ROJER MATHEW versus SOUTH INDIAN BANK LTD. & ORS.

[2019] 16 S.C.R. 1

ROJER MATHEW

SOUTH INDIAN BANK LTD. & ORS.

(Civil Appeal No. 8588 of 2019)

NOVEMBER 13, 2019

[RANJAN GOGOI, CJI, N. V. RAMANA,DR D. Y. CHANDRACHUD, DEEPAK GUPTAAND SANJIV KHANNA, JJ.]

Tribunals – Finance Act, 2017 – Finance Act, 2017, a‘money bill’ or not u/Art.110 – Validity of the Act, 2017 – Held:The majority in K.S. Puttaswamy (Aadhaar-5) pronounced thenature of the impugned enactment without first delineating thescope of Art.110(1) and principles for interpretation or therepercussions of such process – The majority dictum in K.S.Puttaswamy (Aadhaar-5) did not substantially discuss the effect ofthe word ‘only’ in Art.110(1) and offers little guidance on therepercussions of finding when some of the provisions of anenactment passed as ‘Money Bill’ do not conform to Art. 110 (1)(a) (b) – Without expressing firm and final opinion, the analysisin K.S. Puttaswamy (Aadhaar-5) made its application difficult tothe present case and raises potential conflict between thejudgments of Coordinate Benches – Being Bench of equalstrength as that in K.S. Puttaswamy (Aadhaar-5), the batch ofmatters directed to be referred to the Larger Bench.

Tribunals – Finance Act, 2017 – S. 184 – Constitutionalityof s. 184 on account of excessive delegations – Held s.184 doesnot suffer from excessive delegations of legislative functions asthere are adequate principles to guide framing of delegatedlegislation, which would include the binding dictums of the–Supreme Court The objects of the parent enactments as well asthe law laid down by the Supreme Court in R.K. Jain, L. ChandraKumar, R. Gandhi, Madras Bar Association and Gujarat UrjaVikas undoubtedly bind the delegate and mandatorily requires thedelegate u/s. 184 to act strictly in conformity with these decisionsand the objects of delegated legislation stipulated in the statutes.

CDE

ATribunals – The Tribunal, Appellate Tribunal and otherAuthorities (Qualifications, Experience and other Conditions of–Service of Members) Rules, 2017 Conformity of the Rules withthe judicial principles inherent in the Constitutional scheme as–established by the Supreme Court Held: The composition of thesearch-cum-Selection Committees under the Rules amounts toBexcessive interference of the Executive in appointment of membersand presiding offices of statutory Tribunals and it is detrimental–to the independence of Judiciary In addition to this, there hasbeen blatant dilution of judicial character in appointmentswhereby candidates without any judicial experience are prescribedCto be eligible for adjudicatory posts such as that of the presiding–Officer Therefore, the Rules have an effect of dilution of the–judicial character in adjudicatory positions Further, earlierremoval of members or presiding officer was done after an enquiryby the Supreme Court Judges and with necessary consultation withthe Chief Justice of India, under the present Rules it is permissibleDfor the Central Government to appoint an enquiry Committee forremoval of any presiding officer or member on its own – TheMembers and Presiding Officers of Tribunals cannot be removedwithout either the concurrence of the Judiciary or in the manner–specified in the Constitution for Constitutional Court Judges Also,Ethere must be uniform age of superannuation for all members inall the Tribunals, the Rules demonstrate disparity in age ofsuperannuation of Members and Chairpersons/Presiding Officers–of different Tribunals Furthermore, there is inconsistency withinthe Rules with regard to the tenure prescribed for the Members ofTribunals insofar as fixed tenure of three years for both directFappointments from the Bar and appointment of retired judicialofficers or judges of High Court or Supreme Court – It is alsodiscriminatory to the extent that it attempts to create equality–between unequal classes Therefore, the Rules suffer from variousinfirmities and are contrary to the Parent enactment and theGprinciples envisaged in the Constitution, resultantly, directed to bestruck down in entirety.

Tribunals – Finance Act, 2017 – Whether there should be asingle Nodal Agency for administration of all Tribunals – Held: Itmay not be very crucial as to which Ministry or DepartmentHperforms the duties of Nodal Agency for Tribunal, but what is

of utmost importance is that the Tribunal should not be expectedto look towards such Nodal Agency for its day to day requirements– There must be direction to allocate adequate and sufficientfunds for each Tribunal to make it self-sufficient and self-sustainable authority for all intents and purposes.

Tribunals – Judicial Impact Assessment of all tribunals inIndia – Need for – Held: It was directed in Salem Advocate BarAssociation (II) v. Union of India for Committee to be constitutedto assess the need for Judicial Impact Assessment – Pursuantthereto, Jagannadha Rao Committee Report was submitted, itsuggested that legislature must analyse the budgetary requirementof the staff, additional expenditure arising out of the new casesconsequent to the enactment, the number of Civil and CriminalCases expected to arise from the new enactment, the requirement–of Judges etc. The legislature has not conformed to the opinionof the Supreme Court with respect to ‘Judicial Impact Assessment’and thus, has not made any attempt to assess the ramifications ofthe Finance Act, 2017 – Therefore, the Union of India directed tocarry out Financial Impact Assessment in respect of all theTribunals referable to ss. 158 to 182 of the Finance Act, 2017 andundertake an exercise to assess the need based requirements andmake available sufficient resources for each Tribunal establishedby the Parliament.Tribunals – Judges of Tribunals set up by Acts of Parliamentunder Arts. 323-A and 323-B of the Constitution equated in ‘Rank’and ‘Status’ with constitutional functionaries – Held: There can beno doubt that executive action cannot confer status equivalent tothat either Supreme Court or High Court Judges on any memberor head of any Tribunal or other judicial fora – Tribunals are notsubstitutes of Superior Courts and are only supplemental to them– Hence, the status of members of such Tribunals cannot beequated with that of the sitting Judges of Constitutional Courts.

Tribunals – Direct Statutory appeals from Tribunals to the––Supreme Court Consideration of Held: Such statutory appealstake away the inherent ability of the Supreme Court, as envisagedin the Constitution, to regulate cases before it by confining itsconsideration to cases involving the most egregious of wrongs and/or having the greatest impact on public interest – It is evident thatSupreme Court has lost its original character owing to the routine

Ahearing of appeals through invocation of the discretionary–jurisdiction u/Art. 136 For the discharge of constitutionalfunctions of deliberating on substantial questions of law, answeringconstitutional questions and resolving other issues of great Publicimportance, it is essential that Supreme Court has adequate timeto apply its mind and consider matters in depth the practice ofBbringing every second case before the Supreme Court u/Art. 136–must be deprecated Therefore, the Union of India in consultationwith either the Law Commission or any other expert body revisitsuch provisions under various enactments providing for directappeals to the Supreme Court against orders of Tribunals, andCinstead provide appeals to Division Benches of the High Courts,if at all necessary.Tribunals – Amalgamation of Existing Tribunals and setting––up of Benches Need for Held: The ‘importance’ in distributionof case-load and inconsistencies in nature, location andfunctioning of Tribunals require urgent attention – It is essentialDthat after conducting Judicial Impact Assessment, Tribunals beamalgamed with others dealing with similar areas of law, to ensureeffective utilisation of resources and to facilitate access to justice– Therefore, the Union Government directed to carry out anappropriate exercise for amalgamation of existing TribunalsEadopting the test of homogeneity of the subject matters to be dealtwith and thereafter constitute adequate number of BenchesCommensurate with the existing and anticipated volume of work.Tribunals – Tribunalisation – global trend – Discussed.

Disposing of the Petition, the CourtFHELD : PER RANJAN GOGOI, CJI (FOR HIMSELFAND N.V. RAMANA, DR. D.Y. CHANDRACHUD, DEEPAKGUPTA AND SANJIV KHANNA, JJ.)

1. ISSUE I : WHETHER THE ‘FINANCE ACT, 2017’INSOFAR AS IT AMENDS CERTAIN OTHER ENACTMENTSGAND ALTERS CONDITIONS OF SERVICE OF PERSONSMANNING DIFFERENT TRIBUNALS CAN BE TERMED ASA ‘MONEY BILL’UNDER ARTICLE 110 ANDCONSEQUENTLY IS VALIDLY ENACTED?

1.1 Provisions of Part XIV can be broken down into threeHbroad categories. First, abolition and merger of existing

Tribunals; second, uniformizing and delegating to the CentralGovernment through the Rules the power to lay downqualifications; method of appointment and removal, and termsand conditions of service of Presiding Officers and members;and third, termination of services and payment of compensationto presiding officers and members of certain tribunals that havenow become de-funct. [Para 112] [85-A-B]

1.2 Upon an extensive examination of the matter, this Courtnotices that the majority in K.S. Puttaswamy (Aadhaar-5)pronounced the nature of the impugned enactment without firstdelineating the scope of Article 110(1) and principles forinterpretation or the repercussions of such process. It is clearto this Court that the majority dictum in K.S. Puttaswamy(Aadhaar-5) did not substantially discuss the effect of the word‘only’ in Article 110(1) and offers little guidance on therepercussions of finding when some of the provisions of anenactment passed as “Money Bill” do not conform to Article110(1)(a) to (g). Its interpretation of the provisions of theAadhaar Act was arguably liberal and the Court’s satisfaction ofthe said provisions being incidental to Article 110(1)(a) to (f), ithas been argued is not convincingly reasoned, as might not bein accord with the bicameral Parliamentary system envisagedunder our constitutional scheme. Without expressing firm andfinal opinion, it has to be observed that the analysis in K.S.Puttaswamy (Aadhaar-5) makes its application difficult to thepresent case and raises potential conflict between thejudgements of coordinate Benches. [Para 122] [90-A-D]

1.3 Given the various challenges made to the scope ofjudicial review and interpretative principles (or lack thereof) asadumbrated by the majority in K.S. Puttaswamy (Aadhaar-5) andthe substantial precedential impact of its analysis of the AadhaarAct, 2016, it becomes essential to determine its correctness.Being Bench of equal strength as that in K.S. Puttaswamy(Aadhaar-5), this Court accordingly direct that this batch ofmatters be placed before Hon’ble the Chief Justice of India, onthe administrative side, for consideration by larger Bench.[Para 123] [90-E]

DEF

A1.4 There is yet another reason why this Court feel thematter should be referred to Constitution Bench of sevenjudges. L. Chandra Kumar, which was decided by Bench ofseven Judges, had also interpreted on the ambit of supervisionby the High Courts under Article 227(1) of the Constitution toobserve that the Constitutional scheme does not require allBadjudicatory bodies which fall within the territorial jurisdictionof the High Courts should be subject to their supervisoryjurisdiction, as the idea is to divest the High Courts of theironerous burden. Consequently, adding to their supervisoryfunctions vide Article 227(1) cannot be of assistance in anyCmanner. Thereafter, it was observed that different tribunalsconstituted under different enactments are administered by theCentral and the State Governments, yet there was no uniformityin administration. This Court was of the view that until whollyindependent agency for such tribunals can be set up, it isdesirable that all such tribunals should be, as far as possible,Dunder single nodal Ministry which will be in position tooversee the working of these tribunals. For number of reasons,the Court observed that the Ministry of Law would be theappropriate ministry. The Ministry of Law in turn was requiredto appoint an independent supervisory body to oversee theEworking of the Tribunals. As noticed above, this has nothappened. In these circumstances, it would be appropriate ifthese aspects and questions are looked into by Bench of sevenJudges. [Para 124] [90-F-H; 91-A-B]

2. ISSUE II: WHETHER SECTION 184 OF THEFFINANCE ACT, 2017 IS UNCONSTITUTIONAL ONACCOUNT OF EXCESSIVE DELEGATION?

2.1. It will be difficult to hold that Part XIV of the Finance

Act suffers from the vice of unguided delegation as it fails toclearly specify the eligibility qualifications for the Members,GChairpersons, Chairman etc. of different Tribunals as suchrequirements, though important, are not per se functionallyundelegatable. [Para 142] [103-F-H]

2.2 The objects of the parent enactments as well as thelaw laid down by this Court in R.K. Jain, L Chandra Kumar, R.HGandhi, Madras Bar Association and Gujarat Urja Vikas

undoubtedly bind the delegate and mandatorily requires thedelegate under Section 184 to act strictly in conformity with thesedecisions and the objects of delegated legislation stipulated inthe statutes. It must also be emphasised that the Finance Act,2017 nowhere indicates that the legislature had intended todiffer from, let alone make amendments, to remove the edificeand foundation of such decisions by enacting the Finance Act.Indeed, the Attorney General was clear in suggesting that PartXIV was inserted with view to incorporate the changesrecommended by this Court in earlier decisions. [Para 143] [104-A-C]

2.3. On examining the Constitutional scheme, the statuteswhich had created tribunals and the precedents of this Courtlaying down attributes of independence of tribunals in differentfacets, this Court does not think that the power to prescribequalifications, selection procedure and service conditions ofmembers and other office holders of the tribunals is intendedto vest solely with the Legislature for all times and purposes.Policy and guidelines exist. Subject to aforesaid, the submissionof Attorney General that Section 184 was inserted to bringuniformity and with view to harmonise the diverse and wide-ranging qualifications and methods of appointment acrossdifferent tribunals carries weight and, needs to be accepted.[Para 148] [107-C-D]

2.4 Cautioning against the potential misuse of Section 184by the executive, it was vehemently argued by the petitioner(s)that any desecration by the Executive of such powers threatensand poses risk to the independence of the tribunals. merepossibility or eventuality of abuse of delegated powers in theabsence of any evidence supporting such claim, cannot be aground for striking down the provisions of the Finance Act, 2017.It is always open to Constitutional court on challenge made tothe delegated legislation framed by the Executive to examinewhether it conforms to the parent legislation and other laws, andapply the “policy and guideline” test and if found contrary, canbe struck down without affecting the constitutionality of the rulemaking power conferred under Section 186 of the Finance Act,2017. [Para 149] [107-E-G]

A3. ISSUE III: IF SECTION 184 IS VALID, WHETHERTRIBUNAL, APPELLATE TRIBUNAL AND OTHERAUTHORITIES (QUALIFICATIONS, EXPERIENCEAND OTHER CONDITIONS OF SERVICE OFMEMBERS) RULES, 2017 ARE IN CONSONANCEWITH THE PRINCIPAL ACT AND VARIOUSBDECISIONS OF THIS COURT ON FUNCTIONING OFTRIBUNALS?

3.1 (A) Composition of Search-cum-Selection Committees

3.1 (1) The composition of the Search-cum-SelectionCCommittees under the Rules amounts to excessive interferenceof the Executive in appointment of members and presidingofficers of statutory Tribunals and would undoubtedly bedetrimental to the independence of judiciary besides being anaffront to the doctrine of separation of powers. [Para 154] [118-

3.1 (2) This Court is in complete agreement with theanalogy elucidated by the Constitution Bench in the FourthJudges Case for compulsory need for exclusion of control of theExecutive over quasi-judicial bodies of Tribunals dischargingEresponsibilities akin to Courts. The Search-cum-SelectionCommittees as envisaged in the Rules are against theconstitutional scheme inasmuch as they dilute the involvementof judiciary in the process of appointment of members oftribunals which is in effect an encroachment by the executiveon the judiciary. [Para 158] [121-D-F]F

3.2 (B) Qualifications of members and presiding officers

3.2 (1) There has been blatant dilution of judicialcharacter in appointments whereby candidates without anyjudicial experience are prescribed to be eligible for adjudicatoryGposts such as that of the Presiding Officer. [Para 160] [122-E]

3.2 (2) The contentions of the petitioner(s) are, therefore,duly accepted by this Court insofar as it is contended that theRules have an effect of dilution of the judicial character inadjudicatory positions. It has been repeatedly ruled by this CourtHin catena of decisions that judicial functions cannot be

performed by technical members devoid of any adjudicatoryexperience. [Para 161] [121-B]

3.2 (3) This Court concurs with the consistent view takenby this Court in number of cases. It is also well-establishedprinciple followed throughout in various other jurisdictions aswell, that wherever Parliament decides to divest the traditionalCourts of their jurisdiction and transfer the lis to some otheranalogous Court/Tribunal, the qualification and acumen of themembers in such Tribunal must be commensurate with that ofthe Court from which the adjudicatory function is transferred.Adjudication of disputes which was originally vested in Judgesof Courts, if done by technical or non-judicial member, is clearlya dilution and encroachment on judicial domain. With greatrespect, Parliament cannot divest judicial functions upontechnical members, devoid of the either adjudicatory experienceor legal knowledge. [Para 163] [127-D-F]

3.2 (4) It is necessary to notice few other changes broughtabout by the new Rules. Firstly, most Tribunals were earlierheaded by judicial members. With the exception of someTribunals like the Debt Recovery Tribunal, presiding officerswere retired judges either of the Supreme Court or of HighCourts. Under the present formulation of Rules, the CentralGovernment has widened eligibility by making persons whootherwise have no judicial or legal experience but if they areotherwise of “ability, integrity and standing, and having specialknowledge of, and professional experience of” certain specialisedsubjects “which in the opinion of the Central Government isuseful” eligible for being appointed as presiding officers. Further,others who are “qualified to be” Supreme Court and High Courtjudges can also head Tribunals. perusal of Articles 124(3) and217(2) of the Constitution shows that it specifies only the veryminimum prerequisites for appointment as judge of theConstitutional Courts. Instead, predominant portion of theconsideration for appointment to this Court or to the HighCourts is uncodified and is based on holistic consideration ofthe practice, legal acumen, expertise and character of Advocates.The effect of the new criteria would be to make every secondadvocate eligible, in effect, vastly diluting the qualifications for

ABC

Aappointment. The characteristics necessary of such people arealso vague which resultantly increases executive discretion. Itthus affects both judicial independence as well as capability andcompetency of these Tribunals. The power/discretion vested tospecify qualifications and decide who should man the Tribunalshas to be exercised keeping in view the larger public interestBand the same must be just, fair and reasonable and not vagueor imprecise. [Para 164] [127-F-H; 128-A-C]

3.2 (5) At this juncture it must also be reiterated thatequality can only be amongst equals, and that it would beimpermissible to treat unequals equally on the basis of undefinedCcontours of ‘Uniformity’. Tribunal to have the character of aquasi-judicial body and legitimate replacement of Courts, mustessentially possess dominant judicial character through theirmembers/presiding officers. It was observed in Madras BarAssociation (2010) that it is fundamental prerequisite forDtransferring adjudicatory functions from Courts to Tribunals thatthe latter must possess the same capacity and independence asthe former, and that members as well as the presiding officersof Tribunals must have significant judicial training and legalexperience. Further, knowledge, training and experience ofmembers/presiding officers of Tribunal must mirror, as far asEpossible, that of the Court which it seeks to substitute. [Para165] [128-D-G]

(C) Constitutionality of procedure of removal

3.3 (1) It is clear from the Scheme contemplated under theFRules that the government has significantly diluted the role ofthe Judiciary in appointment of judicial members. Further, inmany Tribunals like the NGT, the role of the Judiciary inappointment of non-judicial members has entirely been takenaway. Such practice violates the Constitutional scheme and thedicta of this Court in various earlier decisions already referredGto. It is also important to note that in many Tribunals like theNational Green Tribunal where earlier removal of members orpresiding officer could only be after an enquiry by Supreme CourtJudges and with necessary consultation with the Chief Justiceof India, under the present Rules it is permissible for the CentralHGovernment to appoint an enquiry committee for removal of any

presiding officer or member on its own. The Rules are notexplicit on who would be part of such Committee and whatwould be the role of the Judiciary in the process. In doing so, itsignificantly weakens the independence of the Tribunal members.It is well understood across the world and also under ourConstitutional framework that allowing judges to be removed bythe Executive is palpably unconstitutional and would make themamenable to the whims of the Executive, hampering dischargeof judicial functions. [Para 169] [129-F-H; 130-A-B]

3.3 (2) It is essential that the same be observed in letterand spirit and this Court therefore reiterate that Members andPresiding Officers of Tribunals cannot be removed without eitherthe concurrence of the Judiciary or in the manner specified inthe Constitution for Constitutional Court judges. [Para 171] [130-G-H]

3.4 (D) Term of Office and Maximum Age

3.4 (1) Various enactments providing for appointment andother incidentals of members have been brought to our noticeto demonstrate an apparent disparity in age of superannuationof Members and Chairpersons/Presiding Officers of differentTribunals. Illustratively, Section 14D of the Telecom RegulatoryAuthority of India Act, 1997 provides Member of TelecomDisputes Settlement and Appellate Tribunal shall not hold officeafter attaining the age of sixty-five years, whereas, Section 55(1)of the Consumer Protection Act, 2019 provides that Memberof the National Consumer Disputes Redressal Commission shallnot hold office after attaining the age of sixty-seven years. Thisdifference in superannuation age may lead to an undesirablesituation wherein member of Tribunal with low retirementage can be reappointed in another Tribunal with higherretirement age. [Para 172] [131-A-C]3.4 (2) The Constitution of India doesn’t differentiatebetween High Courts in terms of conditions of service of judgesand prescribes uniform age of superannuation for judges of allHigh Courts. Conforming to the principle, as held in earlierjudgements of this Court, the Tribunals should have similarstandards of appointment and service as that of the Court it is

Asubstituting. There must, therefore, be uniform age ofsuperannuation for all members in all the Tribunals. [Para 173][131-D-E]

3.5 (E) Contradictions in the Rules

The Bench has observed following contradictions in theBRules:

(a) There is an inconsistency within the Rules with regardto the tenure prescribed for the Members of Tribunals insofaras fixed tenure of three years for both direct appointmentsfrom the Bar and appointment of retired judicial officers orCjudges of High Court or Supreme Court. It is also discriminatoryto the extent that it attempts to create equality between unequalclasses. The tenure of Members, Vice-Chairman, Chairman, etc.must be increased with due consideration to the prior decisionsof the Court.D

(b) The difference in the age of superannuation of theMembers, Vice-Chairmen and Chairmen, as formulated in theRules is contrary to the objectives of the Finance Act, 2017 viz.,to attain uniformity in the composition of the Tribunalframework. There should be uniform age of superannuationEfor Members, Vice-Chairmen, Chairmen, etc. in all Tribunals.

(c) Rule 4(2) of the Rules providing that the Secretary tothe Government of India in the Ministry or Department underwhich the Tribunal is constituted shall be the convener of theSearch-cum-Selection Committee, is in direct violation of theFdoctrine of Separation of Powers and thus contravenes the basicstructure of the Constitution. Corollary to the dictum of thisCourt in the Fourth Judges Case, judicial dominance inappointment of members of judiciary cannot be diluted by theExecutive.

(d) Rule 7 accords unwarranted discretion to the CentralGGovernment insofar as it merely directs and not mandates theCentral Government to consider the recommendation ofCommittee for removal of Member of Tribunal. The CentralGovernment shall mandatorily consider the recommendation ofthe Committee before removal of any Member of Tribunal.HFurthermore, the proviso to Rule 7 creates an unjust

classification between National Company Law Appellate Tribunal(NCLAT) and other fora inasmuch as the removal ofChairperson or member of NCLAT alone is to be in consultationwith the Chief Justice of India.

(e) Moral turpitude is term well defined by this Court innumerous decisions. Rule 7(b) cannot be allowed to survive asit allows the Executive to interpret the meaning of ‘moralturpitude’, which is an encroachment on the judicial domain.

(f) The power of relaxation of rules with respect to anyclass of persons shall be vested with the Search-cum-SelectionCommittee and not with the Central Government as providedunder Rule 20. As ruled by this Court earlier in Madras BarAssociation (2014), the Central Government cannot be allowedto have administrative control over the Judiciary withoutsubverting the doctrine of separation of powers. [Para 179] [133-A-H; 134-A-D]

4. ISSUE IV: WHETHER THERE SHOULD BE ASINGLE NODAL AGENCY FOR ADMINISTRATION OFALL TRIBUNALS?

4.1 This Court in L. Chandra Kumar v. Union of India,envisaged the administration of the entire Tribunal Frameworkin the country to be monitored by single nodal agency/ministry.It was observed not to be advisable to allow supervision of aTribunal by department/ministry which is party before it. ThisCourt recommended constitution of an independent agency bythe concerned Ministry, to oversee the working of Tribunals.The independent agency when constituted, may also prescribea uniform code for appointment, qualification, condition ofservice, manner of allocation of fund, etc. of the Tribunals. Thiswill, the Court suggested, minimise the influence of the parentministry of the Tribunal, in addition to ensuring uniformity in theentire Tribunal framework. [Para 181] [134-G-H; 135-A-B]

4.2 What appears to be of paramount importance is thatevery Tribunal must enjoy adequate financial independence forthe purpose of its day to day functioning including theexpenditure to be incurred on (a) recruitment of staff; (b)creation of infrastructure; (c) modernisation of infrastructure; (d)computerisation; (e) perquisites and other facilities admissible

Ato the Presiding Authority or the Members of such Tribunal. Itmay not be very crucial as to which Ministry or Departmentperforms the duties of Nodal Agency for Tribunal, but what isof utmost importance is that the Tribunal should not be expectedto look towards such Nodal Agency for its day to dayrequirements. There must be direction to allocate adequateBand sufficient funds for each Tribunal to make it self-sufficientand self-sustainable authority for all intents and purposes. Theexpenditure to be incurred on the functioning of each Tribunalhas to be necessarily charge on the Consolidated Fund of India.Therefore, hitherto, the Ministry of Finance shall, in consultationCwith the Nodal Ministry/Department, shall earmark separate anddedicated funds for the Tribunals. It will not only ensure thatthe Tribunals are not under the financial control of theDepartment, who is litigant before them, but it may alsoenhance the public faith and trust in the mechanism of Tribunals.[Para 184] [136-E-H; 137-A]D5. ISSUE V: WHETHER THERE IS NEED FORCONDUCTING JUDICIAL IMPACT ASSESSMENTOF ALL TRIBUNALS IN INDIA?

5.1 The American principle of ‘Judicial ImpactAssessment’ was first borrowed by this Court in its dictum inESalem Advocate Bar Assn. (II) v. Union of India, whereby it wasobserved that it is imperative for the Legislature to perform aJudicial Impact Assessment of the enactment passed to assessits ramifications on the judiciary. This Court had directed for acommittee to be constituted to assess the need for JudicialFImpact Assessment in the Indian context. Pursuant thereto theJagannadha Rao Committee Report was submitted. The Reportsuggested that by way of Judicial Impact Assessment, thelegislature must analyse the budgetary requirement of the staffthat would require to be created by the statute and additionalexpenditure arising out of the new cases consequent to theGenactment. Further, the financial memorandum, as prepared bythe legislature, must specifically include the number of civil andcriminal cases expected to arise from the new enactment,requirement of more judges and staff for adjudication of thesecases and the necessary infrastructure. [Para 187] [137-E-H;H138-A]

5.2 (1) In the present case, this Court is of the view thatthe legislature has not conformed to the opinion of this Courtwith respect to ‘Judicial Impact Assessment’ and thus, has notmade any attempt to assess the ramifications of the Finance Act,2017. It can be legitimately expected that the multifariousamendments in relation to merger and reorganisation ofTribunals may result in massive increase in litigation which, inabsence of adequate infrastructure, or budgetary grants, willoverburden the Judiciary. [Para 188] [138-E-F]5.2 (2) In the fitness of things, this Court deems itappropriate to direct the Union of India to carry out financialimpact assessment in respect of all the Tribunals referable toSections 158 to 182 of the Finance Act, 2017 and undertake anexercise to assess the need based requirements and makeavailable sufficient resources for each Tribunal established bythe Parliament. [Para 189] [138-G]

6. ISSUE VI: WHETHER JUDGES OF TRIBUNALS SETUP BY ACTS OF PARLIAMENT UNDER ARTICLES323-A AND 323-B OF THE CONSTITUTION CAN BEEQUATED IN ‘RANK’ AND ‘STATUS’ WITHCONSTITUTIONAL FUNCTIONARIES?

6.1 (1) In light of the unequivocal assertions of co-ordinate bench of this Court, there can be no doubt thatexecutive action cannot confer status equivalent to that of eitherSupreme Court or High Court judges on any member or headof any Tribunal or other judicial fora. [Para 193] [141-B]

6.1 (2) Furthermore, that even though manned by retiredjudges of High Courts and the Supreme Court, such Tribunalsestablished under Article 323-A and 323-B of the Constitutioncannot seek equivalence with High Courts or the SupremeCourt. Once judge of High Court or Supreme Court hasretired and he/she no longer enjoys the Constitutional status,the statutory position occupied by him/her cannot be equatedwith the previous position as High Court or Supreme Courtjudge. The rank, dignity and position of Constitutional judgesis hence sui generis and arise not merely by their position in theWarrant of Precedence or the salary and perquisites they draw,

Abut as result of the Constitutional trust accorded in them.Indiscriminate accordance of status of such Constitutional judgeson Tribunal members and presiding officers will do violence tothe very Constitutional Scheme. [Para 194] [141-C-D]

7. ISSUE VII: WHETHER DIRECT STATUTORYBAPPEALS FROM TRIBUNALS TO THE SUPREMECOURT OUGHT TO BE DETOURED?

7.1 Such statutory appeals take away the inherent abilityof the Supreme Court, as envisaged in the Constitution, toregulate cases before it by confining its consideration to casesCinvolving the most egregious of wrongs and/or having thegreatest impact on public interest. [Para 205] [146-E]

7.2 Further, in providing for appeals directly fromTribunals, the jurisdiction of High Courts is in effect curtailedto great extent. Not only does this hamper access to justice,Dbut it also takes away the much needed exposure for High Courtjudges, earnestly needed in vibrant and ever-evolvingjudiciary. Since majority of the judges of the Supreme Court areelevated from the High Courts, their lack of exposure to thesespecialised areas of law hinders their efficacy in adjudicating thedirect statutory appeals from specialised Tribunals. [Para 206]E[146-F-G]

7.3 Providing statutory appeals directly to the SupremeCourt dents this to no end. With increasing tribunalisation,statutory appeal provisions are ostensibly being included withoutundertaking any ‘Judicial Impact Assessment’. As of last countFthere are several hundreds of cases which have been decidedby the NCLAT and many other thousands by other tribunalspending in this Court. [Para 214] [149-G]

7.4. In light of this, provisions for statutory appeals directlyand liberally to the Supreme Court raises the inevitability ofGbogging the Court down and inhibiting its Constitutionalobjective. Further, providing statutory appeals to this Courtagainst orders of Tribunals also undermines the essence oftribunalisation. It is hardly rational to state on one hand that analternate to the ordinary method of justice dispensation needsto be provided owing to the complicated procedures and owingH

to the lack of specialisation of District and High Courts, and inthe same breadth also provide statutory appeals to the finalCourt in that very original system. [Para 216] [150-C-D]

7.5 If High Courts are ill placed to hear routine mattersthen it hardly seems justifiable that this Court would be anybetter placed to resolve disputes in appellate jurisdiction. Finalityas principle must be encouraged and providing statutoryappeals to the Supreme Court only undermines the same.Instead, no discernible harm would arise if decisions of Tribunalsor High Courts attain finality, without reaching this Court. [Para217] [150-E]

8. ISSUE VIII: WHETHER THERE IS NEED FORAMALGAMATION OF EXISTING TRIBUNALS ANDSETTING UP OF BENCHES

8.1 The ‘imbalance’ in distribution of case-load andinconsistencies in nature, location and functioning of Tribunalsrequire urgent attention. It is essential that after conducting aJudicial Impact Assessment as directed earlier, such ‘niche’Tribunals be amalgamated with others dealing with similar areasof law, to ensure effective utilisation of resources and tofacilitate access to justice. [Para 226] [155-F]

CONCLUSION

9. In light of the discussions and analysis, it is held that:

(i) The issue and question of Money Bill, as defined underArticle 110(1) of the Constitution, and certification accorded bythe Speaker of the Lok Sabha in respect of Part-XIV of theFinance Act, 2017 is referred to larger Bench.

(ii) Section 184 of the Finance Act, 2017 does not sufferfrom excessive delegation of legislative functions as there areadequate principles to guide framing of delegated legislation,which would include the binding dictums of this Court.

(iii) The Tribunal, Appellate Tribunal and other Authorities(Qualifications, Experience and other Conditions of Service ofMembers) Rules, 2017 suffer from various infirmities asobserved earlier. These Rules formulated by the Central

AGovernment under Section 184 of the Finance Act, 2017 beingcontrary to the parent enactment and the principles envisagedin the Constitution as interpreted by this Court, are herebystruck down in entirety.

(iv) The Central Government is accordingly directed to re-Bformulate the Rules strictly in conformity and in accordance withthe principles delineated by this Court in R.K. Jain, L. ChandraKumar, Madras Bar Association and Gujarat Urja Vikas Ltd.conjointly read with the observations made in the earlier partof this decision.

C(v) The new set of Rules to be formulated by the CentralGovernment shall ensure non-discriminatory and uniformconditions of service, including assured tenure, keeping in mindthe fact that the Chairperson and Members appointed afterretirement and those who are appointed from the Bar or fromother specialised professions/services, constitute two separateDand distinct homogeneous classes.

(vi) It would be open to the Central Government toprovide in the new set of Rules that the Presiding Officers orMembers of the Statutory Tribunals shall not hold ‘rank’ and‘status’ equivalent to that of the Judges of the Supreme CourtEor High Courts, as the case may be, only on the basis of drawingequal salary or other perquisites.

(vii) There is need-based requirement to conduct‘Judicial Impact Assessment’ of all the Tribunals referable to theFinance Act, 2017 so as to analyse the ramifications of theFchanges in the framework of Tribunals as provided under theFinance Act, 2017. Thus, we find it appropriate to issue writof mandamus to the Ministry of Law and Justice to carry outsuch ‘Judicial Impact Assessment’ and submit the result of thefindings before the competent legislative authority.G

(viii) The Central Government in consultation with the LawCommission of India or any other expert body shall re-visit theprovisions of the statutes referable to the Finance Act, 2017 orother Acts as listed in para 174 of this order and placeappropriate proposals before the Parliament for considerationHof the need to remove direct appeals to the Supreme Court from

orders of Tribunals. decision in this regard by the Union ofAIndia shall be taken within six months.(ix) The Union Government shall carry out an appropriateexercise for amalgamation of existing Tribunals adopting the testof homogeneity of the subject matters to be dealt with andthereafter constitute adequate number of BenchesBcommensurate with the existing and anticipated volume of work.[Para 228] [156-A-H; 157-A-F]

PER DR. D. Y. CHANDRACHUD, J.

