Supreme Court–Centre Rift Over Tribunals: What the Dispute Is About

Tribunals

Tribunals Latest News

  • The Supreme Court expressed strong displeasure after the Centre sought another adjournment in the case challenging the Tribunals Reforms Act, 2021, highlighting ongoing tensions between the judiciary and the government over tribunal control.

Understanding India’s Tribunal System

  • Tribunals are judicial or quasi-judicial bodies created to handle specific types of disputes that require expertise or faster resolution.
  • Their main goals are to reduce the burden on regular courts and to bring technical expertise in areas such as taxation, administration, and corporate law.

Judicial Independence and Supreme Court’s Directives

  • The Supreme Court has emphasised that tribunals must enjoy the same independence from the executive as the judiciary.
  • Key aspects of independence include the selection process, composition, and tenure of members.
  • The Court recommended that administrative control over tribunals be placed under the Law Ministry, not the ministries they adjudicate against, and later proposed an independent National Tribunals Commission.
    • These reforms, however, have not been implemented.

Constitutional Basis of Tribunals

  • Tribunals were formally established through the 42nd Constitutional Amendment (1976), which introduced Articles 323A and 323B:
    • Article 323A: Allows Parliament to create administrative tribunals for public service matters.
    • Article 323B: Allows Parliament and state legislatures to create tribunals on subjects like taxation, land reforms, and labour.
  • In 2010, the Supreme Court clarified that tribunals could also be formed on other subjects under the Seventh Schedule.

Tribunals Reforms Act Faces Challenge Over Judicial Independence

  • The Tribunals Reforms Act, 2021, has been challenged by the Madras Bar Association (MBA) for allegedly undermining judicial independence and violating the separation of powers.
  • Tribunals, which handle specialised cases in areas like taxation, corporate law, and administration, have been affected nationwide by the ongoing case. 
  • The MBA argued that the Act reintroduced provisions—such as a four-year term for tribunal members and a minimum appointment age of 50—that were part of an earlier ordinance struck down by the Supreme Court in July 2021.
  • By re-enacting the same provisions without addressing the legal flaws identified earlier, the petitioners claim Parliament attempted to override a judicial verdict, amounting to “legislative overruling” and weakening the judiciary’s autonomy.

A Long-Running Power Struggle Over Tribunals

  • The tussle between the Centre and the Supreme Court over control of tribunals began with the Finance Act of 2017, which gave the government the power to make rules for tribunals.
  • However, in 2019, the Supreme Court’s Rojer Mathew judgment struck down these rules, saying they weakened judicial independence.

The 2020 Rules and Supreme Court’s Recommendations

  • When the Centre issued new tribunal rules in 2020, they were again challenged by the Madras Bar Association (MBA).
  • The Supreme Court suggested key changes — including a five-year tenure for tribunal members — to protect independence and attract qualified professionals.

The 2021 Ordinance and Court’s Rejection

  • In April 2021, the Centre passed an ordinance setting a four-year tenure and a minimum age of 50 years for tribunal appointments.
  • By July 2021, the Supreme Court struck down these provisions as “arbitrary” and against the principle of separation of powers.

Parliament’s Defiant Response

  • A month later, Parliament passed the Tribunals Reforms Act, 2021, re-enacting the same struck-down provisions.
  • This move reignited the clash between the judiciary and the executive, with critics calling it a direct challenge to judicial authority.

Key Arguments in the Tribunal Reforms Case

  • The Madras Bar Association (MBA) argued that the four-year tenure for tribunal members makes them vulnerable to government pressure, as they might act cautiously to secure reappointment.
  • They also said the minimum age limit of 50 years unfairly excludes younger, capable lawyers, even though individuals can become High Court judges at a younger age.

Government’s Defence: Experience and Policy Autonomy

  • The Union government defended the provisions, saying the age limit ensures sufficient experience, and the four-year term with reappointment offers enough job security.
  • It argued that the Act represents a policy decision within Parliament’s authority, and that by striking down these rules, the judiciary would overstep its powers and violate the principle of separation of powers.

The Fallout: Vacancies Leave Tribunals Struggling to Function

  • The ongoing standoff between the Centre and the Supreme Court over tribunal appointments and service rules has caused serious delays in filling vacancies across several key tribunals.
  • As of December 2022, government data showed:
    • National Company Law Tribunal (NCLT): 24 vacancies out of 32 posts.
    • Armed Forces Tribunal: 24 vacancies out of 34 posts.
    • Income Tax Appellate Tribunal: 18 of 63 judicial posts vacant.
    • Railway Claims Tribunal: Both vice-chairman (judicial) posts vacant, along with 16 of 20 judicial positions.
    • Labour and Industrial Tribunals: Only 13 presiding officers in place against 22 sanctioned posts.
  • The Supreme Court has noted that these persistent delays have made several tribunals “virtually defunct”, undermining their very purpose of providing speedy and specialised justice.

