PETITIONER: S.P. SAMPATH KUMAR ETC. Vs. RESPONDENT: UNION OF INDIA & ORS. DATE OF JUDGMENT09/12/1986 BENCH: MISRA RANGNATH BENCH: MISRA RANGNATH BHAGWATI, P.N. (CJ) KHALID, <NAME>, G.L. (J) DUTT, M.M. (J) CITATION: 1987 AIR 386 1987 SCR (1) 435 1987 SCC (1) 124 JT 1986 996 1986 SCALE (2)960 CITATOR INFO : F 1987 SC 357 (2) F 1987 SC 663 (2) APL 1989 SC 44 (4) RF 1989 SC 653 (11) F 1989 SC1185 (8) R 1989 SC1933 (7) RF 1990 SC1137 (3) ACT: Administrative <ORG>s Act , 1985: ss. 4 , 5 , 6 & 28- -Exclusion of the jurisdiction of <ORG> under Arts. 226 and 227 in service matters-Constitutional validity of--Chairman, Vice-Chairman and Members-Qualifications and mode of appointment to make the <ORG> equally efficacious and effective alternative to <ORG>-- Benches and Circuits of <ORG>-Setting up of. Constitution of India, Arts. 226, 227, 32, 136, 323A and 368--Judicial review-- Exclusion of-- When permissible. HEADNOTE: Clause (1) of Art. 323-A , brought in by Constitution (42nd Amendment) Act , 1976, authorised <ORG> to provide by law for the adjudication or trial by administrative tribunals of disputes and complaints with respect to re- cruitment and conditions of service of persons appointed to public services. Clause (2)(d) of that Article envisaged exclusion of the jurisdiction of all courts, except the jurisdiction of <ORG> under Art. 136 with re- spect to the disputes or complaints referred to in cl. (1). Section 28 of the Administrative <ORG>s Act, 1985 originally enacted within the ambit of Art. 323-A , provided for exclusion of jurisdiction of <ORG> under Art. 32.  The Act as amended by the Administrative <ORG>s (Amendment) Ordinance, 1986, replaced by Act No. 19 of 1987 now saves the jurisdiction of <ORG> both under Art. 32 in respect of original proceedings as also under Art. 136 for entertaining appeals. Section 6(1) of the Act which lays down qualifications of Chairman, states that he should be or have been (a) a Judge of <ORG>, or (b) has for at least two years held office of Vice-Chairman, or (c) has for at least two years held the post of Secretary to the Govern- ment of India. Sub-section (2) provides that a Vice-Chairman should be or have been (a) a Judge of <ORG>, or (b) for at least two years held the post of a Secretary to <ORG>, or (bb) for at least five years held the post of Additional Secretary to <ORG>, or (c) for a period of not less than three years held office as a Judicial Member of an Administrative <ORG>. Sub- section (3) states that the Judicial Member (a) should or should have been qualified to be a Judge of <ORG>, or (b) has been a member of <ORG>, Grade 1, for at least three years. Sub-section (3A) provides that a person to be appointed as Administrative Member (a) should have for at least two years held the post of Addi- tional Secretary to <ORG>, or (b) has for at least three years held the post of a Joint Secretary to <ORG>. The petitioners in these writ petitions and transfer petitions challenged the vires of the 1985 Act. It was contended that the exclusion of the jurisdiction of <ORG> under Arts. 226 and 227 in service matters specified in s.28 of the Act was unconstitutional and void, and that the composition of the <ORG> and mode of appointment of Chairman, Vice-Chairman and Members was outside the scope of the power conferred on <ORG> under Art. 323-A. Allowing the petitions in part, the <ORG>, By the <ORG> HELD: It is <ORG> which is being supplanted by Administrative <ORG>. The office of Chairman of the <ORG>, therefore, for all practical purposes should be equated with the office of the Chief Justice of <ORG>. Judicial discipline generated by experience and training in an adequate dose is a necessary qualification for that post. It is thus essential that he should have been a Judge of <ORG> or he should have for at least two years held office as Vice-Chairman. A person who has merely held the post of Secretary to <ORG> and who has no legal and judicial experience if appointed Chair- man would not only fail to inspire confidence in the public mind but would also render the Administrative <ORG> a much less effective and efficacious mechanism than <ORG>. Clause (c) of s.6(1) of the Act, therefore, must be struck down as invalid. [445 C, 455 DE, 445 ABE] Per <NAME>, CJ. 1.1 Judicial review is a basic and essential feature of the Constitution and no law passed by <ORG> in exercise of its constituent power can abrogate it or take it away. It is, however, within the competence of <ORG> to amend the Constitution so as to substitute in place of <ORG> another alternative institutional mechanism or ar- rangement for judicial review without in any way violating the basic structure doctrine, provided it is no less effica- cious than <ORG>. Then it would be another authori- ty which would be exercising the power of judicial review with a view to enforcing the constitutional limitations and maintaining the rule of law. [441 B, 443 BC] 437 <CITATION> . 1 SCR 206, referred to. 1.2 Clause (2Xd) of Art. 323-A specifically authorises the exclusion of the jurisdiction of <ORG> under Arts. 226 and 227 by any law made by <ORG> under cl.(1). If this constitutional amendment were to permit a law to exclude the jurisdiction of <ORG> under Art. 226 and 227 without sating up an effective alternative institutional mechanism or arrangement for judicial review it would be violative of the basic structure doctrine and hence outside the constitutent power of <ORG>. It must, therefore, be read as implicit in the amendment that such a law to be coustitutionally valid must not leave a void but it must set up another equally effective alternative author- ity and vest the power of judicial review in it. [443 F, H, 44 A B] 2.1 What is needed in a judicial tribunal which is intended to supplant <ORG> is legal training and experience. Service matters which are removed from the jurisdiction of <ORG> under Arts. 226 and 227 and entrusted to the Administrative <ORG> invariably involve questions of interpretation and applicability of Arts. 14, 15, 16 and 311 which require for their determination not only judicial approach but also knowledge and expertise in this particular branch of constitutional law. [445 D, 444 D] 2.2 The Chairman of the Administrative <ORG> should be or should have been a Judge of <ORG> or he should have for at least two years held office as Vice-Chairman. It is <ORG> which is being supplanted by the Adminis- trative <ORG>. Substituting the Chief Justice of <ORG> by a Chairman of the Administrative <ORG> who has merely held the post of a Secretary to <ORG> and who has no legal or judicial experience would not only fall to inspire confidence in the public mind but would also render the Administrative <ORG> a much less effec- tive and efficacious mechanism than <ORG>. Clause (c) of s.6(1) of the Act, therefore, must be struck down as invalid. [445 A, C, B, E] 3. Since the Administrative <ORG> has been created in substitution of <ORG>, its Vice-Chairman would be in the position of <ORG> Judge. Therefore, a District Judge or an advocate who is qualified to be a Judge of <ORG> should be regarded as digible for being Vice- Chairman of the Administrative <ORG>. The provisions of the Act in regard to the composition of the Administrative <ORG> are weighted in favour of members of the Services. This value discounting of the judicial members does have the effect of making the Administrative <ORG> less effective and efficacious than <ORG>. Unless an amendment to that effect is carried out on or before 31st March, 1987 the Act would have to be declared to be invalid because the 438 provision in regard to the composition of the Administrative <ORG> cannot be severed from the other provisions con- tained in the Act. [445 F, 446 A, 445 G, 446 B] 4.1 Under the Act the sole and exclusive power to make appointment of Chairman, Vice-Chairman and Administrative Members is conferred on the <ORG>. No obligation is cast on the <ORG> to consult the Chief Justice of India or to follow any particular selection procedure in this behalf. Total insulation of the judiciary from all forms of interference from the coordinate branches of <ORG> is a basic essential feature of the Constitution. In case of High <ORG> Judges the President cannot make any appointment without consultation with the Chief Justice of <ORG> and the Chief Justice of India. This check or safe- guard is totally absent in the case of appointment of the Chairman, Vice-Chairman and Administrative Members of the Administrative <ORG>. If the <ORG> is created in substitution of <ORG> and the jurisdiction of <ORG> under Arts. 226 and 227 is taken away and vested in it, it is but essential that the same independence from possibility of executive pressure or influence must also be ensured to the Chairman, Vice-Chairman and Members of the <ORG>. [446 D, 447 D, B, E] 4.2 The appointment o[ Chairman, Vice-Chairman and Administrative Members, therefore, should be made by the concerned <ORG> only after consultation with the Chief Justice of India and such consultation must be meaningful and effective. Alternatively, <ORG> headed by the Chief Justice of India or a sitting Judge of <ORG> or concerned High <ORG> nominated by the Chief Justice of India may be set up for making these appointments. If either of these two modes of appointment is adopted, it would save the impunged Act from invalidation. Otherwise, it will be outside the scope of the power con- ferred on <ORG> under Art. 323-A. [447 F, G, 448 B] 5. The <ORG> should set up a permanent bench and if that is not feasible having regard to the volume of work, then at least a circuit bench of the Administrative <ORG> wherever there is a seat of <ORG> on or before 31st March 1987 so that the provisions of the Act could be sus- tained. [448 D] 6. Judgment to operate only prospectively and not to invalidate appointments already made. [448 B] Per <NAME>, J. 1. The Administrative <ORG> Act , 1985, as amended by Act No. 19 of 1986 saves jurisdiction of <ORG> both under Article 32 in respect of original proceedings as also under Article 136 for entertaining appeals. There is thus a forum where matters of importance and grave injustice can be brought 439 for determination or rectification. The exclusion of the jurisdiction of <ORG>, therefore, does not totally bar judicial review. [451 C, 453 A] 2.1 It is open to <ORG> to make effective alterna- tive institutional mechanisms or arrangements in place of <ORG> for providing judicial review. But such an authority or tribunal must be a worthy successor and real substitute of <ORG>--not only in form and de jure but in content and de facto so as to be effective and effi- cient as also capable of upholding the constitutional limi- tations enshrined in Articles 14, 15 and 16 of the Constitu- tion. [453 B, 454 C, 453 E] 2.2 The <ORG> under the scheme of the Act has been contemplated as a substitute and not as supplemental to <ORG>. It is not designed as an additional froum from where parties could go to <ORG>. Under ss. 14 and 15 of the Act all the powers of the <ORG>s, except those of <ORG>, in regard to matters specified therein vest in the <ORG>--either Central or State. Barring of the jurisdiction of <ORG> under Arts. 226 and 227 cannot, therefore, be said to be ultra vires the Constitu- tion. [443 CD, FG, 449 <CITATION> .,  1 SCR 206, 287 and <CITATION> ,  3 SCR 811, referred to. 3.1 The Office of Chairman of the <ORG> should for all practical purposes be equated with the office of Chief Justice of <ORG>. Judicial discipline generated by experience and training in an adequate dose being a neces- sary qualification for that post, ordinarily a retiring or retired Chief Justice of <ORG> or when such a person is not available, a senior Judge of proved ability, either in office or retired should be appointed. In order that the <ORG> may be acceptable to the litigants, who are them- selves members of the various Services, therefore, s.6(1)(c) of the Act, which makes a Secretary to <ORG> also eligible for the post of Chairman, should be omitted. [455 D-F] 3.2 The selection of Vice-Chairman and Members, when it is not of a sitting Judge or retired Judge of <ORG>, should be done by a high powered committee with a sitting Judge of <ORG>, to be nominated by the Chief Justice of India, as its Chairman. This will ensure selec- tion of proper and competent people to man these high of- fices of trust and help to build up reputation and accept- ability. The Central <ORG> to bring the provisions of the Act in accord within a reasonable time not beyond March 31, 1987. Or else, the constitution of <ORG> as a substi- tute of <ORG> would be open to challenge. [455 G, 456 A, H] 3.3 The judgment to operate prospectively and not to affect the 440 appointments already made to the office of Vice-Chairman and Members. [456 B] 4. The term of five years prescribed under s.8 of the Act for Chairman, Vice-Chairman and Members of the <ORG> requiting them to retire at the end of it is too short, which is neither convenient to the person selected for the job nor expedient to the scheme. When amendments to the Act are undertaken this aspect of the matter deserves to be considered. [456 C, F, G] JUDGMENT:

ORIGINAL JURISDICTION: Writ Petition No. 12437 of 1985 etc. (Under Article 32 of the Constitution of India) <NAME>, <NAME>, Mrs. <NAME>, <NAME>, <NAME>, <NAME>, <NAME>, <NAME>, Ms. <NAME>, <NAME>, <NAME> and <NAME> for the Petitioners.

<NAME>, Attorney General, <NAME> and Ms. <NAME> for the Respondents.

<NAME> and <NAME> for the Respondents. The Judgment of the Court was delivered by <NAME>, CJ. I am in entire agreement with the judgment prepared by my learned brother <NAME>, but since the questions involved in these writ petitions are of semi- nal importance affecting as they do, the structure of the judicial system and the principle of independence of the <ORG>, I think I would be failing in my duty if I did not add a few words of my own.

There are two questions which arise for consideration in these writ petitions and they have been succinctly set out in the judgment of <NAME>, J. The first question is whether the exclusion of the jurisdiction of <ORG> under Articles 226 and 227 of the Constitution in service matters specified in section 218of the Administrative Tribu- nals Act, 1985 (hereinafter referred to as the impugned Act) and the vesting of exclusive jurisdiction in such service matters in <ORG> to be constituted under the impugend Act, subject to an exception in favour of the jurisdiction of this <ORG> under Articles 32 and 136, is unconstitutional and void and in any event, even if the first question be answered against the petitioners and in favour of the <ORG>, the second question required to be consid- ered is, whether the composition of <ORG> and the mode of appointment of Chairman, Vice- Chairmen and members have the effect of introducing a con- stitutional infirmity invalidating the provisions of the impugned Act. I agreed with the answers given to these questions in the judgment of <NAME>, J. I would articulate my reasons as follows:--

It is now well-settled as a result of the decision of this Court in <CITATION> .  1 S.C.R. 206 that judicial review is a basic and essential feature of the Constitution and no law passed by <ORG> in exercise of its constituent power can abrogate it or take it away. If the power of judicial review is abrogated or taken away the Constitution will cease to be what it is. It is a fundamental principle of our constitu- tional scheme that every organ of the State, every authority under the Constitution, derives its power from the Constitu- tion and has to act within the limits of such power. It is a limited Government which we have under the Constitution and both the executive and the legislature have to act within the limits of the power conferred upon them under the Con- stitution. Now a question may arise as to what are the powers of the executive and whether the executive has acted within the scope of its power. Such a question obviously cannot be left to the executive to decide and for two very good reasons. First, the decision of the question would depend upon the interpretation of the Constitution and the laws and this would pre-eminently be a matter fit to be decided by the judiciary, because it is the judiciary which alone would be possessed of expertise in this field and secondly, the constitutional and legal protection afforded to the citizen would become illusory, if it were left to the executive to determine the legality of its own action. So also if the legislature makes a law and a dispute arises whether in making the law, the legislature has acted outside the area of its legislative competence or the law is viola- tive of the fundamental rights or of any other provisions of the Constitution, its resolution cannot, for the same rea- sons, be left to the determination of the legislature. The Constitution has, therefore created an independent machinery for resolving these disputes and this independent machinery is the judiciary which is vested with the power of judicial review to determine the legality of executive action and the validity of legislation passed by the legislature. The judiciary is constituted the ultimate interpreter of the Constitution and to it is assigned the delicate task of determining what is the extent and scope of the power con- ferred on each branch of Government, what are the limits on the exercise of such power under the Constitution and wheth- er any action of any branch transgresses such limits. It is also a basic principle of the rule of law which permeates every provision of the Constitution and which forms its very core and essence that the exercise of power by the executive or any other authority must not only be conditioned by the Constitution but also be in accordance with law and it is the judiciary which has to ensure that the law is observed and there is compliance with the requirements of law on the part of the executive and other authorities. This function is discharged by the judi- ciary by exercise of the power of judicial review which is a most potent weapon in the hands of the judiciary for mainte- nance of the rule of law. The power of judicial review is an integral part of our constitutional system and without it, there will be no Government of laws and the rule of law would become a teasing illusion and a promise of unreality. That is why I observed in my judgment in <ORG> case (supra) at pages 287 and 288:---

"I am of the view that if there is one feature of our Constitution which, more than any other, is basic and fundamental to the mainte- nance of democracy and the rule of law, it is the power of judicial review and it is unques- tionably, to my mind, part of the basic struc- ture of the Constitution. Of course, when I say this I should not be taken to suggest that however effective alternative institutional mechanisms or arrangements for judicial review cannot be made by <ORG>. But what I wish to emphasise is that judicial review is a vital principle of our Constitution and it cannot be abrogated without affecting the basic structure of the Constitution. If by a Constitutional amendment, the power of judi- cial review is taken away and it is provided that the validity of any law made by the legislature shall not be liable to be called in question on any ground, even if it is outside the legislative competence of the legislature or is violative of any fundamental rights, it would be nothing short of subver- sion of the Constitution, for it would make a mockery of the distribution of legislative powers between the Union and the States and render the fundamental rights meaningless and futile. So also if a constitutional amendment is made which has the effect of taking away the power of judicial review and providing that no amendment made in the Constitution shall be liable to be.questioned on any ground, even if such amendment is violative of the basic structure and, therefore, outside the amendatory power of <ORG>, it would be making <ORG> sole judge of the consti- tutional validity of what it has done and that would, in effect and substance, nullify the limitation on the amending power of <ORG> and affect the basic structure of the Consti- tution. The conclusion must therefore inevita- bly follow that clause (4) of the Article 368 is unconstitutional and void as damaging the basic structure of the Constitution."

