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Ranjan Gogoi, C.J.: (for himself, Ramana, Chandrachud, Deepak Gupta, and Khanna, JJ.:
Chandrachud, J. and Deepak Gupta, J. supplementing and partly dissenting as well)
- The Madras Bar Association has preferred Writ Petition (Civil) No. 267 of 2012 seeking
the following reliefs:
“i. A writ of mandamus, directing the Union of India, to implement the directions of this
Hon’ble Court in Union of India v. R. Gandhi [(2010) 11 SCC 1, para 96 at pg. 310] and L.
Chandra Kumar v. Union of India [(1997) 3 SCC 261], paras 120 and 121 at page 65 to 67],
where Ministry of Law and Justice, Govt. Of India was ordered to take over the
administration of all tribunals created by Parliament and streamline the functioning of the
same.
ii. A writ of mandamus directing the Ministry of Law & Justice to promptly carry out a
‘Judicial Impact Assessment’ on all tribunals created by Parliament and submit a report on the
same to this Hon’ble Court.” - During the pendency of the aforementioned writ petition, the present lead matter bearing
SLP(C) No. 15804/2017 was filed by Rojer Mathew, assailing the final judgment and order of
the High Court of Kerala. The Petitioner had originally approached the High Court
challenging the constitutional validity of Section 13 (5-A) of the Securitisation and
Reconstruction of Financial Assets and Enforcement of Securities Interest (SARFAESI) Act,
2002 which permits secured creditors to participate in auction of immoveable property if it
remained unsold for want of reserve bid in an earlier auction. Rojer Mathew claimed that the
aforementioned provision violated his rights Under Article 300A and Article 14 of the
Constitution, besides being in contravention of the Code of Civil Procedure which prohibits
mortgagees from participating in auction of immovable property without prior Court
permission. - The foremost contention on behalf of the Petitioners is that Part-XIV could not and ought
not to have been made part of the Finance Act, 2017 as the said part is not classifiable as a
‘money bill’. Emphasis was placed on the wordings of Article 110 which allows those bills
which contain “only” provisions which fall within the metes and bounds of Clauses (a) to (g)
thereof, to be treated as ‘money bill’. By virtue of inclusion of Part XIV, the entirety of the
Finance Act, 2017 was contended to have lost its colour as a ‘money bill’ Under Article 110
and hence its passage without the assent of the Rajya Sabha as required Under Article 107
renders it ultra vires the legislative scheme contemplated in the Constitution. - Learned Counsels vehemently placed reliance on the Constituent Assembly Debates to
lend strength to the importance of the expression “only” under Article 110(1). They seek to
make out a case that such phraseology was deliberately incorporated in the Constitution by
making a conscious departure from Section 37 of the Government of India Act, 1935.
Inclusion of Part XIV in the Finance Act, 2017 is shown as being an act of camouflage and a
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colourable exercise and Petitioners assert that such indirect manner of bypassing of the Rajya
Sabha is impermissible. A larger narrative was presented before this Court, that is, of the
Central Government undermining the character and essence of a bicameral legislature as
envisaged under the Constitution; and interference of this Court was sought through
examination of the substance of the legislation and not mere acceptance of the nomenclature
accorded by the Lok Sabha Speaker under Article 110(3). - In light of these arguments put forth by learned Counsels and the suggestions of by the
Amicus Curiae, the following issues arise for our consideration:
I. Whether the ‘Finance Act, 2017’ insofar as it amends certain other enactments and alters
conditions of service of persons manning different Tribunals can be termed as a ‘money bill’
Under Article 110 and consequently is validly enacted?
II. If the answer to the above is in the affirmative then Whether Section 184 of the Finance
Act, 2017 is unconstitutional on account of Excessive Delegation?
III. If Section 184 is valid, Whether Tribunal, Appellate Tribunal and other Authorities
(Qualifications, Experience and other Conditions of Service of Members) Rules, 2017 are in
consonance with the Principal Act and various decisions of this Court on functioning of
Tribunals?
IV. Whether there should be a Single Nodal Agency for administration of all Tribunals?
V. Whether there is a need for conducting a Judicial Impact Assessment of all Tribunals in
India?
VI. Whether judges of Tribunals set up by Acts of Parliament Under Articles 323-A and 323-
B of the Constitution can be equated in ‘rank’ and ‘status’ with Constitutional functionaries?
VII. Whether direct statutory appeals from Tribunals to the Supreme Court ought to be
detoured?
VIII. Whether there is a need for amalgamation of existing Tribunals and setting up of
benches.
Issue I: Whether the ‘Finance Act, 2017’ insofar as it amends certain other enactments and
alters conditions of service of persons manning different tribunals can be termed as a ‘money
bill’ under Article 110 and consequently is validly enacted? - Upon an extensive examination of the matter, we notice that the majority in K.S.
Puttaswamy (Aadhaar-5) (2019) 1 SCC 1 pronounced the nature of the impugned enactment
without first delineating the scope of Article 110(1) and principles for interpretation or the
repercussions of such process. It is clear to us that the majority dictum in K.S. Puttaswamy
(Aadhaar-5) did not substantially discuss the effect of the word ‘only’ in Article 110(1) and
offers little guidance on the repercussions of a finding when some of the provisions of an
enactment passed as a “Money Bill” do not conform to Article 110(1)(a) to (g). Its
interpretation of the provisions of the Aadhaar Act was arguably liberal and the Court’s
satisfaction of the said provisions being incidental to Article 110(1)(a) to (f), it has been
argued is not convincingly reasoned, as might not be in accord with the bicameral
Parliamentary system envisaged under our constitutional scheme. Without expressing a firm
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and final opinion, it has to be observed that the analysis in K.S. Puttaswamy (Aadhaar-5)
makes its application difficult to the present case and raises a potential conflict between the
judgements of coordinate Benches. - Given the various challenges made to the scope of judicial review and interpretative
principles (or lack thereof) as adumbrated by the majority in K.S. Puttaswamy (Aadhaar-5)
and the substantial precedential impact of its analysis of the Aadhaar Act, 2016, it becomes
essential to determine its correctness. Being a Bench of equal strength as that in K.S.
