The new Tribunals Reforms (Rationalisation and Service Conditions) Bill 2020 introduced by the Central Government in Lok Sabha has sought to override court judgments regarding the service length of Chairperson, Vice Chairperson, and members of tribunals.
While the Supreme Court has, in at least three judgments over the last decade, mandated that the minimum tenure of Chairperson and members of tribunal should be 5 years, the Central government has sought to restrict it to 4 years.
The latest of the Supreme Court rulings which was delivered on November 27, 2020 also clearly directed that the tenure should be kept at a minimum of 5 years.
Despite the judgment, the new Bill has sought to overcome this. The Bill seeks to insert a new provision, sub-section (11) in Section 184 of the Finance Act, 2017.
This new provision makes it expressly clear that the provision takes precedence over any judgment or order of any court.
This new sub-section reads as follows:
“(11) Notwithstanding anything contained in any judgment, order, or decree of any court or any law for the time being in force,— (i) the Chairperson of a Tribunal shall hold office for a term of four years or till he attains the age of seventy years, whichever is earlier; (ii) the Member of a Tribunal shall hold office for a term of four years or till he attains the age of sixty-seven years, whichever is earlier: Provided that where a Chairperson or Member is appointed between the 26th day of May, 2017 and the notified date and the term of his office or the age of retirement specified in the order of appointment issued by the Central Government is greater than that which is specified in this section, then, notwithstanding anything contained in this section, the term of office or age of retirement or both, as the case may be, of the Chairperson or Member shall be as specified in the order of appointment subject to a maximum term of office of five years”.
Thus, the provision seeks to restrict the tenure of Chairperson to a term of 4 years or till the age of 70, whichever is earlier. As regards members of the tribunal, it is 4 years or the age 67.
Tenure of the Members and Chairperson
In 2010, the Supreme Court in Madras Bar Association v. Union of India (also known as R Gandhi judgment) examined the Constitutional validity of Chapters 1B and 1C of the Companies Act, 1956 providing for the constitution of National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT).
The Court in that case had held that members of NCLT and NCLAT should have a tenure of seven (7) or five (5) years subject to eligibility.
“The term of office of three years shall be changed to a term of seven or five years subject to eligibility for appointment for one more term,” the Court had ruled in that case.
In 2019, the Supreme Court in the case of Rojer Mathew v. South Indian Bank was called upon to examine the validity of Finance Act, 2017 and viz Tribunal, Appellate Tribunal, and other Authorities (Qualifications, Experience and other Conditions of Service of Members) Rules which was framed by the government pursuant to the powers conferred by Section 184 of the Act.
The Court upheld Section 184 of the Finance Act which entitled the Central government to frame rules to determine appointment, service conditions, removal, and other aspects of tribunals.
However, it struck down the Rules for various reasons, one of the grounds being that the short period of service of three years as provided under the Rules is anti-merit as it would have the effect of discouraging meritorious candidates to accept the posts of judicial members in the Tribunals. It ordered the Central government to reformulate the Rules in consonance with the judgment in R Gandhi judgment.
The Central government then formulated the Central Tribunal, Appellate Tribunal and other Authorities (Qualifications, Experience and other Conditions of Service of Members) Rules, 2020
As per these rules, the Chairperson or President would have a tenure of 4 years of 70 years of age whichever is earlier. Vice-chairperson and members would have a tenure of 4 years or up to the age of 65 years, which ever is earlier.
The Rules, therefore, again came to be challenged before the Supreme Court by the Madras Bar Association.
In the judgment delivered on November 20, 2020, it placed reliance on R Gandhi and Rojer Mathew to fix the tenure of tribunal chairperson and member at 5 years.
“We, therefore, direct the Government to amend Rule 9 (1) of the 2020 by making the term of Chairman, Chairperson or President as five years or till they attain 70 years, whichever is earlier and other members dealt with in Rule 9(2) as five years or till they attain 67 years, whichever is earlier,” the Court said.
The present bill has thus sought to override these three Supreme Court judgments in fixing the tenure of tribunal members at 4 years.