Passage as Money Bill

10. The basic postulate of our Constitution is that everyauthority is subservient to constitutional supremacy. Noauthority can assume to itself the ultimate power to decide thelimits of its own constitutional mandate. Judicial review isintended to ensure that every constitutional authority keepswithin the bounds of its constitutional functions and authority.In holding constitutional institution within its bounds, judicialreview does not trench upon the doctrine of separation ofpowers. The adjudicatory power vests in the Supreme Court asa constitutional court. In adjudicating on whether there has beena violation of constitutional mandate in passing Bill as aMoney Bill, judicial review does not traverse beyond the limitset by the separation of powers. On the contrary, theindependence of judicial tribunals has been consistentlyrecognised by this Court as an inviolable feature of the basicstructure of the Constitution. Determination of the norms ofeligibility, the process of selection, conditions of service, andthose regulating the impartiality with which the members of thetribunals discharge their functions and their effectiveness asadjudicatory bodies is dependent on their isolation from theexecutive. By leaving the rule making power to the unchartedwisdom of the executive, there has been self-effacement byParliament. The conferment of the power to frame rules on theexecutive has direct impact on the independence of thetribunals. Allowing the executive controlling authority overdiverse facets of the tribunals would be destructive of judicialindependence which constitutes basic feature of theConstitution. [Para 88] [217-B-F]

DEF

20SUPREME COURT REPORTS

AViolation of directions issued by this Court

11.1 It is evident that the Search-cum-Selection Committeeis constituted entirely from personnel within or nominated bythe Central Government. Barring the National Company LawAppellate Tribunal, the Search-cum-Selection Committee for allBother seventeen tribunals specified in the Schedule isconstituted either entirely from personnel within or nominatedby the Central Government or comprises majority of personnelfrom the Central Government. The Search-cum-SelectionCommittee of the National Company Law Appellate Tribunalconsists of an equal number of members from the judiciary asCwell as from the Central Government with no casting vote tothe Chief Justice of India or their nominee. [Para 90] [218-C-E]

11.2 The procedure for selection is fundamentallydestructive of judicial independence. The Union Government hasDvital status in the disputes before many tribunals. Evenotherwise, conferring upon the government such dominatingand overwhelming voice in making appointments is negationof judicial independence. [Para 90] [219-E]

11.3 The constitution of the Search-cum-SelectionEcommittees as stipulated in the Schedule to the 2017 Rulescannot pass constitutional muster under system governed bythe rule of law that accords primacy to the independence of thejudiciary. Independence of the judiciary requires that judicialfunctioning be free from interference by the other two organsFof the state. The Central Government is the largest litigantbefore the tribunals constituted under various statutes. Theindependent functioning of the tribunals stands compromisedwhere the executive has the controlling authority in the selectionof members to the tribunals. The executive is often litigantbefore and has an interest in the disputes which are adjudicatedGby the tribunals. The constitution of the Search-cum-Selectioncommittees stipulated in the 2017 Rules violates the principleof judicial independence and the directions issued by this Courtin R Gandhi and Madras Bar Association. [Para 93] [221-E-G]11.4 This Court finds that though the decision in R GandhiHwas delivered in 2010 and in Madras Bar Association in 2014,

the same anomalies have persisted. An attempt has been madeto dilute judicial independence by creeping assertion ofexecutive power. This is unconstitutional. [Para 98] [224-G-H]

Severability

12. In the present case, Part XIV of the Finance Act 2017is severable. Parliament would, in any event, have enacted thevalid parts of the Finance Act 2017 if it had known that Part XIVis invalid. The valid and invalid parts are not so inextricablylinked that the invalidity of Part XIV should result in theinvalidity of the rest. Nor is Part XIV part of compositescheme linked to the other parts of the Finance Act 2017. Evenafter the excision of Part XIV the remaining part of the FinanceAct would still survive on its own. Hence, Part XIV of theFinance Act 2017 can be excised from the Act. [Para 101] [227-H; 228-A-B]

12.2 Finally, fervent plea was made by the AttorneyGeneral to the effect that even though some provisions containedin the Rules framed on 1 June 2017 may run contrary to theprinciples enunciated by this Court in R Gandhi and Madras BarAssociation, the Central Government would be willing toproceed on the basis of the interim orders which were passedby this Court during the pendency of the proceedings withcertain modifications. This Court unable to accept thesubmission. Part XIV of the Finance Act 2017 could not havebeen enacted in the form of Money Bill. The rules framed bythe Central Government are unconstitutional on the ground thatthey violate the principles of judicial independence set out injudgments of this Court. [Para 102] [228-C-D]

Conclusion

13. Part XIV of the Finance Act 2017 could not have beenenacted in the form of Money Bill. The rules which have beenframed pursuant of the rule making power under Section 184are held to be unconstitutional. However, since during thependency of these proceedings, certain steps were taken inpursuance of the interim orders and appointments have beenmade, it is directed that those appointments shall not be affectedby the declaration of unconstitutionality. The terms and

Aconditions governing the personnel so appointed shall howeverabide by the parent enactments. Upon the declaration ofunconstitutionality, the conditions specified in all correspondingaspects in the parent enactments shall continue to operate. [Para103] [228-E-F]B14. This Court has repeatedly emphasised the need forsetting up an independent statutory body to oversee the workingof tribunals. Despite the directions issued by this Court inChandra Kumar nearly two decades ago, no action has beentaken by the legislature to put in place an umbrella organisationwhich would be tasked with addressing the drawbacks of theCsystem to which this Court has adverted above. The lack of asingle authority to ensure competence and uniform serviceconditions has led to fragmented tribunal system that defeatsthe purpose for which the system was constituted. Moreover,the co-ordinating authority for all tribunals must be theDDepartment of Justice. Vesting that function in individualministries has led to haphazard evolution of the tribunalstructure, besides posing serious dangers to the independenceof tribunals. [Para 104] [228-G-H; 229-A-B]

15. It is imperative that an overarching statutoryorganisation be constituted through legislative intervention toEoversee the working of tribunals. This Court recommends theconstitution of an independent statutory body called the“National Tribunals Commission” to oversee the selectionprocess of members, criteria for appointment, salaries andallowances, introduction of common eligibility criteria, forFremoval of Chairpersons and Members as also for meeting therequirement of infrastructural and financial resources. Thelegislation should aim at prescribing uniform service conditionsfor members. The Commission should comprise the followingmembers:

G(i) Three serving judges of the Supreme Court ofIndia nominated by the Chief Justice of India;

(ii) Two serving Chief Justices or judges of the HighCourt nominated by the Chief Justice of India;

(iii) Two members to be nominated by the CentralHGovernment from amongst officers holding at least

the rank to Secretary to the Union Government:one of them shall be the Secretary to theDepartment of Justice who will be the ex-officioconvener; and

(iv) Two independent expert members to benominated by the Union government inconsultation with the Chief Justice of India. [Para105] [229-B-F]

The senior-most among the Judges nominated by the ChiefJustice of India shall be designated as the Chairperson of theNTC. [Para 106] [229-F-G]

16. While the setting up of the NTC is within thecompetence of the legislature, it must be ensured that theguidelines that have been laid down by this Court to ensure theindependence and efficient functioning of the tribunal system inIndia are observed. The independence of judicial tribunals is aninviolable feature of the basic structure of the Constitution. Theprocedure of selection, appointment, removal of members andprescription of the service conditions of tribunal membersdetermine the independence of the tribunals. As this Court hasheld, in preserving the independence of the tribunals as facetof judicial independence, the adjudicatory body must be robust:subservient to none and accountable to the need to renderjustice in the context of specialized adjudication. This isreflected in the need for vigilance in guarding the independenceof courts and tribunals. [Para 107] [229-G-H; 230-A-B]17. Competence, professionalism and specialisation areindispensable facets of robust tribunal system designed todeliver specialised justice. The Commission must be vested withthe power to oversee the administration of all tribunalsestablished under the enactments of Parliament to ensure theadequate manning of the tribunals with the infrastructure and staffrequired to meet the exigencies of the system. The Uniongovernment should also consider formulating law to ensure theconstitution of an All India Tribunal Service governing therecruitment and conditions of service of the non-adjudicatorypersonnel for tribunals. At present, the administrative staff ofthe tribunals is by and large brought on deputation. The tribunals

Aare woefully short of an adequate complement of trainedadministrative personnel. Hence, there is an urgent need to setup an All India Tribunal Service in the interests of the effectivefunctioning of the tribunal system. [Para 108] [230-C-E]

PER DEEPAK GUPTA, J.B

Issue No. 1

18. There is total agreement with the Chief Justice in asmuch as he has held that the decision of the Hon’ble Speakerof the House of People under Article 110 (3) of the Constitutionis not beyond judicial review. There is also an agreement withChis views that keeping in view of the high office of the Speaker,the scope of judicial review in such matters is extremelyrestricted. If two views are possible then there can be no mannerof doubt that the view of the Speaker must prevail. Keeping inview the lack of clarity as to what constitutes Money Bill, it isDagreed with the Hon’ble Chief Justice that the issue as towhether Part XIV of the Finance Act, 2017, is Money Bill ornot may be referred to larger bench. [Para 18] [236-E-F]

Issue no. 2

E19. As far as Issue No.2 is concerned, there isdisagreement with the conclusion of Chief Justice. There canbe no doubt that Parliament is not expected to deal with allmatters and it can delegate certain “non-essential” matters tothe executive. Every condition need not be laid down by theLegislature. [Para 19] [236-G]F

20. I am in respectful disagreement with the Chief Justicethat the objects of the parent enactments and the law laid downby this Court in R. K. Jain v. Union of India, L. Chandra Kumar,Union of India v.Madras Bar Association, Madras Bar Associationv. Union of India, Madras Bar Association v. Union of India,GGujarat Urja Vikas Nigam Ltd. v. Essar Power Ltd. in essenceshould be read as the guidelines. One would expect the UnionGovernment to abide by the directions of this Court. However,this expectation has been belied by this very enactment whichviolates every principle of law laid down by this Court and, asheld in the judgments of both my brothers, the Rules framed byH

the delegatee are violative of the law laid down by this Court.In this background, it is apparent that both the delegator andthe delegatee felt that they were not bound by these judgments.This is also apparent from the fact that the Rules framed by thedelegatee have not been brought in consonance with the law bythe delegator. [Para 30] [240-F-G; 241-A-B]

Issue nos. 4,5,7 and 8

21. There are various reasons why there should be onenodal agency. Tribunals are facing many problems like lack ofmanpower, very few benches, vacancies lying unfilled for longperiod, financial dependence on the department which may belitigating before the tribunal etc. These are ills which can beavoided if Tribunals fall under one umbrella organisation. Oneumbrella organisation will be better equipped to understand theproblems faced by all the Tribunals. This could lead tostandardization of Tribunals and uniform approach to the needsof each tribunal. large number of tribunals, especially thosecast with the duty of discharging adjudicatory functions have beenconstituted with view to replace the courts and in many casesthe jurisdiction earlier exercised by the High Courts has beenvested in such tribunals. It is, therefore, imperative that thesetribunals must be manned by persons of impeccable integrity,high intellect and having vast experience in the field in whichthey will exercise jurisdiction. These tribunals also must havefunctional autonomy. This cannot be achieved unless there is anodal body which shall look after the administrative needs of thetribunals. For more than 2 decades the Government has notthought it fit to comply with the 7-Judge Bench judgment of thisCourt in L. Chandra Kumar. These matters cannot be permittedto linger on indefinitely. Therefore, direction must be givento the Government to set up single nodal agency within aperiod of 6 months from today till which time the present systemmay continue. Merely giving financial autonomy to the tribunalswill not do away with the need of having one common umbrellaorganisation to supervise all the tribunals. [Para 36] [242-D-H;243-A]

22. Even without carrying out any judicial impactassessment it is clear, as held in Madras Bar Association, 2010

Athat tribunals in India have unfortunately not achieved fullindependence. When tribunals are established, they depend uponthe sponsoring department for funds, infrastructure and evenspace for functioning. Administrative members of the tribunalare, more often than not, drawn from this department. This, inmy opinion, strikes at the very root of judicial independenceBbecause the biggest litigant or stakeholder itself becomes partand parcel of the adjudicating body which is supposed to be free,independent and fearless. [Para 37] [243-B-C]

23. (1) The need for carrying out judicial impactassessment of all the tribunals in India cannot be overCemphasised. Experience has shown that the tribunals are notfully independent and more often than not, the number ofvacancies in the tribunals are so high as to make the tribunalsdysfunctional if not non-functional. The promised benches remaina mirage in the air and the litigants from remote areas of theDcountry have to come to the State capitals or the National Capitalfor redressal of their grievances. [Para 38] [243-B]23. (2) The committee which carries out the judicial impactassessment of the functioning of the tribunals has to deal with awhole lot of issues. It is neither feasible nor proper to lay downEall the issues in this judgment but some are highlighted. Anotherimportant issue which must be dealt with is whether the tribunalshave really helped in early disposal of the cases. The time spentfor disposal may vary from case to case but this Court is mainlydealing with the cases which end in the High Courts or at theSupreme Court. This must be done not only on an all India basisFbut also on State to State basis. There are many smaller Statesin the country where the Civil Courts and the High Courts arenot overburdened with work. In these States, the cases aredecided 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 paradox that theGStates which are judicially well administered and where disposalis quick, do not get the permanent benches and the litigantssuffer whereas States which are very slow in disposing of thecases get more benches. Even when Circuit Benches come tothese States there is huge time gap between two sittings. TheHwhole purpose of providing cheaper and faster justice gets lost

because the Circuit Benches come rarely and many times theconstitution of the Circuit Benches changes on every visitresulting in matters being reheard every time. [Para 43] [245-E-H; 246-A-B]

24. Having tribunals without benches in at least the capitalsof States and Union Territories amounts to denial of justice tocitizens of those States and Union Territories. It also makes thejustice delivery system very metropolis centric. This has manyadverse effects. The bench and the bar in smaller district townsand capitals of smaller States which were handling these mattersin competent manner are deprived of handling these types ofcases. This also makes access to justice expensive for thelitigants. It also leads to situation where the bench and thebar in these areas would not have any experience of handlingmatters relating to jurisdictions transferred to tribunals whichthey used to handle earlier. Therefore, the local bench and barwill never develop and the entire bulk of work will be capturedby those practicing in Delhi or in those State capitals wherebenches of the tribunals are set up. Instead of taking justice tothe common man, he is forced to spend more money, spend moretime and travel long distances in his quest for justice, which ishis fundamental right. [Para 44] [246-B-D]

25. The litigants cannot wait for judicial impact assessmentand action by the Government which may or may not take place.Experience has shown that the judgments right from L. ChandraKumar to Madras Bar Association, 2010 have not been compliedwith by the Union in letter and spirit. Citizens of this countrycannot be denied justice which is the first promise made in thePreamble. Therefore, whichever State/Union Territory the benchof particular tribunal is not established or functioning, thelitigants of that State will have right to invoke the extraordinarywrit jurisdiction of the jurisdictional High Court under Article226 of the Constitution for redressal of their grievances. Theycannot be expected to go to far off distant places and spend hugeamounts of money, much beyond their means to ventilate theirgrievances. The alternative remedy of approaching tribunal isan illusory remedy and not an efficacious alternative remedy. Theself-imposed bar or restraint of an alternative efficacious remedywould not apply. Such litigants are entitled to file petitions under

AArticle 226 of the Constitution of India before the jurisdictionalHigh Court. In L. Chandra Kumar it was clearly held that theright of judicial review is part of the basic structure of theConstitution and this right must be interpreted in manner thatit is truly available to the litigants and should not be an illusoryright. [Para 45] [246-E-H; 247-A-B]B

26. One more aspect which needs to be looked into is theneed to have two-tier tribunal system like in the UnitedKingdom- lower tribunal and an appellate tribunal. If there aretwo-tier tribunals then there would be adjudication at theappellate level by an appellate tribunal. Having one appellateCforum within the hierarchy of tribunals would probably lessen theburden on the High Courts and the Supreme Court. [Para 46][247-B]

27. Recruitment to the lower tribunal should be done onthe basis of an objective criteria like the written test conductedDfor the post of District Judges. The persons selected to thelower tribunals can be made eligible for promotion to theappellate tribunals. In fact, there can be common service to manmore than one or more tribunals. [Para 47] [247-C-F]

28. If there are tribunal services and there is provision forEappeal within the hierarchy of the tribunals and the High Courtsexercise their writ jurisdiction or if in some matters appeals areprovided to the High Courts in the first instance, many of theills which plague the system may be overcome. If the aforesaidsystem is followed then the question of appointing retired Judgesor bureaucrats will not arise. The amicus curiae in his note hasFraised an issue that tribunals should not become haven forretired persons. In my view, there should normally be no postretiral sinecures. Though the ideal situation would be to haveno appointments from retired judges or bureaucrats, this maynot be possible in the near future because there are no tribunalGservices and most of the posts at this stage may have to be filledfrom amongst retired persons. At the same time, an effort hasto be made to ensure that in the foreseeable future the numberof retired persons being reappointed is brought down and morepersons from within the tribunal services are appointed up tothe highest level in the tribunal. [Para 48] [247-G-H; 248-A-B]H

29. There may be some posts which require retired judgesto be appointed such as Lokpal, Lokayukta, Chairpersons of theHuman Rights Commission, Chairman of the Law Commissionof India, etc. But this should not become matter of routineespecially when the appointments are being made by theexecutive. If the administration makes appointments and judges,serving or newly retired judges, are under consideration forsuch posts then the independence of the judiciary is likely tobe compromised. The public of this country still reposes greatfaith in the judiciary. That faith will be eroded in case it is feltthat the appointments are made for extraneous reasons. Mostjudges live up to the expectations of the high standards ofintegrity and propriety expected from them but one cannot shutour eyes to the harsh reality that there are few black sheep.One cannot expect justice from those who, on the verge ofretirement, throng the corridors of power looking for post retiralsinecures. Therefore, the majority of members of the selectingbody must comprise of the Chief Justice of India and/or his/hernominees and the views of the Chief Justice and/or his/hernominees must be given precedence over the views of othermembers. [Para 49] [248-C-F]30. It is agreed with the Chief Justice that an attemptshould be made to do away with filing of first appeal as matterof right to the Supreme Court. At present, at least 2 dozenstatues provide for appeals directly to the Supreme Court. TheSupreme Court becomes Court of first appeal which is highlyavoidable. If the law laid down in L. Chandra Kumar is followed,the High Courts should have the jurisdiction to entertain writpetitions against the orders of the tribunals. This will reduce theburden on the Supreme Court. Even more importantly, the HighCourts, when they entertain these matters, will deal with themwithin the limited scope of writ jurisdiction. If the jurisdictionof the High Courts is bypassed by providing for appeals directlyto the Supreme Court, soon stage will come when we will haveno High Court Judges who would have heard matters in variousjurisdictions. It would be virtually impossible for them to handlesuch matters in the Supreme Court where the tenure of Judgeis on an average only about 4 years. [Para 51] [249-B-D]

ABC

30SUPREME COURT REPORTS

A31. The next issue is who should carry out the judicialimpact assessment. The Judicial Impact Assessment Committeeshould comprise of two retired judges of the Supreme Court,the senior being the Chairperson of the Committee, and oneretired Chief Justice of High Court all three to be nominatedby the Chief Justice of India. Out of the three at least two shouldBhave been the Chairperson or members of tribunals. Twomembers of the Executive, not below the rank of Secretary, tothe Government of India, one from the Ministry of Law andJustice and one from some other branch can also be membersbut these members should be appointed in consultation with theCChief Justice of India. [Para 53] [249-E-G]

32. The last issue is whether there should be aCommission or body to oversee the appointment of membersof various tribunals. In my view it is necessary to have such aCommission which is itself an independent body manned by

Dhonest and competent persons. This body is required to selectthose persons who man the specialised tribunals in terms of thelaw laid down in various judgments of this Court. There is needto have persons who not only have grassroot experience but ajudicious mix of judicial members and those with grassrootexperience. There is need to have persons who have anEindependent outlook, integrity, character, good reputation andpeople who are totally free from the influence or pressure fromthe Government. It is only then that the people will have faithin the adjudicating mechanism of the tribunals. [Para 54] [249-G-H; 250-A-B]FPER RANJAN GOGOI, CJI (FOR HIMSELFANDN.V. RAMANA, DR. D.Y. CHANDRACHUD, DEEPAKGUPTAAND SANJIV KHANNA, JJ.):

Union of India v. R. Gandhi, President, Madras BarAssociation (2010) 11 SCC 1 : [2010] 6 SCR 857 ;GL. Chandra Kumar v. Union of India (1997) 3 SCC261 : [1997] 2 SCR 1186 ; R.K. Jain v. Union of India(1993) 4 SCC 119 : [1993] 3 SCR 802 ; MadrasBar Association v. Union of India (2014) (2014) 10SCC 1 : [2014] 10 SCR ; Gujarat Urja Vikas Ltd. v.Essar Power Ltd. (2016) 9 SCC 103 : [2016] 5 SCRH10 ; Salem Advocate Bar Assn. (II) v. Union of India

(2005) 6 SCC 344 : [2005] 1 Suppl. SCR 929 ; RajaRam Pal v. Lok Sabha (2007) 3 SCC 184 : [2007] 1SCR 317 ; Gwalior Rayon Silk Mfg. (Wvg.) Co. v. Asstt.Commissioner of Sales (1974) 4 SCC 98 : [1974]2 SCR 879 ; T.N. Seshan v. Union of India (1995) 4SCC 611 : [1995] 2 Suppl. SCR 106 ; Union of Indiav. Major General Shrikant Sharma (2015) 6 SCC 773: [2015] 4 SCR 676 – relied on.

Jaswant Sugar Mills Ltd., Meerut v. Lakshmichand AIR1963 SC 677 : [1963] Suppl. SCR 242 ; AssociatedCement Co. Ltd. v. PN Sharma AIR 1965 SC 1595 :[1965] SCR 366 ; M.C. Mehta v. Union of India (1986)2 SCC 176 : [1986] 1 SCR 312 ; Union of India v. R.Gandhi, President, Madras Bar Association (2010) 11SCC 1 : [2010] 6 SCR 857 ; Madras Bar Associationv. Union of India (2015) 8 SCC 583 : [2015] 6 SCR638 ; Rajiv Garg v. Union of India (WP No. 120 of2017) on 08th February, 2013 ; MSM Sharma v. Dr.Shree Krishna Sinha (2007) 3 SCC 184 : [2007] 1SCR 317 ; Union of India v. Jyoti Prakash Mitter(1971) 1 SCC 396 : [1971] 3 SCR 483 ; R (Jackson)v. Attorney General [2005] UKHL 56 ; Mohd. SaeedSiddiqui v. State of Uttar Pradesh (2014) 11 SCC 415;Yogendra Kumar Jaiswal v. State of Bihar (2016) 3SCC 183 : [2015] 14 SCR 1037 ; Justice Puttaswamy(Retd.) and Anr. v. Union of India (2019) 1 SCC 1 ;Hari Ram v. Babu Gopal Prasad (1991) Supp. 2 SCC608 ; M/s Saru Smelting (P) Ltd. v. Commissionerof Sales Tax, Lucknow (1993) Supp. 3 SCC 97 :[1993] 3 SCR 719 ; Kihoto Hollohan v. Zachillhuand Others (1992) Supp. 2 SCC 651 : [1992] 1 SCR686 ; In re: The Delhi Laws Act, 1951 AIR [1951] SCR747 ; B. Shama Rao v. Union Territory of Pondicherry,(2015) 4 SCC [2015] 2 SCR 51 ; Ramesh Birch v.Union of India 1990 AIR 560 : [1989] 2 SCR 629 ;Devi Das Gopal Krishnan & Ors v. State of Punjab &Or AIR 1967 SC 1895 : [1967] SCR 557 ; MunicipalCorporation of Delhi v. Birla Cotton, Spinningand Weaving Mills, Delhi and Another AIR 1968 SC

32SUPREME COURT REPORTSA1232 : [1968] SCR 251 ; M.K. Papiah & Sons v.Excise Commissioner (1975) 1 SCC 492 : [1975] 3SCR 607 ; Avinder Singh v. State of Punjab (1979) 1SCC 137 : [1979] 1 SCR 845 ; Registrar of Coop.Societies v. K. Kunjabmu (1980) 1 SCC 340 : [1980]2 SCR 260 ; Keshavlal Khemchand and Son PrivateBLimited & Others v. Union of India (2015) 4 SCC770 : [2015] 2 SCR 51 ; Supreme Court Advocates-On-Record Association and Another v. Union of India(2016) 5 SCC 1 : [2015] 13 SCR 1 ; KesavanandaBharati v. State of Kerala (1973) 4 SCC 225 : [1973]CSuppl. SCR 1 ; Union of India v. Madras BarAssociation (2010) 11 SCC 1 : [2010] 6 SCR 857 ;Madras Bar Association v. Union of India & Anr.(2014) 10 SCC 1 : [2014] 10 SCR 1 ; Bihar LegalSupport Authority v. Chief Justice of India (1986) 4SCC 767 : [1987] 1 SCR 295 ; Mafatlal Industries Ltd.Dv. Union of India (1997) 5 SCC 536 : [1996] 10 Suppl.SCR 585 ; Sangram Singh v. Election Tribunal [1955]2 SCR 1 – referred to.

Marbury v. Madison 5 U.S. (1 Cranch) 137 (1803) –referred to.

ROJER MATHEW v. SOUTH INDIAN BANK LTD.

[2007] 1 SCR 317referred toPara 102A[1971] 3 SCR 483referred toPara 102(2014) 11 SCC 415referred toPara 106[2015] 14 SCR 1037referred toPara 107(2019) 1 SCC 1referred toPara 108B(1991) Supp. 2 SCC 608referred toPara 114[1993] 3 SCR 719referred toPara 114[1992] 1 SCR 686referred toPara 115C[1951] SCR 747referred toPara 131[2015] 2 SCR 51referred toPara 131[1989] 2 SCR 629referred toPara 134[1967] SCR 557referred toPara 134D[1968] SCR 251referred toPara 136[1975] 3 SCR 607referred toPara 137[1979] 1 SCR 845referred toPara 138[1980] 2 SCR 260referred toPara 139E[2015] 2 SCR 51referred toPara 140[1974] 2 SCR 879relied onPara 141[2015] 13 SCR 1referred toPara 144[1973] Suppl. SCR 1referred toPara 153F[2010] 6 SCR 857referred toPara 155[2014] 10 SCR 1referred toPara 155[2005] 1 Suppl. SCR 929relied onPara 187[1995] 2 Suppl. SCR 106relied onPara 192G[1987] 1 SCR 295referred toPara 210[2015] 4 SCR 676relied onPara 218[1996] 10 Suppl. SCR 585referred toPara 221[1955] 2 SCR 1referred toPara 222H

PER DR. D.Y. CHANDRACHUD, J.:

Kihoto Hollohan v. Zachillhu and Others (1992) Supp.2 SCC 651 : [1992] 1 SCR 686; N P Ponnuswami v.Returning Office, Namakkal Constituency, Namakkal,Salem, Dist. [1952] SCR 218 ; Union of India v.Tulsiram Patel (1985) 3 SCC 398 : [1985] 2 Suppl.SCR 131 ; Babulal Parate v State of Bombay [1960]1 SCR 605 ; Special Reference No. 1 of 1964 Powers,Privileges and Immunities of State Legislatures, Inre (Special Reference No. 1 of 1964), AIR 1965 SC745 : [1965] SCR 413 ; Ramdas Athawale v Union ofIndia (2010) 4 SCC 1 : [2010] 3 SCR 1059 ; Raja RamPal v Hon’ble Speaker, Lok Sabha (2007) 3 SCC184 : [2007] 1 SCR 317 ; L. Chandrakumar v. Unionof India (1997) 3 SCC 261 : [1997] 2 SCR 1186 ;Union of India v. R. Gandhi, President, Madras BarAssociation (2010) 11 SCC 1 : [2010] 6 SCR 857 ;Madras Bar Association v. Union of India (2014) 10SCC 1 : [2014] 10 SCR 1 ; State of Bombay v. UnitedMotors (India) Ltd. [1953] SCR 1069 ; – relied on.

S P Sampath Kumar v Union of India (1987) 1 SCC124 : [1987] 1 SCR 435 ; Madras Bar Association v.Union of India (2015) (2015) 8 SCC 583 : [2015] 6SCR 638 ; Union of India v. Jyoti Prakash Mitter(1971) 1 SCC 396 : [1971] 3 SCR 483 ; MangaloreGanesh Beedi Works v State of Mysore AIR 1963 SC589 : [1963] Suppl. SCR 275 ; Mohd. Saeed Siddiquiv State of Uttar Pradesh (2014) 11 SCC 415 ;Yogendra Kumar Jaiswal v State of Bihar (2016) 3 SCC183 : [2015] 14 SCR 1037 ; Pandit MSM Sharma vDr Shree Krisha Sinha AIR 1960 SC 1186 ; JusticePuttaswamy (Retd.) and Anr. v. Union of India (2019)1 SCC 1 ; Kuldip Nayar v Union of India (2006) 7SCC 1 : [2006] 5 Suppl. SCR 1 ; State of West Bengalv. Anwar Ali Sarkar [1952] SCR 284 ; R.K. Gargv. Union of India (1981) 4 SCC 675 : [1982] 1 SCR947 ; Subramanian Swamy v. Director, Central Bureauof Investigation (2014) 8 SCC 682 : [2014] 6 SCR

ROJER MATHEW v. SOUTH INDIAN BANK LTD.

873 ; Bhim Singh v. Union of India (2010) 5 SCC 538: [2010] 6 SCR 218 ; R.M.D. Chamarbaugwalla v.Union of India [1957] SCR 930 ; State of Bombay v.F N Balsara [1951] SCR 682 – referred to.

The Treatise on The Law, Privileges, Proceedings andUsage of Parliament C. Knight & Company, 1844 HMSeervai, Constitutional Law of India, Universal Law CoPvt Ltd, Vol I, (1991), at pp.299-300 – referred to.

Case Law Reference

[2019] 16 S.C.R.

L. Chandrakumar v. Union of India (1997) 3 SCCC261 : [1997] 2 SCR 1186 ; Gwalior Rayon Millsv. Assistant Commissioner, Sales Tax AIR 1974 SC1660 : [1974] 2 SCR 879 ; Ramesh Birch v. Union ofIndia 1989 Supp (1) SCC 430 : [1989] 2 SCR 629 -relied on.

Union of India v. Madras Bar Association, (2010) 11DSCC 1 : [2010] 6 SCR 857 ; Madras Bar Associationv. Union of India (2015) 8 SCC 583 : [2015] 6 SCR638 ; Gujarat Urja Vikas Nigam Ltd. v. Essar PowerLtd. (2016) 9 SCC 103 : [2016] 5 SCR 101 ; MinervaMills Ltd. v. Union of India, (1980) 2 SCC 591 ;EKesavananda Bharati v. State of Kerala, (1973) 4SCC 225 : [1973] Suppl. SCR 1 ; Re Article 143,Constitution of India and Delhi Laws Act (1912) etc.AIR (38) 1951 SC 332 : [1951] SCR 747 ;Harishankar Bagla v. M.P. State AIR 1954 SC 465 :[1955] SCR 313 ; Madras Bar Association v. UnionFof India (2014) 10 SCC 1 : [2014] 10 SCR 1 ; AnitaKushwaha v. Pushap Sudan, (2016) 8 SCC 509 :[2016] 9 SCR 560 – referred to.

ROJER MATHEW v. SOUTH INDIAN BANK LTD.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 8588of 2019.

From the Judgment and Order dated 20.01.2017 of the HighCourt of Kerala at Ernakulam in W.A. No. 2349/2016 in W.P.(C) No.26290/2014.

With

W. P. (C) No. 267/2012, 279/2017, 558/2017, 561/2017, 625/2017,640/2017, 1016/2017, 788/2017, 925/2017, 1098/2017, 1129/2017, 33/2018, 205/2018, 467/2018, T. C. (C) No. 49/2018, 51/2018 and T. P.(C) No. 2199/2018.

K.K. Venugopal, A.G., Tushar Mehta, S.G. A.N.S. Nadkarni,A.S.G., Ms. Madhavi Diwan, A.S.G., Arvind P. Datar, Sr. Advocate(A.C.), Mohan Parasaran, Ms. Priya Hingorani, Ms. Aishwarya Bhati,Ms. Prem Lata Bansal, Sidharth Luthra, Ashok Kumar Panda, Ms. V.Mohana, R. Balasubramanian, Sr. Advs., Rahul Unnikrishnan, N. SaiVinod, T.V.S. Raghavendra Sreyas, Ms. Mayuri Raghuvanshi,V. Ranghuvanshi, Mr. Renjith B. Marar, Ms. Lakshmi N. Kaimal, AnilSharma, Krishnadas V., Ms. Ruchira Goel, Muhammad Ali Khan,Abhishek Jebraj, Omar Hoda, Namrah Nasir, Sparsh Prasad, Ms. AditiPani, Nikhil Swami, A.K. Behera, V.K. Verma, Tarun Verma, Gp. Capt.K.S. Bhati, Ms. Vaidruti Mishra, Ms. Tanuja Patra, Rupesh Kumar,Ms. H. Mota, Pravesh Bahuguna, Anand Varma, Dhairya Madan,Shwetank Singh, Sanjay Sharma, K. Krishna Kumar, Sudipto Sircar,A. Subba Rao, Annam D. N. Rao, Annam Venkatesh, Rahul Mishra,Mrs. Maneesha Dhir, Alok Dhir, Karan Batura, Ashu Kansal,Ms. Anushree Prashit Kapadia, Ms. Diksha Rai, Varun K. Chopra,Tejaswi Kumar Pradhan, Satyabrata Panda, Manoranjan Paikaray,

38SUPREME COURT REPORTS

AAniruddha Purushotham, D.K. Gandhi, Sanjay Sharma, Jagjit SinghChhabra, Rajiv Shukla, Ms. Shivani Kapoor, Prakash Ranjan Nayak,Gorang Goyal, V.P. Gupta, Jagdish Kumar Chawla, Anuj Bansal,A. Kumar, Nikhil Nayyar, Ms. Shraddha Deshmukh, Ms. RukhmaniBobde, Saurabh Mishra, Ankur Talwar, Ms. Ankita Sharma, Ms. NikitaKapoor, Zoheb Hossain, Rajat Nair, Chinmayee Chandran, Mohd.BShahan Ulla, Vivek Gurnani, Piyush Goyal, Arvind K. Sharma, G.S.Makker, Mukesh Kumar Maroria, P. I. Jose, Ms. P.S. Chandralekha,Mrs. Anil Katiyar, Ashok Mathur, Sonal Jain, E.C. Agrawal, ParthivK. Goswami, Ms. Diksha Rai, Ms. Palak Mahajan, Ishan Bisht,M/s Saharya & Co., Ajay Bansal, Gaurav Yadav and Ms. Veena Bansal,CAdvs. for the appearing parties.

The Judgments of the Court were delivered by

RANJAN GOGOI, CJI

1. Leave granted.

DBRIEF BACKGROUND:

2. In the present batch of cases, the constitutionality of Part XIVof the Finance Act, 2017 and of the rules framed in consonance hasbeen assailed. While it would be repetitious to reproduce the pleadingsEof each case separately, brief reference is being made, illustratively,to the prayers made in three matters to aid the formulation of coreissues arising for adjudication.

3. The Madras Bar Association has preferred Writ Petition (Civil)No. 267 of 2012 seeking the following reliefs:

“i. writ of mandamus, directing the Union of India, toimplement the directions of this Hon’ble Court in Unionof India v. R. Gandhi [(2010) 11 SCC 1, para 96 at pg.310] and L. Chandra Kumar v. Union of India [(1997)3 SCC 261], paras 120 and 121 at page 65 to 67], whereMinistry of Law and Justice, Govt. Of India was orderedto take over the administration of all tribunals createdby Parliament and streamline the functioning of thesame.

ii. writ of mandamus directing the Ministry of Law &HJustice to promptly carry out ‘Judicial Impact

Assessment’ on all tribunals created by Parliament andsubmit report on the same to this Hon’ble Court.”

4. This Writ Petition was originally heard by three-judge Benchon 18[th] February, 2015 wherein it was observed that the case presentedsubstantial questions of Constitutional interpretation, necessitatinghearing by Constitution Bench. The orders passed from time to timereveal that, on 18[th] January, 2016, this Court perused the contents ofthe Tribunals, Appellate Tribunals and other Authorities (Conditions ofService) Bill, 2014 and felt that “it would be more appropriate ifobservations made in Union of India vs. R. Gandhi, President,Madras Bar Association[1] (in paragraphs 64-70) are alsoconsidered by the Government.”

5. The matter was listed again on 27[th] March, 2019 and thisCourt took cognizance of non-implementation of the directions issuedvide para 96 of L. Chandra Kumar vs. Union of India[2], which readsas follows:

“96. We are of the opinion that, until wholly independent agencyfor the administration of all such Tribunals can be set up, it isdesirable that all such tribunals should be, as far as possible, undera single nodal ministry which will be in position to oversee theworking of these tribunals. For number of reasons thatMinistry should appropriately be the Ministry of Law. It wouldbe open for the Ministry, in its turn, to appoint an independentsupervisory body to oversee the working of the Tribunals.”

6. Thereafter on the same day, this Court opined as follows:

“Tentatively, we are of the view that the said directions ought tohave been implemented by the Government of India long back.In the course of hearing today, learned Attorney General for Indiarelying on an affidavit filed on behalf of the Union of India inthe year 2013, had pointed out certain difficulties including theneed for an amendment of the Government of India (Allocationof Business) Rules, 1961. Learned Attorney General has alsopointed out that the Ministry of Law and Justice is overburdenedand may not be able to act and function as the nodal agency,which the Court had in mind while issuing directions way back

1 (2010) 11 SCC 1.

2 (1997) 3 SCC 261.

Ain the year 1997 in L. Chandra Kumar (supra). There cannot byany manner of doubt that to ensure the efficient functioning andto streamline the working of Tribunals, they should be broughtunder one agency, as already felt and observed by this Court inL. Chandra Kumar (supra). The Court would like to have benefitof the view of the Government of India as on today by meansBof an affidavit of the competent authority to be filed within twoweeks from today.

The second prayer made in the writ petition has also beenconsidered by us and in this regard we have taken note ofcompilation placed before the Court by the learned AttorneyGeneral, which would go to show the present vacancy positionin different Tribunals, which is one of the issues that we wouldattempt to resolve. From the compilation of the learned AttorneyGeneral, it appears that the Central Administrative Tribunal, theIntellectual Property Appellate Board, the Armed Forces Tribunal,the National Green Tribunal and the Income Tax AppellateTribunal would require immediate attention. While everyendeavour would be made by the nominee of the Chief Justicewho heads the Selection Committee before whom the issue ofrecommendations may have been pending to expedite the same,such of the recommendations which have already been made by

the Search-cum-Selection Committee as is in the case of NationalCompany Law Tribunal and National Law Appellate Tribunal,should be immediately implemented by making appointmentswithin the aforesaid period of two weeks and the result thereofbe placed before the Court vide affidavit of the competentauthority, as ordered to be filed by the present order.

Once the aforesaid information is made available, appropriateorders will be passed by this Court, which may, inter alia, includeremitting the matter to smaller Bench for monitoring on acontinuous basis, so as to ensure due and proper functioning ofGthe Tribunals. Matter be listed before this Bench after twoweeks.”

7. During the pendency of the aforementioned writ petition, thepresent lead matter bearing SLP(C) No. 15804/2017 was filed by RojerMathew, assailing the final judgment and order of the High Court ofHKerala. The petitioner had originally approached the High Court

challenging the constitutional validity of Section 13 (5-A) of theSecuritisation and Reconstruction of Financial Assets and Enforcementof Securities Interest (SARFAESI) Act, 2002 which permits securedcreditors to participate in auction of immoveable property if it remainedunsold for want of reserve bid in an earlier auction. Rojer Mathewclaimed that the aforementioned provision violated his rights underArticle 300A and Article 14 of the Constitution, besides being incontravention of the Code of Civil Procedure which prohibits mortgageesfrom participating in auction of immovable property without prior Courtpermission.

8. During the course of arguments, it was brought to the noticeof this Court that appointments to the Debt Recovery Tribunals wasnot in consonance with the Constitutional spirit of judicial independence.Accordingly, though Rojer Mathew was given an opportunity toapproach the High Court for reconsideration of his plea on 16[th] May,2018, nevertheless this Court kept his petition pending to allowconsideration of broader issues concerning restructuring of Tribunals.Assistance of Shri Arvind P. Datar, Sr. Advocate as Amicus Curiaewas also requested by this Court.

9. The third matter to be taken note of is Writ Petition (Civil)No. 279/2017 where the petitioner, Kudrat Sandhu, has filed PublicInterest Litigation challenging the vires of Part XIV of the Finance Act,2017 by which the provisions of twenty-five different enactments wereamended to effect sweeping changes to the requisite qualifications,method of appointment, terms of office, salaries and allowances, andvarious other terms and conditions of service of the members andpresiding officers of different statutory Tribunals. The impugnedprovisions of the Finance Act, 2017 have been referred to in extensoat appropriate parts of this order.

GENESIS OF TRIBUNALISATION:

10. Delay and backlogs in the administration of justice is ofparamount concern for any country governed by the rule of law. Inour present judicial setup, disputes often take many decades to attainfinality, travelling across series of lower courts to the High Court andending with an inevitable approach to the Supreme Court.

11. Such crawling pace of the justice delivery system onlyaggravates the misery of affected parties. Although with nebulous

Aorigins, the adage “justice delayed, is justice denied” is apt in thiscontext. Courts in this country, probably in quest to ensure completejustice for everyone, overlook the importance of expediency and finality.This situation has only worsened over the years, as evidenced throughpiling pendency across all Courts. It would however be wrong to placethe blame of such delay squarely on the judiciary, for an empiricalBexamination of pendency clearly demonstrates that the ratio of judgesagainst the country’s population is one of the lowest in the world andthe manpower (support staff) and infrastructure provided is dismal.12. In addition to the delay in administration of justice, anotherimportant facet requiring attention is the rise of specialization andCincrease of complex regulatory and commercial aspects, which requireesoteric appraisal and adjudication. The existing lower courts in thecountry are not well equipped to deal with such complex new issueswhich see constant evolution as compared to the stable nature of existingcivil, criminal and the tax jurisprudence.

D13. Evidently, there is desperate need to overcome thesehurdles of delay in administration of justice. Creation of tribunals hasevolved as one solution in the ever-constant strive to increase accessto justice. ‘Tribunal’ can be understood as body tasked withdischarging quasi-judicial functions with the primary objective ofEproviding special forum for specific type of disputes and for fasterand more efficacious adjudication of issues. In Jaswant Sugar MillsLtd., Meerut vs. Lakshmichand[3], test was laid down whereunderit is to be examined whether the authority has the trappings of Court,facets of which include the authority to make determinations, evidentiaryand procedural powers and ability to impose sanctions. However, perFa five-judge bench in Associated Cement Co. Ltd. v. PN Sharma[4],Tribunals were vested with primarily judicial character for it wasobserved that:

“9. ….. Special matters and questions are entrusted to them fortheir decision and in that sense, they share with the courts oneGcommon characteristic; both the courts and the tribunals are“constituted by the State and are invested with judicial asdistinguished from purely administrative or executive functions”,(vide Durga Shankar Mehta v. Thakur Raghuraj Singh [(1955)

3 AIR 1963 SC 677.H4 AIR 1965 SC 1595.

1 SCR 267 at p. 272] ). They are both adjudicating bodies andthey deal with and finally determine disputes between partieswhich are entrusted to their jurisdiction. The procedure followedby the courts is regularly prescribed and in discharging theirfunctions and exercising their powers, the courts have to conformto that procedure. The procedure which the tribunals have tofollow may not always be so strictly prescribed, but the approachadopted by both the courts and the tribunals is substantially thesame, and there is no essential difference between the functionsthat they discharge. As in the case of courts, so in the case oftribunals, it is the State’s inherent judicial power which has beentransferred and by virtue of the said power, it is the State’sinherent judicial function which they discharge. Judicial functionsand judicial powers are one of the essential attributes of asovereign State, and on considerations of policy, the State transfersits judicial functions and powers mainly to the courts establishedby the Constitution; but that does not affect the competence ofthe State, by appropriate measures, to transfer part of its judicialpowers and functions to tribunals by entrusting to them the taskof adjudicating upon special matters and disputes between parties.It is really not possible or even expedient to attempt to describeexhaustively the features which are common to the tribunals andthe courts, and features which are distinct and separate. Thebasic and the fundamental feature which is common to both thecourts and the tribunals is that they discharge judicial functionsand exercise judicial powers which inherently vest in sovereignState.”