It is undoubtedly true that my judgment in <ORG> case (supra) was a minority judgment but so far as this aspect is concerned, the majority Judges also took the same view and held that judicial review is a basic and essential feature of the Constitution and it cannot be abrogated without affecting the basic structure of the Constitution and it is equally clear from the same decision that though judicial review cannot be altogether abrogated by <ORG> by amending the Constitution in exercise of its constituent power, <ORG> can certainly, without in any way violat- ing the basic structure doctrine, set up effective alterna- tive institutional mechanisms or arrangements for judicial review. The basic and essential feature of judicial review cannot be dispensed with but it would be within the compe- tence of <ORG> to amend the Constitution so as to substitute in place of <ORG>, another alternative institutional mechanism or arrangement for judicial review, provided it is no less efficacious than <ORG>. Then, instead of <ORG>, it would be another insti- tutional mechanism or authority which would be exercising the power of judicial review with a view to enforcing the constitutional limitations and maintaining the rule of law. Therefore, if any constitutional amendment made by Parlia- ment takes away from <ORG> the power of judicial review in any particular area and vests it in any other institutional mechanism or authority, it would not be viola- tive of the basic structure doctrine, so long as the essen- tial condition is fulfilled, namely that the alternative institutional mechanism or authority set up by the parlia- mentary amendment is no less effective than <ORG>. Here, in the present case, the impugned Act has been enacted by <ORG> in exercise of the power conferred by clause (1) of Article 323A which was introduced in the Constitution by Constitution (42nd Amendemnt) Act, 1976. Clause (2) (d) of this Article provides that a law made by <ORG> under clause (1) may exclude the jurisdiction of courts, except the jurisdiction of <ORG> under Article 136 , with respect to the disputes or complaints referred to in clause (1). The exclusion of the jurisdiction of <ORG> under Articles 226 and 227 by any law made by <ORG> under clause (1 ) of Article 323A is, there- fore, specifically authorised by the constitutional amend- ment enacted in clause (2) (d) of that Article. It is dear from the discussion in the preceding paragraph that this constitutional amendment authorising exclusion of the juris- diction of <ORG> under Articles 226 and 227 postu- lates for its validity that the law made under clause (1) of Article 323A excluding the jurisdiction of <ORG> under Articles 226 and 227 must provide for an effective alternative institutional mechanism or authority for judi- cial review. If this constitutional amendment were to permit a law made under clause (1) of Article 323A to exclude the jurisdiction of <ORG> under Articles 226 and 227 without setting up an effective alternative institutional mechanism or arrangement for judicial review, it would be violative of the basic structure doctrine and hence outside the constituent power of <ORG>. It must, therefore, be read as implicit in this constitutional amend- ment that the law excluding the jurisdiction of <ORG> under Articles 226 and 227 permissible under it must not leave a void but it must set up another effective insti- tutional mechanism or authority and vest the power of judi- cial review in it. Consequently, the impugned Act excluding the jurisdiction of <ORG> under Articles 226 and 227 in respect of service matters and vesting such jurisdic- tion in <ORG> can pass the test of constitutionality as being within the ambit and coverage of clause (2) (d) of Article 323A , only if it can be shown that <ORG> set up under the impugned Act is equally efficacious as <ORG>, so far as the power of judicial review over service matter is concerned. We must, therefore, address ourselves to the question whether <ORG> established under the impugned Act can be regarded as equally effective and efficacious in exercising the power or judicial review as <ORG> acting under Articles 226 and 227 of the Constitution. It is necessary to bear in mind that service matters which are removed from the jurisdiction of <ORG> under Articles 226 and 227 of the Constitution and entrusted to <ORG> set up under the impugned Act for adjudication involve questions of interpretation and applicability of Articles 14, 15, 16 and 311 in quite a large number of cases. These questions require for their determination not only judicial approach but also knowledge and expertise in this particular branch of constitutional law. It is necessary that those who adjudicate upon these questions should have same modicum of legal training and judicial experience because we find that some of these questions are so difficult and complex that they baffle the minds of even trained Judges in <ORG>s and <ORG>. That is the reason why at the time of the preliminary hearing of these writ petitions we insisted that every bench of <ORG> should consist of one judicial member and one administrative member and there should be no preponderance of administrative members on any bench. Of course, the presence of the administrative member would provide input of practical experience in the function- ing of the services and add to the efficiency of <ORG> but the legal input would undeniably be more important and sacrificing the legal input or not giving it sufficient weightage would definitely impair the efficacy and effectiveness of <ORG> as compared to <ORG>. Now section 6 provides that the Chairman of <ORG> should be or should have been a Judge of <ORG> or he should have for at least two years held office of Vice-Chairman or he should have for at least two years held the post of Secretary to <ORG> or any other post under the Central or State Government carrying a scale of pay which is not less than that of a Secretary to <ORG>. I entirely agree with <NAME> J. that the Chairman of <ORG> should be or should have been a Judge of <ORG> or he should have for at least two years held office as Vice-Chairman. If he has held office as Vice-Chairman for a period of at least two years he would have gathered sufficient experience and also within such period of two years, acquired reasonable familiarity with the constitutional and legal questions involved in service matters, But substituting the Chief Justice of <ORG> by a Chairman of <ORG> who has merely held the post of a Secretary to the Government and who has no legal or judicial experience would not only fail to inspire confidence in the public mind but would also render <ORG> a much less effective and efficacious mechanism than <ORG>. We cannot afford to forget that it is <ORG> which is being supplant- ed by <ORG> and it must be so manned as to inspire confidence in the public mind that it is a highly competent and expert mechanism with judicial approach and objectivity. Of course, I must make it clear that when I say this, I do not wish to cast any reflection on the mem- bers of <ORG> because fortunately we have, in our country, brilliant civil servants who possess tremendous sincerity, drive and initiative and who have remarkable capacity to resolve and overcome administrative problems of great complexity. But what is needed in a judicial tribunal which is intended to supplant <ORG> is legal train- ing and experience. I am, therefore, of the view, in agree- ment with <NAME> J. that clause (c) of section 6 (1) must be struck down as invalid.