Puttaswamy (Aadhaar-5), we accordingly direct that this batch of matters be placed before
Hon’ble the Chief Justice of India, on the administrative side, for consideration by a larger
Bench. - There is yet another reason why we feel the matter should be referred to a Constitution
Bench of seven judges. L. Chandra Kumar (1997) 3 SCC 261, which was decided by a
Bench of seven Judges, had also interpreted on the ambit of supervision by the High Courts
under Article 227(1) of the Constitution to observe that the Constitutional scheme does not
require all adjudicatory bodies which fall within the territorial jurisdiction of the High Courts
should be subject to their supervisory jurisdiction, as the idea is to divest the High Courts of
their onerous burden. Consequently, adding to their supervisory functions vide Article 227(1)
cannot be of assistance in any manner. Thereafter, it was observed that different tribunals
constituted under different enactments are administered by the Central and the State
Governments, yet there was no uniformity in administration. This Court was of the view that
until a wholly independent agency for such tribunals can be set up, it is desirable that all such
tribunals should be, as far as possible, under a single nodal Ministry which will be in a
position to oversee the working of these tribunals. For a number of reasons, the Court
observed that the Ministry of Law would be the appropriate ministry. The Ministry of Law in
turn was required to appoint an independent supervisory body to oversee the working of the
Tribunals. As noticed above, this has not happened. In these circumstances, it would be
appropriate if these aspects and questions are looked into by a Bench of seven Judges.
Issue II: whether Section 184 of the Finance Act, 2017 is unconstitutional on account of
excessive delegation? - The second challenge against Part XIV of the Finance Act, 2017 is predicated on the
assertion that this is a case of excessive delegation as it falters on the anvil of “essential
legislative functions” and “policy and guidelines” tests. - The objects of the parent enactments as well as the law laid down by this Court in R.K.
Jain v. Union of India (1993) 4 SCC, L. Chandra Kumar v. Union of India (1997) 3 SCC
261, Madras Bar Assn. (2010) 11 SCC 1, Madras Bar Assn. (2014) 10 SCC 1 and Gujarat
Urja Vikas (2016) 9 SCC 103 undoubtedly bind the delegate and mandatorily requires the
delegate Under Section 184 to act strictly in conformity with these decisions and the objects
of delegated legislation stipulated in the statutes. It must also be emphasised that the Finance
Act, 2017 nowhere indicates that the legislature had intended to differ from, let alone make
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amendments, to remove the edifice and foundation of such decisions by enacting the Finance
Act. Indeed, the learned Attorney General was clear in suggesting that Part XIV was inserted
with a view to incorporate the changes recommended by this Court in earlier decisions. - On examining the Constitutional scheme, the statutes which had created tribunals and the
precedents of this Court laying down attributes of independence of tribunals in different
facets, we do not think that the power to prescribe qualifications, selection procedure and
service conditions of members and other office holders of the tribunals is intended to vest
solely with the Legislature for all times and purposes. Policy and guidelines exist. Subject to
aforesaid, the submission of learned Attorney General that Section 184 was inserted to bring
uniformity and with a view to harmonise the diverse and wide-ranging qualifications and
methods of appointment across different tribunals carries weight and, in our view, needs to be
accepted. - Cautioning against the potential misuse of Section 184 by the executive, it was
vehemently argued by the learned counsel for the petitioner(s) that any desecration by the
Executive of such powers threatens and poses a risk to the independence of the tribunals. A
mere possibility or eventuality of abuse of delegated powers in the absence of any evidence
supporting such claim, cannot be a ground for striking down the provisions of the Finance
Act, 2017. It is always open to a Constitutional court on challenge made to the delegated
legislation framed by the Executive to examine whether it conforms to the parent legislation
and other laws, and apply the “policy and guideline” test and if found contrary, can be struck
down without affecting the constitutionality of the rule making power conferred under
Section 186 of the Finance Act, 2017.
Issue III: If section 184 is valid, whether Tribunal, Appellate Tribunal and Other Authorities
(Qualifications, Experience and Other Conditions of Service of Members) Rules, 2017 are in
consonance with the principal act and various decisions of this court on functioning of
tribunals? - Composition of a Search-cum-Selection Committee is contemplated in a manner
whereby appointments of Member, Vice-President and President are predominantly made by
nominees of the Central Government. A perusal of the Schedule to the Rules shows that save
for token representation of the Chief Justice of India or his nominee in some Committees, the
role of the judiciary is virtually absent. - We are in agreement with the contentions of the Learned Counsel for the petitioner(s),
that the lack of judicial dominance in the Search-cum-Selection Committee is in direct
contravention of the doctrine of separation of powers and is an encroachment on the judicial
domain. The doctrine of separation of powers has been well recognised and re-interpreted by
this Court as an important facet of the basic structure of the Constitution, in its dictum in
Kesavananda Bharati v. State of Kerala (1973) 4 SCC 225 and several other later decisions.
