UNION OF INDIA v. R. GANDHI, PRESIDENT, MADRAS BAR ASSOCIATION

Citation: [2010] 6 S.C.R. 857

Court: Supreme Court of India

Bench: K.G. BALAKRISHNAN, R.V. RAVEENDRAN, D.K. JAIN, P. SATHASIVAM, J.M. PANCHAL

Case summary

UNION OF INDIA v. R. GANDHI, PRESIDENT, MADRAS BAR ASSOCIATION.pdf

Judgment text

[2010] 6 S. C. R. 857 UNION OF INDIA A v. R. GANDHI, PRESIDENT, MADRAS BAR ASSOCIATION (Civil Appeal No. 3067 of 2004 etc. ) MAY 11, 2010 [K. G. BALAKRISHNAN, CJI, R. V. RAVEENDRAN, D. K. JAIN, P. SATHASIVAM AND J. M. PANCHAL, JJ. ] Companies Act, ; 956 - Chapters 1B and 1C - Creation of National Company ;_aw Tribunal (NCLT) and National. Company Law Appellate Tribunal (NCLA T) - For adjudication of cases which were adjudicated by CLB, BIFR, A.

A/FR and High courl in its company jurisdiction - Validity of - Held: Creation of NCLT and NCLA T and vesting in them jurisdiction of High Courl is not unconstitutional - Parliament has the o legislative competence to make laws providing for constitution of tribunals to deal with company matters even though it is not mentioned in Arlie/es 323A and 3238 - Such legislation is subject to constitutional limitations - It should not encroach upon the independence of judiciary and should not be voilative of doctrines of rule of law and separation of powers - Such legislation is subject to judicial review if the courl finds that the tribunalisation would adversely affect the independence of judiciary or the standards of judiciary - Appointment of the Member of Tribunals from civil services who continue to be employee of the Government by maintaining their lien would amount to transfer of judicial function to executive which goes against the doctrine of separation of power and independence of judiciary - In case where jurisdiction is transferred from courts to tribunals for expeditious disposal and where specialized knowledge is not required appointment of Technical Member is not necessary - In such case, if Technical Member is appointed, it would amount to encroachment upon the independence of judiciary and Rule of Law and would be unconstitutional - It is for the legislature to decide whether the tribunal should have only Judicial Member or a combination of Judicial of Technical Member- When Judges of the High Court are substituted with Members of tribunal, the standards should be approximate to the standards of mainstream judicial functioning - Chapters 1B and 1C presently structured, are unconstitutional as they dilute the independence of tribunal and standards of qualification of Members of the tribunal - They can be made operational on making suitable amendments thereof - Corrections suggested to set right the defect in Chapter 1B and 1C- Constitution of India, 1950-Articles 226, 323A and 3231.

3; Seventh Schedule, List I Entries 77, 78, 79 and 40 rlw Entry 5, List Ill Entries 11A rlw Entry 46. Constitution of India, 1950: o Article 14 - Right to equality - Includes a right to adjudication by a forum exercising judicial power in impartial and independent manner consistent with the recognized principles of adjudication. Articles 246, 323A and 3238, Seventh Schedule List I - Power of Parliament to enact law in List I is absolute - The power so conferred by Article 246 is not affected or controlled by Article 323A and 3238.

Legislation - Challenge to validity of legislation - Basis for -- Held: Legislation can be declared unconstitutional or invalid only on the grounds of legislative competence or for violation of fundamental rights or constitutional provisions including the provisions which enshrine the principles of Rule of Law, separation of power and independence of judiciary - Legislation cannot be held invalid for violating basic structure of the Constitution - Constitution of India, 1950. Judicial Fora - Courts and Tribunals - Distinction between.

Accepting the recommendations of Eradi Committee, BAR ASSOCIATION Government passed Company (Second amendment) Act, 2002 inserting chapters 1B and 1C in Companies Act, 1956· which provided for establishment of National ' Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) to take over the functions which were being performed by Company Law Board (CLB), Board of Industrial and Financial Reconstruction (BIFR), Appellate Authority for Industrial and Financial Reconstruction (AAIFR) and the High Court. Madras Bar Association challenged the validity of the Chapters 1B and 1C. High Court held that creation of the tribunal and vesting therein the powers exercised by High Court and Company Law Board was not unconstitutional. However, it held that several provision of chapters 1B and 1C i. e.

Sections 10-FD(f)(g)(h), 10-FE, 10-FF, 10-FL(2), 1O-FR(3) and 10-FT were defective and thus violative of basic constitutional scheme of separation of power and independence of judiciary; and that unless the provisions were amended by removing the defects, it would be unconstitutional to constitute NCLT and NCLAT. Pursuant to the judgment of the High Court, Union of India agreed to rectify many of the defects pointed out by the High Court. It has, however, not accepted the defects so far as Sections 1O-FD(3)(f), (g) and (h) and 10- FX were concerned. A three judges Bench of Supreme Court held that the judicial pronouncements by the Supreme Court, holding that Parliament and the State Legislatures possessed legislative competence to effect changes in the original jurisdiction of the Supreme Court and the High Court, had not dealt with the issues i. e.

(i) To what extent the powers and judiciary of High Court (except judicial review under Article 226 I 227) can be transferred to tribunals; '(ii) Is there a demarcating line for the Parliament to vest intrinsic judicial functions traditionally performed by courts in any tribunal or authority outside the judiciary; and (iii) Whether the "wholesale transfer of powers" as contemplated by the Companies (Second Amendment) Act, 2002 would offend the constitutional scheme of separation of powers and independence of judiciary so as to aggrandize one branch over the other. Therefore, the three judges Bench directed these appeals to be heard by a Constitution Bench. Partly allowing the appeals, the Court HELD: Difference between Courts and Tribunals: 1. 1. The term 'Courts' refers to places where justice o is administered or refers to Judges who exercise judicial functions.

Courts are established by the State for administrMion of justice that is for exercise of the judicial power ot'the State to maintain and uphold the rights, to punish wrongs and to adjudicate upon disputes. Tribunals on the other hand are special alternative institutional mechanisms, usually brought into existence by or under a statute to decide disputes arising with reference to that particular statute, or to determine controversies arising out of any administrative law. Courts refer to Civil Courts, Criminal Courts and High Courts. Tribunals can be either private Tribunals (Arbitral Tribunals), or Tribunals constituted under the Constitution (Speaker or the Chairman acting under Para 6(1) of the Tenth Schedule) or Tribunals authorized by the Constitution (Administrative Tribunals under Article 323A of the Constitution and tribunals for other matters under Article 323B) of the constitution or statutory tribunals which are created under a statute.

[Para 12] [901-E-H; 902-A] Harinagar Sugar Mills Ltd. vs. Shyam Sundar BAR ASSOCIATION Jhunjhunwala - (1962) 2 SCR 339; Jaswant Sugar Mills vs. A Laxmi Chand - 1963 Supp (1) SCR 242; Associated Cement Companies Ltd. vs. P. N. Sharma - (1965) 2 SCR 366; Kihoto Ho/Johan vs. Zachil/hu - 1992 Supp (2) SCC 651; S. P. Sampath Kumar vs. Union of India - (1987) 1 SCC 124, referred to. B 1. 2. Though both courts and tribunals exercise judicial power and discharge similar functions, there are certain well-recognised differences between courts and tribunals. They are: (i) Courts are established by the State and are entrusted with the State's inherent. judicial power C for administration of justice in general. Tribunals are established under a statute to adjudicate upon disputes arising under the said statute, or disputes of a specified I nature. Therefore, all courts are tribunals. But all tribunals are not courts. (ii) Courts are exclusively manned by Judges.