I also fail to see why a District Judge or an advocate who is qualified to be a Judge of <ORG> should not be eligible to be considered for appointment as Vice-Chairman of <ORG>. It may be noted that since <ORG> has been created in substitution of <ORG>, the Vice-Chairman of <ORG> would be in the position of <ORG> Judge and if a District Judge or an advocate qualified to be a Judge of <ORG>, is eligible to be <ORG> Judge, there is no reason why he should not equally be eligible to be a Vice-Chairman of <ORG>. Can the position of a Vice-Chairman of <ORG> be considered higher than that of <ORG> Judge so that a person who is eligible to be <ORG> Judge may yet be regarded as ineligible for becoming a Vice-Chairman of <ORG>? It does appear that the provisions of the impugned Act in regard to the composition of <ORG> are a little weighted in favour of members of the <ORG>. This weightage in favour of the members of the <ORG> and value-discounting of the judi- cial members does have the effect of making <ORG> less effective and effi- cacious than <ORG>. I would therefore suggest that a District Judge or an Advocate who is qualified to be a Judge of <ORG> should be regarded as eligible for being Vice-Chairman of <ORG> and unless an amendment to that effect is carried out on or before 31st March, 1987, the impugned Act would have to be declared to be invalid, because the provision in regard to composition of <ORG> cannot be severed from the other provisions contained in the impugned Act. That takes me to another serious infirmity in the provi- sions of the impugned Act in regard to the mode of appoint- ment of the Chairman, Vice Chairman and members of <ORG>. So far as the appointment of judi- cial members of <ORG> is concerned, there is a provision introduced in the impugned Act by way of amendment that the judicial members shall be appointed by the <ORG> concerned in consultation with the Chief Justice of India. Obviously no exception can be taken to this provision, because even so far as Judges of <ORG> are concerned, their appointment is required to be made by the President inter alia in consultation with the Chief Justice of India. But so far as the appointment of Chairman, Vice-Chairmen and administrative members is con- cerned, the sole and exclusive power to make such appoint- ment is conferred on the <ORG> under the impugned Act. There is no obligation cast on the <ORG> to consult the Chief Justice of India or to follow any particular selection procedure in this behalf. The result is that it is left to the absolute unfettered discretion of the <ORG> to appoint such person or persons as it likes as Chairman, Vice-Chairman and administrative members of <ORG>. Now it may be noted that almost all cases in regard to service matters which come before <ORG> would be against the <ORG> or any of its officers and it would not at all be conducive to judicial independence to leave unfettered and unrestricted discretion in the executive to appoint the Chairman, Vice-Chairmen and administrative members, if a judicial member or an adminis- trative member is looking forward to promotion as Vice- Chairman or Chairman, he would have to depend on the good- will and favourable stance of the executive and that would be likely to affect the independence and impartiality of the members of the <ORG>. The same would be the position vis-a-vis promotion to the office of Chairman of the' Admin- istrative <ORG>. The administrative members would also be likely to carry a sense of obligation to the executive for having been appointed members of <ORG> and that would have a tendency to impair the independence and objectivity of the members of the <ORG>. There can be no doubt that the power of appointment and promotion vested in the executive can have prejudicial effect on the independence of the Chairman, Vice-Chairmen and members of <ORG>, if such power is absolute and unfettered. If the members have to look to the executive for advancement, it may tend, directly or indirectly, to influ- ence their decision-making process particularly since the <ORG> would be a litigant in most of the cases coming before <ORG> and it is the action of the <ORG> which would be challenged in such cases. That is the reason why in case of appointment of <ORG> Judges, the power of appointment vested in the executive is not an absolute unfettered power but it is hedged in by a wholesome check and safeguard and the President cannot make an appointment of <ORG> Judge without consultation with the Chief Justice of <ORG> and the Chief Justice of India and a healthy convention has grown up that no appointment would be made by the <ORG> which is not approved by the Chief Justice of India. This check or safe- guard is totally absent in the case of appointment of the Chairman, Vice-Chairmen and administrative members of <ORG> and the possibility cannot be ruled out-indeed the litigating public would certainly carry a feeling--that the decisionmaking process of the Chairman, Vice-Chairmen and members of <ORG> might be likely to be affected by reason of dependence on the executive for appointment and promotion. It can no longer be disputed that total insulation of the judiciary from all forms of interference from the coordinate branches of <ORG> is a basic essential feature of the Constitu- tion. The Constitution makers have made anxious provision to secure total independence of the judiciary from executive pressure or influence. Obviously, therefore if the Adminis- trative <ORG> is created in substitution of <ORG> and the jurisdiction of <ORG> under Articles 226 and 227 is taken away and vested in <ORG>, the same independence from possibility of execu- tive pressure or influence must also be ensured to the Chairman, Vice-Chairmen and members of <ORG>. Or else <ORG> would cease to be an equally effective and efficacious substitute for <ORG> and the provisions of the impugned Act would be rendered invalid. I am, therefore, of the view that the appointment of Chairman, Vice-Chairmen and administrative members should be made by the concerned <ORG> only after consultation with the Chief Justice of India and such consultation must be meaningful and effective and ordinarily the recommendation of the Chief Justice of India must be accepted unless there are cogent reasons, in which event the reasons must be disclosed to the Chief Justice of India and his response must be invited to such reasons. There is also another alternative which may be adopted by the <ORG> for making appointments of Chairman, Vice Chairmen and mem- bers and that may be by setting up a High Powered Selection Committee headed by the Chief Justice of India or a sitting Judge of <ORG> or concerned <ORG> nominated by the Chief Justice of India. Both these mOdes of appointment will ensure selection of proper and competent persons to man <ORG> and give it prestige and reputation which would inspire confidence in the public mind in regard to the competence, objectivity and impartiality of those manning <ORG>. If either of these two modes of appointment is adopted, it would save the impugned Act from invalidation. Otherwise, it will be outside the scope of the power conferred on <ORG> under Article 323-A. I would, however hasten to add that this judgment will operate only prospectively and will not invalidate appointments already made to <ORG>. But if any appointments of Vice-Chairmen or administrative members are to be made hereafter, the same shall be made by the <ORG> in accordance with either of the aforesaid two modes of ap- pointment.

I may also add that if <ORG> is to be an equally effective and efficacious substitution for <ORG> on the basis of which alone the impugned Act can be sustained, there must be a permanent or if there is not sufficient work, then a Circuit Bench of <ORG> at every place where there is a seat of <ORG>. I would, therefore, direct the <ORG> to set up a permanent bench and if that is not feasible having regard to the volume of work, then at least a Circuit Bench of <ORG> wherever there is a seat of <ORG>, on or before 31st March, 1987. That would be neces- sary if the provisions of the impugned Act are to be sus- tained. So far as rest of the points dealt with in the judgment of <NAME>, J. are concerned, I express my entire agreement with the view taken by him.

<NAME>: The challenge raised to the vires of the Administrative <ORG>s Act , 1985, (hereinafter re- ferred to as 'the Act') in an application under Article 32 of the Constitution and the other connected matters has been referred to the Constitution Bench for adjudication. Indis- putably the Act has been framed within the ambit of Article 323A which was brought into the Constitution by the Forty- Second Amendment Act in 1976. In exercise of power vested under Section 1(3) of the Act, <ORG> ap- pointed 1.11.1985 as the date from which the Act would come into force. Thereupon <NAME> and others (W.P. 12460 of 1985) moved this <ORG> and the connected matters were brought before this <ORG> or different High <ORG>s which have since been transferred' to this <ORG> to be analogously heard. On 31.10. 1985 <ORG> of this <ORG> gave certain interim directions including stay of transfer of the pending applications under Article 32 which were liable to be transferred to the <ORG> and also for continuance of exercise of jurisdiction under Article 32 in regard to disputes covered under the Act notwithstanding the bar provided in Section 28 .

<NAME>

In the writ applications as presented the main challenge was to the abolition of the Jurisdiction of this <ORG> under Article 32 in respect of specified service disputes. Chal- lenge was also raised against the taking away of the juris- diction of <ORG> under Articles 226 and 227. It was further canvassed that establishment of benches of the <ORG> at Allahabad, Bangalore, Bombay, Calcutta, Gauhati, Madras. and Nagpur with the principal seat at Delhi would still prejudice the parties whose cases were already pending before the respective <ORG> located at places other than these places and unless at the seat of every <ORG> facilities for presentation of applications and for hearing thereof were provided the parties and their lawyers would be adversely affected. The interim order made on October 31, 1985, made provisions to meet the working difficulties. Learned Attorney General on behalf of <ORG> assured the <ORG> that early steps would be taken to amend the law so as to save the jurisdiction under Article 32 , remove other minor anomalies and set up a bench of the <ORG> at the seat of every <ORG>. By the Administra- tive <ORG>s (Amendment) Ordinance, 1986, these amendments were brought about and by now an appropriate Act of Parlia- ment has replaced the Ordinance. Most of the original grounds of attack thus do not survive and the contentions that were canvassed at the hearing by the counsel appearing for different parties are these (1) Judicial review is a fundamental aspect of the basic structure of our Constitution and bar of the jurisdiction of <ORG> under Articles 226 and 227 as contained in Section 28 of the Act cannot be sustained;

(2) Even if the bar of jurisdiction is upheld, the <ORG> being a substitute of <ORG>, its constitution and set up should be such that it would in fact function as such substitute and become an institution in which the parties could repose faith and trust;

(3) Benches of the Tribunal should not only be established at the seat of every High Court but should be available at every place where <ORG> have permanent benches;

(4) So far as Tribunals set up or to be set up by the Central or the State Govern-

ments are concerned, they should have no jurisdiction in respect of employees of <ORG> or members of the subordinate judiciary and employees working in such estab- lishments inasmuch as exercise of jurisdiction of the <ORG> would interfere with the control absolutely vested in the respective <ORG> in regard to the judicial and other subordinate officers under Article 235 of the Constitution.

