The Hindu Business Line : Why tribunals?

A DIVISION BENCH of the Madras High Court was entirely justified in striking down as unconstitutional the National Company Law Tribunal and the National Company Law Appellate Tribunal for what are undoubtedly certain infirm features in their constitution. By far the most serious structural lacuna is the stipulation that members appointed to these two bodies shall hold office for three years. The court quite rightly pointed out that a term of three years is extremely short and is clearly a disincentive for people to take up positions of responsibility in company law administration.

As a post-retirement sinecure for civil servants or even for retiring members of the judiciary, a three-year term that these positions offer may be all right. But it is certainly not good enough to attract professionals with 20 years experience in management, finance, science and technology — fields from which the government is hoping to draw talent. An even more serious objection to such a stipulation, and one that strikes at the very roots of the concept of independent judgment, is that these individuals are expected to be objective in ruling on cases where the government is a party to the litigation. Would it be reasonable to assume that they would rule against the government on whom depends the issue of their continuance in office? Even if they are objective in their ruling, public perception could well be to the contrary which is not desirable especially at a time when the country is trying to attract foreign capital on the strength of its legal system.

But beyond a reform of the appointment norms, the Government faces a more serious challenge. There is the danger of these tribunals and their appellate bodies becoming additional layers in the judicial process of company administration with adverse consequences to the corporate sector regulatory environment. Though conceived as fast-track alternatives to the High Court on matters involving company administration, they are unlikely to turn out quite as that. Decisions of these bodies would be challenged in High Courts especially those that involve minority shareholders' rights or where the subject is some regulatory initiative of the Government. Courts have consistently held the view that while the government is well within its rights to set up tribunals, the jurisdiction of High Courts cannot be taken away. In fact this line of thinking has prompted many State governments to think of disbanding the Administrative Tribunals they had constituted to adjudicate on staff matters as these bodies were additional levels of jurisdiction.

The question to be asked is whether the country needs such institutions in the first place. Given the judicial thinking, the time has perhaps come for a fundamental re-look at the concept of a quasi-judicial mechanism implicit in the constitution of tribunals and their appellate bodies. Perhaps, strengthening the High Court infrastructure with the appointment of more judges is a better alternative as these tribunals serve little beyond offering sinecures for retired civil servants.

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