2019 (11) TMI 716 - SC - Indian Laws

Constitutional spirit of judicial independence - appointments to the Debt Recovery Tribunals - constitutionality of the Finance Act, 2017 - satisfaction of test of a money bill under Article 110 of the Constitution. - Competence of selection committee - validity of section 184 of the Finance Act, 2017 Held That - RANJAN GOGOI, CJI (i) 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. (ii) 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. (iii) 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. (iv) 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. (v) 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. (vi) 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. (vii) 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. (viii) 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. (ix) 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. Dr Dhananjaya Y Chandrachud, J 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. 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. Deepak Gupta, J. 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. 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. Regarding Issue Nos. 3 6 I agree with the Chief Justice and I do not want to add anything. Regarding Issue Nos. 4, 5, 7 8 I agree with the Chief Justice both on the reasoning and conclusions on these issues

Summary

Issues Involved:
1. Whether the Finance Act, 2017 can be termed as a 'money bill' under Article 110.
2. Whether Section 184 of the Finance Act, 2017 is unconstitutional on account of excessive delegation.
3. Whether the 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 the Court on functioning of Tribunals.
4. Whether there should be a Single Nodal Agency for administration of all Tribunals.
5. Whether there is a need for conducting a Judicial Impact Assessment of all Tribunals in India.
6. 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.
7. Whether direct statutory appeals from Tribunals to the Supreme Court ought to be detoured.
8. Whether there is a need for amalgamation of existing Tribunals and setting up of benches.

Issue-wise Analysis:

I. Whether the Finance Act, 2017 can be termed as a 'money bill' under Article 110 and consequently is validly enacted?
The judgment discusses the constitutional framework governing 'money bills' and the role of the Speaker in certifying a bill as a 'money bill.' It emphasizes that the decision of the Speaker under Article 110(3) is not immune from judicial review. The judgment notes that the certification of a bill as a 'money bill' must strictly adhere to the provisions of Article 110. The majority opinion in K.S. Puttaswamy (Aadhaar-5) held that the Aadhaar Act was validly passed as a 'money bill,' while the minority opinion explicitly overruled previous decisions that put the Speaker's decision beyond judicial review. The judgment concludes that the issue of whether the Finance Act, 2017 is a 'money bill' should be referred to a larger Bench for consideration.

II. Whether Section 184 of the Finance Act, 2017 is unconstitutional on account of excessive delegation?
The judgment examines whether Section 184, which delegates the power to make rules regarding qualifications, appointment, and service conditions of tribunal members, constitutes excessive delegation. It concludes that the delegation of such powers without clear guidelines amounts to excessive delegation and is unconstitutional. The judgment emphasizes that the qualifications for tribunal members are an essential legislative function that cannot be delegated without clear guidelines.

III. Whether the 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 the Court on functioning of Tribunals?
The judgment finds that the Rules formulated under Section 184 suffer from various infirmities, including excessive executive interference in the appointment process, lack of judicial dominance in the Search-cum-Selection Committees, and dilution of judicial character in appointments. It concludes that the Rules are contrary to the principles laid down in previous decisions of the Court and are unconstitutional. The judgment directs the Central Government to re-formulate the Rules in accordance with the principles delineated in earlier decisions.

IV. Whether there should be a Single Nodal Agency for administration of all Tribunals?
The judgment supports the need for a single nodal agency to oversee the administration of all tribunals. It highlights the problems arising from the current system where tribunals are administered by their sponsoring ministries, leading to a lack of uniformity and potential conflicts of interest. The judgment recommends the establishment of an independent statutory body called the 'National Tribunals Commission' to oversee the selection process, service conditions, and administration of tribunals.

V. Whether there is a need for conducting a Judicial Impact Assessment of all Tribunals in India?
The judgment emphasizes the importance of conducting a Judicial Impact Assessment to analyze the ramifications of changes in the tribunal framework. It notes that the legislature has not conducted such an assessment for the Finance Act, 2017, and directs the Ministry of Law and Justice to carry out a Judicial Impact Assessment and submit the findings to the competent legislative authority.

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?
The judgment asserts that tribunal members cannot be equated in rank and status with judges of Constitutional Courts. It emphasizes that the rank, dignity, and position of Constitutional judges are sui generis and arise from the Constitutional trust accorded to them. The judgment directs the Union of India to ensure that tribunal members are not accorded status equivalent to that of Constitutional judges.

VII. Whether direct statutory appeals from Tribunals to the Supreme Court ought to be detoured?
The judgment highlights the problems arising from direct statutory appeals to the Supreme Court, including increased pendency and reduced access to justice. It recommends that the Union of India revisit the provisions allowing direct appeals to the Supreme Court and consider providing appeals to Division Benches of High Courts instead. The judgment directs the Union to undertake this exercise within six months.

VIII. Whether there is a need for amalgamation of existing Tribunals and setting up of benches?
The judgment supports the rationalization and amalgamation of existing tribunals based on their case-load and subject-matter. It recommends setting up circuit benches of all tribunals at the seats of major jurisdictional High Courts to ensure accessibility. The judgment directs the Union to conduct a Judicial Impact Assessment and take appropriate steps for amalgamation and setting up of benches.

Conclusion:
The judgment holds that the Finance Act, 2017 could not have been enacted as a 'money bill' and that the Rules framed under Section 184 are unconstitutional. It directs the Central Government to re-formulate the Rules, establish a single nodal agency for tribunals, conduct a Judicial Impact Assessment, and revisit provisions for direct statutory appeals to the Supreme Court. The judgment emphasizes the need for independence and uniformity in the tribunal framework and recommends the establishment of the 'National Tribunals Commission' to oversee the administration of tribunals.