After or<NAME> arguments were over, learned Attorney Gener- <NAME>, after obtaining instructions from the Centr<NAME> Government filed a memorandum to the effect that section 2(q) of the Act would be suitably amended so as to exclude officers and servants in the employment of <ORG> and members and staff of the subordinate judiciary from the purview of the Act. In the same memorandum it has <NAME>so been said that Government would arrange for sittings of the benches of the Tribun<NAME> at the seat or seats of <ORG> on the basis that 'sittings' will include 'circuit sittings' and the details thereof would be worked out by the Chairman or the Vice-Chairman concerned.

With these concessions made by the learned Attorney General, only two aspects remain to be dealt with by us, namely, those covered by the first and the second conten- tions.

Strong reliance was placed on the judgment of Bhagwati, J (one of us---presently the learned Chief Justice) in <CITATION> .,  1 SCR 206, 287 where it was said:

"The power of judicial review is an integral part of our constitutional system and without it, there will be no Government of laws and the rule of law would become a teasing illu- sion and a promise of unreality. I am of the view that if there is one feature of our Constitution which, more than any other, is basic and fundamental to the maintenance of democracy and the rule of law, it is the power of judicial review and it is unquestionably, to my mind, part of the basic structure of the Constitution. Of course, when 1 say this I should not be taken to suggest that, however effective alternative institutional mechanisms or arrangements for judicial review cannot be made by <ORG>. But what I wish to empha- sise is that judicial review is a vital prin- ciple of our Constitution and it cannot be abrogated without affecting the basic struc- ture of the Constitution. If by a constitu- tional amendment, the power of judicial review is taken away and it is provided that the validity of any law made by the <ORG> shall not be liable to be called in question on any ground, even if it is outside the legislative competence of the <ORG> or is violative of any fundamental rights, it would be nothing short of subversion of the Constitution, for it would make a mockery of the distribution of legislative powers between the <ORG> and the States and render the fundamental rights meaningless and futile. So also if a constitu- tional amendment is made which has the effect of taking away the power of judicial review."

Article 32 was described by Dr. <NAME> in course of the debate in <ORG> as the 'soul' and 'heart' of the Constitution and it is in recognition of this position that though Article 323A(2)(d) authorised exclusion of jurisdiction under Article 32 and the original Act had in Section 28 provided for it, by amendment jurisdiction under Article 32 has been left untouched. The Act thus saves jurisdiction of this Court both under Article 32 in respect of original proceedings as also under Article 136 for enter- taining appeals against decisions of the <ORG> on grant of Special Leave. Judicial review by the apex court has thus been left in tact.

The question that arises, however, for consideration is whether bar of jurisdiction under Articles 226 and 227 affects the provision for judicial review. The right to move <ORG> in its writ jurisdiction--unlike the one under Article 32 , is not a fundamental right. Yet, <ORG>s, as the working experience of three and a half dec- ades shows have in exercise of the power of judicial review played a definite and positive role in the matter of preser- vation of fundamental and other rights and in keeping admin- istrative action under reasonable control. In these thirty- six years following the enforcement of the Constitution, not only has India's population been more than doubled but also the number of litigations before the courts including <ORG>s has greatly increased. As the pendency in <ORG>s increased and soon became the pressing problem of backlog, the nation's attention came to be bestowed on this aspect. Ways and means to relieve <ORG>s of the load began to engage the attention of the Government at the <ORG> as also in the various <ORG>s. As early as 1969, a <ORG> was set up by <ORG> under the chairmanship of Mr. Justice <NAME> of this <ORG> to make recommendations suggesting ways and means for effective, expeditious and satisfactory disposal of matters relating to service disputes of Government servants as it Was found that a sizable portion of pending litigations related to this category. The <ORG> recommended the setting up of an independent <ORG> to handle the pending cases before this <ORG> and <ORG>s. While this report was still engaging the attention of Government, <ORG> also took note of the situation and recommended the setting up of Civil Services <ORG>s to deal with appeals of Government servants against discipli- nary action. In certain <ORG>s, <ORG>s of this type came into existence and started functioning. But <ORG> looked into the matter further as it transpired that the major chunk of service litigation related to mat- ters other than disciplinary action. In May 1976, a Confer- ence of Chief Secretaries of the <ORG>s discussed this problem. Then came the Forty-Second Amendment of the Consti- tution bringing in Article 323A which authorised <ORG> to provide by law "for the adjudication or trial by adminis- trative tribunals of disputes and complaints with respect to recruitment and conditions of service of persons appointed to public services and posts in connexion with the affairs of the <ORG> or of any <ORG> or of any local or other au- thority within the territory of India or under the control of <ORG> or of any <ORG> owned or controlled by the Government." As already stated this Arti- cle envisaged exclusion of the jurisdiction of all courts, except the jurisdiction of. the Supreme <ORG> under Article 136 , with respect to the disputes or complaints referred to in clause (1). Though the Constitution now contained the enabling power, no immediate steps were taken to set up any <ORG> as contemplated by Article 323A. A Constitution Bench of this <ORG> in <CITATION> ,  3 SCR 811 observed:

"There are few other litigative areas than disputes between members of various services inter se, where the principle that public policy requires that all litigation must have an end can apply with greater force. Public servants ought not to be driven or required to dissipate their time and energy in court-room battles. Thereby their attention is diverted from public to private affairs and their inter se disputes affect their sense of oneness without which no institution can function effectively. The constitution of Service Tribunals by State GOvernments with an apex Tribunal at the Centre which in the generality of the cases, should be the final arbiter of controversies relating to conditions of serv- ice, including the vexed question of seniori- ty, may save the courts from the avalanche of writ petitions and appeals in service matters. The proceedings of such Tribunals can have the merit Of informality and if they will not be tied down to strict rules of evidence, they might be able to produce solutions which will satisfy many...."

In the meantime the problem of the backlog of cases in <ORG> becomes more acute and pressing and came to be further discussed in <ORG> and in conferences and seminars. Ultimately in January 1985, both Houses of Parlia- ment passed the Bill and with the Presidential assent on 27th February, 1985, the law enabling the long awaited <ORG> to be constituted came into existence. As already noticed, <ORG> notified the Act to come into force with effect from 1.11.1985.

Exclusion of the jurisdiction of <ORG> in service matters and its propriety as also validity have thus to be examined in the background indicated above. We have already seen that judicial review by this Court is left wholly unaffected and thus there is a forum where matters of importance and grave injustice can be brought for determina- tion or rectification. Thus exclusion of the jurisdiction of <ORG> does not totally bar judicial review. This Court in <ORG> case did point out that "effective alternative institutional mechanisms or arrangements for judicial review" can be made by <ORG>. Thus it is possible to set up an alternative institution in place of <ORG> for providing judicial review. The debates and deliberations spread over almost two decades for explor- ing ways and means for relieving <ORG> of the load of backlog of cases and for assuring quick settlement of service disputes in the interest of the public servants as also the country cannot be lost sight of while considering this aspect. It has not been disputed before us--and perhaps could not..have been--that the <ORG> under the scheme of the Act would take over a part of the existing backlog and a share of the normal load of <ORG>. The <ORG> has been contemplated as a substitute and not as supplemen- tal to <ORG> in the scheme of administration of justice. To provide the <ORG> as an additional forum from where parties could go to <ORG> would certainly have been a retrograde step considering the situation and circumstances to meet which the innovation has been brought about. Thus barring of the jurisdiction of <ORG> can indeed not be a valid ground of attack.