The exclusion of the Judiciary from the control and influence of the Executive is not limited
to traditional Courts alone, but also includes Tribunals since they are formed as an alternative
to Courts and perform judicial functions.
339 - We are of the view that the Search-cum-Selection Committee as formulated under the
Rules is an attempt to keep the judiciary away from the process of selection and appointment
of Members, Vice-Chairman and Chairman of Tribunals. This Court has been lucid in its
ruling in Supreme Court Advocates-on-Record Assn. v. Union of India (2016) 5 SCC 1
(Fourth Judges Case), wherein it was held that primacy of judiciary is imperative in selection
and appointment of judicial officers including Judges of High Court and Supreme Court.
Cognisant of the doctrine of Separation of Powers, it is important that judicial appointments
take place without any influence or control of any other limb of the sovereign. Independence
of judiciary is the only means to maintain a system of checks and balances on the working of
Legislature and the Executive. The Executive is a litigating party in most of the litigation and
hence cannot be allowed to be a dominant participant in judicial appointments. - We are in complete agreement with the analogy elucidated by the Constitution Bench in
Fourth Judges case (2016) 5 SCC 1 for compulsory need for exclusion of control of the
executive over quasi-judicial bodies of tribunals discharging responsibilities akin to courts.
The Search-cum-Selection Committees as envisaged in the Rules are against the
constitutional scheme inasmuch as they dilute the involvement of judiciary in the process of
appointment of Members of tribunals which is in effect an encroachment by the executive on
the judiciary. - The stature of the people manning an institution lends credibility and colour to the
institution itself. There is a perceptible signalling effect in having retired Supreme Court
justices as presiding officers of a particular Tribunal of National importance. The same instils
an inherent fairness, dignity and exalted status in the Tribunal. Permitting such institutions to
be also occupied by persons who have not manned an equivalent position or those with lesser
judicial experience, does not bode well for the Tribunal besides discouraging competent
people from offering their services. On the same analogy, it would be an anathema to say that
High Court judges and District Court judges can both occupy the same position in a Tribunal. - It is clear from the Scheme contemplated under the Rules that the government has
significantly diluted the role of the Judiciary in appointment of judicial members. Further, in
many Tribunals like the NGT, the role of the Judiciary in appointment of non-judicial
members has entirely been taken away. Such a practice violates the Constitutional scheme
and the dicta of this Court in various earlier decisions already referred to. It is also important
to note that in many Tribunals like the National Green Tribunal where earlier removal of
members or presiding officer could only be after an enquiry by Supreme Court Judges and
with necessary consultation with the Chief Justice of India, under the present Rules it is
permissible for the Central Government to appoint an enquiry committee for removal of any
presiding officer or member on its own. The Rules are not explicit on who would be part of
such a Committee and what would be the role of the Judiciary in the process. In doing so, it
significantly weakens the independence of the Tribunal members. It is well understood across
the world and also under our Constitutional framework that allowing judges to be removed by
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the Executive is palpably unconstitutional and would make them amenable to the whims of
the Executive, hampering discharge of judicial functions. - This Court criticised the imposition of short tenures of members of Tribunals in Union
of India v. Madras Bar Association, (2010) and a longer tenure was recommended. It was
observed that short tenures also discourage meritorious members of Bar to sacrifice their
flourishing practice to join a Tribunal as a Member for a short tenure of merely three years.
The tenure of Members of Tribunals as prescribed under the Schedule of the Rules is antimerit and attempts to create equality between unequals. A tenure of three years may be
suitable for a retired Judge of High Court or the Supreme Court or even in case of a judicial
officer on deputation. However, it will be illusory to expect a practising advocate to forego
his well-established practice to serve as a Member of a Tribunal for a period of three years.
The legislature intended to incorporate uniformity in the administration of Tribunal by virtue
of Section 184 of Finance Act, 2017. Nevertheless, such uniformity cannot be attained at the
cost of discouraging meritorious candidates from being appointed as Members of Tribunals. - In the light of the discussion as aforesaid, we hold that the Rules would require a second
look since the extremely short tenure of the Members of Tribunals is anti-merit and has the
effect of discouraging meritorious candidates to accept posts of Judicial Members in
Tribunals. - On the contentions of parties and in the light of the aforementioned discussion, the
Bench has observed following contradictions in the Rules:
175.1. There is an inconsistency within the Rules with regard to the tenure prescribed for the
Members of Tribunals insofar as a fixed tenure of three years for both direct appointments
from the Bar and appointment of retired judicial officers or judges of High Court or Supreme
Court. It is also discriminatory to the extent that it attempts to create equality between
unequal classes. The tenure of Members, Vice-Chairman, Chairman, etc. must be increased
with due consideration to the prior decisions of the Court.
175.2. The difference in the age of superannuation of the Members, Vice-Chairmen and
Chairmen, as formulated in the Rules is contrary to the objectives of the Finance Act, 2017
viz., to attain uniformity in the composition of the Tribunal framework. There should be a
uniform age of superannuation for Members, Vice-Chairmen, Chairmen, etc. in all Tribunals.
175.3. Rule 4(2) of the Rules providing that the Secretary to the Government of India in the
Ministry or Department under which the Tribunal is constituted shall be the convener of the
Search-cum-Selection Committee, is in direct violation of the doctrine of Separation of
Powers and thus contravenes the basic structure of the Constitution. Corollary to the dictum
of this Court in the Fourth Judges Case, judicial dominance in appointment of members of
judiciary cannot be diluted by the Executive.
