I submit that this does not necessitate the CCI to be judicially-dominant body because although Section 61 requires that matters relating to antitrust and competition must be submitted before the CCI, but as argued above, the CCI does not replicate a Civil Court in terms of its powers and functions.

Hence, I submit that the CCI does not adjudicate disputes and has very limited judicial powers which are vastly different from a traditional Civil Court or any judicial or quasi-judicial tribunal for that matter. In such a case, the CCI in its current form is not unconstitutional even if its selection committee is not judiciary-dominant as it is not replacing any Civil Court as such. In any case, the CCI’s decisions which affect any person or enterprise adversely are appealable to a judicial body – the Appellate Tribunal.

Guest Post: On the (Un)Constitutionality of Competition Commission – II

[This is a two-part series by Rahul Dev.]

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I submit that the characterization of the CCI as an administrative body is incorrect. It is to be considered a judicial body which performs the function akin to those performed by courts. Once it is considered a judicial body, it can be said that it requires the same independence from the executive as enjoyed by courts of law.

The primary objective of the CCI is to ensure competition in markets, by enforcing the provisions of the Act. To that end, its objective is to ensure that the provisions of the Act are not contravened. The only powers provided to the CCI to enforce the provisions of the Act are provided under Sections 27, 28 and 31 of the Act. These sections empower the Commission to pass orders and issue directions to entities found to be engaging in anti-competitive behaviour. The CCI is also empowered to issue interim orders during an inquiry under Section 33 of the Act.

The CCI does not have any legislative or executive powers to ensure compliance with provisions of the Act and prevent anti-competitive behaviour. It cannot pass orders or issue directions in rem which are binding on the public at large or have any statutory force. It does perform an advisory function under Section 49 of the Act. However in its performance of the advisory function it does not have the power to enforce provisions of the Act. This is clarified by the provision itself which states that the advice of the CCI shall not be binding on the Government in formulating a policy.

An examination of the nature of functions performed by the CCI under Sections 27, 28 and 31 is to be made in order to determine the nature of the function performed in enforcing the provisions of the Act. For without the powers provided under these sections, the CCI would be devoid of any power to enforce the provisions of the Act. Therefore the nature of these powers would determine the nature of the primary functions performed by the CCI.

On the face of it, the powers provided to the CCI by the aforesaid provisions are judicial. They relate to the power to pass orders and issue directions against parties. A test to determine whether a decision is a judicial decision or a quasi-judicial decision was laid down by the King’s Bench of the High Court in England in Cooper v. Wilson, (1937)2 K.B. 307. The test has been followed by the Supreme Court of India in a number of decisions, some of which were in fact cited before the Delhi High Court. The Test states:

A true judicial decision presupposes an existing dispute between two or more parties, and then involves four requisites :- (1) The presentation (not necessarily orally) of their case by the parties to the dispute; (2) if the dispute between them is a question of fact, the ascertainment of the fact by means of evidence adduced by the parties to the dispute and often with the assistance of argument by or on behalf of the parties on the evidence; (3) if the dispute between them is a question of law, the submission of legal argument by the parties, and (4) a decision which disposes of the whole matter by a finding upon the facts in dispute and application of the law of the land to the facts so found, including where required a ruling upon any disputed question of law. A quasi-judicial decision equally presupposes an existing dispute between two or more parties and involves (1) and (2), but does not necessarily involve (3) and never involves (4). The place of (4) is in fact taken by administrative action, the character of which is determined by the Minister’s free choice.

 

Examination of Nature of Decision under Section 27

In order to apply this test to the function of the CCI under Section 27, the procedure adopted by the CCI in conducting the inquiry under Section 19 is to be examined. The procedure is provided for under Section 26 of the Act. According to the said provision, upon receipt of information or reference, the CCI is required to form an opinion as to the existence of a prima facie case of contravention of the provisions of the Act. If it finds a prima facie case of contravention of the Act, it is required to direct the Director General to investigate the matter. If it finds no prima facie case of contravention of the provisions of the Act from the information provided, it is required to pass an order to that effect and close the matter. It is also required to send a copy of the order to the parties concerned.

A reading of the regulations governing the contents of information to be filed before the CCI (Regulation 10 of the CCI (General) Regulations 2009), reveals that the information is to contain detailed facts, allegations of contraventions of provisions of the Act along with supporting evidence which may be available, arguments in support of its contentions and reliefs which are claimed. The submission of such a document to the CCI satisfies the first requisite of the test that there must be a presentation of their case by parties to the dispute.

It is inconsequential that, in the event the CCI finds no prima facie case of contravention and passes an order to that effect, a presentation of the case is not made by the party against whom the dispute had been raised (Opposite Party) as required by the aforementioned test. This is because the Regulations require that a copy of the information be sent to the Opposite Party. Further, Section 26 of the Act mandates that the order of the CCI is required to be sent to both the informant and the opposite party. These requirements suppose the existence of a dispute between the informant and the opposite party.

Although the aforementioned test requires that the case of both parties to the dispute be presented, the presentation of its case by the Opposite Party may not be required in circumstances where the information lacks sufficient merit for the CCI to make out a prima facie case. The desperate lack of merit in the case of one party such that it obviates the necessity of a response from the other party cannot change the character of the proceeding. The authority to which the case is presented may itself identify the lack of merit and dismiss the matter at the threshold.

The High Courts exercise a similar power at the stage of Preliminary Hearing of a Writ Petition. The only difference is that the Petitioner there is given an opportunity to orally present her case. If the High Court finds that the petition lacks merit, it may dismiss the matter at the threshold without issuing notice to be issued to the Respondent. However, the lack of response from the respondent in a writ petition which lacks merit does not change the nature of the proceeding or the decision made thereon.

Having established that in such cases the act of filing of information meets the first criteria of the test, I shall proceed to examine whether an order made in such cases meets other criteria laid down by the test. The second criteria is that if the dispute is between the parties is a question of fact, the authority must ascertain facts by means of evidence adduced by the parties to the dispute and often with the assistance of argument by or on behalf of the parties on the evidence.

In forming a prima facie opinion which is the basis of the order, The CCI would be required to establish the veracity of facts stated in the information. The ascertainment of the veracity of facts is to be done by evaluating evidence produced along with the information. Since no investigation can take place at this stage, the CCI would necessarily be required to rely on evidence produced by the informant in verifying facts. Therefore an order passed under Section 26(1) of the Act would satisfy the second criteria.

So far as the third criteria is concerned, the CCI would ordinarily not consider a question of law while forming a prima facie opinion as to a possible contravention of the Act. It is to be noted that this criteria need not be met if no question of law is raised. Therefore the question of considering a legal argument at this stage does not arise.

