2020 (12) TMI 3 - SC - Companies Law

Tribunals - Member of the Tribunal or Appellate Tribunal or other authorities - Constitutionality of various provisions concerning the selection, appointment, tenure, conditions of service, and ancillary matters relating to various tribunals - constitutional validity of the Tribunal, Appellate Tribunal and other Authorities Qualification, Experience and Other Conditions of Service of Members Rules, 2020 - Allegation that the Search-cum-Selection Committees provided for in the 2020 Rules did not conform to the principles of judicial dominance - Appointment of persons without judicial experience to the posts of Judicial Members/ Presiding Officer/ Chairpersons - terms of office - Advocates, eligible for appointment or not - Administrative control of the executive in matters relating to appointments and conditions of service - principles of separation of powers and independence of judiciary. National Tribunals Commission - HELD THAT - The Union of India directed to set up a National Tribunals Commission as suggested by this Court by its order dated 07.05.2018 at the earliest. Setting up of such Commission would enhance the image of the Tribunals and instill confidence in the minds of the litigants. Dependence of the Tribunals for all their requirements on the parent Department will not extricate them from the control of the executive. Judicial independence of the Tribunals can be achieved only when the Tribunals are provided the necessary infrastructure and other facilities without having to lean on the shoulders of the executive. This can be achieved by establishment of an independent National Tribunals Commission - there should be a separate tribunals wing established in the Ministry of Finance, Government of India to take up, deal with and finalize requirements of all the Tribunals till the National Tribunals Commission is established. Search-cum-selection Committee - HELD THAT - Rule 4 (2) of the Rules postulates that a panel of two or three persons shall be recommended by the Search-cum-Selection Committee from which the appointments to the posts of Chairperson or members of the Tribunal shall be made by the Central Government. The learned Amicus Curiae voiced serious objections to Rule 4(2) on the ground that it would be compromising judicial independence - The recommendations for appointments by the Search-cum-Selection Committee should be final and the executive should not be permitted to exercise their discretion in the matter of appointments to the Tribunals. Accordingly, we direct that Rule 4(2) of the 2020 Rules shall be amended and till so amended, that it be read as empowering the Search-cum-Selection Committee to recommend the name of only one person for each post. However, taking note of the submissions made by the learned Attorney General regarding the requirement of the reports of the selected candidates from the Intelligence Bureau, another suitable person can be selected by the Search-cum-Selection Committee and placed in the waiting list. In case, the report of the Intelligence Bureau regarding the selected candidate is not satisfactory, then the candidate in the waiting list can be appointed. Terms of Office - HELD THAT - Section 184 of the Finance Act, 2017 provides for reappointment of Chairpersons, Vice-Chairpersons and members of the Tribunals on completion of their tenure. There is no mention of reappointment in the 2020 Rules. However, the learned Attorney General submitted that the members shall be entitled to seek reappointment. Reappointment for at least one term shall be provided to the persons who are appointed to the Tribunals at a young age by giving preference to the service rendered by them. House Rent Allowance - HELD THAT - Experience has shown that lack of housing in Delhi has been one of the reasons for retired Judges of the High Courts and the Supreme Court to not accept appointments to Tribunals. At the same time, scarcity of housing is also a factor which needs to be kept in mind. The only way to find a solution to this problem is to direct the Government of India to make serious efforts to provide suitable housing to the Chairperson and the members of the Tribunals and in case providing housing is not possible, to enhance the house rent allowance to ₹ 1,25,000/- for members of Tribunals and ₹ 1,50,000/- for the Chairman or Chairperson or President and Vice Chairman or Vice Chairperson or Vice President of Tribunals. In other words, an option should be given to the Chairperson and the members of the Tribunals to either apply for housing accommodation to be provided by the Government of India as per the existing rules or to accept the enhanced house rent allowance. This direction shall be effective from 01.01.2021. Advocates as Judicial Members - HELD THAT - While the Attorney General suggested that an advocate who has 25 years of experience should be considered for appointment as a Judicial member, the learned Amicus Curiae suggested that it should be 15 years. An Advocate of a High Court with experience of ten years is qualified for appointment as a Judge of the High Court as per Article 217 (2) of the Constitution of India. As the qualification for an advocate of a High Court for appointment as a Judge of a High Court is only 10 years, we are of the opinion that the experience at the bar should be on the same lines for being considered for appointment as a judicial member of a Tribunal. Exclusion of Advocates in 10 out of 19 tribunals, for consideration as judicial members, is therefore, contrary to MADRAS BAR ASSOCIATION VERSUS UNION OF INDIA 2015 (5) TMI 501 - SUPREME COURT . However, it is left open to the Search-cum-Selection Committee to take into account in the experience of the Advocates at the bar and the specialization of the Advocates in the relevant branch of law while considering them for appointment as judicial members. Eligibility of Members of Indian Legal service - HELD THAT - Wherever legal expertise in the particular domain is implicated, it would be natural that advocates with experience in the same, or ancillary field would provide the catchment for consideration for membership. This is also the case with selection of technical members, who would have expertise in the scientific or technical, or wherever required, policy background. These tribunals are expected to be independent, vibrant and efficient in their functioning. Appointment of competent lawyers and technical members is in furtherance of judicial independence. Younger advocates who are around 45 years old bring in fresh perspectives. Many states induct lawyers just after 7 years of practice directly as District Judges. If the justice delivery system by tribunals is to be independent and vibrant, absorbing technological changes and rapid advances, it is essential that those practitioners with a certain vitality, energy and enthusiasm are inducted. 25 years of practice even with a five-year degree holder, would mean that the minimum age of induction would be 48 years it may be more, given the time taken to process recommendations. Therefore, a tenure without assured re-engagements would not be feasible. 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. Removal of Members - HELD THAT - The learned Attorney General submitted that the preliminary scrutiny done by the Central Government, according to Rule 8 (1) is only for the purpose of weeding out frivolous complaints. The learned Attorney General has also fairly submitted that the recommendations made by the Search-cum-Selection Committee shall be implemented by the Central Government. We are in agreement with the submissions of the learned Attorney General. Time Limit for appointment - HELD THAT - The pendency of cases in the Tribunals is increasing mainly due to the lack of personnel in the Tribunals which is due to the delay in filling up the vacancies as and when they arise due to the retirement of the members. There is imminent need for expediting the process of selections and appointments to ensure speedy justice. We, therefore, direct that the Government of India shall make the appointments to the Tribunals within three months after the Search-cum-Selection Committee completes the selection and makes its recommendations. Retrospectivity of 2020 Rules - HELD THAT - ll 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. Petition disposed off.

