Rojer Mathew (S) v. South Indian Bank Ltd. And Others (S).

Per Chandrachud, J.

Tribunalisation : A global trend

India is no exception to the global trend towards the tribunalisation of justice. World over, tribunals have been constituted both in regulatory and adjudicatory areas. Tribunals act as adjudicators of disputes. This movement has in part been occasioned by new legislation governing modern societies as they confront the challenges thrown up by the complexities of social and economic orderings. The engagement of law with economics and technology has been shaped by social, cultural and historical contexts. While many of them may reflect the shared aspirations of societies governed by a common legal tradition, it would be simplistic to assume that the challenges thrown up by the layered adjudication through tribunals are common to all societies. Hence, while analysing the impact of the growing movement towards tribunalisation—a feature which is common to all societies—it is important to bear in mind the context in which our problems arose. Precedents, both judicial and scholarly, in other jurisdictions furnish a useful point of reference, so long as we understand that which is peculiarly our own.

(Para 228)

The old and the new

Courts and tribunals should in theory be, but are not always in practice, cooperative allies. Tribunals have taken over the mantle of deciding cases which conventionally were assigned for adjudication to courts. Litigation, traditionally the domain of courts, has in incremental stages come to be transferred to the decision-making authority of tribunals. There is hence a jurisdictional transfer of dispute resolution to tribunals. Accompanied by legislative enactment, this postulates the exclusivity of entrustment to tribunals. Then again, new tribunals have been constituted to deal with subject areas of a genre quite distinct from, and therefore, unlike the traditional pattern of litigation with which conventional courts were familiar. Tribunals have thus not only taken away subjects which have been carved out of the jurisdiction of courts as a matter of legislative policy, but have also fostered a new culture of adjudication over areas in which a traditional court mechanism had little experience and expertise. In that sense, tribunalisation represents an amalgam of the old and the new : a combination of the role which was traditionally performed by the court together with new functional responsibilities, quite unlike the dispute resolution function which was traditionally performed by courts.

(Para 229)

Domain specialisation

The movement towards setting up tribunals has been hastened in many parts by the need for specialisation. Specialisation acknowledges the pool of knowledge and domain expertise of persons who discharge core adjudicatory functions within tribunals. The assumption which underlies the setting up of tribunals is that those who decide are individuals possessed of the qualities necessary for adjudication in that specific field. Acquisition of knowledge prior to appointment to a tribunal and practical experience of handling subject areas reserved for the tribunal bring together a pool of individuals possessing the qualifications and abilities to render specialised justice. In fostering specialisation, the tribunal structure emphasises the specialisation of adjudicatory personnel. But equally, an important facet is the specialisation of those who appear before the tribunals. A specialised Bar is an invaluable input towards the efficiency of institutional adjudication. Together, this contributes to an adjudicatory process which is cognizant of the special features, needs and requirements of the subject areas carved for the tribunal.

(Para 230)

The extent to which the purpose of setting up tribunals is realised is often a projection of ground realities. These realities, including the manner and extent to which provisions of the law governing a tribunal are enforced, directly impact upon the efficacy of the tribunal. Critical to the purpose of having a specialised tribunal is the presence of specialised adjudicators on decision-making posts. For, it is their domain expertise which defines the quality of outcomes in the adjudicatory process. Collectively, the presence of specialised adjudicators depends upon well-trained and qualified persons and their availability in a source pool. This factor has often been lost sight of in the selection of Judges to specialised tribunals. Absent the requisite degree of expertise, the procedure and functioning of the tribunal may only replicate a conventional adjudication in a court of law which the tribunal seeks to substitute.

(Para 231)

Expedition

Apart from specialisation, a significant reason for the establishment of tribunals is expedition in the course of justice. This is also linked to the perceived values implicit in a specialised adjudicatory process. Domain expertise, particularly in a complex area, is a means of allowing adjudicators who understand the subject to decide quickly and effectively. It is often expected that the tribunal will follow procedures which are less cumbersome and tied to forms established in conventional courts. By allowing for a measure of procedural flexibility coupled with domain knowledge, tribunals are expected to remedy some of the causes which burden the judicial system.

(Para 232)

Similarly, another object of the growing need for tribunalisation is to unburden the court system. That purpose may be subserved when a chunk of existing cases pending before the conventional court system are transferred for adjudication to the newly created body. Reducing the burden on courts is a partial realisation of the purpose underlying the creation of the tribunal. Equally significant is that the tribunal must possess the ability not to allow, over a period of time, accretions of undisposed cases which had created judicial arrears in the first place. Statistical reduction of pending arrears in the judicial system occasioned by the creation of a tribunal has to be matched by the capacity of the new body to dispose of cases transferred to it from the court as well as new institutions before it. If this is not achieved, the net result is to defeat the very purpose of establishing the tribunal.

(Para 233)

Impact assessment

The analysis above indicates that the actual impact of the creation of a structure of tribunals needs to be closely monitored to assess the efficacy of a tribunal as a measure of legal reform. The efficacy of the tribunal is functionally dependent on the availability of resources and capital, both human and otherwise. The tribunal must be possessed of adequate infrastructure both in terms of physical availability and the deployment of technological knowledge in the management of litigation. The procedures adopted by the tribunal must be flexible enough to allow for decision-making effectively and without delay. The process of making appointments to the tribunals must be seamless in order to fill up vacancies arising from retirement or unforeseen causes. The presence of large-scale vacancies can render tribunals defunct. This defeats the cause of justice in the area of the jurisdiction of the tribunal. This problem becomes particularly acute where a jurisdiction of a conventional court has been transferred to the tribunal under the provisions of an operating enactment. Absent a recourse to traditional courts for the resolution of conflicts, a litigant is virtually denied access as a result of an unavailable adjudicator to resolve a dispute. In other words, the process for appointment and selection has a direct bearing on the efficacy of tribunalisation. Keeping vacancies unfilled, either as a matter of tardy procedures or for other reasons, has the tendency to denude the efficacy of the tribunal as a dispute resolution mechanism. The surest way to deny access to justice is to keep a large number of vacancies.

(Para 234)

Independence

Above all, the efficacy of tribunalisation rests in the confidence in the process of providing justice. This is determined by the independence and objectivity of justice providers. There is a vital societal interest in preserving the sanctity of the process by which Judges are selected for appointment. The method of selecting and appointing Judges to tribunals determines in the ultimate analysis, the independence of the tribunals. Tribunals have been conceived as institutional measures to provide justice in substitution of that provided by conventional courts. Hence, there is a valid reason to ensure the independence of these adjudicating bodies. The process of selection as well as the terms of appointment is determinative of the ability to attract talent to the tribunals. Hence, in preserving the independence of the tribunals as a facet of judicial independence, the effort must be to ensure that the adjudicatory body is robust : subservient to none and accountable to the need to render justice in the context of specialised adjudication.

(Para 235)

A brief history of tribunalisation in India

The establishment of tribunals in India attained constitutional recognition by the insertion of Articles 323-A and 323-B in the Constitution, which granted power to Parliament and State Legislatures to establish Administrative Tribunals and tribunals for other matters respectively.

(Para 237)

In pursuance of the power conferred upon it by Article 323-A(1) of the Constitution, Parliament enacted the Administrative Tribunals Act, 1985 (1985 Act) for the setting up of tribunals to deal exclusively with service matters. In S.P. Sampath Kumar, (1987) 1 SCC 124 (Sampath Kumar), the first challenge to the constitutionality of tribunals arose. Upholding the vires of the 1985 Act, the Court suggested several amendments to cure the defects with respect to the composition of the tribunal and the mode of appointment of the Chairperson, Vice-Chairperson and members which were to be carried out by 31-3-1987.

(Para 238)

S.P. Sampath Kumar v. Union of India, (1987) 1 SCC 124, referred to

Decisions subsequent to Sampath Kumar case had required a fresh look. In L. Chandra Kumar, (1997) 3 SCC 261 (Chandra Kumar), a seven-Judge Bench revisited the challenge to the 1985 Act and the power conferred on Parliament or the State Legislatures by Articles 323-A(2)(d) and 323-B(3)(d) of the Constitution, as the case may be, to exclude the jurisdiction of “all courts”, except that of the Supreme Court under Article 136 in respect of disputes referred to in those Articles. Overruling the decision in Sampath Kumar case, the Court drew a distinction between the substitutional role and the supplemental role of tribunals with respect to High Courts and held that the role of tribunals is supplemental in nature. It was held that 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 323-A(2)(d) and 323-B(3)(d) as unconstitutional. It was also held that an “exclusion of jurisdiction” clause enacted in any legislation, under the aegis of Articles 323-A(2)(d) and 323-B(3)(d) is unconstitutional.

(Paras 239 and 240)

L. Chandra Kumar v. Union of India, (1997) 3 SCC 261 : 1997 SCC (L&S) 577, relied on

S.P. Sampath Kumar v. Union of India, (1987) 1 SCC 124, held, overruled

In Madras Bar Assn., (2010) 11 SCC 1, the Court noted that despite the salient objective behind the constitution of tribunals, “full independence” had not been achieved by them. The Court affirmed the view in L. Chandra Kumar, (1997) 3 SCC 261 that a tribunal may consist of both judicial and technical members. Judicial members ensure “impartiality, fairness and reasonableness in consideration” and technical members ensure “the availability of expertise and experience related to the field of adjudication”.

(Para 241)

Union of India v. Madras Bar Assn., (2010) 11 SCC 1, referred to

Though the legislature is empowered to prescribe qualifications for members, the Court held that superior courts in the country retain their power of judicial review over the prescribed qualifications to ensure that judicial functions are discharged effectively. The Court surveyed various enactments and the qualifications prescribed in them for appointment as judicial and technical members and noted that the “speed at which the qualifications for appointment as members is being diluted is, to say the least, a matter of great concern for the independence of the judiciary”. The Court cautioned that tribunals cannot become providers of sinecure to members of civil services, by appointing them as technical members. The Court emphasised that “impartiality, independence, fairness and reasonableness in decision-making are the hallmarks of judiciary” and laid down the eligibility criteria for judicial and technical members. Taking note of the recruitment conditions for judicial and technical members, tenure and service conditions, the Court upheld the creation of NCLT and Nclat. Several suggestions to amend Parts 1-B and 1-C were issued, to be carried out as a condition precedent to ensure that NCLT and Nclat may be made operational in accordance with the observations made by the Court.

(Para 242)

In Madras Bar Assn., (2014) 10 SCC 1, the constitutional validity of the National Tax Tribunal Act “2005 Act” and the Constitution (Forty-Second) Amendment Act, 1976 was challenged on the ground of violating the basic structure of the Constitution. The National Tax Tribunal (NTT) was vested with the power of adjudicating appeals which included a substantial question of law arising from orders passed by appellate tribunals under specific tax enactments. Prior to the 2005 Act, the jurisdiction to adjudicate these appeals lay with the jurisdictional High Court.

(Para 243)

The Court rejected the contention that there was a constitutional mandate for the appellate jurisdiction pertaining to tax matters to remain with the High Courts, but held that the members of the tribunal should be appointed in the same manner and should be entitled to the same security of tenure as the Judges of the Court sought to be substituted. The Court rejected the challenge based on the separation of powers and proceeded to examine the validity of individual provisions. Section 6 of the Act permitted accountant members or technical members in the respective appellate tribunals to be appointed as members of NTT. The Court affirmed the position laid down in L. Chandra Kumar, (1997) 3 SCC 261 and Madras Bar Assn., (2010) 11 SCC 1 that the appointment of technical members is restricted to the cases where technical expertise is essential for adjudication and is impermissible in any other case. Thus, the provision was struck down.

(Para 244)

Section 7 of the 2005 Act provided for the process of selection and appointment of the Chairperson and members of NTT. The Court observed that as the jurisdiction of the High Courts was being transferred to the Tribunal, the stature of the members, conditions of service, and manner of appointment and removal of members must be akin to that of the Judges of High Courts. The selection process included Secretaries of the Departments of the Central Government. The Court struck down the section as unconstitutional. Finally, Section 8 stipulated that that a Chairperson/member who is appointed for an initial duration of five years, is eligible for reappointment for a further period of five years. Striking down the provision as unconstitutional, the Court held that the provision for reappointment would undermine the independence of the member who would presumably be constrained to decide matters in a manner that would ensure their reappointment. The Court noted that since NTT had been vested with jurisdiction that earlier vested in the High Courts, all matters of appointment and extension of tenure must be shielded from the executive. The Court noted that upon the declaration of numerous provisions as unconstitutional, the remaining provisions were rendered “otiose and worthless”. Hence, the 2005 Act was struck down in its entirety.

(Para 245)

Madras Bar Assn. v. Union of India, (2014) 10 SCC 1; L. Chandra Kumar v. Union of India, (1997) 3 SCC 261 : 1997 SCC (L&S) 577; Union of India v. Madras Bar Assn., (2010) 11 SCC 1, referred to

Pursuant to the enactment of the Companies Act, 2013, a Constitution Bench in Madras Bar Assn., (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., (2010) 11 SCC 1 and observed that many discrepancies persisted which were in contravention of the directions issued 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., (2010) 11 SCC 1 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.

(Para 246)

Madras Bar Assn. v. Union of India, (2015) 8 SCC 583; Union of India v. Madras Bar Assn., (2010) 11 SCC 1, referred to

Shortcomings of the current framework

Tribunalisation was intended to combat the high pendency of cases before Indian courts. However, experience gained from the working of tribunals suggests that the efficiency of tribunals in India is significantly reduced due to systemic and administrative problems. The 272nd Report of the Law Commission of 2017 has highlighted the high level of pendency before the tribunals.

(Para 247)

Law Commission of India : 272nd Report on Assessment of Statutory Frameworks of Tribunals in India, referred to

Vidhi Centre for Legal Policy in a report titled “Reforming the Tribunals Framework in India” highlights the problems plaguing the tribunal system in India. These problems have been categorised thus:

(Para 248)

(A) Lack of independence

The Report highlights that in some cases, Ministries are parties before the tribunals. The staff, finances, and administration are under the control of the Ministry. The problem is exacerbated by a revolving door between the bureaucracy and tribunal posts. Therefore, the Report states that it is crucial to assess the independence of tribunals based on the certain parameters including (a)appointment of members; (b) removal of members; (c) reappointments; (d)nodal Ministry; and (e) proclivity to appoint Judges/bureaucrats.

(Para 249)

(B) Administrative concerns : lack of uniformity in regulation

The Report notes that an inconsistency in qualification requirements leads to differences in competencies, maturity and status of members. These inconsistencies are problematic with regard to the growing trend of tribunalisation. Further, the short tenure of members obviates the cultivation of “domain expertise”, which can have an impact on the efficacy of tribunals. It is also recommended that the age of retirement be made uniform as uneven tenures hamper institutional continuity. The Report notes the holding in L. Chandra Kumar, (1997) 3 SCC 261 which criticises the inconsistencies in the appointment process, qualification of members, age of retirement, resources and infrastructure of different tribunals. They can be attributed to tribunals operating under different ministries. The Report affirms the observation in the judgment that a single nodal authority or Ministry is required for the administration of tribunals in order to improve efficiency.

(Para 250)

L. Chandra Kumar v. Union of India, (1997) 3 SCC 261 : 1997 SCC (L&S) 577, cited

(C) Pendency and vacancy in Tribunals

The Report notes that the high rate of pendency can be attributed to systemic issues. For example, the Debt Recovery Tribunal had 58% failed hearings (i.e. avoidable adjournments that were not penalised) and condonations were often granted due to delays in filing. Such delays accounted for more than half the time taken up by cases. Another significant cause for delays is absenteeism of tribunal members.

(Para 251)

(D) Jurisdiction of the High Courts

Provisions allowing direct appeals to the Supreme Court which bypass the jurisdiction of High Courts have been examined in multiple cases. Despite existing precedents and Law Commission of India recommendations, parent statutes of many tribunals allow for a direct appeal to the Supreme Court. Two issues have been noted : firstly, a direct appeal to the Supreme Court is inaccessible to litigants; and secondly, such a provision leads to congestion of the docket of the Supreme Court.

(Para 252)

Violation of directions issued by the Supreme Court under the impugned 2017 Rules

It is evident that the Search-cum-Selection Committee is constituted entirely from personnel within or nominated by the Central Government. Barring the National Company Law Appellate Tribunal, the Search-cum-Selection Committee for all other seventeen tribunals specified in the Schedule is constituted either entirely from personnel within or nominated by the Central Government or comprises a majority of personnel from the Central Government. The Search-cum-Selection Committee of the National Company Law Appellate Tribunal consists of an equal number of members from the judiciary as well as from the Central Government with no casting vote to the Chief Justice of India or their nominee. The procedure for selection is fundamentally destructive of judicial independence. The Union Government has vital status in the disputes before many tribunals. Even otherwise, conferring upon the Government such a dominating and overwhelming voice in making appointments is a negation of judicial independence.