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175.4. Rule 7 accords unwarranted discretion to the Central Government insofar as it merely
directs and not mandates the Central Government to consider the recommendation of
Committee for removal of a Member of a Tribunal. The Central Government shall
mandatorily consider the recommendation of the Committee before removal of any Member
of Tribunal. Furthermore, the proviso to Rule 7 creates an unjust classification between
National Company Law Appellate Tribunal (NCLAT) and other fora inasmuch as the removal
of Chairperson or member of NCLAT alone is to be in consultation with the Chief Justice of
India
175.5. Moral turpitude is a term well defined by this Court in numerous decisions. Rule 7(b)
cannot be allowed to survive as it allows the Executive to interpret the meaning of ‘moral
turpitude’, which is an encroachment on the judicial domain.
175.6. The power of relaxation of rules with respect to any class of persons shall be vested
with the Search-cum-Selection Committee and not with the Central Government as provided
under Rule 20. As ruled by this Court earlier in Madras Bar Association (2014) 10 SCC 1,
the Central Government cannot be allowed to have administrative control over the Judiciary
without subverting the doctrine of separation of powers.
Issue IV: Whether there should be a single nodal agency for administration of all tribunals? - This Court in L. Chandra Kumar v. Union of India (supra), envisaged the
administration of the entire Tribunal Framework in the country to be monitored by a single
nodal agency/ministry. It was observed not to be advisable to allow supervision of a Tribunal
by a department/ministry which is a party before it. This Court recommended constitution of
an independent agency by the concerned Ministry, to oversee the working of Tribunals. The
independent agency when constituted, may also prescribe a uniform code for appointment,
qualification, condition of service, manner of allocation of fund, etc. of the Tribunals. This
will, the Court suggested, minimise the influence of the parent ministry of the Tribunal, in
addition to ensuring uniformity in the entire Tribunal framework…. - What appears to be of paramount importance is that every Tribunal must enjoy adequate
financial independence for the purpose of its day to day functioning including the expenditure
to be incurred on (a) recruitment of staff; (b) creation of infrastructure; (c) modernisation of
infrastructure; (d) computerisation; (e) perquisites and other facilities admissible to the
Presiding Authority or the Members of such Tribunal. It may not be very crucial as to which
Ministry or Department performs the duties of Nodal Agency for a Tribunal, but what is of
utmost importance is that the Tribunal should not be expected to look towards such Nodal
Agency for its day to day requirements. There must be a direction to allocate adequate and
sufficient funds for each Tribunal to make it self-sufficient and self-sustainable authority for
all intents and purposes. The expenditure to be incurred on the functioning of each Tribunal
has to be necessarily a charge on the Consolidated Fund of India. Therefore, hitherto, the
Ministry of Finance shall, in consultation with the Nodal Ministry/Department, shall earmark
separate and dedicated funds for the Tribunals. It will not only ensure that the Tribunals are
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not under the financial control of the Department, who is a litigant before them, but it may
also enhance the public faith and trust in the mechanism of Tribunals.
Issue V: Whether there is a need for conducting a Judicial Impact Assessment of all tribunals
in india? - The American principle of ‘Judicial Impact Assessment’ was first borrowed by this Court
in its dictum in Salem Advocate Bar Assn. (II) v. Union of India (2005) 6 SCC 344, whereby
it was observed that it is imperative for the Legislature to perform a Judicial Impact
Assessment of the enactment passed to assess its ramifications on the judiciary. This Court
had directed for a committee to be constituted to assess the need for Judicial Impact
Assessment in the Indian context. Pursuant thereto the Jagannadha Rao Committee Report
was submitted. The Report suggested that by way of Judicial Impact Assessment, the
legislature must analyse the budgetary requirement of the staff that would require to be
created by the statute and additional expenditure arising out of the new cases consequent to
the enactment. Further, the financial memorandum, as prepared by the legislature, must
specifically include the number of civil and criminal cases expected to arise from the new
enactment, requirement of more judges and staff for adjudication of these cases and the
necessary infrastructure. The requisite paragraphs of the decision in Salem Advocate Bar
Assn. (supra) are reproduced as follows: - The Committee has also suggested that: Further, there must be ‘judicial impact
assessment’, as done in the United States, whenever any legislation is introduced either in
Parliament or in the State Legislatures. The financial memorandum attached to each Bill must
estimate not only the budgetary requirement of other staff but also the budgetary requirement
for meeting the expenses of the additional cases that may arise out of the new Bill when it is
passed by the legislature. The said budget must mention the number of civil and criminal
cases likely to be generated by the new Act, how many courts are necessary, how many
judges and staff are necessary and what is the infrastructure necessary. So far in the last fifty
years such judicial impact assessment has never been made by any legislature or by
Parliament in our country.
50 . Having regard to the constitutional obligation to provide fair, quick and speedy justice,
we direct the Central Government to examine the aforesaid suggestions and submit a report to
this Court within four months. - In the present case, we are of the view that the legislature has not conformed to the
opinion of this Court with respect to ‘Judicial Impact Assessment’ and thus, has not made any
attempt to assess the ramifications of the Finance Act, 2017. It can be legitimately expected
that the multifarious amendments in relation to merger and reorganisation of Tribunals may
result in massive increase in litigation which, in absence of adequate infrastructure, or
budgetary grants, will overburden the Judiciary.
343 - In the fitness of things, we deem it appropriate to direct the Union of India to carry out
financial impact assessment in respect of all the Tribunals referable to Sections 158 to 182 of
the Finance Act, 2017 and undertake an exercise to assess the need based requirements and
make available sufficient resources for each Tribunal established by the Parliament.