Tribunals can have a Judge as the sole member, or can have a combination of a Judicial Member and a Technical Member who is an 'expert' in the field to which Tribunal relates. Some highly specialized fact finding tribunals may have only Technical Members, but they are rare and are exceptions. (iii) While courts are governed by detailed statutory procedural rules, in particular the CPC and Evidence Act, requiring an elaborate procedure in decision making, tribunals generally regulate their own procedure applying the provisions of the CPC only where it is required, and without being restricted by the strict rules of Evidence Act. [Para 14] [907-8-F] Independence of Judiciary and Separation of Powers: 2. 1. Impartiality, independence, fairness and reasonableness in decision making are the hallmarks of Judiciary. If 'Impartiality' is the soul of Judiciary, 'Independence' is the life blood of Judiciary. Without independence, impartiality cannot thrive. Independence .

is not the freedom for Judges to do what they like. It is A the independence of judicial thought. It is the freedom from interference and pressures which provides the judicial atmosphere where he can work with absolute commitment to the cause of justice and constitutional values. It is also the discipline in life, habits and outlook B that enables a Judge to be impartial. Its existence depends however not only on philosophical, ethical or moral aspects but also upon several mundane things security in tenure, freedom from ordinary monetary worries, freedom from influences and pressures within c (from others in the Judiciary) and without (from the Executive). Independence of Judiciary has always been recognized as a part of the basic structure of the Constitution [Para 15 and 16] [907-G-H; 908-A-C; 911-B] Union of India vs. Sankalchand Himatlal Sheth 1977 (4) D SCC 193; Supreme Court Advocates-on-Record Association and Ors. v. Union of India (1993) 4 SCC 441; L. Chandra Kumar v.

Union of India (1997) 3 SCC 261; State of Bihar vs. Bal Mukund Shah 2000 (4) SCC 640; Shri Kumar Padma Prasad vs. Union of India 1992 (2) SCC 428; All India Judges E Association vs. Union of India 2002 (4) SCC 247, referred to. 'The Framing of India's Constitution' by B. Shiva Rao, volume 1-8, Page 196); F 2. 2. The doctrine of separation of powers has also been always considered to be a part of the basic structure of the Constitution. [Para 17] [914-8] Rai Sahib Ram Jawaya Kapur vs. The State of Punjab 1955 (2) SCR 225; Chandra Mohan vs. State of UP AIR 1966 G SC 1987; Indira Nehru Gandhi vs. Raj Narain 1975 Supp SCC 1; L. Chandra Kumar v. Union of India (1997) 3 SCC 261; Keshavananda Bharati vs. State of Kera/a 1973 (4) SCC 225, State of Bihar vs. Bal Mukund Shah 2000 (4) SCC 640; I. R. Coelho vs. State of Tamil Nadu 2007 (2) SCC 1, H referred to. BAR ASSOCIATION Recommendations for better working of Tribunals: 3. 1.

Only if continued judicial independence is assured, tribunals can discharge judicial functions. In order to make such independence a reality, it is fundamental that the members of the tribunal shall be 8 independent persons, not civil servants. They should resemble courts and not bureaucratic Boards. Even the dependence of tribunals on the sponsoring or parer:it department for infrastructural facilities or personnel may undermine the independence of the tribunal. [Para 20] [917-F-G] 3. 2. In India tribunals have not achieved full independence. The Secretary of the concerned 'sponsoring department' sits in the Selection Committee for appointment. When the tribunals are formed, they are mostly dependant on their sponsoring department for funding, infrastructure and even space for functioning.

The statutes constituting tribunals routinely provide for members of civil services from the sponsoring departments becoming members of the tribunal and continuing their lien with their parent cadre. [Para 23] [921-0-E] L. Chandra Kumar v. Union of India (1997) 3 SCC 261, followed. Judicial Review by De Smith 6th Edn. , Page 50; 'Administrative Law' by H. W. R. Wade & C. F. Forsyth (10th Edn. , pp. 773, 774 and 777); Leggatt Committee's Report, referred to Extent of power of Government to transfer the judicial functions traditionally performed by courts· to tribunals: 4. 1. 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, Item 11 A r/w Entry 46 of List Ill of the Seventh Schedule of the Constitution.

Articles 323A and 3238 of the Constitution are enabling provisions whi nce and administration of the Tribunal under the overall control and supervision of the President. The Union Government has accepted the decision and has 8 agreed to drop the provision for Member Administration. It was stated that the Act would be amended to provide that the administration and financial functions would be discharged under the overall control and supervision of the President. It was stated that the Act would be further amended to provide for C creation of the posts of Vice-Presidents. Section 10 FR(3) : Appointment of members of the Appellate Tribunal (7. 12) The High Court has observed that section 1OFR(3) 0 must be suitably amended to delete the reference to all subjects other than·1aw and accountancy.

It has also stated that it would be more appropriate to incorporate a provision similar to that in section 5(3) of the SICA which provides that a member of the Appellate Authority shall be a person who is or has been a Judge of a High Court or who is or has been an officer not below the rank of a Secretary to the Government who has been a member of the Board for not less than three years. The Union Government contends that the provision is only an enabling one; and since the Chairperson of the Appellate Tribunal would be a former Judge of the Supreme Court or former Chief Justice of High Court, it may not be advisable to limit the scope of eligibility criteria for members E1Specially when a Selection Committee headed by the Chief Justice of India or his nominee would make the selection. Section 1OFX - Selection Process for President/ Chairperson (7.

13) The High Court has expressed the view that the selection of the President/Chairperson should be by a Committee headed by the Chief Justice of India in consultation with two senior Judges of the Supreme Court. The Union Government has submitted that it would not be advisable to make such a provision in regard to appointment of President/Chairperson of statutory Tribunals. It is pointed out no other legislation constituting Tribunals has such a provision. ! he challenge in the appeals 8. Union of India contends that the High Court having held that the Parliament has the competence and power to establish NCLT and NCLAT, ought to have dismissed the writ petition. It is submitted that some of the directions given by the High Court to reframe and recast Parts IB and IC of the Act amounts to converting judicial review into judicial- legislation.

However, as 0 Union of India has agreed to rectify several of the defects pointed out by the High Court (set out above), the appeal by the Union Government is now restricted to the findings of the High Court relating to sections 1OFD(3){f), (g) and (h) and 10FX. 9. On the other hand, MBA in its appeal contends that the High Court ought not to have upheld the constitutional validity of Parts IB and IC of the Act providing for establishment of NCLT and NCLAT; that the High Court ought to have held that constitution of such Tribunals taking away the entire Company Law jurisdiction of the High Court and vesting it in a Tribunal which is not under the control of the Judiciary, is violative of . doctrine of separation of powers and the independence of Judiciary which are parts of the basic structure of the Constitution. MBA also contends that the decisions of this Court in Union of India vs.

Delhi High Court Bar Association - 2002 (4) sec 275, with reference to constitutional validity of the provisions of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 providing for constitution of the Debt Recovery Tribunals and State of Karnataka vs. Vishwabharathi House Building Co-op. , Society - 2003 (2) sec 412 in regard to the constitutional validity of Consumer Protection Act, 1986 providing for constitution of consumer fora 1 require reconsideration. 10. When these civil appeals came up for hearing before a three-Judge Bench of this Court, the Bench was of the view that the decisions in L. Chandra Kumar v. Union of India (1997) 3 SCC 261, Union of India v. Delhi Bar Association (2002) 4 SCC 275 and State of Karnataka v.

Vishwa Bharati Housing Building Cooperative Societies & Anr (2003) 2 SCC 412 holding that Parliament and State legislatures possessed legislative competence to effect changes in the original jurisdiction in the Supreme Court and High Court, had not dealt with the following issues: (i) To what extent the powers and judiciary of High Court (excepting judicial review under Article 226/ 227) can be transferred to Tribunals? (ii) Is there a demarcating line for the Parliament to vest intrinsic judicial functions traditionally performed by courts in any Tribunal or authority outside the judiciary? (iii) Whether the "wholesale transfer of powers" as contemplated by the Companies (Second Amendment) Act, 2002 would offend the constitutional scheme of separation of powers and independence of judiciary so as to aggrandize one branch over the other? Therefore the Three Judge Bench, by order dated 13. 5.