(Para 328)

The Rules under Section 184 of the Finance Act, 2017, termed the Tribunal, Appellate Tribunal and Other Authorities (Qualifications, Experience and Other Conditions of Service of Members) Rules, 2017 were notified on 1-6-2017.

(Para 327)

Column 4 of the Schedule to the 2017 Rules stipulates the composition of the Search-cum-Selection Committee for the various tribunals. It is evident that the Search-cum-Selection Committee of the Industrial Tribunal is constituted entirely from personnel within or nominated by the Central Government. Barring the National Company Law Appellate Tribunal, the Search-cum-Selection Committee for all other seventeen tribunals specified in the Schedule is constituted either entirely from personnel within or nominated by the Central Government or comprises a majority of personnel from the Central Government. The Search-cum-Selection Committee of the National Company Law Appellate Tribunal consists of an equal number of members from the judiciary as well as from the Central Government with no casting vote to the Chief Justice of India or their nominee. The procedure for selection is fundamentally destructive of judicial independence. The Union Government has vital status in the disputes before many tribunals. Even otherwise, conferring upon the government such a dominating and overwhelming voice in making appointments is a negation of judicial independence.

(Paras 328.1 and 328.2)

In Madras Bar Assn., (2014) 10 SCC 1, Section 7 of the National Tax Tribunal Act, 2005 provided for the process of selection and appointment of the Chairperson and members of NTT. The Court observed that as the jurisdiction of the High Courts was being transferred to the Tribunal, the stature of the members, conditions of service, and manner of appointment and removal of members must be akin to that of the Judges of the High Courts.

(Para 330)

Madras Bar Assn. v. Union of India, (2014) 10 SCC 1, relied on

The constitution of the Search-cum-Selection Committees as stipulated in the Schedule to the 2017 Rules cannot pass constitutional muster under a system governed by the rule of law that accords primacy to the independence of the judiciary. Independence of the judiciary requires that judicial functioning be free from interference by the other two organs of the State. The Central Government is the largest litigant before the tribunals constituted under various statutes. The independent functioning of the tribunals stands compromised where the executive has the controlling authority in the selection of members to the tribunals. The executive is often a litigant before and has an interest in the disputes which are adjudicated by the tribunals. The constitution of the Search-cum-Selection Committees stipulated in the 2017 Rules violates the principle of judicial independence and the directions issued in Madras Bar Assn., (2010) 11 SCC 1 and Madras Bar Assn., (2014) 10 SCC 1.

(Paras 329 to 331)

Union of India v. Madras Bar Assn., (2010) 11 SCC 1; Madras Bar Assn. v. Union of India, (2014) 10 SCC 1, relied on

Hinds v. R., 1977 AC 195 : (1976) 2 WLR 366 (PC), cited

Column 5 of the Schedule to the 2017 Rules stipulates that the term of office shall be three years for all tribunals. This disregards the principle enunciated in Madras Bar Assn., (2010) 11 SCC 1.

(Para 332)

Union of India v. Madras Bar Assn., (2010) 11 SCC 1, relied on

Rule 18(2) stipulates that members who have been appointed to tribunals shall not practice before the tribunal, appellate tribunal or the authority after retirement. Inherent in the efficient functioning of tribunals is that appointment to tribunals is made attractive to practicing individuals who are guaranteed a reasonable period of service.

(Para 332)

Section 184 stipulates that the Chairperson, Vice-Chairperson, Chairman, Vice-Chairman, President, Vice-President, Presiding Officer or Member of the Tribunal, Appellate Tribunal or other Authority is eligible for reappointment. This is restated in Rule 9. This is in violation of the direction issued in Madras Bar Assn., (2014) 10 SCC 1 where Section 8 which provided for reappointment was struck down.

(Para 333)

Rule 20 vests the Central Government with vast powers to relax the provisions of the applicable rules.

(Para 333)

The Central Government to whom a rule-making authority was conferred by Section 184 has not observed the principles which were enunciated in Madras Bar Assn., (2010) 11 SCC 1 and Madras Bar Assn., (2014) 10 SCC 1 either in letter or in spirit. The dangers inherent in conferring such an unguided power on the executive to frame rules governing the selection, appointment and conditions of service of the members of the tribunals is evident from the Rules which have been framed. The Rules disregard binding principles enunciated in decisions of the Court. The Rules are destructive of judicial independence and are unconstitutional.

(Para 334)

Union of India v. Madras Bar Assn., (2010) 11 SCC 1; Madras Bar Assn. v. Union of India, (2014) 10 SCC 1, relied on

Proprietary Articles Trades Assn. v. Attorney General for Canada, 1931 AC 310 (PC), referred to

The Douglas Letters : Selections from the Private Papers of William Douglas, edited by Melvin L. Urofsky, 1987 Edn., p. 162, Adler and Adler, referred to

Though the decision in Madras Bar Assn., (2010) 11 SCC 1 was delivered in 2010 and in Madras Bar Assn., (2014) 10 SCC 1 in 2014, the same anomalies have persisted. An attempt has been made to dilute judicial independence by a creeping assertion of executive power. This is unconstitutional.

(Para 336)

National Tribunals Commission (NTC)

There is a need for setting up an independent statutory body to oversee the working of tribunals. Despite directions issued in L. Chandra Kumar, (1997) 3 SCC 261 nearly two decades ago, no action has been taken by the legislature to put in place an umbrella organisation which would be tasked with addressing the drawbacks of the system adverted herein. The lack of a single authority to ensure competence and uniform service conditions has led to a fragmented tribunal system that defeats the purpose for which the system was constituted. Moreover, the coordinating authority for all tribunals must be the Department of Justice. Vesting that function in individual ministries has led to haphazard evolution of the tribunal structure, besides posing serious dangers to the independence of tribunals.

(Para 342)

L. Chandra Kumar v. Union of India, (1997) 3 SCC 261 : 1997 SCC (L&S) 577, referred to

It is imperative that an overarching statutory organisation be constituted through legislative intervention to oversee the working of tribunals. The constitution of an independent statutory body called the “National Tribunals Commission” (NTC) is recommended 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 ex-officio convener; and

(iv) Two independent expert members to be nominated by the Union Government in consultation with the Chief Justice of India.

The seniormost among the Judges nominated by the Chief Justice of India shall be designated as the Chairperson of NTC.

(para 343)

While the setting up of NTC is within the competence of the legislature, it must be ensured that the guidelines that have been laid down by the court to ensure the independence and efficient functioning of the tribunal system in India are observed. The independence of judicial tribunals is an inviolable feature of the basic structure of the Constitution. The procedure of selection, appointment, removal of members and prescription of the service conditions of tribunal members determine the independence of the tribunals. In preserving the independence of the tribunals as a facet of judicial independence, the adjudicatory body must be robust : subservient to none and accountable to the need to render justice in the context of specialised adjudication. This is reflected in the need for vigilance in guarding the independence of courts and tribunals.

(Para 344)

Competence, professionalism and specialisation are indispensable facets of a robust tribunal system designed to deliver specialised justice. The Commission must be vested with the power to oversee the administration of all tribunals established under the enactments of Parliament to ensure the adequate manning of the tribunals with the infrastructure and staff required to meet the exigencies of the system. The Union Government should also consider formulating a law to ensure the constitution of an All-India Tribunal Service governing the recruitment and conditions of service of the non-adjudicatory personnel for tribunals. At present, the administrative staff of the tribunals is by and large brought on deputation. The tribunals are woefully short of an adequate complement of trained administrative personnel. Hence, there is an urgent need to set up an All-India Tribunal Service in the interests of the effective functioning of the tribunal system.

(Para 345)

Per Deepak Gupta, J.

Some tribunals have both regulatory as well as adjudicatory roles. Most of the discussion hereinafter relates to the adjudicatory role of tribunals.

(Para 350)

The issue in a nutshell is whether tribunals are an effective alternative to courts; if yes, who should man them. Keeping in view the ever-changing developments in law and the provisions of Articles 323-A and 323-B of the Constitution, tribunals as an alternative to courts, have come to stay. The main issue is how to ensure that these tribunals function effectively, fearlessly and efficiently.

(Para 351)

Madras Bar Assn. v. Union of India, (2020) 6 SCC 247, referred to

By and large I am in agreement with the reasoning and conclusions arrived at by the Chief Justice, especially on Issues I and III to VIII. I am, however, unable to persuade myself to agree with the Chief Justice that Section 184 of the Finance Act, 2017 does not suffer from the vice of excessive delegation. I also feel that some specific directions need to be given for appointment of a body to carry out judicial impact assessment. It may also be necessary to lay down some parameters or reference points for such a body to look into. Since the Government till date has not followed the recommendation of the seven-Judge Bench in L. Chandra Kumar case that there should be a wholly independent agency for the administration of all tribunals, some directions in this regard are required. Lastly, I feel that a direction needs to be given to constitute a body to select the Chairpersons/Members of the Tribunals. However, since the correctness of the law laid down in L. Chandra Kumar, (1997) 3 SCC 261 has not been doubted, there is no need to refer this matter to a Bench of seven Judges.

(Paras 353 and 354)

L. Chandra Kumar v. Union of India, (1997) 3 SCC 261 : 1997 SCC (L&S) 577, referred to

Before entering into a detailed discussion on the issues involved, I would like to highlight that there are some glaring errors in Part XIV which clearly show non-application of mind.

(Para 355)

Section 9-A of the Armed Forces Tribunal Act, 2007 was introduced by Section 181 of the Finance Act, 2017. This provides the qualifications, terms and conditions of service, etc. of Chairpersons and Members of the appellate tribunal. This provision shows total non-application of mind because the Armed Forces Tribunal Act, 2007 has no provision for an appellate tribunal. In fact, Section 6 of the Armed Forces Tribunal Act, 2007 itself provides the qualifications for appointment for Chairperson and other members and it is not clear what was sought to be achieved by introducing Section 9-A by the Finance Act, 2017.

(Para 356)

Background

On 26-11-1949, We, the People of India gave unto ourselves the Constitution, the basic features of which amongst others are judicial review, democracy, separation of powers, etc. These basic features of the Constitution are an inherent part of our Constitution and polity.

(Para 357)

Minerva Mills Ltd. v. Union of India, (1980) 2 SCC 591; L. Chandra Kumar v. Union of India, (1997) 3 SCC 261 : 1997 SCC (L&S) 577; Kesavananda Bharati v. State of Kerala, (1973) 4 SCC 225, relied on

Part III of the Constitution which sets out the fundamental rights has often been referred to as the heart and soul of the Constitution. The essence of the Constitution was beautifully captured by our Founding Fathers in the Preamble of the Constitution where we promised to ourselves Justice, Liberty, Equality and Fraternity. The first and foremost attribute of the Preamble is Justice. India should be a democratic republic is also a part of the Preamble. The ultimate power under our Constitution resides with the people and not those holding positions of power.

(Para 358)

The rule of law is the golden thread which runs through our Constitution. This golden thread binds together the various chapters of the Constitution dealing with Citizenship, Fundamental Rights, the Union, the States, the Panchayats, Scheduled and Tribal Areas, Relations between Union and States, Trade, Commerce and Intercourse within the Territory of India, Services under the Union and States, etc. Each of these facets amongst others are governed not only by the Constitution but by the laws. The oath, to which each one of us, holding constitutional posts subscribes, enjoins us to uphold the Constitution and the laws. This is the rule of law. The bedrock of our democracy is the rule of law and not the rule of men. Anywhere, anytime, when ordinary people are given the chance to choose, the choice is always the same; freedom, not tyranny; democracy, not dictatorship; rule of law, not the rule of men.

(Para 359)

One of the essential ingredients of both democracy and rule of law is an independent and fearless judiciary. A free and vibrant country is one where there is freedom of expression and governance by the rule of law. There can be rule of law only when we have Judges and adjudicators who can take decisions independent of any extraneous influence. If rule of law is absent, there is no accountability, there is abuse of power and corruption. When the rule of law disappears, we are ruled not by laws but by the idiosyncrasies and whims of those in power.

(Para 360)

Tribunals have come to stay. Both, the Chief Justice and Brother Chandrachud,J. have dealt with the issue of tribunalisation in great detail. The men who man the tribunals should command the same respect as the Judges of courts and they should, as far as possible, have the same qualifications and attributes. This is absolutely necessary because if the people of this country are to have faith in tribunals then it is the duty of all concerned to ensure that these tribunals function fairly and independently like courts are expected to. With the increase in specialisation in different branches of law, it would not be possible to urge that we do not need specialised tribunals. No human being can be expected to know the entire law. Judges are trained to work in various fields of law. At the same time, it cannot be denied that the fast-changing face of technology and ever-growing demands of the people have led to the introduction of thousands of new legislations and some of these require specialised knowledge of certain branches of law combined with technology.

(Para 361)

The courts in India were successfully handling all jurisdictions. The problem was not lack of talent. The problem was not lack of knowledge. The main problem was extremely low number of Judges as compared to the population and a very high vacancy position. Tribunalisation of justice was done not because the courts were incapable of handling the matters but mainly because there were huge delays in settling matters. Now even for complex commercial matters, specialised commercial courts have been set up. However, at the same time, one cannot deny that in the fast-expanding technological world, there is a need to have expert adjudicators. Therefore, there is a need to have specialised tribunals. These tribunals being substitutes for courts must also meet the expectations of our Founding Fathers and be totally independent and fearless.

(Para 362)

Union of India v. Madras Bar Assn., (2010) 11 SCC 1, referred to

Unfortunately, the working of some of the tribunals leaves much to be desired. Not all the problems arise because of the persons who run the tribunals. Many difficulties arise because of huge vacancies, few Benches, financial crunch and dependence of the tribunals on the departments, which sadly administer the tribunals. Some of the tribunals are virtually subjugated to the departments as far as the administrative matters are concerned and this also affects the independence of the judiciary. Judicial independence not only means independence to take the right decisions but functional independence is equally important. Perceptions are also very important. What does the litigating public appearing before the tribunal feel? Is the tribunal functioning like a wing of the Government or as an independent body? If there has to be separation of powers then these tribunals must have functional autonomy to run themselves as they best feel like.

(Para 363)

Issues III & VI

I agree with the Chief Justice and I do not want to add anything.

(Para 380)

Issues IV, V, VII & VIII

I agree with the Chief Justice both on the reasoning and conclusions on these issues. However, as already pointed out above, since nobody has raised a challenge to the correctness of the law laid down by the seven-Judge Bench in L. Chandra Kumar, (1997) 3 SCC 261 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 seven Judges.

(Para 381)

However, I would like to add a few words because I feel that it is important to highlight the problems being faced and the issues which need to be resolved by the body which will carry out the judicial impact assessment of the tribunals in the form of a Judicial Impact Assessment Committee. I am clearly of the view that as laid down in L. Chandra Kumar case, there must be a single independent nodal agency for administering all the tribunals. The seven-Judge Bench held that all tribunals should as far as possible be under a single nodal agency. Until such a nodal agency is set up it was felt that the Ministry of Law and Justice would be the most appropriate Ministry for this purpose.

(Para 382)

L. Chandra Kumar v. Union of India, (1997) 3 SCC 261 : 1997 SCC (L&S) 577, referred to

There are various reasons why there should be one nodal agency. Tribunals are facing many problems like lack of manpower, very few Benches, vacancies lying unfilled for long period, financial dependence on the department which may be litigating before the tribunal, etc. These are ills which can be avoided if tribunals fall under one umbrella organisation. One umbrella organisation will be better equipped to understand the problems faced by all the tribunals. This could lead to standardisation of tribunals and a uniform approach to the needs of each tribunal. A large number of tribunals, especially those cast with the duty of discharging adjudicatory functions have been constituted with a view to replace the courts and in many cases the jurisdiction earlier exercised by the High Courts has been vested in such tribunals. It is, therefore, imperative that these tribunals must be manned by persons of impeccable integrity, high intellect and having vast experience in the field in which they will exercise jurisdiction. These tribunals also must have functional autonomy. This cannot be achieved unless there is a nodal body which shall look after the administrative needs of the tribunals. For more than two decades the Government has not thought it fit to comply with the 7-Judge Bench judgment in L. Chandra Kumar, (1997) 3 SCC 261 . These matters cannot be permitted to linger on indefinitely. Therefore, a direction must be given to the Government to set up a single nodal agency within a period of 6 months from today till which time the present system may continue. Merely giving financial autonomy to the tribunals will not do away with the need of having one common umbrella organisation to supervise all the tribunals.

