Supreme Court Directs Reconsideration of ITAT Appointments: Advocate Association Bengaluru vs. Anoop Kumar Mendiratta (2022)

Date of the Judgment: 17 May 2022

Citation: [Not Available in Source]

Judges: Dr. Dhananjaya Y Chandrachud, J and Pamidighantam Sri Narasimha, J.

Can the government bypass the recommendations of a Search-cum-Selection Committee (SCSC) when appointing members to a tribunal? The Supreme Court of India recently addressed this critical question in a case concerning appointments to the Income Tax Appellate Tribunal (ITAT). The court examined the procedure for these appointments and the extent to which the government can rely on additional feedback received after the SCSC has made its recommendations. The judgment was delivered by a two-judge bench comprising Dr. Dhananjaya Y Chandrachud, J and Pamidighantam Sri Narasimha, J.

Case Background

In 2018, an advertisement was released for 37 vacant posts in the Income Tax Appellate Tribunal (ITAT), comprising 21 Judicial Members and 16 Accountant Members. The Search-cum-Selection Committee (SCSC), chaired by Hon’ble Mr Justice A M Khanwilkar, Judge, Supreme Court of India, was formed to conduct the selection process.

On 21 September 2019, the SCSC recommended 41 individuals for appointment to the ITAT. This included 28 candidates in the main list (16 Judicial Members and 12 Accountant Members) and 13 in the waitlist. The recommendations were submitted to the Department of Legal Affairs on 3 October 2019, and subsequently, on 16 October 2019, to the Appointments Committee of the Cabinet (ACC) for approval.

The ACC approved 13 appointments on 11 September 2021 and 9 more on 1 October 2021, totaling 22 appointments. These appointments were made from both the main and wait lists. Consequently, 19 recommended candidates were not appointed.

Timeline

Course of Proceedings

On 16 December 2021, the Supreme Court, while issuing notice in the proceedings, noted that the Attorney General had assured that appointments would be made by the end of the month. The Court also noted that the government had not cleared some names due to inputs from Intelligence Bureau (IB) reports and medical reports. The Court directed the Attorney General to produce the concerned files.

Legal Framework

The case references Section 3(7) of the Tribunals Reforms Act, 2021, which initially required the SCSC to recommend two candidates for each vacancy. Although this provision was struck down by the Supreme Court in an earlier judgment, it was subsequently re-enacted in the Tribunals Reforms Act, 2021. The court also considered the general procedure for appointments to tribunals and the role of the SCSC in these appointments.

The Court also considered Section 270A of the Income Tax Act, 1961, which deals with the initiation of penalty proceedings when the assessed income is higher than the income reported by the assessee.

Arguments

Petitioner’s Arguments (Mr. R Basant):

• ✓ Out of 41 persons recommended by the SCSC, only 22 were selected by the ACC, leaving 19 positions unfilled.
• ✓ 19 new vacancies have arisen, resulting in a total of 38 unfilled positions in the ITAT.
• ✓ The ACC selectively appointed candidates from both the main and wait lists, with only 16 of 28 from the main list and 6 of 13 from the wait list being appointed.
• ✓ The ACC relied on reports and feedback obtained after the SCSC recommendations, without placing these before the SCSC.

Amicus Curiae’s Arguments (Mr. Arvind Datar):

• ✓ Candidates from the wait list should not have been appointed until the main list was exhausted.
• ✓ The ranking in the SCSC recommendations should be strictly followed.
• ✓ Although the provision requiring two candidates per vacancy was struck down, it was re-enacted.
• ✓ Any post-recommendation inputs should be placed before the SCSC for consideration.

Attorney General’s Arguments (Mr. K K Venugopal):

• ✓ Appointments from the wait list are legitimate if candidates from the main list do not accept the appointment.
• ✓ Section 3(7) of the Tribunals Reforms Act 2021 allows for considering waitlist candidates.
• ✓ The competent authority received information about penalty proceedings against some candidates.
• ✓ No contempt case is made out as the Finance Secretary is not involved in ITAT appointments and the former Secretary of the Department of Legal Affairs has been appointed as a High Court Judge.

The Attorney General conceded that any subsequent inputs should be remitted back to the SCSC for consideration. He also stated that in the future, all inputs would be provided to the SCSC before recommendations are finalized.

[TABLE] of Submissions:

Issues Framed by the Supreme Court

The primary issue before the Supreme Court was:

1. Whether the Appointments Committee of the Cabinet (ACC) could rely on feedback received after the Search-cum-Selection Committee (SCSC) recommendations without referring it back to the SCSC.