What, however, has to be kept in view is that the Tribu- nal should be a real substitute of <ORG>--not only in form and de jure but in content and de facto. As was pointed out in <ORG>, the alternative arrangement has to be effective and efficient as also capable of uphold- ing the constitutional limitations. Article 16 of the Con- stitution guarantees equality of opportunity in matters of public employment. Article 15 bars discrimination on grounds of religion, race, caste, sex or place of birth. The touch- stone of equality enshrined in Article 14 is the greatest of guarantees for the citizen. Centering around these articles in the Constitution a service jurisprudence has already grown in this country. Under Sections 14 and 15 of the Act all the powers of the <ORG> except those of this <ORG> in regard to matters specified therein vest in the <ORG>--either Central or State. Thus the <ORG> is the substitute of the 'High <ORG> and is entitled to exercise the powers thereof.

<ORG> have been functioning over a century and a quarter and until <ORG> was established under the Government of India Act, 1935, used to be the highest courts within their respective jurisdiction subject to an appeal to <ORG> in a limited category of cases. In this long period of about six scores of years, <ORG> have played their role effectively, efficiently as also satisfactorily. The litigant in this country has seasoned himself to look upto <ORG> as the unfailing protec- tor of his person, property and honour. The institution has served its purpose very well and the common man has thus come to repose great confidence therein. Disciplined, inde- pendent and trained Judges well-versed in law and working with all openness in an unattached and objective manner have ensured dispensation of justice over the years. Aggrieved people approach the <ORG> the social mechanism to act as the arbiter--not under legal obligation but under the belief and faith that justice shall be done to them and the <ORG>'s authorities would implement the decision of the <ORG>. It is, therefore, of paramount importance that the substitute institution--the <ORG>--must be a worthy successor of <ORG> in all respects. That is exactly what this <ORG> intended to convey when it spoke of an alternative mechanism in <ORG> case.

Chapter II of the Act deals with establishment of Tribu- nals and Benches thereof. Section 4 provides for establish- ment while Section 5 deals with composition of the <ORG> and Benches thereof. Section 6 lays down the qualifications of Chairman, Vice-Chairman and members. So far as the Chair- man is concerned, sub-section (1) requires that he should be or have been--

(a) a Judge of a High Court; or

(b) has for at least two years, held office as Vice-Chairman; or

(c) has, for at least two years, held the post of a Secretary to <ORG> or any other post under the <ORG> or <ORG> carrying a scale of pay which is not less than that of a Secretary to <ORG>.

Sub-section (2) prescribing the qualification for Vice-

Chairman provides that he should be or have been-

(a) a Judge of a High Court; or

(b) for at least two years, held the post of a Secretary to <ORG> or any other post under the <ORG> or a State Gov- ernment carrying a scale of pay which is not less than that of a Secretary to the Govern- ment of India; or (bb) for at least five years, held the post of an Additional Secretary to Government of India or any other post carrying equivalent pay; or

(c) for a period of not less than three years held office as a judicial member of <ORG>.

Sub-section (3) prescribes the qualification of a judi-

cial member and requires that: (a) he should be or should have been or qualified to be a Judge of <ORG>; or (b) has been a member of <ORG> and has held a post in Grade I of that service for at least three years. Sub-section (3-A) provides the qualification for ap- pointment as administrative member and lays down that such person should have, for at least two years, held the post of an Additional Secretary to <ORG> or any other post under the <ORG> or <ORG> carrying a scale of pay not less than that of an Additional Secretary to <ORG>; or (b) has, for at least three years, held the post of a Joint Secretary to <ORG> or any other post under the <ORG> or <ORG> carrying a scale of pay which is not less than that of a Joint Secretary to <ORG>. So far as the Chairman is concerned, we are of the view that ordinari- ly a retiring or retired Chief Justice of <ORG> or when such a person is not available, a Senior Judge of proved ability either in office or retired should be ap- pointed. That office should for all practical purposes be equated with the office of Chief Justice of <ORG>. We must immediately point out that we have no bias, in any manner, against members of the <ORG>. Some of them do exhibit great candour, wisdom, capacity to deal with intri- cate problems with understanding, detachment and objective- ness but judicial discipline generated by experience and training in an adequate dose is, in our opinion, a necessary qualification for the post of Chairman. We agree that a Vice-Chairman with these qualifications and experience of two years may be considered for appointment as Chairman but in order that the <ORG> may be acceptable to the liti- gants who are themselves members of the various services, section 6(1)(c) should be omitted. We do not want to say anything about Vice-Chairman and members dealt with in sub- sections (2), (3) or (3A) because so far as their selection is concerned, we are of the view that such selection when it is not of a sitting Judge or retired Judge of <ORG> should be done by a high powered committee with a sitting Judge of <ORG> to be nominated by the Chief Justice of India as its Chairman. This will ensure selection of proper and competent people to man these high offices of trust and help to build up reputation and acceptability. Once the qualifications indicated for appointment of Chair- man are adopted and the manner of selection of Vice-Chairman and members is followed, we are inclined to think that the manning of the <ORG> would be proper and conducive to appropriate functioning. We do not propose to strike down the prescriptions containing different requirements but would commend to the <ORG> Government to take prompt steps to bring the provisions in accord with what we have indicated. We must state that unless the same be done, the constitution of the <ORG> as a substitute of <ORG> would be open to challenge. We hasten to add that our judgment shall operate prospec- tively and would not affect appointments already made to the offices of Vice-Chairman and Member--both administrative and judicial.

Section 8 of the Act prescribes the term of office and provides that the term for Chairman, Vice-Chairman or mem- bers shall be of five years from the date on which he enters upon his office or until he attains the age of 65 in the case of Chairman or Vice-Chairman and 62 in the case of member, whichever is earlier. The retiring age of 62 or 65 for the different categories is in accord with the pattern and fits into the scheme in comparable situations. We would, however, like to indicate that appointment for a term of five years may occasionally operate as a dis-incentive for well-qualified people to accept the offer to join <ORG>. There may be competent people belonging to younger age groups who would have more than five years to reach the prevailing age of retirement. The fact that such people would be required to go out on completing the five year period but long before the superannuation age is reached is bound to operate as a deterrent. Those who come to be Chair- man, Vice-Chairman or members resign appointments, if any, held by them before joining the <ORG> and, as such, there would be no scope for their return to the place or places from where they come. A five year period is not a long one. Ordinarily some time would be taken for most of the members to get used to the service-jurisprudence and when the period is only five years, many would have to go out by the time they are fully acquainted with the law and have good grip over the job. To require retirement at the end of five years is thus neither convenient to the person selected for the job nor expedient to the scheme. At the hearing, learned Attorney-General referred to the case of a member of <ORG> who is appointed for a term and even suffers the disqualification in the matter of further employment. We do not think that is a comparable situation. On the other hand, membership in other high-powered Tribu- nals like the Income-tax Appellate <ORG> or the <ORG> under the Customs Act can be referred to. When amendments to the Act are undertaken, this aspect of the matter deserves to be considered, particularly because the choice in that event would be wide leaving scope for proper selection to be made.

We hope and trust that within a reasonable period not beyond 31st March, 1987, the amendments indicated shall be brought about so as to remove the defects found in the Act.

<NAME>, <NAME> and <NAME>.

We have read both the Judgments just delivered--the main judgment of learned Brother <NAME> and the other of Hon'ble the Chief Justice. We agree with both. P.S.S.