(Para 383)

L. Chandra Kumar v. Union of India, (1997) 3 SCC 261 : 1997 SCC (L&S) 577, referred to

Even without carrying out any judicial impact assessment it is clear, as held in Madras Bar Assn., (2010) 11 SCC 1 that tribunals in India have unfortunately not achieved full independence. When tribunals are established, they depend upon the sponsoring department for funds, infrastructure and even space for functioning. Administrative members of the tribunal are, more often than not, drawn from this department. This strikes at the very root of judicial independence because the biggest litigant or stakeholder itself becomes part and parcel of the adjudicating body which is supposed to be free, independent and fearless.

(Para 384)

Union of India v. Madras Bar Assn., (2010) 11 SCC 1, relied on

The need for carrying out judicial impact assessment of all the tribunals in India cannot be over emphasised. Experience has shown that the tribunals are not fully independent and more often than not, the number of vacancies in the tribunals are so high as to make the tribunals dysfunctional if not non-functional. The promised Benches remain a mirage in the air and the litigants from remote areas of the country have to come to the State capitals or the National Capital for redressal of their grievances.

(Para 385)

Access to justice is a fundamental right. Denial of access to justice also takes place when a litigant has to spend too much money, time and effort to approach the adjudicating authority to get justice. In India where delays plague the tribunals, a client will not hurriedly approach a tribunal even if he has a genuine grievance. Amongst the many tribunals set up, the tax tribunals have been probably the most successful. One of the reasons why the tax tribunals have been successful is that the recruitment of members of these tax tribunals is normally done at a younger age and there is scope of career progression not only within the tribunal but also from the tribunals to the High Courts. This can only happen if younger and competent people are recruited rather than retired persons. Another reason for the success of the tax tribunals is that the litigant is either the Revenue or an assessee, both of whom have the wherewithal to fight cases. Similarly, in Administrative Tribunals it is government servants mainly who are involved. Commercial tribunals also deal with the litigants who normally have sufficient finances. But now there are other tribunals like NGT which may be approached by poor villagers.

(Para 386)

Anita Kushwaha v. Pushap Sudan, (2016) 8 SCC 509 : (2016) 4 SCC (Civ) 80 : (2016) 3 SCC (Cri) 530 : (2016) 2 SCC (L&S) 463, relied on

The Central Administrative Tribunal (CAT) was set up in the year 1985. It can definitely be termed as one of the better functioning tribunals. However, even this tribunal has only 17 regular Benches including the Principal Bench at Delhi and 4 Circuit Benches. Prior to the establishment of CAT, a Central Government employee had a right to move the civil courts for grant of relief. This meant that such employee could even approach a Sub-Judge for grant of relief. That jurisdiction has been taken away. In L. Chandra Kumar, (1997) 3 SCC 261 , while upholding the constitution of the tribunals, a 7-Judge Bench held that the orders of the tribunals would be amenable to judicial review under Article 226 of the Constitution albeit with a caveat that these matters would be decided by a Division Bench.

(Para 387)

L. Chandra Kumar v. Union of India, (1997) 3 SCC 261 : 1997 SCC (L&S) 577, relied on

The vacancy position even in CAT is very high. Out of a total strength of 65 members, CAT is short by 25 members — 12 administrative members and 13 judicial members. This is a shortage of about 38%. The Chandigarh Bench of the Tribunal is supposed to have 4 members. However, presently there is only 1 judicial member and as such there is no Bench available in Chandigarh. The Chandigarh Bench has jurisdiction over the States of Punjab, Haryana, Himachal Pradesh and Union Territories of Jammu and Kashmir, Ladakh and Chandigarh. The Central Government employees in these areas have virtually been left remediless. It is easy for the members of the All-India Civil Services holding high positions to approach the Principal Bench at Delhi, but one cannot even imagine the plight of a lowly placed peon or clerk who is expected to travel long distances to New Delhi, spend huge amount of money, pay the extremely high fees of the lawyers of a metropolis like Delhi to file a case in Delhi. Such a litigant is financially boarded out of the litigation process.

(Para 388)

To give another example, NGT was to have its Principal Bench at Delhi and 4 Zonal Benches and 4 Circuit Benches. It was expected that in the future more Benches would be added. Sadly, the reverse has taken place. At the present moment, only the Principal Bench is functioning with only one Chairperson and 3 judicial members (as against the sanctioned strength of 20 judicial members), and two expert members (as against the total sanctioned strength of 20 expert members). The situation is extremely grim. Day in and day out we all talk about pollution and the environment but the harsh reality is that as against a Chairperson and 40 members, at present the Chairperson has the assistance of only 5 members. The result is that no hearings are taking place in the Zonal Benches or the Circuit Benches. It is brought to notice of the court that cases are taken up by videoconferencing. Videoconferencing can definitely be used as a tool to hold hearings in some cases but initial filing and hearings must as far as possible be done in open court if the public is to have faith in the institution. Open hearings are essential to build trust and confidence in the community. Members of the public will have faith only in those tribunals and courts which are open to the public. Presently, the situation is such that if someone from Andaman and Nicobar Islands wants to raise some issue before NGT he will have to come at least to Calcutta to file a case, whereas earlier he could have filed a case before the Circuit Bench of the Calcutta High Court at Port Blair. Here also, the hearing, if any, will be conducted through videoconferencing. There is no Bench of NGT functioning in the North-East covering as many as 8 States. Similarly, there is no Bench functioning in the environmentally and ecologically fragile States of Himachal Pradesh and Uttarakhand and the Union Territories of Ladakh and Jammu and Kashmir. This clearly shows that functioning of the tribunals leaves much to be desired.

(Para 389)

The committee which carries out the judicial impact assessment of the functioning of the tribunals has to deal with a whole lot of issues. It is neither feasible nor proper to lay down all the issues in this judgment but I am highlighting some of them. Another important issue which must be dealt with is whether the tribunals have really helped in early disposal of the cases. The time spent for disposal may vary from case to case but we are mainly dealing with the cases which end in the High Courts or at the Supreme Court. This must be done not only on an all-India basis but also on State-to-State basis. There are many smaller States in the country where the civil courts and the High Courts are not overburdened with work. In these States, the cases are decided much faster than in many other larger States. Normally, it is these smaller States which do not get permanent Benches, sometimes not even Circuit Benches. It is a paradox that the States which are judicially well administered and where disposal is quick, do not get the permanent Benches and the litigants suffer whereas States which are very slow in disposing of the cases get more Benches. Even when Circuit Benches come to these States there is a huge time gap between two sittings. The whole purpose of providing cheaper and faster justice gets lost because the Circuit Benches come rarely and many times the constitution of the Circuit Benches changes on every visit resulting in matters being reheard every time.

(Para 390)

Having tribunals without Benches in at least the capitals of States and Union Territories amounts to denial of justice to citizens of those States and Union Territories. It also makes the justice delivery system very metropolis centric. This has many adverse effects. The Bench and the Bar in smaller district towns and capitals of smaller States which were handling these matters in a competent manner are deprived of handling these types of cases. This also makes access to justice expensive for the litigants. It also leads to a situation where the Bench and the Bar in these areas would not have any experience of handling matters relating to jurisdictions transferred to tribunals which they used to handle earlier. Therefore, the local Bench and Bar will never develop and the entire bulk of work will be captured by those practicing in Delhi or in those State capitals where Benches of the tribunals are set up. Instead of taking justice to the common man, we are forcing the common man to spend more money, spend more time and travel long distances in his quest for justice, which is his fundamental right.

(Para 391)

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, (1997) 3 SCC 261 to Madras Bar Assn., (2010) 11 SCC 1 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, 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 the jurisdictional High Court. In L. Chandra Kumar case 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.

(Para 392)

L. Chandra Kumar v. Union of India, (1997) 3 SCC 261 : 1997 SCC (L&S) 577; Union of India v. Madras Bar Assn., (2010) 11 SCC 1, relied on

One more aspect which needs to be looked into is the need to have a two-tier tribunal system like in the United Kingdom, a lower tribunal and an appellate tribunal. If there are two-tier tribunals then there would be adjudication at the appellate level by an appellate tribunal. Having one appellate forum within the hierarchy of tribunals would probably lessen the burden on the High Courts and the Supreme Court.

(Para 393)

Recruitment to the lower tribunal should be done on the basis of an objective criteria like the written test conducted for the post of District Judges. The persons selected to the lower tribunals can be made eligible for promotion to the appellate tribunals. In fact, there can be common service to man more than one or more tribunals. To give an example, there can be a common service for all the tax tribunals. There can also be a common service for the State Administrative Tribunals, the Central Administrative Tribunal and for the judicial members of the Armed Forces Tribunal. This will obviously require setting up of separate tribunal services. If this is done, we will have tribunal services from which people will rise to man these tribunals, the appellate tribunals and also to the posts of Chairpersons of tribunals. The body carrying out the judicial impact assessment should also look into the issue as to whether it would be better to have a tribunal service rather than appointing retired Judges. If members of the Bar or from the administration or from the State judiciary are appointed at the lowest rung of the tribunal and they have a long tenure knowing that they will retire after 15 or 20 years, one would be able to attract better talent and a more committed workforce. A long tenure for members is also essential for maintaining judicial independence. They shall also have aspirations of reaching the higher levels, which would be an inducement for a better work culture.

(Para 394)

If there are tribunal services and there is provision for appeal within the hierarchy of the tribunals and the High Courts exercise their writ jurisdiction or if in some matters appeals are provided to the High Courts in the first instance, many of the ills which plague the system may be overcome. If the aforesaid system is followed then the question of appointing retired Judges or bureaucrats will not arise. The amicus curiae in his note has raised an issue that tribunals should not become a haven for retired persons. There should normally be no post-retiral sinecures. Though the ideal situation would be to have no appointments from retired Judges or bureaucrats, this may not be possible in the near future because we have no tribunal services and most of the posts at this stage may have to be filled from amongst retired persons. At the same time, an effort has to be made to ensure that in the foreseeable future the number of retired persons being reappointed is brought down and more persons from within the tribunal services are appointed up to the highest level in the tribunal.

(Para 395)

There may be some posts which require retired Judges to be appointed such as Lokpal, Lokayukta, Chairpersons of the Human Rights Commission, Chairman of the Law Commission of India, etc. But this should not become a matter of routine especially when the appointments are being made by the executive. If the administration makes appointments and Judges, serving or newly retired Judges, are under consideration for such posts then the independence of the judiciary is likely to be compromised. The public of this country still reposes great faith in the judiciary. That faith will be eroded in case it is felt that the appointments are made for extraneous reasons. Most Judges live up to the expectations of the high standards of integrity and propriety expected from them but we cannot shut our eyes to the harsh reality that there are a few black sheep. One cannot expect justice from those who, on the verge of retirement, throng the corridors of power looking for post-retiral sinecures. Therefore, I am of the considered opinion that the majority of members of the selecting body must comprise of the Chief Justice of India and/or his/her nominees and the views of the Chief Justice and/or his/her nominees must be given precedence over the views of other members.

(Para 396)

If retired Judges of the High Courts or the Supreme Court are good enough to man the tribunals after retirement, There is no reasons why the retirement age of the High Court Judges should not be increased to make it at par with the retirement age of the Judges of the Supreme Court. This would take care of the vacancies which would otherwise arise in the next 3 years. As of 1-9-2019 as against the sanctioned strength of 1079 Judges there were 414 vacancies in the High Courts. Given the slow pace at which these vacancies are being filled up, the number of vacancies is bound to rise. Though we are discussing tribunals, even the independence and functioning of the High Courts is threatened by this humungous vacancy position.

(Para 397)

I agree with the Chief Justice that an attempt should be made to do away with filing of first appeal as a matter of right to the Supreme Court. At present, at least 2 dozen statues provide for appeals directly to the Supreme Court. The Supreme Court becomes a court of first appeal which is highly avoidable. If we follow the law laid down in L. Chandra Kumar, (1997) 3 SCC 261 , the High Courts should have the jurisdiction to entertain writ petitions against the orders of the tribunals. This will reduce the burden on the Supreme Court. Even more importantly, the High Courts, when they entertain these matters, will deal with them within the limited scope of writ jurisdiction. If the jurisdiction of the High Courts is bypassed by providing for appeals directly to the Supreme Court, soon a stage will come when we will have no High Court Judges who would have heard matters in various jurisdictions. It would be virtually impossible for them to handle such matters in the Supreme Court where the tenure of a Judge is on an average only about 4 years.

(Para 398)

L. Chandra Kumar v. Union of India, (1997) 3 SCC 261 : 1997 SCC (L&S) 577, relied on

The Judicial Impact Assessment Committee can also after assessment recommend that some tribunal(s) should be wound up and the jurisdiction of that tribunal(s) be given back to civil courts or to the High Courts or to some other tribunal. It can also suggest the merger of two or more tribunals.

(Para 399)

The next issue is who should carry out the judicial impact assessment. The Judicial Impact Assessment Committee should comprise of two retired Judges of the Supreme Court, the senior being the Chairperson of the Committee, and one retired Chief Justice of a High Court all three to be nominated by the Chief Justice of India. Out of the three at least two should have been the Chairperson or Members of tribunals. Two members of the executive, not below the rank of Secretary, to the Government of India, one from the Ministry of Law and Justice and one from some other branch can also be members but these members should be appointed in consultation with the Chief Justice of India.

(Para 400)

The last issue is whether there should be a Commission or a body to oversee the appointment of members of various tribunals. It is necessary to have such a Commission which is itself an independent body manned by honest and competent persons. This body is required to select those persons who man the specialised tribunals in terms of the law laid down in various judgments. We need persons who not only have grassroot experience but a judicious mix of judicial members and those with grassroot experience. We need persons who have an independent outlook, integrity, character and good reputation. We need people who are totally free from the influence or pressure from the Government. It is only then that the people will have faith in the adjudicating mechanism of the tribunals.

(Para 401)

L. Chandra Kumar v. Union of India, (1997) 3 SCC 261 : 1997 SCC (L&S) 577; Union of India v. Madras Bar Assn., (2010) 11 SCC 1; R.K. Jain v. Union of India, (1993) 4 SCC 119 : 1993 SCC (L&S) 1128, relied on

Serving Judges of the Supreme Court or the Chief Justice of the High Courts are already overburdened and have no time to spare. It would be much better if they could spend their time and energy in filling up the vacancies in the High Courts rather than venturing into the field of tribunals.

(Para 402)

Having a very large committee would not serve the purpose. A smaller committee comprising of competent people is a better solution and, such commission should comprise of 2 retired Supreme Court Judges with the seniormost being the Chairman and one retired Chief Justice of High Court to be appointed by the Chief Justice of India. There must be one member representing the executive to be nominated by the Central Government from amongst officers holding the rank of Secretary to the Government of India or equivalent. This member shall be the ex-officio convener. One expert member can be co-opted by the full time members. This expert member must have expertise and experience in the field/jurisdiction covered by the tribunal to which appointments are to be made.

(Para 403)

One can only hope that keeping these thoughts in mind a system is developed which ensures selection of people having impeccable integrity, who are totally independent, have a good character and reputation, are free from influence or pressure, and have requisite experience in the jurisdictions they would deal with as Chairpersons/Members of tribunals.