2007 directed the appeals to be heard by a Constitution Bench, observing that as the issues raised are of seminal importance and likely to have serious impact on the very structure and independence of judicial system. '\. [2010] 6 S. C. R 11. We may first refer to the relevant provisions of the Companies Act, 1956 as amended by the Companies (Second Amendment) Act, 2002 relating to the constitution of NCLT and NCLAT: . Part 18 - National Company Law Tribunal 10FB. Constitution of National Company Law Tribunal: The Central Government shall, by notification in the Official Gazette, constitute a Tribunal to be known as the National Company Law Tribunal to exercise and discharge such powers and functions as ar~. or may be, conferred on it by or under this Act or any other law for the time being in force. 10FC.

Composition of Tribunal: The Tribunal shall consist of a President and such number of Judicial and Technical Members not exceeding sixty-two, as the Central Government deems fit, to be appointed by that Government, by notification in the Official Gazette. 1OFD. Qualifications for appointment of President and Members: (1) The Central Government shall appoint a person who has been, or is qualified to be, a Judge of a High Court as the President of the Tribunal.

(2) A person shall not be qualified for appointment as Judicial Member unless he- (a) has, for at least fifteen years, held a judicial office in the territory of India; or (b) has, for at least ten years been an advocate of a High Court, or has partly held judicial office and has been partly in practice as an advocate for a total period of fifteen years; or (c) has held for at least fifteen years a Group 'A' post or an equivalent post under the Central Government or a State Government including at least three years of service as a Member of the Indian Company Law Service (Legal Branch) in Senior Administrative Grade in that service; or (d) has held for at least fifteen years a Group 'A' post or an equivalent post under the Central Government (including 8 at least three years of service as a Member of the Indian Legal Service in Grade I of that service).

(3) A person shall not be qualified for appointment as Technical Member unless he- (a) has held for at least fifteen years a Group 'A' post or an equivalent post under the Central Government or a State Government [including at least three years of service as a Member of the Indian Company Law Service (Accounts Branch) in Senior Administrative Grade in that o Service]; or (b) is, or has been, a Joint Secretary to the Government of India under the Central Staffing Scheme, or any other post under the Central Government or a State Government carrying a scale of pay which is not less than that of a Joint Secretary to the Government of India for at least five years and has adequate knowledge of, and experience in, dealing with problems relating to company law; or (c) is, or has been, for at least fifteen years in practice as a chartered accountant under the Chartered Accountants Act, 1949 (38 of 1949); or (d) is, or has been, for at least fifteen years in practice as a cost accountant under , the Costs and Works Accountants Act, 1959 (23 of 1959); or (e) is, or has been, for at least fifteen years working experience as a Secretary in whole-time practice as defined in clause (45A) of section 2 of this Act and is a member of the Institute of the Companies Secretaries of India constituted under the Company Secretaries Act, 1980 (56 of 1980); or (f) is a person of ability, integrity and standing having special knowledge of, and professional experience of not less than twenty years in, science, technology, economics, banking, industry, law, matters relating to industrial finance, industrial management, industrial reconstruction, administration, investment, accountancy, marketing or any other matter, the special knowledge of, or professional experience in, which would be in the opinion of the Central Government useful to the Tribunal; or (g) is, or has been, "Government on the recommendations of a Selection " eommittee consisting of: '· ', "·· 1a) Chief Justice of India or his nominee Chairperson; (b) Secretary in the Ministry of Finance and Company Affairs Member; (c) Secretary in the Ministry of Labour Member; (d) Secretary in the Ministry of Law and Justice (Department of Legal Affairs or Legislative Department) Member; (e) Secretary in the Ministry of Finance and Company Affairs (Department of Company Affairs) Member.

(2) The Joint Secretary in the Ministry or Department of the Central Government dealing with this Act shall be the Convenor of the Selection Committee. )()()( )()()( )()()( (5) Before recommending any person for appointment as the Chairperson and Members of the Appellate Tribunal and President and Members of the Tribunal, the Selection Committee shall satisfy itself that such person does not have financial or other interest which is likely to affect prejudicially his functions as such Chairperson or member of the Appellate Tribunal or President or Member of the Tribunal, as the case may be. (6) No appointment of the Chairperson and Members of the Appellate Tribunal and President and Members of the Tribunal shall be invalidated merely by reason of any vacancy or any defect in the constitution of the Selection Committee. 10G.

Power to punish for contempt: The Appellate Tribunal shall have the same jurisdiction, powers and authority in respect of contempt of itself as the High Court has and 8 may exercise, for this purpose under the provisions of the Contempt of Courts Act, 1971 (70 of 1971), shall have the effect subject to modifications that- (a) the reference therein to a High Court shall be construed as including a reference to the Appellate Tribunal; (b) the reference to Advocate-General in section 15 of the said Act shall be construed as a reference to such law officers as the Central Government may specify in this behalf. 1OGB.

Civil court not to have jurisdiction: (1) No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which the Tribunal or the Appellate Tribunal is empowered to determine by or under this Act or any other law for the time being in force and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or any other law for the time being in force. 10GF.

Appeal to Supreme Court: Any person aggrieved by any decision or order of the Appellate Tribunal may file an appeal to the Supreme Court within sixty days from the date of communication of the decision or order of the Appellate Tribunal to him on any question of law arising out of such decision or order: Provided that the Supreme Court may, if it is satisfied that the appellant was prevented by sufficient cause from filing the appeal within the said period, allow it to be filed within a further period not exceeding sixty days. BAR ASSOCIATION [R. V. RAVEENDRAN, J. ] Section 1OFJ relates to removal and suspension of President or members of the NCLT. Section 1OFV relates to removal and suspension of Chairman or members of NCLAT.

Sub-section (2) of those sections provide that the PresidenUChairman or a member shall not be removed from his office except by an order made by the Central Government on the ground of proven misbehaviour or incapacity after an inquiry made by a Judge of the Supreme Court in which the President/Chairman or member has been informed of the charges against him and given a reasonable opportunity of being heard in respect of those charges. Sub-section (3) provides that the Central Government may suspend from office, the PresidenUChairman or Member of the Tribunal in respect of whom a reference has been made to the Judge of the Supreme Court under sub-section (2) until the Central 0 Government has passed orders on receipt of the report of the Judge of the Supreme Court on such reference. Difference between Courts and Tribunals 12. The term 'Courts' refers to places where justice is administered or refers to Judges who exercise judicial functions.

Courts are established by the state for administration of justice that is for exercise of the judicial power of the state to maintain and uphold the rights, to punish wrongs and to adjudicate upon disputes. Tribunals on the other hand are special alternative institutional mechanisms, usually brought into existence by or under a statute to decide disputes arising with reference to that particular statute, or to determine controversies arising out of any administrative law. Courts refer to Civil Courts, Criminal Courts and High Courts. Tribunals can, be either private Tribunals (Arbitral Tribunals), or Tribunals constituted under the Constitution (Speaker or the Chairman acting under Para 6(1) of the Tenth Schedule) or Tribunals authorized by the Constitution (Administrative Tribunals under Article 323A and Tribunals for other matters under Article 3238) or Statutory Tribunals which are created under a statute (Motor Accident Claims Tribunal, Debt Recovery Tribunals and consumer fora).

Some Tribunals are manned exclusively by Judicial Officers (Rent Tribunals, Motor Accidents Claims Tribunal, Labour Courts and Industrial Tribunals). Other statutory Tribunals have Judicial and Technical Members (Administrative Tribunals, TDSAT, Competition Appellate Tribunal, Consumer fora, Cyber Appellate Tribunal, etc). 1. 3. This court had attempted to point out the difference between Court and Tribunal in several decisions. We may refer a few of them. (13. 1) In Harinagar Sugar Mills Ltd. vs. Shyam Sundar Jhunjhunwala - (1962) 2 SCR 339, Hidayatullah J. , succinctly explained the difference between Courts and Tribunals, thus: "All Tribunals are not courts, though all courts are Tribunals". The word "courts" is used to designate those Tribunals which are set up in an organized state for the administration of justice. By administration of justice is meant the exercise of juridical power of the state to maintain and uphold rights and to punish "wrongs".