Issue VI: Whether judges of tribunals set up by acts of parliament under articles 323-A and
323-B of the constitution can be equated in ‘rank’ and ‘status’ with constitutional
functionaries? - This Court in L. Chandra Kumar (1997) 3 SCC 261 observed that Tribunals are not
substitutes of Superior Courts and are only supplemental to them. Hence, the status of
members of such Tribunals cannot be equated with that of the sitting judges of Constitutional
Courts else, as V.R. Krishna Iyer, J. aptly pointed in his article titled ‘Why Stultify Judges’
Status?’, “Creating deemed Justices of High Courts with equal status and salaries suggests an
oblique bypassing of the Constitution….”. The relevant extract of L. Chandra Kumar (supra)
is reproduced as follows: - Before moving on to other aspects, we may summarise our conclusions on the
jurisdictional power of these Tribunals. The Tribunals are competent to hear matters where
the vires of statutory provisions are questioned. However, in discharging this duty, they
cannot act as substitutes for the High Courts and the Supreme Court which have, under our
constitutional set-up, been specifically entrusted with such an obligation. Their function in
this respect is only supplementary and all such decisions of the Tribunals will be subject to
scrutiny before a Division Bench of the respective High Courts….” - We would further point out that the Warrant of Precedence is a mere selfserving
executive decision and not a law in itself. It is a reflection of the inter-se hierarchy amongst
functionaries for the purposes of discharge of important ceremonial functions and other State
duties. It cannot either confer rights or alter the status accorded by law. It would further be
clearly abhorrent to use such an instrument to undermine the order of precedence clearly
accorded under the Constitution. - It is hence essential that the Union of India, takes note of the observations of this Court
herein and abide by the spirit of the Constitution in respecting the aforementioned difference
between constitutional functionaries and statutory authorities. It is important for the Union of
India to ensure that judges of High Courts and the Supreme Court are kept on a separate
pedestal distanced from any other Tribunal or quasi-judicial Authority.
Issue VII: Whether direct statutory appeals from tribunals to the Supreme Court ought to be
detoured? - The ambit of appellate jurisdiction is clear from a perusal of Articles 132 to 136 of the
Constitution. Article 132 provides that an appeal may be instituted before the Supreme Court
against any order of the High Court where a substantial question of law arises for
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consideration. Article 133(3) specifies that there shall be no appeal from the order of a single
judge of the High Court unless the contrary is provided through a law by the Parliament.
Further, Article 134 delineates the jurisdiction of the Supreme Court in criminal matters
restricting it primarily to cases where the High Court has awarded death sentence either in
trial before it or in reversal of an earlier acquittal by the trial court. In addition to this, Article
134(2) is lucid in its wording to provide that in absence of any specific legislation by the
Parliament to enlarge the criminal appellate jurisdiction of this Court, no routine appeal lies
before the Supreme Court in criminal matters. The extract from Article 134(2) has been
reproduced below:
“(2) Parliament may by law confer on the Supreme Court any further powers to entertain and
hear appeals from any judgment, final order or sentence in a criminal proceeding of a High
Court in the territory of India subject to such conditions and limitations as may be specified in
such law.” - It is evident that this Court has also lost its original character owing to the routine
hearing of appeals through invocation of the discretionary jurisdiction under Article 136. It is
apposite to hold that Article 136 was never meant to be used in this manner as was very aptly
remarked by Dr. B.R. Ambedkar before the Constituent Assembly, who noted that:
“The Supreme Court is not likely to grant special leave in any matter whatsoever unless it
finds that it involves a serious breach of some principle in the administration of justice, or
breach of certain principles which strike at the very root of administration of justice as
between man and man.” - It is hence clear post L. Chandra Kumar (supra) that writ jurisdiction under Article 226
does not limit the powers of High Courts expressly or by implication against military or
armed forces disputes. The limited ouster made by Article 227(4) only operates qua
administrative supervision by the High Court and not judicial review. Article 136(2) prohibits
direct appeals before the Supreme Court from an order of armed forces tribunals, but would
not prohibit an appeal to the Supreme Court against the judicial review exercised by the High
Court under Article 226. - It is apparent that the Legislature has not been provided with desired assistance so that it
may rectify the anomalies which arise from provisions of direct appeal to the Supreme Court.
Considering that such direct appeals have become serious impediments in the discharge of
Constitutional functions by this Court and also affects access to justice for citizens, it is high
time that the Union of India, in consultation with either the Law Commission or any other
expert body, revisit such provisions under various enactments providing for direct appeals to
the Supreme Court against orders of Tribunals, and instead provide appeals to Division
Benches of High Courts, if at all necessary. Doing so would have myriad benefits. In addition
to increasing affordability of justice and more effective Constitutional adjudication by this
Court, it would also provide an avenue for High Court Judges to keep face with
contemporaneous evolutions in law, and hence enrich them with adequate experience before
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they come to this Court. We direct that the Union undertake such an exercise expeditiously,
preferably within a period of six months at the maximum, and place the findings before
Parliament for appropriate action as may be deemed fit.