14. Further, this Court has in various judgments explicitly heldthat tribunals are mutually exclusive from administrative or legislativebodies, and although not strictly Courts, they nevertheless performjudicial functions. With the inclusion of technical members along withjudicial members in composition of Tribunals, it is ensured that theadjudicatory authority is equipped with the technical knowledge requiredto comprehend and decide issues involving specialised subjects.

15. Such issues are not unique to our country. Globally, the issuessuch as need for specialization or pendency have resulted in aunanimous consensus for tribunalisation. perusal of the prevailing legalregime governing tribunals and their interface with the government,

Aprovides useful benchmark in examining methods to retain theircharacter.

AN INTERNATIONAL PERSPECTIVE

16. The global approach to the institution of specialized Tribunalsis largely consistent one. cursory examination brings to fore aBuniversal inherent need to disperse disputes across different adjudicatorybodies to reduce the burden on Constitutional Courts and ensure fasterresolution of specific disputes. Almost all countries in the world haveincorporated laws pertaining to the working of Tribunals within theirConstitutional framework in some form or the other. In light of ourCcommon law traditions and colonial history, it would be imperative toexamine the position of law across the world:

I. United Kingdom

17. Tribunals are one of the most important institutions in thedispensation of justice in the British Judicial system. Numerous TribunalsDhave been established to deal with issues involving property rights,employment, immigration, mental health, etc. Their functions are similarto the mainstream judicial bodies and are concerned with disputesbetween individuals and the State. However, there is stark distinctionbetween Tribunals and Ordinary Courts in England; for unlike ordinaryECourts, the Tribunals comprise of members with special expertise andexperience with many of them being appointed from amongst advocatesor from persons with technical exposure.

18. Such tribunalisation traces its origins to the early twentiethcentury. The efficacy of specialised, quasi-judicial body for adjudicationFof specific disputes was realised over period of time as the newlyevolved system of Tribunals gradually gained appreciation andrecognition in the legal fraternity. During the development of the railwaysin the early 19[th] century, the judges found themselves ill-equipped todeal with technically specialised trade disputes arising from monopolisticrailway companies. Such inexpert adjudication also resulted inGdissatisfaction of the litigants. Consequently, specialized tribunal ofCommissioners was appointed in 1873 and later converted to theRailways and Canals Commission. Later in the nineteenth century, theBritish Government set up tribunals for pension and unemploymentbenefit to enhance accessibility to the poor and less-educated, including,Hspecial tribunals set up to adjudicate disablement pensions for

servicemen wounded in World War I. In the twentieth century, postthe Leggatt review, many dozens of tribunals for subjects as diverseas tax, mental health, social security, employment and asylum were setup, with thousands of adjudicating members.

19. As Tribunals started marking their individual identity andresolving conflicts brought before them, there was an emergent needto amend the framework of these alternate fora in tune with societalchanges. The Donoughmore Committee, in 1932, critiqued the delegationof judicial functions to quasi-judicial body and recommended that thejudicial powers should vest solely with the Ordinary Courts of law. Itwas further recommended that establishment of Tribunals should onlybe in special cases where Ordinary Courts lacks expertise. Applicabilityof principles of natural justice must also be extended to such Tribunals.Courts should be adequately empowered to ensure that the Tribunalsfunction within their restricted domain.

20. The need for supervisory jurisdiction over Tribunals was againdiscussed in 1957 when the Frank’s Committee made itsrecommendations which were implemented by the Tribunal and InquiriesAct, 1958. The Frank’s Committee Report presented glowing critiquein favour of tribunalisation, contending that it was cheaper, faster, betterand more accessible. This finding has been echoed by variousinternational commissions which have noted the beneficial impacts oftribunalisation viz., cost effectiveness, accessibility, reduction inpendency, specialized expertise, etc.

“Tribunals are not ordinary courts, but neither are theyappendages of Government Departments. Much of the officialevidence … appeared to reflect the view that tribunals shouldproperly be regarded as part of the machinery of administration,for which the Government must retain close and continuingresponsibility. Thus, for example, tribunals in the social servicesfield would be regarded as adjuncts to the administration of theservices themselves. We do not accept this view. We considerthat tribunals should properly be regarded as machinery providedby Parliament for adjudication rather than as part of themachinery of administration. The essential point is that in all thesecases Parliament has deliberately provided for decision outsideand independent of the Department concerned, either at firstinstance … or on appeal from decision of Minister or of an

Aofficial in special statutory position… Although the relevantstatutes do not in all cases expressly enact that tribunals are toconsist entirely of persons outside the Government service, theuse of the term ‘tribunal’ in legislation undoubtedly bears thisconnotation, and the intention of Parliament to provide for theindependence of tribunals is clear and unmistakable.”[5]B

21. Pursuant to this, the Council on Tribunals was established withthe purpose of overseeing composition and working of various Tribunals.Further, the Sir Andrew Leggatt Committee (2001) scrutinised theexisting state of Tribunals wherein the inherent deficiencies of non-uniform Tribunal system were highlighted. The report of the Committee,Ctitled ‘Tribunals for User— One System, One Service’ suggested anew structurally reformed system of Tribunals with more uniformadministration and procedure. It was also suggested that singleAppellate Division should be the only route of appeal against the ordersof the Tribunals. In 2007, the Tribunals, Courts and Enforcement ActDwas enacted which formulated new system of two Tribunals -the First-

tier Tribunal and the Upper Tribunal - with unified route for appeal.[6]

22. In the year 2006 the United Kingdom created TribunalService, which was later merged with the Courts Service in 2010,resulting in the creation of single cohesive judicial structure and serviceEfor the country.

II. Canada

23. The Tribunal system in Canada, although of recent origin, iswell established having distinct identity of its own. Similar to the systemin England, in Canada too, the Tribunal system has successfully becomeFone of the foundations of the judicial system.[7] Federal or provinciallegislations are enacted to constitute and empower specialised Tribunalsfor specific subject matters such as human rights, insurance claims, etc.[8]

5 Drewry, Gavin, “The Judicialisation of Administrative Tribunals in the U.K: FromHewart to Leggatt” 28 TRAS 51 (2009)G6 Excerpts from the ‘Explanatory Notes to the Tribunals, Courts and Enforcement

6 Excerpts from the ‘Explanatory Notes to the Tribunals, Courts and EnforcementAct, 2007’ prepared by the Ministry of Justice, British Parliament.

7 Malik, Lokendra; Lata, Kusum; Kaur, Avneet, Constitutional Government in India(Satyam Law International, New Delhi, 2016) at p. 191.

8 Administrative Tribunals in Canada, available at: http://www.thecanadianencyclopedia.ca/en/article/administrative-tribunals/ (last visited onH10.09.2019).

The work of the Tribunals are regulated by legislation and Membersare usually appointed for their expertise in the subject.

24. Many of the Tribunals are empowered by their enablinglegislation or general legislations to have powers similar to Civil Courts.However, Tribunals in Canada are less formal than Courts and areoutside the general Court system; their decisions are subject to JudicialReview to ensure adherence to law. In striking resemblance to ourjudicial system, the Canadian Constitution also provides inherent powerof judicial review of decisions of Tribunals to superior Courts, whereeither no provision of appeal is provided or is specifically barred by astatute. Appeals from orders of Tribunals in Canada are heard byFederal Court of Canada, the immediate forum below the SupremeCourt of Canada.

III. Australia

25. The Australian system of Tribunals is an amalgamation ofthe system prevalent in England and Canada. Tribunals in Australia wereestablished primarily to reduce the burden on Civil Courts and providean effective, yet cheap means of justice for the public. There prevailsa variety of Tribunals to review different types of Government decisionsincluding social security, taxation, etc. The Tribunals serve multifariouspurpose, deciding issues between individuals and individuals & State.For instance, in several Australian States, the Tribunals work as SmallClaims Courts. The Court of Appeals is facet of the Supreme Court,enjoying appellate powers over all the other Courts and Tribunals inthe country.

IV. United States of America

26. The doctrine of separation of powers is adhered to in muchstringent manner in comparison to other common law countries. Thereis no delegation of judicial powers and no judicial power is vested inadministrative bodies which are not Courts. The inception of judicialcontrol over administrative action was with the enactment ofAdministrative Procedure Act, 1946. However, the Act merely madethe decisions of Tribunals appealable on question of interpretation oflaw. Nevertheless, the Supreme Court of the United States had takena more liberal view of the same leaving scope, though extremely limited,for judicial review.

AV. France

27. Being Civil Law system, France has dual legal systemcomprising of— Private Law (droit privé) and Administrative Law(droit administratif).[9] It has special Tribunal viz. Tribunal desConflicts for performing both judicial and administrative functions.[10]BThe decisions of Tribunal des Conflicts are not entirely within thepurview of judicial review. Judicial Review is expressly ousted fromsome of the administrative actions. Further, to adjudicate disputesbetween individual and officials of State, the Counseil d’Etat wasformed.C28. With change in time, the Tribunal system of France also

C28. With change in time, the Tribunal system of France alsoevolved. new Three-Tier Tribunal system was established. The firsttier being Tribunal administratif — Administrative Court or the OriginalCourt having wide jurisdiction covering all subject matters; the secondtier is Cour administrative d’appel — Administrative Court of Appeal,formed to decide appeals from the Original Court and; the third tier isDConseil d’Etat — Court of Last Resort, which was formed to finallydecide appeals from the Original Court or Court of Appeal. However,unlike in common law countries, the Appellate Courts in France lackpower of judicial review on the ground of authority being ultra vires.

VI. South AfricaE

29. South Africa having similar colonial origins as India, inheriteda similar legal system as India. Having multiple functions and discharginga range of judicial, quasi-judicial as well as administrative powers, everytribunal is unique creation of its parent statute. Akin to many critiquesin India, such tribunals are often criticized for their lack of uniformity,Fincoherence and haphazardness.

DOMESTIC PERCEPTION:

30. It is interesting to note that establishment of Tribunals in Indiarelate back to as early as the year 1941 when the Income Tax AppellateTribunal (ITAT) was established to expedite tax disputes. To structuraliseGthe establishment of Tribunals, vide the 42[nd] Constitutional Amendment,Article 323A and 323B were introduced, delineating powers as well as

9George A. Bermann; Etienne Picard, Introduction to French Law (Kluwer LawInternational, Netherlands, 2008) at p. 58.H10 Bartlett, C. A. Hereshoff, “The French Judicial System” 33 CLT 952 (1913).

the composition and formation of Tribunals. Numerous Tribunalsthereafter have been established, with the source of power to legislatefor establishing such tribunals being referable to Article 323A or Article323B of the Constitution. The three-tier tribunal system in India findsits resemblance to the system as prevalent in France. The forums offirst instance have Original Jurisdiction with High Court as the AppellateCourt and the Supreme Court being the final adjudicatory body.Furthermore, it is not out of context to point out the similarity of theConstitution of India with the Canadian Constitution, insofar as it alsoprovides inherent power of judicial review to Constitutional Courts overall subordinate Courts.

31. Hence, the need for establishment of newer and morespecialised adjudicatory bodies is not newfound but has evolved throughdevelopments spread over an era.

I. Administrative Reforms Commission - 1966

32. The Administrative Reforms Commission was set up toexplore the arenas for establishing Administrative Tribunals for differentsubject matters. It recommended establishment of Civil ServicesTribunals as adjudicatory entities for disciplinary punishments awardedto civil servants.

II. Wanchoo Committee - 1970

33. The Wanchoo Committee recommended reforms to theIncome Tax Appellate Tribunal to effectuate replacement of Civil Courtsfor expeditious redressal of tax disputes. It also recommended formationof Direct Taxes Settlement Tribunal to ensure speedy remedies anddecisions of disputes.

III. High Court’s Arrears Committee Report - 1972

34. committee headed by Justice JC Shah highlighted an urgentneed for individual-specialised Tribunals for exclusively dealing withservice matters and to unburden High Courts by restricting the barrageof writ petitions being filed by government employees.

IV. Swaran Singh Committee - 1976

35.The Swaran Singh Committee took radical view byadvocating amendments to the Constitution for regulation of Tribunalsand to curtail the writ jurisdiction of High Court and the Supreme Court.

AThis report attracted lot of critique from the legal fraternity and waslater rejected in Sakinala Hari Nath vs. State Of Andhra Pradesh[11].

V. Raghavan Committee - 2002

36. In accordance with contemporaneous evolutions in theBcommercial sphere, the Raghavan Committee was set up to suggestmethods to regulate anti-competitive practices. This Committeerecommended establishment of the Competition Commission of India(CCI), which was envisioned to maintain adequate competition in themarket and protect consumer welfare. Further, the Competition Act,2002 was later enacted which provided certain powers of Civil CourtsCto the CCI for effective enquiry and adjudication.

37. Tribunals can thus be viewed as alternate avenues to facilitateswift dispensation of justice through less-formal procedures ofadjudication. An examination of existing Tribunals in India and acrossforeign jurisdictions, shows that they are best suited to deal withDcomplex subject-matters requiring technical expertise such as servicelaw, tax law, company law or environment law, etc.

LEGISLATIVE DEVELOPMENT OFTRIBUNALISATION:

E38. In India, the Constitution (42[nd] Amendment) Act, 1976 pavedway for tribunalisation of the justice dispensation system by introductionof Articles 323A and 323B in the Constitution. These provisions areto the following effect:

“PART XIV-A: TRIBUNALSF

323-A. Administrative tribunals.—(1) Parliament may, by law,provide for the adjudication or trial by administrative tribunals ofdisputes and complaints with respect to recruitment and conditionsof service of persons appointed to public services and posts inconnection with the affairs of the Union or of any State or ofGany local or other authority within the territory of India or underthe control of the Government of India or of any corporationowned or controlled by the Government.

11 1993 (3) ALT 471; See also: L. Chandra Kumar v. Union of India 1997 (2) SCRH1186

(2) law made under clause (1) may—

(a) provide for the establishment of an administrativetribunal for the Union and separate administrativetribunal for each State or for two or more States;

(b) specify the jurisdiction, powers (including the power topunish for contempt) and authority which may beexercised by each of the said tribunals;

(c) provide for the procedure (including provisions as tolimitation and rules of evidence) to be followed by thesaid tribunals;

(d) exclude the jurisdiction of all courts, except thejurisdiction of the Supreme Court under Article 136, withrespect to the disputes or complaints referred to inclause (1);

(e) provide for the transfer to each such administrativetribunal of any cases pending before any court or otherauthority immediately before the establishment of suchtribunal as would have been within the jurisdiction ofsuch tribunal if the causes of action on which such suitsor proceedings are based had arisen after suchestablishment;

(f) repeal or amend any order made by the President underclause (3) of Article 371-D;

(g) contain such supplemental, incidental and consequentialprovisions (including provisions as to fees) as Parliamentmay deem necessary for the effective functioning of,and for the speedy disposal of cases by, and theenforcement of the orders of, such tribunals.

(3) The provisions of this article shall have effect notwithstandinganything in any other provision of this Constitution or in any otherlaw for the time being in force.

323-B. Tribunals for other matters.—(1) The appropriateLegislature may, by law, provide for the adjudication or trial bytribunals of any disputes, complaints, or offences with respectto all or any of the matters specified in clause (2) with respectto which such Legislature has power to make laws.

A(2) The matters referred to in clause (1) are the following,namely:—

(a) levy, assessment, collection and enforcement of any tax;(b) foreign exchange, import and export across customsfrontiers;

(c) industrial and labour disputes;

(d) land reforms by way of acquisition by the State of anyestate as defined in Article 31-A or of any rights thereinor the extinguishment or modification of any such rightsor by way of ceiling on agricultural land or in any otherway;

(e) ceiling on urban property;

(f) elections to either House of Parliament or the Houseor either House of the Legislature of State, butexcluding the matters referred to in Article 329 andArticle 329-A;

(g) production, procurement, supply and distribution offoodstuffs (including edible oilseeds and oils) and suchother goods as the President may, by public notification,declare to be essential goods for the purpose of thisarticle and control of prices of such goods;

(h) rent, its regulation and control and tenancy issuesincluding the right, title and interest of landlords andtenants;

(i) offences against laws with respect to any of the mattersspecified in sub-clauses (a) to (h) and fees in respectof any of those matters;

(j) any matter incidental to any of the matters specified insub-clauses (a) to (i).

(3) law made under clause (1) may—

(a) provide for the establishment of hierarchy of tribunals;

(b) specify the jurisdiction, powers (including the power topunish for contempt) and authority which may beHexercised by each of the said tribunals;

(c) provide for the procedure (including provisions as tolimitation and rules of evidence) to be followed by thesaid tribunals;

(d) exclude the jurisdiction of all courts except thejurisdiction of the Supreme Court under Article 136 withBrespect to all or any of the matters falling within thejurisdiction of the said tribunals;(e) provide for the transfer to each such tribunal of anycases pending before any court or any other authorityimmediately before the establishment of such tribunalC

(e) provide for the transfer to each such tribunal of anycases pending before any court or any other authorityimmediately before the establishment of such tribunalas would have been within the jurisdiction of suchtribunal if the causes of action on which such suits orproceedings are based had arisen after suchestablishment;

(f) contain such supplemental, incidental and consequentialprovisions (including provisions as to fees) as theappropriate Legislature may deem necessary for theeffective functioning of, and for the speedy disposal ofcases by, and the enforcement of the orders of, suchtribunals.

(4) The provisions of this article shall have effect notwithstandinganything in any other provision of this Constitution or in any otherlaw for the time being in force.

Explanation.—In this article, “appropriate Legislature”, in relationto any matter, means Parliament or, as the case may be, StateLegislature competent to make laws with respect to such matterin accordance with the provisions of Part XI.”

39. Drawing its competence from Article 323A of theConstitution, the Parliament enacted the Administrative Tribunals Act,1985. The primary objective was to provide forum alternative to theHigh Courts for routine service appeals, which otherwise wasoverburdening the working of the Constitutional Courts. It recognisedthat the higher Courts were envisaged to primarily deal with importantConstitutional issues and substantial question of law of general publicimportance.

A40. Furthermore, guidelines were issued by this Court in numerousdecisions to highlight paucity of technical expertise in certain subject-matters and thus the imminent need for an expedited disposal of suchcases through Tribunals. It was indicated in M.C. Mehta v. Union ofIndia[12], that dedicated Tribunal with both judicial and technical expertsis necessary to hear environmental disputes.B

41. Consequently, the National Environment Tribunal Act, 1995and National Environment Appellate Authority Act, 1997 were enacted.However, these were soon found to be incapable of providing expeditiousresolution of disputes which necessitated reforms as suggested by theLaw Commission of India. This led to the establishment of the NationalCGreen Tribunal (NGT) in 2010 as special fast-track Court only to dealwith issues related to the environment.

42. Similarly, Article 323B empowers the appropriate Legislatureto enact legislation to provide for adjudication or trial by Tribunals ofany disputes, complaints or offences with respect to the mattersDspecified in Clause (2) of the said Article. The matters specified inArticle 323B(2) exhaustively deal with variety of matters which canbe brought within the purview of tribunalisation by both the Parliamentand State Legislatures.

JUDICIAL DEVELOPMENT OF TRIBUNALISATION :

43. This Court has observed through numerous decisions that theterm ‘Tribunal’ refers to quasi-judicial authority. test to determinewhether particular body was merely an administrative organ of theExecutive or Tribunal was evolved by this Court in Jaswant SugarMills Ltd., Meerut vs. Lakshmichand[13]. It was to be examinedFwhether the body is vested with powers of Civil Court or not, and itwas held that any adjudicatory body vested with powers of takingevidence, summoning of witnesses, etc. must be categorised as aTribunal.

44. In R.K. Jain vs. Union of India[14]a three-judge Bench ofGthis Court emphasised the need for safe and sound justice deliverysystem adept at satisfying the confidence of litigants. It was furthernoted that since members of Tribunals discharge quasi-judicial functions,

12 1986 (2) SCC 17613 AIR 1963 SC 677.H14 (1993) 4 SCC 119.

it is imperative that they possess requisite legal expertise, some judicialexperience and an iota of legal training. Moreover, since Tribunals areconstituted as substitutes to Courts, their efficacy in upholding the faithof litigants cannot be compromised. It was however observed that truedelivery of justice by Tribunals was still far-fetched idea since themechanism for judicial review and remedy of appeal to the SupremeCourt was costly and discouraging. People from remote areas oftenfound their right to appeal being handicapped by geographical andfinancial constraints. Hence, it was suggested by this Court that newerfora be dispersed across the country and that members from the Baralso be included in the composition of such Tribunals. An urgent needto reform the working of tribunals and regular monitoring of theirfunctioning was also stressed upon.

45. Subsequently, in L. Chandra Kumar v. Union of India[15],a Constitution Bench of seven judges of this Court examined reportsof expert committees and commissions analysing the problem of arrears.The Malimath Committee Report (1989-1990) was also referred to,wherein it was found that many Tribunals failed the test of publicconfidence due to purported lack of competence, objectivity and judicialapproach. This Court thus called for drastic measures to elevate thestandards of Tribunals in the country.

46. It was also reiterated that the exclusion of judicial review byHigh Courts was impermissible and providing direct statutory appealsto the Supreme Court impeded the common litigant from exercising hisright to appeal because the appellate forum, being situated in Delhi, wasinaccessible to many. While criticising the short terms of members andthe lack of judicial experience of non-judicial members, this Courtobserved need for establishment of an oversight mechanism to reviewthe competence of all persons manning Tribunals. Thus, it wassuggested that all Tribunals be brought under ‘Single Nodal Ministry’,most appropriately the Ministry of Law & Justice, for overseeing ofworking of Tribunals. Liberty was however, granted to the Ministry toappoint an independent supervisory body to delegate the aforesaidfunctions. Further, the court noted that the procedure of selection ofmembers of Tribunals, allocation of funds and all other intricacies wouldhave to be culled out by such an umbrella organisation.

15 (1997) 3 SCC 261.

A47. In Union of India vs. R. Gandhi, President, Madras BarAssociation[16], Constitution Bench of five judges of this Court reviewedthe Constitutional validity of Parts I-B and I-C of The Companies Act,1956 inserted by the Companies (2[nd] Amendment) Act, 2002.

48. The bench observed that if Tribunals are established inBsubstitution of Courts, they must also possess independence, securityand capacity. Additionally, with transfer of jurisdiction from traditionalCourt to Tribunal, it would be imperative to include members of thejudiciary as presiding officers/members of the Tribunal. Technicalmembers could only be in addition to judicial members and that alsoonly when specialised knowledge or know-how is required. Any inclusionCof technical members in the absence of any discernible requirement ofspecialisation would amount to dilution and encroachment upon theindependence of the judiciary.49. This Court also observed that higher administrative experiencedoes not necessarily result in better adjudication and that there had beenDa gradual encroachment on the independence of the judiciary throughinclusion of more administrative/technical members in the Tribunals. Itheld that such practice needed to be checked and accordingly maderequisite corrections to Parts I-B and I-C of The Companies Act, 1956(as amended in 2002) as elucidated in para 120 of the judgement, whichEis reproduced below:

“120. We may tabulate the corrections required to set right thedefects in Parts I-B and I-C of the Act:

(i) Only Judges and advocates can be considered forappointment as judicial members of the Tribunal. OnlyFHigh Court Judges, or Judges who have served in therank of District Judge for at least five years or aperson who has practised as lawyer for ten years canbe considered for appointment as judicial member.Persons who have held Group or equivalent postGunder the Central or State Government with experiencein the Indian Company Law Service (Legal Branch) andthe Indian Legal Service (Grade I) cannot be consideredfor appointment as judicial members as provided in sub-sections (2)(c) and (d) of Section 10-FD. The expertise

in Company Law Service or the Indian Legal Servicewill at best enable them to be considered forappointment as technical members.

(ii) As NCLT takes over the functions of the High Court,the members should as nearly as possible have the sameposition and status as High Court Judges. This can beachieved, not by giving the salary and perks of HighCourt Judge to the members, but by ensuring thatpersons who are as nearly equal in rank, experience orcompetence to High Court Judges are appointed asmembers. Therefore, only officers who are holding theranks of Secretaries or Additional Secretaries alone canbe considered for appointment as technical members ofthe National Company Law Tribunal. Clauses (c) and(d) of sub-section (2) and clauses (a) and (b) of sub-section (3) of Section 10-FD which provide for personswith 15 years experience in Group post or personsholding the post of Joint Secretary or equivalent post inthe Central or the State Government, being qualified forappointment as Members of Tribunal, are invalid

(iii) “technical member” presupposes an experience in thefield to which the Tribunal relates. member of theIndian Company Law Service who has worked withAccounts Branch or officers in other departments whomight have incidentally dealt with some aspect ofcompany law cannot be considered as “experts”qualified to be appointed as technical members.Therefore clauses (a) and (b) of sub-section (3) are notvalid.

(iv) The first part of clause (f) of sub-section (3) providingthat any person having special knowledge or professionalexperience of 20 years in science, technology,economics, banking, industry could be considered to bepersons with expertise in company law, for beingappointed as technical members in the Company LawTribunal, is invalid.

(v) Persons having ability, integrity, standing and specialknowledge and professional experience of not less than

fifteen years in industrial finance, industrial management,industrial reconstruction, investment and accountancy,may however be considered as persons having expertisein rehabilitation/revival of companies and therefore,eligible for being considered for appointment as technicalmembers.

(vi) In regard to category of persons referred in clause (g)of sub-section (3) at least five years’ experience shouldbe specified.

(vii) Only clauses (c), (d), (e), (g), (h), and the latter part ofclause (f) in sub-section (3) of Section 10-FD andofficers of civil services of the rank of the Secretaryor Additional Secretary in the Indian Company LawService and the Indian Legal Service can be consideredfor purposes of appointment as technical members ofthe Tribunal.

(viii) Instead of five-member Selection Committee with theChief Justice of India (or his nominee) as Chairpersonand two Secretaries from the Ministry of Finance andCompany Affairs and the Secretary in the Ministry ofLabour and the Secretary in the Ministry of Law andJustice as members mentioned in Section 10-FX, theSelection Committee should broadly be on the followinglines:

a. Chief Justice of India or his nominee—Chairperson(with casting vote);

b. Senior Judge of the Supreme Court or ChiefJustice of High Court—Member;

c. Secretary in the Ministry of Finance and CompanyAffairs—Member; and

d. Secretary in the Ministry of Law and Justice—Member.

(ix) The term of office of three years shall be changed to aterm of seven or five years subject to eligibility forappointment for one more term. This is becauseconsiderable time is required to achieve expertise in the

ROJER MATHEW v. SOUTH INDIAN BANK LTD.[RANJAN GOGOI, CJI]

field concerned. term of three years is very short andby the time the members achieve the requiredknowledge, expertise and efficiency, one term will beover. Further the said term of three years with theretirement age of 65 years is perceived as having beentailor-made for persons who have retired or shortly toretire and encourages these Tribunals to be treated aspost-retirement havens. If these Tribunals are to functioneffectively and efficiently they should be able to attractyounger members who will have reasonable period ofservice.

(x) The second proviso to Section 10-FE enabling thePresident and members to retain lien with their parentcadre/ministry/department while holding office asPresident or Members will not be conducive for theindependence of members. Any person appointed asmember should be prepared to totally disassociatehimself from the executive. The lien cannot thereforeexceed period of one year.

(xi) To maintain independence and security in service, sub-section (3) of Section 10-FJ and Section 10-FV shouldprovide that suspension of the President/Chairman ormember of Tribunal can be only with the concurrenceof the Chief Justice of India.

(xii) The administrative support for all Tribunals should befrom the Ministry of Law and Justice. Neither theTribunals nor their members shall seek or be providedwith facilities from the respective sponsoring or parentMinistries or Department concerned.

(xiii) Two-member Benches of the Tribunal should alwayshave judicial member. Whenever any larger or specialBenches are constituted, the number of technicalmembers shall not exceed the judicial members.”

50. Later, in Madras Bar Association vs. Union of India(2014)[17], whilst striking down the newly-created National Tax Tribunalunder the National Tax Tribunals Act, 2005, it was observed that

17 (2014) 10 SCC 1.

Aprocedure of appointment and conditions of service of members mustbe akin to judges of the Courts which were sought to be substituted bythe Tribunal(s).

51. Only persons with professional legal qualifications coupledwith substantial experience in law were held to be competent to handleBcomplex legal issues. It was further held that litigating party (Govt.)should never be participant in the appointment process of membersof the Tribunal. Similarly, provision for reappointment or extension oftenure is ipso facto prejudicial to the independence of the members ofTribunal. difference was also drawn between appointments toTribunals which substituted Courts of first instance and to those whichCwere not subordinate to High Courts.52. It was further reiterated that establishment of Tribunal withits seat at Delhi could cause hardship to litigants from other parts ofthe country, depriving them of convenient access to justice. Moreover,the Court held that in order to uphold their independence and fairnessDit would be inappropriate for the Central Government to have anyadministrative control over members of the Tribunal.

53. In Madras Bar Association vs. Union of India (2015)[18],vires of the Companies Act, 2013 which contemplated establishmentof National Company Law Tribunal (NCLT) and National CompanyELaw Appellate Tribunal (NCLAT) were challenged. Interestingly, whileexamining Chapter XXVII of Companies Act, 2013 i.e. Sections 407to 434, this Court held that although the establishment of NCLT andNCLAT was not unconstitutional but there was need for curingdefects in accordance with the dictum of R. Gandhi (supra).F[[19]]

54. Finally, in Gujarat Urja Vikas Ltd. vs. Essar Power Ltd.[[19]],while examining the composition and working of Tribunals and statutoryframework thereof, this Court reiterated its earlier decisions in L.Chandra Kumar (supra) and Madras Bar Association (2014)(supra), observing that remedy of appeal to this Court was in effect,Gbeing obliterated due to cost and inaccessibility. In addition to this, aflood of appeals from all the Tribunals directly to this Court hinderedits efficiency in fulfilling its primary Constitutional role. Since appellatetribunals, manned by non-judicial members, were adjudging complex

18 (2015) 8 SCC 583.H19 (2016) 9 SCC 103.

questions of law, the composition of Tribunals was put under reviewby this Court and reference to the Law Commission of India wasmade in this regard. Pursuant to this, the Law Commission of India, inits 272[nd] Report titled ‘Assessment of Statutory Frameworks ofTribunals in India’ gave detailed analysis of statutory framework withrespect to Tribunalisation in India.

THE FINANCE ACT, 2017: ITS LEGISLATIVEBACKGROUND

55. Primary challenge in the present batch of cases is to theFinance Act, 2017. Though this enactment was purportedly to giveeffect to “the finance proposals of the central government for thefinancial year 2017-18” but Part XIV thereof consists ofcomprehensive provisions meant to effect “Amendments to Central Actsto Provide for Merger of Tribunals and other Authorities andConditions of Service of Chairpersons, Members, etc”.

56. scrutiny of Part XIV of the Finance Act, 2017 discloseshow by virtue of Sections 158 to 182, Parliament has amended twenty-five central enactments which form the foundation for multiple Tribunals.It has been submitted by the learned Attorney General, theseamendments seek to rationalise the functioning of Tribunals, inconformity with the principles laid down by this Court in its priordecisions.

57. Sections 158 to 182 of Part-XIV are broadly in pari materiaexcept that each Section deals with separate Tribunal. In order tocomprehend the manner in which Parliament has sought to achieve auniform pattern of qualifications, appointment, term of office, salariesand allowances, resignation, removal and other terms and conditionsof service of members and presiding officers of various Tribunals, itwould be sufficient to illustratively reproduce Sections 158 and 173 ofPart XIV of the Finance Act, 2017. Section 173 reads as follows:

“I.—AMENDMENT TO THE CINEMATOGRAPH ACT, 1952

173. In the Cinematograph Act, 1952, after section 5D, thefollowing section shall be inserted, namely:—

“5E. Notwithstanding anything contained in this Act, thequalifications, appointment, term of office, salaries and allowances,resignation, removal and the other terms and conditions of service

Aof the Chairman and other members of the Appellate Tribunalappointed after the commencement of Part XIV of Chapter VIof the Finance Act, 2017, shall be governed by the provisions ofsection 184 of that Act: Provided that the Chairman and memberappointed before the commencement of Part XIV of Chapter VIof the Finance Act, 2017, shall continue to be governed by theBprovisions of this Act and the rules made thereunder as if theprovisions of section 184 of the Finance Act, 2017 had not comeinto force.”.

58. In addition to this, some Sections in Part XIV also amalgamateexisting Tribunals. Section 158 has been reproduced below as anCexample of such Sections which in addition to the elements of Section173 also effect amalgamations:

“158. Amendment of Act 14 of 1947.— In the IndustrialDisputes Act, 1947,—

(a) in Section 7A, after sub-section (1), the following sub-sectionshall be inserted, namely:—

“(1A) The Industrial Tribunal constituted by the CentralGovernment under sub-section (1) shall also exercise, on andEfrom the commencement of Part XIV of Chapter VI of theFinance Act, 2017, the jurisdiction, powers and authorityconferred on the Tribunal referred to in Section 7D of theEmployees’ Provident Funds and Miscellaneous Provisions Act,1952 (19 of 1952).”;

(b) after Section 7C, the following section shall be inserted,namely:—

“7D. Qualifications, terms and conditions of service of PresidingOfficer.— Notwithstanding anything contained in this Act, thequalifications, appointment, term of office, salaries and allowances,resignation and removal and other terms and conditions of serviceof the Presiding Officer of the Industrial Tribunal appointed bythe Central Government under sub-section (1) of Section 7A,shall, after the commencement of Part XIV of Chapter VI ofthe Finance Act, 2017, be governed by the provisions of Section184 of that Act:

Provided that the Presiding Officer appointed before thecommencement of Part XIV of Chapter VI of the Finance Act,2017, shall continue to be governed by the provisions of this Act,and the rules made thereunder as if the provisions of Section 184of the Finance Act, 2017 had not come into force.”

59. There are two significant expressions worth noticing in thesesimilarly worded Sections 158 to 182. First, every such Section opensup with non-obstante clause and it provides that “notwithstandinganything contained in …… Act the qualifications, appointment, termof office, salaries and allowances, resignation, removal and theother terms and conditions of service of the Chairman and othermembers of the Appellate Tribunal appointed after thecommencement 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 provisionsin both the Finance Act, 2017 as well as the other twenty-fiveenactments which stand amended.

60. To critical analyse the intention of the legislature in enactingSection 184, reference must be made to the immediately precedingSection 183 which is to be found in sub-part ‘S’ of the Act titled“Conditions of service of Chairpersons and members of Tribunals,Appellate Tribunals and other Authorities”. Since Sections 183 and184 would need to be read conjointly, both are reproduced below:

“S.—CONDITIONS OF SERVICE OF CHAIRPERSONAND MEMBERS OF TRIBUNALS, APPELLATETRIBUNALS AND OTHER AUTHORITIES

183. Application of Section 184.— Notwithstanding anythingto the contrary contained in the provisions of the Acts specifiedin column (3) of the Eighth Schedule, on and from the appointedday, provisions of Section 184 shall apply to the Chairperson,Vice-Chairperson, Chairman, Vice-Chairman, President, Vice-President, Presiding Officer or Member of the Tribunal, AppellateTribunal or, as the case may be, other Authorities as specified incolumn (2) of the said Schedule:

Provided that the provisions of Section 184 shall not apply to theChairperson, Vice-Chairperson, Chairman, Vice-Chairman,President, Vice-President, Presiding Officer or, as the case may

be, Member holding such office as such immediately before theappointed day.

184. Qualifications, appointment, term and conditions ofservice, salary and allowances, etc., of Chairperson, Vice-Chairperson and Members, etc., of the Tribunal, AppellateTribunal and other Authorities.— (1) The Central Governmentmay, by notification, make rules to provide for qualifications,appointment, term of office, salaries and allowances, resignation,removal and the other terms and conditions of service of theChairperson, Vice-Chairperson, Chairman, Vice-Chairman,President, Vice-President, Presiding Officer or Member of theTribunal, Appellate Tribunal or, as the case may be, otherAuthorities as specified in column (2) of the Eighth Schedule:

Provided that the Chairperson, Vice-Chairperson, Chairman, Vice-Chairman, President, Vice-President, Presiding Officer orMember of the Tribunal, Appellate Tribunal or other Authorityshall hold office for such term as specified in the rules made bythe Central Government but not exceeding five years from thedate on which he enters upon his office and shall be eligible forreappointment:

Provided further that no Chairperson, Vice-Chairperson,Chairman, Vice-Chairman, President, Vice-President, PresidingOfficer or Member shall hold office as such after he has attainedsuch age as specified in the rules made by the CentralGovernment which shall not exceed,—

(a) in the case of Chairperson, Chairman [President or thePresiding Officer of the Securities Appellate Tribunal],the age of seventy years;

(b) in the case of Vice-Chairperson, Vice-Chairman, Vice-President, Presiding Officer [of the Industrial Tribunalconstituted by the Central Government and the DebtsRecovery Tribunal] or any other Member, the age ofsixty-seven years:

(2) Neither the salary and allowances nor the other terms andconditions of service of Chairperson, Vice-Chairperson,Chairman, Vice-Chairman, President, Vice-President, PresidingOfficer or Member of the Tribunal, Appellate Tribunal or, as the

case may be, other Authority may be varied to his disadvantageafter his appointment.”

61. Further, the Central Government in purported exercise of itspowers under the aforementioned provisions, has notified the ‘Tribunal,Appellate Tribunal and other Authorities (Qualifications, Experience andother Conditions of Service of Members) Rules, 2017’ [in short “theRules”].

PETITIONERS’ CASE:

62. The pleadings and arguments in most of the individual casesare similar and overlapping. Hence, for the sake of brevity, it is notnecessary to refer to the submissions of each of the counsel individually.Broadly, however, petitioners have questioned the validity of Part XIVread with the 8[th] and 9[th] Schedules of the Finance Act 2017, as beingex-facie unconstitutional, arbitrary, in colourable exercise of legislativepower, and offensive to the basic structure of the Constitution.

63. The foremost contention on behalf of the petitioners is thatPart-XIV could not and ought not to have been made part of the FinanceAct, 2017 as the said part is not classifiable as ‘money bill’. Emphasiswas placed on the wordings of Article 110 which allows those billswhich contain “only” provisions which fall within the metes and boundsof Clauses (a) to (g) thereof, to be treated as ‘money bill’. By virtueof inclusion of Part XIV, the entirety of the Finance Act, 2017 wascontended to have lost its colour as ‘money bill’ under Article 110and hence its passage without the assent of the Rajya Sabha as requiredunder Article 107 renders it ultra vires the legislative schemecontemplated in the Constitution.

64. Learned counsels vehemently placed reliance on theConstituent Assembly Debates to lend strength to the importance ofthe expression “only” under Article 110(1). They seek to make out acase that such phraseology was deliberately incorporated in theConstitution by making conscious departure from Section 37 of theGovernment of India Act, 1935. Inclusion of Part XIV in the FinanceAct, 2017 is shown as being an act of camouflage and colourableexercise and petitioners assert that such indirect manner of bypassingof the Rajya Sabha is impermissible. larger narrative was presentedbefore this Court, that is, of the Central Government undermining thecharacter and essence of bicameral legislature as envisaged under

Athe Constitution; and interference of this Court was sought throughexamination of the substance of the legislation and not mere acceptanceof the nomenclature accorded by the Lok Sabha Speaker under Article110(3).

