Legal Correspondent

Will have an impact on independence of judicial system

  • Amendments had the effect of barring High Courts' jurisdiction
  • There is as yet no demarcating line

    New Delhi: A five-Judge Constitution Bench of the Supreme Court will examine whether the Centre can set up the National Company Law Tribunal and the National Company Law Appellate Tribunal by curtailing the powers of the judiciary.

    A three-judge Bench comprising Chief Justice K.G. Balakrishnan, Justice D. K. Jain and Justice V. S. Sirpurkar said that since the issue would have a serious impact on the structure and independence of the judicial system, a Constitution Bench should hear the matter.

    The reference to the Constitution Bench was made recently while dealing with civil appeals filed by the Centre and the Madras Bar Association against a Madras High Court judgment relating to the Companies (Second Amendment) Act, 2002, which provided for setting up of a National Company Law Tribunal and also a National Company Law Appellate Tribunal.

    The Bench noted that the amendments had the effect of barring the jurisdiction exercised by the High Courts under Articles 226 and 227. Almost all jurisdictions hitherto exercised by the High Courts in regard to the company matters would be transferred and exercised by the proposed Tribunal and Appellate Tribunal.

    It said: ``law relating to the legislative competence to establish tribunals has been enunciated in several judgments of this court. However, in none of the decisions rendered so far the question as to what extent such powers of High Court can be transferred to Tribunals, excepting judicial review under Articles 226/227, has not been considered.''

    The Bench said: ``there is as yet no demarcating line to show that, except for powers exercised under Articles 226 and 227, the Parliament has the legislative competence to vest intrinsic judicial functions, traditionally performed by courts in any tribunal or authority, outside the judiciary. The question to be determined is whether such `wholesale transfer of powers' as contemplated by the Companies (Second Amendment) Act, 2002 would offend the constitutional scheme of separation of powers and independence of judiciary, so as to aggrandise one branch over the other."

    The Bench said: ``since the issues raised in the appeals are of seminal importance and are likely to have a serious impact on the very structure and independence of the judicial system, we are of the view that the issue with regard to the constitution of the tribunals and the areas of their jurisdiction needs to be given a fresh look and, therefore, the matter deserves to be heard by a Constitution Bench.''