(Para 404)

N. Administrative Law — Delegation of Legislative Function/Power — Extent of Permissible Delegation — Delegation of legislative power to executive under Ss. 183 to 188 and Pt. XIV of Finance Act, 2017, to make rules to specify the qualifications, method of selection and appointment, terms of office, salaries and allowances, removal including resignation and all other terms and conditions of service and superannuation of members of tribunals constituted under a large number of statutes — Held (per majority), delegation of such legislative power is permissible — Though in present case, the rules concerned i.e. the 2017 Rules were ultra vires for different reasons (see Shortnotes A to G)

— Held (per majority), S. 184 of the Finance Act, 2017, delegating such legislative power is valid, and it does not suffer from excessive delegation as there are adequate principles to guide framing of delegated legislation, which would include the binding precedents of the court

— On examining of the Constitutional scheme, statutes and precedents, it is clear that the delegation of power to prescribe qualifications, selection procedure and service conditions of members and other office-bearers of tribunals is not intended to vest solely with legislature for all times and purpose — A mere apprehension of risk to independence of tribunals or a mere possibility 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 guidelines” test and if found contrary, can be struck down without affecting the constitutionality of the rule-making power conferred under S. 186 of the Finance Act, 2017

— Reading of Ss. 183 to 188 of the Finance Act, 2017 indicates that except for providing the upper age-limit, maximum tenure of five years and right of re-appointment for Members of tribunals, the Finance Act delegates the power to specify the qualifications, method of selection and appointment, terms of office, salaries and allowances, removal including resignation and all other terms and conditions of service to Central Government — Governing statutory provisions embodied in existing parent legislations specified in Sch. VIII Column 3 of the Finance Act, 2017, are accordingly overwritten to confer said power on Central Government — Further, said earlier enactments did not stipulate the manner of appointment, terms of office, salaries and allowances, resignation, removal, that is, the terms and conditions of service, which stipulations are delegated and they are not part of the principal enactment

— Pt. XIV of the Finance Act, 2017 does not suffer from the vice of unguided delegation — The objects of the parent enactments as well as the law laid down in L. Chandra Kumar, (1997) 3 SCC 261 ; Madras Bar Assn., (2010) 11 SCC 1; R.K. Jain, (1993) 4 SCC 119 ; Madras Bar Assn., (2014) 10 SCC 1; Gujarat Urja Vikas Nigam Ltd., (2016) 9 SCC 103 undoubtedly bind the delegate and mandatorily require the delegate under S. 184 of the Finance Act, 2017 to act strictly in conformity with these decisions and objects of delegated legislation stipulated therein — 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, Central Government was clear in suggesting that Pt. XIV of the Finance Act, 2017 was inserted with a view to incorporate the changes recommended by the Court in earlier decisions

— Per Chandrachud, J. (dissenting on this point), qualification of members of tribunal cannot be delegated — Prescribing qualification of tribunals is the most essential legislative function and it cannot be delegated to the rule-making authority of Central Government

— Per Deepak Gupta, J. (dissenting on this point), what should be essential qualification and attributes of persons to man such high posts as Chairperson and Members of tribunals is an essential part of legislative function which cannot be delegated to Central Government — As the Constitution could not have provided that qualifications of Judges of Supreme Court and High Courts would be fixed by Central Government; so also if the tribunals are to replace High Courts, why should the same principle not be applied to them — It is paradoxical that there are no guidelines in the Finance Act, 2017 for essential qualifications, eligibility criteria and experience, etc. even though there are guidelines with regard to terms and conditions of services of Chairperson/Members of tribunals — Thus, unfettered and unguided powers have been vested in the delegate and there is excessive delegation — S. 184 of the Finance Act, 2017 suffers from excessive delegation and therefore, should be struck down — Precedents cannot be read as guidelines for delegated legislation — Repealed legislation cannot be read as guidelines for delegated legislation — It cannot be expected that the delegate would again refer to the repealed enactments to seek guidelines for fixing qualification and terms and conditions, etc. of those to be appointed as Chairperson/Members of tribunals

— Taxation — Finance Act, 2017, Ss. 183 to 188 and Pt. XIV

(Paras 120 to 125, 141 to 145, 223.2; 347 and 348; and 366 to 379)

O. Administrative Law — Delegation of Legislative Function/Power — Generally — Nature, Scope and Extent — Delegation of legislative power — Whether excessive, unguided and uncontrolled — Policy and guidelines test — Principles laid down in judicial precedents, held (per majority) can provide the necessary guidance, as delegate is as much bound to comply with judicial precedents as it is bound to comply with legislative policy — Delegate is bound to act strictly in conformity with the applicable binding judicial precedents

— 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, including the applicable judicial precedents, and apply the “policy and guidelines” test and if found contrary, can be struck down without affecting the constitutionality of the rule-making power itself — Constitution of India, Arts. 141 and 144

(Paras 120 to 125, 141 to 145 and 223.2)

P. Administrative Law — Delegation of Legislative Function/Power — Essential Legislative Function — Reiterated, essential legislative function cannot be delegated — What constitutes essential delegated function depends on consideration of provisions of a particular Act and the nature of the body to which delegation is made — What can be delegated is the task of subordinate legislation necessary for implementing the purpose and object of the Act — Therefore, there must be policy and guidelines for framing delegated legislation

(Paras 119 to 142)

Q. Administrative Law — Delegation of Legislative Function/Power — Generally — Nature, Scope and Extent — Delegation is inevitable — No doubt legislature cannot self-efface its personality and make over in terms the plenary and essential legislative functions — But complexities of modern administration are bafflingly intricate and present themselves with urgencies and difficulties and the need for flexibility, which the direct legislation may not provide — Delegation is therefore, inevitable and an administrative necessity — Thus, while essential legislative policy cannot be delegated, inessentials can be delegated over to relevant agencies — Policy and guidelines test can be applied for effecting this

(Para 134)

R. Administrative Law — Delegation of Legislative Function/Power — Extent of Permissible Delegation — There should be limits on delegation — Parliament has ample and extensive powers of legislation, these would include the power to entrust some of the functions and powers to another body or authority — At the same time, there should be limitations on such delegation

— Policy and guidelines test — To conclude that there has been no excessive delegation, it must be established that the policy of legislature has been sufficiently indicated and change in policy has not been left to the pleasure of the delegate — It is not necessary that the legislation should “dot all the i's and cross all the t's of its policy” — It is sufficient if it gives the broadest indication of the general policy of the legislature — There should be sufficient guidelines, safeguards and checks in the Act which prevents excessive delegation — Body to whom delegation is made is relevant

— Delegation to an elected body — When delegation is made an elected body accountable to people, it acts as a sufficient check

— Delegation to an administrative body — Law-making power may not be granted to an administrative body to be exercised under the guise of administrative discretion — Accordingly, in delegating powers to an administrative body with respect to the administration of statutes, the legislature must ordinarily prescribe a policy, standard, or rule for their guidance and must not vest them with an arbitrary and uncontrolled discretion with regard thereto, and a statute or ordinance which is deficient in this respect is invalid — In order to avoid the pure delegation of legislative power by the creation of an administrative agency, the legislature must set limits on such agency's power and enjoin on it a certain course of procedure and rules of decision in the performance of its function; and, if the legislature fails to prescribe with reasonable clarity the limits of power delegated to an administrative agency, or if those limits are too broad, its attempt to delegate is a nullity

(Paras 126 to 137)

Held :

Per majority

The Finance Act, 2017 : its legislative background

Primary challenge in the present batch of cases is to the Finance Act, 2017. Though this enactment was purportedly to give effect to “the finance proposals of the Central Government for the Financial Year 2017-18” but Part XIV thereof consists of comprehensive provisions meant to effect “Amendments to Central Acts to Provide for Merger of Tribunals and other Authorities and Conditions of Service of Chairpersons, Members, etc.”

(Para 52)

A scrutiny of Part XIV of the Finance Act, 2017 discloses how by virtue of Sections 158 to 182, Parliament has amended twenty-five Central enactments which form the foundation for multiple tribunals.

(Para 53)

Sections 158 to 182 of Part XIV are broadly in pari materia except that each section deals with a separate tribunal. Parliament has sought to achieve a uniform pattern of qualifications, appointment, term of office, salaries and allowances, resignation, removal and other terms and conditions of service of members and Presiding Officers of various tribunals.

(Para 54)

There are two significant expressions worth noticing in these similarly worded Sections 158 to 182. First, every such section opens up with a non obstante clause and it provides that “notwithstanding anything contained in … Act the qualifications, appointment, term of office, salaries and allowances, resignation, removal and the other terms and conditions of service of the Chairman and other members of the Appellate Tribunal appointed after the commencement of Part XIV of Chapter VI of the Finance Act, 2017, shall be governed by the provisions of Section 184 of that Act”. Second, Section 184 of the Finance Act overrides all other provisions in both the Finance Act, 2017 as well as the other twenty-five enactments which stand amended.

(Para 56)

To critically analyse the intention of the legislature in enacting Section 184, reference must be made to the immediately preceding Section 183 which is to be found in sub-part ‘S’ of the Act titled “Conditions of service of Chairperson and Members of tribunals, Appellate Tribunals and Other Authorities”. Sections 183 and 184 would need to be read conjointly. Further, the Central Government in purported exercise of its powers under the aforementioned provisions, has notified the “Tribunal, Appellate Tribunal and Other Authorities (Qualifications, Experience and Other Conditions of Service of Members) Rules, 2017” (the 2017 Rules).

(Paras 57 and 58)

Issue II : Whether Section 184 of the Finance Act, 2017 is Unconstitutional on Account of Excessive Delegation?

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.

(Para 119)

The Eighth Schedule referred to in Section 183 contains a list of 19 tribunals with corresponding enactments under which they were constituted. Section 183 overrides the provisions of the enactments specified in Schedule VIII Column 3 and mandates that from the appointed date, the authorities specified therein and in Schedule VIII Column 2 shall be appointed in terms of provisions of Section 184 of the Finance Act. These provisions, however, do not apply to those who have already been appointed to the said posts immediately before the appointed date, that is the date on which the Central Government may, by a notification in the Official Gazette, bring the said provisions into effect.

(Para 120)

Reading of Sections 183 to 188 of the Finance Act, 2017 indicates that except for providing the upper age-limit and that the person appointed shall not have tenure exceeding five years from the date on which he enters office and shall be eligible for re-appointment, the Finance Act delegates the power to specify the qualifications, method of selection and appointment, terms of office, salaries and allowances, removal including resignation and all other terms and conditions of service to the Central Government which would act as a delegatee of Parliament. The governing statutory provisions embodied in the existing parent legislation specified in Schedule VIII Column 3 and the rules made thereunder are overwritten and authority and power is conferred on the Central Government to decide qualifications for appointment, process for selection, and terms and conditions of service including salaries, allowances, resignation and removal through delegated or subordinate legislation.

(Paras 120 to 125)

Delegated legislation — Scope and extent of delegation — Policy and guideline theory/test

For the first time in Delhi Laws Act, 1912, In re, 1951 SCC 568, a seven-Judge Bench delivering seven different judgments clearly evinced the divergence of opinion on the issue.

(Para 126)

All the seven Judges in Delhi Laws Act, 1912, In re, 1951 SCC 568 were in unison that abdication or effacement by conferring the power of legislation to the subordinate authority even if partial is not permissible. The difference of opinion primarily arose from the meaning and scope of the abdication or effacement of the legislative power.

(Para 127)

Delhi Laws Act, 1912, In re, 1951 SCC 568; B. Shama Rao v. State (UT of Pondicherry), AIR 1967 SC 1480, relied on

Locke's Appeal, (1873) 72 Pa 491, cited

The lines of reasoning were different but nevertheless the Judges had accepted the inevitable—that while Parliament has ample and extensive powers of legislation, these would include the power to entrust some of the functions and powers to another body or authority. At the same time, in Delhi Laws Act, 1912, In re, 1951 SCC 568 the Judges had agreed that there should be limitations on such delegation. However, on the question as to what is this limitation, there was a lack of consensus.

(Para 130)

Ramesh Birch v. Union of India, 1989 Supp (1) SCC 430, affirmed

Delhi Laws Act, 1912, In re, 1951 SCC 568, referred to

The “policy and guideline” theory is a test to decide whether or not it is a case of excessive delegation which means reference and giving proper regard to the context of the Act and the object and purposes sought to be achieved which should be clear and it is not necessary that the legislation should “dot all the i's and cross all the t's of its policy”. It is sufficient if it gives the broadest indication of the general policy of the legislature.

(Para 130)

Ramesh Birch v. Union of India, 1989 Supp (1) SCC 430, affirmed

Delhi Laws Act, 1912, In re, 1951 SCC 568; Devi Das Gopal Krishnan v. State of Punjab, AIR 1967 SC 1895, referred to

It should be found out whether there are sufficient guidelines, safeguards and checks in the Act which prevents excessive delegation. The nature of body to which delegation is made is also a relevant factor to be taken into consideration in determining whether there is sufficient guidance in the matter of delegation and also when delegation is made to an elected body accountable to the people including those who paid taxes, as this acted as a sufficient check.

(Para 132)

MCD v. Birla Cotton Spg. & Wvg. Mills, AIR 1968 SC 1232, relied on

The Court should examine what constitutes essential features that the legislature cannot delegate. This cannot be delineated in detail but nevertheless and certainly it does not include the change of policy. The legislator is the master of the policy and the delegate is not free to switch the policy for then it would be usurpation of legislative power itself. Therefore, when the question of the excessive delegation arises, investigation has to be made whether policy of the legislation has not been indicated sufficiently or whether change of policy has been left to the pleasure of the delegate. This aspect is of substantial importance and relevance in the present case.

(Para 133)

M.K. Papiah & Sons v. Excise Commr., (1975) 1 SCC 492 : 1975 SCC (Tax) 128, affirmed

The Constitution has created three instrumentalities with certain basic powers and it is axiomatic that legislative powers are not abdicated for this would mean betrayal of the Constitution and is intolerable in law. Therefore, legislature cannot self-efface its personality and make over in terms the plenary and essential legislative functions. Nevertheless, the complexities of modern administration are bafflingly intricate and present themselves with urgencies and difficulties and the need for flexibility, which the direct legislation may not provide. Delegation of some part of the legislative powers therefore became inevitable and an administrative necessity. Thus, while essential legislative policy cannot be delegated, however inessentials can be delegated over to relevant agencies. The policy and principles test can be applied through express provisions empowering delegation or any other provision of the statute including the Preamble, the scheme or even the subject-matter of the statute.

(Paras 134 to 136)

Avinder Singh v. State of Punjab, (1979) 1 SCC 137; Registrar of Coop. Societies v. K. Kunjabmu, (1980) 1 SCC 340; Keshavlal Khemchand & Sons (P) Ltd. v. Union of India, (2015) 4 SCC 770 : (2015) 2 SCC (Civ) 681, affirmed

In Keshavlal Khemchand & Sons (P) Ltd., (2015) 4 SCC 770 the Court held that the earlier judgments had not been able to lay down the principle including as to what exactly constitutes “essential legislative function”, but the following inferences were drawn:

(1) The proposition that essential legislative functions cannot be delegated does not appear to be such a clearly settled proposition and requires a further examination.

(2) There is a need for some amount of delegated legislation in the modern world.

(3) If the parent enactment enunciates the legislative policy with sufficient clarity, delegation of the power to make subordinate legislation to carry out the purpose of the parent enactment is permissible.

(4) Whether the policy of the legislature is sufficiently clear to guide the delegate depends upon the scheme and the provisions of the parent Act.

(5) The nature of the body to whom the power is delegated is also a relevant factor in determining “whether there is sufficient guidance in the matter of delegation.

(para 136)

Keshavlal Khemchand & Sons (P) Ltd. v. Union of India, (2015) 4 SCC 770 : (2015) 2 SCC (Civ) 681, affirmed

Appropriate in regard to “policy and guideline” test would be reference to yet another earlier judgment in Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd., (1974) 4 SCC 98 wherein while referring to the views of an eminent American jurist Willoughby, it was stated that the law-making power may not be granted to an administrative body to be exercised under the guise of administrative discretion. Accordingly, in delegating powers to an administrative body with respect to the administration of statutes, the legislature must ordinarily prescribe a policy, standard, or rule for their guidance and must not vest them with an arbitrary and uncontrolled discretion with regard thereto, and a statute or ordinance which is deficient in this respect is invalid. In other words, in order to avoid the pure delegation of legislative power by the creation of an administrative agency, the legislature must set limits on such agency's power and enjoin on it a certain course of procedure and rules of decision in the performance of its function; and, if the legislature fails to prescribe with reasonable clarity the limits of power delegated to an administrative agency, or if those limits are too broad, its attempt to delegate is a nullity.

(Para 137)

Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd. v. CST, (1974) 4 SCC 98 : 1974 SCC (Tax) 226, relied on

Willoughby on the Constitution of the United States, 2nd Edn. Vol. III, p. 1637; Corpus Juris Secundum, Vol. 73, p. 324, referred to

Application of policy and guidelines test to present case

It is in this context that the court has to examine whether the plea of excessive delegation would prevail and merits acceptance as Section 184 of the Finance Act does not prescribe the qualifications for appointment, and terms and conditions of service. It will be difficult to hold that Part XIV of the Finance Act suffers from the vice of unguided delegation as it fails to clearly specify the eligibility qualifications for the Members, Chairpersons, Chairman, etc. of different tribunals as such requirements, though important, are not per se functionally undelegatable.

(Para 138)

The objects of the parent enactments as well as the law laid down in R.K. Jain, (1993) 4 SCC 119 , L. Chandra Kumar, (1997) 3 SCC 261 , Madras Bar Assn., (2010) 11 SCC 1, Madras Bar Assn., (2014) 10 SCC 1 and Gujarat Urja Vikas Nigam Ltd., (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 Central Government was clear in suggesting that Part XIV was inserted with a view to incorporate the changes recommended by the Court in earlier decisions.

