2019 Supreme(SC) 1258

SUPREME COURT OF INDIA
RANJAN GOGOI, CJI., N.V. RAMANA, DHANANJAYA Y. CHANDRACHUD, DEEPAK GUPTA, SANJIV KHANNA, JJ.
Rojer Mathew – Appellant
Versus
South Indian Bank Ltd. & Ors. – Respondents
Civil Appeal No. 8588 of 2019 [Arising out of Special Leave Petition (Civil) No.15804 of 2017], W.P.(C) No.267 of 2012, W.P.(C) No. 279, 558, 561, 625, 640, 1016, 788, 925, 1098, 1129 of 2017, W.P.(C) No. 33 of 2018, W.P.(C) No. 205 of 2018, W.P.(C) No.467 of 2018, T.C.(C) No. 49 of 2018, T.C.(C) No. 51 of 2018, T.P.(C) No. 2199 of 2018
Decided on : 13-11-2019

IMPORTANT POINTS
Majority view
Question of Money Bill referred to larger Bench.
Section 184 of the Finance Act, 2017 does not suffer from excessive delegation of legislative functions.
The Tribunal, Appellate Tribunal and other Authorities (Qualifications, Experience and other Conditions of Service of Members) Rules, 2017 struck down in entirety.
The Central Government directed to re-formulate the Rules ensuring non-discriminatory and uniform conditions of service, including assured tenure.
Need-based ‘Judicial Impact Assessment’ of all the Tribunals referable to the Finance Act, 2017 required to be conducted.
Central Government directed to re-visit the provisions of the statutes referable to the Finance Act, 2017.
Union Government directed to 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.
Per D. Y. Chandrachud, J.
Part XIV of the Finance Act 2017 could not have been enacted in the form of a Money Bill.
Constitution of an independent statutory body called the “National Tribunals Commission” 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 recommended.
The commission should comprise of the stated Members.
Defining the qualifications necessary for appointment of members is an essential legislative function and cannot be delegated to the rule making authority of the central government.

Headnote:

Per Ranjan Gogoi, J. (Majority view)

(a) Administration of justice - Evolution of Tribunals - Reasons - Crawling pace of the justice delivery system - And rise of specialization and increase of complex regulatory and commercial aspects requiring esoteric appraisal and adjudication for which lower courts are not well equipped - Tribunals were therefore created with trappings of courts performing judicial functions - Also equipped with technical knowledge required to comprehend and decide issues involving specialised subjects. (Para 11, 12, 13, 14)

(b) Finance Act, 2017 - Part XIV, Sections 158 to 182 - Amendment of twenty-five central enactments forming the foundation for multiple Tribunals - Similarity in all sections - First, every section opens up with a non-obstante clause - Second, Section 184 overrides all other provisions in both the Finance Act, 2017 as well as the other twenty-five enactments which stand amended. (Para 59)

(c) Constitution of India - Article 110 - Money Bill - Speaker of Lok Sabha is the only appropriate authority to decide the nature of a bill. (Para 97)

(d) Constitution of India - Article 122 - Union of India contending that labeling Finance Act, 2017 as money Bill is at best a Parliamentary irregularity and hence exempt from judicial scrutiny under Article 122 - Rejected - Provision about finality of Speaker’s decision about nature of the Bill - Not immune from judicial scrutiny - Immunity available limited to ‘irregularity of procedure’ - Does not extend to substantive illegality or unconstitutionality. (Para 102)

(e) Constitution of India - Article 122 - Judicial interpretation - Determination an exempted irregularity or a justiciable illegality is a matter of judicial interpretation - Gross violations of the Constitutional scheme would not be mere procedural irregularities - However, scope of judicial review in matters under Article 110(3) is extremely restricted (Para 103, 104, 110)

(f) Constitution of India - Article 110 - Use of word ‘only’ - Main or substantive provisions of the Act must be covered by sub-clauses (a) to (f) - Otherwise the bill cannot be said to be a “Money Bill”. (Para 115)

