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REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

SPECIAL LEAVE PETITION (CIVIL)NO. 15804 OF 2017 ROJER MATHEW    …PETITIONER

VERSUS SOUTH INDIAN BANK LIMITED AND ORS   …RESPONDENTS

                          O R D E R

1. Restructuring of Tribunal System in the light of constitutional  scheme  as  interpreted  in  decisions  of this  Court  and  the  Expert  Studies  is  the  issue  for consideration.   Concept  of  Tribunals  was  evolved  to decongest the court system and to provide speedy and inexpensive  justice.   Separation  of  powers  and independence  of  judiciary  are  the  constitutional concepts which have to be followed in setting up of Tribunals. Functioning of Tribunals is required to be reviewed on the test of speedy and inexpensive quality justice. 2. In R.K. Jain versus Union of India1, a Bench of this Court called for taking stock of the situation of working  of  Tribunals2.  It  was  observed  that  the

1  (1993) 4 SCC 119 2  Para8

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personnel  appointed  to  man  the  Tribunals  discharge judicial/quasi  judicial  powers  and  thus,  persons  who adjudicate upon such powers must have legal expertise, judicial experience and legal training3.  Independence of judiciary is a must for fair justice4.Institution of Tribunals being a substitute for courts could not be less  effective  than  the  courts  to  uphold  faith  of litigant  public5.   The  Court  expressed  anguish  over ineffectivity  of  alternative  mechanism  for  judicial review.  It was observed that dispensing of justice by Tribunals leaves much to be desired.  Remedy of appeal to this Court was costly and prohibitive and people in far flung areas could ill afford to reach this Court. Members  of  the  Bar  should  be  recruited  to  man  the Tribunals and working of Tribunals may need fresh look and regular monitoring6. 3. In L. Chandra Kumar versus Union of India7, a Bench of 7-Judges referred to the reports of Expert Committees and Commissions which dealt with the problem of arrears.  124th Report of the Law Commission (1988) analyzed  the  situation  existing  in  High  Courts  and recommended  specialized  Tribunals.  The  Malimath Committee  Report  (1989-1990)  noted  that  not  all  the Tribunals inspired confidence in public mind on account

3  Para 67 4  Para 68 5  Para 70 6  Para 76 7  (1997) 3 SCC 261

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of  lack  of  competence,  objectivity  and  judicial approach. Constitution, power and method of appointment needed to be reviewed8.  This Court noted that various Tribunals have not evolved up to the expectations which is  self  evident  and  widely  acknowledged.  Drastic measures  were  required  to  elevate  the  standards9. Exclusion of judicial review by High Courts and direct appeals to this Court was too costly and inaccessible and thus ineffective.  The decisions of the Tribunals should be amenable to scrutiny before a Division Bench of the High Court10. Short tenure of members of Tribunal was not proper. Non judicial members must have judicial experience11. There was need to review the competence of persons manning the Tribunals and oversight mechanism. Wholly  independent  agency  was  required  for administration of all the Tribunals.  A single umbrella organization  could  remove  the  ills  of  the  present system12.   4. In  Union of India versus R. Gandhi, President Madras  Bar  Association13,  the  Constitution  Bench observed that if Tribunals are to be given judicial power which was earlier exercised by courts, they must possess independence, security and capacity associated

8  (paras 8.63 to 8.66 as quoted in para 88 of L. Chandra Kumar) 9  Para 89 10  Para 92 to 94 11  Para 95 12  Para 96 13  (2010) 11 SCC 1

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with  courts.   When  the  jurisdiction  from  courts  is transferred to tribunals, members of judiciary should be  the  presiding  officers/members  such  as  Rent Tribunals, Motor Accident Claims Tribunals and Special Courts.  Provision for technical members in addition to or substitution of judicial members would be a case of dilution  of  and  encroachment  upon  independence  of judiciary14. Technical members could be in addition to judicial members only when a specialized knowledge or expertise was a must.  The legislature could constitute Tribunals  but  there  is  limitation  of  power  on  the legislature  to  prescribe  qualifications  and  such limitation has to be read into the competence of the legislature to provide such qualifications15. Standards expected  from  judicial  members  and  standards  applied for appointment should be as nearly as possible same as applied to appointment of judges who are  sought to be substituted16. Experience of administration may make a member of civil service a good administrator but not necessarily an able and impartial adjudicator17.  There was gradual erosion of independence of judiciary and shrinking of the space occupied by the judiciary and increase  in  number  of  persons  belonging  to  civil service  discharging  functions  which  were  earlier