(Para 139)

Union of India v. Madras Bar Assn., (2010) 11 SCC 1; L. Chandra Kumar v. Union of India, (1997) 3 SCC 261 : 1997 SCC (L&S) 577; Madras Bar Assn. v. Union of India, (2014) 10 SCC 1, relied on

R.K. Jain v. Union of India, (1993) 4 SCC 119 : 1993 SCC (L&S) 1128; Gujarat Urja Vikas Nigam Ltd. v. Essar Power Ltd., (2016) 9 SCC 103, affirmed

Independence of a quasi-judicial authority like the tribunal highlighted in the decisions would be, therefore, read as the policy and guideline applicable. Principle of independence of judiciary/tribunal has within its fold two broad concepts, as held in Supreme Court Advocates-on-Record Assn., (2016) 5 SCC 1 (see para 714):

(i) independence of an individual Judge, that is, decisional independence; and

(ii) independence of the judiciary or the tribunal as an institution or an organ of the State, that is, functional independence.

Individual independence has various facets which include security of tenure, procedure for renewal, terms and conditions of service like salary, allowances, etc. which should be fair and just and which should be protected and not varied to his/her disadvantage after appointment. Independence of the institution refers to sufficient degree of separation from other branches of the Government, especially when the branch is a litigant or one of the parties before the tribunal. Functional independence would include method of selection and qualifications prescribed, as independence begins with appointment of persons of calibre, ability and integrity. Protection from interference and independence from the executive pressure, fearlessness from other power centres — economic and political, and freedom from prejudices acquired and nurtured by the class to which the adjudicator belongs, are important attributes of institutional independence.

(para 140)

Supreme Court Advocates-on-Record Assn. v. Union of India, (2016) 5 SCC 1, relied on

Further, cursory examination of the specified enactments mentioned in Schedule VIII Column 3 of the Finance Act, 2017 reveals that most enactments did not stipulate the manner of appointment, terms of office, salaries and allowances, resignation, removal, that is, the terms and conditions of service, which stipulations are delegated and they are not part of the principal enactment. For example, Section 252(1) of the Income Tax Act, 1961 states that the Central Government may constitute the Appellate Tribunal consisting of as many judicial and accountant members as it thinks fit to exercise the powers and discharge the functions prescribed by the Act. Sections 252(3) and (4) state that the Central Government shall ordinarily appoint a judicial member as the President and may appoint one or more members as Vice-President or Senior Vice-President. Section 252(2) prescribes the eligibility requirements for being a judicial member and Section 252(2-A) stipulates the eligibility requirements for being an administrative member. The Income Tax Act does not prescribe or stipulate manner or method for selection or terms and conditions of service. This is equally true for the Appellate Tribunal constituted under the Central Excise Act.

(Para 141)

Exactly what constituted “essential legislative function” is difficult to define in general terms, but this much was clear that the essential legislative function must at least consist of the determination of the legislative policy and its formulation as a binding rule of conduct. Thus, where the law passed by the legislature declares the legislative policy and lays down the standard which is enacted into a rule of law, it can leave the task of subordinate legislation which by its very nature is ancillary to the statute to subordinate bodies i.e. the making of rules, regulations or bye-laws. The subordinate authority must do so within the framework of the law which makes the delegation, and such subordinate legislation has to be consistent with the law under which it is made and cannot go beyond the limits of the policy and standard laid down in the law. Provided the legislative policy is enunciated with sufficient clearness or a standard is laid down, the courts should not interfere with the discretion that undoubtedly rests with the legislature itself in determining the extent of delegation necessary in a particular case.

(Para 142)

MCD v. Birla Cotton Spg. & Wvg. Mills, AIR 1968 SC 1232, relied on

Delhi Laws Act, 1912, In re, 1951 SCC 568, cited

The legislature must retain in its own hands the essential legislative functions and what can be delegated is the task of subordinate legislation necessary for implementing the purposes and objects of the Act. Where the legislative policy is enunciated with sufficient clearness or a standard is laid down, the courts should not interfere. What guidance should be given and to what extent and whether guidance has been given in a particular case at all depends on a consideration of the provisions of the particular Act with which the court has to deal including its Preamble. Further, the nature of the body to which delegation is made is also a factor to be taken into consideration in determining whether there is sufficient guidance in the matter of delegation.

(Para 142)

MCD v. Birla Cotton Spg. & Wvg. Mills, AIR 1968 SC 1232, relied on

Keshavlal Khemchand & Sons (P) Ltd. v. Union of India, (2015) 4 SCC 770 : (2015) 2 SCC (Civ) 681, affirmed

On examining the constitutional scheme, the statutes which had created tribunals and the precedents of the court laying down attributes of independence of tribunals in different facets, the 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. Subject to aforesaid, the submission that Section 184 of the Finance Act, 2017 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, needs to be accepted.

(Para 144)

Cautioning against the potential misuse of Section 184 by the executive, it was vehemently argued by 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.

(Para 145)

Per Chandrachud, J. (dissenting on this point)

I am in agreement with the observations of Brother Deepak Gupta, J. that the qualifications of members to tribunals constitute an essential legislative function and cannot be delegated. Tribunals have been conceptualised as specialised bodies with domain-specific knowledge expertise. Indispensable to this specialised 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.

(Para 347)

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.

(Para 348)

Per Deepak Gupta, J. (dissenting on this point)

As far as Issue II is concerned, I am unable to agree with the conclusion of the 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.

(Para 366)

In his judgment, the Chief Justice has referred to a catena of judgments dealing with limits of delegation. It is not necessary to repeat all that has been said in those judgments but reference may be made to a few.

(Para 367)

A seven-Judge Bench in Delhi Laws Act, 1912, In re, 1951 SCC 568 held that the legislature cannot be expected to legislate on all issues and has the power to delegate non-essential functions to a delegatee. At the same time, a close reading of the judgment indicates that it was clearly held that the “essential legislative functions” cannot be delegated. There can be no quarrel with the proposition that delegation of non-essential legislative functions can be done. Even to this there is a caveat. The legislature must have control and functional powers over the delegatee. One of the known methods of exercising such powers is for the delegatee to place the rules/orders passed by it in exercise of powers delegated to it before the legislature. There should always be legislative control over delegated legislation.

(Para 368)

Delhi Laws Act, 1912, In re, 1951 SCC 568, relied on

Merely because the subordinate legislation has to be placed before the legislature does not mean that there is effective control in all cases.

(Para 369)

Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd. v. CST, (1974) 4 SCC 98 : 1974 SCC (Tax) 226, relied on

The test laid down is that there should be a reasonably clear statement of policy which should guide formulation of delegated legislation.

(Para 370)

Harishankar Bagla v. State of M.P., AIR 1954 SC 465 : 1954 Cri LJ 1322, relied on

The legislature cannot wash their hands of their essential legislative functions.

(Para 371)

Ramesh Birch v. Union of India, 1989 Supp (1) SCC 430, relied on

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, being an essential legislative function, could not have been delegated especially without laying down any guidelines.

(Para 371)

Section 184 empowers the Central Government to make rules to provide for qualification, appointment, term of office, salaries and allowances, etc. of various 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 Schedule VIII Column 2 of the Finance Act, 2017.

(Para 372)

An analysis of Section 184 clearly indicates that Parliament has delegated to the Central Government the power to make rules to provide for the qualifications, appointment, term of office, salaries and allowances, resignation, removal and other terms and conditions of the Chairpersons/Members of the tribunals. The issue is whether by doing so Parliament has delegated “essential legislative functions” and whether Parliament has retained any control.

(Para 373)

The case herein deals with the appointment of Chairpersons/Members to various tribunals. They are enjoined upon to discharge a constitutional function of delivering justice to the people. What should be the essential qualifications and attributes of persons selected to man such high posts is an essential part of legislative functions. The Constitution could not have provided that the qualifications of the Judges of the Supreme Court of India or of the High Courts could be fixed by the Government. If these tribunals are to replace the High Courts, why should the same principles not apply to them. Laying down the qualifications of the persons eligible to hold these high posts was an essential aspect of the legislation keeping in view the importance of the tribunals, the importance of rule of law and the importance of an independent and fearless judiciary.

(Para 374)

These qualifications have to be provided in the legislation and could not be delegated. However, as far as the other terms and conditions such as pay and allowances are concerned, these can be delegated.

(Para 375)

For the sake of argument, even if it was to be said that laying down the qualifications is not an essential function then also, in view of the law laid down, the guidelines should have been found in the legislation itself. It is paradoxical that there are no guidelines for the essential qualifications, even though there are some guidelines with regard to the terms and conditions of services of Chairpersons/Members of the tribunals.

(Para 376)

I am in respectful disagreement with the Chief Justice that the objects of the parent enactments and the law laid down in R.K. Jain, (1993) 4 SCC 119 , L. Chandra Kumar, (1997) 3 SCC 261 , Madras Bar Assn., (2010) 11 SCC 1, Madras Bar Assn., (2014) 10 SCC 1, Madras Bar Assn., (2015) 8 SCC 583 and Gujarat Urja Vikas Nigam 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 the Court. However, this expectation has been belied by this very enactment which violates every principle of law laid down by the 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 the 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.

(Para 377)

Union of India v. Madras Bar Assn., (2010) 11 SCC 1; L. Chandra Kumar v. Union of India, (1997) 3 SCC 261 : 1997 SCC (L&S) 577; R.K. Jain v. Union of India, (1993) 4 SCC 119 : 1993 SCC (L&S) 1128; Madras Bar Assn. v. Union of India, (2014) 10 SCC 1; Madras Bar Assn. v. Union of India, (2015) 8 SCC 583; Gujarat Urja Vikas Nigam Ltd. v. Essar Power Ltd., (2016) 9 SCC 103, referred to

The previous enactments were repealed insofar as matters covered by Part XIV of the Finance Act are concerned. Therefore, it cannot be expected that the delegatee would again refer to the repealed enactments to seek the guidelines for fixing the terms and conditions, etc. of those to be appointed as Chairpersons/Members. If the precedents and the terms and conditions laid down in the repealed enactments are excluded then there are no guidelines whatsoever left for the delegatee to fall back on. The Finance Act provides no guidelines in this regard. It is absolutely silent with regard to the qualification, the eligibility criteria, experience, etc. required for those who are to be appointed as Chairpersons/Members of the tribunals. These powers have been delegated to the Government.

(Para 378)

There being no guidelines, unfettered and unguided powers have been vested in the delegatee and, therefore, 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 Schedule VIII Column 2 of the Finance Act, 2017, suffers from the vice of excessive delegation and is accordingly struck down.

(Para 379)

S. Constitution of India — Art. 110 and Arts. 107, 109, 368, 122(1), 212(1) and 117 — Money Bill or non-Money Bill — Nature and characteristics of Money Bill, whether clearly laid down in precedents for determining impugned legislation as Money Bill — Certification by Speaker that impugned Finance Bill, 2017 was Money Bill — Validity of, when Pt. XIV of the Finance Bill, 2017, sought to reform tribunal system in India, dealt with and altered qualifications, salaries and terms and conditions of service of members and Chairpersons of various tribunals by amending several enactments — Held, matter should be referred to larger Bench as existing precedents do not make things clear as to whether inclusion of Pt. XIV in the Finance Bill, 2017 was valid or not and whether Pt. XIV had characteristic of Money Bill or not, and resultantly whether certification by Speaker was valid or not — Absolute clarity on these issues is required

— Per curiam, majority in K.S. Puttaswamy (Aadhaar-5 J.), (2019) 1 SCC 1 did not examine a difficult question, that is, proper interpretation and scope and effect of word “only” in Art. 110(1) in relation to Arts. 110(1)(a) to (g) — Unless word “only” is interpreted in right manner, Art. 110(1) would be a nullity — While it may be easier to decipher a Bill relating to imposition, abolition, remission, alteration or regulation of any tax, difficulties would arise in the interpretation of Art. 110(1) specifically with reference to Arts. 110(1)(b) to (f) in a Bill relating to borrowing of money or giving of any guarantee by the Government of India, or an amendment of law concerning financial obligation — A liberal and wide interpretation, on the other hand, possibly exposits an opposite consequence — There is a need of absolute clarity — K.S. Puttaswamy (Aadhaar-5 J.), (2019) 1 SCC 1 had a Bench of seven Judges, which is equal in strength to present Bench — K.S. Puttaswamy (Aadhaar-5 J.) case 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 Arts. 110(1)(a) to (g) — Majority in K.S. Puttaswamy (Aadhaar-5 J.) case, did No. apply the doctrine of pith and substance — Applying dominant purpose has its own limitations as many a legislation would have more than one dominant purpose especially when this prescription is read with reference to Arts. 110(1)(a) to (f) — Whether doctrine of severability should be applied and Pt. XIV should be held to be non-Money Bill — As existing precedents do not make things clear, reference to a larger Bench is absolutely required

(Paras 87 to 92, 105 to 118 and 223.1)

— More than two decades ago in L. Chandra Kumar, (1997) 3 SCC 261 , the Court had directed that a wholly independent agency for tribunals should be set up and that until this was done a particular Ministry preferably the Ministry of Law, Central Government should oversee the working of tribunals — But this was not complied with — L. Chandra Kumar case was also delivered by a Bench of seven Judges — Therefore, present case should be referred to a larger Bench — In L. Chandra Kumar case it was observed that constitutional scheme does not require all adjudicatory bodies falling within territorial jurisdiction of High Courts should be subject to their supervisory jurisdiction as the object was to divest High Court of their onerous duty — Therefore, adding to supervisory function under Art. 227(1) cannot be of any assistance in any manner

(Paras 118 and 176 to 180)

— Per Chandrachud, J. (partly concurring), though the present judgment analyses the ambit of the word “only” in Art. 110(1) and the interpretation of Arts. 110(1)(a) to (g) and concludes that Pt. XIV of the Finance Act, 2017 could not have been validly enacted as a Money Bill, the reasons which have been set out by the Chief Justice of India to refer the aspect of Money Bill to a larger Bench are correct — Thus, matter should be referred to a larger Bench

(Paras 254 to 262 and 303 to 347)

— Per Deepak Gupta, J. (concurring), as there is lack of clarity as to what constitutes a Money Bill and whether Pt. XIV of the Finance Act, 2017 is a Money Bill or not, said matter must be referred to a larger Bench — Tribunal, Appellate Tribunal and Other Authorities (Qualifications, Experience and Other Conditions of Service of Members) Rules, 2017 — Taxation — Finance Act, 2017, Pt. XIV and Ss. 183 to 188

(Para 365)

T. Constitution of India — Art. 110 and Arts. 107, 109, 368, 122(1), 212(1) and 117 — Certification by Speaker as to Money Bill — Finality of decision of Speaker and scope of judicial review thereagainst — Immunity to proceedings of Parliament under Art. 122(1) — Scope of availability of, against said certification — Judicial review of decision of Speaker as to whether a Bill is a Money Bill or not, held, maintainable on limited grounds

— Per curiam, finality of decisions under the Constitution has been subject to judicial review by the courts — However, the jurisdiction exercisable by the courts in such matters is rather limited and is subject to the satisfaction of specific conditions — Under Arts. 122(1) and 212(1), immunity that has been granted is limited to “irregularity of procedure” and does not extend to substantive illegality or unconstitutionality — Principle of “expressio unius est exclusio alterius” (whatever has not been included has by implication been excluded), applied — Determining whether an impugned action or breach is an exempted irregularity or a justiciable illegality is a matter of judicial interpretation and would undoubtedly fall within the ambit of courts and cannot be left to the sole authority of Parliament to decide — Interpretation of statutes dealing with legislative processes falls within the domain of the courts — Statutory interpretation is a judicial exercise, regardless of the immunities granted to parliamentary proceedings

(Paras 95 to 104)

— Decision of Speaker under Art. 110(3) though final, is subject to judicial scrutiny to find out whether it is substantially illegal or unconstitutional or not — Therefore, Art. 110(1) has to be given an appropriate meaning and interpretation to avoid and prevent overinclusiveness or underinclusiveness — Any interpretation would have far-reaching consequences — It is, therefore, necessary that there should be absolute clarity — Any ambiguity should be ironed out and affirmatively decided — Even if, in case of dispute, opinion of Speaker is conclusive, that is not a consideration to avoid answering and deciding the scope and ambit of “Money Bill” under Art. 110(1) of the Constitution, which thus has to be referred to larger Bench (see Shortnote A)

(Para 112)

— Immunity to proceedings of Parliament under Art. 122(1) does not bar judicial review of certification by Speaker under Art. 110(3) — The Union's contention that Art. 122 would exempt from judicial scrutiny passage of Bills is a far-fetched contention — If such a blanket exemption were to be granted, then it would open the floodgates to deviation from any constitutional provision governing the functioning of Parliament and its legislative procedure — Since the Constitution explicitly provides a self-contained detailed procedure for enactment of legislation, and does not suggest that mere assent of the President to a law, by whatsoever method adopted, would become a valid law, it is necessary that Supreme Court being the highest constitutional forum for judicial review is provided with enough space for enforcement and protection of the Constitutional scheme

(Paras 92 to 94)

— Per Chandrachud, J. (concurring), certification by Speaker that a Bill is a Money Bill does not exclude judicial review — Purpose of such certification is to prevent controversies in Parliament by introducing an element of procedural simplicity — Irish and British models not adopted in India — Finality associated with certification by Speaker under Art. 110(3) operates between Upper and Lower House but does not exclude judicial review by a constitutional court — Finality does not exclude judicial review if specific words are not used to that effect — Examination of other provisions of the Constitution like Arts. 217(3), 311(3) and Sch. X Para 6(1) dealing with finality are to the same effect

(Paras 263 to 275)

— Immunity to proceedings of Parliament under Art. 122(1) is available to irregularity of procedure and internal activities of legislature — It is not available to illegality, unconstitutionality and external activities of legislature — Implied exclusion of illegality and unconstitutionality by application of principle of expressio unius est exclusion alterius (that is, whatever has not been included has by implication been excluded) — Constitutionality supremacy — Protection of Art. 122 cannot extend to substantive illegality or unconstitutionality because India is governed by constitutional supremacy unlike Britain which is governed by parliamentary sovereignty

(Paras 270 to 275)

— Majority in K.S. Puttaswamy (Aadhaar-5 J.), (2019) 1 SCC 1 analysed two fundamental precepts — Firstly, importance of Rajya Sabha in a bicameral legislature — Secondly, Rajya Sabha as an important institution signifying constitutional federalism — Thus, decision of Speaker to certify a Bill as a Money Bill is not immune from judicial review

(Paras 283 to 302)

— Per Deepak Gupta, J. (concurring), certification by Speaker under Art. 110(3) is not beyond judicial review — However, keeping in view the high office of Speaker, the scope of judicial review in such matters is extremely limited — If two views are possible decision of Speaker must prevail

(Para 365)

U. Constitutional Law — Grant and Separation of powers — Primacy of Constitution — Meaning of constitutional supremacy, per Chandrachud, J.

