ROJER MATHEW versus SOUTH INDIAN BANK LIMITED AND ORS on 7 May 2018

O R D E R

1. Restructuring of Tribunal System in the light of constitutionalFscheme as interpreted in decisions of this Court and the Expert Studiesis the issue for consideration. Concept of Tribunals was evolved todecongest the court system and to provide speedy and inexpensive justice.Separation of powers and independence of judiciary are the constitutionalconcepts which have to be followed in setting up of Tribunals. Functioningof Tribunals is required to be reviewed on the test of speedy andGinexpensive quality justice.

2. In R.K. Jain versus Union of India[1], a Bench of this Courtcalled for taking stock of the situation of working of Tribunals[2]. It wasobserved that the personnel appointed to man the Tribunals discharge1 (1993) 4 SCC 119H2 Para 8

judicial/quasi judicial powers and thus, persons who adjudicate upon suchpowers must have legal expertise, judicial experience and legal training[3].Independence of judiciary is a must for fair justice[4].Institution of Tribunalsbeing a substitute for courts could not be less effective than the courts touphold faith of litigant public[5]. The Court expressed anguish overineffectivity of alternative mechanism for judicial review. It was observedthat dispensing of justice by Tribunals leaves much to be desired. Remedyof appeal to this Court was costly and prohibitive and people in far flungareas could ill afford to reach this Court. Members of the Bar should berecruited to man the Tribunals and working of Tribunals may need freshlook and regular monitoring[6].

3. In L. Chandra Kumar versus Union of India[7], a Bench of7-Judges referred to the reports of Expert Committees and Commissionswhich dealt with the problem of arrears. 124[th] Report of the LawCommission (1988) analyzed the situation existing in High Courts andrecommended specialized Tribunals. The Malimath Committee Report(1989-1990) noted that not all the Tribunals inspired confidence in publicmind on account of lack of competence, objectivity and judicial approach.Constitution, power and method of appointment needed to be reviewed[8].This Court noted that various Tribunals have not evolved up to theexpectations which is self evident and widely acknowledged. Drasticmeasures were required to elevate the standards[9]. Exclusion of judicialreview by High Courts and direct appeals to this Court was too costlyand inaccessible and thus ineffective. The decisions of the Tribunalsshould be amenable to scrutiny before a Division Bench of the HighCourt[10]. Short tenure of members of Tribunal was not proper. Non judicialmembers must have judicial experience[11]. There was need to reviewthe competence of persons manning the Tribunals and oversightmechanism. Wholly independent agency was required for administrationof all the Tribunals. A single umbrella organization could remove the illsof the present system[12].

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7 (1997) 3 SCC 261

8 (paras 8.63 to 8.66 as quoted in para 88 of L. Chandra Kumar)9 Para 8910 Para 92 to 9411 Para 9512 Para 96

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A4. In Union of India versus R. Gandhi, President Madras BarAssociation[13], the Constitution Bench observed that if Tribunals are tobe given judicial power which was earlier exercised by courts, they mustpossess independence, security and capacity associated with courts.When the jurisdiction from courts is transferred to tribunals, members ofjudiciary should be the presiding officers/members such as Rent Tribunals,BMotor Accident Claims Tribunals and Special Courts. Provision fortechnical members in addition to or substitution of judicial members wouldbe a case of dilution of and encroachment upon independence ofjudiciary[14]. Technical members could be in addition to judicial membersonly when a specialized knowledge or expertise was a must. TheClegislature could constitute Tribunals but there is limitation of power onthe legislature to prescribe qualifications and such limitation has to beread into the competence of the legislature to provide such qualifications[15].Standards expected from judicial members and standards applied forappointment should be as nearly as possible same as applied toappointment of judges who are sought to be substituted[16]. Experience ofDadministration may make a member of civil service a good administratorbut not necessarily an able and impartial adjudicator[17]. There was gradualerosion of independence of judiciary and shrinking of the space occupiedby the judiciary and increase in number of persons belonging to civilservice discharging functions which were earlier exercised by courtsEwhich was needed to be checked[18].

5. In Madras Bar Association versus Union of India (2014)[19], it was observed that the newly constituted Tribunals will be invalidlyconstituted unless its members are appointed in same manner and areentitled to same conditions of service as were available to the judges ofFthe courts sought to be substituted[20]. Constitution Bench of this Courtobserved that setting up of a Tribunal with seat at Delhi may deprive thelitigants convenience of access to justice. Litigants may have to facehardship of travelling long distance and incur heavy expenses[21]. It should 13 (2010) 11 SCC 114 Para 90G15 Para 9316 Para 10817 Para 10918 Para 112 and 12019 (2014) 10 SCC 120 Para 113.2H21 Para 122

be inappropriate for the Central Government to have any administrativedealings with the persons or its members to uphold their independenceand fairness.[22] Appointment of non judicial members may constitutedilution and encroachment upon independence of judiciary and rule oflaw. The accountant members or technical members could not handlecomplicated questions of law. The judicial members are to handlesubstantial questions of law. Mere technical knowledge or knowledgeof accounts was not enough[23]. Manner of appointment of members ofTribunals should be by same procedure as appointment of judges whoare substituted. Only a person possessing professional qualification oflaw with substantial experience in law may be able to handle such issues.Manning of Tribunals which are substitute for court of first instance wasdifferent from those who are not subservient to the High Courts[24].A party to the litigant should not participate in the selection process ofmembers of the adjudicating body[25].