Whenever there is an infringement of a right or an injury, the courts are there to restore the vinculum juris, which is disturbed ...... .. When rights are infringed or invaded, the aggrieved party can go and commence a querela before the ordinary Civil Courts. These Courts which are instrumentalities of Government, are invested with the judicial power of the State, and their authority is derived from the Constitution or some Act of Legislature constituting them. Their number is ordinarily fixed and they are ordinarily permanent, and can try any suit or cause within their jurisdiction. Their numbers may be increased or decreased, but they are almost always permanent and go under the compendious name of "Courts of Civil Judicature". There can thus be no doubt that the Central Government does not come within A this class. With the growth of civilization and the problems of modern life, a large number of administrative Tribunals have come into existence.

These Tribunals have the authority of law 8 to pronounce upon valuable rights; they act in a judicial manner and even on evidence on oath, but they are not part of the ordinary Courts of Civil Judicature. They share the exercise of the judicial power of the State, but they are brought into existence to implement some administrative C policy or to determine controversies arising out of some administrative law. They are very similar to Courts, but are not Courts. When the Constitution speaks of 'Courts' in Art. 136, 227, or 228 or in Arts. 233 to 237 or in the Lists, it contemplates Courts of Civil Judicature but not Tribunals other than such Courts. This is the reason for using both D the expressions in Arts. 136 and 227. By "Courts" is meant Courts of Civil Judicature and by "Tribunals", those bodies of men who are appointed to decide controversies arising under certain special laws. E Among the powers of the State is included the power to decide such controversies.

This is undoubtedly one of the attributes of the State, and is aptly called the judicial power of the State. In the exercise ofthis power, a clear division is thus noticeable. Broadly speaking, certain special F matters go before Tribunals, and the residue goes before the ordinary Courts of Civil Judicature. Their procedures may differ, but the functions are not essentially different. What distinguishes them has never been successfully established. " G In my opinion, a Court in the strict sense is a Tribunal which is a part of the ordinary hierarchy of Courts of Civil Judicature maintained by the State under its constitution to exercise the judicial power of the State. These Courts perform all the judicial functions of the State ~xcept those H A that are excluded by law from their jurisdiction. The word "judicial'', be it noted, is itself capable of two meanings. They were admirably stated by Lopes, L. J. in Royal Aquarium and Summer and Winter Garden Society v. Parkinson [1892) 1 Q.

B. 431, in these words : B "The word 'judicial' has two meanings. It may refer to the discharge of duties exercisable by a judge or by justices in court, or to administrative duties which need not be performed in court, but in respect of which it is necessary to being to bear a c judicial mind - that is, a mind to determine what is fair and just in respect of the matters under consideration. " That an officer is required to decide matters before him D "judicially" in the second sense does not make him a Court or even a Tribunal, because that only establishes that he is following a standard of conduct, and is free from bias or interest. Courts and Tribunals act "judicially" in both senses, and E in the term "Court" are included the ordinary and permanent Tribunals and in the term "Tribunal" are included all others, which are not so included". (emphasis supplied) F (13. 2) In Jaswant Sugar Mills vs.

Laxmi Chand - 1963 Supp (1) SCR 242, this Court observed that in order to be a Tribunal, a body or authority must, besides being under a duty to act judicially, should be invested with the judicial power of G the state. (13. 3) In Associated Cement Companies Ltd. vs. P. N. Sharma - (1965) 2 SCR 366, another Constitution Bench of this Court explained the position of Tribunals thus: H "The expression "court" in the context denotes a Tribunal BAR ASSOCIATION [RV. RAVEENDRAN, J. ] constituted by the State as a part of the ordinary hierarchy A of courts which are invested with the State's inherent judicial powers. A sovereign State discharges legislative, executive and judicial functions and can legitimately claim corresponding powers which are described as legislative, executive and judicial powers. Under our Constitution, the B judicial functions and powers of the State are primarily conferred on the ordinary courts which have been constituted under its relevant provisions.

The Constitution recognised a hierarchy of courts and their adjudication are normally entrusted all disputes between citizens and C citizens as well as between the citizens and the State. These courts can be described as ordinary courts of civil judicature. They are governed by their prescribed rules of procedure and they deal with questions of fact ·and law raised before them by adopting a process which in 0 described as judicial process. The powers which these courts exercise, are judicial powers, the functions they discharge are judicial functions and the decisions they reach and pronounce are judicial decisions. In every State there are administrative bodies or authorities E which are required to deal with matters with. in their jurisdiction in an administrative manner and their decisions are described as administrative decisions. In reaching their administrative decisions, administrative bodies can and often to take into consideration questions of policy.

It is not F unlikely that even in this process of reaching administrative divisions, the administrative bodies or authorities are required to act fairly and objectively and would in many cases have to follow the principles of natural justice; but the authority to reach decision conferred on such G administrative bodies is clearly distinct and separate from the judicial power conferred on courts, and the decisions pronounced by administrative bodies are similarly distinct and separate in character from judicial decision pronounced by courts. H A Tribunals which fall under the purview of Article 136(1) occupy a special position of their own under the scheme of our Constitution.

Special matters and questions are entrusted to them for their decision and in that sense, they share with the court one common characteristic; both the B courts and the Tribunals are constituted by the state and are invested with judicial as distinguished from purely administrative or executive functions (vide Durga Shankar Mehta v. Raghuraj Singh - 1955 (1) SCR 267). They are both adjudicating bodies and they deal with and finally determine disputes between parties which are entrusted c to their jurisdiction. The procedure followed by the courts is regularly prescribed and "in discharging their functions and exercising their powers, the courts have to conform to that procedure. The procedure which the Tribunals have to follow may not always be so strictly prescribed, but the D approach adopted by both the courts and the Tribunals is substantially the same, and there is no essential difference between the functions that they discharge.

As in the case of courts, so in the case of Tribunals, it is the State's inherent judicial power which has been transferred E and by virtue of the said power, it is the State's inherent judicial function which they discharge. " (emphasis supplied) (13. 4) In Kihoto Hof/ohan vs. Zachi/lhu - 1992 Supp (2) F SCC 651, a Constitution Bench reiterated the above position and added the following : Where there is a lis - an affirmation by one party and denial by another - and the dispute necessarily involves G a decision on the rights and obligations of the parties to it and the authority is called upon to decide it, there is an exercise of judicial power. That authority is called a Tribunal, if it does not have all the trappings of a court". H In S. P. Sampath Kumar vs.

Union of India - (1987) 1 SCC 124, this Court expressed the view that the Parliament can without in any way_violating the basic structure doctrine make effective alternative institutional mechanisms or arrangements for judicial review. 14. Though both Courts and Tribunals exercise judicial 8 power and discharge similar functions, there are certain wellrecognised differences between courts and Tribunals. They are (i) Courts are established by the State and are entrusted with the State's inherent judicial power for administration of justice in general. Tribunals are established under a statute to adjudicate upon disputes arising under the said statute, or disputes of a specified nature. Therefore, all courts are Tribunals. But all Tribunals are not courts. (ii) Courts are exclusively manned by Judges. Tribunals can have a Judge as the sole member, or can have combination of a Judicial Member and a Technical Member who is an 'expert' in the field to which Tribunal relates.

Some highly specialized fact finding Tribunals may have only Technical Members, but they are rare and are exceptions. (iii) While courts are governed by detailed statutory procedural rules, in particular the Code of Civil Procedure and Evidence Act, requiring an elaborate procedure in decision making, Tribunals generally regulate their owr procedure applying the provisions of the Code of Civil Procerlure only where it is required, and without being restricted by the strict rules of Evidence Act. Re: Independence of judiciary 15. Impartiality, independence, fairness and reasonableness in decision making are the hallmarks of Judiciary. If 'Impartiality' is the soul of Judiciary, 'Independence' is the life blood of Judiciary. Without independence, impartiality cannot thrive. Independence is not the freedom for Judges to do what they like. It is the independence of judicial thought.

It is the freedom from interference and pressures which provides the judicial atmosphere where he can work with absolute commitment to the cause of justice and constitutional values. It is also the discipline in life, habits and outlook that enables a Judge to be impartial. Its existence depends however not only on philosophical, ethical or moral aspects but also upon several mundane things - security in tenure, freedom from ordinary monetary worries, freedom from influences and pressures within (from others in the Judiciary) and without (from the Executive). 1Ei. In Union of India vs. Sanka/chand Himatla/ Sheth - 1977 {4) SCC 193, a Constitution Bench of this Court explained the importance of 'Independence of Judiciary' thus : "Now the independence of the judiciary is a fighting faith of our Constitution. Fearless justice is a cardinal creed of our founding document. It is indeed a part of our ancient tradition which has produced great judges in the past.