— Legislature, executive and judicial wings function under mandate of the Constitution — The ambit of this power is defined by the Constitution — Constitution structures the power of Parliament and State Legislatures — Their authority is plenary within the field reserved to them

(Paras 270 to 275)

V. Constitutional Law — Federalism — Bicameralism — Importance of bicameralism in federal set-up — Importance of Rajya Sabha, in bicameralism, per Chandrachud, J.

(Paras 283 to 302)

Held :

Per curiam

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?

Articles 368 and 110 being two exceptions to general legislative procedure under Article 107

The Indian Parliament is a bicameral legislature. In order to become law, as per the general legislative scheme as provided under Article 107, an ordinary Bill must be passed by a simple majority of both the Rajya Sabha and Lok Sabha and must then receive Presidential ratification. Ordinary Bills can be introduced either by the Government or by any private member in either House of Parliament. After securing requisite majority in the House it is introduced in, ordinary Bills are then sent to the other House for its assent. The Constitution, however, makes two exceptions to this general legislative procedure for formulation of laws.

(Para 87)

Article 368 provides for the constituent power of Parliament to amend the Constitution itself and concomitantly requires a higher threshold of majority in both Houses of Parliament, and in certain cases also require the assent of a simple majority of the State Legislatures. Article 110, in stark contrast, reverses the threshold and significantly reduces the role of the Rajya Sabha for “Money Bills”.

(Para 88)

“Money Bills” as defined under Article 110(1) include Bills which contain “only” provisions covered by Articles 110(1)(a) to (g). These Money Bills can be introduced only in Lok Sabha and the role of the Rajya Sabha is merely consultative. Unlike in the case of ordinary Bills where the Upper House can block the proposed legislation and act as a check on the power of the directly elected Lower House, in case of Money Bills, the Rajya Sabha merely has the ability to recommend amendments, that too only within fourteen days. In case Lok Sabha refuses to accept those recommendations or in case no recommendations are made by the Rajya Sabha within the period of fourteen days, the Money Bill can be directly sent for Presidential ratification and thereafter it becomes valid law.

(Para 89)

Such an exceptional provision has its roots in British tradition and is an inheritance of the Westminster form of Government. The Parliament Act, 1911 was formulated by the United Kingdom Parliament in response to the constitutional crisis of 1909 whereby the unelected Upper House (House of Lords) had stalled important budgetary Bills passed by the elected Lower House (House of Commons), causing a governmental crisis and forcing the elected Government to resign and seek re-election. Through Section 3, the said enactment required the Speaker of the House of Commons to certify that the Bill was a “Money Bill” and post such certification, the Upper House would forfeit its ability to amend or veto the Bill. Further, it also allowed “public Bills” to become law irrespective of refusal by the House of Lords, in case the House of Commons had passed the same draft thrice in a minimum span of two years. It must be noted that the Indian adaptation under Articles 109 and 110 do not have exceptions for “public Bills” nor do they explicitly provide that such certification shall not be amenable to judicial review unlike in the Parliament Act, 1911.

(Para 90)

Lok Sabha Speaker, in fact, on a dispute having so arisen has adjudicated the then Finance Bill, 2017 to be a “Money Bill”

The Constitution of India by Article 110(4), requires that every “Money Bill” be certified to be so by the Speaker before it is transmitted to the Rajya Sabha for their non-binding consideration. The Speaker of Lok Sabha hence is the only appropriate authority to decide the nature of a Bill under Article 110(3).

(Para 91)

In the present dispute, the Union has relied upon the finality accorded to such certification by the terminology of Article 110(3) which provides that in case of any dispute as to the nature of a Bill, “the decision of the Speaker of the House of the People thereon shall be final”. Lok Sabha Speaker, in fact, on a dispute having so arisen has adjudicated the then Finance Bill, 2017 to be a “Money Bill”.

(Para 92)

Bar to judicial review under Article 122(1) — Scope of

Further, the Union also places emphasis on Article 122(1) of the Constitution to contend that the challenge before the Court to the certification of the Speaker of the Finance Bill, 2017 as a “Money Bill” and its consequent passage without the assent of the Rajya Sabha would at best amount to an “irregularity of procedure” of “proceedings in Parliament” and hence cannot be inquired into by the Court.

(Para 92)

It must be noted once again, that like Articles 109 and 110, Article 122 of our Constitution too can be traced to the constitutional history and developments in the United Kingdom. Certain Members of Parliament were tried and imprisoned for their remarks in Parliament during the seventeenth century resulting in the enactment of Article 9 of the Bill of Rights, 1688 which specifies that “…. proceedings in Parliament ought not to be impeached or questioned in any court….” Article 212(1) of the Constitution provides a direct corollary of Article 122(1) with respect to State Legislatures. This provision was initially interpreted to mean that legislative business cannot be invalidated even if it is not strictly in compliance with law for such issues were within the “special jurisdiction” of the legislature to regulate its own business.

(Para 93)

M.S.M. Sharma v. Sri Krishna Sinha, AIR 1959 SC 395, referred to

The Union's contention that Article 122 would exempt from judicial scrutiny passage of Bills is a far-fetched contention. If such a blanket exemption were to be granted, then it would open the floodgates to deviation from any constitutional provision governing the functioning of Parliament and its legislative procedure. Since the Constitution explicitly provides a self-contained detailed procedure for enactment of legislation, and does not suggest that mere assent of the President to a law, by whatsoever method adopted, would become a valid law, it is necessary that the Supreme Court being the highest constitutional forum for judicial review is provided with enough space for enforcement and protection of the Constitutional scheme. A perusal of the expressions used in Article 122 and a comparison with its British roots make it clear that the “proceedings” referred to include the power of Parliament to frame its own rules, set out procedures for debate and discussion and powers to enforce discipline. Section 3 of the Parliament Act, 1911 in the United Kingdom makes the decision of the Speaker of the House of Commons “conclusive for all purposes” and “shall not be questioned in any court of law”. The Constitution of India, however, under Article 110(3), states that “if any question arises whether a Bill is a Money Bill or not, the decision of the Speaker of the House of the People thereon shall be final”. A different syntax seems to indicate that our Constitution makes the decision of the Speaker as to the nature of Bill final qua members of both the Houses of Parliament, though it is not conclusive and unchallengeable before the courts. The scope of judicial review of decisions that enjoy the status of finality under the Constitution has been examined by the Court on several occasions.

(Para 94)

Finality of decisions under the Constitution has been subject to judicial review by the courts

Under Articles 122(1) and 212(1), immunity that has been granted is limited to “irregularity of procedure” and does not extend to substantive illegality or unconstitutionality. Applying the principle of “expressio unius est exclusio alterius” (whatever has not been included has by implication been excluded), it is plain and clear that prohibition against examination on the touchstone of “irregularity of procedure” does not make taboo judicial review on findings of illegality or unconstitutionality.

(Para 95)

Raja Ram Pal v. Lok Sabha, (2007) 3 SCC 184, relied on

Finality of decisions under the Constitution has been subject to judicial review by the courts. However, the jurisdiction exercisable by the courts in such matters is rather limited and is subject to the satisfaction of specific conditions. There is no good ground and reason to take a different view with respect to the power of judicial review against certification of a Bill as a Money Bill by the Speaker under Article 110(4). Article 110(3) which makes this decision final qua both the Houses of Parliament and Article 122(1) which prohibits review by the courts in matters of “irregularity of procedure” cannot operate as a Bar when a challenge is made on the ground of illegality or unconstitutionality under the constitutional scheme.

(Paras 96 and 97)

Raja Ram Pal v. Lok Sabha, (2007) 3 SCC 184; Union of India v. Jyoti Prakash Mitter, (1971) 1 SCC 396, relied on

Determining whether an impugned action or breach is an exempted irregularity or a justiciable illegality is a matter of judicial interpretation and would undoubtedly fall within the ambit of courts and cannot be left to the sole authority of Parliament to decide. Interpretation of statutes dealing with legislative processes falls within the domain of the courts. Statutory interpretation is a judicial exercise, regardless of the immunities granted to parliamentary proceedings.

(Para 98)

R. (Jackson) v. Attorney General, (2006) 1 AC 262 : (2005) 3 WLR 733 : 2005 UKHL 56 (HL), relied on

Hence, gross violations of the Constitutional scheme would not be mere procedural irregularities and would be outside the limited ambit of immunity from judicial scrutiny under Article 122(1). In the case at hand, jurisdiction of the court is, hence, not barred.

(Para 99)

It must be emphasised that the scope of judicial review in matters under Article 110(3) is extremely restricted, with there being a need to maintain judicial deference to Lok Sabha Speaker's certification. There would be a presumption of legality in favour of the Speaker's decision and onus would undoubtedly be on the person challenging its validity to show that such certification was grossly unconstitutional or tainted with blatant substantial illegality. Courts ought not to replace the Speaker's assessment or take a second plausible interpretation. Instead, judicial review must be restricted to only the very extreme instance where there is a complete disregard to the constitutional scheme itself. It is not the function of constitutional courts to act as appellate forums, especially on the opinion of the Speaker, for doing so would invite the risk of paralysing the functioning of Parliament.

(Paras 100 to 104)

K.S. Puttaswamy (Aadhaar-5 J.) v. Union of India, (2019) 1 SCC 1, followed on this point

Mohd. Saeed Siddiqui v. State of U.P., (2014) 11 SCC 415; Yogendra Kumar Jaiswal v. State of Bihar, (2016) 3 SCC 183 : (2016) 2 SCC (Cri) 1, overruled

Applicability of law to facts

In light of the aforementioned narrow scope of inquiry and the high burden to be discharged by the petitioner(s) against the Speaker's certification, the challenge laid to the Finance Act, 2017 may be examined.

(Para 105)

Provisions of Part XIV can be broken down into three broad categories. First, abolition and merger of existing tribunals; second, uniformising and delegating to the Central Government through the Rules the power to lay down qualifications; method of appointment and removal, and terms and conditions of service of Presiding Officers and members; and third, termination of services and payment of compensation to Presiding Officers and members of certain tribunals that have now become defunct.

(Para 106)

K.S. Puttaswamy (Aadhaar-5 J.) v. Union of India, (2019) 1 SCC 1, considered

Hari Ram v. Babu Gokul Prasad, 1991 Supp (2) SCC 608; Saru Smelting (P) Ltd. v. CST, 1993 Supp (3) SCC 97, referred to

Having regard to the definition of “Money Bill” and the meaning and purpose of the word “only” used in Article 110(1) of the Constitution, the legislative intent is that the main and substantive provision of an enactment should only be any or all of the sub-clauses in Articles 110(1)(a) to (f). In the event the main or substantive provisions of the Act are not covered by Articles 110(1)(a) to (f), the Bill cannot be said to be a “Money Bill”. The use of the word “only” in Article 110(1) has its purpose, which is clear restriction for a Bill to be certified as a “Money Bill”.

(Para 109)

Mohd. Saeed Siddiqui v. State of U.P., (2014) 11 SCC 415; Yogendra Kumar Jaiswal v. State of Bihar, (2016) 3 SCC 183 : (2016) 2 SCC (Cri) 1, overruled

Kihoto Hollohan v. Zachillhu, 1992 Supp (2) SCC 651; Raja Ram Pal v. Lok Sabha, (2007) 3 SCC 184, referred to

In the context of Article 110(1) of the Constitution, use of the word “only” in relation to Articles 110(1)(a) to (f) pose an interesting, albeit a difficult question which was not examined and answered by the majority judgment in K.S. Puttaswamy (Aadhaar-5 J.), (2019) 1 SCC 1. While it may be easier to decipher a Bill relating to imposition, abolition, remission, alteration or regulation of any tax, difficulties would arise in the interpretation of Article 110(1) specifically with reference to Articles 110(1)(b) to (f) in a Bill relating to borrowing of money or giving of any guarantee by the Government of India, or an amendment of law concerning financial obligation. Unless the word “only” is interpreted in a right manner, Article 110(1) would be a nullity. A liberal and wide interpretation, on the other hand, possibly exposits an opposite consequence.

(Paras 111 and 116)

K.S. Puttaswamy (Aadhaar-5 J.) v. Union of India, (2019) 1 SCC 1, considered

Kaul and Shakdher:“Practices and Procedures of Parliament”, referred to

Article 110(3) — Interpretation — Need of absolute clarity, stressed — Reference to Bench of seven Judges in view of ambiguity required — Matter referred to larger Bench

The majority judgment in K.S. Puttaswamy (Aadhaar-5 J.), (2019) 1 SCC 1 did not advert to the doctrine of pith and substance whereas judgment of Ashok Bhushan, J. in his concurring judgment had referred to the dominant purpose. The test of dominant purpose possibly has its own limitation as many a legislation would have more than one dominant objective especially when this prescription is read with reference to Articles 110(1)(a) to (f) of the Constitution. Further, determination of what constitutes paramount and cardinal purpose of the legislation and the test applicable to determine this compunction and incertitude itself is not free from ambiguity. Difficulties would arise with reference to Articles 110(1)(b), (c), (d) and (e), when we apply the principles of dominant or the main purpose of an enactment test. Article 110(1)(c) refers to payment of monies into or withdrawal of monies from the Consolidated Fund of India. Article 110(1)(d) refers to appropriation of monies out of the Consolidated Fund of India. Article 110(1)(e) refers to declaration of any expenditure charged on the Consolidated Fund of India or increasing of the amount of such expenditure. Article 110(1)(f) relates to receipt of money on account of Consolidated Fund of India or Public Account of India or issue of such money or the audit of the accounts of the Union or of State. Even Article 110(1)(b) in its amplitude includes an amendment of the law in respect of a financial obligation undertaken or to be undertaken by the Government of India. Once it is held that the decision of the Speaker under Article 110(3) of the Constitution though final, is subject to judicial scrutiny on the principle of constitutional illegality, the provisions of Article 110(1) have to be given an appropriate meaning and interpretation to avoid and prevent overinclusiveness or underinclusiveness. Any interpretation would have far-reaching consequences. It is, therefore, necessary that there should be absolute clarity with regard to the provisions and any ambiguity and debate should be ironed out and affirmatively decided. In case of doubt, certainly the opinion of the Speaker would be conclusive, but that would not be a consideration to avoid answering and deciding the scope and ambit of “Money Bill” under Article 110(1) of the Constitution. For example, taxation enactments like the Income Tax Act would qualify as Money Bill under Article 110(1)(a) and may include provisions relating to Appellate Tribunals which would possibly qualify as incidental provisions covered under Article 110(1)(g), even if we exclude application of Article 110(1)(d). The position it could be argued would be different with reference to provisions for constitution of a tribunal under the Administrative Tribunal Act or the National Green Tribunal Act. The Bill could however state that the expenditure would be charged on the Consolidated Fund of India.

