Law Secretary has no jurisdiction to interfere with the judicial functioning of the Tribunal – SC

Income Tax Appellate Tribunal (ITAT) is a quasi-judicial institution which specializes in dealing with appeals under the Direct Taxes Acts. The orders passed by the ITAT are final, an appeal lies to the High Court only if a substantial question of law arises for determination. However, does the Law Secretary have any say in the working of the Tribunal? Let us refer to the case of ITAT Through President v. V. K. Agarwal (1999) which raised the question of what was the domain of Law Secretary’s power over the functioning of the Tribunal?

Facts of the Case:

• A letter was sent by the Law Secretary, Ministry of Law and Justice to the President of the Tribunal stating that he was in receipt of a written complaint that in a particular case two conflicting orders were passed by the same Bench.
• It was stated therein that the Judicial Member passed the ‘first draft order’ in favour of the assessee and signed the same.
• Subsequently, the Accountant Member passed an order in favour of the Revenue, which was signed by both the members.
• The President was asked to send a report on the same within ten days.
• The President asked the two members to give their comments on the same.
• The members clarified that the first draft of the order was only signed by the Judicial Member and was not an order of the Tribunal for the purposes of the Act.
• It was clarified that pursuant to passing of the draft order, the members discussed the case among themselves and decided that the view taken therein was incorrect.
• Accordingly, the order deciding the issue in favour of the Department was passed by the Accountant Member and signed by both members.
• Before these comments could be communicated to the Law Secretary, he wrote another letter to the President stating therein that if no justification was given to him, adverse inferences will be drawn against the President as well.
• The Tribunal viewed these letters as interference with its judicial functioning and filed an application before the Supreme Court requesting it to issue a show cause notice of contempt against the Law Secretary.

Observations of the Supreme Court (SC)

• The Law Secretary argued that since his responsibilities extended to supervision over the functioning of the Tribunal, he was within his rights to ask for a report from the President.
• The Tribunal, on the other hand, argued that the Law Secretary’s supervision over the Tribunal was limited to matters of administrative nature and he could not be permitted to influence the judicial decisions of the members.
• The first draft prepared by the Judicial Member was not an ‘order’ since it was not signed by both the members.
• There was nothing wrong in the members discussing the matter and finally passing an order contrary to the first draft prepared by the Judicial Member.
• The supervision and control of the Law Secretary over the Tribunal was merely administrative in nature.
• The letters written by the Law Secretary in the present case sought to interfere with the judicial power of the members of the Tribunal, which was not permitted in law.

• The conduct of the Law Secretary in the present case, interfering with the judicial functioning of the Tribunal amounted to a gross contempt of Court.
• It was a deliberate attempt on his part to question the judicial functioning of the Tribunal coming as it did from a person of his rank.
• It was rightly perceived by the President as well as the two concerned Members of the Tribunal as a threat to their independent functioning in the course of deciding appeals coming up before them.
• His apology before the Court was not accepted and a fine of Rs. 2000 was imposed for this contempt.

In simple words, power of Law Secretary is confined to administrative supervision. Law Secretary has no jurisdiction to interfere with the judicial functioning of the Tribunal

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