In England too, from where we have inherited our present system of administration of justice in its broad and essential features, judicial independence is prized as a basic value and so natural and inevitable it has come to be regarded and so ingrained it has become in the life and thought of the people that it is now almost taken for granted and it would be regarded an act of insanity for any one to think otherwise......... . The Constitution makers, therefore, enacted several provisions designed to secure the independence of the superior judiciary by insulating it from executive or legislative control,.............. . ... ... .. even with regard to the Subordinate Judiciary the framers of the Constitution were anxious to secure that it should be insulated from executive interference and once appointment of a Judicial Officer is made, his subsequent career should be under the control of the High Court and he should not be exposed to the possibility of any improper executive pressure.

" In Supreme Court Advocates-on-Record. Association & Ors. v. Union of India (1993) 4 sec 441, J. S. Verma; J. (as he then 8 was) speaking for the majority, described the attributes of an independent judge thus : " . :. Only those persons should be considered fit for appointment as Judges of the superior judiciary who combine the attributes essential for making an able, independent and fearless judge. Several attributes together combine to constitute such a personality. Legal expertise, ability to handle cases, proper personal conduct and. ethical behaviour, firmness and fearlessness are obvious essential attributes of a person suitable for appointment as a superior Judge. ". (emphasis supplied} In his concurring opinion, Pandian J. stated that "it is the cardinal principle of the Constitution that an independent judiciary is the most essential characteristic of a free society like ours. " He further stated : "..

that to have an independent judiciary to meet all challenges, unbending before all authorities and to uphold the imperatives of the Constitution at all times, thereby preserving the judicial integrity, the person to be elevated to the judiciary must be possessed with the highest reputation for independence, uncommitted to any prior interest, loyalty and obligation and prepared under all circumstances or eventuality to pay any price, bea,r any burden and to meet any hardship and always wedded only to the principles of the Constitution and 'Rule of Law'. If the selectee bears a particular stamp for the purpose of . changing the cause of decisions bowing to the diktat of l A his appointing authority, then the independence of judiciary cannot be secured notwithstanding the guaranteed tenure of office, rights and privileges, safeguards, conditions of service and immunity.

Though it is illogical to spin out a new principle that the keynote is not the judge but the s judiciary especially when it is accepted in the same breath that an erroneous appointment of an unsuitable person is bound to produce irreparable damage to the faith of the community in the administration of justice and to inflict serious injury to the public interest and that the necessity c for maintaining independence of judiciary is to ensure a fair and effective administration of justice. " The framers of the Constitution stated in a Memorandum ("See The Framing of India's Constitution - a.

Shiva Rao, volume 1- 8, Page 196) : D "We have assumed that it is recognized on all hands that the independence and integrity of the judiciary in a democratic system of government is of the highest importance and interest not only to the judges but to the E citizens at large who may have to seek redress in the last resort in courts of law against any illegal acts or the highhanded exercise of power by the executive ... in making the following proposals and suggestions, the paramount importance of securing the fearless functioning of an F independent and efficient judiciary has been steadily kept in view. " In L Chandra Kumar, the seven Judge Bench of this Court held: G "The Constitution of India while conferring power of judicial review of legislative action upon the higher judiciary, incorporated important safeguards.

An analysis of the manner in which the Framers of our Constitution incorporated provisions relating to the judiciary would H indicate that they were very greatly concerned with securing the independence of the judiciary. " . ' Independence of Judiciary has always been recognized as a part cf the basic structure of the Constitution (See : Supreme Court Advocates-on-Record Association vs. Union of India - 8 1993 (4) SCC 441, State of Bihar vs. Bal Mukund Shah - 2000 (4) SCC 640, Shri Kumar Padma Prasad vs. Union of India - 1992 (2) SCC 428, and All India Judges Association vs. Union of India - 2002 (4) SCC 247). Separation of Power. 17. In Rai Sahib Ram Jawaya Kapur vs.

The State of Punjab - 1955 (2) SCR 225, this Court explained the doctrine of separation of powers thus : "The Indian Constitution has not indeed recognised the doctrine of separation of powers in its absolute rigidity but the functions of the different parts or branches of the Government have been sufficiently differentiated and consequently it can very well be said that our Constitution does not contemplate assumption, by one organ or part of the State, of functions that essentially belong to another. " In Chandra Mohan vs.

State of UP-AIR 1966 SC 1987, this Court held: ''The Indian Constitution, though it does not accept the strict qoctrine of separation of powers, provides for an independent judiciary in the States; it constitutes a High Court for each State, prescribes the institutional conditions of service of the Judges thereof, confers extensive jurisdiction on it to issue writs to keep all tribunals, including in appropriate cases the Governments, within bounds and gives to it the power of superintendence over all courts and tribunals in the territory over which it has jurisdiction. But the makers of the Constitution also realised that "it is the Subordinate Judiciary in India who are brought most closely into contact with the people, and it is no less important, perhaps indeed even more important, that their independence should be placed beyond question than in thE~ case of the superior Judges.

" Presumably to secure thE~ independence of the judiciary from the executive, the Constitution introduced a group of articles in Ch. VI of Part VI under the heading "Subordinate Courts". But at the time the Constitution was made, in most of the States the magistracy was under the direct control of the executive. Indeed it is common knowledge that in pre-independent India there was a strong agitation that the judiciary should be separated from the executive and that the agitation was based upon the assumption that unless they were separated, the independence of the judiciary at the lower levels would be a mockery. So article 50 of the Directive Principles of Policy states that the State shall take steps to separate the judiciary from the executive in the public services of the States. Simply stated, it means that there shall be a separate judicial service free from the executive control. " (emphasis supplied) In Indira Nehru Gandhi vs.

Raj Narain - 1975 Supp SCC 1, this Court observed that the Indian Constitution recognizes separation of power in a broad sense without however their being any ggid separation of power as under the American Constitution or under the Australian Constitution. This Court held thus: "It is true that no express mention is made in our Constitution of vesting in the judiciary the judicial power as is to be found in the American Constitution. But a division of the three main functions of Government is recognised in our Constitution. Judicial power in the sense of the judicial power of the State is vested in the Judiciary. Similarly, the Executive and the Legislature are vested with powers in their spheres. Judicial power has lain in the BAR ASSOCIATION [R. V. RAVEENDRAN, J. ] hands of the Judiciary prior to the Constitution and also since the Constitution.

It is not the intention that the powers of the Judiciary should be passed to or be shared by the Executive or the Legislature or that the powers of the Legislature or the Executive should pass to or be shared by the Judiciary. "The Constitution has a basic structure comprising the three organs ofthe Republic: the Executive, the Legislature and the Judiciary. It is through each of these organs that the sovereign will of the people has to operate and manifest itself and not through only one of them. None of these three separate organs of the Republic can take over the functions assigned to the other. This is the basic strueture or scheme of the system of Government of Republic.......... .. "But no constitution can survive without a conscious adherence to its fine checks and balances. Just as courts rought to enter into problems entwined in the 'political "'\·. , ·thicket", Parliament must also respect the preserve of the court.

The principle of separation of powers is a principle of restraint ......... " In L. Chandra Kumar, the seven-Judge Bench of this Court referred to the task entrusted to the superior courts in India thus 'The Judges of the superior courts have been entrusted with the task of upholding the Constitution and to this end, have been conferred the power to interpret it. It is they who have to ensure that the balance of power envisaged by the Constitution is maintained and that the legislature and the executive do not, in the discharge of their functions, transgress constitutional limitations. It is equally their duty to oversee that the judicial decisions rendered by those who man the subordinate courts and tribunals do not fall foul of strict standards of legal correctness and judicial and judicial independence. " (emphasis supplied) The doctrine of separation of powers has also been always considered to be a part of the basic structure of the Constitution (See : Keshavananda Bharati vs.

