Column: Decoding the Tribunal Judgment

Column: Decoding the Tribunal Judgment

Rahul Unnikrishnan

The recent decision of the Supreme Court in Rojer Mathew v. South Indian Bank Ltd. dealt with two classes of writ petitions: 

  1. A writ petition filed by the Madras Bar Association in 2012 to direct the Union of India to implement the directions of the Supreme Court in Union of India v. R. Gandhi (2010) 11 SCC 1 and L. Chandra Kumar v. Union of India (1997) 3 SCC 261, wherein the Ministry of Law and Justice was ordered to take over the administration of all tribunals in India; and
  2. A batch of writ petitions challenging the constitutional validity of Part XIV of the Finance Act, 2017 by which the provisions of about twenty-six central enactments were amended, which dealt with different statutory tribunals. 

Part XIV of the Finance Act, 2017

Through Part XIV, at one stroke, the authority and jurisdiction of twenty-six tribunals administered under twenty-six diverse central laws stood modified. The enormity and complexities involved in this legislative exercise is discernible from the following: 

  1. Eight tribunals established under different enactments – specified in the Ninth Schedule – were abolished. However, the jurisdiction and its powers were transferred to seven other tribunals; 
  1. The eligibility criteria, selection process, removal, salaries and allowances, tenure and other service conditions pertaining to various Members (i.e., Chairpersons, Vice-Chairpersons, Technical/Specialist Members and Judicial Members) officiating across twenty-six tribunals specified under twenty-six varied central laws were declared void and non-est; and
  1. The powers to prescribe the eligibility criteria, selection process, removal, salaries and allowances, tenure and other service conditions pertaining to various Members of remaining nineteen tribunals were sub-delegated to the rule-making powers of the Central Government. 

The Money Bill challenge

The primary argument of the petitioners was that the amendments could not have been made through the Finance Act, 2017, as Part XIV could not have been certified as a money bill. 

The Supreme Court held that there is no bar against judicial review of certification of a bill as a Money Bill by the Speaker under Article 110(4) of the Constitution. It is also made clear that Articles 110(3) and 122(1) cannot operate as a bar when a challenge is made on the ground of illegality or unconstitutionality (see para 102). However, the Court proceeded to hold that there would be a presumption of legality in favour of the Speaker’s decision and onus would be on the person challenging its validity to show that such certification was grossly unconstitutional or tainted with blatant substantial illegality. (See para 110) 

The petitioners argued that the word “only” in Article 110(1) had a unique, restrictive meaning, implying that a bill cannot be certified as a Money Bill unless it fell within any of the categories mentioned in Articles 110(1)(a) to (f). This was earlier argued in the challenge to the Aadhaar Act, wherein the majority judgment of Justice Sikri held that the Aadhaar Act was a Money Bill. In the instant case, the Court held as follows:

122. … 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).”  (emphasis added)

The Court then proceeded to observe:

“123.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.” (emphasis added)

An unexpected outcome, indeed! The majority opinion in Aadhaar, especially the part dealing with Money Bill, is riddled with inconsistencies. However, in the instant case, if the Court was of the view that the majority opinion in Aadhaar did not deal with the word “only” in Article 110(1), there was absolutely no need for the judges to refer it to a larger bench. In fact, this is exactly what Mr. Datar had argued- that the current bench could go into the interpretation of the word “only” in Article 110(1). The observations doubting the correctness of the Aadhaar judgment may sound like a victory now, but there are no winners here. Unless the next Chief Justice of India constitutes a seven-judge bench in the immediate future, this reference is as good as dead.

Validity of section 184 of the Finance Act, 2017

Section 184 conferred upon the central government power to make rules by way of notification to provide for (a) qualifications; (b) appointment; (c) term of office; (d) salaries and allowances; (e) resignation; and (f) removal and other terms and conditions of service of the Chairperson, Vice-Chairperson, Chairman, Vice-Chairman, President, Vice-President, Presiding Officer or Member of various tribunals and appellate tribunals. 

The petitioners argued that s. 184 was liable to be struck down for excessive delegation: the subject matters that have been delegated under s. 184 were essential legislative functions. The net-effect of s. 184 was that, the central government issued the Tribunal, Appellate Tribunal and Other Authorities (Qualifications, Experience and Other Conditions of Service of Members) Rules, 2017, which replaced selection process and other conditions of service of members of nineteen tribunals. 

