Rojer Mathew vs South Indian Bank Ltd. and Ors. Chief Manager

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 Signature Not Verified Digitally signed by MADHU BALA this Court called for taking stock of the situation of Date: 2018.05.08 16:38:05 IST Reason: working of Tribunals2. It was observed that the

1 (1993) 4 SCC 119 2 Para8 2

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 India 7, 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 3

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 standards 9.

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 4

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 5

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 6

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 Tribunals 29. 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 7

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 8

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 9

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 10

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 11

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 12

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 13

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 14

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

Attorney General.

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

…………………………………..J. [ INDU MALHOTRA] NEW DELHI;

MAY 07, 2018.