65. nuanced argument was also furthered by petitioners’Bcounsels who highlighted that Tribunals are governed by Article 323-Aand 323-B of the Constitution and laws enacted in this regard cannotbe classified as money bills. Further, Parliament in making changes toTribunals can trace its competence to Entry 11-A of List III of theConstitution which deals with administration of justice, and not financialmatters.C66. Part XIV was also impugned for its effect of terminating theservices of presiding officers and members of various now-defunctTribunals, which was claimed as being direct interference in theindependence of the judiciary.

D67. Section 184(1) of the Finance Act, 2017, in so far as itempowers the Central Government to make rules to provide forqualifications and procedure of appointment, conditions of service, termsand salaries was contended to suffer from the vice of excessivedelegation. It was stated that the said provision takes away all judicialsafeguards and makes the Tribunals amenable to the whims and fanciesEof the largest litigant, the State. This was contended as being againstthe grain of the Constitution, besides affecting administration of justice.In the alternative, counsels also contended that the present formulationof Rules under Section 184 was ultra vires the parent enactment andthe binding dictum expressed by this Court in catena of judgments.F

68. Further, during the course of arguments, various otherdeficiencies and contradictions in the administration of Tribunals andcertain anomalous situations like providing direct appeals to this Courtwere highlighted, which were contended as being against the spirit ofthe Constitution. Petitioners, in addition to challenging the vires of theGFinance Act, 2017 also prayed for mandamus directing the State tomandatorily conduct ‘Judicial Impact Assessment’ of legislations.

UNION OF INDIA’S CASE:

69. Learned Attorney General, on the other hand, passionatelydrew attention to the existence of over 40 tribunals, statutoryHcommissions, and authorities functioning under the Government of India,

each of which has been established under different enactment and isgoverned by different set of rules. As result, the conditions of service,modes of appointment, tenures etc. of members and presiding officersin different Tribunals were shown as vastly varying from one to another,giving rise to several anomalies and distortions. He put forth multipleexamples; like how while members of some of the Commissions/Tribunals enjoy the status of Supreme Court judges, others like themembers of the Debt Recovery Tribunal have only been kept at parwith District Court judges. Similarly, while person once appointed tothe ITAT can continue till the age of superannuation, tenures of personsappointed to the APTEL was merely three years. The Attorney Generalattributed such inconsistencies as drafting errors and further stressedthe need to streamline and harmonise the applicable rules, which is whatwas attempted through the Finance Act, 2017.

70. He also highlighted the inherent contradiction in accordingstatus and rank equivalent to that of Constitutional Court judges tomembers and presiding officers of such Tribunals and regulatory bodies.It was argued that the two have different functions and roles in ourConstitutional setup. While the Supreme Court had strength of 31judges (when the matter was argued), he pointed out, that there aremore than 50 functionaries enjoying the conditions of service of aSupreme Court judge and more than 150 such functionaries who havebeen brought at par with High Court judges. After placing on recordmultiple problems arising in the administration of justice as result ofsuch practice, he advocated the need to keep ‘rank’ and ‘status’separate from ‘salary’ and ‘allowances’.

71. Learned Attorney General further relied upon an order passedby this Court in Rajiv Garg vs. Union of India (WP No. 120 of 2017)on 08[th] February, 2013 directing that decision be taken by the CentralGovernment on uniformity of service conditions in various tribunals.Reliance was also placed on the 13[th] Report of the 2[nd] AdministrativeReforms Commission submitted in April 2009 which recommendedgreater uniformity in service conditions in various tribunals. It waspointed out that, in fact, the Tribunals, Appellate Tribunals and otherAuthorities (Conditions of Service) Bill, 2014 was introduced in the RajyaSabha on 14[th] February, 2014 but somehow could not be passed.Introducing separate amendments for each of these Tribunals wouldhave been unwieldy and impractical, besides resulting in severalinconsistencies. Resultantly, he submits holistic view was taken and

Aa single enactment was sought to be introduced in order to harmoniouslybring uniformity.

72. On behalf of the Union, the petitioners’ contentions wereelaborately refuted. It was submitted that it is settled principle ofConstitutional interpretation that terms of the Constitution, includingBClauses (a) to (g) of Article 110(1), must be interpreted in their widestamplitude, with the result that when the principal enactment had thedominant character of ‘money bill’, all matters incidental thereto andinserted therein would also draw the colour and characteristic of a‘money bill’.

C73. In the alternative, he took aid of Clause (3) of Article 110 tocontend that the Speaker of the Lok Sabha was the final and onlyConstitutional authority to adjudge the nature of bill sought to beintroduced under Article 109. Such decision was both final and hencenot subject to any judicial review by any Court; even otherwise suchDexercise of passing legislations and certifications by the Speaker were“proceedings in Parliament” and could hence “not be called in question”before this Court in view of Article 122(1).74. Both sides have extensively relied upon case law andConstitutional history to substantiate their respective pleas. RelevantEportions of the same are being referred to in the latter parts of thisjudgment whenever necessary.

BRIEF REFERENCE TO INTERLOCUTORY ORDERS:

75. After considering the suggestions filed during the course ofhearing in SLP(C) No. 15804/2017, this Court passed an interim orderFon 9 February 2018, suggesting:

“1. Staying the composition of Search-cum-SelectionCommittee as prescribed in Column 4 of the Scheduleto the Tribunal, Appellate Tribunal and Other Authorities(Qualification, experience and other conditions of serviceGof members) Rules, 2017 both in respect of Chairman/Judicial Members and Administrative Members. Afurther direction to constitute an interim Search-cum-Selection Committee during the pendency of this W.P.in respect of both Judicial/Administrative members asHunder :

a. Chief Justice of India or his nominee - Chairman

b. Chairman of the Central Administrative Tribunal -Member

c. Two Secretaries nominated by the Government ofIndia - Members

2. Appointment to the post of Chairman shall be made bynomination by the Chief Justice of India.

3. Stay the terms of office of 3 years as prescribed inColumn 5 of the Schedule to the Tribunal, AppellateTribunal and other Authorities (Qualification, experienceand other conditions of service of members) Rules, 2017.A further direction fixing the term of office of allselectees by the aforementioned interim Search-cum-Selection Committee and consequent appointees as 5years.

4. All appointments to be made in pursuance to theselection made by the interim Search-cum-SelectionCommittee shall be with conditions of service asapplicable to the Judges of High Court.

5. further direction to the effect that all the selectionsmade by the aforementioned interim selection committeeand the consequential appointment of all the selecteesas Chairman/Judicial/Administrative members for termof 5 years with conditions of service as applicable toJudges of High Court shall not be affected by the finaloutcome of the Writ Petition.”

76. The learned Attorney General agreed with all except thefourth and fifth suggestions reproduced above, and suggested certainmodifications as follows:

“4. All appointments to be made in pursuance to theselection made by the interim Search-cum-SelectionCommittee shall abide by the conditions of service asper the old Acts and the Rules.

5. further direction to the effect that all the selectionsmade by the aforementioned interim selection committee

and the consequential appointment of all the selecteesas Chairman/Judicial/Administrative members shall befor period as has been provided in the old Acts andthe Rules.”

77. This Court agreed to the learned Attorney General’sBsuggestions and accordingly made the following operative directions:

“In view of the aforesaid, we accept the suggestions and directthat the same shall be made applicable for selection of theChairpersons and the Judicial/Administrative/ Technical/ExpertMembers for all tribunals.”

78. Since many of the Search-cum-Selection Committees hadinitiated selection processes and had completed substantial portion ofthe exercise prior to the above order dated 9[th] February, 2018, this Court,on 12[th] February, 2018 passed the following order:

“As some Committees had proceeded, the matter was listed forDfurther hearing. We have heard learned counsel for the parties.Mr. Rohit Bhat, learned counsel assisting the learned AttorneyGeneral for the Union of India shall file the status of the selectionprocess by the Committees, by 13.2.2018.

Mr. Arvind Datar, Mr. C.A. Sundaram and Mr. Mohan Parasaran,Elearned senior counsel shall also file through their Advocates-on-Record joint memorandum with regard to which tribunals arecovered and not covered. The same shall be filed by 10.30 a.m.on 13.2.2018.

Orders reserved.”F

79. Further, vide order dated 20[th] March 2018, this Court clarifiedits previous order of 9[th] February 2018 and directed:

“(iii) The tenure of the Chairperson and the Judicial/Administrative/Expert/Technical Members of all the Tribunalsshall be for period of five years or the maximum age that wasGfixed/determined under the old Acts and Rules;”

80. The following directions were also issued on 16[th] July, 2018with regard to the age of superannuation of Members of the ITAT:

“At this juncture, we may note that there is some confusion withHregard to the Income Tax Appellate Tribunal (ITAT) as regards

the age of superannuation. We make it clear that the personselected as Member of the ITAT will continue till the age of 62years and the person holding the post of President, shall continuetill the age of 65 years.”

81. Corollary to the order dated 16[th] July 2018, six officers whohad been selected as Member (Judicial) in CESTAT, also demandedthe age of superannuation as noted in the case of Members of ITAT,to be applicable to them. Following the same dictum, vide order dated21[st] August 2018, clarification regarding the age of superannuation forMembers of CESTAT, Armed Forces Tribunal and CentralAdministrative Tribunal was made. The relevant portion of that orderreads as follows:

“CESTAT:

2. In IA 113281 of 2018, the applicant is an Additional Districtand Sessions Judge in the State of West Bengal, who has beenselected as Member (Judicial) in the CESTAT. The notificationof appointment of six officers who have been selected asMember (Judicial), including the applicant, stipulates that they shallhold office for period of five years or till attaining the age of62 years, whichever is earlier “in terms of the Hon’ble SupremeCourt’s order dated 20 March 2018". member of the judicialservice would have ordinarily continued until the date ofsuperannuation in the state judicial service, subject to the servicerules. It would be manifestly inappropriate to adopt aninterpretation as result of which, upon assuming office asMember (Judicial) in CESTAT the officer will have tenurewhich will expire after five years, if it falls prior to attaining theage of 62 years. We, accordingly, are of the view that theclarification issued for the ITAT in the order dated 20 March 2018needs to be reiterated in the case of the members of theCESTAT, which we do. We clarify that person selected asMember of the CESTAT will continue until the age of 62 yearswhile person holding the post of President shall continue untilthe age of 65 years.

AFT:

3. Members of the Armed Forces Tribunal shall hold office untilthe attainment of the age of 65 years. Chairpersons who have

Abeen former Judges of the Supreme Court shall hold office untilthe attainment of the age of 70 years.CAT:

4. In the case of the Central Administrative Tribunal, we clarifythat the old rules/provisions shall continue to apply.”

CONCEPT NOTE OF LEARNED AMICUS CURIAE :

82. On the request of this Court, learned Senior Advocate ArvindDatar has provided invaluable assistance as the Amicus Curiae. In hisdetailed Concept Note, he has stressed the need for setting up anindependent oversight body in light of the observations in L. ChandraCKumar (supra), and as reiterated in Madras Bar Association v. Unionof India (2015) (supra) to the effect that Tribunals or their membersshould not be required to seek facilities from the sponsoring or parentministries or concerned departments.83. The Concept Note also emphasised the need to implementDthe ‘74[th] Report of the Parliamentary Standing Committee’ whichrecommended the creation of `National Tribunal Commission’ (NTC)to oversee all the Tribunals in the country. Mr. Datar further suggeststhat such National Tribunal Commission may consist of the following:

�Two retired Supreme Court Judges (with the senior-mostEamongst them to be Chairman).

�Two retired High Court Judges (Members).

�Three members representing the Executive.

84. It is further suggested in the concept note that such membersbe appointed by the following Selection Committee :F

�Chief Justice of India (as Chairperson of the Committeewho exercises casting vote);

�Two senior-most judges of the Supreme Court after theChief Justice of India;

�Current Law Minister; and

�Leader of the opposition.

85. The Concept Note also contains the following suggestions:

�The NTC should oversee functioning of central Tribunalsand similar body may be constituted for State Tribunals.

�The NTC should deal with appointment and removal ofmembers of the Tribunals by constituting sub-committees.

�The member of the Tribunals should be recruited bynational competition. Once recruited they shouldcontinue till the age of 62/65 years subject to theirefficiency and satisfactory working.

�The Tribunals should not be haven for retired persons andappointment process should not result in decisions beinginfluenced if the Government itself is litigant and theappointing authority at the same time.

�There should be restriction on acceptance of anyemployment after retirement.

�Bypassing of High Court jurisdiction under Article 226/227 need to be remedied by statutory amendmentexcluding direct appeals to this Court.

�There should be proper mechanism for removal ofmembers.

86. The aforementioned Concept Note of Learned Amicus Curiaewas considered by this Court on 07.05.2018, resulting in the followingobservations:-

“We broadly approve the concept of having an effective andautonomous oversight body for all the Tribunals with suchexceptions as may be inevitable. Such body should be responsiblefor recruitments and oversight of functioning of members of theTribunals. Regular cadre for Tribunals may be necessary. Learnedamicus suggests setting up of all India Tribunal service on thepattern of U.K. The members can be drawn either from theserving officers in Higher Judicial Service or directly recruitedwith appropriate qualifications by national competition. Theirperformance and functioning must be reviewed by anindependent body in the same was as superintendence by theHigh Court under Article 235 of the Constitution. Direct appealsmust be checked. Members of the Tribunals should not only beeligible for appointment to the High Courts but mechanismshould be considered whereby due consideration is given to themon the same pattern on which it is given to the members of Higher

AJudicial Service. This may help the High Courts to have requisitetalent to deal with issues which arise from decisions of Tribunals.A regular cadre for the Tribunals can be on the pattern of cadresfor the judiciary. The objective of setting up of Tribunals to havespeedy and inexpensive justice will not in any manner behampered in doing so. Wherever there is only one seat of theBTribunal, its Benches should be available either in all states or atleast in all regions wherever there is litigation instead of only oneplace.”

87. On 07.05.2018 itself, the following additional issues were alsosuggested for consideration:

“(i) Creation of regular cadres laying down eligibility forrecruitment for Tribunals;

(ii) Setting up of an autonomous oversight body forrecruitment and overseeing the performance anddiscipline of the members so recruited and other issuesrelating thereto;

(iii) Amending the scheme of direct appeals to this Courtso that the orders of Tribunals are subject to jurisdictionof the High Courts;

(iv) Making Benches of Tribunals accessible to commonman at convenient locations instead of having only onelocation at Delhi or elsewhere. In the alternative,conferring jurisdiction on existing courts as specialCourts or Tribunals.”

F88. Thereafter, this Court opined the following recourse :-

“20. The above issues may require urgent setting up of acommittee, preferably of three members, one of whom must beretired judge of this Court who may be served in Tribunal. SuchCommittee can have inter action with all stakeholders and suggestGa mechanism consistent with the constitutional scheme asinterpreted by this Court in several decisions referred to aboveand also in the light of recommendations of expert bodies. Thisexercise must be undertaken in time bound manner.”

89. This was followed by yet another order of 16[th] May, 2018Hrecommending constitution of Committee within two months and

expecting the Committee to give its report within three monthsthereafter.

FORMULATION OF ISSUES:

90. The core issues canvassed at the Bar concern theconstitutionality of the Finance Act, 2017, particularly whether it satisfiesthe test of ‘money bill’ under Article 110 of the Constitution? Further,in the eventuality that it is held that the impugned legislation has beenvalidly enacted, then does it through Section 184 excessively delegatelegislative power to the Executive? Finally, whether the Rules thusframed as delegated legislation are ultra vires their parent enactmentsand are liable to be struck down?

91. In addition, learned Counsel for the parties have drawnattention to the need to rationalise the administration of Tribunals,especially the conditions of service, mode of appointment, security oftenure and requisite qualifications of members and presiding officersof various Tribunals. They have also highlighted the growing menaceof pendency before this Court arising from direct statutory appeals fromorders of such Tribunals.

92. In light of these arguments put forth by learned Counsels andthe suggestions of by the Amicus Curiae, the following issues arise forour consideration:

I. Whether the ‘Finance Act, 2017’ insofar as it amendscertain other enactments and alters conditions of serviceof persons manning different Tribunals can be termedas ‘money bill’ under Article 110 and consequently isFvalidly enacted?

II. If the answer to the above is in the affirmative thenWhether Section 184 of the Finance Act, 2017 isunconstitutional on account of Excessive Delegation?

III. If Section 184 is valid, Whether Tribunal, AppellateTribunal and other Authorities (Qualifications,Experience and other Conditions of Service ofMembers) Rules, 2017 are in consonance with thePrincipal Act and various decisions of this Court onfunctioning of Tribunals?

IV. Whether there should be Single Nodal Agency foradministration of all Tribunals?

V. Whether there is need for conducting Judicial ImpactAssessment of all Tribunals in India?

VI. Whether judges of Tribunals set up by Acts ofBParliament under Articles 323-A and 323-B of theConstitution can be equated in ‘rank’ and ‘status’ withConstitutional functionaries?

VII. Whether direct statutory appeals from Tribunals to theSupreme Court ought to be detoured?

VIII. Whether there is need for amalgamation of existingTribunals and setting up of benches.

ISSUE I: WHETHER THE ‘FINANCE ACT, 2017’INSOFAR AS IT AMENDS CERTAIN OTHERENACTMENTS AND ALTERS CONDITIONS OFDSERVICE OF PERSONS MANNING DIFFERENTTRIBUNALS CAN BE TERMED AS ‘MONEY BILL’UNDER ARTICLE 110 AND CONSEQUENTLY ISVALIDLY ENACTED?

93. The Indian Parliament is bicameral legislature. In order tobecome law, as per the general legislative scheme as provided underEArticle 107, an ordinary bill must be passed by simple majority ofboth the Rajya Sabha and the Lok Sabha and must then receivePresidential ratification. Ordinary bills can be introduced either by thegovernment or by any private member in either house of Parliament.After securing requisite majority in the House it is introduced in, ordinaryFbills are then sent to the other House for its assent. The Constitution,however, makes two exemptions to this general legislative procedurefor formulation of laws.

94. Article 368 provides for the Constituent power of theParliament to amend the Constitution itself and concomitantly requiresa higher threshold of majority in both houses of Parliament, and in certainGcases also require the assent of simple majority of the Statelegislatures. Article 110, in stark contrast, reverses the threshold andsignificantly reduces the role of the Rajya Sabha for ‘money bills’.Articles 109 and 110 provide that:

“109. (1) Money Bill shall not be introduced in the Council ofHStates.

(2) After Money Bill has been passed by the House ofthe People it shall be transmitted to the Council of Statesfor its recommendations and the Council of States shallwithin period of fourteen days from the date of itsreceipt of the Bill return the Bill to the House of thePeople with its recommendations and the House of thePeople may thereupon either accept or reject all or anyof the recommendations of the Council of States.

(3) If the House of the People accepts any of therecommendations of the Council of States, the MoneyBill shall be deemed to have been passed by both Houseswith the amendments recommended by the Council ofStates and accepted by the House of the People.

(4) If the House of the People does not accept any of therecommendations of the Council of States, the MoneyBill shall be deemed to have been passed by both Housesin the form in which it was passed by the House of thePeople without any of the amendments recommendedby the Council of States.

(5) If Money Bill passed by the House of the People andtransmitted to the Council of States for itsrecommendations is not returned to the House of thePeople within the said period of fourteen days, it shallbe deemed to have been passed by both Houses at theexpiration of the said period in the form in which it waspassed by the House of the People.

110. (1) For the purposes of this Chapter, Bill shall be deemedto be Money Bill if it contains only provisions dealing with allor any of the following matters, namely:—

(a) the imposition, abolition, remission, alteration or regulationof any tax;

(b) the regulation of the borrowing of money or the givingof any guarantee by the Government of India, or theamendment of the law with respect to any financialobligations undertaken or to be undertaken by theGovernment of India;

A(c) the custody of the Consolidated Fund or the ContingencyFund of India, the payment of moneys into or thewithdrawal of moneys from any such Fund;

(d) the appropriation of moneys out of the ConsolidatedFund of India;

(e) the declaring of any expenditure to be expenditurecharged on the Consolidated Fund of India or theincreasing of the amount of any such expenditure;

(f) the receipt of money on account of the ConsolidatedFund of India or the public account of India or theCcustody or issue of such money or the audit of theaccounts of the Union or of State; or

(g) any matter incidental to any of the matters specified insub-clauses (a) to (f).

D(2) Bill shall not be deemed to be Money Bill by reason onlythat it provides for the imposition of fines or other pecuniarypenalties, or for the demand or payment of fees for licences orfees for services rendered, or by reason that it provides for theimposition, abolition, remission, alteration or regulation of any taxby any local authority or body for local purposes.

E(3) If any question arises whether Bill is Money Bill or not,the decision of the Speaker of the House of the People thereonshall be final.

(4) There shall be endorsed on every Money Bill when it istransmitted to the Council of States under article 109, and whenFit is presented to the President for assent under article 111, thecertificate of the Speaker of the House of the People signed byhim that it is Money Bill.”

95. ‘Money bills’ as defined under Article 110(1) thus include billswhich contain “only” provisions covered by sub-clauses (a) to (g). TheseGmoney bills can be introduced only in the Lok Sabha and the role ofthe Rajya Sabha is merely consultative. Unlike in the case of ordinarybills where the Upper House can block the proposed legislation andact as check on the power of the directly elected Lower House, incase of money bills, the Rajya Sabha merely has the ability toHrecommend amendments, that too only within fourteen days. In case

the Lok Sabha refuses to accept those recommendations or in case norecommendations are made by the Rajya Sabha within the period offourteen days, the money bill can be directly sent for Presidentialratification and thereafter it becomes valid law.

96. Such an exceptional provision has its roots in British traditionand is an inheritance of the Westminster form of government. TheParliament Act of 1911 was formulated by the United KingdomParliament in response to the Constitutional crisis of 1909 whereby theunelected Upper House (House of Lords) had stalled importantbudgetary bills passed by the elected Lower House (House ofCommons), causing governmental crisis and forcing the electedgovernment to resign and seek re-election. Through Section 3, the saidenactment required the Speaker of the House of Commons to certifythat the bill was ‘money bill’ and post such certification, the UpperHouse would forfeit its ability to amend or veto the bill. Further, it alsoallowed ‘public bills’ to become law irrespective of refusal by the Houseof Lords, in case the House of Commons had passed the same draftthrice in minimum span of two years. It must be noted that the Indianadaptation under Article 109 and 110 do not have exceptions for ‘publicbills’ nor do they explicitly provide that such certification shall not beamenable to judicial review unlike in the Parliament Act of 1911.

97. The Constitution of India by Article 110(4), requires that every‘money bill’ be certified to be so by the Speaker before it is transmittedto the Rajya Sabha for their non-binding consideration. The Speakerof the Lok Sabha hence is the only appropriate authority to decide thenature of bill under Article 110(3).

98. In the present dispute, the Union has relied upon the finalityaccorded to such certification by the terminology of Article 110(3) whichprovides that in case of any dispute as to the nature of bill, “thedecision of the Speaker of the House of the People thereon shallbe final.” The Lok Sabha Speaker, in fact, on dispute having so arisenhas adjudicated the then Finance Bill, 2017 to be ‘money bill’. Further,the Union also places emphasis on Article 122(1) of the Constitutionwhich provides that:

“122. (1) The validity of any proceedings in Parliament all notbe called in question on the ground of any alleged irregularity ofprocedure.”

A99. The Union thus, alternatively, contends that the challengebefore this Court to the certification of the Speaker of the Finance Bill,2017 as ‘money bill’ and its consequent passage without the assentof the Rajya Sabha would at best amount to an ‘irregularity ofprocedure’ of ‘proceedings in Parliament’ and hence cannot be inquiredinto by this Court.B

100. It must be noted once again, that like Articles 109 and 110,Article 122 of our Constitution too can be traced to the Constitutionalhistory and developments in the United Kingdom. Certain Members ofParliament were tried and imprisoned for their remarks in Parliamentduring the seventeenth century resulting in the enactment of Article 9Cof the Bill of Rights, 1688 which specifies that “…. proceedings inParliament ought not to be impeached or questioned in anyCourt….” Article 212(1) of the Constitution of India provides directcorollary of Article 122(1) with respect to State legislatures.

101. This provision was initially interpreted in MSM Sharma vs.DDr. Shree Krishna Sinha[20] to mean that legislative business cannotbe invalidated even if it is not strictly in compliance with law for suchissues were within the “special jurisdiction” of the legislature to regulateits own business.

102. The Union’s contention that Article 122 would exempt from

Ejudicial scrutiny passage of bills is far-fetched contention. If such ablanket exemption were to be granted, then it would open the floodgatesto deviation from any Constitutional provision governing the functioningof Parliament and its legislative procedure. Since the Constitutionexplicitly provides self-contained detailed procedure for enactmentof legislation, and does not suggest that mere assent of the PresidentFto law, by whatsoever method adopted, would become valid law, itis necessary that this Court being the highest Constitutional forum forjudicial review is provided with enough space for enforcement andprotection of the Constitutional scheme. perusal of the expressionsused in Article 122 and comparison with its British roots make it clearGthat the “proceedings” referred to include the power of the Parliamentto frame its own rules, set out procedures for debate and discussionand powers to enforce disciple. Section 3 of the Parliament Act, 1911in the United Kingdom makes the decision of the Speaker of the Houseof Commons ‘conclusive for all purposes’ and ‘shall not be questionedin any court of law’. The Constitution of India however, under Article110(3), states that ‘if any question arises whether Bill is MoneyBill or not, the decision of the Speaker of the House of the Peoplethereon shall be final’. different syntax seems to indicate that ourConstitution makes the decision of the Speaker as to the nature of Billfinal qua members of both the Houses of Parliament, though it is notconclusive and unchallengeable before the Courts. The scope of judicialreview of decisions that enjoy the status of finality under the Constitutionhas been examined by this Court on several occasions. We would liketo refer to few precedents in this regard. In Raja Ram Pal v. LokSabha[21], this Court had examined the ambit and scope of judicial reviewin matters of Parliamentary privileges and powers under Article 105 ofthe Constitution. The Court had held that under Article 122(1) and212(1), immunity that has been granted is limited to ‘irregularity ofprocedure’ and does not extend to substantive illegality orunconstitutionality by observing:

“Any attempt to read limitation into Article 122 so as torestrict the court’s jurisdiction to examination of theParliament’s procedure in case of unconstitutionality, asopposed to illegality would amount to doing violence to theconstitutional text. Applying the principle of “expressio uniusest exclusio alterius” (whatever has not been included hasby implication been excluded), it is plain and clear thatprohibition against examination on the touchstone of“irregularity of procedure” does not make taboo judicialreview on findings of illegality or unconstitutionality.”

In Union of India v. Jyoti Prakash Mitter[22], this Court hadexamined clause (3) to Article 217 which makes the decision of thePresident after consultation with the Chief Justice of India ‘final’, ifthe question arises as to the age of Judge of High Court. It wasobserved that notwithstanding the declared finality of the order of thePresident, the Court can, in appropriate cases when the order has beenpassed on collateral considerations or the rules of natural justice arenot observed or when the judgment of the President is coloured by theadvice or representation made by the Executive or is made with noevidence, set aside the order of the President made under Article 217(3).

21 (2007) 3 SCC 18422 (1971) 1 SCC 396

AThe Courts, however, do not sit in appeal over the judgment of thePresident or decide the weight to be attached to the evidence which isentirely within the domain of the President.

Reading of the above decisions exposit that ‘finality’ of decisionsunder the Constitution has been subject to judicial review by the Courts.BHowever, the jurisdiction exercisable by the Courts in such matters israther limited and is subject to the satisfaction of specific conditions asdiscussed. We find no good ground and reason to take different viewwith respect to the power of judicial review against certification of abill as Money Bill by the Speaker under Article 110(4). Article 110(3)which makes this decision final qua both the Houses of Parliament andCArticle 122(1) which prohibits review by the courts in matters of‘irregularity of procedure’ cannot operate as bar when challenge ismade on the ground of illegality or unconstitutionality under theConstitutional scheme.103. Determining whether an impugned action or breach is anDexempted irregularity or justiciable illegality is matter of judicialinterpretation and would undoubtedly fall within the ambit of Courts andcannot be left to the sole authority of the Parliament to decide. Such aposition has also been taken in the United Kingdom by the House ofLords in R (Jackson) vs. Attorney General[23]where notwithstandingEthe explicit bar to judicial consideration of all Parliamentary proceedings(and not just procedural irregularities as under the Constitution of India),the Court assumed jurisdiction whilst noting that interpretation of statutesdealing with legislative processes would fall within the domain of theCourts; statutory interpretation being judicial exercise, regardless ofthe immunities granted to parliamentary proceedings under the Bill ofFRights.

104. It would hence be gainsaid that gross violations of theConstitutional scheme would not be mere procedural irregularities andhence would be outside the limited ambit of immunity from judicialscrutiny under Article 122(1). In the case at hand, jurisdiction of thisGCourt is, hence, not barred.

105. On the substantive question of whether the Finance Act,2017 was ‘money bill’ under Article 110(3) it must be noted that untilthe turn of the twenty-first century, this Court took consistent position

H23 [2005] UKHL 56.

that Article 110(3) of the Constitution would act as an express baragainst judicial inquiry into the correctness of the certificate of ‘moneybill’ given by the Speaker of the Lok Sabha.

106. In Mohd. Saeed Siddiqui vs. State of Uttar Pradesh[24], athree-judge bench refused to judicially review the speaker’s certificationof the Uttar Pradesh Lokayukta and Up-Lokayuktas (Amendment) Billas Money bill. The phrase “proceedings of the Legislature” underArticle 212(1) was interpreted to include “everything said or done ineither house”. This Court thus held:

“43. As discussed above, the decision of the Speaker of theLegislative Assembly that the Bill in question was Money Billis final and the said decision cannot be disputed nor can theprocedure of the State Legislature be questioned by virtue ofArticle 212. Further, as noted earlier, Article 255 also shows thatunder the Constitution the matters of procedure do not renderinvalid an Act to which assent has been given to by the Presidentor the Governor, as the case may be. Inasmuch as the Bill inquestion was Money Bill, the contrary contention by thePetitioner against the passing of the said Bill by the LegislativeAssembly alone is unacceptable.”

107. This was relied upon in Yogendra Kumar Jaiswal vs. Stateof Bihar[25], wherein division bench of this Court refused to judiciallyreview the certification of ‘money bill’ accorded by the Speaker to theOrissa Special Courts Bill noting that it was settled post Mohd. Siddiqui(supra) that any such certification would be an “irregularity” and nota “substantiality”.

108. co-ordinate bench of this Court in Justice Puttaswamy(Retd.) and Anr. v. Union of India[26], was tasked with similarquestion of the certification of ‘money bill’ accorded to the Aadhaar(Targeted Delivery of Financial and Other Subsidies, Benefits andServices) Act, 2016 by the Speaker of the Lok Sabha. The majorityopinion after noting the important role of the Rajya Sabha in bicamerallegislative setup, observed that Article 110 being an exceptional provision,must be interpreted narrowly. Although the majority opinion did not

24 (2014) 11 SCC 415.25 (2016) 3 SCC 18326 (2019) 1 SCC 1.

Aexamine the correctness of the decisions in Md. Siddiqui (supra) andYogendra Kumar Jaiswal (supra) or conclusively pronounce on thescope of jurisdiction or power of this Court to judicially reviewcertification by the Speaker under Article 110(3), yet, it independentlyreached conclusion that the impugned enactment fell within the four-corners of Articles 110(1) and hence was ‘money bill’. The minorityBview rendered, however, explicitly overruled both Md. Siddiqui (supra)and Yogendra Kumar Jaiswal (supra).

109. The majority opinion in Puttaswamy (supra) by examiningwhether or not the impugned enactment was in fact ‘money bill’ underArticle 110 without explicitly dealing with whether or not certificationCof the speaker is subject to judicial review, has kept intact the powerof judicial review under Article 110(3). It was further held therein thatthe expression ‘money bill’ cannot be construed in restrictive senseand that the wisdom of the Speaker of the Lok Sabha in this regardmust be valued, save where it is blatantly violative of the scheme ofDthe Constitution. We respectfully endorse the view in Puttaswamy(supra) and are in no doubt that Md. Siddiqui and Yogendra KumarJaiswal in so far as they put decisions of the Speaker under Article110(3) beyond judicial review, cannot be relied upon.

110. It must be emphasized that the scope of judicial review inEmatters under Article 110(3) is extremely restricted, with there being aneed to maintain judicial deference to the Lok Sabha Speaker’scertification. There would be presumption of legality in favour of theSpeaker’s decision and onus would undoubtedly be on the personchallenging its validity to show that such certification was grosslyunconstitutional or tainted with blatant substantial illegality. Courts oughtFnot to replace the Speaker’s assessment or take second plausibleinterpretation. Instead, judicial review must be restricted to only the veryextreme instance where there is complete disregard to theConstitutional scheme itself. It is not the function of ConstitutionalCourts to act as appellate forums, especially on the opinion of theGSpeaker, for doing so would invite the risk of paralyzing the functioningof the Parliament.

111. In light of the aforementioned narrow scope of inquiry andthe high burden to be discharged by the petitioner(s) against theSpeaker’s certification, we may now examine the challenge laid to theHFinance Act, 2017.

112. Provisions of Part XIV can be broken down into three broadcategories. First, abolition and merger of existing Tribunals; second,uniformizing and delegating to the Central Government through theRules the power to lay down qualifications; method of appointment andremoval, and terms and conditions of service of Presiding Officers andmembers; and third, termination of services and payment ofcompensation to presiding officers and members of certain tribunals thathave now become de-funct.

113. Interpretation of Article 110 was made by coordinateConstitution Bench in K.S. Puttaswamy (Aadhaar-5) and is relied uponby both sides.

114. The majority judgment in K.S. Puttaswamy (Aadhaar-5)under the heading ‘Money Bill’, in paragraph 448 and then in paragraphs452 to 461, had recorded the submissions made by the learned counsel,including the submission made on behalf of the petitioners relying uponthe word ‘only’ appearing in Article 110 which defines ‘Money Bill’.With regard to the interpretation to be given to the meaning of the word‘only’, reliance was placed on Hari Ram v. Babu Gopal Prasad[27]and M/s Saru Smelting (P) Ltd. v. Commissioner of Sales Tax,Lucknow[28]. The majority judgment had thereupon referred to thepower of judicial review notwithstanding the use of the word ‘final’ withreference to the power of the Speaker under Article 110(3) of theConstitution, an aspect which we have already answered earlier, andexamined Section 7 of the Aadhaar Act to observe “it is also acceptedby the petitioners that Section 7 is the main provision of the Act”.Thereafter, reference was made to the other provisions of the AadhaarAct to record the majority opinion that the bill in question was rightlyintroduced as “Money Bill”. The majority judgment, therefore, did notelucidate and explain the scope and ambit of sub-clauses (a) to (f) toclause (1) of Article 110 of the Constitution, legal position and facetwhich arises for consideration in the present case and assumesconsiderable importance.

115. Ashok Bhushan, J., in his concurring judgment, fromparagraph 886 onwards, had examined the issue of “Money Bill” andits justiciability and as noticed above, overruled Mohd. Saeed Siddiqui

27 (1991) Supp. 2 SCC 608

28 (1993) Supp. 3 SCC 97

A(supra) and Yogesh (supra) as not laying down the correct law byrelying upon the decisions of this Court in Kihoto Hollohan v. Zachillhuand Others[29]and Raja Ram Pal (supra). Referring to the definitionof “Money Bill” and the meaning and purpose of the word ‘only’ usedin Article 110(1) of the Constitution, Ashok Bhushan, J. had observedthat legislative intent was that the main and substantive provision of anBenactment should only be any or all of the sub-clauses from (a) to (f).In the event the main or substantive provisions of the Act are notcovered by sub-clauses (a) to (f), the bill cannot be said to be “MoneyBill” {See paragraph 905}. It was further observed that the use of theword ‘only’ in Article 110(1) has its purpose, which is clear restrictionCfor bill to be certified as “Money Bill” {See paragraph 906}.Referring to the Aadhaar Act, it was observed that it veers around thegovernment’s constitutional obligation to provide for subsidies, benefitsand services to individuals and other provisions are only incidentalprovisions to the main provision. Therefore, the Aadhaar Bill was rightlycertified by the Speaker as “Money Bill”.D

116. Dr. D.Y. Chandrachud, J., in his minority opinion on the saidquestion, referring to the word ‘only’ in Article 110(1) of the Constitutionhad observed that the pith and substance doctrine which is applicableto legislative entries would not apply when deciding the question whetheror not particular bill is “Money Bill”. Referring to sub-clause (e) ofEArticle 110(1), it was held that the Money Bill must deal with thedeclaration of any expenditure to be charged on the Consolidated Fundof India (or increasing the amount of expenditure) and, therefore,Section 7 of the Aadhaar Act did not have the effect of making the billa Money Bill as it did not declare the expenditure incurred on services,Fbenefits or subsidies to be charge on the Consolidated Fund of India.Section 7 mandates Aadhaar for availing services, benefits or subsidieswhich were already charged to the Consolidated Fund of India.However, this view was not accepted by the majority judgment.117. In the context of Article 110(1) of the Constitution, use ofGthe word ‘only’ in relation to sub-clauses (a) to (f) pose an interesting,albeit difficult question which was not examined and answered bythe majority judgment in K.S. Puttaswamy (Aadhaar-5). While it maybe easier to decipher bill relating to imposition, abolition, remission,alteration or regulation of any tax, difficulties would arise in theH29 (1992) Supp. 2 SCC 651

interpretation of Article 110(1) specifically with reference to sub-clauses(b) to (f) in bill relating to borrowing of money or giving of anyguarantee by the Government of India, or an amendment of lawconcerning financial obligation. In the book, “Practices and Proceduresof Parliament” by Kaul and Shakdher, it is opined that unless the word‘only’ is interpreted in right manner, Article 110(1) would be nullity.A liberal and wide interpretation, on the other hand, possibly expositsan opposite consequence. Relevant portion of the opinion by Kaul andShakdher reads:

“Speaker Mavalankar observed as follows: “Prima facie, itappears to me that the words of article 110 (imposition, abolition,remission, alteration, regulation of any tax) are sufficiently wideto make the Consolidated Bill Money Bill. question may ariseas to what is the exact significance or scope of the word ‘only’and whether and how far that word goes to modify or controlthe wide and general words ‘imposition, abolition, remission, etc.’.I think, prima facie, that the word ‘only’ is not restrictive of thescope of the general terms. If Bill substantially deals with theimposition, abolition, etc., of tax, then the mere fact of theinclusion in the Bill of other provisions which may be necessaryfor the administration of that tax or, I may say, necessary forthe achievement of the objective of the particular Bill, cannot takeaway the Bill from the category of Money Bills. One has to lookto the objective of the bill. Therefore, if the substantial provisionsof the Bill aim at imposition, abolition, etc., of any tax then theother provisions would be incidental and their inclusion cannotbe said to take it away from the category of Money Bill. Unlessone construes the word ‘only’ in this way it might lead to makearticle 110 nullity. No tax can be imposed without makingprovisions for its assessment, collection, administration, referenceto courts or tribunals, etc, one can visualise only one section in aBill imposing the main tax and there may be fifty other sectionswhich may deal with the scope, method, manner, etc., of thatimposition. Further, we have also to consider the provisions ofsub-clause (2) of article 110; and these provisions may be helpfulto clarify the scope of the word ‘only’, not directly but indirectly.”