6. In Madras Bar Association versus Union of India (2015)[26]observations with regard to safeguarding dilution of standards inappointments of tribunals were reiterated[27].

7. In Gujarat Urja Vikas Nigam Limited versus Essar PowerLimited[28], the observations in earlier judgments in L. Chandra Kumarand Madras Bar Association (supra) were reiterated to the effect thatremedy of appeal to this Court was too costly and inaccessible. Further,overcrowding of docket of this Court obstructed key constitutional roleof this Court. Composition of the appellate Tribunal dealing with questionsof law being manned by non judicial members was not desirable whichcalled for a review of composition of such Tribunals[29]. Accordingly, thisCourt framed certain questions to be examined by the Law Commission.The Law Commission has submitted its 272[nd] Report inter aliarecommending restructuring of Tribunals so as not to provide directappeal to this Court. It was also observed that the manner of appointment,eligibility, tenure and other privileges of persons manning Tribunals must 22 Para 124

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26 (2015) 8 SCC 583

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28 (2016) 9 SCC 103

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Abe at par with the persons manning courts sought to be substituted. Theselection procedure must ensure independence of judiciary. All Tribunalsshould be placed under a single umbrella for proper monitoring.

8. 74[th] Report of the Parliamentary Standing Committeeconsidered a draft Bill for Uniform Service Conditions of members ofBthe Tribunals.

9. In the above background, when the present matter came upfor hearing on 24[th] October, 2017 it was pointed out that appointment,norms and functioning of Debt Recovery Tribunals was not consistentwith the observations of this Court in various judgments. Accordingly,Cthe court requested Shri Arvind P. Datar learned senior counsel to assistthe court as amicus. On 6[th] December, 2017, the Court had an interactionwith the Attorney General on the issue of restructuring of Tribunalsspecially creation of a regular cadre to man the Tribunals.

10. On 15[th] March, 2018, learned amicus gave a Concept Note.DIt was also submitted that short term appointments out of retired personswas not conducive to the justice delivery by the Tribunals. The Tribunalsmust be manned by a regular cadre. Selection should be by a nationalcompetition by an expert autonomous body. Oversight mechanism mustbe vested with an autonomous body. There should be no statutory appealdirectly to this Court as it hampered access to justice, litigation in thisECourt being costly and difficult for a litigant located at far off places.

11. Accordingly, this Court recorded that revisit of the structureof tribunals was necessary to uphold the rule of law and independenceof judiciary. The Central Government was directed to file its response.12. Again on 4[th] April, 2018, following further issues were noted :F

“i) How to remedy the handicap in access to justice when aTribunal has only one seat for its working to the exclusion ofjurisdiction of all other courts in the country as noted inGujarat Urja Vikas Nigam Limited versus Essar PowerLimited,(2016) 9 SCC 103 para 34. In such cases, question iswhether jurisdiction of the Tribunal can be conferred on aspecified court nominated by the High Court in each of theState or, where work of such nature may be insignificant insome States, on one officer in more than one States.

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ii) Whether ‘Access to Justice Facilitation Centres’ (AJFCs),with or without private participation, can be set up atconvenient locations in the country from where a party canaccess a Court or Tribunal located at long distance with orwithout payment of such specified charges. Such centres mayalso have facilities for e-filing and such other services asmay facilitate a party for participation in proceedings. Thismay enhance access to justice and obviate need for travellinglong distances, particularly if such parties are in remote areas.

iii) Whether in absence of availability of suitable persons ofstatutorily prescribed qualifications to man Tribunals/Commissions, pending filling up of vacancies, such Tribunals/Commissions can be manned by existing courts 3 inconsultation with the High Courts. Needless to say thatservicing officers are duly selected and accountable in thematter of performance and discipline.

iv) Whether power of Commissions/Tribunals havingoverlapping jurisdiction such as Human Rights Commissions,having only one seat in a State, can be conferred on specifiedcourts in one or more districts, in addition to or in substitutionof such Commission, so as to make access to justice availableat the grass root.”

13. Accordingly, an affidavit has been filed by the Union of India.The affidavit inter alia refers to Finance Act, 2017 dealing with theappointment procedure for the Tribunals and a petition challenging thesame in this Court. It is submitted that the matter being sub judice thiswas not a stage to revisit the issue of manning of Tribunals.

