A five-judge Constitution Bench of the Supreme Court recently referred the question to a larger bench.
A five-judge Constitution Bench of the Supreme Court recently referred the question to a larger bench.

[Breaking] Tribunals: Supreme Court refers passage of Finance Act as Money Bill to larger bench, strikes down Rules framed under Section 184

Murali Krishnan

A Constitution Bench of the Supreme Court today ordered that validity of passage of Finance Act 2017 as Money Bill should be decided by a larger Bench. The decision came in a batch of petitions concerning the functioning of tribunals including a challenge to the Finance Act 2017 which had revamped the schemes governing the functioning of tribunals.

However, the Court upheld Section 184 of the Finance Act which had entitled the Central government to frame rules to determine appointment, service conditions, removal and other aspects of tribunals.

The Court, however, struck down the Tribunal, Appellate Tribunal and other Authorities (Qualifications, Experience and other Conditions of Service of Members) Rules, 2017  framed by the Central Government pursuant to Section 184. It ordered the Centre to reformulate the Rules in consonance with the judgment in R Gandhi.

The Court also ordered the Central government to consider removing direct appeals provided to Supreme Court from various tribunals. The Court has also directed the Ministry of Law and Justice to undertake a Judicial Impact Assessment of Tribunals.

The judgment was delivered by a Bench of Chief Justice of India Ranjan Gogoi and Justices NV Ramana, DY Chandrachud, Deepak Gupta and Sanjiv Khanna.

Justice Chandrachud and Deepak Gupta have given separate judgments.

The judgment was rendered in a batch of petitions challenging the Constitutional validity of Finance Act, 2017 and the Tribunal, Appellate Tribunal and other Authorities (Qualifications, Experience and other Conditions of Service of Members) Rules, 2017 (Rules).

The petitioners had challenged the Finance Act, 2017 particularly Part XIV on various grounds.

Part XIV of the Finance Act repealed substantive provisions relating to the administration of 26 Tribunals established and codified under 26 diverse Central Laws. As a substitute, by virtue of Section 184, the Central Government was given the powers to frame rules in this regard.

One of the major grounds of challenge to the Finance Act was on the ground that the same was passed as a Money Bill.

Money Bills are those Bills which exclusively contain provisions for imposition of taxes and appropriation of moneys out of the Consolidated Fund. They can only be introduced in the Lok Sabha. The Rajya Sabha can only suggest amendments to money bills.

In the present case, all suggestions made by the Rajya Sabha regarding the Bill passed in the Lok Sabha were junked, and the Act came into force on April 1, 2017.

It was the petitioners’ case that the passage of the Finance Act in the form of a Money Bil’ was entirely inappropriate and amounted to a fraud on the Constitution.

Mere incidental burden on the Consolidated Fund is insufficient to qualify proposed legislation as a Money Bill, it had been contended. In the instant case, the provisions affecting administration of tribunals can hardly qualify as a purely fiscal measure, or enacted purely on financial considerations, the petitioner argued.

Further, the petitioner had contended that Section 184 delegated the powers to prescribe service conditions (such eligibility, tenure, appointment process etc.,) to the Central Government and the same was an affront to judicial independence.

Regarding the Rules relating to appointment, service conditions and removal of the members of various tribunals, the petitioner had submitted that the same were in violation of the guidelines of laid down by the Supreme Court in R Gandhi v. Union of India.

Interestingly, the Court also heard the following issues which had been framed in the lead case – Rojer Mathew v. South Indian Bank Limited:

  • Creation of a regular cadres laying down eligibility for recruitment for Tribunals;
  • Setting up of an autonomous oversight body for recruitment and overseeing the performance and discipline of the members so recruited and other issues relating thereto;
  • Amending the scheme of direct appeals to this Court so that the orders of Tribunals are subject to jurisdiction of the High Courts;
  • Making Benches of Tribunals accessible to common man at convenient locations instead of having only one location at Delhi or elsewhere. In the alternative, conferring jurisdiction on existing courts as special Courts or Tribunals.

[Read Judgment]

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