Why tribunals are on the chopping block

With the government proposing in Budget 2017-18 plans to rationalise the number of tribunals, some appellate bodies are likely to face the axe. India has over 35 tribunals that look into designated legal issues and appeals from orders of sectoral regulators.
 
These include the Telecom Disputes Settlement and Appellate Tribunal, Securities Appellate Tribunal, Competition Appellate Tribunal (COMPAT), National Company Law Appellate Tribunal and Debt Recovery Appellate Tribunals — which look into appeals against orders passed by the National Company Law Tribunals (NCLTs) and Debt Recovery Tribunals (DRTs), respectively — and a host of other such bodies.
 
Talk of reducing the number of tribunals has been on for a few years now, with inter-ministerial committees recommending the number of tribunals be reduced by up to half the present figure. The logic being several tribunals are performing identical functions, leading to multiplicity of litigation, along with infrastructural and monetary commitments by the government.

 

Also, there has been criticism of the purpose of these institutions with many judgments delivered by tribunals being challenged in the higher courts. This is largely due to inadequate penalties against frivolous or unwarranted appeals.
 
Arming the case is the question of efficiency and the slow rate of case disposal in these institutions, something the Supreme Court has critically considered on several occasions in the recent past. Many jurists are also sceptical of the overarching influence of the executive in the tribunal-based system. Tribunals are primarily governed by the government departments that play a key role in appoint of most of their members.

 
Another argument put forth by proponents of a reduction in the number of tribunals is that the constitution of tribunals takes away the powers of the high courts through a mechanism of statutory appeals in the Supreme Court. Though various high courts have seen this issue differently, the Supreme Court has reiterated the validity of the high courts under Article 226 and 227 to oversee the judicial activities of tribunals. An example of the apex court’s scepticism on the issue of executive influence can be seen in the 2014 judgment, striking down the National Tax Tribunal on the ground that it interfered with the high court’s jurisdiction to entertain appeals against orders of the Income Tax Appellate Tribunals and Customs, Excise and Service Tax Tribunals.

 
Some tax experts feel that the COMPAT, which hears appeals against orders of the Competition Commission of India, could be on the chopping block. At the moment, the COMPAT functions with only two judges. However, some are not convinced about the soundness of this move.  “Any possibility of dissolving the COMPAT or its merger with the NCLT will defeat the focus of competition law in India. The merging of the COMPAT with the NCLT will cause severe confusion as the former is an economic regulator while the latter is a financial one,” said Sitesh Mukherjee, partner, Trilegal.
 
Many in tax circles feel that the NCLTs and DRTs are burdened excessively with the notification of various provisions of the Companies Act.

 
Moreover, the newly introduced Insolvency and Bankruptcy Code 2016 (IBC) has bestowed the NCLTs with the duty of handling corporate insolvencies. Under the IBC, even restructuring of sick industrial companies, formerly handled by the Board for Financial and Industrial Reconstruction (BIFR) and the Appellate Authority for Industrial and Financial Reconstruction (AAIFR), are now to be solely dealt with by these tribunals.
 
Some experts feel there is little scope for the government to further stratify the tribunals, particularly those relating to the financial sector. According to Sapan Gupta, partner, Shardul Amarchand Mangaldas, instead of thinking of reducing the number of tribunals, the focus needs to be on making the existing ones more robust.