(g) Administration of justice - Judicial propriety - Instantly interpretation of Article 110(1) of the Constitution in issue - Puttaswamy (Aadhaar-5) not delineating scope of Article 110(1) - Substantially not discussing the effect of the word ‘only’- Its application in present case may raise a potential conflict between the judgments of coordinate Benches - matter referred to a Constitution Bench of seven Judges. (Para 122, 123)

(h) Interpretation - Delegated legislation - Abdication or effacement by conferring the power of legislation to the subordinate authority, even if partial, is not permissible - The test of excessive delegation is whether policy of the legislation has not been indicated sufficiently or whether change of policy has been left to the pleasure of the delegate - Instantly Section 184 of the Finance Act, 2017 does not prescribe the qualifications for appointment, and terms and conditions of service - These aspects, though important, are not per se functionally undelegatable - Part XIV inserted to incorporate changes recommended by Supreme Court in earlier decisions - Held, section 184 does not suffer from the vice of excessive delegation. (Para 131, 137, 142, 143)

(i) Finance Act, 2017 - Section 184 - Validity - Section 184 seeks to provide for Individual independence of the functionaries such as security of tenure, procedure for renewal, terms and conditions of service like salary, allowances, etc - It also seeks to provide institutional independence - Most of the enactments creating Tribunals not providing for individual and institutional independence - Left to the delegate - Power to prescribe qualifications, selection procedure and service conditions of members and other office holders of the tribunals is not intended to vest solely with the Legislature for all times and purposes - Policy and guidelines exist - Section 184 held to be inserted to bring uniformity and with a view to harmonise the diverse and wide-ranging qualifications and methods of appointment across different tribunals. (Para 144, 145, 148)

(j) Interpretation of statute - Validity - 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 provisions of the statute. (Para 149)

(k) Tribunal, Appellate Tribunal and other Authorities (Qualifications, Experience and other Conditions of Service of Members) Rules, 2017 - Rule 4 with Schedules - Search-cum-Selection Committee - Composition - By and large, role of judiciary virtually absent - Contravention of doctrine of separation of powers and an encroachment on judicial domain. (Para 152, 153, 154, 158)

(l) Tribunal, Appellate Tribunal and other Authorities (Qualifications, Experience and other Conditions of Service of Members) Rules, 2017 - Rule 3 - Qualifications - Candidates without adjudicatory/judicial experience eligible - Contravention of prior dicta of Supreme Court - Rules have an effect of dilution of the judicial character in adjudicatory positions - Further, qualifications are vague resulting in increased executive discretion. (Para 159, 160, 161, 162, 163, 164)

(m) Tribunal, Appellate Tribunal and other Authorities (Qualifications, Experience and other Conditions of Service of Members) Rules, 2017 - Rule 3 - Eligibility for Chairman of Appellate Tribunal under the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 - A person who is or has been or is qualified to be a Judge of a Supreme Court or a Judge of a High Court - Equating a supreme Court Judge with a High Court Judge - Forced equality - Merits judicial interference. (Para 166)

(n) Tribunal, Appellate Tribunal and other Authorities (Qualifications, Experience and other Conditions of Service of Members) Rules, 2017 - Rule 7 - Procedure for removal - Constitutionality - Allowing judges to be removed by the Executive - Significantly weakening independence of Tribunal members - Palpably unconstitutional. (Para 169)

(o) Tribunal, Appellate Tribunal and other Authorities (Qualifications, Experience and other Conditions of Service of Members) Rules, 2017 - Rule 9 - Different retirement age for different Tribunals and tenure of three years coupled with discretion of Central and State Governments to reappoint retired Members of one Tribunal where age of retirement was lower to another where retirement age if higher - Increases interference by executive - Also discouraging meritorious candidates from being appointed as Members of Tribunals - Rules need a relook. (Para 176, 177, 178)

(p) Tribunal, Appellate Tribunal and other Authorities (Qualifications, Experience and other Conditions of Service of Members) Rules, 2017 - Rule 7(b) - Allowing the Executive to interpret the meaning of ‘moral turpitude’ - An encroachment on judicial domain - Cannot survive. (Para 179)