14  Para 90 15  Para 93 16  Para 108 17  Para 109

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exercised by courts which was needed to be checked18.   5. In Madras Bar Association versus Union of India (2014)19,  it  was  observed  that  the newly  constituted Tribunals  will  be  invalidly  constituted  unless  its members are appointed in same manner and are entitled to same conditions of service as were available to the judges  of  the  courts  sought  to  be  substituted20. Constitution Bench of this Court observed that setting up of a Tribunal with seat at Delhi may deprive the litigants convenience of access to justice. Litigants may have to face hardship of travelling long distance and incur heavy expenses21.  It should be inappropriate for the Central Government to have any administrative dealings  with  the  persons  or  its  members  to  uphold their independence and fairness.22  Appointment of non judicial  members  may  constitute  dilution  and encroachment upon independence of judiciary and rule of law.  The accountant members or technical members could not handle complicated questions of law.  The judicial members  are  to  handle  substantial  questions  of  law. Mere technical knowledge or knowledge of accounts was not  enough23.   Manner  of  appointment  of  members  of Tribunals should be by same procedure as appointment of

18  Para 112 and 120 19  (2014) 10 SCC 1 20 Para  113.2 21  Para 122 22  Para 124 23  Paras 126-127

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judges who are substituted.  Only a person possessing professional  qualification  of  law  with  substantial experience in law may be able to handle such issues. Manning of Tribunals which are substitute for court of first instance was different from those who are not subservient  to  the  High  Courts24.   A  party  to  the litigant  should  not  participate  in  the  selection process of members of the adjudicating body25.   

6. In  Madras  Bar  Association  versus  Union  of India(2015)26 observations with regard to safeguarding dilution of standards in appointments of tribunals were reiterated27.

7. In  Gujarat  Urja  Vikas  Nigam  Limited  versus  Essar Power Limited28,  the observations in earlier judgments in L. Chandra Kumar and Madras Bar Association (supra) were reiterated to the effect that remedy of appeal to this Court was too costly and inaccessible.  Further, overcrowding  of  docket  of  this  Court  obstructed  key constitutional role of this Court. Composition of the appellate Tribunal dealing with questions of law being manned by non judicial members was not desirable which called for a review of composition of such Tribunals29.

24  Para 130 25  Para 131 26  (2015) 8  SCC 583 27  Paras 27 and 28 28  (2016) 9 SCC 103 29  Paras 30-40

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Accordingly, this Court framed certain questions to be examined by the Law Commission.  The Law Commission has submitted  its  272nd Report  inter  alia  recommending restructuring of Tribunals so as not to provide direct appeal to this Court.  It was also observed that the manner  of  appointment,  eligibility,  tenure  and  other privileges of persons manning Tribunals must be at par with  the  persons  manning  courts  sought  to  be substituted.   The  selection  procedure  must  ensure independence  of  judiciary.   All  Tribunals  should  be placed under a single umbrella for proper monitoring. 8. 74th Report  of  the  Parliamentary  Standing Committee considered a draft Bill for Uniform Service Conditions of members of the Tribunals. 9. In the above background, when the present matter came up for hearing on 24th October, 2017 it was pointed out  that  appointment,  norms  and  functioning  of  Debt Recovery  Tribunals  was  not  consistent  with  the observations  of  this  Court  in  various  judgments. Accordingly, the court requested Shri Arvind P. Datar learned senior counsel to assist the court as amicus. On 6th December, 2017, the Court had an interaction with the Attorney General on the issue of restructuring of Tribunals specially creation of a regular cadre to man the Tribunals.   10. On  15th March,  2018,  learned  amicus  gave  a Concept Note.  It was also submitted that short term

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appointments out of retired persons was not conducive to the justice delivery by the Tribunals. The Tribunals must be manned by a regular cadre.  Selection should be by a national competition by an expert autonomous body. Oversight mechanism must be vested with an autonomous body.  There should be no statutory appeal directly to this Court as it hampered access to justice, litigation in this Court being costly and difficult for a litigant located at far off places.   11. Accordingly, this Court recorded that revisit of the structure of tribunals was necessary to uphold the rule of law and independence of judiciary.  The Central Government  was  directed  to  file  its  response.   12.

