Union of India v. R. Gandhi, President, Madras Bar Association (2010) 5 SCALE 514

JurisPrism December 27, 2023

Case Brief
Union of India v. R. Gandhi, President, Madras Bar Association (2010) 5 SCALE 514

Facts:

The case revolves around the Company (Second Amendment) Act, 2002, which introduced chapters 1B and 1C to the Companies Act, 1956. These chapters established the National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT), absorbing functions of the Company Law Board and other bodies. The Madras Bar Association challenged the legality of these chapters. The High Court upheld the establishment but found specific provisions faulty, citing a violation of separation of powers. The Union of India agreed to rectify most findings but contested issues regarding certain sections.

Issues:

1. To what extent can the High Court's powers be delegated to Tribunals?

2. Is there a limit to Parliament's authority in delegating judicial tasks to entities other than the judiciary?

3. Does the bulk transfer of powers to NCLT and NCLAT violate the constitutional framework of separation of powers?

Comments:

Arguments included the necessity of provisions for the proper functioning of NCLT and NCLAT, drawing parallels with other institutional structures. The distinction between general civil courts and administrative tribunals was discussed. The Union of India contested the High Court's directives, alleging a transformation of judicial review into judicial legislation. The Madras Bar Association argued against the constitutional validity of establishing NCLT and NCLAT, citing a violation of the separation of powers doctrine.

Judgment:

The court affirmed Parliament's authority to legislate on matters not exclusively listed in the Seventh Schedule. While acknowledging Parliament's power to establish tribunals under Article 323A and 323B, it emphasized adherence to constitutional limitations, maintaining judicial independence and the Rule of Law. The court distinguished between tribunals requiring specialized knowledge and those created merely to expedite proceedings. It ruled that the inclusion of non-judicial Technical Members, solely for procedural ease, would compromise judicial independence and be unconstitutional. The judgment emphasized that legislative measures must align with constitutional provisions, and the judiciary's independence depends on the competence and independence of tribunal members.