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A recent ruling of the Supreme Court of India has yet again brought to the fore a debate over justice delivery through tribunals. The Court has expressed a range of views that could have a far-reaching impact on justice delivery.

In 2002, the Companies Act, 1956, was amended to provide establishment of company law tribunals to play the role that had hitherto been played by high courts. Specific arrangements and transactions such as mergers, demergers and reduction of capital, and also liquidation and winding up of companies are overseen by high courts having jurisdiction where the registered office of the company is located. The amendment sought to move such jurisdiction to specialised tribunals established for the purpose, with an appellate tribunal adding a layer of appeal.

While upholding the power of Parliament to move jurisdiction from the courts to tribunals, the Supreme Court held that the tribunals pursuant to the amendments made in 2002 would be illegal and unconstitutional. The court has left it to Parliament to legislate on the lines of the law now laid down. The specific noteworthy findings on the composition of the tribunals are:

# If the tribunal is created purely to expedite proceedings and exempt from strict rules of procedure and evidence, the tribunal does not need to have any technical expert as a non-judicial member.

# Only if there is a specific need for special expertise would non-judicial members be required to man a tribunal.

# Only judges and advocates can play the role as judicial members of a tribunal. A judicial member should be as close as possible to a high court judge.

# There ought to be at least one judicial member in any two-member bench of a tribunal. In any larger bench, the number of technical members ought not to be more than the judicial members.

Inability to staff courts and tribunals has remained a consistent contributor of institutional decay in India. The Supreme Court has now underlined the need for tribunals to be manned as much as possible by judges rather than by civil servants enjoying post-retirement sanctuaries, or taking sabbaticals from their executive postings.

Essentially, the exercise of staffing and running quasi-judicial tribunals and conventional courts is a human resource management exercise. Getting the right man for the job would involve prescribing the right criteria for performance appraisal, and transparent rewards. Most importantly, how one gets appointed to a justice-dispensing vehicle ought to be transparent, clear and confidence-inspiring.

Needless to say, the intent behind the judgement is laudable. The shifting of jurisdiction from courts to tribunals ought not to dilute the justice-delivery standards. However, it is equally true that members of tribunals who have not officially been judges have also done quite well in the past as members of tribunals.

The Securities Appellate Tribunal (SAT), a tribunal that was first established in 1995, to hear appeals against orders passed by the Securities and Exchange Board of India (Sebi) presents an excellent case study. Until 2002, C Achutan, an official from the law ministry of the rank of additional secretary who had also served on the board of directors of SEBI, was the presiding officer of the SAT. If the law now laid down by the Supreme Court were to have been directly applied to the SAT, Mr. Achutan would have been ineligible for appointment. However, a lot of securities law jurisprudence was laid down during his tenure — a pointer to how access to quality human resources will be pre-empted by the recent judgement.

“A lifetime of experience in administration may make a member of the civil services a good and able administrator, but not a necessarily good, able and impartial adjudicator,” the court has noted. True, but equally, a person with judicial background is not necessarily always a good, able and impartial adjudicator in a tribunal setting. One often sees tribunals taking very peripheral interest in appeals, akin to writ courts, reluctant to disturb the actions by authorities on the ground that the authority is an expert body.

Judges too are reluctant to become members of tribunals. Many do not like their peers or their erstwhile junior colleagues being able to sit in judgement over their decisions. A Supreme Court judge would be reluctant to work in a tribunal because his actions can be challenged in a writ petition before a high court or in appeal before his former colleagues in the Supreme Court. Of course, there are rare cases of retired judges agreeing to man tribunals located in particular cities — say New Delhi — but sitting high court judge would be reluctant to man a tribunal for similar reasons.

The SAT itself, now a three-member tribunal, has been lacking a member for over a year. If the ratio laid down by the Supreme Court is applied, one would need the third member to be a judicial member because judges have to be in a majority. Clearly, staffing multiple company law tribunals across the country will pose a major challenge. In practical terms, the jurisdiction of high courts under the Companies Act is unlikely to go away in the foreseeable future.

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May 2024