Vesting Jurisdiction in the CERC for Adjudication of Disputes for Contract Enforcement

Author(s): SOLPO Research

Draft Electricity (Amendment) Bill, 2020 – Electricity Contract Enforcement Agency

In the present legal note, we attempt to answer the question  – whether the Electricity Contract Enforcement Agency (“the ECEA” or the “Dispute Resolution Authority”) proposed to be created by introducing an amendment to Electricity Act, 2003 can be lawfully established within the Central Electricity Regulatory Commission (“the CERC”). If this is possible, what should be the minimum safeguards that are required for ensuring that the scheme does not fall foul of the law laid down by the Supreme Court in various judgments?

Executive Summary: The legislature is fully empowered to vest judicial functions in a separate forum i.e. a judicial tribunal. In order to ensure the independence of tribunals, compliance of the principles summarized in the present Legal Note is essential. The legal principles are primarily those that were earlier enumerated in the judgment of the Supreme Court in Madras Bar Asso. (2010)¹ and then largely reiterated in Roger Mathew’s (2019)² case. The judicial principles that emerge are as follows:

(a)     A legislature can enact a law transferring the jurisdiction exercised by courts in regard to any specified subject (other than those which are vested in courts by express provisions of the Constitution) to any tribunal.

(b)     A Tribunal to have the character of a quasi-judicial body and a legitimate replacement to Courts, must essentially possess a dominant judicial character through their members/presiding officers. It is a fundamental prerequisite for transferring adjudicatory functions from Courts to Tribunals that the latter must possess the same capacity and independence as the former, and that members as well as the presiding officers of Tribunals must have significant judicial training and legal experience. Further, knowledge, training and experience of members/presiding officers of a Tribunal must mirror, as far as possible, that of the Court which it seeks to substitute.

(c)     While enacting legislation pertaining to transfer of judicial power, Parliament has to ensure that the newly created court/tribunal conforms with the salient characteristics and standards of the court sought to be substituted.

(d)     The tribunal should have as members, persons of a rank, capacity and status (as nearly as possible) equal to the rank, status and capacity of the court which was till then dealing with such matters. The members of the tribunal should have the independence and security of tenure associated with judicial tribunals. A tenure of three years may be suitable for a retired Judge of High Court or the Supreme Court or even in case of a judicial officer on deputation. However, it will be illusory to expect a practising advocate to forego his well-established practice to serve as a Member of a Tribunal for a period of three years.

(e)     The difference between age of superannuation of Chairman/Presiding Officer and Member of a Tribunal is because Chairman/Presiding Officer is not a promotional post and thus cannot be equated with that of the Member. The post of Chairman/Presiding Officer requires judicial and administrative experience of at least that of the judge of a High Court which is evident from the statutes prescribing them.

(f)      The Tribunals should have similar standards of appointment and service as that of the Court it is substituting. The Search-cum-Selection Committees should not go against the constitutional scheme so as to dilute the involvement of judiciary in the process of appointment of members of tribunals which is in effect an encroachment by the executive on the judiciary.

(g)     Only where the exercise of jurisdiction involves inquiry and decisions into technical or special aspects, where presence of technical members will be useful and necessary, tribunals should have technical members. Indiscriminate appointment of technical members in all tribunals will dilute and adversely affect the independence of the judiciary.

(h)     The legislature can reorganise the jurisdictions of judicial tribunals. For example, it can provide that a specified category of cases tried by a higher court can be tried by a lower court or vice versa (a standard example is the variation of pecuniary limits of the courts). Similarly, while constituting tribunals, the legislature can prescribe the qualifications/eligibility criteria.

(i)      It is an acceptable feature/practice to provide one appellate forum wherever an enactment is a complete code for providing judicial remedies. Providing one right to appeal before an appellate forum is a well-accepted norm which is perceived as a healthy tradition. A second appeal to the Supreme Court is permissible, where the scope of the appeal to the Supreme Court is restricted only “to question of law arising out of such order.

Apart from the said judicial principles, there are a few recommendations of the Law Commissions, which is available from its 272^nd Report (October 2107). An important recommendation of the Law Commission is the need for having benches in different parts of the country so that people of every geographical area may have easy access to justice. While the Law Commission report says that ideally benches of the tribunals should be located at all places where the High Courts are situated, looking to the quantum of work of a particular tribunal a possible solution is to have regional benches. Once that is done, access to justice will stand ensured.

In view of the settled judicial principles, judicial dominance is necessary both at the stage of selection and also in terms of the composition of the judicial forum. The presiding member of the forum should have legal/judicial background. Technical member in the judicial forum should be included only when there is a need for experts. While the Law Commission has opined that there may be any need in involving the judiciary in the selection process of technical members, the view of the Supreme Court is different. The Court has insisted that since the adjudicatory function will be discharged by the tribunal, the judiciary must have a dominant say in the selection process of Chairman / Presiding Officer and members of such tribunal.

Since the right of appeal is a creature of statute, the same can be introduced. If the CERC is vested with the original jurisdiction of decide adjudicate disputes, the first level of appeal can lie with the Appellate Tribunal for Electricity. The second level of appeal will then be in the Supreme Court.

This procedure is distinguished from the procedure that is followed under the Telecom Regulatory Authority of India Act, 1997, where the original jurisdiction for the resolution of dispute is largely vested with the Telecom Dispute Settlement Appellate Tribunal (TDSAT) in terms of section 14 of the 1997 Act (as amended in 2000). The aforesaid vesting of original jurisdiction in the appellate forum i.e. TDSAT has reduced one level of appeal. Now orders passed by TDSAT is appealable only before the Hon’ble Supreme Court of India. However, the constitutional jurisdiction of High Court under Articles 226 and 227 will always be available for testing orders passed by tribunals, subject to well established self-imposed limitations for exercise of such powers. While it is possible to provide an appeal to the Supreme Court in the first instance, this is not a procedure that may in the long term inure either to the benefit of the sector or the overall discharge of responsibility by the Supreme Court (as has been commented upon by the court in Gujarat Urja Vikas Nigam Ltd. v. Essar Power (2016)).

Therefore, in our view, the proposed legislation should keep in mind the minimum/basic ingredients mentioned above. The judicial wing can be created within the CERC, which can then be ringfenced, to perform purely adjudicatory functions.