Summary

Issues Involved:
1. Constitutionality of the "Tribunal, Appellate Tribunal and other Authorities [Qualification, Experience and Other Conditions of Service of Members] Rules, 2020" (2020 Rules).
2. Composition and functioning of the Search-cum-Selection Committees.
3. Term of office for Tribunal members.
4. Eligibility of Advocates for appointment as judicial members.
5. Eligibility of members of the Indian Legal Service for appointment as judicial members.
6. House Rent Allowance for Tribunal members.
7. Procedure for removal of Tribunal members.
8. Time limit for appointments to Tribunals.
9. Retrospectivity of the 2020 Rules.

Detailed Analysis:

1. Constitutionality of the 2020 Rules:
The core controversy was the constitutional validity of the 2020 Rules. The Court noted the historical context of tribunalization in India and previous judgments that mandated judicial independence and proper selection procedures for Tribunal members. The 2020 Rules were challenged on grounds of violating principles of separation of powers and judicial independence.

2. Composition and Functioning of the Search-cum-Selection Committees:
The 2020 Rules provided for Search-cum-Selection Committees that included Secretaries from the sponsoring departments, which was argued to be contrary to judicial independence. The Court directed that the Committees should consist of the Chief Justice of India or his nominee, the outgoing or sitting Chairman of the Tribunal, and two Secretaries from the Government of India, with the Secretary of the sponsoring department serving as a non-voting Member-Secretary. Additionally, the Court mandated a casting vote for the Chief Justice of India or his nominee to ensure judicial dominance.

3. Term of Office for Tribunal Members:
The 2020 Rules set the term of office for Tribunal members at four years, which was contested as being too short. The Court held that the term should be five years, aligning with previous judgments that emphasized longer tenures to ensure efficiency and independence. The Court directed that the tenure for Chairpersons should be five years or until they attain 70 years, and for other members, five years or until they attain 67 years.

4. Eligibility of Advocates for Appointment as Judicial Members:
The 2020 Rules excluded Advocates from being appointed as judicial members in many Tribunals unless they had 25 years of experience. The Court found this exclusion contrary to previous rulings and directed that Advocates with at least 10 years of experience should be eligible for appointment. The Search-cum-Selection Committees should consider the Advocates' experience and specialization in relevant branches of law.

5. Eligibility of Members of the Indian Legal Service for Appointment as Judicial Members:
Members of the Indian Legal Service were allowed to be appointed as judicial members, provided they met the same criteria as Advocates. The Court noted that their experience and specialization should be considered by the Search-cum-Selection Committees.

6. House Rent Allowance for Tribunal Members:
The Court recognized the difficulty in attracting retired Judges to Tribunals due to inadequate housing provisions. It directed the Government to provide suitable housing or enhance the house rent allowance to ?1,50,000 for Chairpersons and ?1,25,000 for other members, effective from 01.01.2021.

7. Procedure for Removal of Tribunal Members:
The 2020 Rules required preliminary scrutiny of complaints against members by the Central Government, followed by an inquiry by the Search-cum-Selection Committee. The Court clarified that the recommendations of the Search-cum-Selection Committee should be final and binding on the Central Government.

8. Time Limit for Appointments to Tribunals:
The Court emphasized the need for timely appointments to ensure effective functioning of Tribunals. It directed the Government to make appointments within three months of the Search-cum-Selection Committee's recommendations.

9. Retrospectivity of the 2020 Rules:
The Court held that the 2020 Rules, notified on 12.02.2020, could not be given retrospective effect. Appointments made before the 2020 Rules would be governed by the parent Acts and Rules, while those made after 12.02.2020 would follow the 2020 Rules with the modifications directed by the Court.

Conclusion:
The Court issued several directives to ensure the independence and effective functioning of Tribunals, including the establishment of a National Tribunals Commission, modifications to the Search-cum-Selection Committees, and amendments to the 2020 Rules regarding tenure, eligibility, and allowances for Tribunal members. The judgment emphasized the importance of judicial independence and the need for the executive to adhere to the Court's directions to avoid future litigation.