PETITIONER: <ORG> Vs. RESPONDENT: M/S SUNDER BROTHERS OF DELHI DATE OF JUDGMENT: 20/04/1966 BENCH: RAMASWAMI, V. BENCH: <CITATION> : 1967 AIR 249 1966 SCR 215 ACT: Indian Arbitration Act , s. 34-Arbitration agreement-Parties how far bound to have dispute decided by agreed arbitrator- One of the parties filing suit-Court's discretion to stay such suit-<ORG> power to interfere with trial court's discretion under 34. HEADNOTE: The appellant society carried on business as public carriers on the Kanpur-Delhi route. By an agreement in 1954 they appointed the respondents as their Managing Agents for a period of 3 years. But much before the expiry of that period they terminated the agreement. Disputes arising between the parties were under the agreement, to be decided by arbitration as provided in the Co-operative Societies Act II of 1912. According to the relevant provisions of the said Act disputes were to be decided by the Registrar of Co- operative Societies or by an arbitrator or arbitrators appointed by him. The respondents however filed a suit against the <ORG> asking for a declaration that the termination of the agreement by the society was illegal and for a mandatory injunction restraining the society from terminating the agreement. The <ORG> thereupon filed an application under s. 34 of the Indian Arbitration Act praying for a stay of the aforesaid suit on the ground that the respondents had agreed to arbitration as provided in the Co-operative Societies Act . <ORG> stayed the suit but the appellate Court set aside the trial Court's order and dismissed the application under s. 34 . <ORG> upheld the appellate Court's order whereupon, by special leave, the society appealed to this Court. HELD:(i) <ORG> rightly refused to stay the suit. It rightly observed that it would be a difficult task for the arbitrator to investigate as to which of the rules made under the Co-operative Societies Act are consistent with and which of those rules are not consistent with the provisions of the Indian Arbitration Act . The suit, moreover, was filed as far back as 1954 and its stay would not be in the interests of its speedy disposal. [219 G-220 B] (ii)It is, of course, the normal duty of the court to hold the parties to the contract and to make them present their disputes to the forum of their choice, but the strict principle of sanctity of contract is subject to the discretion of the Court under s. 34 of the Indian Arbitration Act. A party may be released from the bargain if he can show that the selected arbitrator is likely to show bias or there is sufficient reason to suspect that he will act unfairly or that he has been guilty of unreasonable conduct. [222 D] In the present case the respondent had alleged that <ORG> had approved the termination of the contract of <ORG> with the plaintiff and the Registrar was the Chairman of the Defendant-<ORG>. In the circumstances <ORG> be held to have Properly exercised its discretion under s. 34 of the Indian Arbitration Act in not granting a stay of the proceedings in the suit. [222 E]. 216 Bristol Corporation v. <ORG>  A.C. 241, referred to. (iii)If it appears to the, appellate Court that in exercising its discretion the trial court has acted unreasonably or capriciously or has ignored relevant facts then it would certainly be open to <ORG> to interfere with the trial court's exercise of discretion, [222 H] <ORG> v. Johnston,  A.C. 130, referred to. JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 426 of 1964. Appeal by special leave from the judgment and order dated February 22, 1962 of <ORG> (Circuit Bench) at Delhi in Civil Revision No. 311-D of 1958. <NAME> and <NAME>, for the appellant, <NAME> and <NAME>, for the respondent. The Judgment of the Court was delivered by <NAME>, J. This appeal is brought, by special leave, from the judgment of <ORG> dated February 22, 1962 in Civil Revision No. 331-D of 1958 whereby <ORG> upheld and confirmed the judgment of <ORG> and set aside the judgment of the trial court staying proceedings in the suit.

<ORG> (herein- after referred to as the '<ORG>') was registered under the Cooperative Societies Act No. II of 1912 at Lucknow and was carrying on the business of plying public carriers on Kanpur-Delhi route. The <ORG> had been granted, for this purpose, permits by the Uttar Pradesh Government and <ORG> for seven vehicles. In March, 1954, the <ORG> entered into an agreement with the plaintiffs-M/s Sunder Brothers-through <NAME> and <NAME> by which they were appointed as Managing Agents for carrying on the business as public carriers. The terms of the Managing Agency agreement were embodied in a letter dated March 2, 1954 written by the Secretary of the <ORG>. Clause 28 of the agreement reads as follows:-

"That in the event of there being any dispute regarding the terms and conditions of this agreement and your appointment hereunder as Managing Agents of the aforesaid business or any matter arising from and relating thereto or the subject matter thereof, such dispute shall be decided by arbitration as provided under Co-operative Societies Act II of 1912 and you undertake and agree to be bound by the provisions for arbitration in the said Act".

The agreement was to last for a period of three years but on July 5, 1954 the <ORG> terminated the agreement by its letter dated July 5, 1954, The plaintiffs therefore brought a suit on August 18, 1954 in <ORG>, First Class, Delhi praying for a declaration that the termination of the Managing Agency agreement by the <ORG> was illegal and the plaintiffs were entitled to continue the business of Managing Agents in accordance with the terms and conditions of the agreement. The plaintiffs prayed for a mandatory injunction restraining the defendant-<ORG> from terminating the agreement. The <ORG> made an application under S. 34 of the Indian Arbitration Act, 1940 before the Subordinate Judge, Delhi, for an order for staying the suit. It was claimed by the <ORG> that the suit was not main- tainable, because under S. 51 of the Co-operative Societies Act the dispute was to be adjudicated upon by the Registrar of Co-operative Societies. In the alternative it was alleged that by agreement between the parties the dispute was to be referred to arbitration in accordance with the Co- operative Societies Act and consequently proceedings should be stayed. The trial court stayed the proceedings but on the appeal of the plaintiffs the order of the trial court was set aside and the application of the <ORG> under S. 34 of the Indian Arbitration Act was dismissed. The <ORG> moved <ORG> in revision but the revision application was dismissed and the order of the lower appellate court was confirmed.

It is necessary at this stage to set out the relevant provisions of the Indian Arbitration Act (Act 10 of 1940). Section 34 of this Act states:

"34. Where any party to an arbitration agreement or any person claiming under him commences any legal proceedings against any other party to the agreement or any person claiming under him in respect of any matter agreed to be referred, any party to such legal proceedings may, at any time before filing a written statement or taking any other steps in the proceedings, apply to the judicial authority before which the proceedings are pending to stay the proceedings, and if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement and that the applicant was, at the time when the proceedings were commenced, and still remains, ready and willing to do all things necessary to the proper conduct of the arbitration, such authority may make an order staying the proceedings".

Section 46 provides as follows: "46. The provisions of this Act, except sub- section (1) of section 6 and sections 7 , 12 , 36 and 37 , shall apply to every arbitration under any other enactment for the time being in force, as if the arbitration were pursuant to an 5301- 16(a) arbitration agreement as if that other enactment were an arbitration agreement, except in so far as this Act is in. consistent with that other enactment or with any rules, made thereunder".

Section 47 reads as follows:

"47. Subject to the provisions of section 46 , and save in so far as is otherwise provided by any law for the time being in force, the provisions of this Act shall apply to all arbitrations and to all proceedings thereunder:

Provided that an arbitration award otherwise obtained may with the consent of all the parties interested be taken into consideration as a compromise or adjustment of a suit by any <ORG> before which the suit is pending".

There was some controversy in the lower courts as to whether the arbitration under cl. 28 of the agreement was a statutory arbitration and whether s. 46 of the Indian Arbitration Act was applicable to the case. It was argued by Mr. <NAME> on behalf of the appellant-Society that no statutory arbitration is created by cl. 28 of the agreement but the parties had merely agreed to act in accordance with the provisions of the Co-operative Societies Act (Act 11 of 1912) and the Rules made thereunder. It was contended that the parties had merely incorporated the statutory provisions by reference in their agreement and s. 47 of the Indian Arbitration Act will, therefore, be applicable to the case. This legal position was not controverted by Mr. <NAME> appearing on behalf of the respondent. The only question in debate was whether the lower court rightly exercised their jurisdiction under s. 34 of the Indian Arbitration Act in not granting the stay of the proceedings of the suit. If the arbitration agreement is not to be treated as a statutory arbitration under s. 46 of the Arbitration Act but an arbitration agreement under s. 47 of the Act, then the procedure to be followed for the arbitration under that agreement will be that provided under the Co-operative Societies Act and the Rules framed thereunder. Under S. 47 of the Indian Arbitration Act the arbitration will be governed only by such rules of the Co-operative Societies Act and rules framed thereunder as are not inconsistent with the provisions of the Indian Arbitration Act . In this con- nection it is necessary to refer to Rules 115, 116 and 117 of the Co-operative Societies Rules framed under s. 43 of the Co-operative Societies Act. Rule 115 states as follows:

"Any dispute touching the business of a registered society (i) between members or past members of a society or persons claiming through a member or past member, (ii) or between a member or a past member or persons so claiming and the society or its committee or any officer of the society, (iii) between the society or its committee and any officer of the society, and (iv) between two or more registered societies, shall be decided either by the Registrar or by arbitration and shall for that purpose be referred in writing to the Registrar".

Rule 116 provides:

"The Registrar on receipt of a reference shall either decide the dispute himself, or refer it for decision to an arbitrator or to two joint arbitrators appointed by him or to three arbitrators, of whom one shall be nominated, by each of the parties to the dispute and the third by the Registrar who shall also appoint one of the arbitrators to act as chairman". Rule 117 states:

"In case it is decided to appoint three arbitrators-

(i) The Registrar shall issue a notice calling on each of the parties to nominate one person as its nominee within 15 days of the receipt of the notice.