An order finding no prima facie case of contravention of the provisions of the Act meets the fourth criteria. This is because it does dispose of the whole of the matter upon a finding upon facts and applying the facts found to the law. As noted earlier, at this stage the CCI is required to examine the veracity of facts by evaluating evidence adduced. This process leads the CCI to come to a finding upon the facts alleged in the information. Once it has made a finding upon the facts, it must determine whether the facts found would on the face of it contravene the provisions of the Act. To that end, it is required to consider arguments made by the informant as to why the facts alleged constitute a contravention of the provisions of the Act.

Thereafter, it must apply the facts found to the law. That is to say, the facts found must be tested against the provisions of the Act so as to determine whether they might on the face of it constitute a contravention of the provisions. It is required to apply its mind while making this determination. It is also required to provide reasons in its order as to why, the findings of fact were so made and as to why it found no contravention on the face of the facts found upon their application to the law.

Now, if an order passed under Section 26(1) of the Act is considered a judicial decision, an order passed by the CCI under Section 27 after consideration of objections by the Opposite Party and questions of law and arguments thereon, is also to be considered a judicial decision.

Examination of Nature of Decision under Section 28

Section 28 of the Act empowers the CCI to pass an order in writing directing the division of a dominant enterprise to ensure that such enterprise does not abuse its dominance. The Act in its current form does not specify a procedure to be followed in passing such orders. Prior to the amendment carried out in 2007, an order under Section 28 was to be passed by the Central Government on a recommendation by the CCI. However such a recommendation could be made only if the CCI had found the enterprise in question to have abused its dominant position in the market under Section 27 of the Act. Therefore prior to the amendment, a condition precedent to an order under Section 28 was an order passed under Section 27.

I would submit that this position has not changed after the amendment. This is because, the prohibition under the Act relates to the actual abuse of dominance rather than a possible abuse of dominance. The objective of the Act is not the prevention of dominance in the markets but the prevention of anti-competitive behaviour which arises out of dominance. A reading of the provision would show that there is no guidance with regard to the circumstances under which the CCI may direct the division of an enterprise. There is no guidance as to the factors which may be considered by the CCI before concluding that an enterprise is likely to abuse its dominant position.

Therefore an order under Section 28 cannot be passed without following the procedure under Section 26. As has been examined, the procedure contemplated under Section 26 leads to a decision that is judicial in nature. Therefore an order passed under Section 28 of the would be a judicial decision.

Examination of Nature of Decision under Section 31

Having established that the CCI exercises judicial powers in passing orders with regard to anti-competitive activities under Section 3 and 4 of the Act, we must examine the nature of the function performed by it in regulating combinations through orders passed under Section 31 of the Act. This function cannot be categorised as one that is purely judicial in nature, since it is not an order arising out of an adversarial proceeding. (However it does attain the character of an adversarial proceeding when objections are filed to the proposed combination by a person who would be affected by it.) The passing of an order under Section 31 of the Act involves the examination of facts pertaining to the combination. The CCI thereafter is required to apply such facts and determine whether the combination is likely to have an appreciable adverse effect on competition in the relevant market. This involves consideration of several factors including whether the combination would enjoy a dominant position in the relevant market after such combination is given effect. A list of factors to be considered by the CCI in deciding the question as to whether a combination is likely to have an appreciable adverse effect on competition in India, is provided under Section 20(4) of the Act. Therefore the CCI is required to apply the facts to the policy laid down by the law and determine the question.

There are several judicial elements to the function performed by the CCI in regulating combinations through orders. The function is not very different from the function performed by a company court in mergers and amalgamations of companies. These functions are more akin to judicial functions than to executive or legislative functions.

From the above analysis it is clear that the primary functions of the CCI performed are judicial in nature. Although it does perform secondary functions which are advisory in nature, they cannot be taken to be a basis of classification of the nature of the body. If the function of the CCI is considered to be the prevention of anti-competitive behaviour through the enforcement of the provisions of the Act, the only powers which enable it to do so are judicial in nature. Without these powers, the CCI would be a toothless body, incapable of enforcing the provisions of the Act. Therefore, I submit that the CCI is to be considered a judicial tribunal.

If the status of the CCI is that of a judicial tribunal, its composition and manner of appointment of members would need to be in line with the guidelines laid down by the Supreme Court in paragraph 120 of its judgment in Union of India v. R. Gandhi which were reiterated in Madras Bar Association v. Union of India. This is because once it is characterized as a judicial tribunal, the CCI becomes a judicial body performing the role of a court.

Therefore the constitution of the CCI, which has a preponderance of non-judicial members, coupled with the fact that they are selected by a committee whose majority of members are appointed by the Central Government are clearly violative of the guidelines laid down by the Supreme Court. For these reasons, I submit that the CCI in its current form is unconstitutional.

Guest Post: On the (Un)Constitutionality of Competition Commission – I

[This is a two-part series by Rahul Dev.]

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In April 2019, the Delhi High Court upheld the constitutional validity of the Competition Commission of India (CCI). The challenge to its validity was based on the ground that the structure of the CCI disregarded the constitutional doctrine of the separation of powers. The Petition alleged that the CCI, which was a judicial body performing judicial functions, was not sufficiently independent of the Executive. In this two-part series, I will argue that the CCI is in fact unconstitutional.

Before examining the constitutional validity of the CCI, I believe that a summary of the context in which it was established and its evolution would be useful. A brief overview of the context is as follows: A committee (Raghavan Committee) was appointed by the Government of India in 1999 to advise on a new Competition Law in India. The committee submitted its report in 2000 and recommended the enactment of a new competition law in line with international developments. On the basis of this report the Competition Act 2002 (the Act) was enacted.

Soon after the CCI was established under the Act, A Writ Petition (Brahm Dutt v. Union of India) was filed before the Supreme Court, challenging the Rules prescribed by the Central Government under the Act for the selection of the Chairperson and other Members of the Commission. It was alleged that Rule 3 was unconstitutional on the ground that though the CCI was largely a judicial body, the power to select and appoint its members was conferred on the Central Government. It was contended that the rule in question was contrary to the doctrine of separation of powers and was liable to be struck down.

The Government filed a counter-affidavit refuting the Petitioner’s contentions. However, it thereafter filed two additional counter-affidavits stating that certain amendments were proposed to be carried out in the Act as well as the Rules. It said that the proposed amendments were to be carried out to enable the Chairman and the Members to be selected by a Committee presided over by the Chief Justice of India or his nominee. It was further stated that the alleged usurpation of judicial power would be remedied by the establishment of an appellate authority which would be a judicial body conforming to the doctrine of separation of powers.

