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3. 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.”
7. 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.
63. 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.
64. 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
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).
92. 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?
116. 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
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.
117. 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.
118. 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?
119. 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.
139. 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
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.
144. 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.
145. 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?
148. 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.
149. 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.
153. 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.
154. 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.
164. 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.
165. 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
the Executive is palpably unconstitutional and would make them amenable to the whims of the Executive, hampering discharge of judicial functions.
172. 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 anti- merit 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.
174. 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.
175. 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.
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?
177. 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….
180. 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
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?
183. 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:
49. 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.
184. 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.
185. 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?
191. 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:
93. 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….”
192. 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.
193. 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?
198. 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
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.”
207. 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.”
215. 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.
218. 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
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
220. 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.
221. 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.
222. 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
223. 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 Part- XIV 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
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 non- discriminatory 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
224. 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
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):
240. 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.
246. 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.
253. 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
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.
262. 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).
302. 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.
341. 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.
343. 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
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.
346. 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.
347. 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.
348. 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)
365. 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.
366. 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.
371. 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.
377. 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
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.
379. 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, 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, suffers from the vice of excessive delegation and is accordingly struck down.
Issue III & VI
380. I agree with the Chief Justice and I do not want to add anything.
Issue IV, V, VII & VIII
381. 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.
392. 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.