(Para 112)

Another aspect which would arise for consideration would be the legal consequences in case a non-Money Bill certified by the Speaker as a Money Bill, when presented before the Rajya Sabha is specifically objected to on this count by some Members, but on being put to vote no recommendations are made in respect of “non-Money” Bill related provisions.

(Para 113)

The petitioners contend that every impugned provision be individually examined and brought either under Articles 110(1)(a) to (f) or be incidental thereto, as permitted by Article 110(1)(g). In case even a single provision did not satisfy either of the aforementioned two categories, then the entire Finance Act, 2017 would be an affront to the prefatory phraseology of Article 110(1) and must be declared as being unconstitutional.

(Para 114)

The Central Government submitted that constitutionality of the Finance Act, 2017 would be safe if its dominant provisions, which form the core of the enactment, fall within the ambit of Articles 110(1)(a) to (f). Other minor provisions, even if not strictly incidental, could take the dominant colour and could be passed along with it as a Money Bill. As per such interpretation, provisions ought not to be read in a piecemeal manner, and judicial review ought to be applied deferentially.

(Para 115)

The majority in K.S. Puttaswamy (Aadhaar-5 J.), (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. The majority dictum in K.S. Puttaswamy (Aadhaar-5 J.) case, did No. 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 Articles 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 Articles 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 J.) case makes its application difficult to the present case and raises a potential conflict between the judgments of coordinate Benches.

(Para 116)

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 J.), (2019) 1 SCC 1 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 J.) case, it is accordingly directed that this batch of matters be placed before a larger Bench.

(Para 117)

There is yet another reason why 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. The 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.

(Para 118)

K.S. Puttaswamy (Aadhaar-5 J.) v. Union of India, (2019) 1 SCC 1, doubted on this point and referred to larger Bench

L. Chandra Kumar v. Union of India, (1997) 3 SCC 261 : 1997 SCC (L&S) 577, referred to

Per Chandrachud, J.

Ordinary Bills, Money Bills and Financial Bills

Conceptually, the Constitution contains a classification of Bills as:

(i) Ordinary Bills;

(ii) Money Bills, and

(iii) Financial Bills.

Bills other than Money Bills and Financial Bills can originate in either House of Parliament. An ordinary Bill is passed by both the Houses of Parliament when it has been agreed upon by both the Houses, either without amendment or with such amendments as agreed. The President is conferred with the constitutional authority to convene a joint sitting of both the Houses of Parliament in order to deliberate upon and vote on a Bill which is not a Money Bill. Special provisions are engrafted into the Constitution for the passage of Money Bills. Unlike an ordinary Bill which can originate in either House of Parliament, a Money Bill cannot be introduced in the Council of States. Article 109 specifies the procedure for the passage of a Money Bill.

(para 254)

The role of the Rajya Sabha in the passage of Money Bill is restricted. A Money Bill can originate only in Lok Sabha. After it is passed by Lok Sabha, the Bill is transmitted to the Rajya Sabha for its recommendation. The Rajya Sabha has a stipulated period of fourteen days to submit the Bill back to Lok Sabha with its recommendation. Recommendations of the Rajya Sabha are of a non-binding character. If Lok Sabha rejects the recommendations, it is deemed to have been passed by both the Houses in the form in which it was passed by Lok Sabha without the recommendations of the Rajya Sabha. If the Rajya Sabha were not to respond within the stipulated period of fourteen days, the same consequence would ensue. In distinction to the role which is entrusted to the Rajya Sabha in the passage of ordinary Bills by Article 107, Article 109 confers virtually an overriding authority to Lok Sabha in the passage of Money Bills. A Money Bill, unlike an ordinary Bill, can only originate in Lok Sabha. In the passage of a Money Bill, the Rajya Sabha has thus only a recommendatory role. Ordinary Bills, on the other hand, require the agreement of both the Houses of Parliament to ensure their passage.

(Para 255)

The third category of Bills — Financial Bills, is specified in Article 117. The reference to Financial Bills is contained in the marginal note to Article 117. Article 117(1) indicates that a Bill which makes provision for any of the matters specified in sub-clauses (a) to (f) of Article 110(1) can be introduced or moved only on the recommendation of the President and such a Bill shall not be introduced in the Rajya Sabha. The text of Article 117(1) speaks of Money Bills and other Financial Bills as classes of Bills which can originate only in Lok Sabha.

(Para 256)

Money Bills : Article 110

Article 110 of the Constitution defines a Money Bill for the purposes of theChapter. A Bill is deemed to be a Money Bill “if it contains only provisions” dealingwith any of the matters described in Articles 110(1)(a) to (g). The word “only” isof crucial significance. The consequence of the use of the expression “only” is to impart exclusivity. In other words, a Bill will be deemed to be a Money Bill only if it falls within the description of the matters enunciated in Articles 110(1)(a) to (g). If the Bill contains matters which are unrelated to or do not fall within Articles 110(1)(a) to (g), it is not a Money Bill. Article 110(2) supports this construction since it indicates that a Bill shall not be deemed to be a Money Bill only for the reason that it provides for:

(i) Imposition of fines or other pecuniary penalties;

(ii) Demand or payment of fees for licences or fees for services rendered; or

(iii) The imposition, abolition, remission, alteration or regulation of any tax by any local authority or body for local purposes.

(paras 258 to 261)

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 Articles 110(1)(a) to (g). Article 110(1)(g) covers “any matter incidental to” what is specified in Articles 110(1)(a) to (f). Article 110(1)(g) must not be understood as a residuary provision or a catch-all-phrase encompassing all other matters which are not specified in Articles 110(1)(a) to (f). If this construction were to be placed on Article 110(1)(g), the distinction between an ordinary Bill and a Money Bill would vanish. Hence, to be incidental within the meaning of Article 110(1)(g), the Bill must cover only those matters which fall within the ambit of Articles 110(1)(a) to (f). It is only a matter which is incidental to any of the matters specified in Articles 110(1)(a) to (f) which is contemplated in Article 110(1)(g).

(Para 262)

Certification by the Speaker : Final but not conclusive

The purpose of the certification by the Speaker was to prevent controversies in the Upper House of Parliament by incorporating an element of procedural simplicity.

(Paras 263 and 264)

When the draft article as proposed was accepted and eventually incorporated as Article 110, clause (3) incorporated the principle of finality without a specific exclusion of judicial review. Section 3 of the Parliament Act, 1911 in Britain specifically excluded judicial review by providing that a certificate of the Speaker of the House of Commons “shall be conclusive for all purposes and shall not be questioned in any court of law”. These words imparted both conclusiveness and immunity from judicial review to the certificate from the Speaker. This language was not adopted in the Indian Constitution. The draftspersons of the Constitution carefully did not incorporate an exclusion from judicial review, in respect of a certificate issued by the Speaker under clause (3) of Article 110. Finality, in other words, operates as between the Upper and the Lower Houses and does not exclude judicial review by a constitutional court.

(Para 265)

The interpretation adopted herein is supported for yet another reason. In contexts where the Constitution intends to confer immunity from judicial review, specific words to that effect are used. The expression “shall not be called in question in any court” is, for instance, utilised in Articles 329(a), Article 243-O and Article 243-ZG.

(Para 266)

N.P. Ponnuswami v. Returning Officer, Namakkal Constituency, 1952 SCR 218 : AIR 1952 SC 64, referred to

Distinct from the exclusion of judicial review by the above provisions, there are other provisions of the Constitution where a decision is made “final”. Finality in such contexts has been held not to exclude judicial review. Articles 217(3), 311(3) and Para 6(1) of the Tenth Schedule use the expression “final”.

(Para 267)

Under Article 217(3), the President performs a judicial function and a decision rendered is subject to judicial review on stipulated grounds.

(Para 268)

Union of India v. Jyoti Prakash Mitter, (1971) 1 SCC 396, referred to

The finality attributed to the decision of a disciplinary authority that it is not reasonably practical to hold an inquiry, does not render it immune from judicial review. The finality attributed to the decision of the Speaker of Lok Sabha or the Chairman of the Rajya Sabha in Para 6(1) of the Tenth Schedule to the Constitution does not abrogate judicial review.

(Para 269)

Union of India v. Tulsiram Patel, (1985) 3 SCC 398 : 1985 SCC (L&S) 672; Kihoto Hollohan v. Zachillhu, 1992 Supp (2) SCC 651, relied on

Consequently, purely as a matter of textual analysis, the finality attributed to a certificate issued by the Speaker under Article 110(3) does not grant immunity from judicial review.

(Para 269)

Article 118 of the Constitution allows each of the Houses of Parliament to make rules for regulating their procedure and the conduct of business, subject to the provisions of the Constitution. Article 122(1) provides immunity to proceedings before Parliament being called into question on the ground of “any alleged irregularities of procedure”. In several decisions of the Court which construed the provisions of Article 122 and the corresponding provisions contained in Article 212 for the State Legislatures, a distinction has been drawn between an irregularity of procedure and an illegality. Immunity from judicial review attaches to the former but not to the latter.

(Paras 270 to 273)

Babulal Parate v. State of Bombay, (1960) 1 SCR 605 : AIR 1960 SC 51; Powers, Privileges & Immunities of State Legislatures, In re, Special Reference No. 1 of 1964, AIR 1965 SC 745; Ramdas Athawale (5) v. Union of India, (2010) 4 SCC 1, relied on

There is a distinction between a procedural irregularity and an illegality. Any attempt to read a limitation into Article 122 so as to restrict the court's jurisdiction to examination of Parliament's procedure in case of unconstitutionality, as opposed to illegality would amount to doing violence to the constitutional text. Applying the principle of expressio unius est exclusio alterius (whatever has not been included has by implication been excluded), it is plain and clear that prohibition against examination on the touchstone of “irregularity of procedure” does not make taboo judicial review on findings of illegality or unconstitutionality. But in case gross illegality or violation of constitutional provisions is shown, the judicial review will not be inhibited in any manner by Article 122, or for that matter by Article 105.

(Para 274)

Raja Ram Pal v. Lok Sabha, (2007) 3 SCC 184, relied on

The fundamental constitutional basis for the distinction between an irregularity of procedure and an illegality is that unlike in the United Kingdom where parliamentary sovereignty governs, India is governed by constitutional supremacy. The legislative, executive and judicial wings function under the mandate of a written Constitution. The ambit of their powers is defined by the Constitution. The Constitution structures the powers of Parliament and the State Legislatures. Their authority is plenary within the field reserved to them. Judicial review is part of the basic structure of the Constitution. Any exclusion of judicial review has to be understood in the context in which it has been mandated under a specific provision of the Constitution. Hence, the provisions contained in Article 122 which protect an alleged irregularity of procedure in the proceedings in Parliament being questioned cannot extend to a substantive illegality or a violation of a constitutional mandate.

(Paras 275 to 282)

Mangalore Ganesh Beedi Works v. State of Mysore, AIR 1963 SC 589, clarified

Mohd. Saeed Siddiqui v. State of U.P., (2014) 11 SCC 415; Yogendra Kumar Jaiswal v. State of Bihar, (2016) 3 SCC 183 : (2016) 2 SCC (Cri) 1, overruled

Judicial review of the certificate of the Speaker

The Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Bill, 2016 was certified as a Money Bill under Article 110 by the Speaker of Lok Sabha.. The exclusion of the Rajya Sabha from the legislative process consequent upon the certification by the Speaker under Article 110(3) was one of the specific challenges addressed before the Constitution Bench [K.S. Puttaswamy (Aadhaar-5 J.), (2019) 1 SCC 1]. A.K. Sikri, J. speaking for three of the five Judges of the Constitution Bench, analysed the provisions of the Aadhaar Act, 2016 on the basis of two fundamental precepts : first, the importance of the Rajya Sabha in a bicameral legislature as “succinctly exemplified” (Puttaswamy case, para 462) by the decision in Kuldip Nayar, (2006) 7 SCC 1 (Kuldip Nayar) and second, the Rajya Sabha as an “important institution signifying the constitutional federalism” (Puttaswamy case, para 463).

(Para 283)

K.S. Puttaswamy (Aadhaar-5 J.) v. Union of India, (2019) 1 SCC 1; Kuldip Nayar v. Union of India, (2006) 7 SCC 1, referred to

Sub-Committee on Judicial Accountability v. Union of India, (1991) 4 SCC 699; S.R. Bommai v. Union of India, (1994) 3 SCC 1; Raja Ram Pal v. Lok Sabha, (2007) 3 SCC 184; Ramdas Athawale (5) v. Union of India, (2010) 4 SCC 1; Kihoto Hollohan v. Zachillhu, 1992 Supp (2) SCC 651; Powers, Privileges & Immunities of State Legislatures, In re, Special Reference No. 1 of 1964, AIR 1965 SC 745; Mohd. Saeed Siddiqui v. State of U.P., (2014) 11 SCC 415; Yogendra Kumar Jaiswal v. State of Bihar, (2016) 3 SCC 183 : (2016) 2 SCC (Cri) 1, cited

Granville Austin : The Indian Constitution : Cornerstone of a Nation, Oxford University Press (1966), at p. 205, cited

From an analysis of the judgment [K.S. Puttaswamy (Aadhaar-5 J.), (2019) 1 SCC 1], it is evident that the judgments of both D.Y. Chandrachud, J. and Ashok Bhushan, J. categorically held that the decision of the Speaker to certify a Bill as a Money Bill is not immune from judicial review. There is a clear distinction between an irregularity of procedure under Article 122(1) and a substantive illegality. The certificate of the Speaker under Article 110(3) is not conclusive insofar as judicial review is concerned. Judicial review can determine whether the conditions requisite for a Bill to be validly passed as a Money Bill were fulfilled. The point of difference between the majority (represented by the decisions of Sikri, J. and Ashok Bhushan,J.) and Chandrachud, J. was that on merits, the majority came to the conclusion that the Aadhaar Bill is a Money Bill within the meaning of Article 110(1) while the dissent held otherwise.

(Para 291)

K.S. Puttaswamy (Aadhaar-5 J.) v. Union of India, (2019) 1 SCC 1, considered

On an overall reading of the judgment of Sikri, J., speaking for the majority, it is not possible to accede to the submission that the issue of the reviewability of the certificate of the Speaker is left at large by the decision of the majority. In any event, in view of the issue having arisen in the present case, the aspect of judicial review is dealt herein independently of the decision in K.S. Puttaswamy (Aadhaar-5 J.), (2019) 1 SCC 1.

(Para 292)

K.S. Puttaswamy (Aadhaar-5 J.) v. Union of India, (2019) 1 SCC 1, considered

Bicameralism and Importance of Rajya Sabha

Bicameral legislatures have a significant constitutional role particularly in the context of federal structures. The Rajya Sabha, as our Constitution emphasises, represents the aspirations of the States and is hence a critical element in the constitutional design of the federal structure. The Rajya Sabha is an institution possessed of constitutional continuity. The body is not dissolved like the House of the People and its members retire by rotation. The exclusion of the Rajya Sabha has been contemplated in the context of Money Bills. However, this is an exception to the overarching principle that Bills have to be passed by both Houses of Parliament.

(Paras 293 to 300)

K.S. Puttaswamy (Aadhaar-5 J.) v. Union of India, (2019) 1 SCC 1; Kuldip Nayar v. Union of India, (2006) 7 SCC 1, referred to

S.R. Bommai v. Union of India, (1994) 3 SCC 1, cited

Rajya Sabha Secretariat, Second Chamber In Indian Parliament : Role and Status of Rajya Sabha, (2009), at p. 2; M.N. Kaul and S.L. Shakdher : Practice and Procedure of Parliament, Lok Sabha Secretariat (2001), referred to

There is a significant difference between the provisions of Article 110(1) which defines Money Bills and the provisions of Article 117(1) which enunciates special provisions as to Financial Bills. Article 117(1) provides that a Bill or amendment making provision for any of the matters specified in Articles 110(1)(a) to (f) shall not be introduced or moved except on the recommendation of the President of India and the Bill making such provision shall not be introduced in the Council of States. The word “only” which is employed in Article 110(1) in the definition of Money Bills is absent in Article 117(1). The legislative procedure in the Rajya Sabha explains that Financial Bills are comprised in Categories I and II respectively:

(Para 301)

Financial Bills — Category I

A Bill falling under Article 117(1) of the Constitution is called a financial Bill. It is a Bill which seeks to make provision for any of the matters specified in Articles 110(1)(a) to (f) as also other matters. It is, so to say, a Bill which has characteristics both of a Money Bill as well as or an ordinary Bill. Firstly, it cannot be introduced in Rajya Sabha, and secondly, it cannot be introduced except on the recommendations of the President. Except these two points of difference, a financial Bill in all other respects is just like any other ordinary Bill.