Issue VIII: Whether there is a need for amalgamation of Existing tribunals and setting up of
benches - As noted by this court on numerous occasions, including in Madras Bar Association
2014 10 SCC 1, although it is the prerogative of the Legislature to set up alternate avenues for
dispute resolution to supplement the functioning of existing Courts, it is essential that such
mechanisms are equally effective, competent and accessible. Given that jurisdiction of High
Courts and District Courts is affected by the constitution of Tribunals, it is necessary that
benches of the Tribunals be established across the country. However, owing to the small
number of cases, many of these Tribunals do not have the critical mass of cases required for
setting up of multiple benches. On the other hand, it is evident that other Tribunals are
pressed for resources and personnel. - This ‘imbalance’ in distribution of case-load and inconsistencies in nature, location and
functioning of Tribunals require urgent attention. It is essential that after conducting a Judicial
Impact Assessment as directed earlier, such ‘niche’ Tribunals be amalgamated with others
dealing with similar areas of law, to ensure effective utilisation of resources and to facilitate
access to justice. - We accordingly direct the Union to rationalise and amalgamate the existing Tribunals
depending upon their case-load and commonality of subject-matter after conducting a Judicial
Impact Assessment, in line with the recommendation of the Law Commission of India in its
272nd Report. Additionally, the Union must ensure that, at the very least, circuit benches of all
Tribunals are set up at the seats of all major jurisdictional High Courts.
Conclusion - light of the above discussions and our analysis, it is held that:
223.1. The issue and question of Money Bill, as defined under Article 110(1) of the
Constitution, and certification accorded by the Speaker of the Lok Sabha in respect of PartXIV of the Finance Act, 2017 is referred to a larger Bench.
223.2. Section 184 of the Finance Act, 2017 does not suffer from excessive delegation of
legislative functions as there are adequate principles to guide framing of delegated legislation,
which would include the binding dictums of this Court.
223.3. The Tribunal, Appellate Tribunal and other Authorities (Qualifications, Experience
and other Conditions of Service of Members) Rules, 2017 suffer from various infirmities as
observed earlier. These Rules formulated by the Central Government under Section 184 of the
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Finance Act, 2017 being contrary to the parent enactment and the principles envisaged in the
Constitution as interpreted by this Court, are hereby struck down in entirety.
223.4. The Central Government is accordingly directed to re-formulate the Rules strictly in
conformity and in accordance with the principles delineated by this Court in R.K. Jain
(supra), L. Chandra Kumar (supra), Madras Bar Association (supra) and Gujarat Urja
Vikas Ltd. (supra) conjointly read with the observations made in the earlier part of this
decision.
223.5. The new set of Rules to be formulated by the Central Government shall ensure nondiscriminatory and uniform conditions of service, including assured tenure, keeping in mind
the fact that the Chairperson and Members appointed after retirement and those who are
appointed from the Bar or from other specialised professions/services, constitute two separate
and distinct homogeneous classes.
223.6. It would be open to the Central Government to provide in the new set of Rules that the
Presiding Officers or Members of the Statutory Tribunals shall not hold ‘rank’ and ‘status’
equivalent to that of the Judges of the Supreme Court or High Courts, as the case may be,
only on the basis of drawing equal salary or other perquisites.
223.7. There is a need-based requirement to conduct ‘Judicial Impact Assessment’ of all the
Tribunals referable to the Finance Act, 2017 so as to analyse the ramifications of the changes
in the framework of Tribunals as provided under the Finance Act, 2017. Thus, we find it
appropriate to issue a writ of mandamus to the Ministry of Law and Justice to carry out such
‘Judicial Impact Assessment’ and submit the result of the findings before the competent
legislative authority.
223.8. The Central Government in consultation with the Law Commission of India or any
other expert body shall re-visit the provisions of the statutes referable to the Finance Act,
2017 or other Acts as listed in para 174 of this order and place appropriate proposals before
the Parliament for
consideration of the need to remove direct appeals to the Supreme Court from orders of
Tribunals. A decision in this regard by the Union of India shall be taken within six months.
223.9. The Union Government shall carry out an appropriate exercise for amalgamation of
existing Tribunals adopting the test of homogeneity of the subject matters to be dealt with and
thereafter constitute adequate number of Benches commensurate with the existing and
anticipated volume of work.
Interim Relief - As the Tribunal, Appellate Tribunal and other Authorities (Qualification, Experience and
other Conditions of Service of Members) Rules, 2017 have been struck down and several
directions have been issued vide the majority judgment for framing of fresh set of Rules, we,
as an interim order, direct that appointments to the Tribunal/Appellate Tribunal and the terms
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and conditions of appointment shall be in terms of the respective statutes before the
enactment of the Finance Bill, 2017. However, liberty is granted to the Union of India to seek
modification of this order after they have framed fresh Rules in accordance with the majority
judgment. However, in case any additional benefits concerning the salaries and emoluments
have been granted under the Finance Act, they shall not be withdrawn and will be continued.
These would equally apply to all new members.
