Tribunal Reforms Ordinance 2021 – Explained, Point wise


Recently  President of India promulgated Tribunal Reforms Ordinance 2021 or Tribunal Reforms (Rationalisation and Conditions of Service) Ordinance 2021. The Ordinance dissolves certain existing appellate bodies and transfers their appellate authority to other Judicial Bodies. Further, the ordinance also amends the Finance Act 2017.

The government also introduced the Bill in Lok Sabha on the same subject. The bill also aims to achieve aims similar to the ordinance. The government introduced the ordinance for improving the quality of Justice, But the ordinance also takes away few advantages associated with the Tribunals.

What are Tribunals?
  • The Tribunal is a quasi-judicial institution. They were set up to deal with problems such as resolving administrative or tax-related disputes.
  • Initially, Tribunals were not a part of the Constitution. Swaran Singh Committee recommended including Tribunals as a part of the Constitution.
  • Based on that, the 42nd Amendment Act, 1976 provided constitutional status to Tribunals. Tribunals were placed under Part XIV-A. This part has only two articles:
    • Article 323-A deals with Administrative Tribunals. These tribunals resolve disputes related to the recruitment and service conditions of persons engaged in public service.
    • Article 323-B deals with tribunals for other matters. These tribunals resolve disputes related to Taxation, Foreign exchange, Industrial and labour,  Land reforms, import and export, Food, Ceiling on urban property, etc.
  • Few differences between these tribunals are
    Article 323-A (Administrative Tribunals)Article 323-B (Tribunals for other matters)
    Parliament alone can establish these tribunalsBoth Parliament and State Legislatures can establish these tribunals
    Only one tribunal at the center level and Only one for each state(or two or more states)Government can establish the hierarchy of Tribunals
About the Tribunal Reforms Ordinance 2021

The Tribunal Reforms Ordinance 2021 seeks to dissolve certain existing appellate tribunals and transfer their functions.

The appellate tribunals formed through the following legislations are transferred. These include,

Acts and associated TribunalsAppeals will hear by
The Cinematograph Act, 1952High Court
The Trade Marks Act, 1999High Court
The Copyright Act, 1957Commercial Court Constituted under the  Commercial Courts Act, 2015 or the Commercial Division of a High Court
The Customs Act, 1962High Court
The Patents Act, 1970High Court
The Airports Authority of India Act, 1994The Central government, for disputes arising from the disposal of properties left on airport premises by unauthorised occupants.

High Court, for appeals against orders of an eviction officer.

The Control of National Highways (Land and Traffic) Act, 2002Civil Court
The Geographical Indications of Goods (Registration and Protection) Act, 1999High Court
Changes to the Finance Act 2017

Apart from these changes, the ordinance also amended the Finance Act to include the following changes.

  • The ordinance empowers the Central Government to make rules for qualifications, appointment, term of office, salaries and allowances, resignation, removal, and other terms and conditions of service of Members of Tribunals.
  • Search-cum-Selection Committee: The ordinance also provides that the central government will appoint the Chairperson and Members of the Tribunals. A Search-cum-Selection Committee will make the recommendations for such appointments.
  • Tenure: Now, The tenure of Chairperson of a Tribunal is for a term of four years or till the age of 70, whichever is earlier. Members of a tribunal will also have a tenure of four years or until they turn 67.
Need for the Tribunal Reforms Ordinance 2021

The government introduced these radical changes due to the various challenges faced by the Tribunals in India. Such as,

  1. Huge unfulfilled Vacancy: Different qualification requirements for different tribunal leads to a high level of vacancy in the appellate tribunals. For example, In 13 tribunals alone, nearly 138 posts lying vacant out of 352 posts.
  2. Poor Adjudication & Delay in Judgement: The 272nd Law Commission Report mentions the Tribunals such as Central Administrative Tribunals and others had a pendency of 2.5 Lakh cases. Combined with the Vacancy they cannot determine the appeals. So the ordinance is necessary.
  3. Lack of independence: An interim report titled, Reforming The Tribunals Framework in India mentioned that the tribunals are not independent. The Executive holds key positions in Tribunals and the government is the biggest litigant. So the cases might not be decided fairly. So, the ordinance by shifting the appeals to the Judiciary will enable fair trial.
  4.  Non-uniformity across tribunals with respect to service conditions, tenure of members, varying nodal ministries in charge of different tribunals. This created and contributed to malfunctioning in the managing and administration of tribunals.
  5. Ad-hoc regulation of Tribunals: The tribunals fall under various ministries subjects to frequent ad-hoc regulatory changes. By abolishing the appellate tribunals there won’t be any such possibility for ad-hoc regulations.
  6. Bypassing the jurisdiction of the High Court in certain Tribunals: Few tribunals like NGT, NCLAT, CAT, etc have provisions allowing for direct appeals to the Supreme Court. Even though the Supreme court in the L. Chandra Kumar case criticised them for such practice. The Supreme Court held that it will create congestion in SC and also make the Justice costly and inaccessible.
  7. Thus, the ordinance for abolishing the appellate tribunals and vesting that power to the High Courts is a solution to the problem.
Challenges with the Tribunals Reforms ordinance 2021

Even though the ordinance solves many problems, there are few main challenges with the same.

  1. Burdening JudiciaryIt is not only the tribunals that have long pendency of cases and vacancies, but also the constitutional courts, i.e. the High Courts and the Supreme Court. Shifting the entire appeals towards High courts will provide more burden to the Judiciary.
    For example, A law commission report says that the top five central tribunals in India have taken over 3.50 lakh cases pending from the judiciary.
  2. The high disposal rate of cases in Tribunals is accepted by the 272nd Law Commission Report also. So abolishing the appellate tribunals is not considered a right move.
  3. Against the Flexibility in the Justice delivery system: The introduction of tribunals engendered flexibility and versatility in the judicial system of India. Unlike the procedures of the ordinary court which are stringent and inflexible, the administrative tribunals have a quite informal and easy-going procedure.
Suggestions to improve the tribunals
  1. Firstly, SC has cautioned on the continuous creation of tribunals. So the Government has to stop creating new Tribunals and focus on bringing standardisation in Tribunals instead of abolishing them.
  2. Secondly, the government has to amend the provisions of Tribunals that left High Courts out of its Jurisdiction.
  3. Thirdly, adopting a methodology of a merger like the United Kingdom. The UK also suffered a similar problem to India with Tribunalisation. Further, both countries have similar administrative frameworks. This was highlighted by Supreme Court in NCLT Case. Further, the SC also mentions few significant recommendations. Such as,
    • Leggatt Report of the UK is also applicable to the problem faced by Tribunals in India.
    • India has to create a single tribunals service and nodal agency based on the Leggatt Report
  4. Fourthly, 74th Parliamentary Standing Committee Report on 2015 also mentioned a single nodal agency for monitoring Tribunals, Appellate Tribunals and Other Authorities

The Tribunals in India serve some important purposes. Instead of abolishing appellate tribunals, the government can try implementing the Leggatt Report. As it will not only solve the problem with appellate tribunals but also solve the problems other tribunals as well.

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