State of Kera/a - 1973 (4) SCC 225, Indira Gandhi vs. Raj Narain - 1975 Supp SCC 1, State of Bihar vs. Bal Mukund Shah - 2000 (4) SCC 640 and l. R. Coelho vs. State of Tamil Nadu - 2007 (2) SCC 1). The argument in favour of Tribunals 18. The argument generally advanced to support tribunalisation is as follows : The courts function under archaic and elaborate procedural laws and highly technical Evidence Law. To ensure fair play and avoidance of judicial error, the procedural laws provide for appeals, revisions and reviews, and allow parties to file innumerable applications and raise vexatious objections as a result of which the main matters get pushed to the background. All litigation in courts get inevitably delayed which leads to frustration and dissatisfaction among litigants. In view of the huge pendency, courts are not able to bestow attention and give priority to cases arising under special legislations.

Therefore, there is a need to transfer some selected areas of litigation dealt with by traditional courts to special Tribunals. As Tribunals are free from the shackles of procedural laws and Evidence Law, they can provide easy access to speedy justice in a 'cost-affordable' and 'userfriendly' manner. Tribunals should have a Judicial Member and a Technical Member. The Judicial Member will act as a bulwark ·against apprehensions of bias and will ensure compliance with basic principles of natural justice such as fair hearing and reasoned orders. The Judicial Member would also ensure 'impartiality, fairness and reasonableness in consideration. The presence of Technical Member ensures the availability of expertise and experience related to the field of adjudication for YNION OF INDIA v. R. GANDHI, PRESIDENT, MADRAS 915 BAR ASSOCIATION [RV RAVEENDRAN, J. ] which the special Tribunal is created, thereby improving the quality of adjudication and decision-making. ', / 19.

United Kingdom has a rich experience of functioning of several types of Tribunals as dispute resolution-andgrievance settlement mechanisms in regard to varied social 8 welfare legislations. Several Committees were constituted to study the functioning of the Tribunals, two of which require special mention. The first is the Franks Report which emphasized that Tribunals should be independent, accessible, prompt, expert, informal and cheap. The second is the report of the Committee constituted to undertake the review of delivery of justice through Tribunals, with Sir Andrew Leggatt as Chairman. The Leggatt Committee submitted its report to the Lord High Chancellor of Great Britain in March, 2001. The ·Committee explained the advantages of Tribunals, provided . they could function independently and coherently, thus: "Choosing a tribunal to decide disputes should bring two distinctive advantages for users.

First, tribunal decisions ar~ often made jointly by a panel of people who pool legal and other expert knowledge, and are the better for that range of skills. Secondly, tribunals' procedures and approach to overseeing the preparation of cases and their hearing can be simpler and more informal than the courts, even after the civil justice reforms. Most users ought therefore to be capable of preparing and presenting their cases to the tribunal themselves, providing they have the right kind of help Enabling that kind of direct participation is an important jurisdiction for establishing tribunals at all. xxxxx De Smith's Judicial Review, (6th Edn. , Page 50 Para 1.

085) sets out the advantages of Tribunals thus : "In the design of an administrative justice system, a Tribunal may be preferred to an ordinary court because its members have specialized knowledge of the subject- matter, because it will be more informal in its trappings and procedure, because it may be better at finding facts, applying flexible standards and exercising discretionary powers, and because it may be cheaper, more accessible anti more expeditious than the High Court. Many of the decisions given to Tribunals concern the merits of cases with relatively little legal content, and in such cases a Tribunal, usually consisting of a legally qualified Tribunal judge and two lay members, may be preferred to a court.

Indeed dissatisfaction with the over-technical and allegedly unsympathetic approach of the courts towards social welfare legislation led to a transfer of functions to special Tribunals; the Workmen's Compensation Acts were administered by the ordinary courts, but the National Insurance (Industrial Injuries) scheme was applied by Tribunals. It is, however, unrealistic to imagine that technicalities and difficult legal issues can somehow be avoided by entrusting the administration of complex legislation to Tribunals rather than the courts. " (emphasis supplied) H. W. R. Wade & C. F. Forsyth also refer to the advantage of Tribunals in their 'Administrative Law' (10th Edn. , pp. 773-774): "The social legislation of the twentieth century demanded Tribunals for purely administrative reasons: they could offer speedier, cheaper and more accessible justice, essential for the administration of welfare schemes involving large numbers of small claims.

The process of the courts of law is elaborate, slow and costly. Its defects are those of its merits, for the object is to provide the highest standard of justice; generally speaking, the public wants the best possible article, and is prepared to pay for it. But in administering social services the aim is different. The object is not the best article at any price but the best article that is consistent with efficient administration. Disputes must be disposed of quickly and cheaply, for the benefit of the public purse as well as for that of the claimant. Thus A when in 1946 workmen's compensation claims were removed from the courts and brought within the Tribunal system much unproductive and expensive litigation, particularly on whether an accident occurred in the course of employment, came to an end. The whole system is B based on compromise, and it is from the dilemma of weighing quality against convenience that many of its problems arise.

An accompanying advantage is that of expertise. Qualified C surveyors sit on the Lands Tribunal and experts in tax law sit as Special Commissioners of Income Tax. Specialized Tribunals can deal both more expertly and more rapidly with special classes of cases, whereas in the High Court counsel may take a day or more to explain to the judge D how some statutory scheme is designed to operate. Even without technical expertise, a specialized Tribunal quickly builds up expertise in its own field. Where there is a continuous flow of claims of a particular class, there is every advantage in a special jurisdiction. " E Recommendations for better working of Tribunals 20. Only if continued judicial independence is assured, Tribunals can discharge judicial functions. In order to make such independence a reality, it is fundamental that the members of F the Tribunal shalf be independent persons, not civil servants. They should resemble courts and not bureaucratic Boards.

Even the dependence of Tribunals on the sponsoring or parent department for infrastructural facilities or personnel may undermine the independence of the Tribunal (vide : Wade &· Forsyth: 'Administrative Law' - 10th Edn. , pp. 774 and 777). G 21. The Leggatt Committee's Report explained the task of improving the Tribunals thus : "There are 70 different administrative tribunals in England H A and Wales, leaving aside regulatory bodies. Between them they deal with nearly one million cases a year, and they employ about 3,500 people. But of these 70 tribunals only 20 each hear more than 500 cases a year and many are defunct. Their quality varies from excellent to inadequate. B Our terms of reference require them to be rendered coherent.

So they have to be rationalized and modernized; and this Review has as its four main objects: first, to make the 70 tribunals into one Tribunals System that its members can be proud of; secondly, to render the tribunals independent of their sponsoring departments by having c them administered by one Tribunals Service; thirdly, to improve the training of chairmen and members in the interpersonal skills peculiarly required by tribunals; and fourthly, to enable unrepresented users to participate effectively and without apprehension in tribunal D proceedings. " The Leggatt Committee explained what the users of the system expected from an alternative public adjudication system: "We do not believe that the current arrangements meet what E the modern user needs and expects from an appeal system running in parallel to the courts.

First, users need to be sure, as they currently cannot be, that decisions in their cases are being taken by people with no links with the body they are appealing against. Secondly, a more F coherent framework for tribunals would create real opportunities for improvement in the quality of services that can be achieved by tribunals acting separately. Thirdly, that framework will enable them to develop a more coherent approach to the services which users must receive if they G are to be enabled to prepare and present cases themselves. Fourthly, a user-oriented service needs to be much clearer than it is now in telling users what services they can expect, and what to do if the standards of these services are not met. " H / The Leggatt Committee expressed the view that a single structure for all Tribunals would achieve independence and effective functioning of the Tribunal.

It stated : "There is only one way to achieve independence and coherence: to have all the tribunals supported by a 8 Tribunals Service, that is, a common administrative · service. It would raise their status, while preserving their distinctness from the courts. In the medium term it would yield considerable economies of scale, particularly in relation to the provision of premises for all tribunals, common basic training, and the use of IT. It would also bring greater administrative efficiency, a single point of contact for users, improved geographical distribution of tribunal centres, common standards, an enhanced corporate image, greater prospects of job satisfaction, a better relationship between members and administrative staff, and improved career patterns for both on account of the size and. coherence of the Tribunals Service.