Dr. Dhananjaya Y Chandrachud, J. (Supplementing and partially dissenting): - Chief Justice A M Ahmadi noted that the Constitution provides elaborate provisions
dealing with terms of appointments of judges of higher courts. The learned judge observed
that the same safeguards are not available to the subordinate judiciary or members of
tribunals. Hence, they can never be considered full and effective substitutes for the superior
judiciary in discharging the function of constitutional interpretation: (L. Chnadra Kumar
case (1997) 3 SCC 261, p.301, para 78)
“78…The constitutional safeguards which ensure the independence of the Judges of the
superior judiciary, are not available to the Judges of the subordinate judiciary or to those who
man tribunals created by ordinary legislations. Consequently, Judges of the latter category can
never be considered full and effective substitutes for the superior judiciary in discharging the
function of constitutional interpretation…”
The Court struck down Articles 323A(2)(d) and 323B(3)(d) as unconstitutional. It was also
held that an ―exclusion of jurisdictionǁ clause enacted in any legislation, under the aegis of
Articles 323A(2)(d) and 323B(3)(d) is unconstitutional. - Pursuant to the enactment of the Companies Act 2013, a Constitution Bench of this
Court in Madras Bar Association v. Union of India (2015) 8 SCC 583 dealt with the
contention that despite the directions issued in Madras Bar Assn., (2010) 11 SCC 1 in respect
of the provisions concerning the NCLT and the NCLAT, analogous provisions had been
inserted in the 2013 Act without complying with those directions. The Court embarked on a
comparison of various provisions of the Companies Act 2013 with the directions issued in
Madras Bar Assn. and observed that many discrepancies persisted which were in
contravention of the directions issued by this Court in the earlier round of litigation
concerning the qualifications, appointments, eligibility, and composition of the Selection
Committees. The Court affirmed the directions issued in Madras Bar Assn. including the
direction on the composition of the Selection Committee and held that once remedial
measures are taken to bring the provisions in conformity with the directions issued, the NCLT
and the NCLAT may commence operations. - At its core, the present reference before the Constitution Bench raises the issue of
whether a law which seeks to substitute existing statutory provisions governing the
appointment, selection and conditions of service of diverse tribunals can validly be enacted as
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a Money Bill as a component of the Finance Act. The answer to this question must in turn
depend upon two facets:
(i) Whether judicial review can extend to determining the constitutional validity of a decision
of the Speaker of the Upper House to certify the passage of a Bill as a Money Bill under
Article 110 of the Constitution; and
(ii) Whether the statutory modification of the procedure for appointment and selection of
members and their conditions of service is destructive of judicial independence and hence
ultra vires.
Between the universes represented by these two issues, lie the shades of argument upon which
the decision of this case will turn. - This is a clear indicator of the constitutional position that what makes a Bill a Money
Bill for the purposes of Chapter II of Part V of the Constitution is that it deals only with
matters falling under the description provided in clauses (a) to (g) of Article 110 (1). Clause
(g) of Article 110 (1) covers ―any matter incidental toǁ what is specified in clauses (a) to (f).
Clause (g) must not be understood as a residuary provision or a catch-all-phrase
encompassing all other matters which are not specified in clauses (a) to (f). If this
construction were to be placed on clause (g), the distinction between an Ordinary Bill and a
Money Bill would vanish. Hence, to be incidental within the meaning of clause (g), the Bill
must cover only those matters which fall within the ambit of clauses (a) to (f). It is only a
matter which is incidental to any of the matters specified in clauses (a) to (f) which is
contemplated in clause (g). - The Rajya Sabha reflects the pluralism of the nation and ensures a balance of power. It is
an indispensable constitutive unit of the federal backbone of the Constitution. Potential
differences between the two houses of the Parliament cannot be resolved by simply ignoring
the Rajya Sabha. In a federal polity such as ours, the efficacy of a constitutional body created
to subserve the purpose of a deliberate dialogue, cannot be defeated by immunising from
judicial review the decision of the Speaker to certify a Bill as a Money Bill. - Part XIV of the Finance Act 2017 could not have been enacted in the form of a Money
Bill. The rules which have been framed pursuant of the rule making power under Section 184
are held to be unconstitutional. However, since during the pendency of these proceedings,
certain steps were taken in pursuance of the interim orders and appointments have been made,
we direct that those appointments shall not be affected by the declaration of
unconstitutionality. The terms and conditions governing the personnel so appointed shall
however abide by the parent enactments. Upon the declaration of unconstitutionality, the
conditions specified in all corresponding aspects in the parent enactments shall continue to
operate. - It is imperative that an overarching statutory organisation be constituted through
legislative intervention to oversee the working of tribunals. We recommend the constitution
of an independent statutory body called the ―National Tribunals Commission (NTC) to
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oversee the selection process of members, criteria for appointment, salaries and allowances,
introduction of common eligibility criteria, for removal of Chairpersons and Members as also
for meeting the requirement of infrastructural and financial resources. The legislation should
aim at prescribing uniform service conditions for members. The Commission should comprise
the following members:
(i) Three serving judges of the Supreme Court of India nominated by the Chief Justice of
India;
(ii) Two serving Chief Justices or judges of the High Court nominated by the Chief Justice of
India;
(iii) Two members to be nominated by the Central Government from amongst officers
holding at least the rank to a Secretary to the Union Government: one of them shall be the
Secretary to the Department of Justice who will be the exofficio convener; and
(iv) Two independent expert members to be nominated by the Union government in
consultation with the Chief Justice of India.
The senior-most among the Judges nominated by the Chief Justice of India shall be
designated as the Chairperson of the NTC. - Though the present judgment analyses the ambit of the word “only” in Article 110(1)
and the interpretation of sub-clauses (a) to (g) of clause (1) of Article 110 and concludes that
Part XIV of the Finance Act 2017 could not have been validly enacted as a Money Bill, I am
in agreement with the reasons which have been set out by the learned Chief Justice of India to
refer the aspect of money bill to a larger Bench and direct accordingly. - I am in agreement with the observations of brother Justice Deepak Gupta that the
qualifications of members to tribunals constitute an essential legislative function and cannot
be delegated. Tribunals have been conceptualized as specialized bodies with domain-specific
knowledge expertise. Indispensable to this specialized adjudicatory function is the selection
of members trained in their discipline. Keeping this in mind, the prescription of qualifications
for members of tribunals is a legislative function in its most essential character. - The qualifications for appointment to adjudicatory bodies determine the character of the
body. The adjudicatory tribunals are intended to fulfil the objects of legislation enacted by
Parliament, be it in the area of consumer protection, environmental adjudication, industrial
disputes and in diverse aspects of economic regulation. Defining the qualifications necessary
for appointment of members constitutes the core, the very essence of the tribunal. This is an
essential legislative function and cannot be delegated to the rule making authority of the
central government. It is for the legislature to define the conditions which must be fulfilled for
appointment after assessing the need for domain specific knowledge.