118. The majority judgment did not advert to the doctrine of pithand substance whereas judgment of Ashok Bhushan, J. had referred

CDE

Ato the dominant purpose. The test of dominant purpose possibly has itsown limitation as many legislation would have more than onedominant objective especially when this prescription is read withreference to sub-clauses (a) to (f) of Article 110(1) of the Constitution.Further, determination of what constitutes paramount and cardinalpurpose of the legislation and the test applicable to determine thisBcompunction and incertitude itself is not free from ambiguity.Difficulties would arise with reference to sub-clauses (b), (c), (d) and(e) of Article 110(1), when we apply the principles of dominant or themain purpose of an enactment test. Sub-clause (c) to Article 110(1)refers to payment of monies into or withdrawal of monies from theCConsolidated Fund of India. Sub-clause (d) refers to appropriation ofmonies out of the Consolidated Fund of India. Sub-clause (e) refers todeclaration of any expenditure charged on the Consolidated Fund ofIndia or increasing of the amount of such expenditure. Sub-clause (f)relates to receipt of money on account of Consolidated Fund of IndiaDor Public Account of India or issue of such money or the audit of theaccounts of the Union or of State. Even clause (b) in its amplitudeincludes an amendment of the law in respect of financial obligationundertaken or to be undertaken by the Government of India. Once wehold that the decision of the Speaker under clause (3) of Article 110 ofthe Constitution though final, is subject to judicial scrutiny on the principleEof constitutional illegality, the provisions of Article 110(1) have to begiven an appropriate meaning and interpretation to avoid and preventover-inclusiveness or under-inclusiveness. Any interpretation would havefar reaching consequences. It is therefore, necessary that there shouldbe absolute clarity with regard to the provisions and any ambiguity andFdebate should be ironed out and affirmatively decided. In case of doubt,certainly the opinion of the Speaker would be conclusive, but that wouldnot be consideration to avoid answering and deciding the scope andambit of “Money Bill” under Article 110(1) of the Constitution. Forexample, taxation enactments like the Income Tax Act would qualifyas Money Bill under sub-clause (a) to clause (1) of Article 110 andGmay include provisions relating to Appellate Tribunals which wouldpossibly qualify as incidental provisions covered under sub-clause (g)to clause (1) of Article 110, even if we exclude application of sub-clause(d) to clause (1) of Article 110. The position it could be argued wouldbe different with reference to provisions for constitution of tribunalHunder the Administrative Tribunal Act or the National Green Tribunal

Act. The bill could however state that the expenditure would be chargedon the Consolidated Fund of India.

119. Another aspect which would arise for consideration wouldbe the legal consequences in case Non-Money Bill certified by theSpeaker as Money Bill, when presented before the Rajya Sabha isspecifically objected to on this count by some Members, but on beingput to vote no recommendations are made in respect of “Non-Money”Bill related provisions.

120. The petitioners had argued on the strength of the concurringopinion by Ashok Bhushan, J. holding that in addition to at least oneprovision falling under Article 110(1) (a) to (f), each of the otherremaining provisions must also be incidental to such core provision(s),and hence must satisfy the requirement of Article 110(g). Such aninterpretation, it was contended, would make the insertion of the word‘only’ under the prefatory part of Article 110(1) purposeful, which wassaid to have been glossed over by the Union. Further, it was contendedthat the manner in which the majority correlated Section 7 of the AadhaarAct to Article 110(1)(e) was erroneous, for it only regulated procedurefor withdrawal by imposing requirement for authentication and didnot declare any expenditure to be charge on the Consolidated Fundof India. They had contended that the interpretation of the enactmentby the majority judgement was constitutionally inexact and that similaranalysis ought not to be made in the present case. The petitioners,therefore, contend that every impugned provision be individuallyexamined and brought either under Article 110(1)(a) to (f) or beincidental thereto, as permitted by Article 110(g). In case even singleprovision did not satisfy either of the aforementioned two categories,then the entire Finance Act, 2017 would be an affront to the prefatoryphraseology of Article 110(1) and must be declared as beingunconstitutional.121. However, the learned Attorney General has propounded thatconstitutionality of the Finance Act, 2017 would be safe if its dominantprovisions, which form the core of the enactment, fall within the ambitof Article 110(1)(a) to (f). Other minor provisions, even if not strictlyincidental, could take the dominant colour and could be passed alongwith it as Money Bill. As per such interpretation, provisions oughtnot to be read in piece-meal manner, and judicial review ought to beapplied deferentially.

A122. Upon an extensive examination of the matter, we notice thatthe majority in K.S. Puttaswamy (Aadhaar-5) pronounced the natureof the impugned enactment without first delineating the scope of Article110(1) and principles for interpretation or the repercussions of suchprocess. It is clear to us that the majority dictum in K.S. Puttaswamy(Aadhaar-5) did not substantially discuss the effect of the word ‘only’Bin Article 110(1) and offers little guidance on the repercussions of afinding when some of the provisions of an enactment passed as a“Money Bill” do not conform to Article 110(1)(a) to (g). Itsinterpretation of the provisions of the Aadhaar Act was arguably liberaland the Court’s satisfaction of the said provisions being incidental toCArticle 110(1)(a) to (f), it has been argued is not convincingly reasoned,as might not be in accord with the bicameral Parliamentary systemenvisaged under our constitutional scheme. Without expressing firmand final opinion, it has to be observed that the analysis in K.S.Puttaswamy (Aadhaar-5) makes its application difficult to the presentcase and raises potential conflict between the judgements ofDcoordinate Benches.

123. Given the various challenges made to the scope of judicialreview and interpretative principles (or lack thereof) as adumbrated bythe majority in K.S. Puttaswamy (Aadhaar-5) and the substantialprecedential impact of its analysis of the Aadhaar Act, 2016, it becomesEessential to determine its correctness. Being Bench of equal strengthas that in K.S. Puttaswamy (Aadhaar-5), we accordingly direct thatthis batch of matters be placed before Hon’ble the Chief Justice ofIndia, on the administrative side, for consideration by larger Bench.

124. There is yet another reason why we feel the matter shouldFbe referred to Constitution Bench of seven judges. L. ChandraKumar (supra), which was decided by Bench of seven Judges, hadalso interpreted on the ambit of supervision by the High Courts underArticle 227(1) of the Constitution to observe that the Constitutionalscheme does not require all adjudicatory bodies which fall within theterritorial jurisdiction of the High Courts should be subject to theirGsupervisory jurisdiction, as the idea is to divest the High Courts of theironerous burden. Consequently, adding to their supervisory functions videArticle 227(1) cannot be of assistance in any manner. Thereafter, itwas observed that different tribunals constituted under differentenactments are administered by the Central and the State Governments,Hyet there was no uniformity in administration. This Court was of the

view that until wholly independent agency for such tribunals can beset up, it is desirable that all such tribunals should be, as far as possible,under single nodal Ministry which will be in position to oversee theworking of these tribunals. For number of reasons, the Court observedthat the Ministry of Law would be the appropriate ministry. The Ministryof Law in turn was required to appoint an independent supervisory bodyto oversee the working of the Tribunals. As noticed above, this has nothappened. In these circumstances, it would be appropriate if theseaspects and questions are looked into by Bench of seven Judges.

ISSUE II: WHETHER SECTION 184 OF THE FINANCEACT, 2017 IS UNCONSTITUTIONAL ON ACCOUNTOF EXCESSIVE DELEGATION?

125. The second challenge against Part XIV of the Finance Act,2017 is predicated on the assertion that this is case of excessivedelegation as it falters on the anvil of “essential legislative functions”and “policy and guidelines” tests.

126. The Eighth Schedule referred to in Section 183 contains alist of 19 tribunals with corresponding enactments under which theywere constituted. Section 183 overrides the provisions of theenactments specified in column (3) of the Eighth Schedule and mandatesthat from the appointed date, the Chairperson, Vice-Chairperson,Chairman, Vice Chairman, President, Vice-President, Presiding Officeror Member of the Tribunal, Appellate Tribunal or, as the case may be,other Authorities as specified in column (2) of the Eighth Schedule shallbe appointed in terms of provisions of Section 184 of the Finance Act.These provisions however, do not apply to those who have already beenappointed to the said posts immediately before the appointed date, thatis the date on which the Central Government may, by notification inthe Official Gazette, bring the said provisions into effect.

127. Section 184, to repeat, reads as under:

“184. Qualifications, appointment, term and conditions ofservice, salary and allowances, etc., of Chairperson, Vice-Chairperson and Members, etc., of the Tribunal, AppellateTribunal and other Authorities.—(1) The Central Governmentmay, by notification, make rules to provide for qualifications,appointment, term of office, salaries and allowances, resignation,removal and the other terms and conditions of service of the

Chairperson, Vice-Chairperson, Chairman, Vice-Chairman,President, Vice-President, Presiding Officer or Member of theTribunal, Appellate Tribunal or, as the case may be, otherAuthorities as specified in column (2) of the Eighth Schedule:

Provided that the Chairperson, Vice-Chairperson, Chairman, Vice-Chairman, President, Vice-President, Presiding Officer orMember of the Tribunal, Appellate Tribunal or other Authorityshall hold office for such term as specified in the rules made bythe Central Government but not exceeding five years from thedate on which he enters upon his office and shall be eligible forreappointment:

Provided further that no Chairperson, Vice-Chairperson,Chairman, Vice-Chairman, President, Vice-President, PresidingOfficer or Member shall hold office as such after he has attainedsuch age as specified in the rules made by the CentralGovernment which shall not exceed,—

(a) in the case of Chairperson, Chairman or President, theage of seventy years;

(b) in the case of Vice-Chairperson, Vice-Chairman, Vice-President, Presiding Officer or any other Member, theage of sixty-seven years:

(2) Neither the salary and allowances nor the other terms andconditions of service of Chairperson, Vice-Chairperson,Chairman, Vice-Chairman, President, Vice-President, PresidingOfficer or Member of the Tribunal, Appellate Tribunal or, as theFcase may be, other Authority may be varied to his disadvantageafter his appointment.”

Section 184 has conferred upon the Central Government powerto make rules by way of notification to provide for (a) qualifications;(b) appointment; (c) term of office; (d) salaries and allowances; (e)resignation; and (f) removal and other terms and conditions of serviceGof the 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 specifiedin column (2) of the Eighth Schedule. The first proviso states that theincumbent officers shall hold office for such terms as may be specifiedHin the rules made by the Central Government but the term shall notexceed five years from the date on which he assumes the office andshall be eligible for reappointment. The second proviso states that thepersons so appointed shall hold office till they attain the age specifiedin the rules made by the Central Government which shall not exceedin the case of Chairperson, Chairman and the President, the age of 70years and in the case of Vice-Chairperson, Vice-Chairman, Vice-President or any other Members, the age of 67 years. Sub-section 2to Section 184 states that the salaries and allowances and other termsand conditions of service of the persons appointed may not be variedto their disadvantage after appointment.

128. Section 185 (1) of the Finance Act is also relevant and reads:

“185. Transitional provisions.— (1) Any person appointed asthe Chairperson or Chairman, President or Vice-Chairperson orVice-Chairman, Vice-President or Presiding Officer or Memberof the Tribunals, Appellate Tribunals, or as the case may be, otherAuthorities specified in column (2) of the Ninth Schedule andholding office as such immediately before the appointed day, shallon and from the appointed day, cease to hold such office andsuch Chairperson or Chairman, President, Vice-Chairperson orVice-Chairman, Vice-President or Presiding officer or Membershall be entitled to claim compensation not exceeding threemonths’ pay and allowances for the premature termination ofterm of their office or of any contract of service.”

The Chairperson or Chairman, President or Vice-Chairperson orVice-Chairman, Vice-President or Presiding Officer or Member of theTribunals/Appellate Tribunals specified in column (2) of the NinthSchedule who hold office as per the above provisions before theappointed date shall cease to do so and will be entitled to compensationnot exceeding three months’ pay and allowance for the prematuretermination of the office or the contract of office. However, we wouldclarify that presently we are not examining constitutional vires of sub-section (1) to Section 185.

129. Section 186 of the Finance Act, 2017 reads as under:

“186. General Power to make rules.— Without prejudice toany other power to make rules contained elsewhere in this Part,the Central Government may, by notification, make rules generallyto carry out the provisions of this Part.”

AThe aforesaid provisions stipulate that without prejudice to anyother power to make rules contained elsewhere in the Part XIV of theFinance Act, 2017, the Central Government may, by notification, makesrules generally to carry out the provisions of the said Part.

130. Reading of the said provisions indicates that except forBproviding the upper age limit and that the person appointed shall nothave tenure exceeding five years from the date on which he entersoffice and shall be eligible for re-appointment, the Finance Act delegatesthe power to specify the qualifications, method of selection andappointment, terms of office, salaries and allowances, removal includingresignation and all other terms and conditions of service to the CentralCGovernment which would act as delegatee of the Parliament. Thegoverning statutory provisions embodied in the existing parent legislationspecified in the column (3) of the Schedule and the rules madethereunder are overwritten and authority and power is conferred onthe Central Government to decide qualifications for appointment,Dprocess for selection, and terms and conditions of service includingsalaries allowance, resignation and removal through delegated orsubordinate legislation. Before we look into the vires of this delegation,it behoves us to recount and reflect on the approach adopted by thisCourt in gauging the validity of delegated legislation.E131. This Court addressed this conundrum the first time in Inre: The Delhi Laws Act,[30] wherein seven-Judge Bench deliveredseven different judgements clearly evincing the divergence of opinionon the issue. Albeit, the majority view, as clarified and held by J. M.Shelat, J. speaking for the majority in B. Shama Rao v. UnionTerritory of Pondicherry,[31] can be deduced as under:F

“In view of the intense divergence of opinion except for theirconclusion partially to uphold the validity of the said laws it isdifficult to deduce any general principle which on the principleof state decision can be taken as binding in for future cases. Itis trite to say that decision is binding not because of itsGconclusion but in regard to its ratio and the principle laid downtherein. The utmost therefore that can be said of this decision isthat the minimum on which there appears to be consensus was

30 1951 AIR 332H31 (2015) 4 SCC 770

ROJER MATHEW v. SOUTH INDIAN BANK LTD.[RANJAN GOGOI, CJI]

(1) that legislatures in India both before and after the Constitutionhad plenary power within their respective fields; (2) that theywere never the delegates of the British Parliament; (3) that theyhad power to delegate within certain limits not by reason of sucha power being inherent in the legislative power but because suchpower is recognised even in the United States of America wereseparatist ideology prevails on the ground that it is necessary toeffectively exercise the legislative power in modem state withmultifarious activities and complex problems facing legislaturesand (4) that delegation of an essential, legislative function whichamounts to abdication even partial is not permissible. All of themwere agreed that it could be in respect of subsidiary and ancillarypower.”

All the seven Judges were in unison that abdication or effacementby conferring the power of legislation to the subordinate authority evenif partial is not permissible. The difference of opinion primarily arosefrom the meaning and scope of the abdication or effacement of thelegislative power. On the said aspect, we would like to refer to thejudgments of Fazl Ali, J, Mukherjea, J and Bose, J. Fazl Ali, J. hadexpressed the said principle as :

“The true distinction ..... is this. The legislature cannot delegatethe power to make law; but it can make law to delegate apower to determine some fact or state of things upon which thelaw makes, or intends to make, its own action depend. To denythis would be to stop the wheels of Government.

2. The true import of the rule against delegation is this:

“This rule in broad sense involves the principle underlying themaxim, delegatus non potest delegate, but it is apt to bemisunderstood and has been misunderstood. In my judgment, allthat it means is that the legislature cannot abdicate its legislativefunctions and it cannot efface itself and set up parallel legislatureto discharge the primary duty with which it has been entrusted.This rule has been recognised both in America and inEngland ......

xx xx xx

What constitutes abdication and what class of cases will becovered by that expression will always be question of fact, and

Ait is by no means easy to lay down any comprehensive formulato define it, but it should be recognised that the rule againstabdication does not prohibit the Legislature from employing anysubordinate agency of its own choice for doing such subsidiaryacts as may be necessary to make its legislation effective, usefuland complete.”B

The learned Judge had further observed that an act is law whenit embodies policies, defines standards and directs the authority chosento act within certain prescribed limits and not go beyond. The Act shouldbe complete expression of the will of the Legislature to act in aCparticular way and of its command on how it should be carried out.When the Legislature decides the circumstances as the best way tolegislate on subject, then, such legislation does not amount to abdicationof powers because from the very nature to legislation it is manifest thatwhen power is misused it can be withdrawn, altered and repealed. Mostimportantly, the delegate is to only adopt and extend the laws enactedDby the Legislature.

132. Mukherjea, J. opined that the legislative functions concernwith declaring the legislative policy and laying down the standards whichis to be enacted into rule of law, and what can be delegated as theEtask of subordinate legislation by its very nature is ancillary to the statutewhich delegates the power to make it. When the legislative policy isenunciated with sufficient clearness or the standards are laid down, theCourts cannot interfere with the discretion that the Legislature hasexercised in determining the extent of necessary delegation. TheFdelegatee cannot be allowed to check the policy declared by thelegislators and cannot be given the power to repeal or abrogate anystatute.

133. Bose, J. while observing that the main function of thelegislature is to legislate and not leave it to others, neverthelessGacknowledged that it is impossible to carry on government of modernState with its infinite complexities and ramifications without largedevolution of power and delegation of authority. This is practicalnecessity which has been acknowledged even by the American Courts.To decide otherwise would make it difficult for the government toHfunction and work effectively.

134. Division Bench of this Court in Ramesh Birch v. Unionof India[32]had examined the aforesaid seven opinions and culled outthe ratio to observe that the lines of reasoning were different butnevertheless the judges had accepted the inevitable- that whileParliament has ample and extensive powers of legislation, these wouldinclude the power to entrust some of the functions and powers toanother body or authority. At the same time, in Delhi Laws Act (supra)the judges had agreed that there should be limitations on suchdelegation. However, on the question as to what is this limitation, therewas lack of consensus. The two judges in Ramesh Birch (supra)relying on the ratio in Delhi Laws Act (supra), had observed:“Some thought that there is no abdication or effacement unlessit is total i.e. unless Parliament surrenders its powers in favourof “parallel” legislature or loses control over the local authorityto such an extent as to be unable to revoke the powers given to,or to exercise effective supervision over, the body entrustedtherewith. But others were of opinion that such “abdication” or“effacement” could not even be partial and it would be bad iffull powers to do everything that the legislature can do areconferred on subordinate authority, although the legislature mayretain the power to control the action of such authority byrecalling such power or repealing the Acts passed by thesubordinate authority. different way in which the second ofthe above views has been enunciated—and it is this view whichhas dominated since—is by saying that the legislatures cannotwash their hands off their essential legislative function. Essentiallegislative function consists in laying down the legislative policywith sufficient clearness and in enunciating the standards whichare to be enacted into rule of law. This cannot be delegated.What can be delegated is only the task of subordinate legislationwhich is by its very nature ancillary to the statute which delegatesthe power to make it and which must be within the policy andframework of the guidance provided by the legislature.”

Thereupon the Division Bench had referred to the “policy andguideline” theory as test to decide whether or not it is case ofexcessive delegation which it was observed means reference and givingproper regard to the context of the Act and the object and purposes32 1990 AIR 560

Asought to be achieved which should be clear and it is not necessarythat the legislation should “dot all the i’s and cross all the t’s of itspolicy”. It is sufficient if it gives the broadest indication of the generalpolicy of the legislature.135. We would now refer to an earlier decision of this Court inBDevi Das Gopal Krishnan & Ors v. State of Punjab & Ors[33]whereinK. Subba Rao, CJ. speaking for the Court had struck down Section 5of the East Punjab General Sales Tax Act, 1948 which had empoweredthe State Government to fix rate of tax to such rate as it deemed fit,as bad and unconstitutional observing that the needs of the State andCthe purposes of the Act did not provide sufficient guidance for fixingthe rates of tax. It was observed:

“16. ...But in view of the multifarious activities of welfare State,it cannot presumably work out all the details to suit the varyingaspects of complex situation. It must necessarily delegate theDworking out of details to the executive or any other agency. Butthere is danger inherent in such process of delegation. Anoverburdened legislature or one controlled by powerfulexecutive may unduly overstep the limits of delegation. It maynot lay down any policy at all; it may declare its policy in vagueEand general terms; it may not set down any standard for theguidance of the executive; it may confer an arbitrary power onthe executive to change or modify the policy laid down by itwithout reserving for itself any control over subordinatelegislation. This self effacement of legislative power in favourFof another agency either in whole or in part is beyond thepermissible limits of delegation. It is for Court to hold on fair,generous and liberal construction of an impugned statute whetherthe legislature exceeded such limits. But the said liberal onconstruction should not be carried by the Courts to the extent ofalways trying to discover dormant or latent legislative policyGto sustain an arbitrary power conferred on executive authorities.It is the duty of the Court to strike down without any hesitationany arbitrary power conferred on the executive by thelegislature.”136. year later in Municipal Corporation of Delhi v. BirlaCotton, Spinning and Weaving Mills, Delhi and Another[34]this Court,however, upheld Section 113(2) of the Delhi Municipal Act, 1957 whichhad empowered the corporation to levy certain optional taxes byobserving that there were sufficient guidelines, safeguards and checksin the Act which prevented excessive delegation as the Act hadprovided maximum rate of tax. It was observed that the nature of bodyto which delegation is made is also relevant factor to be taken intoconsideration in determining whether there is sufficient guidance in thematter of delegation and also when delegation is made to an electedbody accountable to the people including those who paid taxes, as thisacted as sufficient check. It was observed:

“A review of these authorities therefore leads to the conclusionthat so far as this Court is concerned the principle is wellestablished that essential legislative function consists of thedetermination of the legislative policy and its formulation as abinding rule of conduct and cannot be delegated by thelegislature. Nor is there any unlimited right of delegation inherentin the legislative power itself. This is not warranted by theprovisions of the Constitution. The legislature must retain in itsown hands the essential legislative functions and what can bedelegated is the task of subordinate legislation necessary forimplementing the purposes and objects of the Act. Where thelegislative policy is enunciated with sufficient clearness or astandard is laid down, the courts should not interfere. Whatguidance should be given and to what extent and whetherguidance has been given in particular case at all depends on aconsideration of the provisions of the particular Act with whichthe Court has to deal including its preamble. Further it appearsto us that the nature of the body to which delegation is made isalso factor to be taken into consideration in determining whetherthere is sufficient guidance in the matter of delegation.”

Thus, the guidelines in the form of providing maximum rates oftax up to which local body may be given discretion to make its choiceor provision for consultation with the people of the local area and thenfixing the rates or subjecting the rate of tax so fixed by the local authority

DEF

Ato the approval of the Government which acts as watch-dog weretreated as satisfying the policy and guideline test.

137. This ratio was followed and expounded in M.K. Papiah &Sons v. Excise Commissioner[35]in which this Court had examined whatconstitutes essential features that the legislature cannot delegate, toBobserve that this cannot be delineated in detail but nevertheless andcertainly it does not include the change of policy. The legislator is themaster of the policy and the delegate is not free to switch the policyfor then it would be usurpation of legislative power itself. Therefore,when the question of the excessive delegation arises, investigation hasto be made whether policy of the legislation has not been indicatedCsufficiently or whether change of policy has been left to the pleasureof the delegate. This aspect is of substantial importance and relevancein the present case.138. In Avinder Singh v. State of Punjab[36]this Court hadhighlighted that the founding document, that is, the Constitution hadDcreated three instrumentalities with certain basic powers and it isaxiomatic that legislative powers are not abdicated for this would meanbetrayal of the Constitution and is intolerable in law. Therefore,legislature cannot self-efface its personality and make over in termsthe plenary and essential legislative functions. Nevertheless, theEcomplexities of modern administration are bafflingly intricate andpresent themselves with urgencies and difficulties and the need forflexibility, which the direct legislation may not provide. Delegation ofsome part of the legislative powers therefore became inevitable andan administrative necessity. Thus, while essential legislative policycannot be delegated, however inessentials can be delegated over toFrelevant agencies.139. Similar opinion was expressed in Registrar of Coop.Societies v. K. Kunjabmu[37], wherein it has been observed:

“3. …They function best when they concern themselves withGgeneral principles, broad objectives and fundamental issuesinstead of technical and situational intricacies which are betterleft to better equipped full time expert executive bodies and

35 (1975) 1 SCC 49236 (1979) 1 SCC 137H37 (1980) 1 SCC 340

specialist public servants. Parliament and the State Legislatureshave neither the time nor the expertise to be involved in detailand circumstance. Nor can Parliament and the State Legislaturesvisualise and provide for new, strange, unforeseen andunpredictable situations arising from the complexity of modernlife and the ingenuity of modern man. That is the raison d’etrefor delegated legislation. That is what makes delegated legislationinevitable and indispensable. The Indian Parliament arid the StateLegislatures are endowed with plenary power to legislate uponany of the subjects entrusted to them by the Constitution, subjectto the limitations imposed by the Constitution itself. The powerto legislate carries with it the power to delegate. But excessivedelegation may amount to abdication. Delegation unlimited mayinvite despotism uninhibited. So, the theory has been evolved thatthe legislature cannot delegate its essential legislative function.Legislate it must by laying down policy and principle and delegateit may to fill in detail and carry out policy. The legislature mayguide the delegate by speaking through the express provisionempowering delegation or the other provisions of the statute, thepreamble, the scheme or even the very subject matter of thestatute. If guidance there is, wherever it may be found, thedelegation is valid. good deal of latitude has been held to bepermissible in the case of taxing statutes and on the same principlea generous degree of latitude must be permissible in the case ofwelfare legislation, particularly those statutes which are designedto further the Directive Principles of State Policy.”

The above decision states that the policy and principles test canbe applied through express provisions empowering delegation or anyother provision of the statute including the preamble, the scheme or eventhe subject matter of the statute.

140. We will refer to recent decision of this Court in KeshavlalKhemchand and Son Private Limited & Others v. Union of India[38]wherein Division Bench of this Court had observed that in spite ofabundance of authority on the subject we are not blessed with certainty,and then observed that in Kunjabmu (supra) this Court had declinedto consider whether M.K. Papiah & Sons (supra) had beaten the finalretreat from the position enunciated in Delhi Laws Act (supra) and had

38 (2015) 4 SCC 770

Aproceeded to examine the theory of “policy and guidelines” referringto several judgments. The Division Bench then went on to observe thatthe earlier judgments had not been able to lay down the principleincluding as to what exactly constitutes “essential legislative function”,but the following inferences can be drawn:

B“51.1 The proposition that essential legislative functions cannotbe delegated does not appear to be such clearly settledproposition and requires further examination which exercise isnot undertaken by the counsel appearing in the matter. We leaveit open for debate in more appropriate case on future date.For the present, we confine to the examination of the question:C

‘Whether defining every expression used in an enactment isan essential legislative function or not?’

51.2 All the judgments examined above recognize that there is aneed for some amount of delegated legislation in the modernworld.D

51.3 If the parent enactment enunciates the legislative policy withsufficient clarity, delegation of the power to make subordinatelegislation to carry out the purpose of the parent enactment ispermissible.

E51.4 Whether the policy of the legislature is sufficiently clear toguide the delegate depends upon the scheme and the provisionsof the parent Act.

51.5 The nature of the body to whom the power is delegated isalso relevant factor in determining “whether there is sufficientFguidance in the matter of delegation.”

141. Appropriate in regard to ‘policy and guideline’ test wouldbe reference to yet another earlier judgment of this Court in GwaliorRayon Silk Mfg. (Wvg.) Co. v. Asstt. Commissioner of Sales[39]wherein while referring to the views of an eminent American juristGWillioughby, it was stated:

“24. The matter has been dealt with on page 1637 of Vol. III inWilloughby on the Constitution of the United States, 2ndEdition, in the following words:

H39 (1974) 4 SCC 98

“The qualifications to the rule prohibiting the delegation oflegislative power which have been earlier adverted to are thosewhich provide that while the real law-making power may notbe delegated, discretionary authority may be granted toexecutive and administrative authorities: (1) to determine inspecific cases when and how the powers legislativelyconferred are to be exercised; and (2) to establishadministrative rules and regulations, binding both upon theirsubordinates and upon the public, fixing in detail the mannerin which the requirements of the statutes are to be met, andthe rights therein created to be enjoyed.”

25. The matter has also been dealt with in Corpus JurisSecundum Vol. 73, page 324. It is stated there that the law-making power may not be granted to an administrative body tobe exercised under the guise of administrative discretion.Accordingly, in delegating powers to an administrative body withrespect to the administration of statutes, the Legislature mustordinarily prescribe policy, standard, or rule for their guidanceand must not vest them with an arbitrary and uncontrolleddiscretion with regard thereto, and statute or ordinance whichis deficient in this respect is invalid. In other words, in order toavoid the pure delegation of legislative power by the creation ofan administrative agency, the Legislature must set limits on suchagency’s power and enjoin on it certain course of procedureand rules of decision in the performance of its function; and, ifthe legislature fails to prescribe with reasonable clarity the limitsof power delegated to an administrative agency, or if those limitsare too broad, its attempt to delegate is nullity.”142. It is in this context we have to examine whether the pleaof excessive delegation would prevail and merits acceptance as Section184 of the Finance Act does not prescribe the qualifications forappointment, and terms and conditions of service. It will be difficult tohold that Part XIV of the Finance Act suffers from the vice of unguideddelegation as it fails to clearly specify the eligibility qualifications forthe Members, Chairpersons, Chairman etc. of different Tribunals as suchrequirements, though important, are not per se functionallyundelegatable.

A143. The objects of the parent enactments as well as the lawlaid down by this Court in R.K. Jain (supra), L Chandra Kumar(supra), R. Gandhi (supra), Madras Bar Association (supra) andGujarat Urja Vikas (supra) undoubtedly bind the delegate andmandatorily requires the delegate under Section 184 to act strictly inconformity with these decisions and the objects of delegated legislationBstipulated in the statutes. It must also be emphasised that the FinanceAct, 2017 nowhere indicates that the legislature had intended to differfrom, let alone make amendments, to remove the edifice and foundationof such decisions by enacting the Finance Act. Indeed, the learnedAttorney General was clear in suggesting that Part XIV was insertedCwith view to incorporate the changes recommended by this Court inearlier decisions.

144. Independence of quasi-judicial authority like the tribunalhighlighted in the above decisions would be, therefore, read as the policyand guideline applicable. Principle of independence of judiciary/tribunalDhas within its fold two broad concepts, as held in Supreme Court

Advocates-On-Record Association and Another v. Union of India[40]{See paragraph 714}, (i) independence of an individual judge, that is,decisional independence; and (ii) independence of the judiciary or theTribunal as an institution or an organ of the State, that is, functionalindependence. Individual independence has various facets which includeEsecurity of tenure, procedure for renewal, terms and conditions ofservice like salary, allowances, etc. which should be fair and just andwhich should be protected and not varied to his/her disadvantage afterappointment. Independence of the institution refers to sufficient degreeof separation from other branches of the government, especially when

Fthe branch is litigant or one of the parties before the tribunal.Functional independence would include method of selection andqualifications prescribed, as independence begins with appointment ofpersons of calibre, ability and integrity. Protection from interference andindependence from the executive pressure, fearlessness from otherpower centres – economic and political, and freedom from prejudicesGacquired and nurtured by the class to which the adjudicator belongs,are important attributes of institutional independence.

145. Further, cursory examination of the specified enactmentsmentioned in column (3) of the Eighth Schedule reveals that most

H40 (2016) 5 SCC 1

enactments did not stipulate the manner of appointment, terms of office,salaries and allowances, resignation, removal, that is, the terms andconditions of service, which stipulations are delegated and they are notpart of the principal enactment. For example, sub-section (1) of Section252 of the Income Tax Act, 1961 states that the Central Governmentmay constitute the Appellate Tribunal consisting of as many judicial andaccountant members as it thinks fit to exercise the powers and dischargethe functions prescribed by the Act. Sub-sections (3) and (4) state thatthe Central Government shall ordinarily appoint judicial Member asthe President and may appoint one or more members as Vice Presidentor Senior Vice President. Sub-section (2) prescribes the eligibilityrequirements for being judicial member and sub-section (2A) stipulatesthe eligibility requirements for being an administrative member. TheIncome Tax Act does not prescribe or stipulate manner or method forselection or terms and conditions of service. This is equally true forthe Appellate Tribunal constituted under the Central Excise Act.

146. Wanchoo, CJ. in The Municipal Corporation of Delhi(supra) had observed:

“13. The question as to the limits of permissible delegation oflegislative power by legislature to subordinate authority hascome before this Court in number of cases and the law as laiddown by this Court is not in doubt now. Considering thecomplexity of modern life it is recognised on all hands thatlegislature cannot possibly have time to legislate in every minutedetail. That is why it has been recognised that it is open to thelegislature to delegate to subordinate authorities the power to makeancillary rules for the purpose of carrying out the intention ofthe legislature indicated in the law which gives power to framesuch ancillary rules. The matter came before this Court for thefirst time In re The Delhi Laws Act, 1912 and it was held inthat case that it could not be said that an unlimited right ofdelegation was inherent in the legislative power itself. This wasnot warranted by the provisions of the Constitution, which vestedthe power of legislation either in Parliament or State legislaturesand the legitimacy of delegation depended upon its being usedas an ancillary measure which the legislature considered to benecessary for the purpose of exercising its legislative powerseffectively and completely. The legislature must retain in its own

hands the essential legislative function. Exactly what constituted“essential legislative function”, it was held further, was difficultto define in general terms, but this much was clear that theessential legislative function must at least consist of thedetermination of the legislative policy and its formulation as abinding rule of conduct. Thus where the law passed by thelegislature declares the legislative policy and lays down thestandard which is enacted into rule of law, it can leave the taskof subordinate legislation which by its very nature is ancillary tothe statute to subordinate bodies i.e. the making of rules,regulations or bye-laws. The subordinate authority must do sowithin the frame-work of the law which makes the delegation,and such subordinate legislation has to be consistent with the lawunder which it is made and cannot go beyond the limits of thepolicy and standard laid down in the law. Provided the legislativepolicy is enunciated with sufficient clearness or standard is laiddown, the courts should not interfere with the discretion thatundoubtedly rests with the legislature itself in determining theextent of delegation necessary in particular case.

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28. review of these authorities therefore leads to the conclusionthat so far as this Court is concerned the principle is wellestablished that essential legislative function consists of thedetermination of the legislative policy and its formulation as abinding rule of conduct and cannot be delegated by thelegislature. Nor is there any unlimited right of delegation inherentin the legislative power itself. This is not warranted by theprovisions of the Constitution. The legislature must retain in itsown hands the essential legislative functions and what can bedelegated is the task of subordinate legislation necessary forimplementing the purposes and objects of the Act. Where thelegislative policy is enunciated with sufficient clearness or astandard is laid down, the courts should not interfere. Whatguidance should be given and to what extent and whetherguidance has been given in particular case at all depends on aconsideration of the provisions of the particular Act with whichthe Court has to deal including its preamble. Further it appearsto us that the nature of the body to which delegation is made is

also factor to be taken into consideration in determining whetherthere is sufficient guidance in the matter of delegation.”

147. Referring to The Municipal Corporation of Delhi (supra),this Court in Keshav Lal, had observed:

“45. ... The Court held that there was no impermissible delegationof legislative power. Hidayatullah, J. speaking for himself and forRamaswami, J. agreed with the conclusion reached at byWanchoo, C.J., though on slightly different reasons.”

148. On examining the Constitutional scheme, the statutes whichhad created tribunals and the precedents of this Court laying downattributes of independence of tribunals in different facets, we do notthink that the power to prescribe qualifications, selection procedure andservice conditions of members and other office holders of the tribunalsis intended to vest solely with the Legislature for all times and purposes.Policy and guidelines exist. Subject to aforesaid, the submission oflearned Attorney General that Section 184 was inserted to bringuniformity and with view to harmonise the diverse and wide-rangingqualifications and methods of appointment across different tribunalscarries weight and, in our view, needs to be accepted.

149. Cautioning against the potential misuse of Section 184 bythe executive, it was vehemently argued by the learned counsel for thepetitioner(s) that any desecration by the Executive of such powersthreatens and poses risk to the independence of the tribunals. merepossibility or eventuality of abuse of delegated powers in the absenceof any evidence supporting such claim, cannot be ground for strikingdown the provisions of the Finance Act, 2017. It is always open to aConstitutional court on challenge made to the delegated legislationframed by the Executive to examine whether it conforms to the parentlegislation and other laws, and apply the “policy and guideline” test andif found contrary, can be struck down without affecting theconstitutionality of the rule making power conferred under Section 186of the Finance Act, 2017.

ISSUE III: IF SECTION 184 IS VALID, WHETHERTRIBUNAL, APPELLATE TRIBUNAL AND OTHERAUTHORITIES (QUALIFICATIONS, EXPERIENCEAND OTHER CONDITIONS OF SERVICE OFMEMBERS) RULES, 2017 ARE IN CONSONANCE

108SUPREME COURT REPORTS

AWITH THE PRINCIPAL ACT AND VARIOUSDECISIONS OF THIS COURT ON FUNCTIONING OFTRIBUNALS?

150. Given that the Central Government has formulated theTribunal, Appellate Tribunal and other Authorities (Qualifications,BExperience and other Conditions of Service of Members) Rules, 2017,(hereinafter referred to as “the Rules”) under Section 184 of theFinance Act, 2017, it is necessary at this stage to examine whether theRules conform to the judicial principles inherent in our Constitutionalscheme as established by this Court in its earlier dicta. Some salientprovisions of the Rules are extracted hereunder:C“Tribunal, Appellate Tribunal and other Authorities (Qualifications,Experience and other Conditions of Service of Members) Rules,2017

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D3. Qualifications for appointment of Member.— Thequalification for appointment of the Chairman, Chairperson,President, Vice-Chairman, Vice-Chairperson, Vice-President,Presiding Officer, Accountant Member, Administrative Member,Judicial Member, Expert Member, Law Member, RevenueMember, Technical Member or Member of the Tribunal,EAppellate Tribunal or, as the case may be, Authority shall be suchas specified in column (3) of the Schedule annexed to these rules.

4. Method of recruitment.— (1) The Chairman, Chairperson,President, Vice-Chairman, Vice-Chairperson, Vice-President,Presiding Officer, Accountant Member, Administrative Member,FJudicial Member, Expert Member, Law Member, RevenueMember, Technical Member or Member of the Tribunal,Appellate Tribunal or, as the case may be, Authority shall beappointed by the Central Government on the recommendation ofa Search-cum-Selection Committee specified in column (4) ofthe said Schedule in respect of the Tribunal, Appellate TribunalGor, as the case may be, Authority specified in column (2) of thesaid Schedule.

(2) The Secretary to the Government of India in the Ministry orDepartment under which the Tribunal, Appellate Tribunal or, asthe case may be, Authority is constituted or established shall beHthe convener of the Search-cum-Selection Committee.

(3) The Search-cum-Selection Committee shall determine itsprocedure for making its recommendation.

(4) No appointment of Chairman, Chairperson, President, Vice-Chairman, Vice-Chairperson, Vice-President, Presiding Officer,Accountant Member, Administrative Member, Judicial Member,Expert Member, Law Member, Revenue Member, TechnicalMember or Member of the Tribunal, Appellate Tribunal orAuthorities shall be invalid merely by reason of any vacancy orabsence in the Search-cum-Selection Committee.