(ii) if a party consists of more than one person, such persons shall jointly make only one nomination.

(iii) if more than one person is nominated by a party the Registrar shall appoint either one of the nominees or some other person of his own choice as the nominee of that party,

(iv) if a party fails to nominate an arbitrator within the appointed time or if its nomination is not valid the Registrar may himself make the nomination,

(v) if one of the arbitrators fails to attend or refuses to work as an arbitrator, the remaining arbitrators may decide the dispute. If two of the arbitrators fail to attend or refuse to work as arbitrators and the claim is not admitted the remaining arbitrator shall refer the case to the Registrar who may authorise him to give an award or appoint one or more arbitrators to proceed, with the reference or he may decide the case himseff".

It has been observed by <ORG> that it would be a difficult task for the arbitrator to investigate as to which of the rules made under the Co-operative Societies Act are consistent with and which of those rules are not consistent with the provisions of the Indian Arbitration Act and therefore it was, a fit case in which discretion of the court under s. 34 of the Indian Arbitration Act should be exercised in not staying the proceedings of the suit. In our opinion, the reasoning of <ORG> has much substance.

There is also another reason why there should not be a stay of the proceedings under S. 34 of the Indian Arbitration Act. The suit was filed in-1954 and, though 12 years have elapsed, nothing has been, done in the suit and it will not be in the interest of speedy disposal of the suit between the parties-if the proceedings in the suit are further stayed and the parties are referred to arbitration. There is also another ground why the proceedings in the suit should not be stayed in the present case. If Rules 11.5 and 116 of <ORG> Rules are applicable then the reference of the dispute has to be made to the Registrar of <ORG> who may either decide the dispute himself or refer the dispute to an arbitrator or two joint arbitrators appointed by him or to three arbitrators, of whom one shall be nominated by each of the parties to the dispute and the third by the Registrar who shall also appoint one of the arbitrators to act as Chairman. It is alleged by the respondent that the Registrar of <ORG> is ex-officio President of the <ORG> and it was with his approval that the agreement in dispute was terminated. It was also pointed out that the Registrar was the chief controlling and supervising officer of the <ORG> under its bye-laws. It was submitted for the respondent that the Registrar may not, therefore, act fairly in the matter and it is improper that he should be an arbitrator in the dispute between the parties. In our opinion, there is much validity in this argument. The legal position is that an order of stay of suit under s. 34 of the Indian Arbitration Act will not be granted if it can be shown that there is good ground for apprehending that the arbitrator will not act fairly in the matter or that it is for some reason improper that he should arbitrate in the dispute between the parties. It is, of course, the normal duty of the <ORG> to hold the parties to the contract and to make them present their disputes to the forum of their choice but an order to stay the legal proceedings in a <ORG> of law will not be granted if-it is shown that there is good ground for apprehending that the arbitrator will not act fairly in the matter or that it is for some reason improper that he should arbitrate in the dispute. Reference may be made, in this connection, to the decision of <ORG> in <ORG> v. <ORG>). This case was concerned with an application for stay of proceedings under s. 4 of the English Arbitration Act which is similar to s. 34 of the Indian Arbitration Act. Upon the settlement of the final account there arose a bona fide dispute of a substantial character between the contractor and the engineer, who was the arbitrator under the contract, involving a probable conflict of evidence between, them. <ORG> held, affirming the decision of the (1) A,C. 241.

Court of appeal, that the fact that the engineer, without any fault of his own, must necessarily be placed in the position of a Judge and a witness is a sufficient reason why the matter should not be referred in accordance with the contract. At pp. 247-248 of the report Lord <NAME> stated as follows:

"Whether it be wise or unwise, prudent or the contrary, he has stipulated that a person who is a servant of the person with whom he contracts shall be the judge to decide upon matters upon which necessarily that arbitrator has himself formed opinions. But though the contractor is bound by that contract, still he has a right to demand that, notwithstanding those preformed views of the engineer, that gentleman shall listen to argument and determine the matter submitted to him as fairly as he can as an honest man; and if it be shown in fact that there is any reasonable prospect that he will be so biased as to be likely not to decide fairly upon those matters, then the contractor is allowed to escape from his bargain and to have the matters in dispute tried by one of the ordinary tribunals of the land. But I think he has more than that right. If, without any fault of his own, the engineer has put himself in such a position that it is not fitting or decorous or proper that he should act as arbitrator in any one or more of those disputes, the contractor has the right to appeal to <ORG> and they are entitled to say, in answer to an application to the Court to exercise the discretion which the 4th section of the Arbitration Act vests in them, "We are not satisfied that there is not some reason for not submitting these questions to the arbitrator". In the present case the question is, has that taken place"? Lord <NAME> after tracing the growth of the law of arbitration made the following observations in his speech:

"But, My Lords, it must be remembered that these arbitration clauses must be taken to have been inserted with due regard to the existing law of the land, and the law of the land applicable to them is, as I have said, that it does not prevent the parties coming to the <ORG>, but only gives to the <ORG> the power to refuse its assistance in proper cases. Therefore to say that if we refuse to stay an action we are not carrying out the bargain between the parties does not fairly describe the position. We are carrying out the bargain between the parties, because that bargain to substitute for the <ORG>s of the land a domestic tribunal was a bargain into which was written, by reason of the existing legislation, the condition that it should only be enforced if the <ORG> thought it a proper case for its being so enforced".

Lord ;<NAME>, after pointing out that s. 4 of the Arbitration Act' gave a discretionary power to the <ORG> to be exercised after it was' satisfied that there was no sufficient reason why the matter should not be referred in accordance with the submission, expressed the' following views:

"In making up its mind on this point the <ORG> must of course give due consideration to the contract between the parties, but it should, I think, always be remembered that the parties may have agreed to the submission precisely because of the discretionary power vested in the <ORG> under the Arbitration Act . They may, very well, for instance, have said to themselves, 'If in any particular case it would be unfair to allow the arbitration we are agreeing to proceed we shall have the protection of the <ORG>".

It is manifest that the strict principle of sanctity of contract is subject to the discretion of the <ORG> under s. 34 of the Indian Arbitration Act, for there must be read in every such agreement an implied term or condition that it would be enforceable only if the <ORG>, having due regard to the other surrounding circumstances, thinks fit in its discretion to enforce it. It is obvious that a party may be released from the bargain if he can show that the selected arbitrator is likely to show bias or by sufficient reason to suspect that he will act unfairly or that he has been guilty of continued unreasonable conduct. As we have already stated, the respondent has alleged in the present case that the Registrar, <ORG> has approved the termination of the contract of Managing Agency with the plaintiff and the Registrar was the chairman of the defen- dant-Society. We are accordingly of the opinion that the High <ORG> properly exercised its discretion under s. 34 of the Indian Arbitration Act in not granting a stay of the proceedings in the suit.

It is well-established that where the discretion vested in the <ORG> under s. 34 of the Indian Arbitration Act has been exercised by the lower court the appellate court should be slow to interfere with the exercise of that discretion. In dealing with the matter raised before it at the appellate stage the appellate court would normally not be justified in interfering with the exercise of the discretion under appeal solely on the ground that if it had considered the matter at the trial stage it may have come to a contrary conclusion. If the discretion has been exercised by the trial court reasonably and in a judicial manner the fact that the appellate court would have taken a different view may not justify interference with the trial court's exercise of discretion. As is often said, it is ordinarily not open to the appellate court to substitute its own exercise of discretion for that of the trial Judge; but if it appears to the, appellate court that in exercising its discretion the trial court has acted unreasonably or capriciously or has ignored relevant facts then it would certainly be open to the appellate court to interfere with the trial court's exercise of discretion. This principle is well-established; but, as has been observed by Viscount Simon, L. C., in <ORG> v. Johnston(1):

"The law as to the reversal by a court of appeal of an order made by a Judge below in the exercise of his discretion is well- established, and any difficulty that arises is due only to the application of well-settled principles in an individual case".

For these reasons we hold that the appellant has made out no case for our interference with the order of <ORG> refusing stay of the proceedings in the suit under S. 34 of the Indian Arbitration Act. The appeal accordingly fails and is dismissed with costs.

Appeal dismissed.