(Para 301)

Financial Bills — Category II

There is yet another class of Bills which are also Financial Bills under Article 117(3). Such Bills are more in the nature of ordinary Bills rather than the Money Bills and Financial Bills mentioned earlier. The only point of difference between this category of Financial Bills and the ordinary Bills is that such a financial Bill, if enacted and brought into operation, involves expenditure from the Consolidated Fund of India and cannot be passed by either House of Parliament unless the President has recommended to that House the consideration of the Bill. In all other respects this category of Bills is, just like ordinary Bills, so that such a financial Bill can be introduced in Rajya Sabha, amended by it or a joint sitting can be introduced in Rajya Sabha, amended by it or a joint sitting can be held in case of disagreement between the Houses over such a Bill. There is, in other words, no limitation on the power of Rajya Sabha in respect of such Financial Bills.

(Para 301)

The above classification re-emphasises the distinction of a financial Bill with a Money Bill, which is a Bill which contains “only” provisions of the description specified in Articles 110(1)(a) to (g).

(Para 301)

Legislative Procedure in the Rajya Sabha : Rajya Sabha Secretariat, at p. 17, referred to

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 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 deliberative dialogue, cannot be defeated by immunising from judicial review the decision of the Speaker to certify a Bill as a Money Bill.

(Para 302)

Whether certification by the Speaker is of the entire Finance Bill when it was transmitted to the Rajya Sabha

The Central Government submitted that payment of salaries is made out of the Consolidated Fund of India. Once this be the position, the other provisions of Part XIV are, it was urged, incidental in nature. It is argued that salaries, allowances and pension will have a direct nexus with the Consolidated Fund of India and are incidental to the provisions contained in the Finance Act, 2017. In this context, reliance was placed on : (i) the presumption of constitutional validity (ii) the importance of the doctrine of separation of powers.

(Para 312)

State of W.B. v. Anwar Ali Sarkar, 1952 SCR 284 : AIR 1952 SC 75 : 1952 Cri LJ 510; R.K. Garg v. Union of India, (1981) 4 SCC 675 : 1982 SCC (Tax) 30; Subramanian Swamy v. CBI, (2014) 8 SCC 682 : (2014) 6 SCC (Cri) 42 : (2014) 3 SCC (L&S) 36; Bhim Singh v. Union of India, (2010) 5 SCC 538, referred to

The provisions of Part XIV of the Finance Act, 2017 amend, first and foremost, the legislative enactments under which diverse tribunals, including appellate tribunals were constituted. By and as a result of the amendments, the statutory provisions relating to qualifications for appointment, the process of appointment, terms of office and the terms and conditions of service including salaries, allowances, resignation and removal are overridden and are to be governed by the provisions of Section 184. Section 184 confers a rule-making power on the Central Government to stipulate all the above aspects in regard to the adjudicatory personnel appointed to these tribunals. By this process, the governing statutory provisions embodied in the parent legislation are overridden and authority is conferred upon the 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.

(Paras 303 to 313)

This completely transgresses the conditions stipulated in Article 110(1) for constituting a Money Bill. Article 110 does not Bar the inclusion of non-fiscal proposals in a Money Bill. But while permitting the inclusion of non-fiscal subjects, Article 110(1)(g) embodies the requirement that such a matter must be incidental to any of the matters specified in Articles 110(1)(a) to (f). In other words, the inclusion of a non-fiscal matter is permissible in a Money Bill only if it is incidental or ancillary to a matter specified in Articles 110(1)(a) to (f). Part XIV has repealed and replaced substantive provisions contained in the enactments specified in the Eighth and Ninth Schedules which are not referable to Articles 110(1)(a) to (f). Part XIV of the Finance Act, 2017 is thus not incidental within the meaning of Article 110(1)(g). The plain consequence is that by adopting the special procedure contained in Article 109, the substantive procedure governing ordinary Bills under Articles 107 and 108 has been rendered otiose. If the provisions contained in PartXIV were to be enacted in the form of an Ordinary Bill, the Rajya Sabha would have a vital voice in deliberating and discussing on the nature of the legislative proposals. Part XIV contains provisions which lie outside the domain permissible under Article 110.

(Para 314)

Thus, the submission of the Central Government cannot be accepted. It cannot be accepted that since salaries are payable out of the Consolidated Fund, Part XIV of the Finance Act bears a nexus with Articles 110(1)(c) and (d) and that the other provisions are merely incidental. That the amendment has a bearing on the financial burden on the Consolidated Fund of India cannot be the sole basis of bringing the amendment within the purview of Article 110(1). On a close analysis of the provisions, it is evident that what is claimed to be incidental has swallowed up the entire legislative exercise. The provisions of Part XIV of the Finance Act, 2017 canvass a range of amendments which include qualifications and process for appointment terms of office and terms and conditions of service including salaries, allowances, resignation and removal which cannot be reduced to only a question of the financial burden on the Consolidated Fund of India. The effect of Part XIV is to amend and supersede the provisions contained in the parent enactments governing all aspects of the appointment and terms of service of the adjudicatory personnel of the tribunals specified in the Eighth and Ninth Schedules. This exercise cannot be construed as a legitimate recourse to the power of enacting a Money Bill.

(Para 315)

It was urged that the provisions of Part XIV of the Finance Act, 2017, insofar as they have a financial bearing on the Consolidated Fund of India, are sustainable with reference to Articles 110(1)(c), (d), (e) and (g).

(Para 316)

Article 110(1)(c) deals, inter alia, with the withdrawal of money from either the Consolidated Fund of India or the Contingency Fund of India. Article 110(1)(d) deals with the appropriation of money out of the Consolidated Fund of India. Article 110(1)(e) stipulates either the declaration of any expenditure or the increase in the amount of expenditure charged on the Consolidated Fund of India. It was contended that Part XIV of the Finance Act, 2017, insofar as it has a bearing on the Consolidated Fund of India, is incidental to the matters referred to in Articles 110(1)(c), (d) and (e).

(Para 317)

Article 110(1)(g) stipulates that provisions dealing with any matter incidental to the matters specified in Articles 110(1)(a) to (f) fall within the purview of Article 110(1). However, this is distinct from contending that where a Bill contains provisions not referable to Articles 110(1)(a) to (f) but has an incidental bearing on the Consolidated Fund of India, this by itself would bring such a Bill within the purview of Article 110(1)(g).

(Para 318)

Article 110(1) defines a Money Bill as a Bill which contains “only provisions” dealing with all or any of the matters enumerated in Articles 110(1)(a) to (f). The import of Article 110(1)(g) is that the proposed Bill may also contain provisions which have an incidental bearing on the matters enumerated in Articles 110(1)(a) to (f). However, Article 110(1)(g) cannot be read to permit a Bill consisting of provisions which do not directly pertain to matters enumerated in Articles 110(1)(a) to (f), but have only an incidental bearing on the matters enumerated in Articles 110(1)(a) to (f). Implicit in the term “incidental” is the relation between the principal subject-matters of the Bill which must be referable to Articles 110(1)(a) to (f) and other matters. Every provision of a Bill which is claimed to be a Money Bill must directly pertain to any of the matters enumerated in Articles 110(1)(a) to (f). Where it is claimed that a provision falls within the ambit of Article 110(1)(g), the provision must depend on or be appurtenant “to any of the matters specified in Articles 110(1)(a) to (f).

(Para 319)

Part XIV of the Finance Act, 2017 canvasses a range of amendments which include qualifications and process for appointment of Members of tribunals, terms of office and terms and conditions of service including salaries, allowances, resignation and removal which are not referable to Articles 110(1)(a) to (f). Almost every government action involves an increase or decrease of expenditure which may be relatable to the Consolidated Fund of India. Accepting the argument urged would amount to inverting Article 110(1)(g) and allowing any Bill which is not referable to the matters enumerated in Article 110(1) to be passed as a Money Bill so long as it can be shown that the provisions may have some bearing on the Consolidated Fund of India.

(Para 320)

Further, the contention urged that the transfer of the power to determine salaries has a direct nexus with the Consolidated Fund of India glosses over the distinction between the power to determine or modify salaries and the determination modification of the salary. The transfer of the power to determine or modify salaries does not, by itself, lead to the conclusion that such transfer of authority to the rule-making function by the Central Government is referable to the Consolidated Fund of India in the manner contemplated in Articles 110(1)(a) to (f).

(Para 321)

The transfer of authority to determine qualifications and process for appointments, terms of office and terms and conditions of service including salaries, allowances, resignation and removal of tribunal members from the statutory provisions determined by the legislature to the executive is the transfer of a substantive right which has a bearing on constitutional design as well as the independence of adjudicatory tribunals. They are not referable to Articles 110(1)(c), (d) and (e) of Article 110(1) and do not amount to matters incidental to any of the matters enumerated in Articles 110(1)(a) to (f).

(Para 322)

There is undoubtedly a presumption of constitutionality which attaches to legislation. The presumption is founded on the principle that the legislature in a parliamentary democracy understands the needs and conditions of the time and that the executive government which pilots legislation through the competent legislature is accountable to both the legislature and to the people whom the elected arm of Government represents. But the presumption of constitutionality is what it is, namely, a presumption. The presumption can be displaced on a clear violation of a constitutional mandate or infraction being established. Where a Bill which contains provisions which are not referable to Articles 110(1)(a) to (g) is passed as a Money Bill, that constitutes a clear violation of the mandate of Article 110. The presumption of constitutionality stands displaced.

(Para 323)

The Central Government urged that the doctrine of separation of powers would require the court to tread with caution since certification of a Bill as a Money Bill, as he submits, pertains to the internal functioning of Parliament. Judicial review, it was submitted, would violate the separation of powers. The submission overlooks the fundamental position that the certification of a Bill as a Money Bill and the invocation of the provisions of Article 110 is an exception which has been carved out by the Constitution to the constitutional requirements accompanying the passage of ordinary legislation. In passing the Bill as a Money Bill, the immediate impact is to denude the Rajya Sabha of the legislative role which is assigned to it in the passage of legislation.

(Para 324)

The Rajya Sabha as a legislative institution represents the voice, concerns and aspirations of Indian federalism. The reduction of the role of the Rajya Sabha in the case of a Money Bill was engrafted by the draftspersons of the Constitution with a specific purpose. In their view, Money Bills should appropriately be reserved for the authority of the Lower House which consists of directly elected representatives of the people. But to regard a Bill which is not a Money Bill as one which passes muster under Article 110 is a breach of a substantive constitutional provision, a violation of constitutional process and hence, an illegality.

(Para 325)

The basic postulate of our Constitution is that every authority is subservient to constitutional supremacy. No authority can assume to itself the ultimate power to decide the limits of its own constitutional mandate. Judicial review is intended to ensure that every constitutional authority keeps within the bounds of its constitutional functions and authority. In holding a constitutional institution within its bounds, judicial review does not trench upon the doctrine of separation of powers. The adjudicatory power vests in the Supreme Court as a constitutional court. In adjudicating on whether there has been a violation of a constitutional mandate in passing a Bill as a Money Bill, judicial review does not traverse beyond the limit set by the separation of powers. On the contrary, the independence of judicial tribunals has been consistently recognised by the court as an inviolable feature of the basic structure of the Constitution. Determination of the norms of eligibility, the process of selection, conditions of service, and those regulating the impartiality with which the members of the tribunals discharge their functions and their effectiveness as adjudicatory bodies is dependent on their isolation from the executive. By leaving the rule-making power to the uncharted wisdom of the executive, there has been a self-effacement by Parliament. The conferment of the power to frame rules on the executive has a direct impact on the independence of the tribunals. Allowing the executive a controlling authority over diverse facets of the tribunals would be destructive of judicial independence which constitutes a basic feature of the Constitution.

(Para 326)

Severability

The certification of the Speaker of the Bill as a Money Bill attaches to the entirety of the Finance Bill. Hence, the consequence of accepting the submission of the petitioners would result in the invalidation of the entire Finance Act. The Court should therefore, apply the doctrine of severability to Part XIV of the Finance Act, 2017.

(Para 337)

R.M.D. Chamarbaugwalla v. Union of India, 1957 SCR 930 : AIR 1957 SC 628, applied

State of Bombay v. F.N. Balsara, 1951 SCR 682 : AIR 1951 SC 318 : (1951) 52 Cri LJ 1361; State of Bombay v. United Motors (India) Ltd., 1953 SCR 1069 : AIR 1953 SC 252, referred to

The principles which govern the exercise of the doctrine of severability have been formulated thus:

(i) In determining whether the valid parts of a statute are separable from the invalid parts thereof, it is the intention of the legislature that is the determining factor. The test to be applied is whether the legislature would have enacted the valid part if it had known that the rest of the statute was invalid.

(para 338)

Corpus Juris Secundum, Vol. 82, p. 156; Sutherland on Statutory Construction, Vol. 2, pp. 176-177, cited

(ii) If the valid and invalid provisions are so inextricably mixed up that they cannot be separated from one another, then the invalidity of a portion must result in the invalidity of the Act in its entirety. On the other hand, if they are so distinct and separate that after striking out what is invalid, what remains is in itself a complete code independent of the rest, then it will be upheld notwithstanding that the rest has become unenforceable.

(para 338)

Cooley's Constitutional Limitations, Vol. I at pp. 360-361; Crawford on Statutory Construction, pp. 217-218, cited

(iii) Even when the provisions which are valid are distinct and separate from those which are invalid, if they all form part of a single scheme which is intended to be operative as a whole, then also the invalidity of a part will result in the failure of the whole.

(para 338)

Crawford on Statutory Construction, pp. 218-219, cited

(iv) Likewise, when the valid and invalid parts of a statute are independent and do not form part of a scheme but what is left after omitting the invalid portion is so thin and truncated as to be in substance different from what it was when it emerged out of the legislature, then also it will be rejected in its entirety.

(para 338)

(v) The separability of the valid and invalid provisions of a statute does not depend on whether the law is enacted in the same section or different section. It is not the form, but the substance of the matter that is material, and that has to be ascertained on an examination of the Act as a whole and of the setting of the relevant provision therein.

(para 338)

Cooley's Constitutional Limitations, Vol. I, pp. 361-362, cited

(vi) If after the invalid portion is expunged from the statute what remains cannot be enforced without making alterations and modifications therein, then the whole of it must be struck down as void, as otherwise it will amount to judicial legislation.

(para 338)

Sutherland on Statutory Construction, Vol. 2, p. 194, cited

(vii) In determining the legislative intent on the question of separability, it will be legitimate to take into account the history of the legislation, its object, the title and the Preamble to it.

(para 338)

Sutherland on Statutory Construction, Vol. 2, pp. 177-178, cited

In the present case, applying these principles enunciated above, Part XIV of the Finance Act, 2017 is severable. The intent of the legislature is the guiding principle under the first of the above principles. Parliament would, in any event, have enacted the valid parts of the Finance Act, 2017 if it had known that Part XIV is invalid. The valid and invalid parts are not so inextricably linked that the invalidity of PartXIV should result in the invalidity of the rest. Nor is Part XIV a part of a composite scheme linked to the other parts of the Finance Act, 2017. Even after the excision of Part XIV the remaining part of the Finance Act would still survive on its own. Hence, Part XIV of the Finance Act, 2017 can be excised from the Act.

(Para 339)

Finally, a fervent plea was made to the effect that even though some provisions contained in the Rules framed on 1-6-2017 may run contrary to the principles enunciate in Madras Bar Assn., (2010) 11 SCC 1 and Madras Bar Assn., (2014) 10 SCC 1, the Central Government would be willing to proceed on the basis of the interim orders which were passed during the pendency of the proceedings with certain modifications. The submission cannot be accepted. Part XIV of the Finance Act, 2017 could not have been enacted in the form of a Money Bill. The Rules framed by the Central Government are unconstitutional on the ground that they violate the principles of judicial independence set out in judgments of the Court.

(Para 340)

Conclusion

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 to 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, it is directed 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.

(Para 341)

Though the present judgment analyses the ambit of the word “only” in Article 110(1) and the interpretation of Articles 110(1)(a) to (g) 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 Chief Justice of India to refer the aspect of Money Bill to a larger Bench and direct accordingly.

(Para 346)

Per Deepak Gupta, J.

I am in total agreement with the Chief Justice inasmuch as he has held that the decision of the 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 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.

(Paras 365 and 353)

SS-D/63339/C