The Supreme Court, being of the view that the proposed amendments would have a direct bearing on the outcome of the Writ Petition, did not pronounce a judgment on the issue at that time. It decided to leave all questions open to be decided after the proposed amendments were made, and disposed of the matter. The amendments that were spoken of by the Central Government were carried out in 2007. It was through this amendment that the CCI, which was established in 2003, attained its current structure.

Examination of CCI’s Constitutional Validity by the Delhi High Court

Several car manufacturers who were aggrieved by an order passed by the CCI filed Writ Petitions before the Delhi High Court challenging several provisions of the Act. Through these petitions they, inter alia, challenged the constitutional validity of the CCI. These petitions were heard together and disposed of by a common judgment on 10th April 2019 (Mahindra Electric Mobility Limited and Anr. vs. Competition Commission of India and Anr.).

Section 8 of the Act provides for the composition of the CCI and the qualifications of its members. The violation of the doctrine of separation of powers by Section 8 may have been raised since it does not mandate that a majority of the members ought to be qualified to be appointed to a judicial office. Section 9 of the Act provides for the manner of appointment of the members of the commission. It provides that the members of the CCI are to be appointed by the Central Government from names recommended by a Selection Committee. The Selection Committee is to consist of the Chief Justice of India or his nominee and four other members to be appointed by the Central Government. The conceivable basis of challenge under this provision is that appointments to a judicial body are controlled by the Central Government.

The Delhi High Court heard the matter and held that the CCI does not violate the doctrine of separation of powers. I submit that the decision of the Court is incorrect.

A violation of the doctrine of separation of powers entails an encroachment by one organ of the State into the powers of another. In this case it entails the encroachment by the Executive into the powers of the Judiciary. Therefore the first question that requires consideration is:

Whether the CCI is a part of the judiciary? In other words, can the CCI be considered a judicial body?

The Delhi High Court examined the nature of the functions performed by the CCI as well as its status so that it may decide whether the CCI is a judicial body or not . However, the question for consideration was framed in a way which could not aid the court in deciding whether the CCI is a judicial body. The question framed was:

“Is the CCI a tribunal exercising judicial functions, or is it performing administrative and investigative functions and also adjudicating issues before it?”

The question has two parts. The first part: “Is the CCI a tribunal exercising judicial functions?” the second part: “or, is it performing administrative and investigative functions and also adjudicating issues before it?” Therefore, the question gives rise to two possibilities.

First possibility: The CCI is a judicial body performing judicial functions.

Second Possibility: The CCI performs judicial functions as well as administrative and investigative functions.

The two possibilities may not be mutually exclusive. That is to say, the two possibilities could occur simultaneously. The CCI could be a judicial body which also performs other administrative and investigative functions (perhaps in the course of performing its judicial functions).

The question however divides the two possibilities by the word ‘or’. By doing so it is assumed that it is not possible for a body to be a judicial body and perform investigative functions and minor administrative functions.

In my submission, a situation where a judicial body may in fact perform minor investigative and administrative functions. The CCI itself is such a body. The civil courts are also such bodies. One may refer to the powers of a civil court under Order XXVI Rule 9 of the Code of Civil Procedure 1908, to issue a commission to a person to conduct local investigations to elucidate on a matter in dispute and file a report regarding such investigations. A report filed by the commissioner along with the evidence collected would be evidence in the suit. The investigation carried out by the commissioner on the orders of the court is nothing but a fact finding exercise. It is an exercise of collection of evidence by the Court. The nature of this function may not be termed as an adjudicatory but an investigative one. However, this function is performed to aid the court in deciding certain issues in a suit. It is a means to perform the end function of the court which is judicial in its nature. Merely because it also performs this investigative function in aid of its judicial functions, it cannot be said that the civil court is not a judicial body. The function of investigation performed by the Director General on the orders of the CCI are to be seen in the same light.

Now, the question as to whether the CCI is a judicial body requires to be answered. In the discussion on the nature of the functions performed by CCI the Delhi High Court relied heavily upon the decision of the Supreme Court in Competition Commission of India vs. Steel Authority of India and Anr. I submit that the reliance on this decision by the High Court was misplaced. The High Court quoted a passage from the decision of the Supreme Court which states (without discussion on the point) that the functions of the CCI are wide and held that it was bound by this enunciation of law. The passage quoted was:

“75. … Under the scheme of the Act, this Commission is vested with inquisitorial, investigative, regulatory, adjudicatory and to a limited extent even advisory jurisdiction. Vast powers have been given to the Commission to deal with the complaints or information leading to invocation of the provisions of Sections 3 and 4 read with Section 19 of the Act”.”

This statement was made by the Supreme Court as a part of an overview of Competition Law in India. The overview did not pertain to any particular issue but was generally made before the issues in that case were taken up for discussion. It may safely be said that the statement forms a part of the obiter-dicta of the judgment. It was wholly irrelevant to that case, in which the questions revolved around the scope of powers of the CCI in forming a prima facie opinion under Section 26(1) of the Act. The statement being a part of the obiter-dicta of the judgment was not binding on the Delhi High Court.

The reliance placed by the High Court upon the decision of the Supreme Court in Steel Authority of India Limited (supra) was misplaced for another reason. The question that arose for the consideration of the Supreme Court in Steel Authority of India Limited (supra) was with regard to the scope of power of the CCI while forming a prima facie opinion under Section 26(1) of the Act. In order to answer that question it considered the nature of the function performed by the CCI specifically under Section 26(1) of the Act. In coming to the conclusion that the function under Section 26(1) of the Act was inquisitorial, it did not characterize any other function of the CCI to be inquisitorial. It was only the function of forming a prima facie opinion which was considered to be inquisitorial.

The Delhi High Court however applied this finding to characterize the entire proceeding before the CCI. This is apparent from its statements in paragraphs 76 and 77 of its decision. The statements read as under:

76. Characterizing the proceeding before CCI as one akin to the preliminary stages of a departmental proceeding, the court, in SAIL (supra), held that prima facie opinion formation was merely an administrative function and that inquiry into the information or complaint (received by CCI) commences after such opinion was formed…”

77. It is therefore clear that though information or complaint which may trigger an inquiry, (but not necessarily so, in all cases) is received by the CCI, the initial steps it takes are not always towards, or in aid of adjudication. They are to ascertain fuller details and inquire into the veracity (or perhaps) seriousness of the contents of the information, to discern whether such investigation and further steps towards adjudication are necessary.