The Court upheld the validity of s. 184 and held that eligibility qualifications for the members, Chairpersons, Chairman, etc., of different tribunals are not per se functionally undelegatable. In para 143 of the majority judgment, the Court held as follows:

“143. The objects of the parent enactments as well as the law laid down by this Court in R.K. Jain (supra), L Chandra Kumar (supra), R. Gandhi (supra), Madras Bar Association (supra) and Gujarat Urja Vikas (supra) 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.(emphasis added)

The judgments mentioned in para 143, according to the Court, form the policy and guideline, and any rules made under s. 184 must conform to the directions given in those judgments. In other words, the Court held that there is no excessive delegation in s. 184, but the rules issued thereunder must conform to the policy and guidelines set out in R. Gandhi and other judgments. 

However, the Court failed to note that most of these tribunals replaced jurisdiction of High Courts. As such, it is all the more important to give similar protection and independence to tribunal members. This was correctly highlighted by Justice Deepak Gupta, who wrote a mostly concurring opinion, dissenting only on this issue. He held, rather in strong terms-:

“30. 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 India9, L. Chandra Kumar (supra), Union of India v. Madras Bar Association10, Madras Bar Association v. Union of India11, Madras Bar Association v. Union of India12, Gujarat Urja Vikas Nigam Ltd. v. Essar Power Ltd.13 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.” (emphasis added)

The above paragraph clearly sums up the reason behind repeated PILs on the issue of tribunalisation. The judgments in L. Chandra Kumar and R. Gandhi have settled the law in this regard. Yet, the central government, in open defiance of these judgments, have issued no less than ten notifications in violation of R. Gandhi principles. The notification on GST Appellate Tribunal is the most recent example in this regard.

Thus, it is submitted that, when the central government has repeatedly violated Constitution Bench decisions of the Supreme Court, the Court should not have allowed any delegation of powers to the Executive that would violate principles of independence of judiciary. 

Validity of Tribunal, Appellate Tribunal and Other Authorities (Qualifications, Experience and Other Conditions of Service of Members) Rules, 2017

The above rules were framed under s. 184 of the Finance Act, 2017. The Court struck down the entire rules for being violative of principles laid down in L. Chandra Kumar and R. Gandhi. The highlights are as follows:

  1. The majority of the composition of Search-cum-Selection Committee should always be from the Judiciary. The Executive is a litigating party in most of the litigation and hence cannot be allowed to be a dominant participant in judicial appointments;
  2. Parliament cannot divest judicial functions upon technical members, devoid of either adjudicatory experience or legal knowledge;
  3. Persons of “ability, integrity and standing, and having special knowledge of, and professional experience of” certain specialized subjects “which in the opinion of the Central Government is useful”, are not eligible to be appointed as Presiding Officers of tribunals. In other words, there cannot be any vague qualifications for members or Presiding Officers of tribunals;
  4. The members and Presiding Officers of tribunals cannot be removed without either the concurrence of the judiciary or in the manner specified in the Constitution for Constitutional Court judges; and
  5. The short tenure of members of tribunals increases interference by the Executive jeopardizing the independence of judiciary. This would also discourage meritorious candidates to accept posts of Judicial Members in tribunals.

The curious case of writ petition filed by Madras Bar Association

As mentioned already, the prayer in WP No. 267 of 2012, which was filed by the Madras Bar Association, was to implement the directions in L. Chandra Kumar and R. Gandhi. Both these judgments had, inter alia, directed the Union of India to bring all tribunals under the administrative control of Ministry of Law and Justice. On 27.03.2019, when this matter was listed, the Court, to know the view of the Government of India, directed them to file an affidavit within two weeks. This was after the Attorney General informed the Court that the Ministry of Law and Justice is already overburdened. The Court proceeded to order –“Matter be listed before this Bench after two weeks”. However, this did not happen, and the Court, in the instant case, proceeded to dispose off this writ petition as well. It held:

“184. 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.” (emphasis added)

“231. Writ Petition (Civil) No. 267 of 2012 is also disposed of in the above terms as the issues arising are similar.” 

It is submitted that the above paragraph is in violation of a seven-judge bench decision of the Supreme Court in L. Chandra Kumar and a five-judge bench decision in R. Gandhi. These two decisions had made it expressly clear that all tribunals should be placed under the Ministry of Law and Justice. A similar observation was also made by Justice Nariman in Swiss Ribbons. In fact, para 120(xii) of R. Gandhi says-

The administrative support for all tribunals should be from the Ministry of Law and Justice”.

This observation was binding on the current bench, and the Court ought to have followed it verbatim. Indeed, after adjourning this writ for two weeks, it was highly improper for the Court to decide on this issue, without giving an opportunity for the petitioner to present their case.

It is sincerely hoped that Union of India drafts a new set of rules complying with the directions issued in the R. Gandhi decision. 

The author is a practicing advocate at the Madras High Court. He assisted Senior Advocate Arvind P. Datar, who appeared for Madras Bar Association and Revenue Bar Association in this batch of writ petitions.

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