Case Law Details
UOI Vs. R. Gandhi (Supreme Court – 5 Judges)
Parliament is competent to constitute Tribunals for special Acts. However, the failure to ensure independence of judiciary and separation of judicial and executive power renders the Company Law Tribunal unconstitutional. Suggestions given on how to remedy the defects.
The Companies (Second Amendment) Act 2002 provides for the constitution of the National Company Law Tribunal (‘NCLT’) and National Company Law Appellate Tribunal (‘NCLAT’) to take-over the functions which are being performed by the CLB, BIFR, AAIFR and the High Court. The constitutional validity of the said amendment was challenged before the Madras High Court. The High Court upheld the creation of the NCLT and the vesting the powers thereto as being constitutional though it took the view that certain provisions were violative of the basic constitutional scheme of (i) separation of judicial power from the Executive and Legislative power and (ii) independence of judiciary enabling impartial exercise of judicial power. In an appeal to the Supreme Court, the UOI accepted to rectify some of the defects pointed out by the High Court though it challenged the other findings. HELD by the Supreme Court:
(i) The fundamental right to equality before law under Article 14 of the Constitution includes a right to have the person’s rights adjudicated by a forum which exercises judicial power in an impartial and independent manner. When access to courts to enforce such rights is sought to be abridged etc 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;
(ii) Parliament has the legislative competence to make a law providing for constitution of Tribunals to deal with disputes and matters arising out of special enactments like the Companies Act by taking away the jurisdiction vested in the High Courts. However, this power is subject to constitutional limitations and cannot encroach upon the independence of the judiciary and must keep in view the principles of Rule of Law and separation of powers. If Tribunals are to be vested with judicial power hitherto vested in or exercised by courts, such Tribunals should possess the independence, security and capacity associated with courts;
Please become a Premium member. If you are already a Premium member, login here to access the full content.
