It’s increasingly a conflict between the judiciary and the quasi judiciary, seen by many as closer to the executive than the judiciary. The question is whether the new, powerful tribunals and commissions proposed by the government to speed and “modernise” dispensation of justice in the economic, financial and social arenas would also result in its “trivialisation”.
Take the cases of the National Company Law Tribunal and the National Tax Tribunal, both in hibernation due to legal problems. The Supreme Court has recently referred the gamut of issues surrounding the Parliament-vetted proposal to set up the NCLT to a Constitution bench. One view is that the SC decision marks another chapter in the incessant struggle between the judiciary and the government over power-sharing.
The proposal to set up the Competition Commission of India was also stuck in the court for long. The apex court finally cleared it, after giving it a two-tier structure — regulator sans judicial powers and above it, a panel for adjudication. The government is yet to complete the resultant legislative process.
The government says that in proposing the specialised quasi judicial body called NCLT, it aims to speed resolution of company matters of great business interest in tandem with the pace of globalised world. The huge pendency of company law cases with high courts is frustrating enough for anyone to be convinced of the government’s contention.
NCLT laws were added to the Companies Act in 2002 and these came into effect on April 1, 2003. According to the Act, the tribunal will supersede the Company Law Board (CLB) and the Board for Industrial and Financial Reconstruction (BIFR). More importantly, it is supposed to assume the powers of high courts (company court) in relation to reduction of capital, merger and amalgamations and winding up of companies.
Dealing with “oppression and mismanagement” and ordering probe into company affairs will also be the NCLT’s mandate. All existing cases before CLB and BIFR will go to the tribunal. The key difference is that while CLB’s decision can be challenged in any high court, NCLT’s orders can’t be.
Similar is the case of the National Tax Tribunal (NTT) which is also yet to come into being due to litigation. Unlike the Income-Tax Appellate Tribunals (ITAT) whose decisions can be challenged in high courts, NTT’s orders can’t be challenged in HCs unless through a writ petition.
One advantage of powerful tribunals is that unlike courts, they are not bound by “rigid” rules of procedures enunciated under CPC, CRPC, Evidence Act, etc. To a large extent, tribunals are merely bound by principles of natural justice. This gives them a lot more freedom to deal with situations squarely. It is also reckoned that tribunals could be more nimble-footed in adapting to the rapidly unfolding complexities of the legal world due to new technologies and businesses.
Tribunals consist of experts with domain knowledge in the field — taxation, accounting, competition laws, etc — which might enable them to assimilate the subject matter of the (legal) dispute more intently than courts. The ever-changing nature of business has necessitated a corresponding agility of the justice delivery mechanism. Avoiding straightjacket of courts is expected to go a long way in cutting time needed to make decisions.
Since the proposed more powerful tribunals would also reduce the scope for appeal against their orders, the final settlement would be much quicker for economic actors to take necessary follow-up action. “Tribunals like NCLT will be a good blend of judicial experience and specialised knowledge. They would definitely help the economy,” says Preeti Malhotra, president, Institute of Company Secretaries of India.
The counter-argument is that judgement of people lacking judicial experience (tribunals comprise subject experts) could be more prone to be erroneous. Government sources, however, say that since all the tribunals are designed to comprise representatives of the judiciary also, this concern could be exaggerated. “If the tribunals are manned with people with same calibre as HC judges, there is little room for judgements to go astray. Of course, there should also be persons with judicial background in each tribunal,” says T N Pandey, former chairman, the Central Board of Direct Taxes.
It has also been pointed out that differing legal interpretations of the same issue by the high courts sometimes create additional burden on the justice-rendering system. Tribunals could be an answer to this problem also. For example, once the National Tax Tribunal is in place, all direct and indirect tax disputes now being managed by the respective appellate tribunals, would go to it. Any difference among NTT members would be resolved though an in-built mechanism of a larger bench.
The judiciary’s concern is that there could be political appointees to the tribunals and, so, the ruling political dispensation could have an undesirable influence on the functioning of these bodies.
But there are ways to avoid such situations. On ensuring competence and impartiality of the members, a system for periodical evaluation of the tribunal’s performance could be instituted. Since the members of the proposed tribunals are to be selected by a panel headed by the chief justice of India or his nominee, the screening would be largely foolproof even at that stage.
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