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CASE NO.: Appeal (civil)  3067 of 2004

PETITIONER: Union of India

RESPONDENT: R. Gandhi

DATE OF JUDGMENT: 18/05/2007

BENCH: K.G. BALAKRISHNAN, D.K. JAIN & V.S. SIRPURKAR

JUDGMENT: JUDGMENT                                O    R    D    E    R WITH CIVIL APPEAL NO. 3717 OF 2005 Madras Bar Association                          \005    Appellant Versus Union of India                                          \005    Respondent

       The challenge in these appeals is to the validity of the  provisions of Companies Act, 1956 as amended by the  Companies (Second Amendment) Act, 2002, which provides for  setting up of National Company Law Tribunal and National  Company Law Appellate Tribunal.  Barring the jurisdiction  exercised 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.

2.      We have heard Mr. Gopal Subramanium learned  Additional Solicitor General of India and Mr. A.P. Datar  learned Senior Counsel appearing for the Madras Bar  Association, at some length.

3.      Law relating to the legislative competence to establish  Tribunals has been enunciated in several judgments of this  court, including L. Chandra Kumar Vs. Union of India and  Ors (1997) 3 SCC 261; Union of India & Anr. Vs. Delhi High  Court Bar Association & Ors. (2002) 4 SCC 275 and State of  Karnataka Vs. Vishwabharathi House Building Cooperative  Society & Ors. (2003) 2 SCC 412.  It has been held that under  Entries 77, 78, 95 of List I, Entry 65 of List II and Entry 11A of  List III, the Parliament and State Legislatures possess  legislative competence to effect changes in the original  jurisdiction of the Supreme Court and the High Courts.

4.      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.  There is as yet no  demarcating line to show that, except for powers exercised  under Article 226 & 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 aggrandize one branch over

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the other.

5.      Since the issues raised in the appeals are of seminal  importance and are likely to have 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.