It should be committed by Charter to provide a high quality, unified service, to operate independently, to deal openly and honestly with users of tribunals, to seek to maintain public confidence, and to report annually on its performance. The report expressed the view that the independence of tribunals would best be safeguarded by having their administrative support provided by the Lord Chancellor's Department as he is uniquely placed to protect the independence of those who sit in tribunals as well as. ,.. of the judiciary, through a Tribunals Service and a Tribunals System analogous with, but separate from, the Court Service and the courts. Most of the recommendations of the Leggatt Report were accepted and culminated in the 'Tribunals, Courts & Enforcement Act, 2007'. The Act recognizes that Tribunals do not form part of administration, but are machinery of adjudication.

As a result of the said Act, the appointments to Tribunals are on the recommendations of a Judicial Appointments Commission. The sponsoring Department (that generates the disputes that the Tribunal will have to decide) has no say in the appointments. Neither the infrastructure nor the staff are provided to the Tribunals by the sponsoring Parent Depa11ment. The Tribunals have become full-fledged part of Judicial system with no connection or link with the 'parent department'. A common Tribunal service has been established as an executing agency in the Ministry of Law & Justice. 22. This Court, in L. Chandra Kumar, made similar suggestions for achieving the independence of Tribunals : "It has been brought to our notice that one reason why these Tribunals have been functioning inefficiently is because there is no authority charged with supervising and fulfilling their administrative requirements ........

The situation at present is that different Tribunals constituted under different enactments are administered by different administrative departments of the Central and the State Governments. The problem is compounded by the fact that some Tribunals have been created pursuant to Central Le£1islations and some others have been created by State Le£1islations. However, even in the case of Tribunals created by Parliamentary legislations, there is no uniformity in administration. We are of the view that, until a wholly ' independent agency for the administration of all such Tribunals can be set-up, it is desirable that all such Tribunals should be, as far as possible, under a single nodal Ministry which will be in a position to oversee the working of these Tribunals. For a number of reasons that Ministry should appropriately be the Ministry of Law. It would be open for the Ministry, in its turn, to appoint an independent supervisory body to oversee the working of the Tribunals.

This will ensure that if the President or Chairperson of the Tribunal is for some reason unable to take sufficient interest in the working of the Tribunal, the entire! system will not languish and the ultimate consumer BAR ASSOCIATION [R. V. RAVEENDRAN, J. ] of justice will not suffer. The creation of a single umbrella organisation will, in our view, remove many of the ills of the present system. If the need arises, there can be separate umbrella organisations at the Central and the State levels. Such a supervisory authority must try to ensure that the independence of the members of all such Tribunals is maintained. To that extent, the procedure for the selection of the members of the Tribunals, the manner in which ·funds arc allocated for the functioning of the Tribunals and all other consequential details will have to be clearly spelt out. " 23. But in India, unfortunately Tribunals have not achieved full independence.

The Secretary of the concerned 'sponsoring department' sits in the Selection Committee for appointment. When the Tribunals are formed, they are mostly dependant on their sponsoring department for funding, infrastructure and even space for functioning. The statutes constituting Tribunals routinely provide for members of civil services from the sponsoring departments becoming members of the Tribunal and continuing their lien with their parent cadre. Unless wide ranging reforms as were implemented in United Kingdom and as were suggested by Chandra Kumar are brought about, Tribunals in India will not be considered as independent. Whether the Government can transfer the judicial functions traditionally performed by courts to Tribunals? 24. It is well settled that courts perform all judicial functions of the State except those that are excluded by law from their jurisdiction.

Section 9 of Code of Civil Procedure, for example, provides that the courts shall have jurisdiction to try all suits of a civil nature excepting suits of which their cognizance is either expressly or impliedly barred. 25. Article 32 provides that without prejudice to the powers conferred on the Supreme Court by clauses (1) and (2) of the said Article, Parliament may by law, empower any other court to exercise within the local limits of its jurisdiction all or any of the powers exercisable by the Supreme Court under clause (2) of Article 32. Article 247 provides that notwithstanding anything contained in Chapter I of Part XI of the Constitution, Parliament may by law provide for the establishment of any additional courts for the better administration of laws made by Parliament or of any existing laws with respect to a matter enumerated in the Union List.

Article 245 provides that subject to the provisions of the Constitution, Parliament may make laws for the whole or any part of the territory of India, and the Legislature of a State may make laws for the whole or any part of the State. Article 246 deals with the subject matter of laws made by Parliament and by the legislatures of States. The Union List (List I of Seventh Schedule) enumerates the matters with respect to which Parliament has exclusive powers to make laws. Entry 77 of List I refers to Constitution, organization, 0 jurisdiction and powers of the Supreme Court. Entry 78 of List I refers to constitution and organization of the High Courts. Entry 79 of List I refers to extension or exclusion of the jurisdiction of a High Court, to or from any Union Territory. Entry 43 of List I refers to incorporation, regulation and winding up of trading corporations and Entry 44 of List I refers to incorporation, regulation and winding up of corporations.

Entry 95 of List I refers to jurisdiction and powers of all courts, except the Supreme Court, with respect to any of the matters in Union List. The Concurrent List (List Ill of the Seventh Schedule) enumerates the matters with respect to which a Parliament and legislature of a state will have concurrent power to make laws. Entry 11A of List Ill refers to administration of justice, constitution and organization of all courts except the Supreme Court and the High Courts. Entry 46 of List Ill refers to jurisdiction and powers of all courts, except the Supreme Court, with respect to any of the matters in List Ill. 26. Part XIV-A was inserted in the Constitution with effect from 3. 1. 1977 by the Constitution (Forty-second Amendment) Act, 1976. The said part contains two Articles.

Article 323A · relates to Administrative Tribunals and empowers the Parliament to make a law, providing for the adjujiication or trial by Administrative Tribunals of disputes and complaints with respect to recruitment and conditions of service of persons appointed to public services and posts in connection with the affairs of the Government or of any State or of ai:iy local or other authority within the territory of India or under the control of the Government of India or of any corporation owned or controlled by the Government.

Article 323B empowers the approp~iate Legislature to make a law, providing for the adjudication or trial by Tribunals of any disputes, complaints, or offences with respect to all or any of the following matters specified in clause (2) with respect to which such Legislature has power to make laws: • (a) levy, assessment, collection and enforcement of any tax; (b) foreign exchange, import and'export across customs frontiers; (c) industrial and labour disputes; (d) land reforms by way of acquisition by the State of any estate as defined in article 31A or of any rights therein or the extinguishment or modification of any such rights or by way of ceiling on agricultural land or in any other way; (e) ceiling on urban property; (f) elections to either House of Parliament or the House or either House of the Legislature of a State, but excluding the matters referred to in article 329 and article 329A; (g) production, procurement, supply and distribution of foodstuffs (including edible oilseeds and oils) and suc.

h other goods as the President may, by public notification, declare to be essential goods for the purpose of this article and control of prices of such goods; (h) rent, its regulation and control and tenancy issues including the rights, title and interest of landlords and tenants, 8 (i) offences against laws with respect to any of the matters specified in sub-clauses (a) to (h) and fees in respect of any of those matters; 0) any matter incidental to any of the matters specified in sub-clauses (a) to (i).

" ClausE~ (2) of Article 323A and clause (3) of Article 3238 lay down that a law made under sub-clause (1) of the respective • Articles may provide for the following : 0 Article 323A Article 3238 -- ~ (a) provide for tl'le Provide for the establishment of ~):in establishment of a hierarchy administrative Tribunal for of Tribunals; the Union and a separate administrative Tribunal for each State or for two or more States; (b) specify the jurisdiction, Specify the jurisdiction, powers (including the powers (including the power power to punish for to punish for contempt) and contempt) and authority authority which may be which may be exerci~d exercised by each of the by each of the said said Tribunals Tribunals; " BAR ASSOCIATION [RV. RAVEENDRAN, J.