(q) Finance Act, 2017 - Sections 158 to 182 - Tribunals - Presently under different departments of Ministries which are often litigant before it - Jeopardizes independence of Tribunals - Court, in the past, had suggested a single nodal agency for all tribunals - However, Tribunals not expected to look towards the nodal agency for their day to day expenses - Finance Ministry directed to, in consultation with the Nodal Ministry of Department, earmark separate and dedicated funds for the Tribunals. (Para 184)

(r) Finance Act, 2017 - Sections 158 to 182 - Tribunals - ‘Judicial Impact Assessment’ - Not done - Union of India directed to carry out financial impact assessment in respect of all the Tribunals referable to Sections 158 to 182 of the Finance Act, 2017 to assess the need based requirements and make available sufficient resources for each Tribunal established by the Parliament. (Para 189)

(s) Finance Act, 2017 - Sections 158 to 182 - Tribunals - Equivalence in pay, allowances and status of Supreme Court and High Court Judges accorded to Chairmen or Presidents of various Tribunals and authorities - Without any rationale - According such equivalence with constitutional functionaries by the executive or Legislature - Disturbing fabric of hierarchy and discipline - Mere equality in conditions of service to that of a Supreme Court judge cannot confer equal status to such other functionaries - Even the retired judges of High Courts and the Supreme Court manning such Tribunals cannot seek equivalence with High Courts or the Supreme Court. (Para 190, 192, 194)

(t) Constitution of India - Articles 132 to 136 - Statutory appeals directly to Supreme Court against orders of specialised tribunals - Take away inherent ability of Supreme Court to regulate cases before it by confining its consideration to cases involving the most egregious of wrongs and of or having the greatest impact on public interest - Such provisions curtail jurisdiction on High Court - Approaching Supreme Court not possible for everyone due to distance and finance required - Article 136 was never meant to be used for regular appeals. (Para 205, 206, 209, 211)

(u) Constitution of India - Articles 136 - Article 136(2) prohibits direct appeals before the Supreme Court from an order of armed forces tribunals which are amenable to judicial review by High Court - An appeal to Supreme Court against the judicial review exercised by the High Court under Article 226 is not prohibited - Such provisions providing for direct appeal to Supreme court need relook - Union of India directed accordingly. (Para 220, 223)

(v) Constitution of India - Articles 226 - High Courts should use powers of judicial review restrictively and sparingly and on limited grounds - To ensure not to become alternate forums of appeal - Jurisdiction under Article 226 part of basic structure - Cannot be tampered with or diluted. (Para 221, 222)

(w) Tribunals - Many tribunals over-loaded while many others hardly have critical number of cases - Spread of tribunals not wide - Union directed to rationalise and amalgamate the existing Tribunals depending upon their case-load and commonality of subject-matter after conducting a Judicial Impact Assessment. (Para 227)

Per D. Y. Chandrachud, J. (Partly concurring)

(x) Tribunalisation - Tribunals represent a combination of the role traditionally performed by the court and new functional responsibilities due to specialization requiring specialized justice - Expeditious adjudication - Unlike the dispute resolution function traditionally performed by courts - Necessity of assessment and monitoring of impact of tribunals - Independence of tribunals needs to be ensured - Substitutional and supplemental role of tribunals - (Para 2, 3, 5, 7, 8, 12)

(y) Tribunalisation - Qualifications for members of tribunals - Legislature is empowered to prescribe - But amenable to judicial review. (Para 15)

(z) Constitution of India - Article 110(3) - Certification by Speaker as to whether a Bill is money Bill to be final - Held, the finality operates as between the Upper and the Lower Houses - Does not exclude judicial review by a constitutional court. (Para 33, 36)

(aa) Constitution of India - Article 122 - Immunity from judicial review to proceedings before Parliament - Irregularities of procedure - Illegality - Distinction - Protecting to an alleged irregularity of procedure in the proceedings in Parliament under Article 110 cannot extend to a substantive illegality or a violation of a constitutional mandate. (Para 39, 40)

(ab) Constitution of India - Article 122 - Rajya sabha - Constitutional body created to subserve the purpose of a deliberate dialogue - Its efficacy cannot be defeated by immunising from judicial review the decision of the Speaker to certify a Bill as a Money Bill. (Para 65)