 

This mischaracterization of the entire proceeding before the CCI may have been overlooked if the Court thereafter analysed the other functions of the CCI independently and came to its conclusions as to their nature. However, the decision lacks such an analysis.

(I would submit that the finding made by the Supreme Court in Steel Authority of India Ltd. (supra) that the CCI performs only an administrative function in forming a prima facie opinion under Section 26(1) of the Act is incorrect. This is because the formation of a prima facie opinion requires the application of facts to the law. Thereafter it involves the application of a judicial mind to determine whether from the set of given facts a possibility of contravention of the law exists. The function under Section 26(1) of the Act does not end at ascertaining the veracity or seriousness of the contents of information. It is one of the functions to verify the contents of the information, but not the only one. The important function under Section 26(1) of the Act is the formation of a prima facie opinion. A detailed analysis has been made later in this article. For now, we may assume that the Delhi High Court was bound to hold the function under Section 26(1) as inquisitorial.)

Instead of analysing the other functions of the CCI, the High Court summarised them and ambiguously stated that the functions were administrative in nature. The relevant portion of the judgment has been extracted below:

78. At the next stage, after CCI directs investigation, the Director General (DG), after investigation, has to report to it [Section 26 (2)]. If the recommendation of the DG is that no case exists, the CCI is nevertheless obliged to forward a report to the informant/complainant, receive its or his comments and afford a hearing [Section 26 (5)]. After the hearing, it may dismiss the complaint [Section 26 (6)]; or direct further inquiry [Section 26 (7)]. If, on the other hand, the DG‟s report recommends that there exists some contravention of provisions of the Act, the CCI has to proceed further, and inquire into that [Section 26 (3) read with Section 26 (8)]. The CCI has limited powers of the civil court [Section 36 (2)] in matters such as (a) summoning and enforcing the attendance of any person and examining him on oath; (b) requiring the discovery and production of documents; (c) receiving evidence on affidavit; (d) issuing commissions for the examination of witnesses or documents; (e) requisitioning, subject to the provisions of sections 123 and 124 of the Indian Evidence Act, 1872 (1 of 1872), any public record or document or copy of such record or document from any office. The CCI can also require the opinion of experts [Section 36 (3)]. Significantly, CCI has no power to review its orders: previously, Section 37 permitted review; however, the 2007 amendment repealed that provision; it has limited rectification power, under Section 38. In case of imposition of penalty, one mode of recovery is through reference to the concerned income tax authority [Section 39 (2)]; such officer or income tax authority can then recover the penalty as if the party concerned were an ―assessee in default‖ under provisions of the Income tax Act [Section 39 (3)]. These investigative powers are also conferred concurrently upon the DG [Section 41 (2)].

A reading of the above paragraph reveals that there is no analysis whatsoever into the nature of the functions mentioned. The functions mentioned are clearly different from that discussed by the Supreme Court in its decision in Steel Authority of India Limited (supra). For instance, in the summary of functions made by the Court, it is mentioned that the CCI may dismiss the complaint based on the recommendation of the Director General that no case contravention of the Act exists. However, it may do so after hearing the parties concerned. This function of dismissal of the complaint is, on the face of it, adjudicatory. However no discussion into its nature has been made by the High Court.

There is another problem with examining independent functions such as investigation directed by the CCI in an inquiry under Section 19 of the Act, or the dispatch of notice upon the receipt of information from an informant. These functions are performed as a part of the entire function of conducting the inquiry and passing orders. They are never performed on their own or in isolation. For instance, an order directing the Director General to conduct an investigation can never be passed without an inquiry being initiated under Section 19 of the Act. If they were performed in isolation, their performance would lead to no logical end. Therefore the nature of these functions cannot be taken to characterize the CCI. The nature of the larger function is to be examined in order to determine the nature of functions performed by the CCI.

Thereafter, the High Court erroneously relied on the decision of the Supreme Court in Excel Crop Care India v. Competition Commission of India, to delineate the role of the CCI. In that case a contention was taken up by the Appellant that the Director General has no jurisdiction to investigate certain anti-competitive activities which took place after information had been filed with the CCI under Section 19 of the Act. Therefore the question in that case was whether the jurisdiction of the Director General in conducting investigations under the Act extended to actions which took place after the information had been filed. It did not pertain to the role of the CCI or the nature of functions performed by it. There was no discussion by the Court on this aspect.

The Delhi High Court quoted a passage from the said decision of the Supreme Court which did not discuss the role of the CCI in any manner and held that the said decision underlined the role of the CCI through investigation. In my submission, the decision of the Supreme Court does not aid the identification of the nature of functions of the CCI.

It was thereafter held that the CCI does not solely perform adjudication so that it may be characterized as a tribunal discharging solely judicial powers of the state. It was rather considered to be an administrative body which also performs quasi judicial functions.

The second issue framed by the High Court was whether the CCI violates the doctrine of separation of powers and is therefore unconstitutional. A vague continuation of the discussion as to the character of the CCI was made. The structure of the CCI was compared to regulatory bodies such as SEBI, TRAI, AERA, AAI and State Commissions and the Central Commission under the Electricity Act and it was stated that statutes governing these bodies do not require that its officers performing adjudicatory functions need not possess judicial experience. Such comparisons could not assist the Court in determining the character of CCI since the functions performed by these bodies differ widely. The CCI is fundamentally different since it does not have any legislative or executive powers, barring limited powers to regulate its own procedure.

The Court thereafter recognised that the CCI does perform certain adjudicatory functions in passing orders. However, it held that the adjudicatory functions were not to be given such primacy as to hold the CCI to be a judicial tribunal. Therefore, the challenge to the constitutional validity of the CCI on the ground that it was a violation of the doctrine of separation of powers was rejected.

In my opinion the finding that adjudicatory functions of the CCI cannot be given primacy is incorrect. It is a finding that is crucial to the point in discussion since the nature of an independent function would change the nature of the body depending on the weight attached to the function in question. That discussion will be taken up in the next post.

The Tribunals Judgment – II: On Independence

[Editorial Note: Justice is an indivisible concept. We cannot, therefore, discuss contemporary Supreme Court judgments without also acknowledging the Court’s failure – at an institutional level – to do justice in the case involving sexual harassment allegations against the Chief Justice. This editorial caveat will remain in place for all future posts on this blog dealing with the Supreme Court, until there is a material change in circumstances.]