] (c) provide for the procedure provide for the (including provisions as to procedure(including limitation and rules of provisions as to limitation evidence) to be followed and rules of evidence) to by the said Tribunals; be followed by the said 8 Tribunals; (d) exclude the jurisdiction of exclude the jurisidiction of all courts, except the all courts except the jurisdiction of the jurisdiction of the Supreme Supreme Court under Court under article 136 with article 136, with respect respect to all or any of the to the disputes or matters falling within the complaints referred to in jurisdiction of the said clause (1 ); Tribunals; (e) provide for the transfer to provide for the transfer to each such administrative each such Tribunal of any Tribunal of any cases cases pending before any pending before any court court or any other authority or other authority immediately before the immediately before the establishment of such establishment of such Tribunal as would have Tribunal as would have been within the jurisdiction been within the jurisdiction of such Tribunal if the of such Tribunal if the cause of action on which cause of action on which such suits or proceedings such suits or proceedings are based had arisen after are based had arisen after such establishment; such establishment; (f) repeal or amend any order made by the President under clause (3) of article 371 D; contain such supplemental, (g) contain such incidental and supplemental, incidental consequential provisions an·d consequential (including provisions as to provisions (including fees) as the appropriate provisions as to fees) as 8 Legislature may deem Parliament may deem necessary for the effective necessary for the effective functioning of, and for the functioning of, and for the speedy disposal of cases speedy disposal of cases by, and the enforcement of by, and the enforcement the orders of, such of the orders of, such Tribunals.

Tribunals. 27. In L. Chandra Kumar v. Union of India (1997 (3) SCC 261], this Court held that clause 2(d) of Article 323A and clause 3(d) of Article ~238, to the extent they empower Parliament and State Legislature to totally exclude the jurisdiction of all courts except thejurisdiction of the Supreme Court under Article 136, in regard to the disputes and complaints referred to in Article 32:3A(1) and the matters specified in Article 3238(2), offended the basic and essential features of the Constitution and were unconstitutional. This Court also held that "exclusion of jurisdiction" clause enacted in any legislation, under the aegis of Articles 323A [2(d)] and 3238[3(d)] are also unconstitutional. It was declared that the jurisdiction conferred upon the High Court under Articles 226 and 227 and upon the Supreme Court under Article 32 of the Constitution is a part of the inviolable basic structure of our Constitution. 28.

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, Item 11A read with Entry 46 of List Ill of the Seventh Schedule. Referring UNION OF INDIA v. R. GANDHI, PRESIDENT, MA). ZlRAS 927 BAR ASSOCIATION [R. V. RAVEENDRAN, J. J to these Articles, this Court in two cases, namely, Union. otlndia . v. Delhi High Court Bar Association [2002 (4) SCC 275] and State of Karnataka v. Vishwabharathi House Building Cooperative Society & Ors. [2003 (2) SCC 412] held that Articles 323A and 3238 are enabling provisions which enab! e 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 Entr{ in the Seventh Schedule. 29.

In Navinchandra Mafatlal vs The Commissioner of Income-Tax - 1955 (1) SCR 829, this Court held: ".. As pointed out by Gwyer C. J. in United Provinces v. Atiqa Begum - 1940 F. C. R. 110 none of the items in the Lists is to be read in a narrow or restricted sense and that each general word should be held to extend to all ancillary or subsidiary matters which can fairly and reasonably be said to be comprehended in it. It is, therefore, clear-and it is acknowledged by Chief Justice Chagla-that in construing an entry in a List conferring legislative powers the widest possible construction according to their ordinary meaning must be put upon the words used therein.

The cardinal rule of interpretation, however, is that words should be read in their ordinary, natural and grammatical meaning subject to this rider that in construing words in a constitutional enactment conferring legislative power the most liberal construction should be put upon the words so that the same may have effect in their widest amplitude. " In Union of India vs. Harbhajan Singh Dhillon - 1971 (2) SCC 779, this Court held : "It seems to us that the function of Article 246(1 ), read with Entries 1 to 96 of List I, is to give positive power to Parliament to legislate in respect of those entries. Object is not to debar Parliament from legislating on a matter, eiven if other provisions of the Constitution enable it to do so. " The power of Parliament to enact a law which is not 8 covered by an entry in Lists II and Ill is absolute. The power so conferred by Article 246 is in no way affected or controlled by Article 323 A or 323 B.

MBA contends that if the power to enact a law to constitute tribunals was already in existence with refemnce to the various fields of legislation enumerated in the Seventh Schedule, there was no need for enacting ,Articles 323A or 3238 conferring specific power to Legislatures to makei laws for constitution of Tribunals. It is their contention that the very fact that Articles 323A and 3238 have been specifically enacted empowering the concerned legislature to rnake 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 323A and 3238. The contention is not sound.

It is evident that Part XIV-A containing Articles 323A and 3238 was inserted in the Constitution so as to provide for establishment of tribunals which can exclude the jurisdiction of all courts including the jurisdiction of High Courts and Supreme Court undeir Articles 226/227 and 32, in respect of disputes and complaints covered by those Articles. It was thought that unless such enabling power was vested in the Legislatures by a constitutional provision, it may not be possible to enact laws excluding the jurisdiction of the High Courts and Supreme Court. However, this is now academic because clause 2(d) of Article 323A and clause 3(d) of Article 323B have been held to be unconstitutional in Chandra Kumar. 30.

In ACC (supra), this Court recognized the competence of the State to transfer a part of the judicial power from coups to Tribunal : ' "Judicial functions and judicial powers are one of the considerations of policy, the State transfers its judicial functions and powers mainly to the courts established by the Constitution; but that does not affect the competence of the State, by appropriate measures, to transfer a part of its judicial powers and functions to Tribunals by entrusting to them the task of adjudicating upon special matters and disputes between parties. It is really not possible or even expedient to attempt to describe exhaustively the features which are common to the Tribunals and the courts, and features which are distinct and separate. The basic and the fundamental feature which is common to both the courts and the Tribunals is that they discharge judicial functions and exercise judicial powers which inherently vest in a sovereign State. " (emphasis supplied) 31.

Therefore, even though revival/rehabilitation/regulation/ winding up of companies are not matters which are mentioned in Article 323A and 3238, the Parliament has the legislative competence to make a law providing for constitution of Tribunals to deal with disputes and matters arising out of the Companies Act. 32. The Constitution contemplates judicial power being exercised by both courts and Tribunals. Except the powers and jurisdictions vested in superior courts by the Constitution, powers and jurisdiction of courts are controlled and regulated by Legislative enactments. High Courts are vested with the jurisdiction to entertain and hear appeals, revisions and references in pursuance of provisions contained in several specific legislative enactments. If jurisdiction of High Courts can be created by providing for appeals, revisions and references to be heard by the High Courts, jurisdiction can also be taken away by deleting the provisions for appeals, revisions or references.

It also follows that the legislature has the power to create Tribunals with reference to specific enactments and confer jurisdiction on them to decide disputes in regard to matters arising from such special enactments. Therefore it cannot be said that legislature has no power to transfer judicial functions traditionally performed by courts to Tribunals. 33. The argument that there cannot be 'whole-sale transfer of powers' is misconceived. It is nobody's case that the entire 8 functioning of courts in the country is transferred to Tribunals. The competence of the Parliament to make a law creating Tribunals to deal with disputes arising under or relating to a particular statute or statutes cannot be disputed. When a Tribunal is constituted under the Companies Act, empowered to deal with disputes arising under the said Act and the statute substitutes the word 'Tribunal' in place of 'High Court' necessarily there will be 'whole-sale transfer' of company law matters to the Tribunals.

It is an inevitable consequence of creation of Tribunal, for such disputes, and will no way affect the validity of the law creating the Tribunal. 34. We will next consider the question whether provision for a Technical Member along with the Judicial Member making any difference to decide the validity of the provision for constitution of Tribunals. This Question is covered by the decision in L. Chandra Kumar (supra), this Court held : "We are also required to address the issue of the competence of those who man the Tribunals and the question of who is to exercise administrative supervision over them. It has been urged that only those who have had judicial experience should be appointed to such Tribunals. In the case of Administrative Tribunals, it has been pointed out that the administrative members who have been appointed have little or no experience in adjudicating such