Source: IE | PRS

Tribunals FAQs

Q1: What triggered the current Supreme Court–Centre rift over tribunals?

Ans: The Centre’s repeated adjournments in the Tribunals Reforms Act case angered the Supreme Court, highlighting long-standing tensions over control and independence of tribunals.

Q2: What is the Tribunals Reforms Act, 2021, about?

Ans: It reorganises tribunals, setting a four-year tenure and a 50-year minimum age for appointments — provisions critics say undermine judicial independence.

Q3: Why did the Madras Bar Association challenge the Act?

Ans: The MBA argued that re-enacting provisions earlier struck down by the Court amounts to “legislative overruling,” violating separation of powers and judicial autonomy.

Q4: What has been the impact of this dispute?

Ans: Delays in tribunal appointments have left many bodies nearly defunct — for example, 24 vacancies in the NCLT and Armed Forces Tribunal each.

Q5: What reforms has the Supreme Court recommended for tribunals?

Ans: The Court urged creation of an independent National Tribunals Commission and administrative control under the Law Ministry, but these reforms remain unimplemented.

Sebi Flags Risks in Digital Gold Investments: What Investors Should Know

Digital Gold

Digital Gold Latest News

  • The Securities and Exchange Board of India (SEBI) has warned the public against investing in digital and e-gold products, which have gained popularity amid rising gold prices and the ease of online ownership. 
  • SEBI cautioned that, despite being marketed as safe alternatives to physical gold, digital gold investments are unregulated and fall outside any legal oversight, exposing investors to significant financial risks.

Digital Gold and its Popularity

  • Digital gold enables investors to buy, sell, and store gold electronically without physically holding it. 
  • Its price is linked to physical gold and transactions are recorded using blockchain technology.
  • It offers easy access, low entry amounts, and no storage hassles, allowing quick liquidation or conversion into coins, bars, or jewellery when needed.
  • The recent 59% surge in gold prices, with MCX spot gold rising from ₹76,577 to ₹1.22 lakh per 10 gm in a year, has significantly boosted investor interest in digital and e-gold products.

Why SEBI Issued a Caution on Digital Gold Investments

  • SEBI noted that many online platforms are promoting digital and e-gold products as easy, convenient alternatives to physical gold. 
  • However, the regulator clarified that these products are not recognised as securities and do not fall under its regulatory framework or commodity derivatives laws.
  • Since digital gold remains unregulated, investors lack legal protection or oversight, making such investments risky and potentially misleading.

Why Digital Gold Is Considered Risky for Investors

  • SEBI warned that digital gold operates outside any regulatory oversight, leaving investors without legal protection or recourse under securities market laws.
  • These products carry counterparty and operational risks, meaning investors could lose money if the platform defaults. 
  • Unlike gold ETFs or commodity derivatives, digital gold doesn’t require demat accounts or margin deposits, making it easy to access but riskier.
  • Offered widely by jewellers and online platforms, digital gold’s popularity—amplified by social media marketing—has grown rapidly, prompting Sebi’s caution against its unregulated and high-risk nature.

Regulated Gold Investment as an Option

  • Experts recommend that investors avoid unregulated digital gold and instead choose Sebi-regulated products to ensure safety and transparency.
  • Sebi allows gold investments through Gold ETFs, exchange-traded commodity derivatives, and Electronic Gold Receipts (EGRs) — all of which are traded on regulated exchanges like MCX and NSE under strict risk management and margin frameworks.
  • These regulated avenues, along with Sovereign Gold Bonds (SGBs), offer secure trading, transparent pricing, and clearing corporation guarantees, significantly reducing counterparty and operational risks compared to unregulated digital gold platforms.

Source: IE | NDTV | IT

Digital Gold FAQs

Q1: What is digital gold?

Ans: Digital gold lets investors buy and store gold online using blockchain technology, offering low-cost access and quick liquidity without physical possession.

Q2: Why did Sebi warn investors about digital gold?

Ans: Sebi found many online platforms offering unregulated digital gold products marketed as safe alternatives, exposing investors to high financial and legal risks.

Q3: What makes digital gold risky?

Ans: Digital gold operates outside regulatory oversight, with no investor protection. It carries counterparty risks — investors could lose funds if platforms default.

Q4: What are safer alternatives to digital gold?

Ans: Experts advise investing in Sebi-regulated instruments like Gold ETFs, Electronic Gold Receipts (EGRs), and Sovereign Gold Bonds (SGBs) for transparency and legal protection.

Q5: How do regulated gold products ensure investor safety?

Ans: Products traded on MCX and NSE are subject to risk management systems, margin frameworks, and clearing corporation guarantees, reducing default and operational risks.

Index of Industrial Production to Undergo Major Changes

Industrial Production

Industrial Production Latest News

  • The Government of India is preparing for a comprehensive overhaul of the Index of Industrial Production.