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In yesterday’s post, I discussed the significance of the Tribunals Judgment on the vexed issue of money bills. Today’s post discusses the judgment’s engagement with the principal legal provision under challenge – Section 184 of the Finance Act. While the majority upheld the constitutionality of the Finance Act – but struck down the Rules framed under it – Chandrachud and Gupta JJ, writing separate dissenting opinions, struck down the primary legislation as well.

Recall that Section 184 of the Act authorised the Government to “by notification, make rules to provide for qualifications, appointment, term of office, salaries and allowances, resignation, removal and the other terms and conditions of service” of Tribunal Members. It set upper age limits, and prohibited the variance of the terms and conditions to the detriment of members, after their appointment. The Petitioners argued this amounted to excessive delegation, and would make “the Tribunals amenable to the whims and fancies of the largest litigant, the State.” On the other hand, the Section was defended by the Union of India on the ground that the existence of multiple Tribunals in the country required harmonisation.

The Majority Opinion 

The Act

The Majority Opinion restated the law on excessive delegation, noting that what is prohibited is the “abdication or effacement by conferring the power of legislation to the subordinate authority” (in this case, to the government) – that is, “essential legislative functions” could not be delegated. Or, to put it another way, legislation would have to stipulate the policy with sufficient clarity, while leaving the implementation of it to the executive branch.

Applying this test, the Majority held that Section 184 did not suffer from excessive delegation. However, the Majority’s rationale for that was somewhat curious. In paragraph 143, it noted:

The objects of the parent enactments as well as the law laid down by this Court in R.K. Jain (supra), L Chandra Kumar (supra), R. Gandhi (supra), Madras Bar Association (supra) and Gujarat Urja Vikas (supra) undoubtedly bind the delegate and mandatorily requires the delegate under Section 184 to act strictly in conformity with these decisions and the objects of delegated legislation stipulated in the statutes. It must also be emphasised that the Finance Act, 2017 nowhere indicates that the legislature had intended to differ from, let alone make amendments, to remove the edifice and foundation of such decisions by enacting the Finance Act. Indeed, the learned Attorney General was clear in suggesting that Part XIV was inserted with a view to incorporate the changes recommended by this Court in earlier decisions.

In other words, the Majority held that the “policy” came not from the Finance Act, but from previous judgments of the Court that had set out the framework within which Tribunals would necessarily have to function; and it then deemed that the Finance Act had adopted this framework, as it had given no indication to the contrary. This framework, the Majority went on to hold, was constituted by principles such as independence (both individual, and institutional) of the Tribunal. Independence required “a sufficient degree of separation” between Tribunals and the Government:

Functional independence would include method of selection and qualifications prescribed, as independence begins with appointment of persons of calibre, ability and integrity. Protection from interference and independence from the executive pressure, fearlessness from other power centres – economic and political, and freedom from prejudices acquired and nurtured by the class to which the adjudicator belongs, are important attributes of institutional independence. (paragraph 144)

It must be said that this is a somewhat innovative development in the law of excessive delegation. Interestingly, the Court was unable to provide precedent to support its view that “legislative policy” – the existence of which was an essential precondition for delegation to be valid – could itself be – er – delegated to the Courts instead. That said, however, this was a highly specific case: the history of Tribunalisation in India has been a history of dialogue between the Court and the Legislature; in a sense, the constitutional framework within which Tribunals function has evolved out of this dialogue. To the extent that the Majority Opinion is justifiable, then, it is a justification that – at best – is limited to the facts of this case.

The Rules

Having laid out the principle of independence – and what it required – the Majority went on to examine the Rules that the government had passed under Section 184. Appointment to the Tribunals were to be made upon the recommendation of a “Search-cum-Selection Committee.” These Committees were dominated by government nominees and bureaucrats. On this basis, the Majority Opinion held that “the lack of judicial dominance in the Search-cum-Selection Committee is in direct contravention of the doctrine of separation of powers and is an encroachment on the judicial domain.” (paragraph 153) This was specially important because “the Executive is a litigating party in most of the litigation and hence cannot be allowed to be a dominant participant in judicial appointments.” (paragraph 157)

Next, the Majority found that the qualification of the members was lacking. Technical members without any adjudicatory experience could be appointed, and Presiding Officers need not have any judicial experience. This was particularly important, as these Tribunals had been formed after divesting the Courts from adjudicating in these domains; consequently, it was necessary that “the qualification and acumen of the members in such Tribunal must be commensurate with that of the Court from which the adjudicatory function is transferred.” (paragraph 163) And even the qualifications of judicial members had been weakened, with a substantial amount of discretion being placed in the hands of the government, to appoint individuals it considered suitable. This, the Majority held, was unconstitutionally vague.

Thirdly, the Majority found that the removal process vested too much power in the hands of the government as well; the government could constitute a committee, which could recommend removal. The Court noted that “it is well understood across the world and also under our Constitutional framework that allowing judges to be removed by the Executive is palpably unconstitutional and would make them amenable to the whims of the Executive, hampering discharge of judicial functions.” (paragraph 169)

Fourthly, the Majority found that there were inconsistencies in retirement ages, and the tenures themselves were short – they were of three years. The Court held that “a short tenure, coupled with provision of routine suspensions pending enquiry and lack of immunity thereof increases the influence and control of the Executive over Members of Tribunals, thus adversely affecting the impartiality of the Tribunals.” (paragraph 175)

On the bases of these findings (summed up in paragraph 179), the Majority Opinion found the Rules to be unconstitutional, and struck them down.

These observations and findings are undoubtedly correct. The Majority Opinion drew a clear link between institutional independence (the “policy” underlying tribunalisation, as reflected in the Finance Act), and the government control over (a) appointments, (b) qualifications, (c) removal, and (d) tenure. It also went on to note – while considering the issue of a “nodal agency” to oversee the functioning of tribunals – the importance of (e) financial independence.

And lastly, the Majority Opinion found that direct appeals from the Tribunals to the Supreme Court were constitutionally problematic, and directed the government to reconsider the appeals process within six months. Perhaps unfortunately, however, the Majority Opinion framed this as a question more about judicial efficiency, and less about a valuable procedural right to access the High Courts under Article 226.

The Concurring/Dissenting Opinions

A large part of Justice Chandrachud’s substantive analysis of the Act was integrated with his analysis of the Money Bill issue (discussed in the previous post). Chandrachud J. did note, however, that:

By leaving the rule making power to the uncharted wisdom of the executive, there has been a self-effacement by Parliament. The conferment of the power to frame rules on the executive has a direct impact on the independence of the tribunals. Allowing the executive a controlling authority over diverse facets of the tribunals would be destructive of judicial independence which constitutes a basic feature of the Constitution. (paragraph 88)

While this was not framed as a response to the Majority Opinion on the issue of excessive delegation, in effect, that is what it is. According to Chandrachud J., Parliament could not validly delegate “controlling authority” over Tribunals to the Executive, given the overarching framework of judicial independence. On the analysis of the Rules, Chandrachud J.’s analysis mirrored that of the Majority.

