On 6 June 2023, an un-dersecretary in the ministry of corporate affairs (MCA) issues a vacancy circular seeking applications to fill the post of judicial and technical members in the national company law appellate tribunal (NCLAT).
The last date was indicated as 18th August and on 17th August it is extended till 1 September 2023, presumably as the circular did not elicit much response or someone supposed to apply did not, within the time!
Why is the above relevant to be highlighted at the start of an article with the Bollywood-style title ‘ CJI Ko Gussa Kyun Aata Hai?
NCLAT came into being on 1 June 2016 under the Companies Act 2013. It is one among the many appellate tribunals (about 14 or so) that have been spawned under different parent legislation to serve as the forum for appeal from the orders passed by the respective tribunals constituted under the relevant laws.
The one waiting in the wings to emerge is the goods and services tax (GST) appellate tribunal!
This phenomenon of specific appellate tribunals has taken away the jurisdiction that formerly remained with the high courts in the different states in the Union to hear such appeals under the various laws.
The matter of chipping away at the jurisdiction of the high courts and tribunalisation has been quite contentious and different challenges came about to the constitution and character of these bodies.
These tribunals, by structure, accommodate retired judges (judicial member) and administrative personnel (technical member). A few of the tribunals, including NCLAT, are required to be helmed by a retired Supreme Court judge or a retired chief justice of a high court.
Others among the 14 are headed by a retired high court judge. How conscious is the difference is difficult to opine by looking at the laws administered, but not very critical to this article.
The head of the tribunal is variously titled as ‘chairperson’, ‘president’ and ‘presiding officer’!
As can be seen from the first para here, the vacancy is announced by the concerned administrative ministry which drives the process of receiving the applications and deals with the rest of the administrative details.
The appointment is carried out by the Central government based on the recommendations of a search-cum-selection committee.
The committee consists of: (i) the Chief Justice of India, or a Supreme Court judge nominated by him, as the chairperson (with casting vote), (ii) two secretaries nominated by the Central government, (iii) the sitting or outgoing chairperson, or a retired Supreme Court judge, or a retired chief justice of a high court, and (iv) the secretary of the ministry under which the tribunal is constituted (with no voting right).
The composition of such appointment committees, including that of the collegium system, has been a bone of contention and it is best not to further comment on this!
But, inherently, these bodies, that become a post-retirement sinecure for either members of the judiciary or from the IAS and other administrative bodies, lack the vitality of the high courts which command certain gravitas by virtue of the history and the sanctity of the Constitutional status.
Another aspect to note is that the chairperson, wherever mandated to be a retired SC judge, would, ipso facto, have a very short tenure, considering that the retirement age is 65 years in the SC and 67 years in the tribunals.
While it is difficult to pinpoint where things can go wrong in such bodies, the issue inheres in the fact that the members are mostly retired and superannuated from their previous assignments and see this as an adjunct to their career, before settling into work as arbitrators or advisers which has no age bar!
A high court has many judges who, by turn, take up various subjects and this process helps to get a variety of talent to deal with each of the subjects.
At the level of the higher judiciary, the experience of dealing with different situations and issues and an instinct to sense a just cause from an unjust one is more important than a deep specialisation in corporate matters, competition law, or intellectual property, or whatever else!
The specialised tribunals are set up on the premise that dealing with identical matters will help homogenise the outcome, ensure more predictability, etc. The multiplicity of high courts carries the problem of different views emerging on the same issue.
Therefore, there are pros and cons in both structures.
As per the reports in the press last evening (18th October), the CJI had expressed anguish at the way the NCLAT bench had issued its order in the Chabbria cousins’ clash on 13th October, when there was a status quo order from the SC.
There appears to be an attempt by the members involved to create an impression of a genuine mistake by recalling the said order on 16th October (extracted in the note below) which has riled the CJI.
The two members have been summoned to appear before the SC on 30th October.
The specific concern of the CJI was expressed in quite explosive words: “NCLT and NCLAT have got down to a rot now. The case is an illustration of that rot.”
The saying goes, ‘A fish rots from the head down’.
It is difficult to pinpoint the head in this matter but, nevertheless, it presents a good opportunity to have a comprehensive relook at the way all the tribunals function and change them, if they should continue, from being a haven for retired people to institutions that would rival the high courts and actually supply legal talent to the other courts in the country.
It is time to draft lawyers and professionals who are much younger than the minimum age of 50 years specified for such tribunals and treat them at par with the high courts in the appointment of the judges and make movement between the high court and the tribunals seamless to cross-pollinate knowledge, experience and the working culture.
16 October 2023: In aforesaid appeal on 13 October 2023, Judgment was pronounced. In the evening, the Registry brought to the notice an e-mail dated 13 October 2023 issued at 5.35pm addressed to Registrar NCLAT enclosing therewith an order dated 13 October 2023, passed by the Supreme Court in contempt petition (C) No. 1195/2023 in CA No6108/2023. After the order was produced we perused the same and we noticed that the Supreme Court in its order in paragraph 1 sub paragraph 6 had directed that Judgment in pending appeal shall be delivered by the NCLAT after it is duly apprised of the fact that the result of Annual General Meeting has been declared. In view of the order of the Supreme Court, it is imperative for us to pass an order for Suspending the Judgment of this court dated 13 October 2023 till this Appellate Tribunal is duly apprised of the fact that the result of the Annual General Meeting has been declared or subject to order/direction passed by the Supreme Court.
[Justice Rakesh Kumar] Member (Judicial) [Dr. Alok Srivastava] Member (Technical)
(Ranganathan V is a CA and CS. He has over 43 years of experience in the corporate sector and in consultancy. For 17 years, he worked as Director and Partner in Ernst & Young LLP and three years as senior advisor post-retirement handling the task of building the Chennai and Hyderabad practice of E&Y in tax and regulatory space. Currently, he serves as an independent director on the board of four companies)