Understanding the Index of Industrial Production

  • The Index of Industrial Production (IIP) is one of India’s most critical macroeconomic indicators, along with the Consumer Price Index (CPI), which measures retail inflation. 
  • Released monthly by MoSPI, the IIP captures changes in the volume of production in three sectors, mining, manufacturing, and electricity, based on data from 14 source agencies covering 407 items or item groups.
  • The IIP is also classified into six use-based categories:
    • Primary goods, Capital goods, Intermediate goods, Infrastructure or construction goods, Consumer durables, Consumer non-durables
  • Currently, the IIP uses 2011-12 as its base year, but this is set to be updated to 2022-23 to reflect more contemporary industrial structures and output patterns.

Rationale Behind the Overhaul

  • According to MoSPI’s discussion paper released in November 2025, the overhaul was necessitated by a major statistical challenge: the continued inclusion of closed or non-operational factories in the IIP sample.
    • Around 8.9% of the IIP’s factory sample reportedly consists of units that have either shut down permanently or stopped producing the assigned goods.
    • The presence of such inactive units distorts the industrial growth picture by forcing the ministry to rely on imputation or estimation methods, which reduces the accuracy of data.
  • To address this, MoSPI has proposed an automatic substitution mechanism, where factories that remain non-operational or fail to report data for three consecutive months will be replaced with new, active factories of similar scale and output.
  • This move, according to the ministry, will maintain the continuity and robustness of the IIP series, ensuring it reflects actual industrial performance rather than estimates.

How the Substitution Mechanism Will Work

  • Under the proposed framework:
    • A status check will be initiated if a factory reports zero production for three consecutive months.
    • Upon confirmation that the unit is permanently closed or no longer produces the assigned item, it will be removed from the sample.
  • A new factory producing the same or equivalent item will be added, provided:
    • It has been operational for at least 12 months.
    • Its Gross Value Added (GVA) or output value is comparable to the replaced factory, ensuring size consistency.
  • Until overlapping data between the old and new factories is established, temporary ‘nil’ or imputed values may be used, leading to a short lag before substitution is fully reflected in the IIP.
  • This substitution system aligns India’s statistical practices with international standards, as similar procedures are followed by advanced economies to ensure the reliability of industrial indices.

Updating the Base Year to 2022-23

  • The overhaul is also part of a broader review of the IIP, with MoSPI planning to shift the base year from 2011-12 to 2022-23. The last revision took place in 2017, and the decade-long gap has made the index less reflective of the current industrial ecosystem.
  • The updated base year will incorporate:
    • Newly emerging industries such as electric vehicle manufacturing, semiconductors, and green technologies.
    • Changes in product composition and weightage to capture shifts in consumer demand and industrial output.
    • Integration of digital data sources to reduce manual reporting delays.
  • This recalibration will ensure that the IIP remains relevant and aligned with India’s rapidly evolving industrial landscape.

Importance of IIP in Economic Policy

  • The IIP serves as a crucial indicator for policymakers, investors, and analysts to gauge short-term industrial trends. It influences decisions on:
    • Monetary policy: The Reserve Bank of India (RBI) uses IIP data alongside inflation and employment indicators to assess economic health.
    • Fiscal planning: Government agencies rely on IIP trends to forecast tax revenues, employment potential, and infrastructure requirements.
    • Private sector investment: Businesses use IIP data to identify growth sectors and assess market demand.
  • As of September 2025, India’s industrial output grew by 4% year-on-year, while growth for the 1st half of FY2025-26 stood at 3%, slightly lower than the 4.1% recorded in the corresponding period last year.
  • These figures highlight the need for a more responsive and accurate statistical system that reflects real-time industrial performance.

Challenges and the Way Forward

  • While the proposed substitution mechanism promises greater accuracy, it also presents challenges:
    • Timely verification of factory status will require close coordination between state statistical offices and industry bodies.
    • Maintaining comparability between replaced and new units will be crucial to prevent statistical distortions.
    • Data lags may persist during the transition period as overlapping production data is compiled.
  • To ensure a smooth transition, MoSPI has sought public feedback on the proposed methodology by November 25, 2025, aiming for a consensus-driven and technically robust framework.

Source: IE

Industrial Production FAQs

Q1: What is the Index of Industrial Production (IIP)?

Ans: The IIP measures changes in the volume of industrial output across mining, manufacturing, and electricity sectors on a monthly basis.

Q2: Why is the IIP being overhauled?

Ans: To replace non-operational factories in the sample, reduce data distortion, and update the base year to reflect current industrial realities.

Q3: When will the revised IIP series be released?

Ans: The new IIP series, with 2022-23 as the base year, will be launched in May 2026.

Q4: What portion of the current IIP sample includes closed factories?

Ans: About 8.9% of factories in the existing IIP sample are non-operational, affecting data accuracy.

Q5: How does IIP data impact economic policy?

Ans: IIP trends guide monetary, fiscal, and industrial policies, helping assess economic growth, investment, and employment trends.

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