Lastly, on the issue of excessive delegation, Gupta J. filed a brief opinion agreeing with Chandrachud J. As he observed:

We are in the present case dealing with the appointment of Chairpersons/Members to various Tribunals. They are enjoined upon to discharge a constitutional function of delivering justice to the people. What should be the essential qualifications and attributes of persons selected to man such high posts is, in my view, an essential part of legislative functions. (paragraph 27)

Gupta J. went on to make the important point that the Constitution itself could not have “delegated” the appointment process for judges to the executive (although recall that the NJAC did delegate it to the legislature!). And if Tribunals were meant to substitute for Courts, then – logically – the same considerations had to apply. Gupta J. specifically took issue with the Majority Opinion that the legislative policy was provided by the judgments of the Court; he noted – and in my view correctly – that it could not always be assumed that the other branches were prompt and accurate in following Court judgments.

Addendum: Impact upon the RTI Amendments 

Previously on this blog, we have discussed the amendments that were made to the RTI Act earlier this year. In a similar fashion, the RTI Amendments had delegated to the Government authority over the constitution and running of the Information Commission, through secondary legislation. Now, it is true that the Information Commission is not identical to the Tribunals that were dealt with under the Finance Act. That said, however, in my view, this judgment has an important impact upon the RTI Amendments – and the Rules that were subsequently framed.

First, let us see the extent to which there is similarity between the two situations. In my view, the similarity exists in two important respects. First, in view of the fundamental right to information, and the role played by the Information Commission (as I argued in that earlier post), the requirement of individual and institutional independence is at least as pressing for the Information Commission as it is for the Tribunals. Secondly, the presence of the government as the largest litigator was an important factor in this case; in the RTI context, however, the Government is an even bigger litigator, as information requests are made to Public Information Officers. Institutional independence, then, becomes even more important.

With that having been established, this judgment makes clear that (a) appointment, (b) qualifications, (c) removal, (d) tenure, and (e) financial independence are all integral facets of institutional independence. While the Court’s specific findings with respect to the adjudicatory character of the Tribunals may not be directly applicable (although the point is arguable), the link between the above five factors and government control applies across the board. The RTI Rules, therefore, can be directly examined under this framework.

And lastly, as I have argued above, the Majority Opinion’s finding that Section 184 did not suffer from excessive delegation was based upon the very specific history of the tribunalisation. In the absence of that history, I believe that it is more than arguable that the RTI Amendments suffer from the vice of excessive delegation (again, in the context of the fact that the right to information is a fundamental right); indeed, Chandrachud and Gupta JJ.’s dissents on the point show us exactly how.

It remains to be seen, however, how the Courts will deal with these issues if a challenge is brought before them.

 

Carving out an exception to the basic structure?: The Supreme Court’s judgment on Judicial Review and the Armed Forces Tribunal

On March 11, the Supreme Court held in Union of India vs Major General Shri Kant Sharma that Sections 30 and 31 of the Armed Forces Tribunal Act effectively excluded the jurisdiction of the High Courts to hear petitions challenging orders of the Armed Forces Tribunal. This judgment is worth a close scrutiny, because while it seems to carve out an exception to the well-accepted rule that judicial review under Articles 226 and 227 of the Constitution is part of the basic structure, the Supreme Court expressly denied that to be the basis of its decision.

The Armed Forces Tribunal Act is a law dealing with the adjudication of service-related disputes for members of the Armed Forces, as well as court martials, and matters incident thereto. The Act provides for the establishment of an Armed Forces Tribunal to adjudicate service matters with respect to the armed forces. Clearly, its functions are similar to that of the Central Administrative Tribunal (its composition is not, but since that aspect is not addressed by the judgment, we will not discuss it here).

The crucial sections at issue were Sections 30 and 31, which provided for appeals from the orders of the Tribunal. Section 30 states:

“Subject to the provisions of section 31, an appeal shall lie to the Supreme Court against the final decision or order of the Tribunal (other than an order passed under section 19).”

Section 31 likewise states:

“An appeal to the Supreme Court shall lie with the leave of the Tribunal; and such leave shall not be granted unless it is certified by the Tribunal that a point of law of general public importance is involved in the decision, or it appears to the Supreme Court that the point is one which ought to be considered by that Court.”

Sections 30 and 31, therefore, lay down the procedure for appealing an order of the Armed Forces Tribunal to the Supreme Court. Parallel to this, Section 33 excludes the jurisdiction of civil courts, and Section 34 provides the transfer of all pending cases (including cases in the High Courts) to the Tribunal, after the commencement of the Tribunal.

The question before the Court was whether Sections 30 and 31 barred the jurisdiction of the High Courts from hearing petitions (under 226/227) against the orders of the Armed Forces Tribunal. The Court began by pointing out certain specific provisions of the Constitution. Under Article 33 of the Constitution, Parliament may modify the operation of Part III to the armed forces. Article 227(4) of the Constitution, part of the provision dealing with the superintendence of the High Courts, provides that “nothing in this article shall be deemed to confer on a High Court powers of superintendence over any court or tribunal constituted by or under any law relating to the Armed Forces.” Article 136(2), part of the provision dealing with special leave to appeal to the Supreme Court, provides that “nothing in clause ( 1 ) shall apply to any judgment, determination, sentence or order passed or made by any court or tribunal constituted by or under any law relating to the Armed Forces.”

At this point, the following argument seems to be there to be made: admittedly, judicial review under Articles 226 and 227, and under Article 32, is part of the basic structure of the Constitution. But the Constitution itself, through various provisions, carves out an exception in the cases of the armed forces, where the scope of judicial review is to be regulated by statute (Articles 227(4) and 136(2)). Consequently, Parliament may, by law, bar the jurisdiction of the High Court to hear appeals from orders passed by the Armed Forces Tribunal.

Such an argument is open to objection. It also raises the fascinating question of whether an original constitutional provision can be unconstitutional because it violates the basic structure (if judicial review is part of the basic structure, than how can 227(4) and 136(2) be consistent with that?)). The Court, however, did not make this argument at all. Instead, it first affirmed the proposition that the Armed Forces Tribunal Act cannot take away the jurisdiction of the High Court under Articles 226 and 227 (paragraph 25).

