Union of India v R. Gandhi, President, Madras Bar Association (2010)

It is the case on how a tribunal must be constituted. L. Chandra Kumar decides the jurisdiction question; R. Gandhi decides the composition question, and gives the three-fold distinction between courts and tribunals that the syllabus asks for. Its result is one students routinely get wrong: the creation of the tribunal was upheld, and its composition struck down.

The Madras Bar Association challenged Chapters 1B and 1C of the Companies Act 1956, which created the National Company Law Tribunal and the National Company Law Appellate Tribunal and transferred the High Court's company jurisdiction to them. Three contentions were raised: that "Parliament does not have the legislative competence to vest intrinsic judicial functions that have been traditionally performed by the High Courts for nearly a century in any Tribunal outside the Judiciary"; that transferring that jurisdiction "to the Tribunal which is not under the control of the Judiciary is violative of the doctrine of separation of powers and independence of the Judiciary which are parts of the basic structure"; and that the Article 323B(2) list "is exhaustive and not illustrative" and does not cover insolvency, revival and restructuring.

1. "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."
2. "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."
3. "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 own procedure applying the provisions of the Code of Civil Procedure only where it is required, and without being restricted by the strict rules of Evidence Act."

But the underlying function is the same: "so in the case of Tribunals, it is the State's inherent judicial power which has been transferred and by virtue of the said power, it is the State's inherent judicial function which they discharge." And S. P. Sampath Kumar had held "that the Parliament can without in any way violating the basic structure doctrine make effective alternative institutional mechanisms or arrangements for judicial review."

"The fundamental right to equality before law and equal protection of laws guaranteed by Article 14 of the Constitution clearly includes a right to have the person's rights, adjudicated by a forum which exercises judicial power in an impartial and independent manner, consistent with the recognized principles of adjudication. Therefore wherever access to courts to enforce such rights is sought to be abridged, altered, modified or substituted by directing him to approach an alternative forum, such legislative act is open to challenge if it violates the right to adjudication by an independent forum."

So although "the validity of the provisions of a legislative act cannot be challenged on the ground it violates the basic structure of the constitution, it can be challenged as violative of constitutional provisions which enshrine the principles of Rule of Law, separation of power and independence of Judiciary."

• "(a) A legislature can enact a law transferring the jurisdiction exercised by courts in regard to any specified subject (other than those which are vested in courts by express provisions of the Constitution) to any tribunal."
• "(b) All courts are tribunals. Any tribunal to which any existing jurisdiction of courts is transferred should also be a Judicial Tribunal. This means that such Tribunal should have as members, persons of a rank, capacity and status as nearly as possible equal to the rank, status and capacity of the court which was till then dealing with such matters and the members of the Tribunal should have the independence and security of tenure associated with Judicial Tribunals."
• "(c) Whenever there is need for 'Tribunals', there is no presumption that there should be technical members in the Tribunals." Where jurisdiction is shifted "on the ground of pendency and delay in courts, and the jurisdiction so transferred does not involve any technical aspects requiring the assistance of experts, the Tribunals should normally have only judicial members." Technical members belong only "where the exercise of jurisdiction involves inquiry and decisions into technical or special aspects", because "Indiscriminate appointment of technical members in all Tribunals will dilute and adversely affect the independence of the Judiciary."
• "(d) The Legislature can re-organize the jurisdictions of Judicial Tribunals", and may prescribe qualifications and eligibility criteria, but "The same is however subject to Judicial Review." If the court thinks "such tribunalisation would adversely affect the independence of judiciary or the standards of judiciary, the court may interfere to preserve the independence and standards of judiciary", such an exercise being "part of the checks and balances measures to maintain the separation of powers".

"The issue is not whether judicial functions can be transferred from courts to Tribunals. The issue is whether judicial functions can be transferred to Tribunals manned by persons who are not suitable or qualified or competent to discharge such judicial powers or whose independence is suspect."

The vice: "if a Tribunal is packed with members who are drawn from the civil services and who continue to be employees of different Ministries or Government Departments by maintaining lien over their respective posts, it would amount to transferring judicial functions to the executive which would go against the doctrine of separation of power and independence of judiciary."

"Rule of law can be meaningful only if there is an independent and impartial judiciary to render justice. An independent judiciary can exist only when persons with competence, ability and independence with impeccable character man the judicial institutions." Where a tribunal substitutes for the High Court, "the standards expected from the Judicial Members of the Tribunal and standards applied for appointing such members, should be as nearly as possible as applicable to High Court Judges, which are apart from a basic degree in law, rich experience in the practice of law, independent outlook, integrity, character and good reputation." Hence "only persons with a judicial background, that is, those who have been or are Judges of the High Court and lawyers with the prescribed experience, who are eligible for appointment as High Court Judges, can be considered for appointment of Judicial Members."

"We uphold the decision of the High Court that the creation of National Company Law Tribunal and National Company Law Appellate Tribunal and vesting in them, the powers and jurisdiction exercised by the High Court in regard to company law matters, are not unconstitutional." But: "We declare that Parts 1B and 1C of the Act as presently structured are unconstitutional", though they "may be made operational by making suitable amendments".

A legislature may transfer to a tribunal any jurisdiction not vested in courts by the Constitution itself; but a tribunal that takes over a court's jurisdiction must be a judicial tribunal, its members of comparable rank, status, capacity, independence and security of tenure, with technical members only where technical questions arise. Composition is justiciable under Article 14 and the principles of the rule of law, separation of powers and judicial independence.

• It is step three of the five-step answer on tribunalisation: transfer is lawful, exclusion of review is not, and composition is justiciable.
• Step four is Rojer Mathew, which holds that "the qualifications of members to tribunals constitute an essential legislative function and cannot be delegated", and struck down section 184 of the Finance Act 2017 for excessive delegation.
• Use proposition (b) whenever a problem asks whether a particular tribunal is lawfully constituted; use proposition (c) whenever technical members are appointed to a body doing ordinary legal work.