Supreme Court today pulled up the central government for delay in filling up vacancies in important tribunals. The court said the government is emasculating tribunals by not appointing personnel.
But why is the Supreme Court so concerned? How many vacancies? Are we talking about? How big are the delays in appointments to tribunals?
The numbers are quite staggering, in 15 tribunals there are as many as 240 vacancies - chairs of 19 presidents, 110 judicial members, and 111 technical members are lying vacant. The problem is acute at the NCLT and the NCLAT.
After having been red-flagged by the parliamentary panel, now the apex court slammed the government. It observed that the NCLT and NCLAT are the cornerstones of the government efforts to rehabilitate bad debts, but yet, no appointments. Chairs of one Chairperson, 19 traditional members and 14 technical members are lying vacant.
Interestingly, recommendations for 11 judicial members and 10 technical members have gone out as early as May of 2020. And there's been no forward movement on the recommendations. Similarly, NCLT is missing one chairperson, one judicial member, and one technical member. Not just the empty chairs of the tribunal, Supreme Court has also served with the Centre for passing Tribunals Reforms Act, which the court termed as a virtual replica of provisions struck down by the court.
To discuss this in-depth, CNBC-TV18 spoke with Vikas Singh, Senior Advocate and President, the Supreme Court Bar Association; Anuradha Dutt, Managing Partner, DMB Advocates; Ruby Ahuja, Senior Partner, Karanjwala, and Company; and Cherag Balsara, Advocate at Bombay High Court.
When asked what it means when one says there are as many as 240 vacancies? How severely are these vacant positions impairing the functioning of these tribunals? How acute and how severe is this situation? Supreme Court has taken very strong exception - your first thoughts?
Dutt said she agreed with the Supreme Court. She said, “To take an example say NCLT and NCLAT you took away the jurisdiction of company matters from High Court saying that there should be a specialised tribunal, then you bring in IBC and you give that jurisdiction to them, but then you don't have enough manpower. So nothing is being done. NCLAT chairman has not been there for quite some time now since the last person retired. Look at GST - you had laud two, three years ago that there will be a GST Forum but you don't have it till now.”
According to Dutt, "The problem is this is all a part of the dispensation of justice. So you set up, you decide that No, I don't want to go to high courts, I want a specialised tribunal and then they are not manned. Look at FEMA PMLA no judge for two years now. So the reason why the judiciary faces the pressure is because if one were to file an appeal and see nobody there, one would have to rush to High Court and ask High Court to consider my case."
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If HC rejects then will have to go to the Supreme Court. So the whole idea of having a specialise tribunal goes away. “According to me, this is part of the dispensation of justice, which is as critical, if not more as making laws by the parliament, which also seems to be now at hold. I really understand because there are people who are frustrated. There are litigants who feel the pinch. So, the government must realise that this is extremely critical and as important as any other function of either the executive or the legislature,” said Dutt.
Ahuja said, "As Dutta pointed out that it makes no sense to bring in law because if one has nobody or no tribunals, which can implement it then this statutory period, which has been prescribed under the code, according to me now has been given a goby because unfortunately, it's nobody's fault. But there are too many adjournments because sometimes the members can't say sometimes the forum is not complete, so matters are getting adjourned."
“We'll have to remember one very important thing that once when they took away the company law jurisdiction from the High Court and vested it in the tribunals. NCLT is one tribunals, which today has three big commercial jurisdictions within it. It has IBC it has company law, and it has CCI. All appeals from CCI also go to NCLAT. So not having a chairperson for NCLAT? I don't think is a great idea,” said Ahuja.
"The tribunals were formed because you wanted speedy justice. Now, I don't know what you're going to do with it because everything is going to get highly delayed. There will be a time and one won’t be surprised if people start filing proceedings in the High Court, if the members are not sitting, then you increase the burden of the High Courts which are already burdened. They anyway have a lot of backlog to deal with."
“My view has always been that the IBC appellate tribunal cannot be with company law appellate tribunal because that anyway has two more jurisdiction. If you want to have a speedy disposal, you want to have a resolution as fast as possible and help the bad debts which this country is facing, you must have a single focused tribunals dealing with IBC issues. Otherwise, amending this court again and again to has no meaning, because who's going to implement it, how it's going to get implemented? That is what even the honourable judges today mentioned. I'm sure the government is going to listen to it and do something as fast as possible” said Ahuja.
Looking at this issue from a slightly different perspective, if one looks at the recommendations that were made, the timeline between the recommendations being made and the action that have been taken taking NCLT for instance, recommendations went back as way back as May 20.
So, we are talking about nearly two years now, what is the main issue here? Why are we seeing such a major roadblock in terms of recommendations, translating into appointments?
Singh said, “As far as the recommendations getting delayed are concerned, that is something which is really disturbing to the Supreme Court. And that is why they are they have given very clear four alternatives to the government."
"But the more disturbing part of this whole thing is not that it is getting delayed. The more disturbing part is that there is a complete breach of the concept of separation of powers, because once the Supreme Court has decided something by judicial order, you can change the basis of the judgement, but you can't say that the judgement itself is wrong."
"For instance, if a Supreme Court order decides that this building has a height, which is not permissible in law, you can change the law and say retrospectively that this building is justified from the side. But you cannot if the Supreme Court were to say that this height is not correct, for XYZ reason, then you cannot still bring in law and say that I don't agree with the Supreme Court judgement. So that's the one disturbing part,”
“The other disturbing part is when you look at the IBC, the moment a reference happens, the moratorium takes effect. Now the moratorium means that nobody can pursue any other remedy against the company before the NCLT. Now if there is a moratorium, and if there is no timeline to decide because there is a further timeline to decide everything, there is an outer limit to decide everything."
"Now with the shortage of members that will not happen, so it will be a complete, haywire kind of a situation where companies will be in liquidation and the matters will remain outstanding four years together, “ said Singh, adding that he was the victim of one such matter.
"I am a homebuyer in one matter where in spite of the NCLAT saying that you decide in a particular time frame, they are not able to decide they're not able to give dates because they are no members, so what to do. Every time it gets listed, it gets listed by two months again. So it's a very sad state of affairs."
"The Supreme Court has very clearly said today that either we stay on new law and make a positive order asking you to appoint all those people who are already part of the recommendation headed by a Supreme Court Judge, or come up with the appointment orders within this week."
"And then they will hear you on Monday on the constitutionality of the new law and not probably a grant a stay in the meanwhile. So I think the choice is very, very clear to the government, if the government really wants to even defend the law even for a day, it will have to notify all these appointments not only on the NCLT, but also NCLAT, "said Singh.
For the entire discussion, watch the accompanying video