Supreme Court Clarifies Tenure of IPAB Chairperson: International Association for Protection of Intellectual Property (India Group) vs. Union of India (2021)

Introduction

Date of the Judgment: 12 February 2021
Citation: (2021) INSC 69
Judges: L. Nageswara Rao, Hemant Gupta, S. Ravindra Bhat, JJ.

Can the tenure of a Chairperson of the Intellectual Property Appellate Board (IPAB) be extended beyond the age of 65, based on the provisions of the Finance Act, 2017? The Supreme Court of India addressed this question in a miscellaneous application, clarifying the interplay between the Trademarks Act, 1999, and the Finance Act, 2017, concerning the service conditions of tribunal members.

The core issue revolved around whether the incumbent Chairperson of the IPAB, whose initial appointment was under the Trademarks Act, 1999, could continue in office beyond the age of 65, given that the Finance Act, 2017, introduced new provisions regarding the terms and conditions of service for tribunal members. The applicant sought an extension of the Chairperson’s term, arguing that the Finance Act, 2017, had effectively superseded the age limit of 65 years prescribed in the Trademarks Act, 1999.

The judgment was delivered by a three-judge bench comprising Justices L. Nageswara Rao, Hemant Gupta, and S. Ravindra Bhat, with Justice S. Ravindra Bhat authoring the opinion.

Case Background

The International Association for Protection of Intellectual Property (India Group) filed a miscellaneous application seeking the extension of the term of the incumbent Chairperson of the Intellectual Property Appellate Board (IPAB). The applicant argued that the Chairperson’s appointment was governed by Section 89A of the Trademarks Act, 1999, as amended by the Finance Act, 2017.

The Finance Act, 2017, introduced changes to the terms of service for tribunal members, including the IPAB. The applicant contended that Section 184 of the Finance Act, 2017, which prescribes the term of office and conditions of service, superseded the age limit of 65 years for the Chairperson as contemplated under Section 86 of the Trademarks Act, 1999. The applicant argued that the outer age limit for the chairperson was 70 years as per Section 184 of the Finance Act, 2017.

The applicant relied on the Supreme Court’s judgment in Rojer Mathew v. South Indian Bank Ltd. [(2020) 6 SCC 1], which stated that appointments made before the 2020 Rules were governed by the parent enactment. In this case, the parent act is the Trademarks Act, 1999. The applicant also relied on the judgment in Madras Bar Association v. Union of India [(2020) SCC OnLine SC 962], which clarified that the incumbent would continue to hold office even after attaining the age of 65.

Timeline:

Course of Proceedings

The applicant, the International Association for Protection of Intellectual Property (India Group), filed a Writ Petition (WP(C) 1431/2019), which was disposed of by the Supreme Court in the judgment reported as Madras Bar Association v. Union of India [(2020) SCC OnLine SC 962]. The current miscellaneous application was filed seeking an extension of the term of the incumbent Chairperson of the IPAB, whose tenure was extended by interim orders of the court until 31.12.2020.

Legal Framework

The case hinges on the interpretation of several key legal provisions:

• Section 83 of the Trademarks Act, 1999: Establishes the Intellectual Property Appellate Board (IPAB) to exercise the jurisdiction, powers, and authority conferred on it by the Act.
• Section 84 of the Trademarks Act, 1999: Deals with the composition of the IPAB, stating that a bench shall consist of one judicial member and one technical member. It also provides for the Chairperson to discharge the functions of either a Judicial or Technical Member.
  • (2) Subject to the other provisions of this Act, a Bench shall consist of one Judicial Member and one Technical Member and shall sit at such place as the Central Government may, by notification in the Official Gazette, specify.
  • (3) Notwithstanding anything contained in sub-section (2), the [Chairperson]— (a) may, in addition to discharging the functions of the Judicial Member or Technical Member of the Bench to which he is appointed, discharge the functions of the Judicial Member or, as the case may be, the Technical Member, of any other Bench;
• Section 85 of the Trademarks Act, 1999: Specifies the qualifications for appointment as Chairperson, Vice-Chairperson, or other Members of the IPAB.
  • (1) A person shall not be qualified for appointment as the Chairperson unless he— (a) is, or has been, a Judge of a High Court; or (b) has, for at least two years, held the office of a [Vice-Chairperson].
• Section 86 of the Trademarks Act, 1999: Prescribes the term of office for the Chairperson, Vice-Chairperson, and other members, setting the age limit at 65 years for the Chairperson and Vice-Chairperson.
  • The Chairperson, Vice-Chairperson or other Members shall hold office as such for a term of five years from the date on which he enters upon his office or until he attains,— (a) in the case of Chairperson and Vice-Chairperson, the age of sixty-five years; and (b) in the case of a Member, the age of sixty-two years, whichever is earlier.
• Section 87 of the Trademarks Act, 1999: Provides for the Vice-Chairperson or senior-most member to act as Chairperson in certain circumstances.
• Section 89A of the Trademarks Act, 1999: Introduced by the Finance Act, 2017, it stipulates that the terms and conditions of service of the Chairperson and members appointed after the commencement of Part XIV of the Finance Act, 2017, shall be governed by Section 184 of the Finance Act, 2017.
  • Notwithstanding anything in this Act, the qualifications, appointment, term of office, salaries and allowances, resignation, removal and other terms and conditions of service of the Chairperson, Vice-Chairperson and other Members of the Appellate Board appointed after the commencement of Part XIV of Chapter VI of the Finance Act, 2017 (7 of 2017), shall be governed by the provisions of section 184 of that Act: Provided that the Chairperson, Vice-Chairperson and other Members appointed before the commencement of Part XIV of Chapter VI of the Finance Act, 2017 (7 of 2017), shall continue to be governed by the provisions of this Act, and the rules made thereunder as if the provisions of section 184 of the Finance Act, 2017, had not come into force
• Section 161 of the Finance Act, 2017: Amended the Trademarks Act, 1999, to include Section 89A.
• Section 183 of the Finance Act, 2017: States that the provisions of Section 184 shall apply to the Chairperson, Vice-Chairperson, and members of tribunals, notwithstanding anything to the contrary in the Acts specified in the Eighth Schedule.
• Section 184 of the Finance Act, 2017: Authorizes the Central Government to make rules regarding the qualifications, appointment, term of office, and other conditions of service for tribunal members. It also sets the maximum age limit for the Chairperson at 70 years.
  • (1) The Central Government may, by notification, make rules to provide for qualifications, appointment, term of office, salaries and allowances, resignation, removal and the other terms and conditions of service of the Chairperson, Vice-Chairperson, Chairman, Vice-Chairman, President, Vice-President, Presiding Officer or Member of the Tribunal, Appellate Tribunal or, as the case may be, other Authorities as specified in column (2) of the Eighth Schedule: Provided that the Chairperson, Vice-Chairperson, Chairman, Vice-Chairman, President, Vice-President, Presiding Officer or Member of the Tribunal, Appellate Tribunal or other Authority shall hold office for such term as specified in the rules made by the Central Government but not exceeding five years from the date on which he enters upon his office and shall be eligible for reappointment: Provided further that no Chairperson, Vice-Chairperson, Chairman, Vice-Chairman, President, Vice-President, Presiding Officer or Member shall hold office as such after he has attained such age as specified in the rules made by the Central Government which shall not exceed— (a) in the case of Chairperson, Chairman or President, the age of seventy years; (b) in the case of Vice-Chairperson, Vice-Chairman, Vice-President, Presiding Officer or any other Member, the age of sixty-seven years:

These provisions, when read together, determine the tenure, age limits, and service conditions for the Chairperson and members of the IPAB. The Finance Act, 2017, aimed to standardize these conditions across various tribunals, but its implementation and interpretation have led to the present dispute.

Arguments

The arguments presented before the Supreme Court can be categorized as follows:

• Applicant’s Arguments:
  • The applicant contended that the incumbent Chairperson’s appointment was governed by Section 89A of the Trademarks Act, 1999, which stipulates that the terms of service would be as per Section 184 of the Finance Act, 2017.
  • It was argued that Section 184 of the Finance Act, 2017, sets the outer age limit for the Chairperson at 70 years, thus superseding the 65-year limit in Section 86 of the Trademarks Act, 1999.
  • The applicant relied on the judgment in Rojer Mathew v. South Indian Bank Ltd. [(2020) 6 SCC 1], which stated that appointments made before the 2020 Rules were governed by the parent enactment, i.e., the Trademarks Act, 1999, and therefore, the age limit of 65 years would not apply.
  • The applicant also relied on the judgment in Madras Bar Association v. Union of India [(2020) SCC OnLine SC 962], which clarified that the incumbent would continue to hold office even after attaining the age of 65.
  • The applicant emphasized the need for continuity and argued that the IPAB could not function effectively without a judicial member as a chairperson.
  • The applicant highlighted that at the time, none of the members of the board were judicial appointees, and there was no Vice-Chairman to act as the Chairperson.
• Third-Party Objectors’ Arguments:
  • The third-party objectors argued that the incumbent’s tenure was explicitly fixed until 21.09.2019, as per the amended appointment order of 29.12.2017.
  • They contended that Section 89A of the Trademarks Act, 1999, only meant that the terms of service would be governed by Section 184 of the Finance Act, 2017, which does not specify a tenure but only prescribes outer limits, leaving the specific terms to be determined by rules.
  • They argued that the 2017 Rules, which were in effect when the incumbent was appointed, set a maximum tenure of three years, which had already expired by 21.09.2019.
  • They stated that the judgment in Rojer Mathew protected the tenures of sitting members and chairpersons until new rules were framed, but the incumbent’s tenure had already ended before this judgment.
  • They argued that the outer limit under the parent act was 65 years, and therefore, the incumbent’s tenure could not be extended.

Submissions Table

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in a separate section. However, the core issue that the Court addressed was:

1. Whether the incumbent Chairperson of the IPAB could continue in office beyond the age of 65, based on the provisions of the Finance Act, 2017, and the Trademarks Act, 1999.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues:

Authorities

The Supreme Court considered the following authorities in its judgment:

Judgment

The Supreme Court dismissed the application, holding that the incumbent Chairperson’s tenure could not be extended.