Treatment of the Issue by the Court

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

Authorities

The Court considered the following:

Legal Provisions:

• ✓ Section 3(7) of the Tribunals Reforms Act, 2021: This section initially mandated the SCSC to recommend two candidates for each vacancy. Although struck down earlier, it was re-enacted. The court considered its implications on the selection process.
• ✓ Section 270A of the Income Tax Act, 1961: The court noted that this provision leads to the automatic initiation of penalty proceedings when assessed income exceeds the income reported by the assessee.

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• ✓ Section 3(7) of the Tribunals Reforms Act, 2021: The Court noted its existence and implications on the selection process, but did not make any specific comment on its validity.
• ✓ Section 270A of the Income Tax Act, 1961: The Court acknowledged that penalty proceedings under this section are automatically initiated.

What weighed in the mind of the Court?

The Supreme Court emphasized the importance of a fair and transparent appointment process. The Court was concerned that the ACC had relied on feedback obtained after the SCSC recommendations without giving the SCSC an opportunity to consider this new information. The Court highlighted that the SCSC, being chaired by a Supreme Court Judge and comprising senior government officials, is the appropriate body to evaluate the suitability of candidates. The Court also noted that the feedback received by the ACC was often subjective and lacked transparency, as it did not disclose the underlying material on which it was based. The Court also considered the fact that the IB reports, which are usually placed before the SCSC, were sometimes at variance with the feedback received by the ACC.

Sentiment Analysis of Reasons Given by the Supreme Court:

Fact:Law Ratio Table:

Logical Reasoning Flowchart:

The Court held that any feedback received after the SCSC recommendations should be placed before the SCSC for reconsideration. The Court stated, “If, in an exceptional case, subsequent to the formulation and submission of recommendations of the SCSC, any tangible material comes to the knowledge of the competent authority, it is only proper and appropriate, as the Attorney General submits, that such material should be placed before the SCSC.” The Court also emphasized that “all inputs bearing on the candidature of each prospective applicant under consideration, whether the inputs emanate from the IB or from any other source, ought to be placed by the Union Government on the record of the SCSC in advance, before the recommendations are formulated.” The Court further noted that “the SCSC, which is chaired by a Judge of the Supreme Court also consists of two Secretaries of the Union Government. A comprehensive exercise is conducted by the Committee, inter alia, involving calling for inputs from the IB, verifying the record of each candidate and conducting personal interaction.”

The Court did not find it expedient to pursue contempt proceedings, but re-numbered the contempt petition as an interlocutory application. The Court directed the Union Government to place all relevant material before the SCSC within one week and requested the SCSC to convene a meeting to decide whether any modification of its recommendations is needed.

Key Takeaways

• ✓ The Appointments Committee of the Cabinet (ACC) cannot rely on feedback received after the Search-cum-Selection Committee (SCSC) has made its recommendations without referring it back to the SCSC.
• ✓ All inputs, whether from the Intelligence Bureau (IB) or other sources, must be placed before the SCSC in advance, before it makes its recommendations.
• ✓ In exceptional cases, if new material comes to light after the SCSC recommendations, it must be placed before the SCSC for reconsideration.
• ✓ The SCSC, chaired by a Supreme Court judge, is the appropriate body to evaluate candidates for appointments to tribunals.

The judgment emphasizes the need for transparency and fairness in the appointment process and ensures that the SCSC’s recommendations are not undermined by subsequent, potentially biased, feedback.

Directions

The Supreme Court directed the following:

• ✓ The Union Government must place all relevant material, including the feedback received by the ACC, before the SCSC within one week.
• ✓ The SCSC must convene a meeting to consider whether any modification of its recommendations is warranted.
• ✓ The Union Government must process the recommendations of the SCSC and apprise the Court of the decision taken.

Specific Amendments Analysis

Not Applicable.

Development of Law

The ratio decidendi of this case is that the Search-cum-Selection Committee (SCSC) is the primary body for evaluating candidates for appointments to tribunals, and any feedback received after the SCSC has made its recommendations must be referred back to the SCSC for reconsideration. This judgment reinforces the importance of transparency and fairness in the appointment process and ensures that the SCSC’s recommendations are not undermined by subsequent, potentially biased, feedback. There is no change in the previous position of law but a clarification of how the appointment process should be conducted.

Conclusion

The Supreme Court’s judgment in Advocate Association Bengaluru vs. Anoop Kumar Mendiratta directs the Union Government to refer back the feedback received by the Appointments Committee of the Cabinet (ACC) to the Search-cum-Selection Committee (SCSC) for reconsideration. This decision underscores the importance of the SCSC in the appointment process and ensures transparency and fairness. The judgment clarifies that the SCSC’s recommendations should not be undermined by subsequent, potentially biased, feedback, and that all relevant material must be placed before the SCSC for a comprehensive evaluation. The Court did not find it necessary to pursue contempt proceedings, but re-numbered the contempt petition as an interlocutory application.