Again on 4th April, 2018, following further issues were noted :

“i) How to remedy the handicap in access to justice when a Tribunal has only one seat for its working to the exclusion of jurisdiction of all other courts in the country  as  noted  in  Gujarat  Urja  Vikas Nigam Limited versus Essar Power Limited, (2016) 9 SCC 103 para 34. In such cases, question  is  whether  jurisdiction  of  the Tribunal can be conferred on a specified court nominated by the High Court in each of the State or, where work of such nature may be insignificant in some States, on one officer in more than one States.  ii)  Whether  ‘Access  to  Justice Facilitation  Centres’  (AJFCs),  with  or without private participation, can be set up at convenient locations in the country from where a party can access a Court or Tribunal located at long distance with or without payment of such specified charges. Such centres may also have facilities for e-filing and such other services as may facilitate  a  party  for  participation  in

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proceedings.  This  may  enhance  access  to justice  and  obviate  need  for  travelling long  distances,  particularly  if  such parties are in remote areas.  iii) Whether in absence of availability of suitable persons of statutorily prescribed qualifications  to  man Tribunals/Commissions, pending filling up of  vacancies,  such  Tribunals/Commissions can  be  manned  by  existing  courts  3  in consultation  with  the  High  Courts. Needless  to  say  that  servicing  officers are duly selected and accountable in the matter of performance and discipline.  iv) Whether power of Commissions/Tribunals having  overlapping  jurisdiction  such  as Human Rights Commissions, having only one seat  in  a  State,  can  be  conferred  on specified courts in one or more districts, in addition to or in substitution of such Commission,  so  as  to  make  access  to justice available at the grass root.”

13. Accordingly, an affidavit has been filed by the Union of India.  The affidavit  inter alia refers to Finance  Act,  2017  dealing  with  the  appointment procedure for the Tribunals and a petition challenging the  same  in  this  Court.   It  is  submitted  that  the matter being sub judice this was not a stage to revisit the issue of manning of Tribunals.  14. The affidavit does not deal with working of all the  Tribunals  and  is  confined  to  the  Debt  Recovery Tribunals.  It is presumed that system of Debt Recovery Tribunal  was  far  more  efficient  than  the  system  of courts.  It is stated that as on 30.09.1990 more than 15 lakh bank cases were pending in courts but as on 31.03.2017  only  78,961  cases  were  pending  before  39 Debt Recovery Tribunals. It is however concluded that

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Union of India was not averse to revisit the issue of access to justice. 15. Learned amicus pointed out that the affidavit of Union of India does not deal with the issues raised in these proceedings.  The assumption in the affidavit in comparing the working of courts and Tribunals was not based on entire relevant data. Reference to 15 lakh cases appears to be reference to all the cases, while reference to pendency before Tribunals is only in cases involving more than 10 lakhs. Moreover, the data of yearly institution and disposal has not been furnished to  compare  the  rate  of  disposal.  Longest  period  of pendency  before  different  Tribunals  is  also  not indicated. 16. Learned amicus referred to the concept note to the  effect  that  there  was  need  for  an  independent oversight  body  in  the  light  of  observations  in  L. Chandra  Kumar (supra)  which  have  been  reiterated  in NCLT case  (Madras Bar Association) (2015) (supra) to the effect that the Tribunals or their members should not be required to seek facilities from the sponsoring or  parent  ministries  or  concerned  departments.   74th

Report  of  the  Parliamentary  Standing  Committee  also recommended creation of a National Tribunal Commission to  oversee  all  the  Tribunals  in  the  country. Accordingly, it has been suggested that an independent body called National Tribunal Commission (NTC) should

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be constituted as follows : A. Two retired Supreme Court Judges (with the senior-most amongst them to be Chairman) B. Two retired High Court Judges (Members) C. Three members representing the Executive.  