The Court then cited a number of precedents for the proposition that although the jurisdiction of the High Court could not be taken away by any statute, in deciding whether or not to exercise its jurisdiction, the High Court must take into account the legislative intention behind the statute in question. Citing the prior case of Nivedita Sharma vs Cellular Operators Association of India, the Court observed that “when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation.” (paragraph 25)

But what was the statutory forum in the present case? Here is where the judgment becomes somewhat murky. Paragraph 33 of the judgment is preceded by a heading called “Statutory remedy“. Here, the Court cited the case Union of India vs Brigadier P.S. Singh Gill, and extracted a lengthy set of paragraph that detailed the appeals procedure under Sections 30 and 31 of the Armed Forces Tribunal Act. But Sections 30 and 31, as we saw, provide for an appeal to the Supreme Court. Surely the provision of an appeal to the Supreme Court cannot be the “alternative statutory forum” to the jurisdiction of the High Courts! That would fly in the fact of the Chandra Kumar judgment, the entire history of the Tribunals Cases and, indeed, the fundamental proposition that Articles 226/227 are part of the basic structure.

But then what is the alternative statutory forum? The only possible answer has to be: the Armed Forces Tribunal itself. This, indeed, is what the Court implied earlier in the judgment. In paragraph 14, it stated that: “it is clear from the scheme of the Act that jurisdiction of the Tribunal constituted under the Armed Forces Tribunal Act is in substitution of the jurisdiction of Civil Court and the High Court.“

But there is a serious problem here. And that is the L. Chandra Kumar judgment. In that case, as is well-known, a seven-judge bench of the Supreme Court held that Tribunals, as they were constituted an functioning, could act complementary to the High Courts, but not as substitutes. This was because:

“The constitutional safeguards which ensure the independence of the Judges of the superior judiciary, are not available to the Judges of the subordinate judiciary or to those who man Tribunals created by ordinary legislations. Consequently, Judges of the latter category can never be considered full and effective substitutes for the superior judiciary in discharging the function of constitutional interpretation. We, therefore, hold that the power of judicial review over legislative action vested in the High Courts under Articles 226 and in this Court under Article 32 of the Constitution is an integral and essential feature of the Constitution, constituting part of its basic structure. Ordinarily, therefore, the power of High Courts and the Supreme Court to test the constitutional validity of legislations can never be ousted or excluded.”

This has been a constant position of law. In its recent judgment, striking down the National Tax Tribunals, the Supreme Court based its entire analysis on a detailed demonstration of how the Tribunals lacked the essential qualities of the Courts (judicial independence etc.), that would allow them to serve as effective substitutes.

The Court’s judgment, therefore, is question-begging. It takes the existence of the Armed Forces Tribunal to be evidence of an “alternative statutory forum” that is a “substitute” for the High Courts. On that basis, it holds that while the jurisdiction of the High Courts cannot be ousted, it should not exercise its jurisdiction because of the existence of the alternative forum! As I have endeavoured to show, in my opinion, both steps of the argument are ill-founded, and in conflict with established precedent. Furthermore, why wouldn’t exactly the same reasoning apply to the Central Administrative Tribunal? What was needed in this case, to complete the argument was a detailed analysis showing that the Armed Forces Tribunal, in its composition, structure and powers and functions, was an effective substitute for the High Court. This, however, was not done.

The Court buttressed its judgment by pointing to a possible “anomalous situation” that would be created by permitting the High Courts to exercise their jurisdiction. It observed, in para 37:

“If any person aggrieved by the order of the Tribunal, moves before the High Court under Article 226 and the High Court entertains the petition and passes a judgment or order, the person who may be aggrieved against both the orders passed by the Armed Forces Tribunal and the High Court, cannot challenge both the orders in one joint appeal. The aggrieved person may file leave to appeal under Article 136 of the Constitution against the judgment passed by the High Court but in view of the bar of jurisdiction by clause (2) of Article 136, this Court cannot entertain appeal against the order of the Armed Forces Tribunal. Once, the High Court entertains a petition under Article 226 of the Constitution against the order of Armed Forces Tribunal and decides the matter, the person who thus approached the High Court, will also be precluded from filing an appeal under Section 30 with leave to appeal under Section 31 of the Act against the order of the Armed Forces Tribunal as he cannot challenge the order passed by the High Court under Article 226 of the Constitution under Section 30 read with Section 31 of the Act. Thereby, there is a chance of anomalous situation.”

But surely, if the Armed Forces Tribunal passes an order, which is assailed to the High Court under Article 226, and either party is aggrieved by the High Court’s decision, then the petition to the Supreme Court will be against the High Court’s order, and not the Tribunal’s? Why would there be a need to appeal the order of the Tribunal before the Supreme Court, when the most proximate decision is that of the High Court?

In any event, whatever the merits of the anomalous situations, the other objections to the judgment remain. The Supreme Court has deprived members of the armed forces an important constitutional remedy against the violation of their rights. It’s justification for doing so, I would suggest with respect, is unconvincing.

The National Tax Tribunals Judgment: Two Interesting Constitutional Issues

Last week, in a judgment that caused quite a stir, the Supreme Court held the National Tax Tribunal Act (and, consequently, the National Tax Tribunal, a centralised adjudicatory for the purpose of deciding and harmonising substantive questions of tax law) to be unconstitutional. I have written a detailed analysis of the judgment elsewhere; in brief, the Court held that the NTT Act transferred the jurisdiction of the High Courts to the Tax Tribunal without ensuring that the Tribunal had sufficient trappings of a Court (e.g., independence and qualifications of its judges etc.) Consequently, it fell foul of the L. Chandra Kumar judgment, and the principle of separation of powers (which the Court rather mysteriously treated as a “constitutional convention”). In a pithy concurring opinion, which is well worth a read, Nariman J. held that it was impermissible to remove the judicial power of deciding substantial questions of law from the High Court.

In this post, I want to focus on two issues thrown up by the judgment, which have been discussed before on this blog, albeit mainly from a theoretical perspective. In its judgment, the Supreme Court relied extensively on the 1975 Privy Council case of Hinds vs The Queen. Hinds was an appeal from the Court of Appeals of Jamaica. The Jamaican Parliament had passed the “Gun Court Act”, which set up a parallel court system to try certain firearm-related offences. One of the courts it set up was vested with the jurisdiction and powers otherwise enjoyed by the higher judiciary, but its officials possessed neither the independence, and nor the qualifications, that were also enjoyed by the higher judiciary under the Jamaican Constitution. The Privy Council found the act to be unconstitutional, since it violated the principle of the separation of powers between executive and judiciary, which – it held – was a “necessary implication” flowing from the structure of post-colonial, commonwealth “Westminster Constitutions”; it had done so, specifically, by transferring the jurisdiction of the senior judiciary to a parallel court, without guaranteeing the judicial independence of the officers of that court through the rules of tenure, appointment and retirement that applied to regular, senior judges.