(5) Nothing in this rule shall apply to the appointment of Chairman,Chairperson, President, Vice-Chairman, Vice-Chairperson, Vice-President, Presiding Officer, Accountant Member, AdministrativeMember, Judicial Member, Expert Member, Law Member,Revenue Member, Technical Member or Member of theTribunal, Appellate Tribunal or, as the case may be, Authorityfunctioning as such immediately before the commencement ofthese rules.

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6. Resignation by Member.— Member may, by writingunder his hand addressed to the Central Government, resign hisoffice at any time:

Provided that the Member shall, unless he is permitted by theCentral Government to relinquish office sooner, continue to holdoffice until the expiry of three months from the date of receiptof such notice or until person duly appointed as successorenters upon his office or until the expiry of his term of office,whichever is the earliest.

7. Removal of Member from office.— The CentralGovernment may, on the recommendation of Committeeconstituted by it in this behalf, remove from office any Member,who —

(a) has been adjudged as an insolvent; or

(b) has been convicted of an offence which, in the opinionof the Central Government, involves moral turpitude; or

(c) has become physically or mentally incapable of actingas such Member; or

(d) has acquired such financial or other interest as is likelyto affect prejudicially his functions as Member; or

(e) has so abused his position as to render his continuancein office prejudicial to the public interest:

Provided that where Member is proposed to be removed onany ground specified in clauses (b) to (e), the Member shall beinformed of the charges against him and given an opportunity ofbeing heard in respect of those charges:

Provided further that the Chairperson or member of the NationalCompany Appellate Tribunal shall be removed from office inconsultation with the Chief Justice of India.

8. Procedure for inquiry of misbehavior or incapacity of theMember.— (1) If written complaint is received by the CentralGovernment, alleging any definite charge of misbehavior orincapacity to perform the functions of the office in respect of aChairman, Vice-Chairman, Chairperson, Vice-Chairperson,President, Vice-President, Presiding Officer, Accountant Member,Administrative Member, Judicial Member, Expert Member, LawMember, Revenue Member, Technical Member or Member, theMinistry or Department of the Government of India under whichthe Tribunal, Appellate Tribunal or, as the case may be, Authorityis constituted or established, shall make preliminary scrutinyof such complaint.

(2) If on preliminary scrutiny, the Ministry or Department of theGovernment of India under which the Tribunal, Appellate Tribunalor, as the case may be, Authority is constituted or established, isof the opinion that there are reasonable grounds for making aninquiry into the truth of any misbehavior or incapacity of aChairman, Vice-Chairman, Chairperson, Vice-Chairperson,President, Vice-President, Presiding Officer, Accountant Member,Administrative Member, Judicial Member, Expert Member, LawMember, Revenue Member, Technical Member or Member, itshall make reference to the Committee constituted under rule7 to conduct the inquiry.

(3) The Committee shall complete the inquiry within such timeor such further time as may be specified by the CentralGovernment.

(4) After the conclusion of the inquiry, the Committee shall submitits report to the Central Government stating therein its findingsand the reasons therefor on each of the charges separately withsuch observations on the whole case as it may think fit.

(5) The Committee shall not be bound by the procedure laid downby the Code of Civil Procedure, 1908 (5 of 1908) but shall beguided by the principles of natural justice and shall have powerto regulate its own procedure, including the fixing of date, placeand time of its inquiry.

9. Term of office of Member.— Save as otherwise providedin these rules, the Chairman, Chairperson, President, Vice-Chairman, Vice-Chairperson, Vice President, Presiding Officer,Accountant Member, Administrative Member, Judicial Member,Expert Member, Law Member, Revenue Member, TechnicalMember or, as the case may be, Member shall hold office for aterm as specified in column (5) of the said Schedule and shallhold the office up to such age as specified in column (6) in thesaid Schedule from the date on which he enters upon his officeand shall be eligible for reappointment.

10. Casual vacancy.— (1) In case of casual vacancy in theoffice of,—

(a) the Chairman, Chairperson, President, or Presiding Officerof the Security Appellate Tribunal, the Central Government shallhave the power to appoint the senior most Vice-Chairperson orVice-Chairman, Vice-President or in his absence, one of theAccountant Member, Administrative Member, Judicial Member,Expert Member, Law Member, Revenue Member, TechnicalMember, or Member of the Tribunal, Appellate Tribunal or, asthe case may be, Authority to officiate as Chairperson, Chairman,President or Presiding Officer.(b) the Chairperson of the Debts Recovery Appellate Tribunal,the Central Government shall have power to appoint theChairperson of another Debts Recovery Appellate Tribunal toofficiate as Chairperson and in case of casual vacancy in theoffice of the Presiding Officer of the Debts Recovery Tribunal,the Chairperson of the Debts Recovery Appellate Tribunal shallhave power to appoint the Presiding Officer of another DebtsRecovery Appellate Tribunal to officiate as Presiding Officer.

11. Salary and allowances.— (1) The Chairman, Chairpersonor President of the Tribunal, Appellate Tribunal or, as the casemay be, Authority or the Presiding Officer of the SecurityAppellate Tribunal shall be paid salary of Rs. 2,50,000 (fixed)and other allowances and benefits as are admissible to CentralGovernment officer holding posts carrying the same pay.

(2) The Vice-Chairman, Vice-Chairperson, Vice-President,Accountant Member, Administrative Member, Judicial Member,Expert Member, Law Member, Revenue Member, TechnicalMember or, as the case may be, Member shall be paid salaryof Rs. 2,25,000 and shall be entitled to draw allowances as areadmissible to Government of India Officer holding Group ‘A’post carrying the same pay.

(3) Presiding Officer of the Debt Recovery Tribunal or aPresiding Officer of the Industrial Tribunal constituted by theCentral Government shall be paid salary of Rs. 1,44,200-2,18,200 and shall be entitled to draw allowances as are admissibleto Government of India officer holding Group ‘A’ post carryingthe same pay.

(4) In case of person appointed as the Chairman, Chairperson,President, Vice-Chairman, Vice-Chairperson, Vice President,Presiding Officer, Accountant Member, Administrative Member,Judicial Member, Expert Member, Law Member, RevenueMember, Technical Member or Member, as the case may be, isin receipt of any pension, the pay of such person shall be reducedby the gross amount of pension drawn by him.

12. Pension, Gratuity and Provident Fund.— (1) In case ofa serving Judge of the Supreme Court, High Court or servingJudicial Member of the Tribunal or member of the Indian LegalService or member of an organised Service appointed to thepost of the Chairperson, Chairman, President or Presiding Officerof the Security Appellate Tribunal, the service rendered in theTribunal, Appellate Tribunal or, as the case may be, Authority shallcount for pension to be drawn in accordance with the rules ofthe service to which he belongs and he shall be governed by theprovisions of the General Provident Fund (Central Services)Rules, 1960 and the Contribution Pension System.

(2) In all other cases, the Accountant Member, AdministrativeMember, Judicial Member, Expert Member, Law Member,Revenue Member, Technical Member or Member shall begoverned by the provisions of the Contributory Provident Fund(India) Rules, 1962 and the Contribution Pension System.

(3) Additional pension and gratuity shall not be admissible forservice rendered in the Tribunal, Appellate Tribunal or, as the casemay be, Authority.

13. Leave.— (1) The Chairman, Chairperson, President, Vice-Chairman, Vice-Chairperson, Vice President, AccountantMember, Administrative Member, Judicial Member, ExpertMember, Law Member, Revenue Member, Technical Member,Presiding Officer or Member shall be entitled to thirty days ofearned Leave for every year of service.

(2) Casual Leave not exceeding eight days may be granted tothe Chairman, Chairperson, President, Vice-Chairman, Vice-Chairperson, Vice President, Accountant Member, AdministrativeMember, Judicial Member, Expert Member, Law Member,Revenue Member or Technical Member, Presiding Officer or aMember in calendar year.

(3) The payment of leave salary during leave shall be governedby rule 40 of the Central Civil Services (Leave) Rules, 1972.

(4) The Chairman, Chairperson, President, Vice-Chairman, Vice-Chairperson, Vice President, Presiding Officer, AccountantMember, Administrative Member, Judicial Member, ExpertMember, Law Member, Revenue Member, Technical Memberor Member shall be entitled to encashment of leave in respectof the earned Leave standing to his credit, subject to the conditionthat maximum leave encashment, including the amount receivedat the time of retirement from previous service shall not in anycase exceed the prescribed limit under the Central Civil Service(Leave) Rules, 1972.

14. Leave sanctioning authority.— (1) Leave sanctioningauthority,—

(a) for the Vice-Chairman, Vice-Chairperson, Vice-President,Presiding Officer of the Debts Recovery Tribunal and Industrial

Tribunal, Accountant Member, Administrative Member, JudicialMember, Expert Member, Law Member, Revenue Member,Technical Member or Member shall be Chairman, Chairpersonor as the case may be, President; and

(b) for the Chairman, Chairperson, Presiding Officer of SecurityAppellate Tribunal or President, shall be the Central Government,who shall also be sanctioning authority for Accountant Member,Administrative Member, Judicial Member, Expert Member orMember in case of absence of Chairman, Chairperson, PresidingOfficer of Security Appellate Tribunal or President.

(2) The Central Government shall be the sanctioning authorityfor foreign travel to the Chairman, Chairperson, President, Vice-Chairman, Vice-Chairperson, Vice-President, AccountantMember, Administrative Member, Judicial Member, ExpertMember, Technical Member, Presiding Officer or Member.

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18. Other conditions of service.— (1) The terms andconditions of service of Chairman, Chairperson, President, Vice-Chairman, Vice-Chairperson, Vice-President, AccountantMember, Administrative Member, Judicial Member, ExpertMember, Technical Member, Presiding Officer or Member withrespect to which no express provision has been made in theserules, shall be such as are admissible to Group ‘A’ Officer ofthe Government of India of corresponding status.

(2) The Chairman, Chairperson, President, Vice-Chairman, Vice-Chairperson, Vice-President, Administrative Member, JudicialMember, Expert Member, Technical Member, Presiding Officeror Member shall not practice before the Tribunal, AppellateTribunal or Authority after retirement from the service of thatTribunal, Appellate Tribunal or, as the case may be, Authority.

(3) The Chairman, Chairperson, President, Vice-Chairman, Vice-Chairperson, Vice-President, Accountant Member, AdministrativeMember, Judicial Member, Expert Member, Technical Member,Presiding Officer or Member shall not undertake any arbitrationwork while functioning in these capacities in the Tribunal,Appellate Tribunal or Authority.

(4) The Chairman, Chairperson, President, Vice-Chairman, Vice-Chairperson, Vice-President, Presiding Officer, AccountantMember, Administrative Member, Judicial Member, ExpertMember, Law Member, Revenue Member, Technical Memberor Member of the Tribunal, Appellate Tribunal or, as the casemay be, Authority shall not, for period of two years from thedate on which they cease to hold office, accept any employmentin, or connected with the management or administration of, anyperson who has been party to proceeding before the Tribunal,Appellate Tribunal or, as the case may be, Authority:Provided that nothing contained in this rule shall apply to anyemployment under the Central Government or StateGovernment or local authority or in any statutory authority orany corporation established by or under any Central, State orProvincial Act or Government company as defined in clause(45) of Section 2 of the Companies Act, 2013 (18 of 2013).

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20. Power to relax.— Where the Central Government is of theopinion that it is necessary or expedient so to do, it may, by orderfor reasons to be recorded in writing relax any of the provisionsof these rules with respect to any class or category of persons.

21. Interpretation.— If any question arises relating to theinterpretation of these rules, the decision of the CentralGovernment thereon shall be final.

22. Saving.— Nothing in these rules shall affect reservations,relaxation of age limit and other concessions required to beprovided for the Scheduled Castes, Scheduled Tribes, Ex-servicemen and other special categories of persons in accordancewith the orders issued by the Central Government from time totime in this regard.”

(A) Composition of Search-cum-Selection Committees

151. The composition of some of the Search-cum-SelectionCommittees, as provided in the Rules, have been reproduced belowillustratively:

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A“Industrial Tribunal:

Search-cum-Selection Committee for the post of the PresidingOfficer, -

(i) person to be nominated by the Central Government-chairperson;

(ii) Secretary to the Government of India, Ministry ofLabour and Employment- member;

(iii) .Secretary to the Government of India to be nominatedby the Central Government-member;

(iv) two experts to be nominated by the CentralGovernment- members.

Income Tax Appellate Tribunal:

(A) Search-cum-Selection Committee for the post of thePresident and Vice-President, -

(i) sitting Judge of Supreme Court to be nominatedby the Chief Justice of India-chairperson;

(ii) the President, Income-tax Appellate Tribunal-member; and

(iii) the Secretary to the Government of India, Ministryof Law and Justice (Department of Legal Affairs)-member.

(B) Search-cum-Selection Committee for the AccountantMember and Judicial Member, –

(i) nominee of the Minister of Law and Justice-chairperson;

(ii) Secretary to the Government of India, Ministry ofLaw and Justice (Department of Legal Affairs)-member;

(iii) President of the Income tax Appellate Tribunal –member; and

(iv) such other persons, if any, not exceeding two, as theMinister of Law and Justice may appoint-member.

Central Administrative Tribunal:

(A) Search-cum-Selection Committee for the post ofChairman and Judicial Member, –

(i) Chief Justice of India or his nominee- chairperson;

(ii) Chairman of the Central Administrative Tribunal,BPrincipal Bench – member;

(iii) Secretary to the Government of India, (Departmentof Personnel and Training)- member;

(iv) Secretary to the Government of India, Ministry ofLaw and Justice -member;C

(v) one expert, to be nominated by the CentralGovernment of India - member.

(B) Search-cum-Selection Committee for the post ofAdministrative Member, –

(a) person to be nominated by the Central Government- chairperson;

(b) Chairman of the, Central Administrative Tribunal –member;

(c) Secretary to the Government of India, (Departmentof Personnel and Training)- member;

(d) Secretary to the Government of India, Ministry ofLaw and Justice -member;

(e) one expert, to be nominated by the Government ofIndia - member.”

152. Composition of Search-cum-Selection Committee iscontemplated in manner whereby appointments of Member, Vice-President and President are predominantly made by nominees of theCentral Government. perusal of the Schedule to the Rules shows thatsave for token representation of the Chief Justice of India or hisnominee in some Committees, the role of the judiciary is virtually absent.

153. We are in agreement with the contentions of the LearnedCounsel for the petitioner(s), that the lack of judicial dominance in theSearch-cum-Selection Committee is in direct contravention of the

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Adoctrine of separation of powers and is an encroachment on the judicialdomain. The doctrine of separation of powers has been well recognisedand re-interpreted by this Court as an important facet of the basicstructure of the Constitution, in its dictum in Kesavananda Bharati v.State of Kerala[41], and several other later decisions. The exclusion ofthe Judiciary from the control and influence of the Executive is notBlimited to traditional Courts alone, but also includes Tribunals since theyare formed as an alternative to Courts and perform judicial functions.

154. Clearly, the composition of the Search-cum-SelectionCommittees under the Rules amounts to excessive interference of theExecutive in appointment of members and presiding officers of statutoryCTribunals and would undoubtedly be detrimental to the independenceof judiciary besides being an affront to the doctrine of separation ofpowers.

155. In R.K. Jain v. Union of India (supra), three-JudgeBench of this Court asserted the need for independent system ofDappointment and administration of Tribunals to maintain public trust inthe judiciary while expressing its agony over inefficacy of the workingof Tribunals in the country. In addition to discussing the perils of providingdirect statutory appeals to the Apex Court from the Tribunals, it wasalso suggested that there is an imminent need for reform in the mannerEof recruitment of members of Tribunals to maintain public faith in theinstitution of judiciary. Adjudication of disputes by technical membersshould be confined only to cases requiring specialised technicalknowledge. [Union of India vs. Madras Bar Association[42]andMadras Bar Association vs. Union of India & Anr.[43]]

F156. Subsequently, in its dictum in L. Chandra Kumar v. Unionof India (supra), seven-Judge Bench of this Court noted theobservations in the Malimath Committee Report, discussing theadministration of the Tribunals established under Article 323-A andArticle 323-B of the Constitution. The Malimath Committee Report hadpointed out that Tribunal constituted in substitution of any other CourtGshould have similar standards of appointment, qualifications andconditions of service, to inspire the confidence of the public at large.Shortcomings in composition, tenure, conditions of service, etc. of the

41 (1973) 4 SCC 22542 (2010) 11 SCC 1H43 (2014) 10 SCC 1 [Para 107 & 126]

Members of Tribunals were also highlighted in the Report as reasonsfor increased intervention by the Executive in the working of judicialinstitutions. The relevant extract is reproduced below:

“88. …The observations contained in the Report, to this extentthey contain review of the functioning of the Tribunals over aperiod of three years or so after their institution, will be usefulfor our purpose. Chapter VIII of the second volume of theReport, “Alternative Modes and Forums for Dispute Resolution”,deals with the issue at length. After forwarding its specificrecommendations on the feasibility of setting up “GramNyayalayas”, Industrial Tribunals and Educational Tribunals, theCommittee has dealt with the issue of Tribunals set up underArticles 323-A and 323-B of the Constitution. The relevantobservations in this regard, being of considerable significance toour analysis, are extracted in full as under:

“Functioning of Tribunals

8.63 Several tribunals are functioning in the country. Not all ofthem, however, have inspired confidence in the public mind. Thereasons are not far to seek. The foremost is the lack ofcompetence, objectivity and judicial approach. The next is theirconstitution, the power and method of appointment of personnelthereto, the inferior status and the casual method of working. Thelast is their actual composition; men of calibre are not willing tobe appointed as presiding officers in view of the uncertainty oftenure, unsatisfactory conditions of service, executivesubordination in matters of administration and politicalinterference in judicial functioning. For these and other reasons,the quality of justice is stated to have suffered and the cause ofexpedition is not found to have been served by the establishmentof such tribunals.

8.64 Even the experiment of setting up of the AdministrativeTribunals under the Administrative Tribunals Act, 1985, has notbeen widely welcomed. Its members have been selected fromall kinds of services including the Indian Police Service. Thedecision of the State Administrative Tribunals are not appealableexcept under Article 136 of the Constitution. On account of theheavy cost and remoteness of the forum, there is virtual negationof the right of appeal. This has led to denial of justice in many

cases and consequential dissatisfaction. There appears to be amove in some of the States where they have been establishedfor their abolition.

Tribunals — Tests for Including High Court’s Jurisdiction

8.65 Tribunal which substitutes the High Court as an alternativeinstitutional mechanism for judicial review must be no lessefficacious than the High Court. Such tribunal must inspireconfidence and public esteem that it is highly competent andexpert mechanism with judicial approach and objectivity. Whatis needed in tribunal, which is intended to supplant the HighCourt, is legal training and experience, and judicial acumen,equipment and approach. When such tribunal is composed ofpersonnel drawn from the judiciary as well as from services orfrom amongst experts in the field, any weightage in favour ofthe service members or expert members and value-discountingthe judicial members would render the tribunal less effective andefficacious than the High Court. The Act setting up such atribunal would itself have to be declared as void under suchcircumstances. The same would not at all be conducive to judicialindependence and may even tend, directly or indirectly, toinfluence their decision-making process, especially when theGovernment is litigant in most of the cases coming before suchtribunal. (See S.P. Sampath Kumar v. Union of India, (1987) 1SCC 124) The protagonists of specialist tribunals, whosimultaneously with their establishment want exclusion of the writjurisdiction of the High Courts in regard to matters entrusted foradjudication to such tribunals, ought not to overlook these vitaland important aspects. It must not be forgotten that what ispermissible to be supplanted by another equally effective andefficacious institutional mechanism is the High Courts and notthe judicial review itself. Tribunals are not an end in themselvesbut means to an end; even if the laudable objectives of speedyjustice, uniformity of approach, predictability of decisions andspecialist justice are to be achieved, the framework of the tribunalintended to be set up to attain them must still retain its basicjudicial character and inspire public confidence. Any scheme ofdecentralisation of administration of justice providing for analternative institutional mechanism in substitution of the High

Courts must pass the aforesaid test in order to be constitutionallyvalid….””

157. We are of the view that the Search-cum-SelectionCommittee as formulated under the Rules is an attempt to keep thejudiciary away from the process of selection and appointment ofMembers, Vice-Chairman and Chairman of Tribunals. This Court hasbeen lucid in its ruling in Supreme Court Advocates-on-Record Assn.v. Union of India[44] (Fourth Judges Case), wherein it was held thatprimacy of judiciary is imperative in selection and appointment of judicialofficers including Judges of High Court and Supreme Court. Cognisantof the doctrine of Separation of Powers, it is important that judicialappointments take place without any influence or control of any otherlimb of the sovereign. Independence of judiciary is the only means tomaintain system of checks and balances on the working of Legislatureand the Executive. The Executive is litigating party in most of thelitigation and hence cannot be allowed to be dominant participant injudicial appointments.

158. We are in complete agreement with the analogy elucidatedby the Constitution Bench in the Fourth Judges Case (supra) forcompulsory need for exclusion of control of the Executive over quasi-judicial bodies of Tribunals discharging responsibilities akin to Courts.The Search-cum-Selection Committees as envisaged in the Rules areagainst the constitutional scheme inasmuch as they dilute theinvolvement of judiciary in the process of appointment of members oftribunals which is in effect an encroachment by the executive on thejudiciary.

(B) Qualifications of members and presiding officers

159. The Rules also prescribe the qualifications for Chairperson,Vice-Chairperson, Member, etc. of both judicial and technical members.A bare perusal of the Rules reveals that while prescribing thequalifications of technical member, the prior dicta of this Court has beenignored by the Central Government inasmuch as the technical membersare being appointed without any adjudicatory experience. Thequalifications for appointment as technical member in the Customs,Excise and Service Tax Appellate Tribunal as prescribed under theRules are illustratively reproduced below:

A“(1) person shall not be qualified for appointment as Presidentunless, -

(a) he is or has been Judge of High Court; or

(b) he is the member of the Appellate Tribunal.

B(2) person shall not be qualified for appointment as JudicialMember, unless, -

(a) he has for at least ten years held judicial office in theterritory of India; or

(b) he has been member of the Indian Legal Service andChas held post in Grade-I of that Service or anyequivalent or higher post for at least three years; or

(c) he has been an advocate for at least ten years.

(3) person shall not be qualified for appointment as TechnicalMember unless he has been member of the Indian RevenueDService (Customs and Central Excise Service Group ‘A’) andhas held the post of Commissioner of Customs or Central Excise

or any equivalent or higher post for at least three years.”

160. In addition to this, there has been blatant dilution of judicialcharacter in appointments whereby candidates without any judicialEexperience are prescribed to be eligible for adjudicatory posts such asthat of the Presiding Officer. Illustratively, the qualifications for PresidingOfficer in Industrial Tribunal as specified in the Rules may be noticedbelow:

“A person shall not be qualified for appointment as PresidingFOfficer, unless he, -

(a) is, or has been, or is qualified to be, Judge of HighCourt; or

(b) he has, for period of not less than three-years, beenGa District Judge or an Additional District Judge; or

(c) is person of ability, integrity and standing, and havingspecial knowledge of, and professional experience of notless than twenty years in economics, business,commerce, law, finance, management, industry, publicaffairs, administration, labour relations, industrial disputesH

or any other matter which in the opinion of the CentralGovernment is useful to the Industrial Tribunal.”

161. The contentions of the Learned Counsel for petitioner(s)are, therefore, duly accepted by this Court insofar as it is contendedthat the Rules have an effect of dilution of the judicial character inadjudicatory positions. It has been repeatedly ruled by this Court in acatena of decisions that judicial functions cannot be performed bytechnical members devoid of any adjudicatory experience.

162. In Madras Bar Assn. v. Union of India (supra), five-judge Bench of this Court reiterated the urgent need to monitor thepressure and/or influence of the executive on the Members of theTribunals. It was asserted that any Tribunal which sought to replacethe High Court must be no less independent or judicious in itscomposition. It was also clarified that the Members of the Tribunal,replacing any Court, including the High Court must possess expertisein law and shall have appropriate legal experience. Even thoughParliament can transfer jurisdiction from the traditional Courts to anyother analogous Tribunal, the Tribunal must be manned by membershaving qualifications equivalent to that of the Court from whichadjudicatory function is transferred. Hence, any adjudication transferredto Technical or Non-Judicial member is clear act of dilution and anencroachment upon the independence of judiciary. It was further ruledby this Court that even though the legislature has the powers toreorganise or prescribe qualifications for members of Tribunals, it is openfor this Court to exercise “judicial review” of the prescribed standards,if the adjudicatory standards are adversely affected. The decision ofthis Court read as follows:

“105. … It was also sought to be asserted that the tribunalconstituted under the enactment being substitute of the HighCourt ought to have been constituted in manner that it wouldbe able to function in the same manner as the High Court itself.Since insulation of the judiciary from all forms of interferenceeven from the coordinate branches of the Government was bynow being perceived as basic essential feature of theConstitution, it was felt that the same independence frompossibility of executive pressure or influence needed to be ensuredfor the Chairman, Vice-Chairman and Members of theAdministrative Tribunal. In recording its conclusions, even though

it was maintained that “judicial review” was an integral part ofthe “basic structure” of the Constitution yet it was held thatParliament was competent to amend the Constitution, andsubstitute in place of the High Court another alternativeinstitutional mechanism or arrangement. This Court, howevercautioned that it was imperative to ensure that the alternativearrangement was no less independent and no less judicious thanthe High Court (which was sought to be replaced) itself.

xxx

107. In Union of India v. Madras Bar Assn. [(2010) 11 SCC 1], all the conclusions/propositions narrated above were reiteratedand followed, whereupon the fundamental requirements whichneed to be kept in mind while transferring adjudicatory functionsfrom courts to tribunals were further crystallised. It came to beunequivocally recorded that tribunals vested with judicial power(hitherto before vested in, or exercised by courts), should possessthe same independence, security and capacity, as the courts whichthe tribunals are mandated to substitute. The members of thetribunals discharging judicial functions could only be drawn fromsources possessed of expertise in law and competent to dischargejudicial functions. Technical members can be appointed totribunals where technical expertise is essential for disposal ofmatters, and not otherwise. Therefore it was held that where theadjudicatory process transferred to tribunals did not involve anyspecialised skill, knowledge or expertise, provision forappointment of technical members (in addition to, or in substitutionof judicial members) would constitute clear case of delusionand encroachment upon the independence of the judiciary andthe “rule of law”. The stature of the members, who wouldconstitute the tribunal, would depend on the jurisdiction which wasbeing transferred to the tribunal. In other words, if the jurisdictionof the High Court was transferred to tribunal, the stature ofthe members of the newly constituted tribunal, should bepossessed of qualifications akin to the Judges of the High Court.Whereas in case, the jurisdiction and the functions sought to betransferred were being exercised/performed by District Judges,the Members appointed to the tribunal should be possessed ofequivalent qualifications and commensurate stature of District

Judges. The conditions of service of the members should be suchthat they are in position to discharge their duties in anindependent and impartial manner. The manner of theirappointment and removal including their transfer, and tenure oftheir employment, should have adequate protection so as to beshorn of legislative and executive interference. The functioningof the tribunals, their infrastructure and responsibility of fulfillingtheir administrative requirements ought to be assigned to theMinistry of Law and Justice. Neither the tribunals nor theirmembers, should be required to seek any facilities from the parentministries or department concerned. Even though the legislaturecan reorganise the jurisdiction of judicial tribunals, and canprescribe the qualifications/eligibility of members thereof, the samewould be subject to “judicial review” wherein it would be opento court to hold that the tribunalisation would adversely affectthe adjudicatory standards, whereupon it would be open to courtto interfere therewith. Such an exercise would naturally be partof the checks and balances measures conferred by theConstitution on the judiciary to maintain the rule of “separationof powers” to prevent any encroachment by the legislature orthe executive.

xxx

113.2. …The power of discharging judicial functions which wasexercised by members of the higher judiciary at the time whenthe Constitution came into force should ordinarily remain withthe court, which exercised the said jurisdiction at the time ofpromulgation of the new Constitution. But the judicial power couldbe allowed to be exercised by an analogous/similar court/tribunalwith different name. However, by virtue of the constitutionalconvention while constituting the analogous court/tribunal it willhave to be ensured that the appointment and security of tenureof Judges of that court would be the same as of the court soughtto be substituted. This was the express conclusion drawn in Hindscase [Hinds v. R., 1977 AC 195] . In Hinds case, it wasacknowledged that Parliament was not precluded fromestablishing court under new name to exercise the jurisdictionthat was being exercised by members of the higher judiciary atthe time when the Constitution came into force. But when that

ABC

was done, it was critical to ensure that the persons appointed tobe members of such court/tribunal should be appointed in thesame manner and should be entitled to the same security oftenure as the holder of the judicial office at the time when theConstitution came into force. Even in the treatise ConstitutionalLaw of Canada by Peter W. Hogg, it was observed: if provinceinvested tribunal with jurisdiction of kind, which ought toproperly belong to Superior, District or County Court, then thatcourt/tribunal (created in its place), whatever is its official name,for constitutional purposes has to, while replacing Superior,District or County Court, satisfy the requirements and standardsof the substituted court. This would mean that the newlyconstituted court/tribunal will be deemed to be invalidlyconstituted, till its members are appointed in the same manner,and till its members are entitled to the same conditions of serviceas were available to the Judges of the court sought to besubstituted. In the judgments under reference it has also beenconcluded that breach of the above constitutional conventioncould not be excused by good intention (by which the legislativepower had been exercised to enact given law). We are satisfied,that the aforesaid exposition of law is in consonance with theposition expressed by this Court while dealing with the conceptsof “separation of powers”, the “rule of law” and “judicial review”.In this behalf, reference may be made to the judgments in L.Chandra Kumar case, as also, in Union of India v. Madras BarAssn. (2010). Therein, this Court has recognised that transferof jurisdiction is permissible but in effecting such transfer, thecourt to which the power of adjudication is transferred must beendured with salient characteristics, which were possessed bythe court from which the adjudicatory power has beentransferred…

XXX

128. There seems to be no doubt, whatsoever, that the Membersof court/tribunal to which adjudicatory functions are transferredmust be manned by Judges/members whose stature andqualifications are commensurate to the court from which theadjudicatory process has been transferred. This position isrecognised the world over. The constitutional conventions in

respect of Jamaica, Ceylon, Australia and Canada, on this aspectof the matter have been delineated above. The opinion of thePrivy Council expressed by Lord Diplock in Hinds case, has beenshown as being followed in countries which have Constitutionson the Westminster model. The Indian Constitution is one suchconstitution. The position has been clearly recorded whileinterpreting Constitutions framed on the above model, namely, thateven though the legislature can transfer judicial power from atraditional court to an analogous court/tribunal with differentname, the court/tribunal to which such power is transferred shouldbe possessed of the same salient characteristics, standards andparameters, as the court the power whereof was beingtransferred. It is not possible for us to accept that AccountantMembers and Technical Members have the stature andqualification possessed by the Judges of High Courts.”

163. We concur with the above which reiterates the consistentview taken by this Court in number of cases. It is also well-established principle followed throughout in various other jurisdictionsas well, that wherever Parliament decides to divest the traditional Courtsof their jurisdiction and transfer the lis to some other analogous Court/Tribunal, the qualification and acumen of the members in such Tribunalmust be commensurate with that of the Court from which theadjudicatory function is transferred. Adjudication of disputes which wasoriginally vested in Judges of Courts, if done by technical or non-judicialmember, is clearly dilution and encroachment on judicial domain. Withgreat respect, Parliament cannot divest judicial functions upon technicalmembers, devoid of the either adjudicatory experience or legalknowledge.

164. It is necessary to notice few other changes brought aboutby the new Rules. Firstly, most Tribunals were earlier headed by judicialmembers. With the exception of some Tribunals like the Debt RecoveryTribunal, presiding officers were retired judges either of the SupremeCourt or of High Courts. Under the present formulation of Rules, theCentral Government has widened eligibility by making persons whootherwise have no judicial or legal experience but if they are otherwiseof “ability, integrity and standing, and having special knowledgeof, and professional experience of” certain specialised subjects“which in the opinion of the Central Government is useful” eligiblefor being appointed as presiding officers. Further, others who are

A“qualified to be” Supreme Court and High Court judges can also headTribunals. perusal of Articles 124(3) and 217(2) of the Constitutionshows that it specifies only the very minimum prerequisites forappointment as judge of the Constitutional Courts. Instead, apredominant portion of the consideration for appointment to this Courtor to the High Courts is uncodified and is based on holisticBconsideration of the practice, legal acumen, expertise and character ofAdvocates. The effect of the new criteria would be to make everysecond advocate eligible, in effect, vastly diluting the qualifications forappointment. The characteristics necessary of such people are alsovague which resultantly increases executive discretion. It thus affectsCboth judicial independence as well as capability and competency of theseTribunals. The power/discretion vested to specify qualifications anddecide who should man the Tribunals has to be exercised keeping inview the larger public interest and the same must be just, fair andreasonable and not vague or imprecise.D165. At this juncture it must also be reiterated that equality canonly be amongst equals, and that it would be impermissible to treatunequals equally on the basis of undefined contours of ‘Uniformity’.A Tribunal to have the character of quasi-judicial body and legitimatereplacement of Courts, must essentially possess dominant judicialcharacter through their members/presiding officers. It was observedEin Madras Bar Association (2010) (supra) that it is fundamentalprerequisite for transferring adjudicatory functions from Courts toTribunals that the latter must possess the same capacity andindependence as the former, and that members as well as the presidingofficers of Tribunals must have significant judicial training and legalFexperience. Further, knowledge, training and experience of members/presiding officers of Tribunal must mirror, as far as possible, that ofthe Court which it seeks to substitute. Illustratively, the composition ofAppellate Tribunal under the Smugglers and Foreign ExchangeManipulators (Forfeiture of Property) Act, 1976, delineating thisincongruity is reproduced below for reference:GAppellate Tribunal under the Smugglers and ForeignExchange Manipulators (Forfeiture of Property) Act, 1976

(1) The Chairman of the Appellate Tribunal shall be personwho is or has been or is qualified to be Judge of aHSupreme Court or Judge of High Court.

(2) The Member of the Appellate Tribunal shall be personnot below the rank of Joint Secretary to the Governmentof India.

166. It appears to us to be incomprehensible as to how bothSupreme Court and High Court judges can be eligible for the same postwhen their experience, exposure, knowledge and stature under theConstitution are vastly different and the two do not form onehomogenous class. There can be no forced equality between the two.Doing so would be suggestive of non-application of mind. Such anexercise would merit judicial interference.

167. Further, dispensation of justice requires that the adjudicatinginstitution command respect with the populace. Anomalous situationscreated by allowing High Court judges to be appointed to positionoccupied earlier by Supreme Court judge, affects the prestige of theJudiciary as an institution.

168. The stature of the people manning an institution lendscredibility and colour to the institution itself. There is perceptiblesignalling effect in having retired Supreme Court justices as presidingofficers of particular Tribunal of National importance. The same instilsan inherent fairness, dignity and exalted status in the Tribunal. Permittingsuch institutions to be also occupied by persons who have not mannedan equivalent position or those with lesser judicial experience, does notbode well for the Tribunal besides discouraging competent people fromoffering their services. On the same analogy, it would be an anathemato say that High Court judges and District Court judges can both occupythe same position in Tribunal.

(C) Constitutionality of procedure of removal

169. It is clear from the Scheme contemplated under the Rulesthat the government has significantly diluted the role of the Judiciary inappointment of judicial members. Further, in many Tribunals like theNGT, the role of the Judiciary in appointment of non-judicial membershas entirely been taken away. Such practice violates the Constitutionalscheme and the dicta of this Court in various earlier decisions alreadyreferred to. It is also important to note that in many Tribunals like theNational Green Tribunal where earlier removal of members or presidingofficer could only be after an enquiry by Supreme Court Judges andwith necessary consultation with the Chief Justice of India, under the

Apresent Rules it is permissible for the Central Government to appointan enquiry committee for removal of any presiding officer or memberon its own. The Rules are not explicit on who would be part of sucha Committee and what would be the role of the Judiciary in the process.In doing so, it significantly weakens the independence of the Tribunalmembers. It is well understood across the world and also under ourBConstitutional framework that allowing judges to be removed by theExecutive is palpably unconstitutional and would make them amenableto the whims of the Executive, hampering discharge of judicialfunctions.

170. In Madras Bar Association (2014) (supra), this Court heldCthat:

“…it was acknowledged that Parliament was not precluded fromestablishing court under new name to exercise the jurisdictionthat was being exercised by members of the higher judiciary atthe time when the Constitution came into force. But when thatDwas done, it was critical to ensure that the persons appointed tobe members of such court/tribunal should be appointed in thesame manner and should be entitled to the same security oftenure as the holder of the judicial office at the time when theConstitution came into force. Even in the treatise ConstitutionalELaw of Canada by Peter W. Hogg, it was observed: if provinceinvested tribunal with jurisdiction of kind, which ought toproperly belong to Superior, District or Country Court, then thatcourt/tribunal (created in its place), whatever is its official name,for constitutional purposes has to, while replacing Superior,District or Country Court, satisfy the requirements and standardsFof the substituted court. This would mean that the newlyconstituted court/tribunal will be deemed to be invalidlyconstituted, till its members are appointed in the same manner,and till its members are entitled to the same conditions of serviceas were available to the Judges of the court sought to beGsubstituted.”

171. It is essential that the same be observed in letter and spiritand we therefore reiterate that Members and Presiding Officers ofTribunals cannot be removed without either the concurrence of theJudiciary or in the manner specified in the Constitution for ConstitutionalHCourt judges.

(D) Term of Office and Maximum Age

172. Various enactments providing for appointment and otherincidentals of members have been brought to our notice to demonstratean apparent disparity in age of superannuation of Members andChairpersons/Presiding Officers of different Tribunals. Illustratively,Section 14D of the Telecom Regulatory Authority of India Act, 1997provides Member of Telecom Disputes Settlement and AppellateTribunal shall not hold office after attaining the age of sixty-five years,whereas, Section 55(1) of the Consumer Protection Act, 2019 providesthat Member of the National Consumer Disputes RedressalCommission shall not hold office after attaining the age of sixty-sevenyears. This difference in superannuation age may lead to an undesirablesituation wherein member of Tribunal with low retirement age canbe reappointed in another Tribunal with higher retirement age.

173. The Constitution of India doesn’t differentiate between HighCourts in terms of conditions of service of judges and prescribes auniform age of superannuation for judges of all High Courts. Conformingto the principle, as held in earlier judgements of this Court, the Tribunalsshould have similar standards of appointment and service as that of theCourt it is substituting. There must, therefore, be uniform age ofsuperannuation for all members in all the Tribunals.

174. The only differentiation in age of superannuation providedby the Constitution is that between judges of High Courts and SupremeCourt. We find the reason for the same in the intention of the ConstituentAssembly which aimed to incorporate the experience and knowledgeof High Court Judge when elevated as Supreme Court judge. Hence,to utilise the experience and knowledge acquired during tenure as ajudge of High Court, Supreme Court judges are provided with higherage of superannuation than the judges of High Court. Similarly, thedifference between age of superannuation of Chairman/PresidingOfficer and Member of Tribunal is because Chairman/PresidingOfficer is not promotional post and thus cannot be equated with thatof the Member. The post of Chairman/Presiding Officer requires judicialand administrative experience of at least that of the judge of HighCourt which is evident from the statutes prescribing them.