Deepak Gupta, J. (Supplementing and partially dissenting)
350 - I am in total agreement with the Chief Justice in as much as he has held that the decision
of the Hon’ble Speaker of the House of People under Article 110 (3) of the Constitution is not
beyond judicial review. I also agree with his views that keeping in view of the high office of
the Speaker, the scope of judicial review in such matters is extremely restricted. If two views
are possible then there can be no manner of doubt that the view of the Speaker must prevail.
Keeping in view the lack of clarity as to what constitutes a Money Bill, I agree with the
Hon’ble Chief Justice that the issue as to whether Part XIV of the Finance Act, 2017, is a
Money Bill or not may be referred to a larger Bench. - As far as Issue No.2 is concerned, I am unable to agree with the conclusion of Chief
Justice. There can be no doubt that Parliament is not expected to deal with all matters and it
can delegate certain “non-essential” matters to the executive. Every condition need not be laid
down by the Legislature. - In Ramesh Birch v. Union of India, 1989 Supp (1) SCC 430 a Bench of this Court
clearly held that the legislature cannot wash their hands of their essential legislative functions.
It held as follows.
“19…A different way in which the second of the above views has been enunciated — and it is
this view which has dominated since — is by saying that the legislatures cannot wash their
hands of their essential legislative function. Essential legislative function consists in laying
down the legislative policy with sufficient clearness and in enunciating the standards which
are to be enacted into a rule of law. This cannot be delegated. What can be delegated is only
the task of subordinate legislation which is by its very nature ancillary to the statute which
delegates the power to make it and which must be within the policy and framework of the
guidance provided by the legislature.”
By the Finance Act, 2017 the number of tribunals were reduced to 19. It is the case of the
Government that the tribunals are necessary so that technically qualified people can man the
tribunal. The nature of work done by different tribunals is totally different. The essential
qualifications for filling up the posts of members of administrative tribunals, company law
tribunals or the National Green Tribunal would be totally different. This function, in my
opinion, being an essential legislative function, could not have been delegated especially
without laying down any guidelines. - I am in respectful disagreement with the Chief Justice that the objects of the parent
enactments and the law laid down by this Court in R. K. Jain v. Union of India (1993) 4 SCC
119, L. Chandra Kumar (supra), Union of India v. Madras Bar Association (2010) 11 SCC
1, Madras Bar Association v. Union of India (2014) 10 SCC 1, Madras Bar Association v.
Union of India (2015) 8 SCC 583, Gujarat Urja Vikas Nigam Ltd. v. Essar Power Ltd.
(2016) 9 SCC 103 in essence should be read as the guidelines. One would expect the Union
Government to abide by the directions of this Court. However, this expectation has been
belied by this very enactment which violates every principle of law laid down by this Court
and, as held in the judgments of both my brothers, the Rules framed by the delegatee are
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violative of the law laid down by this Court. In this background, it is apparent that both the
delegator and the delegatee felt that they were not bound by these judgments. This is also
apparent from the fact that the Rules framed by the delegatee have not been brought in
consonance with the law by the delegator. - There being no guidelines, unfettered and unguided powers have been vested in the
delegatee and, therefore, in my opinion, there is excessive delegation. As such, I would hold
that Section 184 of the Finance Act, 2017 insofar as it delegates the powers to lay down the
qualifications of Chairperson, Vice-Chairperson, Chairman, Vice-Chairman, President, VicePresident, 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, suffers from the
vice of excessive delegation and is accordingly struck down.
Issue III & VI - I agree with the Chief Justice and I do not want to add anything.
Issue IV, V, VII & VIII - I agree with the Chief Justice both on the reasoning and conclusions on these issues.
However, as already pointed out above, I am of the view that since nobody has raised a
challenge to the correctness of the law laid down by 7-Judge Bench in L. Chandra Kumar
(supra) that there should be one wholly independent agency for the administration of all the
tribunals. There is no need to refer this issue to a Bench of 7 Judges. - The litigants cannot wait for judicial impact assessment and action by the Government
which may or may not take place. Experience has shown that the judgments right from L.
Chandra Kumar (supra) to Madras Bar Association, 2010 (supra) have not been complied
with by the Union in letter and spirit. Citizens of this country cannot be denied justice which
is the first promise made in the Preamble. Therefore, I am of the view that in whichever
State/Union Territory the bench of a particular tribunal is not established or functioning, the
litigants of that State will have a right to invoke the extraordinary writ jurisdiction of the
jurisdictional High Court under Article 226 of the Constitution for redressal of their
grievances. They cannot be expected to go to far off distant places and spend huge amounts of
money, much beyond their means to ventilate their grievances. The alternative remedy of
approaching a tribunal is an illusory remedy and not an efficacious alternative remedy. The
self-imposed bar or restraint of an alternative efficacious remedy would not apply. Such
litigants are entitled to file petitions under Article 226 of the Constitution of India before the
jurisdictional High Court. In L. Chandra Kumar (supra) it was clearly held that the right of
judicial review is a part of the basic structure of the Constitution and this right must be
interpreted in a manner that it is truly available to the litigants and should not be an illusory
right.