How each authority was viewed by the Court?

• Rojer Mathew v. South Indian Bank Ltd. [(2020) 6 SCC 1]: The Court clarified that the interim directions in this case did not apply to the incumbent as his tenure had already ended.
• Madras Bar Association v. Union of India [(2020) SCC OnLine SC 962]: The Court distinguished this case, stating that it did not apply to the present situation.
• Kudrat Sandhu v. Union of India [2018 SCC Online 1335 (SC)] and Kudrat Sandhu v Union of India [2018 (18) SCC 796]: The Court relied on the interim orders in these cases, which clarified the tenure of tribunal members.
• Sections 83, 84, 85, 86, 87, and 89A of the Trademarks Act, 1999: The Court interpreted these sections to clarify the composition, functions, and tenure of the IPAB.
• Sections 161, 183, and 184 of the Finance Act, 2017: The Court interpreted these sections to clarify the applicability of the Finance Act, 2017, to the terms of service of the Chairperson and members.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the following factors:

• Fixed Tenure: The Court emphasized that the incumbent Chairperson’s tenure was explicitly fixed until 21.09.2019, by the amended order of 29.12.2017. This was a crucial factual aspect that weighed heavily in the Court’s decision.
• Expiration of Rules: The Court noted that the 2017 Rules, under which the incumbent was appointed, had set a maximum tenure of three years. This tenure had already expired by 21.09.2019, before the judgment in Rojer Mathew.
• Prospective Application of Finance Act: The Court clarified that the provisions of the Finance Act, 2017, particularly Section 184, which set the maximum age limit at 70 years, did not apply retrospectively to the incumbent. The Court held that the changes brought about by the Finance Act, 2017, were not meant to extend the tenure of those already appointed under the old rules.
• Interpretation of Section 89A: While the Court acknowledged that Section 89A of the Trademarks Act, 1999, aimed to supersede pre-existing age and tenure limits, it clarified that the Finance Act, 2017, only stipulated outer limits, and the specific terms were to be determined by rules.
• Functioning of the IPAB: The Court considered the argument that the IPAB could not function without a judicial member as Chairperson. However, the Court clarified that Section 84(3) of the Trademarks Act, 1999, allows the Chairperson to discharge the functions of either a Judicial or Technical Member. Further, Section 85 allows a technical member to be appointed as Chairperson if they have held the office of Vice-Chairperson for at least two years.
• Interim Orders: The Court also considered the interim orders in Kudrat Sandhu, which clarified that the tenure of tribunal members would be as per the old acts and rules, or for a maximum of three years for chairpersons.

The Court’s reasoning was based on the principle that theincumbent’s appointment and tenure were governed by the rules in force at the time of his appointment, and the Finance Act, 2017, did not automatically extend his tenure beyond the expiration of those rules.

Ratio Decidendi

The ratio decidendi of the judgment can be summarized as follows:

The Finance Act, 2017, while amending the Trademarks Act, 1999, and setting outer limits for age and tenure of tribunal members, does not automatically extend the tenure of those already appointed under the old rules. The terms of service of such appointees are determined by the rules in force at the time of their appointment. If their tenure has expired under the old rules, the Finance Act, 2017, does not retrospectively extend it.

Obiter Dicta

While the judgment primarily focused on the tenure of the incumbent Chairperson, the Court made several observations that can be considered as obiter dicta:

• The Court clarified that the Finance Act, 2017, was intended to standardize the terms and conditions of service for members of various tribunals.
• The Court emphasized the importance of clearly defined tenure for tribunal members to ensure certainty and stability in the functioning of tribunals.
• The Court noted that the Finance Act, 2017, did not intend to create a situation where tribunal members could continue indefinitely beyond their original tenure.
• The Court clarified that the 2017 Rules, which had set a maximum tenure of three years, were valid until they were superseded by new rules.
• The Court also clarified that the intention of the Finance Act, 2017, was not to create a situation where tribunals would be left without a Chairperson, and that Section 84(3) of the Trademarks Act, 1999, allows the Chairperson to discharge the functions of either a Judicial or Technical Member. Further, Section 85 allows a technical member to be appointed as Chairperson if they have held the office of Vice-Chairperson for at least two years.

Flowchart of the Decision

Conclusion

The Supreme Court’s judgment in International Association for Protection of Intellectual Property (India Group) vs. Union of India clarified the interplay between the Trademarks Act, 1999, and the Finance Act, 2017, concerning the tenure of the Chairperson of the IPAB. The Court held that the Finance Act, 2017, did not automatically extend the tenure of those appointed under the old rules. The terms of service of such appointees are determined by the rules in force at the time of their appointment.

The judgment underscored the principle that statutory amendments do not have retrospective effect unless explicitly stated and that the terms of service are governed by the rules in force at the time of appointment. This decision has significant implications for the functioning of tribunals and the service conditions of their members. It also emphasizes the need for clear and unambiguous legal provisions regarding the tenure and terms of service for appointees to tribunals.