(ac) Constitution of India - Article 110 - Finance Bill 2017 - Introduced as Money Bill - Amending legislative enactments creating diverse tribunals - Overriding statutory provisions relating to qualifications for appointment, process of appointment, terms of office and the terms and conditions of service of Chairpersons and Members - Conferring authority on Central Government to formulate other aspects of the process from qualifications for office and the process of appointment to the terms of service, through delegated legislation - Transgression of Article 110(1) for a Money Bill - Part XIV of the Finance Act 2017 not incidental within the meaning of Article 110(1) (g). (Para 75, 76)

(ad) Constitution of India - Article 110 - Finance Act 2017 - Overriding provisions of 24 enactments and substantive changes therein becoming main aim of part XIV of the Act - Amendment having a bearing on financial burden on Consolidated Fund of India which cannot be sole basis of brining the amendment within the purview of Article 110(1) has become incidental. (Para 77, 80)

(ae) Constitution of India - Article 110(1) - Money Bill - Term “incidental” - Principal subject matters of the bill must be referable to sub-clauses (a) to (f) - Other matters may be incidental thereto for application of clause (g). (Para 81)

Administration of justice - Service law - Salary - “Power to determine or modify salaries” and the “determination or modification of the salary” - Distinction -

Transfer of such authority to Central Government - Does not mean it is referable to the Consolidated Fund of India within the meaning of Article 110. (Para 83, 84)

(af) Interpretation of statute - Presumption of constitutionality - Can be displaced on a clear violation of a constitutional mandate or infraction - Passing of a Bill containing provisions not referable to Article 110(1) as Money Bill - Constitutes a clear violation of the mandate of Article 110 - Presumption of constitutionality stands displaced. (Para 85)

Constitutional law - Separation of power - Judicial review of certification of Money Bill by Speaker - Does not violate separation of powers. (Para 88)

(ag) Tribunal, Appellate Tribunal and Other Authorities (Qualifications, Experience and Other Conditions of Service of Members) Rules 2017 - Rule 3, 4, 7, 9 - Search-cum-Selection Committee constituted entirely from personnel within or nominated by the Central Government - No provision for casting vote to the Chief Justice of India or their nominee even in NCLAT - Procedure for selection destructive of judicial independence - Violating directions given by Supreme Court in different judgments - (Para 90, 93, 96, 98)

(ah) Interpretation of statute - Part XIV of the Finance Act 2017 - Doctrine of severability - Applicable even when part of the Act, including taxing statute, is held invalid - Part XIV of the Finance Act 2017 which has been held invalid can be excised from the Act. (Para 99, 100, 101)

Per Deepak Gupta, J. (Partly concurring)

(ai) Administration of justice - Judicial propriety - Correctness of the law laid down in L. Chandrakumar - No need to refer the matter to larger Bench. (Para 6)

(aj) Constitutional law - Judicial review - Basic feature of constitution. (Para 10)

(ak) Tribunalisation - Persons manning the tribunals - Should command the same respect as the Judges of Courts and, - They should have the same qualifications and attributes. (Para 14)

(al) Delegated legislation - The “essential legislative functions” cannot be delegated - There should always be legislative control - Merely requiring the subordinate legislation to be placed before the legislature does not mean that there is effective control in all cases - Finance Act, 2017 - Section 184 - Reducing number of tribunals to 19 - Delegating function of determining essential qualifications for filling up the posts of members of administrative tribunals, company law tribunals or the National Green Tribunal to Central Government - This being an essential legislative function, could not have been delegated especially without laying down any guidelines - Section 184 suffers form vice of excessive delegation. (Para 21, 22, 24, 26, 27, 32)

(am) Tribunalisation - Finance Act, 2017 - Section 184 - Need for a single nodal agency, judicial impact assessment and two tier tribunal system emphasized. (Para 35, 36, 38, 46)

Administration of justice - Filing of first appeal as a matter of right to the Supreme Court - Should be done away with. (Para 51)

Facts of the case:

In the present batch of cases, the constitutionality of Part XIV of the Finance Act, 2017 and of the rules framed in consonance has been assailed.

Finding of the Court:

Interpretation of Article 110(1) referred to larger Bench.

Judicial review is a basic structure of the constitution.

Part XIV of the Finance Act, 2017 is invalid.