A175. Another oddity which was brought to our notice is that therehas been an imposition of short tenure of three years for the membersof the Tribunals as enumerated in the Schedule of Tribunals Rules, 2017.A short tenure, coupled with provision of routine suspensions pendingenquiry and lack of immunity thereof increases the influence and controlBof the Executive over Members of Tribunals, thus adversely affectingthe impartiality of the Tribunals. Furthermore, prescribing such shorttenures precludes cultivation of adjudicatory experience and is thusinjurious to the efficacy of Tribunals.

176. This Court criticised the imposition of short tenures ofCmembers of Tribunals in Union of India v. Madras Bar Association,(2010) (supra) and longer tenure was recommended. It was observedthat short tenures also discourage meritorious members of Bar tosacrifice their flourishing practice to join Tribunal as Member for ashort tenure of merely three years. The tenure of Members of Tribunalsas prescribed under the Schedule of the Rules is anti-merit and attemptsDto create equality between unequals. tenure of three years may besuitable for retired Judge of High Court or the Supreme Court or evenin case of judicial officer on deputation. However, it will be illusoryto expect practising advocate to forego his well-established practiceto serve as Member of Tribunal for period of three years. TheElegislature intended to incorporate uniformity in the administration ofTribunal by virtue of Section 184 of Finance Act, 2017. Nevertheless,such uniformity cannot be attained at the cost of discouragingmeritorious candidates from being appointed as Members of Tribunals.177. Additionally, the discretion accorded to the Central or StateFGovernment to reappoint members after retirement from one Tribunalto another discourages public faith in justice dispensation system whichis akin to loss of one of the key limbs of the sovereign. Additionally,the short tenure of Members also increases interference by theExecutive jeopardising the independence of judiciary.G

178. In the light of the discussion as aforesaid, we hold that theRules would require second look since the extremely short tenure ofthe Members of Tribunals is anti-merit and has the effect ofdiscouraging meritorious candidates to accept posts of Judicial Membersin Tribunals.H

(E) Contradictions in the Rules

179. On the contentions of parties and in the light of theaforementioned discussion, the Bench has observed followingcontradictions in the Rules:

(a) There is an inconsistency within the Rules with regardto the tenure prescribed for the Members of Tribunalsinsofar as fixed tenure of three years for both directappointments from the Bar and appointment of retiredjudicial officers or judges of High Court or SupremeCourt. It is also discriminatory to the extent that itattempts to create equality between unequal classes. Thetenure of Members, Vice-Chairman, Chairman, etc. mustbe increased with due consideration to the priordecisions of the Court.

(b) The difference in the age of superannuation of theMembers, Vice-Chairmen and Chairmen, as formulatedin the Rules is contrary to the objectives of the FinanceAct, 2017 viz., to attain uniformity in the compositionof the Tribunal framework. There should be uniformage of superannuation for Members, Vice-Chairmen,Chairmen, etc. in all Tribunals.

(c) Rule 4(2) of the Rules providing that the Secretary tothe Government of India in the Ministry or Departmentunder which the Tribunal is constituted shall be theconvener of the Search-cum-Selection Committee, is indirect violation of the doctrine of Separation of Powersand thus contravenes the basic structure of theConstitution. Corollary to the dictum of this Court in theFourth Judges Case, judicial dominance in appointmentof members of judiciary cannot be diluted by theExecutive.

(d) Rule 7 accords unwarranted discretion to the CentralGovernment insofar as it merely directs and notmandates the Central Government to consider therecommendation of Committee for removal of aMember of Tribunal. The Central Government shallmandatorily consider the recommendation of the

Committee before removal of any Member of Tribunal.Furthermore, the proviso to Rule 7 creates an unjustclassification between National Company Law AppellateTribunal (NCLAT) and other fora inasmuch as theremoval of Chairperson or member of NCLAT alone isto be in consultation with the Chief Justice of India.

(e) Moral turpitude is term well defined by this Court innumerous decisions. Rule 7(b) cannot be allowed tosurvive as it allows the Executive to interpret themeaning of ‘moral turpitude’, which is an encroachmenton the judicial domain.

(f) The power of relaxation of rules with respect to anyclass of persons shall be vested with the Search-cum-Selection Committee and not with the CentralGovernment as provided under Rule 20. As ruled by thisCourt earlier in Madras Bar Association (2014)(supra), the Central Government cannot be allowed tohave administrative control over the Judiciary withoutsubverting the doctrine of separation of powers.

ISSUE IV: WHETHER THERE SHOULD BE SINGLENODAL AGENCY FOR ADMINISTRATION OF ALLETRIBUNALS?

180. Ld. Amicus highlighted an apparent problem persisting inthe current Tribunal framework in India. Tribunals established underdifferent Central and State enactments are usually administered by theirsponsoring or parent Ministry or concerned department. Thus, whenFTribunals or members thereof have to seek financial, administrative orany other facility from department who is also the litigant before them,their fairness or independence is likely to be compromised. Such ananomalous situation can only be remedied by the establishment of asingle nodal agency, overseeing the entire Tribunal system in the country,Gbringing all such Tribunals to parity.181. This Court in L. Chandra Kumar v. Union of India(supra), envisaged the administration of the entire Tribunal Frameworkin the country to be monitored by single nodal agency/ministry. It wasobserved not to be advisable to allow supervision of Tribunal by adepartment/ministry which is party before it. This Court recommended

constitution of an independent agency by the concerned Ministry, tooversee the working of Tribunals. The independent agency whenconstituted, may also prescribe uniform code for appointment,qualification, condition of service, manner of allocation of fund, etc. ofthe Tribunals. This will, the Court suggested, minimise the influence ofthe parent ministry of the Tribunal, in addition to ensuring uniformity inthe entire Tribunal framework. The relevant excerpt may be reproducedbelow:

“96. …We are of the view that, until wholly independent agencyfor the administration of all such Tribunals can be set up, it isdesirable that all such Tribunals should be, as far as possible, undera single nodal ministry which will be in position to oversee theworking of these Tribunals. For number of reasons that Ministryshould appropriately be the Ministry of Law. It would be openfor the Ministry, in its turn, to appoint an independent supervisorybody to oversee the working of the Tribunals. This will ensurethat if the President or Chairperson of the Tribunal is for somereason unable to take sufficient interest in the working of theTribunal, the entire system will not languish and the ultimateconsumer of justice will not suffer. The creation of singleumbrella organisation will, in our view, remove many of the illsof the present system. If the need arises, there can be separateumbrella organisations at the Central and the State levels. Sucha supervisory authority must try to ensure that the independenceof the members of all such Tribunals is maintained. To that extent,the procedure for the selection of the members of the Tribunals,the manner in which funds are allocated for the functioning ofthe Tribunals and all other consequential details will have to beclearly spelt out.”

182. In Union of India vs. Madras Bar Association (2010)(supra), five-Judge Constitution Bench of this Court had theopportunity to discuss the Tribunals’ structure as prevalent in the UnitedKingdom. It was noted that United Kingdom has variety of disputeredressal mechanisms which necessitated constitution of numerouscommittees to analyse the functioning of Tribunals. However, this Courtprimarily referred to the Leggatt Committee Report, constituted toundertake the review of delivery of justice through tribunals. Afteranalysing the success story of Tribunals in U.K., this Court noticed

Acontrast in India and expressed its dissatisfaction with respect to thefunctioning of Tribunals in India, observing:

“70. But in India, unfortunately tribunals have not achieved fullindependence. The Secretary of the “sponsoring department”concerned sits in the Selection Committee for appointment. WhenBthe tribunals are formed, they are mostly dependent on theirsponsoring department for funding, infrastructure and even spacefor functioning. The statutes constituting tribunals routinelyprovide for members of civil services from the sponsoringdepartments becoming members of the tribunal and continuingtheir lien with their parent cadre. Unless wide ranging reformsCas were implemented in United Kingdom and as were suggestedby L. Chandra Kumar are brought about, tribunals in India willnot be considered as independent.”

183. This Court had earlier noted the statements of the Ld.Attorney General vide order dated 27 March 2019 in W.P. (C) No. 267/D2012, wherein it was submitted that the Ministry of Law is alreadyoverburdened and cannot effectively perform the supervisory function,as single nodal Ministry, for all the Tribunals, as was earlier suggestedby this Court.

184. What appears to be of paramount importance is that everyETribunal must enjoy adequate financial independence for the purposeof its day to day functioning including the expenditure to be incurredon (a) recruitment of staff; (b) creation of infrastructure; (c)modernisation of infrastructure; (d) computerisation; (e) perquisites andother facilities admissible to the Presiding Authority or the MembersFof such Tribunal. It may not be very crucial as to which Ministry orDepartment performs the duties of Nodal Agency for Tribunal, butwhat is of utmost importance is that the Tribunal should not be expectedto look towards such Nodal Agency for its day to day requirements.There must be direction to allocate adequate and sufficient funds foreach Tribunal to make it self-sufficient and self-sustainable authorityGfor all intents and purposes. The expenditure to be incurred on thefunctioning of each Tribunal has to be necessarily charge on theConsolidated Fund of India. Therefore, hitherto, the Ministry of Financeshall, in consultation with the Nodal Ministry/Department, shall earmarkseparate and dedicated funds for the Tribunals. It will not only ensureHthat the Tribunals are not under the financial control of the Department,

who is litigant before them, but it may also enhance the public faithand trust in the mechanism of Tribunals.

ISSUE V: WHETHER THERE IS NEED FORCONDUCTING JUDICIAL IMPACT ASSESSMENTOF ALL TRIBUNALS IN INDIA?

185. It was brought to our notice by the Learned Counsel forthe petitioner(s) that there is an imminent need for conducting JudicialImpact Assessment of all the Tribunals referable to the Finance Act,2017. It was argued that neither the Legislature nor the Executive hadconducted any assessment to analyse the adverse repercussions of thechanges brought in the framework of Tribunals in India, if any, by thelegislative exercises carried out from time to time.

186. The contentions of the petitioner(s) cannot be said to beunfounded. The three limbs of the State viz., the Legislature, theExecutive and the Judiciary are so intertwined that there is directimpact of the action of one limb on another. Every legislation results inan immediate increase in the number of pending litigations. It is theresponsibility of the other branches of the State to be conscious of thelimitations of the Judiciary in keeping pace with increasing pendencyof litigation. Care has to be taken to ensure that while enhancing theefficacy of legislations the accrual of resultant litigation is minimal.

187. The American principle of ‘Judicial Impact Assessment’ wasfirst borrowed by this Court in its dictum in Salem Advocate Bar Assn.(II) v. Union of India[45], whereby it was observed that it is imperativefor the Legislature to perform Judicial Impact Assessment of theenactment passed to assess its ramifications on the judiciary. This Courthad directed for committee to be constituted to assess the need forJudicial Impact Assessment in the Indian context. Pursuant thereto theJagannadha Rao Committee Report was submitted. The Reportsuggested that by way of Judicial Impact Assessment, the legislaturemust analyse the budgetary requirement of the staff that would requireto be created by the statute and additional expenditure arising out ofthe new cases consequent to the enactment. Further, the financialmemorandum, as prepared by the legislature, must specifically includethe number of civil and criminal cases expected to arise from the newenactment, requirement of more judges and staff for adjudication of

Athese cases and the necessary infrastructure. The requisite paragraphsof the decision in Salem Advocate Bar Assn. (supra) are reproducedas follows:

“49. The Committee has also suggested that:

“Further, there must be ‘judicial impact assessment’, as doneBin the United States, whenever any legislation is introducedeither in Parliament or in the State Legislatures. The financialmemorandum attached to each Bill must estimate not only thebudgetary requirement of other staff but also the budgetaryrequirement for meeting the expenses of the additional casesCthat may arise out of the new Bill when it is passed by thelegislature. The said budget must mention the number of civiland criminal cases likely to be generated by the new Act, howmany courts are necessary, how many judges and staff arenecessary and what is the infrastructure necessary. So far inthe last fifty years such judicial impact assessment has neverDbeen made by any legislature or by Parliament in our country.”

50. Having regard to the constitutional obligation to provide fair,quick and speedy justice, we direct the Central Government toexamine the aforesaid suggestions and submit report to thisCourt within four months.”E

188. In the present case, we are of the view that the legislaturehas not conformed to the opinion of this Court with respect to ‘JudicialImpact Assessment’ and thus, has not made any attempt to assess theramifications of the Finance Act, 2017. It can be legitimately expectedthat the multifarious amendments in relation to merger and reorganisationFof Tribunals may result in massive increase in litigation which, inabsence of adequate infrastructure, or budgetary grants, will overburdenthe Judiciary.

189. In the fitness of things, we deem it appropriate to direct theUnion of India to carry out financial impact assessment in respect ofGall the Tribunals referable to Sections 158 to 182 of the Finance Act,2017 and undertake an exercise to assess the need based requirementsand make available sufficient resources for each Tribunal establishedby the Parliament.

ISSUE VI: WHETHER JUDGES OF TRIBUNALS SETHUP BY ACTS OF PARLIAMENT UNDER ARTICLES

ROJER MATHEW v. SOUTH INDIAN BANK LTD.[RANJAN GOGOI, CJI]

323-A AND 323-B OF THE CONSTITUTION CAN BEEQUATED IN ‘RANK’ AND ‘STATUS’ WITHCONSTITUTIONAL FUNCTIONARIES?

190. concerning trend has been brought to the notice of thisCourt by the Learned Counsels. The Union has, in addition to equalpay and perks, accorded status equivalent to that of Supreme Courtand High Court judges to Chairmen/Presidents of various Tribunals andauthorities.

191. It is apposite to refer to the ‘Warrant of Precedence’ whichdelineates the sequential hierarchy of functionaries which is used mostoften for formal ceremonial arrangements. Such enhancement of thestatus of certain officials is sans any rationale and falls squarely outsidethe Constitutional scheme. Although seemingly pedantic, according statusequivalent or higher than Constitutional functionaries by executive orderor by legislation strikes at the essence of the Constitutional dignity andstature accorded to such authorities. The absurdity of the situation canbe demonstrated clearly if tomorrow bureaucrat is accorded higherstatus than that of Minister, who is the head of his department. Suchdesignations do not have personal value but rather represent theframework and structure of governance envisaged. Illogical changesor altercations hence disturbs the fabric of hierarchy and disciplinenecessary for the effective functioning of the State.192. similar situation arose in T.N. Seshan vs. Union ofIndia[46]wherein the Government of India had by ordinance accordedpay and perks equivalent to that of Supreme Court judges to the ChiefElection Commissioner. Consequently, demand was made foraccording rank in the Warrant of Precedence equivalent to that ofSupreme Court judges. five-judge bench of this Court held that mereequality in conditions of service to that of Supreme Court judge cannotconfer equal status to such other functionaries. It was noted that:

“34. One of the matters to which we must advert is the questionof the status of an individual whose conditions of service are akinto those of the Judges of the Supreme Court. This seemsnecessary in view of the reliance placed by the CEC on thisaspect to support his case. In the instant case some of theservice conditions of the CEC are akin to those of the Supreme

ACourt Judges, namely, (i) the provision that he can be removedfrom office in like manner and on like grounds as Judge of theSupreme Court and (ii) his conditions of service shall not bevaried to his disadvantage after appointment. So far as the firstis concerned instead of repeating the provisions of Article 124(4),the draftsman has incorporated the same by reference. TheBsecond provision is similar to the proviso to Article 125(2). Butdoes that confer the status of Supreme Court Judge on theCEC? It appears from the D.O. No. 193/34/92 dated 23-7-1992addressed to the then Home Secretary, Shri Godbole, the CEChad suggested that the position of the CEC in the Warrant ofCPrecedence needed reconsideration. This issue he seems to haveraised in his letter to the Prime Minister in December 1991. Itbecomes clear from Shri Godbole’s reply dated 25-7-1992, thatthe CEC desired that he be placed at No. 9 in the Warrant ofPrecedence at which position the Judges of the Supreme Courtfigured. It appears from Shri Godbole’s reply that the proposalDwas considered but it was decided to maintain the CEC’s positionat No. 11 along with the Comptroller and Auditor General of Indiaand the Attorney General of India. However, during the courseof the hearing of these petitions it was stated that the CEC andthe Comptroller and Auditor General of India were thereafterEplaced at No. 9-A. At our request the learned Attorney Generalplaced before us the revised Warrant of Precedence which didreveal that the CEC had climbed to position No. 9-A along withthe Comptroller and Auditor General of India. Maintenance ofthe status of Judges of the Supreme Court and the High Courtsis highly desirable in the national interest. We mention thisFbecause of late we find that even personnel belonging to otherfora claim equation with High Court and Supreme Court Judgesmerely because certain jurisdictions earlier exercised by thoseCourts are transferred to them not realising the distinctionbetween constitutional and statutory functionaries. We would likeGto impress on the Government that it should not conferequivalence or interfere with the Warrant of Precedence, if it islikely to affect the position of High Court and Supreme CourtJudges, however pressing the demand may be, without firstseeking the views of the Chief Justice of India. We may addthat Mr G. Ramaswamy, learned counsel for the CEC, frankly

conceded that the CEC could not legitimately claim to be equatedwith Supreme Court Judges. We do hope that the Governmentwill take note of this and do the needful.”

193. In light of the unequivocal assertions of co-ordinate benchof this Court, there can be no doubt that executive action cannot conferstatus equivalent to that of either Supreme Court or High Court judgeson any member or head of any Tribunal or other judicial fora.

194. Furthermore, that even though manned by retired judges ofHigh Courts and the Supreme Court, such Tribunals established underArticle 323-A and 323-B of the Constitution cannot seek equivalencewith High Courts or the Supreme Court. Once judge of High Courtor Supreme Court has retired and he/she no longer enjoys theConstitutional status, the statutory position occupied by him/her cannotbe equated with the previous position as High Court or SupremeCourt judge. The rank, dignity and position of Constitutional judges ishence sui generis and arise not merely by their position in the Warrantof Precedence or the salary and perquisites they draw, but as resultof the Constitutional trust accorded in them. Indiscriminate accordanceof status of such Constitutional judges on Tribunal members andpresiding officers will do violence to the very Constitutional Scheme[47].

195. This Court in L. Chandra Kumar (supra) observed thatTribunals are not substitutes of Superior Courts and are onlysupplemental to them. Hence, the status of members of such Tribunalscannot be equated with that of the sitting judges of Constitutional Courtselse, as V.R. Krishna Iyer, J. aptly pointed in his article titled ‘WhyStultify Judges’ Status?’, “Creating deemed Justices of High Courtswith equal status and salaries suggests an oblique bypassing of theConstitution….”. The relevant extract of L. Chandra Kumar (supra)is reproduced as follows:

“93. Before moving on to other aspects, we may summarise ourconclusions on the jurisdictional power of these Tribunals. TheTribunals are competent to hear matters where the vires ofstatutory provisions are questioned. However, in discharging thisduty, they cannot act as substitutes for the High Courts and theSupreme Court which have, under our constitutional set-up, been

47 Justice VR Krishna Iyer, “Why Stultify Judges’ Status?”, (2002) 2 LW (JS) 85(June, 2000)

142SUPREME COURT REPORTS

Aspecifically entrusted with such an obligation. Their function inthis respect is only supplementary and all such decisions of theTribunals will be subject to scrutiny before Division Bench ofthe respective High Courts….”

196. We would further point out that the Warrant of PrecedenceBis mere self-serving executive decision and not law in itself. It is areflection of the inter-se hierarchy amongst functionaries for thepurposes of discharge of important ceremonial functions and other Stateduties. It cannot either confer rights or alter the status accorded bylaw. It would further be clearly abhorrent to use such an instrument toundermine the order of precedence clearly accorded under theCConstitution.

197. It is hence essential that the Union of India, takes note ofthe observations of this Court herein and abide by the spirit of theConstitution in respecting the aforementioned difference betweenconstitutional functionaries and statutory authorities. It is important forDthe Union of India to ensure that judges of High Courts and the SupremeCourt are kept on separate pedestal distanced from any other Tribunalor quasi-judicial Authority.

ISSUE VII: WHETHER DIRECT STATUTORYAPPEALSFROM TRIBUNALS TO THE SUPREME COURTEOUGHT TO BE DETOURED?

198. During the course of arguments, various facets werehighlighted before this Court, including the soaring pendency of casesand non-adherence of directions of this Court in earlier judgmentsrequiring reconsideration by the legislature of the increasing trend ofFproviding direct statutory appeals to this Court against orders ofTribunals.

199. As discussed earlier, Tribunalisation has increased at rapidpace in the past few decades in our country. Since establishment ofthe ITAT during the pre-independence era, the number of tribunals hasGnow increased to several dozens. The Constitution of India (42[nd]Amendment) Act, 1976 provided for setting up of AdministrativeTribunals through Article 323A as well as other Tribunals under Article323B. These aforementioned provisions in the Constitution wereconstrued by the legislature in manner resulting in the ousting ofHjurisdiction of all Courts except the Supreme Court under Article 136.

Later, in L. Chandrakumar (supra), this court very aptly held thatjudicial review by High Courts under Article 226 is part of the basicstructure and hence could not be ousted by any legislation or evenConstitutional amendment. Moreover, this Court in L. Chandrakumar(supra) and later in Madras Bar Association (2014) (supra) andGujarat Urja Vikas Ltd. (supra) reiterated the urgent need to do awaywith increasingly common provisions in statutes providing directstatutory appeal to this Court, which as discussed elaborately belowposes significant problems in the administration of justice and is alsoagainst the Constitutional scheme.

200. Since the aforesaid issue has not been directly raised bythe petitioners and only passing reference has been made, it isnecessary to delineate whether providing such appeals to this Court isin consonance with the three-tier Judicial system as established underour Constitution.

201. An examination of the jurisdiction of the Supreme Court asenvisaged under the Constitution must be made. Such jurisdictionbestowed upon this Court by the Constitution can be broken into threelimbs: appellate, original and advisory. brief description of thesejurisdictions is provided below:

Original jurisdiction:

(i) Writ jurisdiction under Article 32.

(ii) Disputes of election to President/Vice-President underArticle 71.

(iii) Inter-state or State-Centre disputes under Article 131.

(iv) Transfer cases under Articles 139 and 139A.

(v) Contempt of Court under Article 145.

Appellate jurisdiction:

(i) Appeals against orders of High Courts with certificateGof there being substantial constitutional questions underArticle 132.

(ii) Appeals against orders of High Courts in civil caseswith certificate that there is substantial question ofgeneral importance or that the matter needs to bedecided by the HC under Article 133.H

(iii) Appeals against orders of High Courts in criminal casesagainst award of death penalty in the first instance bythe HC, either on appeal or in original trial under Article134.

(iv) All other cases appealable to the Federal Court beforeBcommencement of the Constitution under Article 135.

(v) Discretionary power to grant special leave to appeal anyorder by any court or tribunal under Article 136.

Advisory jurisdiction:

C(i) Presidential reference under Article 143.

(ii) Reference on removal of Public Service Commissionmember under Article 317.

202. The ambit of appellate jurisdiction is clear from perusalof Articles 132 to 136 of the Constitution. Article 132 provides that anDappeal may be instituted before the Supreme Court against any orderof the High Court where substantial question of law arises forconsideration. Article 133(3) specifies that there shall be no appeal fromthe order of single judge of the High Court unless the contrary isprovided through law by the Parliament. Further, Article 134 delineatesEthe jurisdiction of the Supreme Court in criminal matters restricting itprimarily to cases where the High Court has awarded death sentenceeither in trial before it or in reversal of an earlier acquittal by the trialcourt. In addition to this, Article 134(2) is lucid in its wording to providethat in absence of any specific legislation by the Parliament to enlargeFthe criminal appellate jurisdiction of this Court, no routine appeal liesbefore the Supreme Court in criminal matters. The extract from Article134(2) has been reproduced below:

“(2) Parliament may by law confer on the Supreme Court anyfurther powers to entertain and hear appeals from any judgment,Gfinal order or sentence in criminal proceeding of High Courtin the territory of India subject to such conditions and limitationsas may be specified in such law.”

203. Article 134(2) is successful in clarifying two things. Firstly,there is no provision analogous to Article 134(2) under Article 133 toHexpand the jurisdiction of the Supreme Court in non-criminal matters.

ROJER MATHEW v. SOUTH INDIAN BANK LTD.[RANJAN GOGOI, CJI]

Secondly, Article 134(2) does not encompass matters other than thosearising out of criminal proceedings from the High Courts.

204. Presently, there are more than two dozen statutes whichprovide direct appeals to the Supreme Court from various Tribunals andHigh Courts. non-exhaustive list of such Statutes includes:

(i) Section 35L of the Central Excise Act, 1944 (1 of 1944);

(ii) Section 116A of the Representation of the People Act,1951 (43 of 1951);

(iii) Section 38 of the Advocates Act, 1961 (25 of 1961);

(iv) Section 261 of the Income Tax Act, 1961 (43 of 1961)before the establishment of National Tax Tribunal;

(v) Section 130E of the Customs Act, 1962 (52 of 1962);

(vi) Section 19(1)(b) of the Contempt of Courts Act, 1971(70 of 1971);

(vii) Section 374 and 379 of the Code of Criminal Procedure,1973 (2 of 1974) read with Section 2 of Supreme Court(Enlargement of Criminal Appellate Jurisdiction) Act,1970 (28 of 1970);

(viii) Section 23 of the Consumer Protection Act, 1986 (68of 1986);

(ix) Section 19 of the Terrorist and Disruptive Activities(Prevention) Act, 1987 (28 of 1987);

(x) Section 10 of the Special Courts (Trial of Offencesrelating to Transactions in Securities) Act, 1992 (27 of1992);

(xi) Section 15Z of the Securities and Exchange Board ofIndia Act, 1992 (15 of 1992);

(xii) Section 18 of the Telecom Regulatory Authority of IndiaAct, 1997 (24 of 1997);

(xiii) Section 53T of the Competition Act, 2002 (12 of 2003);

(xiv) Section 125 of the Electricity Act, 2003 (36 of 2003);

(xv) Section 24 of the National Tax Tribunal Act, 2005 (49of 2005);

(xvi) Section 30 of the Armed Forces Tribunal Act, 2007 (55of 2007);

(xvii) Section 37 of the Petroleum and Natural Gas RegulatoryBoard Act, 2006 (19 of 2006);

(xviii) Section 31 of the Airports Economic RegulatoryAuthority of India Act, 2008 (27 of 2008);

(xix) Section 22 of the National Green Tribunal Act, 2010 (19of 2010);

(xx) Section 423 of the Companies Act, 2013 (18 of 2013);

(xxi) Section 38 of the Pension Fund Regulatory andDevelopment Authority Act, 2013 (23 of 2013);

(xxii) Section 21 of the Black Money (Undisclosed ForeignIncome and Assets) and Imposition of Tax Act, 2015(22 of 2015);

(xxiii) Section 62 and 182 of Insolvency and Bankruptcy Code,2016 (31 of 2016); and

(xxiv) Section 118 of the Central Goods and Services Tax Act,2017 (12 of 2017).

E205. Such statutory appeals take away the inherent ability of theSupreme Court, as envisaged in the Constitution, to regulate casesbefore it by confining its consideration to cases involving the mostegregious of wrongs and/or having the greatest impact on public interest.

206. Further, in providing for appeals directly from Tribunals, theFjurisdiction of High Courts is in effect curtailed to great extent. Notonly does this hamper access to justice, but it also takes away the muchneeded exposure for High Court judges, earnestly needed in vibrantand ever-evolving judiciary. Since majority of the judges of the SupremeCourt are elevated from the High Courts, their lack of exposure to thesespecialised areas of law hinders their efficacy in adjudicating the directGstatutory appeals from specialised Tribunals.

207. perusal of the Indian Judiciary: Annual Report 2017-18, published by this Court shows that pendency in the Supreme Courtstands at more than 56,000 cases. Each year this Court hears ahumungous volume of cases and disposes of approximately 60,000 -H90,000 cases annually, thus amounting to staggering 4,000 - 6,000

cases per bench. Out of all the cases instituted before this Court, lessthan 2% is for exercise of writ jurisdiction under Article 32 whereasan overwhelming majority of cases are petitions for special leave toappeal under Article 136.

208. Although the rate of admission of cases peaked at about20% in 2011 and has fallen since then, it is still far above the marginalrate of about 1% in other comparable jurisdictions such as the SupremeCourt of the United States. The mere task of hearing all cases andconsidering whether to grant leave or not usurps majority of theCourt’s time. As result of frequent invocation of Article 136 by litigants,the Court is left with hardly any time to discharge its key Constitutionalfunctions of deciding substantial Constitutional questions, as envisagedby our founding fathers. As compared to the early 1960s whereConstitution Benches decided hundreds of cases, the number is no morethan dozen now. Most seminal cases involving major issues ofjurisprudence or effecting revolutionary changes on the legal landscapeare by compulsion heard by Division Benches, thus defeating the veryobjective of Article 145(3).209. The decrease in propensity of person with humble meansor situated farther away from the Delhi to approach the Supreme Courtis evidence of the fact that the remedy to approach this Court has been,in effect, limited to only those with access to ample financial resources.Numerous studies have shown how every tenth case decided by theHigh Court of Delhi or every sixteenth case decided by the High Courtof Punjab & Haryana is appealed before this Court, as compared to aminuscule rate of appeal of little over 1% against the decision of HighCourt of Madras. Being an authority entrusted to resolve Constitutionalconflicts or to safeguard the fundamental rights of citizens, this Courtcannot afford to provide access only to the affluent. Although it wouldbe futile to examine the effects of such rampant regular appeals,however, it is apparent that it substantially affects the time and qualityof judicial determination by this Court. This view had also been notedin the 272[nd] Report of the Law Commission wherein it was pointed outthat:

“3.12. The objective behind establishing the ‘Tribunals’ was toprovide an effective and speedier forum for dispensation ofjustice, but in the wake of routine appeals arising from the ordersof such forums, certain issues have been raised because such

Aappeals are obstructing the constitutional character of theSupreme Court and thus,disturbing the effective working of theSupreme Court as the appeals in these cases do not alwaysinvolve question of general public importance. The SupremeCourt is primarily expected to deal with matters of constitutionalimportance and matters involving substantial question of law ofBgeneral public importance. Due to overburdening, the SupremeCourt is unable to timely address such matters.”

210. Resultantly, majority of the matters involving significantConstitutional questions remain untouched for years; consequently theability of this Court to keep in check the legislative and executiveCencroachments is significantly compromised. Cases heard by theConstitution Bench comprising of five or more judges have fallensignificantly from over 15% in the 1950s to an average of 0.1 - 0.2%during the last two decades. Hence, it is clear that this Court has been,in way, transformed from Constitutional-Writ Court to Court ofDAppeals whereunder mere increase of the number of judges is no morea solution. Whilst the number of judges has increased slightly more thanfour times, the number of cases since 1950 has increased more thanseventy folds! It is clear that there is pressing need to realign theexercise of jurisdiction of this Court and ensure that the Constitutionalvision is not defeated. This view has been resonated by this Court sinceEit was highlighted by Justice P.N. Bhagwati in Bihar Legal SupportAuthority vs. Chief Justice of India[48]in the following manner:

“The Supreme Court of India was never intended to be regularcourt of appeal against orders made by the High Court or thesessions court of the magistrates. It was created for the purposeFof laying down the law for the entire country and theextraordinary jurisdiction of granting special leave was conferredupon it under Article 136 of the Constitution so that it couldinterfere whenever it found that the law was not correctlyenunciated by the lower courts or tribunals and it was necessaryGto pronounce the correct law on the subject.”

211. It is evident that this Court has also lost its original characterowing to the routine hearing of appeals through invocation of thediscretionary jurisdiction under Article 136. It is apposite to hold that

Article 136 was never meant to be used in this manner as was veryaptly remarked by Dr. B.R. Ambedkar before the Constituent Assembly,who noted that:

“The Supreme Court is not likely to grant special leave in anymatter whatsoever unless it finds that it involves serious breachof some principle in the administration of justice, or breach ofcertain principles which strike at the very root of administrationof justice as between man and man.”

212. Such self-effacement of this Court’s Constitutional dutiesrequires to be reined in. It is, therefore, essential that this Courtjudiciously exercise its appellate jurisdiction. For the discharge ofConstitutional functions of deliberating on substantial questions of law,answering Constitutional questions and resolving other issues of greatpublic importance, it is essential that this Court has adequate time toapply its mind and consider matters in depth. The existing practice ofbringing every second case before the SC under Article 136 must bedeprecated.

213. Such proposed restrictive appellate jurisdiction wouldmirror the practice of the highest Courts in various other jurisdictions.The Supreme Court of the United States in the famous case ofMarbury vs. Madison[49]noted that it was impermissible for thelegislature to expand its original jurisdiction. After examining theframework of the Constitution of the United States, the Court notedthat the original jurisdiction of the SC was limited to disputes involvingStates (as federal units) and the Union only. Except for that, all othercases can only be brought about in appellate jurisdiction. Although notexplicitly stated, such an exercise was felt to be necessary to check aburgeoning expansion and overloading of the Court’s docket.

214. Providing statutory appeals directly to the Supreme Courtdents this to no end. With increasing tribunalisation, statutory appealprovisions are ostensibly being included without undertaking any ‘JudicialImpact Assessment’. As of last count there are several hundreds ofcases which have been decided by the NCLAT and many otherthousands by other tribunals pending in this Court.

215. Note must be taken of the direction this country is headingtowards for the same has lasting impact on the kind of disputes which

49 5 U.S. (1 Cranch) 137 (1803).

Aarise before this court. No system can be made in vacuum, includingour own. With the establishment of more tribunals and with increasingcommercialisation in line with India’s transformation to an open marketliberal economy, the number of these cases is bound to only increase.Unlike routine criminal or civil matters which are tried exclusively beforeordinary courts, matters which fall before Tribunals are often complexBand commercial.

216. In light of this, provisions for statutory appeals directly andliberally to the Supreme Court raises the inevitability of bogging theCourt down and inhibiting its Constitutional objective. Further, providingstatutory appeals to this Court against orders of Tribunals alsoCundermines the essence of tribunalisation. It is hardly rational to stateon one hand that an alternate to the ordinary method of justicedispensation needs to be provided owing to the complicated proceduresand owing to the lack of specialisation of District and High Courts, andin the same breadth also provide statutory appeals to the final Court inDthat very original system.

217. If High Courts are ill placed to hear routine matters then ithardly seems justifiable that this Court would be any better placed toresolve disputes in appellate jurisdiction. Finality as principle must beencouraged and providing statutory appeals to the Supreme Court onlyEundermines the same. Instead, no discernible harm would arise ifdecisions of Tribunals or High Courts attain finality, without reachingthis Court.

218. dichotomy in law is further caused by provisions of directappeal from Tribunals to this Court, as noted in the case of the ArmedFForces Tribunals in Union of India v. Major General ShrikantSharma[50]. The two-judge Bench viewed that:

“Likelihood of anomalous situation

42. If the High Court entertains petition under Article 226 ofthe Constitution of India against an order passed by the ArmedGForces Tribunal under Section 14 or Section 15 of the Actbypassing the machinery of statute i.e. Sections 30 and 31 ofthe Act, there is likelihood of anomalous situation for the aggrievedperson in praying for relief from this Court.

43. Section 30 provides for an appeal to this Court subject toleave granted under Section 31 of the Act. By clause (2) ofArticle 136 of the Constitution of India, the appellate jurisdictionof this Court under Article 136 has been excluded in relation toany judgment, determination, sentence or order passed or madeby any court or tribunal constituted by or under any law relatingto the Armed Forces. If any person aggrieved by the order ofthe Tribunal, moves the High Court under Article 226 and theHigh Court entertains the petition and passes judgment or order,the person who may be aggrieved against both the orders passedby the Armed Forces Tribunal and the High Court, cannotchallenge both the orders in one joint appeal. The aggrievedperson may file leave to appeal under Article 136 of theConstitution against the judgment passed by the High Court butin view of the bar of jurisdiction by clause (2) of Article 136,this Court cannot entertain appeal against the order of the ArmedForces Tribunal. Once, the High Court entertains petition underArticle 226 of the Constitution against the order of the ArmedForces Tribunal and decides the matter, the person who thusapproached the High Court, will also be precluded from filing anappeal under Section 30 with leave to appeal under Section 31of the Act against the order of the Armed Forces Tribunal as hecannot challenge the order passed by the High Court underArticle 226 of the Constitution under Section 30 read with Section31 of the Act. Thereby, there is chance of anomalous situation.Therefore, it is always desirable for the High Court to act in termsof the law laid down by this Court as referred to above, whichis binding on the High Court under Article 141 of the Constitutionof India, allowing the aggrieved person to avail the remedy underSection 30 read with Section 31 of the Armed Forces TribunalAct.

44. The High Court (the Delhi High Court) while entertainingthe writ petition under Article 226 of the Constitution bypassedthe machinery created under Sections 30 and 31 of the Act.However, we find that the Andhra Pradesh High Court and theAllahabad High Court had not entertained the petitions underArticle 226 and directed the writ petitioners to seek resort underSections 30 and 31 of the Act. Further, the law laid down bythis Court, as referred to above, being binding on the High Court,

Awe are of the view that the Delhi High Court was not justifiedin entertaining the petition under Article 226 of the Constitutionof India.”

219. The seven-judge Constitution Bench in L. Chandra Kumar(supra) considered at great length the permissibility of altering theBpower of judicial review exercisable by High Courts under Article 226.It authoritatively held that all orders passed by Tribunals which havebeen established under Article 323A or 323B of the Constitution, shallbe amenable to the writ jurisdiction of High Courts. This Court, however,in an attempt to respect the intent of facilitating speedy disposalCexpressed by the Parliament, directed that such orders of the CentralAdministrative Tribunals be heard by Division Bench of the High Courtif challenged under Article 226. This Court, thus, held:-“91. It has also been contended before us that even in dealingwith cases which are properly before the Tribunals, the mannerDin which justice is dispensed by them leaves much to be desired.Moreover, the remedy provided in the parent statutes, by wayof an appeal by special leave under Article 136 of theConstitution, is too costly and inaccessible for it to be real andeffective. Furthermore, the result of providing such remedy isEthat the docket of the Supreme Court is crowded with decisionsof Tribunals that are challenged on relatively trivial grounds andit is forced to perform the role of first appellate court. We havealready emphasised the necessity for ensuring that the HighCourts are able to exercise judicial superintendence over thedecisions of the Tribunals under Article 227 of the Constitution.FIn R.K. Jain case [(1993) 4 SCC 119 : 1993 SCC (L&S) 1128 :(1993) 25 ATC 464] , after taking note of these facts, it wassuggested that the possibility of an appeal from the Tribunal onquestions of law to Division Bench of High Court withinwhose territorial jurisdiction the Tribunal falls, be pursued. ItGappears that no follow-up action has been taken pursuant to thesuggestion. Such measure would have improved mattersconsiderably. Having regard to both the aforestated contentions,we hold that all decisions of Tribunals, whether created pursuantto Article 323-A or Article 323-B of the Constitution, will beHsubject to the High Court’s writ jurisdiction under Articles 226/

227 of the Constitution, before Division Bench of the High Courtwithin whose territorial jurisdiction the particular Tribunal falls.”

220. It is hence clear post L Chandrakumar (supra) that writjurisdiction under Article 226 does not limit the powers of High Courtsexpressly or by implication against military or armed forces disputes.The limited ouster made by Article 227(4) only operates quaadministrative supervision by the High Court and not judicial review.Article 136(2) prohibits direct appeals before the Supreme Court froman order of armed forces tribunals, but would not prohibit an appeal tothe Supreme Court against the judicial review exercised by the HighCourt under Article 226.