In its NTT judgment, the Supreme Court quoted extensively from Hinds. In particular, consider this quotation, which comes after the Privy Council referred to Canadian, Australian and other commonwealth Constitutions (notably, not the Indian):

“All of them [Constitutions] were negotiated as well as drafted by persons nurtured in the tradition of that branch of the common law of England that is concerned with public law and familiar in particular with the basic concept of separation of legislative, executive, and judicial power as it had been developed in the unwritten Constitution of the United Kingdom. As to their subject matter, the peoples for whom these new Constitutions were being provided were already living under a system of public law in which the local institutions through which government was carried on, the legislature, the executive and the courts, reflected the same basic concept. The new Constitutions, particularly in the case of unitary states, were evolutionary, not revolutionary. They provided for the continuity of government through successor institutions, legislative, executive and judicial, of which members were to be selected in a different way, but each institution was to exercise powers which, although enlarged, remained of a similar character to those that had been exercised by the corresponding institution that it had replaced.”

Previously on this blog, I’d drawn a distinction between two types of constitutional provisions: conservative and transformative. Most Constitutions are framed at a point of a decisive break with the past, with its institutions and its values, and certain aspects of a Constitution reflect the “transformation” from one set of values and institutions to another; but the past is never a wholly foreign country, and many institutions and structures not only survive revolutionary moments, but are actually entrenched and strengthened in a Constitution, through its “conservative” provisions. A good – albeit schematic – example is that of the American Constitution: its Bill of Rights was (largely) conservative, seeking to guarantee to the American citizens the ancient and deeply-rooted common law rights (e.g., to a jury trial, against unreasonable searches and seizures etc.) enjoyed by British subjects. On the other hand, the Constitution proper was transformative, replacing British monarchy with a system of representative, republican government, exercised through three separate wings of State.

Whether a particular constitutional provision is conservative or transformative, and to what extent it is transformative can have profound implications for constitutional interpretation. For instance, it is sometimes argued that the American Nineteenth Amendment, which guaranteed women the right to vote, transformed not only their voting status, but the entire legal and political framework, based upon the inferior political and legal status of women, that underlay and justified the denial of their right to vote until that moment. Consequently, the Nineteenth Amendment is used by scholars to ground a jurisprudence of sex-equality and non-discrimination within the American Constitution.

Earlier, in the context of India, I’d tried to argue that the transformative nature of Article 15 justified Naz Foundation (Delhi HC’s) reading of “sexual orientation” into “sex”: in providing a universal guarantee of non-discrimination on a set of grounds that were traditionally the sites of social oppression, the Constitution was signaling a shift from a society in which moral membership in society was contingent upon certain unchangeable aspects of one’s personality (race, caste, sex, place of birth, religion) to one in which ever individual was guaranteed equal moral membership, regardless of those unchangeable aspects (and sexual orientation was one such).

In Madras Bar Association, the Supreme Court applies this interpretive technique, by holding that the Constitution’s structural provisions, which set up the institutions and modes of government, are conservative: they entrench the “Westminster model” that was in practice in colonial India, one of whose features was the separation of powers and concomitant independence of the judiciary, guaranteed through appointment processes and security of tenure. Notice that this interpretive technique is based, ultimately, on a historical claim: whether this “Westminster model” was actually made part of our Constitution and, if so, to what extent, needs to be deciphered not merely from the constitutional text, but from a detailed investigation into its history. Unfortunately, the Supreme Court does nothing of the sort: it glibly assumes that the Westminster Model is the model of our Constitution, and decides the case accordingly. This is problematic because the Constitution was, after all, framed in a post-colonial moment, and it requires much argument to demonstrate what set of structures and institutions the framers simply wished to see carry on unchanged into the new republic; however, the use of the analysis itself is promising, and bodes well for the future.

The other paragraph from Hinds that the Court quoted was:

“Because of all this a great deal can be, and in drafting practice often is, left to necessary implication from the adoption in a new constitution of a governmental structure which makes provisions for a Legislature, an Executive and a Judicature. It is taken for granted that the basic principle of separation of powers will apply to the exercise of their respective functions by these three organs of government… [and] what is implicit in the very structure of a Constitution on the Westminster Model is that judicial power, however it be distributed from time to time between various courts, is to continue to be vested in persons appointed to hold judicial office in the manner and on the terms laid down in the chapter dealing with the Judicature, even though this is not expressly stated in the Constitution.“

Previously on this blog – also in the context of Naz Foundation – we had discussed constitutional structure as one of the bases for interpretation. A structural analysis derives constitutional obligations or principles not from a textual reading of individual or aggregated provisions, but – as the American jurist Charles Black explained – from the “structure and relations… created by the text… and the inferences drawn from them.” Or, to put it in more linguistic terms, there are things that a Constitution says, and there are things that it does not say, but which, when it is taken as a whole, it necessarily implies.

In the Hinds case, much of the argument was historical: separation of powers and independence of the judiciary simply was a basic feature of Westminster governance. But, as we saw in the excerpts, the Privy Council speaks of the “structure” of the Constitution on the Westminster model, and uses the term “necessary implications”. The structural argument is quite straightforward: Constitutions are the fundamental documents creating and detailing the division of powers among the governing institutions in society. A deliberate and intentional division into three separate wings, with specific duties attached to each wing, presupposes that (in the absence of clear contrary evidence), the Constitution requires that the domains that it has marked out for each of the wings be protected from encroachment by the others. Thus, separation of powers and the independence of the judiciary simply come out as structural corollaries of the Westminster-type Constitution.

Something along these lines was the reasoning of the Privy Council in Hinds. Unfortunately, the Supreme Court walked down a very different path: it held that separation and independence were constitutional “conventions”, and accordingly, had to be upheld. This is unfortunate, because of course the meaning of convention is, precisely, that which is not legally enforceable. Thus, the Court’s decision is deeply problematic on this point.

Notwithstanding that, however, these two issues remain fascinating for the debate over constitutional interpretation. The conservative/transformative model is perhaps truest to Indian history, and can serve as an interpretive guide to a number of provisions; and, constitutional provisions flowing necessarily from the structure of the Constitution can have as much legal force as the text itself. The judgment in Madras Bar Association opens the gates for a further decision to engage with and clarify these interpretive points; whether future courts will accept the invitation is something that remains to be seen.