LexUNION OF INDIA versus R. GANDHI, PRESIDENT, MADRAS BAR ASSOCIATION
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[2010] 6 S.C.R. 857 UNION OF INDIA v. R. GANDHI, PRESIDENT, MADRAS BAR ASSOCIATION (Civil Appeal No. 3067 of 2004 etc.) MAY 11, 2010 [K.G. BALAKRISHNAN, CJI, R.V. RAVEENDRAN, D. K. JAIN, P. SATHASIVAM AND J.M. PANCHAL, JJ.] Companies Act, ; 956 - Chapters 1 B and 1 C - Creation A B of National Company ;_aw Tribunal (NCLT) and National. C Company Law Appellate Tribunal (NCLA T) - For adjudication of cases which were adjudicated by CLB, BIFR, A.A/FR and High courl in its company jurisdiction - Validity of - Held: Creation of NCLT and NCLA T and vesting in them jurisdiction of High Courl is not unconstitutional - Parliament has the o legislative competence to make laws providing for constitution of tribunals to deal with company matters even though it is not mentioned in Arlie/es 323A and 3238 - Such legislation is subject to constitutional limitations - It should not encroach upon the independence of judiciary and should not be E voilative of doctrines of rule of law and separation of powers - Such legislation is subject to judicial review if the courl finds that the tribunalisation would adversely affect the independence of judiciary or the standards of judiciary - Appointment of the Member of Tribunals from civil services F who continue to be employee of the Government by maintaining their lien would amount to transfer of judicial function to executive which goes against the doctrine of separation of power and independence of judiciary - In case where jurisdiction is transferred from courts to tribunals for expeditious disposal and where specialized knowledge is not G required appointment of Technical Member is not necessary - In such case, if Technical Member is appointed, it would amount to encroachment upon the independence of judiciary and Rule of Law and would be unconstitutional - It is for the 857 H 858 SUPREME COURT REPORTS [2010] 6 S.C.R. A legislature to decide whether the tribunal should have only Judicial Member or a combination of Judicial of Technical Member- When Judges of the High Court are substituted with Members of tribunal, the standards should be approximate to the standards of mainstream judicial functioning - Chapters B 1 B and 1 C presently structured, are unconstitutional as they dilute the independence of tribunal and standards of qualification of Members of the tribunal - They can be made operational on making suitable amendments thereof - Corrections suggested to set right the defect in Chapter 1 B c and 1C- Constitution of India, 1950-Articles 226, 323A and 3231.3; Seventh Schedule, List I Entries 77, 78, 79 and 40 rlw Entry 5, List Ill Entries 11 A rlw Entry 46. Constitution of India, 1950: o Article 14 - Right to equality - Includes a right to adjudication by a forum exercising judicial power in impartial and independent manner consistent with the recognized principles of adjudication. Articles 246, 323A and 3238, Seventh Schedule List I - E Power of Parliament to enact law in List I is absolute - The power so conferred by Article 246 is not affected or controlled by Article 323A and 3238. F Legislation - Challenge to validity of legislation - Basis for -- Held: Legislation can be declared unconstitutional or invalid only on the grounds of legislative competence or for violation of fundamental rights or constitutional provisions including the provisions which enshrine the principles of Rule of Law, separation of power and independence of judiciary - G Legislation cannot be held invalid for violating basic structure of the Constitution - Constitution of India, 1950. H Judicial Fora - Courts and Tribunals - Distinction between. Accepting the recommendations of Eradi Committee, UNION OF INDIA v. R. GANDHI, PRESIDENT, MADRAS 859 BAR ASSOCIATION Government passed Company (Second amendment) Act, A 2002 inserting chapters 1B and 1C in Companies Act, 1956· which provided for establishment of National ' Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) to take over the functions which were being performed by Company Law Board B (CLB), Board of Industrial and Financial Reconstruction (BIFR), Appellate Authority for Industrial and Financial Reconstruction (AAIFR) and the High Court. Madras Bar Association challenged the validity of the Chapters 1 B and 1 C. High Court held that creation of the C tribunal and vesting therein the powers exercised by High Court and Company Law
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