14. The affidavit does not deal with working of all the Tribunalsand is confined to the Debt Recovery Tribunals. It is presumed thatsystem of Debt Recovery Tribunal was far more efficient than the systemof courts. It is stated that as on 30.09.1990 more than 15 lakh bankcases were pending in courts but as on 31.03.2017 only 78,961 caseswere pending before 39 Debt Recovery Tribunals. It is howeverconcluded that Union of India was not averse to revisit the issue ofaccess to justice.

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A15. Learned amicus pointed out that the affidavit of Union ofIndia does not deal with the issues raised in these proceedings. Theassumption in the affidavit in comparing the working of courts andTribunals was not based on entire relevant data. Reference to 15 lakhcases appears to be reference to all the cases, while reference topendency before Tribunals is only in cases involving more than 10 lakhs.BMoreover, the data of yearly institution and disposal has not been furnishedto compare the rate of disposal. Longest period of pendency beforedifferent Tribunals is also not indicated.

16. Learned amicus referred to the concept note to the effectCthat there was need for an independent oversight body in the light ofobservations in L. Chandra Kumar (supra) which have been reiteratedin NCLT case (Madras Bar Association) (2015) (supra) to the effectthat the Tribunals or their members should not be required to seek facilitiesfrom the sponsoring or parent ministries or concerned departments. 74[th]Report of the Parliamentary Standing Committee also recommendedDcreation of a National Tribunal Commission to oversee all the Tribunalsin the country. Accordingly, it has been suggested that an independentbody called National Tribunal Commission (NTC) should be constitutedas follows :

A. Two retired Supreme Court Judges (with the senior-mostEamongst them to be Chairman)

B. Two retired High Court Judges (Members)

C. Three members representing the Executive.

F The appointment of members of the NTC should be by followingSelection Committee :

Chief Justice of India (as Chairperson of the Committee whoexercises a casting vote); Two senior most judges of the Supreme Court after the ChiefGJustice of India ; Current Law Minister; and Leader of the Opposition.

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17. The NTC should oversee functioning of central Tribunals andsimilar body may be constituted for State tribunals. The NTC shoulddeal with appointment and removal of members of the Tribunals byconstituting sub committees. The concept note also deals with furtherdetails on the subject. Further suggestion is that the member of theTribunals should be recruited by national competition. Once recruitedthey should continue till the age of 62/65 years subject to their efficiencyand satisfactory working. The Tribunals should not be heaven for retiredpersons and appointment process should not result in decisions beinginfluenced if the Government itself is a litigant and the appointing authorityat the same time. There should be restriction on acceptance of anyemployment after retirement. There is also suggestion that bypassing ofHigh Court jurisdiction under Article 226/227 needs to be remedied bystatutory amendment excluding direct appeals to this Court. There shouldbe proper mechanism for removal of members.

18. We broadly approve the concept of having an effective andautonomous oversight body for all the Tribunals with such exceptions asmay be inevitable. Such body should be responsible for recruitmentsand oversight of functioning of members of the Tribunals. Regular cadrefor Tribunals may be necessary. Learned amicus suggests setting up ofall India Tribunal service on the pattern of U.K. The members can bedrawn either from the serving officers in Higher Judicial Service ordirectly recruited with appropriate qualifications by national competition.Their performance and functioning must be reviewed by an independentbody in the same was as superintendence by the High Court under Article235 of the Constitution. Direct appeals must be checked. Members ofthe Tribunals should not only be eligible for appointment to the HighCourts but a mechanism should be considered whereby due considerationis given to them on the same pattern on which it is given to the membersof Higher Judicial Service. This may help the High Courts to haverequisite talent to deal with issues which arise from decisions of Tribunals.A regular cadre for the Tribunals can be on the pattern of cadres for thejudiciary. The objective of setting up of Tribunals to have speedy andinexpensive justice will not in any manner be hampered in doing so.Wherever there is only one seat of the Tribunal, its Benches should beavailable either in all states or at least in all regions wherever there islitigation instead of only one place.

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A19. To sum up, the issues requiring consideration may be asunder :

(i) Creation of a regular cadres laying down eligibility forrecruitment for Tribunals;

(ii) Setting up of an autonomous oversight body for recruitmentBand overseeing the performance and discipline of the membersso recruited and other issues relating thereto;

(iii) Amending the scheme of direct appeals to this Court so thatthe orders of Tribunals are subject to jurisdiction of the HighCourts;C

(iv) Making Benches of Tribunals accessible to common man atconvenient locations instead of having only one location at Delhior elsewhere. In the alternative, conferring jurisdiction onexisting courts as special Courts or Tribunals.

D20. The above issues may require urgent setting up of a committee,preferably of three members, one of whom must be retired judge of thisCourt who may be served in a Tribunal. Such Committee can have interaction with all stakeholders and suggest a mechanism consistent withthe constitutional scheme as interpreted by this Court in several decisionsreferred to above and also in the light of recommendations of expertEbodies. This exercise must be undertaken in a time bound mannerTo consider the matter for further, list on Thursday i.e. 10[th] May,2018 as prayed by learned Attorney General.

FDevika Gujral

Directions issued.

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