The  appointment  of  members  of  the  NTC  should  be  by following Selection Committee :

Chief Justice of India (as Chairperson of the Committee who exercises a casting vote); Two  senior  most  judges  of  the  Supreme  Court after the Chief Justice of India; Current Law Minister; and Leader of the Opposition.

17. The NTC should oversee functioning of central Tribunals and similar body may be constituted for State tribunals.  The NTC should deal with appointment and removal of members of the Tribunals by constituting sub committees.  The concept note also deals with further details on the subject.  Further suggestion is that the member of the Tribunals should be recruited by national competition.  Once recruited they should continue till the age of 62/65 years subject to their efficiency and satisfactory  working.   The  Tribunals  should  not  be heaven  for  retired  persons  and  appointment  process should not result in decisions being influenced if the Government  itself  is  a  litigant  and  the  appointing authority  at  the  same  time.   There  should  be restriction  on  acceptance  of  any  employment  after retirement.  There is also suggestion that bypassing of High Court jurisdiction under Article 226/227 needs to be  remedied  by  statutory  amendment  excluding  direct

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appeals to this Court. There should be proper mechanism for removal of members. 18. We  broadly  approve  the  concept  of  having  an effective  and  autonomous  oversight  body  for  all  the Tribunals with such exceptions as may be inevitable. Such body should be responsible for recruitments and oversight of functioning of members of the Tribunals. Regular cadre for Tribunals may be necessary.   Learned amicus  suggests  setting  up  of  all  India  Tribunal service on the pattern of U.K.   The members can be drawn  either  from  the  serving  officers  in  Higher Judicial Service or directly recruited with appropriate qualifications  by  national  competition.   Their performance  and  functioning  must  be  reviewed  by  an independent body in the same was as superintendence by the High Court under Article 235 of the Constitution. Direct  appeals  must  be  checked.   Members  of  the Tribunals should not only be eligible for appointment to the High Courts but a mechanism should be considered whereby due consideration is given to them on the same pattern on which it is given to the members of Higher Judicial Service.  This may help the High Courts to have requisite talent to deal with issues which arise from decisions of Tribunals.  A regular cadre for the Tribunals  can  be  on  the  pattern  of  cadres  for  the judiciary.  The objective of setting up of Tribunals to have speedy and inexpensive justice will not in any

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manner be hampered in doing so.  Wherever there is only one  seat  of  the  Tribunal,  its  Benches  should  be available  either  in  all  states  or  at  least  in  all regions wherever there is litigation instead of only one place.  

19. To sum up, the issues requiring consideration may be as under :

(i) Creation  of  a  regular  cadres  laying  down eligibility for recruitment for Tribunals;

(ii) Setting up of an autonomous oversight body for  recruitment  and  overseeing  the performance and discipline of the members so recruited and other issues relating thereto;

(iii) Amending  the  scheme  of  direct  appeals  to this Court so that the orders of Tribunals are  subject  to  jurisdiction  of  the  High Courts;

(iv) Making  Benches of  Tribunals accessible  to common man at convenient locations instead of  having  only  one  location  at  Delhi  or elsewhere.  In the alternative, conferring jurisdiction on existing courts as special Courts or Tribunals.

20. The above issues may require urgent setting up of a committee, preferably of three members, one of whom must be retired judge of this Court who may be served in a Tribunal.  Such Committee can have inter action with all stakeholders and suggest a mechanism consistent  with  the  constitutional  scheme  as interpreted by this Court in several decisions referred to above and also in the light of recommendations of expert bodies.  This exercise must be undertaken in a time bound manner

To  consider  the  matter  for  further,  list  on

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Thursday  i.e.  10th May,  2018  as  prayed  by  learned Attorney General.

…………………………………..J.                           [ ADARSH KUMAR GOEL ]

…………………………………..J.        [ INDU MALHOTRA]

NEW DELHI; MAY 07, 2018.