221. However, it is essential that High Courts use such powersof judicial review restrictively and on limited grounds, similar to theconcept of ‘regulatory deference’ which has evolved in the UnitedStates. Such need was also noted by nine-judge bench in MafatlalIndustries Ltd. vs. Union of India[51]which held that:

“… While the jurisdiction of the High Courts under Article 226—and of this Court under Article 32—cannot be circumscribed bythe provisions of the said enactments, they will certainly havedue regard to the legislative intent evidenced by the provisionsof the said Acts and would exercise their jurisdiction consistentwith the provisions of the Act. The writ petition will be consideredand disposed of in the light of and in accordance with theprovisions of Section 11-B. This is for the reason that the powerunder Article 226 has to be exercised to effectuate the rule oflaw and not for abrogating it.”

222. The jurisdiction under Article 226, being part of the basicstructure, can neither be tampered with nor diluted. Instead, it has tobe zealously-protected and cannot be circumscribed by the provisionsof any enactment, even if it be formulated for expeditious disposal andearly finality of disputes. Further, High Courts are conscious enough tounderstand that such power must be exercised sparingly by them toensure that they do not become alternate forums of appeal. five-judge

51 (1997) 5 SCC 536

52 (1955) 2 SCR 1

Abench in Sangram Singh v. Election Tribunal[52]whilst reiterating thatjurisdiction under Article 226 could not be ousted, laid down certainguidelines for exercise of such power:

“13. The jurisdiction which Articles 226 and 136 confer entitlesthe High Courts and this Court to examine the decisions of allBtribunals to see whether they have acted illegally. That jurisdictioncannot be taken away by legislative device that purports toconfer power on tribunal to act illegally by enacting statutethat its illegal acts shall become legal the moment the tribunalchooses to say they are legal. The legality of an act or conclusionCis something that exists outside and apart from the decision ofan inferior tribunal. It is part of the law of the land whichcannot be finally determined or altered by any tribunal of limitedjurisdiction. The High Courts and the Supreme Court alone candetermine what the law of the land is vis-a-vis all other courtsand tribunals and they alone can pronounce with authority andDfinality on what is legal and what is not. All that an inferior tribunalcan do is to reach tentative conclusion which is subject toreview under Articles 226 and 136. Therefore, the jurisdictionof the High Courts under Article 226 with that of the SupremeCourt above them remains to its fullest extent despite Section105.”E

223. It is apparent that the Legislature has not been providedwith desired assistance so that it may rectify the anomalies which arisefrom provisions of direct appeal to the Supreme Court. Considering thatsuch direct appeals have become serious impediments in the dischargeFof Constitutional functions by this Court and also affects access tojustice for citizens, it is high time that the Union of India, in consultationwith either the Law Commission or any other expert body, revisit suchprovisions under various enactments providing for direct appeals to theSupreme Court against orders of Tribunals, and instead provide appealsto Division Benches of High Courts, if at all necessary. Doing so wouldGhave myriad benefits. In addition to increasing affordability of justiceand more effective Constitutional adjudication by this Court, it wouldalso provide an avenue for High Court Judges to keep face withcontemporaneous evolutions in law, and hence enrich them withadequate experience before they come to this Court. We direct thatHthe Union undertake such an exercise expeditiously, preferably within

period of six months at the maximum, and place the findings beforeParliament for appropriate action as may be deemed fit.

ISSUE VIII: WHETHER THERE IS NEED FORAMALGAMATION OF EXISTING TRIBUNALS ANDSETTING UP OF BENCHES

224. While seeking ‘Judicial Impact Assessment’ of all existingTribunals, counsels for petitioners/appellant(s) have underscored theexorbitant pendency before of number of Tribunals like the CESTATand ITAT, which they claim affects the very objective of tribunalisation.On the other hand, they also highlight an incongruity wherein numerousTribunals are hardly seized of any matters, and are exclusively situatedin one location.

225. As noted by this court on numerous occasions, including inMadras Bar Association (2014) (supra), although it is the prerogativeof the Legislature to set up alternate avenues for dispute resolution tosupplement the functioning of existing Courts, it is essential that suchmechanisms are equally effective, competent and accessible. Giventhat jurisdiction of High Courts and District Courts is affected by theconstitution of Tribunals, it is necessary that benches of the Tribunalsbe established across the country. However, owing to the small numberof cases, many of these Tribunals do not have the critical mass of casesrequired for setting up of multiple benches. On the other hand, it isevident that other Tribunals are pressed for resources and personnel.226. This ‘imbalance’ in distribution of case-load andinconsistencies in nature, location and functioning of Tribunals requireurgent attention. It is essential that after conducting Judicial ImpactAssessment as directed earlier, such ‘niche’ Tribunals be amalgamatedwith others dealing with similar areas of law, to ensure effectiveutilisation of resources and to facilitate access to justice.

227. We accordingly direct the Union to rationalise andamalgamate the existing Tribunals depending upon their case-load andcommonality of subject-matter after conducting Judicial ImpactAssessment, in line with the recommendation of the Law Commissionof India in its 272[nd] Report. Additionally, the Union must ensure that,at the very least, circuit benches of all Tribunals are set up at the seatsof all major jurisdictional High Courts.

156SUPREME COURT REPORTS

ACONCLUSION

228. In light of the above discussions and our analysis, it is held

that:

(i) The issue and question of Money Bill, as defined underArticle 110(1) of the Constitution, and certificationBaccorded by the Speaker of the Lok Sabha in respectof Part-XIV of the Finance Act, 2017 is referred to alarger Bench.

(ii) Section 184 of the Finance Act, 2017 does not sufferfrom excessive delegation of legislative functions asthere are adequate principles to guide framing ofdelegated legislation, which would include the bindingdictums of this Court.

(iii) The Tribunal, Appellate Tribunal and other Authorities(Qualifications, Experience and other Conditions ofDService of Members) Rules, 2017 suffer from variousinfirmities as observed earlier. These Rules formulatedby the Central Government under Section 184 of theFinance Act, 2017 being contrary to the parentenactment and the principles envisaged in theEConstitution as interpreted by this Court, are herebystruck down in entirety.

(iv) The Central Government is accordingly directed to re-formulate the Rules strictly in conformity and inaccordance with the principles delineated by this CourtFin R.K. Jain (supra), L. Chandra Kumar (supra),Madras Bar Association (supra) and Gujarat UrjaVikas Ltd. (supra) conjointly read with the observationsmade in the earlier part of this decision.

(v) The new set of Rules to be formulated by the CentralGovernment shall ensure non-discriminatory and uniformGconditions of service, including assured tenure, keepingin mind the fact that the Chairperson and Membersappointed after retirement and those who are appointedfrom the Bar or from other specialised professions/services, constitute two separate and distinctHhomogeneous classes.

(vi) It would be open to the Central Government to providein the new set of Rules that the Presiding Officers orMembers of the Statutory Tribunals shall not hold ‘rank’and ‘status’ equivalent to that of the Judges of theSupreme Court or High Courts, as the case may be, onlyon the basis of drawing equal salary or other perquisites.

(vii) There is need-based requirement to conduct ‘JudicialImpact Assessment’ of all the Tribunals referable to theFinance Act, 2017 so as to analyse the ramifications ofthe changes in the framework of Tribunals as providedunder the Finance Act, 2017. Thus, we find itappropriate to issue writ of mandamus to the Ministryof Law and Justice to carry out such ‘Judicial ImpactAssessment’ and submit the result of the findings beforethe competent legislative authority.

(viii) The Central Government in consultation with the LawCommission of India or any other expert body shall re-visit the provisions of the statutes referable to theFinance Act, 2017 or other Acts as listed in para 174 ofthis order and place appropriate proposals before theParliament for consideration of the need to remove directappeals to the Supreme Court from orders of Tribunals.A decision in this regard by the Union of India shall betaken within six months.

(ix) The Union Government shall carry out an appropriateexercise for amalgamation of existing Tribunals adoptingthe test of homogeneity of the subject matters to be dealtwith and thereafter constitute adequate number ofBenches commensurate with the existing and anticipatedvolume of work.

INTERIM RELIEF

229. As the Tribunal, Appellate Tribunal and other Authorities(Qualification, Experience and other Conditions of Service of Members)Rules, 2017 have been struck down and several directions have beenissued vide the majority judgment for framing of fresh set of Rules,we, as an interim order, direct that appointments to the Tribunal/Appellate Tribunal and the terms and conditions of appointment shall

Abe in terms of the respective statutes before the enactment of theFinance Bill, 2017. However, liberty is granted to the Union of India toseek modification of this order after they have framed fresh Rules inaccordance with the majority judgment. However, in case any additionalbenefits concerning the salaries and emoluments have been grantedunder the Finance Act, they shall not be withdrawn and will beBcontinued. These would equally apply to all new members.

230. The present batch of matters is accordingly disposed of.

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

DR. DHANANJAYA Y. CHANDRACHUD, J

INDEX

AIntroduction

A.1Challenges of the tribunal structure

�A global trend

�The old and the new

�Domain specialisation

�Expedition

�Impact assessment

�Independence

A.2A brief history of tribunalisation in India

A.3Shortcomings of the current framework

BThe Reference to the Constitution Bench

CMoney Bills

�Ordinary Bills, Money Bills and FinancialBills

�Money Bills : Article 110

�Certification by the Speaker

�Final but not conclusiveA

�Matters of procedure and substantiveillegalities

DPuttaswamy: Judicial review of the certificate of theSpeaker

ERole of the Rajya Sabha

�Bicameralism

FMerits of the challenge

F.1Passage as Money Bill

F.2Violation of directions issued by this Court

F.3Severability

GConclusion

AIntroduction

A.1 Challenges of the tribunal structure

global trend

1. India is no exception to the global trend towards thetribunalisation of justice. World over, tribunals have been constitutedboth in regulatory and adjudicatory areas. Tribunals act as adjudicatorsof disputes. This movement has in part been occasioned by newlegislation governing modern societies as they confront the challengesthrown up by the complexities of social and economic orderings. Theengagement of law with economics and technology has been shapedby social, cultural and historical contexts. While many of them mayreflect the shared aspirations of societies governed by common legaltradition, it would be simplistic to assume that the challenges thrownup by the layered adjudication through tribunals are common to allsocieties. Hence, as we analyse the impact of the growing movementtowards tribunalisation – feature which is common to all societies –it is important to bear in mind the context in which our problems havearisen as we attempt to find answers to many of those concerns.Precedents, both judicial and scholarly, in other jurisdictions furnish auseful point of reference, so long as we understand that which ispeculiarly our own.

160SUPREME COURT REPORTS

AThe old and the new

2. Courts and tribunals should in theory be, but are not alwaysin practice, cooperative allies. Tribunals have taken over the mantle ofdeciding cases which conventionally were assigned for adjudication tocourts. Litigation, traditionally the domain of courts, has in incrementalBstages come to be transferred to the decision-making authority oftribunals. There is hence jurisdictional transfer of dispute resolutionto tribunals. Accompanied by legislative enactment, this postulates theexclusivity of entrustment to tribunals. Then again, new tribunals havebeen constituted to deal with subject areas of genre quite distinct from,and therefore, unlike the traditional pattern of litigation with whichCconventional courts were familiar. Tribunals have thus not only takenaway subjects which have been carved out of the jurisdiction of courtsas matter of legislative policy, but have also fostered new cultureof adjudication over areas in which traditional court mechanism hadlittle experience and expertise. In that sense, tribunalisation representsDan amalgam of the old and the new: combination of the role whichwas traditionally performed by the court together with new functionalresponsibilities, quite unlike the dispute resolution function which wastraditionally performed by courts.

Domain specialisationE

3. The movement towards setting up tribunals has been hastenedin many parts by the need for specialisation. Specialisationacknowledges the pool of knowledge and domain expertise of personswho discharge core adjudicatory functions within tribunals. Theassumption which underlies the setting up of tribunals is that those whoFdecide are individuals possessed of the qualities necessary foradjudication in that specific field. Acquisition of knowledge prior toappointment to tribunal and practical experience of handling subjectareas reserved for the tribunal bring together pool of individualspossessing the qualifications and abilities to render specialised justice.In fostering specialisation, the tribunal structure emphasises theGspecialisation of adjudicatory personnel. But equally, an important facetis the specialisation of those who appear before the tribunals. Aspecialised Bar is an invaluable input towards the efficiency ofinstitutional adjudication. Together, this contributes to an adjudicatoryprocess which is cognisant of the special features, needs andHrequirements of the subject areas carved for the tribunal.

4. The extent to which the purpose of setting up tribunals isrealized is often projection of ground realities. These realities, includingthe manner and extent to which provisions of the law governing atribunal are enforced, directly impact upon the efficacy of the tribunal.Critical to the purpose of having specialised tribunal is the presenceof specialised adjudicators on decision-making posts. For, it is theirdomain expertise which defines the quality of outcomes in theadjudicatory process. Collectively, the presence of specialisedadjudicators depends upon well-trained and qualified persons and theiravailability in source pool. This factor has often been lost sight of inthe selection of judges to specialised tribunals. Absent the requisitedegree of expertise, the procedure and functioning of the tribunal mayonly replicate conventional adjudication in court of law which thetribunal seeks to substitute.

Expedition

5. Apart from specialisation, significant reason for theestablishment of tribunals is expedition in the course of justice. This isalso linked to the perceived values implicit in specialised adjudicatoryprocess. Domain expertise, particularly in complex area, is meansof allowing adjudicators who understand the subject to decide quicklyand effectively. It is often expected that the tribunal will followprocedures which are less cumbersome and tied to forms establishedin conventional courts. By allowing for measure of proceduralflexibility coupled with domain knowledge, tribunals are expected toremedy some of the causes which burden the judicial system.

6. Similarly, another object of the growing need for tribunalisationis to unburden the court system. That purpose may be subserved whena chunk of existing cases pending before the conventional court systemare transferred for adjudication to the newly created body. Reducingthe burden on courts is partial realisation of the purpose underlyingthe creation of the tribunal. Equally significant is that the tribunal mustpossess the ability not to allow, over period of time, accretions ofundisposed cases which had created judicial arrears in the first place.Statistical reduction of pending arrears in the judicial system occasionedby the creation of tribunal has to be matched by the capacity of thenew body to dispose of cases transferred to it from the court as wellas new institutions before it. If this is not achieved, the net result is todefeat the very purpose of establishing the tribunal.

AImpact assessment

7. Our analysis above indicates that the actual impact of thecreation of structure of tribunals needs to be closely monitored toassess the efficacy of tribunal as measure of legal reform. Theefficacy of the tribunal is functionally dependent on the availability ofBresources and capital, both human and otherwise. The tribunal mustbe possessed of adequate infrastructure both in terms of physicalavailability and the deployment of technological knowledge in themanagement of litigation. The procedures adopted by the tribunal mustbe flexible enough to allow for decision-making effectively and withoutdelay. The process of making appointments to the tribunals must beCseamless in order to fill up vacancies arising from retirement orunforeseen causes. The presence of large-scale vacancies can rendertribunals defunct. This defeats the cause of justice in the area of thejurisdiction of the tribunal. This problem becomes particularly acutewhere jurisdiction of conventional court has been transferred to theDtribunal under the provisions of an operating enactment. Absent arecourse to traditional courts for the resolution of conflicts, litigant isvirtually denied access as result of an unavailable adjudicator to resolvea dispute. In other words, the process for appointment and selectionhas direct bearing on the efficacy of tribunalisation. Keeping vacanciesunfilled, either as matter of tardy procedures or for other reasons,Ehas the tendency to denude the efficacy of the tribunal as disputeresolution mechanism. The surest way to deny access to justice is tokeep large number of vacancies.

Independence

F8. Above all, the efficacy of tribunalisation rests in the confidencein the process of providing justice. This is determined by theindependence and objectivity of justice providers. There is vital societalinterest in preserving the sanctity of the process by which judges areselected for appointment. The method of selecting and appointing judgesto tribunals determines in the ultimate analysis, the independence of theGtribunals. Tribunals have been conceived as institutional measures toprovide justice in substitution of that provided by conventional courts.Hence, there is valid reason to ensure the independence of theseadjudicating bodies. The process of selection as well as the terms ofappointment is determinative of the ability to attract talent to the tribunals.HHence, in preserving the independence of the tribunals as facet of

judicial independence, the effort must be to ensure that the adjudicatorybody is robust: subservient to none and accountable to the need to renderjustice in the context of specialised adjudication.

A2 brief history of tribunalisation in India

9. Delay and backlog in adjudication of cases was problem evenduring the colonial era.[1] The earliest available effort suggesting reformsto handle arrears was the Justice Rankin Committee report in 1924.Since then, there have been number of expert body reports, includingthe Law Commission of India. In India, the establishment of tribunalswas done in 1941 by the colonial government. Post-Independence,tribunals were first created in the sphere of tax laws. The originalConstitution referred to tribunals only incidentally in Articles 136 and227, which specify that the Supreme Court and the High Courtsrespectively shall have power to review decisions of tribunals. TheHigh Court Arrears Committee constituted with Justice J. C. Shah asChairperson in 1969 recommended the constitution of an independenttribunal to handle service matters pending before the High Courts andthe Supreme Court. The Swaran Singh Committee had been constitutedby the Union Government to recommend changes to the Constitution.Its report released in 1986 recommended the setting up of tribunalsfor three broad subject areas to reduce arrears in the Indian legalsystem. The report further recommended that the decisions of all thesetribunals should be subject to the jurisdiction of the Supreme Court underArticle 136 of the Constitution, but should exclude the jurisdiction of allother courts, including writ jurisdiction.

10. Consequently, the establishment of tribunals in India attainedconstitutional recognition by the insertion of Articles 323A and 323B inthe Constitution, which granted power to the Parliament and statelegislatures to establish administrative tribunals and tribunals for othermatters respectively.

11. In pursuance of the power conferred upon it by clause (1)of Article 323A of the Constitution, Parliament enacted theAdministrative Tribunals Act 1985[2] for the setting up of tribunals to deal

1Arun K Thiruvengadam, ‘Tribunals’ in The Oxford Handbook Of The IndianConstitution (Sujit Choudhry et al eds., (Oxford University Press New York, 2016),pp. 412-31.2“1985 Act”

Aexclusively with service matters. In S P Sampath Kumar v Union ofIndia[3](‘Sampath Kumar’), the first challenge to the constitutionalityof tribunals arose. This court held that the ‘tribunal should be realsubstitute for High Courts — ‘not only in form and de jure but in contentand de facto.’ In this view, alternative arrangements have to beeffective and efficient as also capable of upholding constitutionalBlimitations. The court held that though judicial review is basic featureof the Constitution, vesting of the power of judicial review in analternative institutional mechanism would not do violence to the basicstructure of the Constitution so long as it was ensured that thealternative mechanism was an effective and real substitute for the HighCCourt. It was also held that High-Power Selection Committee[4] mustbe constituted with sitting judge of the Supreme Court nominated bythe Chief Justice of India to ensure the selection of competentadjudicators to the tribunals. Upholding the vires of the 1985 Act, theCourt suggested several amendments to cure the defects with respectto the composition of the tribunal and the mode of appointment of theDChairperson, Vice-Chairperson and members which were to be carriedout by 31 March, 1987.

12. Decisions subsequent to Sampath Kumar had required afresh look by larger Bench of this Court over the issues that had beendecided. In L Chandra Kumar v Union of India[5](‘ChandraEKumar’), seven judge Bench of this Court revisited the challenge tothe 1985 Act and the power conferred on the Parliament or the statelegislatures by Articles 323A(2)(d) and 323B(3)(d), as the case maybe, to exclude the jurisdiction of ‘all courts’, except that of this Courtunder Article 136 in respect of disputes referred to in those Articles.Overruling the decision in Sampath Kumar, this Court drew aFdistinction between the substitutional role and the supplemental role oftribunals with respect to High Courts and held that the role of tribunalsis supplemental in nature.

3(1987) 1 SCC 1244“We do not want to say anything about Vice-Chairman and members dealt with inGsub-sections (2), (3) or (3-A) because so far as their selection is concerned, we areof the view that such selection when it is not of sitting Judge or retired Judge ofa High Court should be done by high-powered committee with sitting Judge ofthe Supreme Court to be nominated by the Chief Justice of India as its Chairman.This will ensure selection of proper and competent people to man these high officesof trust and help to build up reputation and acceptability.”H5(1997) 3 SCC 261

13. Chief Justice M Ahmadi noted that the Constitutionprovides elaborate provisions dealing with terms of appointments ofjudges of higher courts. The learned judge observed that the samesafeguards are not available to the subordinate judiciary or membersof tribunals. Hence, they can never be considered full and effectivesubstitutes for the superior judiciary in discharging the function ofconstitutional interpretation :

“78…The constitutional safeguards which ensure theindependence of the Judges of the superior judiciary, arenot available to the Judges of the subordinate judiciary orto those who man tribunals created by ordinarylegislations. Consequently, Judges of the latter categorycan never be considered full and effective substitutes forthe superior judiciary in discharging the function ofconstitutional interpretation…”

(Emphasis supplied)

The Court struck down Articles 323A(2)(d) and 323B(3)(d) asunconstitutional. It was also held that an “exclusion of jurisdiction”clause enacted in any legislation, under the aegis of Articles 323A(2)(d)and 323B(3)(d) is unconstitutional.

14. In Union of India v R Gandhi, President, Madras BarAssociation[6](‘R Gandhi’), the constitutional validity of Chapters 1-B and 1-C of the Companies Act, 1956 as inserted by the Companies(Second Amendment) Act 2002 which provided for the constitution ofa National Company Law Tribunal[7] and the National Company LawAppellate Tribunal[8] was challenged. Justice R V Raveendran noted thatdespite the salient objective behind the constitution of tribunals, ‘fullindependence’ had not been achieved by them. The Court affirmed theview in Chandra Kumar that tribunal may consist of both judicialand technical members. Judicial members ensure ‘impartiality, fairnessand reasonableness in consideration’ and technical members ensure ‘theavailability of expertise and experience related to the field ofadjudication’.

6 (2010) 11 SCC 17 “NCLT”8 “NCLAT”

A15. Though the legislature is empowered to prescribequalifications for members, the Court held that superior courts in thecountry retain their power of judicial review over the prescribedqualifications to ensure that judicial functions are discharged effectively.The Court surveyed various enactments[9] and the qualificationsprescribed in them for appointment as judicial and technical membersBand noted that the ‘speed at which the qualifications for appointmentas members is being diluted is, to say the least, matter of great concernfor the independence of the judiciary.’ The Court cautioned that tribunalscannot become providers of sinecure to members of civil services, byappointing them as technical members. The Court emphasised thatC‘impartiality, independence, fairness and reasonableness in decisionmaking are the hallmarks of judiciary’ and laid down the eligibilitycriteria for judicial and technical members. Taking note of therecruitment conditions for judicial and technical members, tenure andservice conditions, the Court upheld the creation of the NCLT andNCLAT. Several suggestions to amend part 1-B and 1-C were issued,Dto be carried out as condition precedent to ensure that the NCLTand the NCLAT may be made operational in accordance with theobservations made by this Court.

16. In Madras Bar Association v Union of India[10](‘MadrasBar Association II’), the constitutional validity of the National TaxETribunal Act 2005[11] and the Constitution (Forty-Second) Amendment1976 was challenged on the ground of violating the basic structure ofthe Constitution. The National Tax Tribunal[12] was vested with the powerof adjudicating appeals which included substantial question of lawarising from orders passed by appellate tribunals under specific taxFenactments. Prior to the 2005 Act, the jurisdiction to adjudicate theseappeals lay with the jurisdictional High Court.

17. The Court rejected the contention that there was aconstitutional mandate for the appellate jurisdiction pertaining to taxmatters to remain with the High Courts, but held that the members ofGthe Tribunal should be appointed in the same manner and should be

9Administrative Tribunals Act 1985, Information Technology Act 2000, CompaniesAct 1956 as amended (Chapter 1B).10 (2014) 10 SCC 1

11 2005 ActH12 “NTT”

entitled to the same security of tenure as the judges of the Court soughtto be substituted. The Court rejected the challenge based on theseparation of powers and proceeded to examine the validity of individualprovisions. Section 6 of the Act permitted accountant members ortechnical members in the respective appellate tribunals to be appointedas members of the NTT. The Court affirmed the position laid down inChandra Kumar and R Gandhi that the appointment of technicalmembers is restricted to the cases where technical expertise is essentialfor adjudication and is impermissible in any other case. Thus, theprovision was struck down.

18. Section 7 of the 2005 Act provided for the process of selectionand appointment of the Chairperson and members of the NTT. TheCourt observed that as the jurisdiction of the High Courts was beingtransferred to the Tribunal, the stature of the members, conditions ofservice, and manner of appointment and removal of members must beakin to that of the judges of High Courts. The selection process includedSecretaries of the Departments of the Central Government. The Courtstruck down the section as unconstitutional. Finally, Section 8 stipulatedthat that Chairperson/Member who is appointed for an initial durationof five years, is eligible for reappointment for further period of fiveyears. Striking down the provision as unconstitutional, the Court heldthat the provision for reappointment would undermine the independenceof the member who would presumably be constrained to decide mattersin manner that would ensure their reappointment. The Court notedthat since the NTT had been vested with jurisdiction that earlier vestedin the High Courts, all matters of appointment and extension of tenuremust be shielded from the executive. The Court noted that upon thedeclaration of numerous provisions as unconstitutional, the remainingprovisions were rendered ‘otiose and worthless’. Hence, the 2005 Actwas struck down in its entirety.

19. Pursuant to the enactment of the Companies Act 2013, aConstitution Bench of this Court in Madras Bar Association v Unionof India[13] dealt with the contention that despite the directions issuedin R Gandhi in respect of the provisions concerning the NCLT andthe NCLAT, analogous provisions had been inserted in the 2013 Actwithout complying with those directions. The Court embarked on acomparison of various provisions of the Companies Act 2013 with the

Adirections issued in R Gandhi and observed that many discrepanciespersisted which were in contravention of the directions issued by thisCourt in the earlier round of litigation concerning the qualifications,appointments, eligibility, and composition of the Selection Committees.The Court affirmed the directions issued in R Gandhi including thedirection on the composition of the Selection Committee and held thatBonce remedial measures are taken to bring the provisions in conformitywith the directions issued, the NCLT and the NCLAT may commenceoperations.

A.3 Shortcomings of the current frameworkC20. Tribunalisation was intended to combat the high pendencyof cases before Indian Courts. However, experience gained from theworking of tribunals suggests that the efficiency of tribunals in India issignificantly reduced due to systemic and administrative problems. The272nd Report of the Law Commission of 2017 has highlighted the highlevel of pendency before the Tribunals. The chart from the report isDreproduced below:

21. Vidhi Centre for Legal Policy in report titled “ReformingFThe Tribunals Framework In India” highlights the problems plaguingthe tribunal system in India. These problems have been categorised thus:

A) Lack of independence

The report highlights that in some cases, Ministries are partiesbefore the tribunals. The staff, finances, and administration are underGthe control of the Ministry. The problem is exacerbated by revolvingdoor between the bureaucracy and tribunal posts. Therefore, the reportstates that it is crucial to assess the independence of tribunals basedon the certain parameters including (a) appointment of members; b)removal of members; (c) reappointments; (d) nodal ministry; andH(e) proclivity to appoint judges/bureaucrats.

B) Administrative concerns: lack of uniformity inregulation

The report notes that an inconsistency in qualificationrequirements leads to differences in competencies, maturity and statusof members. These inconsistencies are problematic with regard to thegrowing trend of tribunalisation. Further, the short tenure of membersobviates the cultivation of ‘domain expertise’, which can have an impacton the efficacy of tribunals. It is also recommended that the age ofretirement be made uniform as uneven tenures hamper institutionalcontinuity. The report notes the holding in L Chandra Kumar whichcriticizes the inconsistencies in the appointment process, qualificationof members, age of retirement, resources and infrastructure of differenttribunals. They can be attributed to tribunals operating under differentministries. The report affirms the observation in the judgment that asingle nodal authority or ministry is required for the administration oftribunals in order to improve efficiency.

C) Pendency and vacancy in Tribunals

The report notes that the high rate of pendency can be attributedto 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 delaysaccounted for more than half the time taken up by cases. Anothersignificant cause for delays is absenteeism of tribunal members.

D) Jurisdiction of the High Courts

Provisions allowing direct appeals to the Supreme Court whichby-pass the jurisdiction of High Courts have been examined in multiplecases. Despite existing precedents and Law Commission of Indiarecommendations, parent statutes of many tribunals allow for directappeal to the Supreme Court. Two issues have been noted: Firstly,a direct appeal to the Supreme Court is inaccessible to litigants; andSecondly, such provision leads to congestion of the docket of theSupreme Court.

The Reference to the Constitution Bench

22. At its core, the present reference before the ConstitutionBench raises the issue of whether law which seeks to substituteexisting statutory provisions governing the appointment, selection and

Aconditions of service of diverse tribunals can validly be enacted as aMoney Bill as component of the Finance Act. The answer to thisquestion must in turn depend upon two facets :

(i) Whether judicial review can extend to determining theconstitutional validity of decision of the Speaker of theBUpper House to certify the passage of Bill as aMoney Bill under Article 110 of the Constitution; and

(ii) Whether the statutory modification of the procedure forappointment and selection of members and theirconditions of service is destructive of judicialCindependence and hence ultra vires.

Between the universe represented by these two issues, lie theshades of argument upon which the decision of this case will turn.

Money Bills

DOrdinary Bills, Money Bills and Financial Bills

23. Conceptually, the Constitution contains classification of Billsas: (i) Ordinary Bills; (ii) Money Bills and (iii) Financial Bills. Bills otherthan Money Bills and Financial Bills can originate in either House ofParliament[14]. An Ordinary Bill is passed by both the Houses ofParliament when it has been agreed upon by both the Houses, eitherEwithout amendment or with such amendments as agreed. The Presidentis conferred with the constitutional authority to convene joint sittingof both the Houses of Parliament in order to deliberate upon and voteon Bill which is not Money Bill[15].Special provisions are engrafted

F14 Article 107(1) : Subject to the provisions of articles 109 and 117 with respect toMoney Bills and other financial Bills, Bill may originate in either House ofParliament.

15 Article 108 : (1) If after Bill has been passed by one House and transmitted tothe other House—

(a) the Bill is rejected by the other House; or

(b) the Houses have finally disagreed as to the amendments to be made in the Bill;Gor

(c) more than six months elapse from the date of the reception of the Bill by theother House without the Bill being passed by it, the President may, unless theBill has elapsed by reason of dissolution of the House of the People, notify tothe Houses by message if they are sitting or by public notification if they are notsitting, his intention to summon them to meet in joint sitting for the purpose ofHdeliberating and voting on the Bill:

into the Constitutin for the passage of Money Bills. Unlike an OrdinaryBill which can originate in either House of Parliament, Money BillSpecial provisions are engrafted into the Constitution for the passageof Money Bills. Unlike an Ordinary Bill which can originate in eitherHouse of Parliament, Money Bill cannot be introduced in the Councilof States. Article 109 specifies the procedure for the passage of aMoney Bill. Article 109 reads thus:

“109. (1) Money Bill shall not be introduced in the Council ofStates.

(2) After Money Bill has been passed by the House of thePeople it shall be transmitted to the Council of States for itsrecommendations and the Council of States shall within periodof fourteen days from the date of its receipt of the Bill returnthe Bill to the House of the People with its recommendations

Provided that nothing in this clause shall apply to Money Bill.

(2) In reckoning any such period of six months as is referred to in clause (1), noaccount shall be taken of any period during which the House referred to in sub-clause (c) of that clause is prorogued or adjourned for more than four consecutivedays.

(3) Where the President has under clause (1) notified his intention of summoningthe Houses to meet in joint sitting, neither House shall proceed further with theBill, but the President may at any time after the date of his notification summonthe Houses to meet in joint sitting for the purpose specified in the notificationand, if he does so, the Houses shall meet accordingly.

(4) If at the joint sitting of the two Houses the Bill, with such amendments, ifany, as are agreed to in joint sitting, is passed by majority of the total numberof members of both Houses present and voting, it shall be deemed for the purposesof this Constitution to have been passed by both Houses:Provided that at joint sitting—

(a) if the Bill, having been passed by one House, has not been passed by theother House with amendments and returned to the House in which it originated,no amendment shall be proposed to the Bill other than such amendments (if any)as are made necessary by the delay in the passage of the Bill;

(b) if the Bill has been so passed and returned, only such amendments as aforesaidshall be proposed to the Bill and such other amendments as are relevant to thematters with respect to which the Houses have not agreed; and the decision ofthe person presiding as to the amendments which are admissible under this clauseshall be final.

(5) joint sitting may be held under this article and Bill passed thereat,notwithstanding that dissolution of the House of the People has intervened sincethe President notified his intention to summon the Houses to meet therein.

Aand the House of the People may thereupon either accept orreject all or any of the recommendations of the Council of States.

(3) If the House of the People accepts any of therecommendations of the Council of States, the Money Bill shallbe deemed to have been passed by both Houses with theBamendments recommended by the Council of States andaccepted by the House of the People.

(4) If the House of the People does not accept any of therecommendations of the Council of States, the Money Bill shallbe deemed to have been passed by both Houses in the form inCwhich it was passed by the House of the People without any ofthe amendments recommended by the Council of States.

(5) If Money Bill passed by the House of the People andtransmitted to the Council of States for its recommendations isnot returned to the House of the People within the said periodDof fourteen days, it shall be deemed to have been passed by bothHouses at the expiration of the said period in the form in whichit was passed by the House of the People.”

24. The role of the Rajya Sabha in the passage of Money Bill isrestricted. Money Bill can originate only in the Lok Sabha. After itEis passed by the Lok Sabha, the Bill is transmitted to the Rajya Sabhafor its recommendation. The Rajya Sabha has stipulated period offourteen days to submit the Bill back to the Lok Sabha with itsrecommendation. Recommendations of the Rajya Sabha are of non-binding character. If the Lok Sabha rejects the recommendations, it isFdeemed to have been passed by both the Houses in the form in whichit was passed by the Lok Sabha without the recommendations of theRajya Sabha. If the Rajya Sabha were not to respond within thestipulated period of fourteen days, the same consequence would ensue.In distinction to the role which is entrusted to the Rajya Sabha in theGpassage of Ordinary Bills by Article 107, Article 109 confers virtuallyan overriding authority to the Lok Sabha in the passage of Money Bills.A Money Bill, unlike an Ordinary Bill, can only originate in the LokSabha. In the passage of Money Bill, the Rajya Sabha has thus onlya recommendatory role. Ordinary Bills, on the other hand, require theagreement of both the Houses of Parliament to ensure their passage.H

25. The third category of Bills - Financial Bills, is specified inArticle 117[16]. The reference to Financial Bills is contained in themarginal note to Article 117. Article 117 (1) indicates that Bill whichmakes provision for any of the matters specified in clauses (a) to (f)of Article 110 (1) can be introduced or moved only on therecommendation of the President and such Bill shall not be introducedin the Rajya Sabha. The text of Article 117 (1) speaks of Money Billsand other Financial Bills as classes of Bills which can originate only inthe Lok Sabha.

Money Bills : Article 110

Article 110 contains definition of Money Bills in the followingterms :

“110. (1) For the purposes of this Chapter, Bill shall be deemedto be Money Bill if it contains only provisions dealing with allor any of the following matters, namely:—

(a) the imposition, abolition, remission, alteration or regulationof any tax;

(b) the regulation of the borrowing of money or the givingof any guarantee by the Government of India, or theamendment of the law with respect to any financialEobligations undertaken or to be undertaken by theGovernment of India;

16 Article 117 : (1) Bill or amendment making provision for any of the mattersspecified in sub-clauses (a) to (f) of clause (1) of article 110 shall not be introducedor moved except on the recommendation of the President and Bill making suchprovision shall not be introduced in the Council of States:Provided that no recommendation shall be required under this clause for the movingof an amendment making provision for the reduction or abolition of any tax.(2) Bill or amendment shall not be deemed to make provision for any of thematters aforesaid by reason only that it provides for the imposition of fines orother pecuniary penalties, or for the demand or payment of fees for licences orfees for services rendered, or by reason that it provides for the imposition, abolition,remission, alteration or regulation of any tax by any local authority or body forlocal purposes.(3) Bill which, if enacted and brought into operation, would involve expenditurefrom the Consolidated Fund of India shall not be passed by either House ofParliament unless the President has recommended to that House the considerationof the Bill.

A(c) the custody of the Consolidated Fund or the ContingencyFund of India, the payment of moneys into or thewithdrawal of moneys from any such Fund;

(d) the appropriation of moneys out of the ConsolidatedFund of India;

(e) the declaring of any expenditure to be expenditurecharged on the Consolidated Fund of India or theincreasing of the amount of any such expenditure;

(f) the receipt of money on account of the ConsolidatedFund of India or the public account of India or theCcustody or issue of such money or the audit of theaccounts of the Union or of State; or

(g) any matter incidental to any of the matters specified insub-clauses (a) to (f).

(2) Bill shall not be deemed to be Money Bill by reason onlythat it provides for the imposition of fines or other pecuniarypenalties, or for the demand or payment of fees for licences orfees for services rendered, or by reason that it provides for theimposition, abolition, remission, alteration or regulation of any taxby any local authority or body for local purposes.

E(3) If any question arises whether Bill is Money Bill or not,the decision of the Speaker of the House of the People thereonshall be final.

(4) There shall be endorsed on every Money Bill when it istransmitted to the Council of States under article 109, and whenFit is presented to the President for assent under article 111, thecertificate of the Speaker of the House of the People signed byhim that it is Money Bill.”

26. Tracing the origin and evolution of Money Bills, ThomasErskine May in “The Treatise on The Law, Privileges,GProceedings and Usage of Parliament”[17] dwells on the relationshipbetween the House of Commons and House of Lords in Britain inregard to their powers of taxation and on matters of national revenueand public expenditure. For nearly three hundred years, the House of

Commons was possessed of the legal right to originate grants, but theHouse of Lords was not precluded from amending Bill. By tworesolutions of the Commons in 1671 and 1678, the powers of the Houseof Lords were curtailed so as to enable only the Commons to have thesole right to direct or limit the scope of Bill regarding taxation andgovernment expenditure. The House of Lords came to be excludedfrom altering any such Bill. Even after the enactment of the StandingOrder of 1849 which accommodated space to the House of Lords tosuggest amendments of legislative issues, the tussle between the Houseof Commons and the House of Lords continued, resulting in the passageof the Parliament Act of 1911. Section 1 defines the power of the Houseof Lords in Money Bills in the following terms :

“1. Powers of House of Lords as to Money Bills.—(1) If aMoney Bill, having been passed by the House of Commons, andsent up to the House of Lords at least one month before the endof the session, is not passed by the House of Lords withoutamendment within one month after it is so sent up to that House,the Bill shall, unless the House of Commons direct to the contrary,be presented to His Majesty and become an Act of Parliamenton the Royal Assent being signified, notwithstanding that theHouse of Lords have not consented to the Bill.”

Section 1(2) defines the expression Money Bill in the followingmanner :

“1. (2) Money Bill means Public Bill which in the opinion ofthe Speaker of the House of Commons contains only provisionsdealing with all or any of the following subjects, namely, theimposition, repeal, remission, alteration, or regulation of taxation;the imposition for the payment of debt or other financial purposesof charges on the Consolidated Fund, the National Loans Fundor on money provided by Parliament, or the variation or repealof any such charges; supply; the appropriation, receipt, custody,issue or audit of accounts of public money; the raising orguarantee of any loan or the repayment thereof; or subordinatematters incidental to those subjects or any of them. In this sub-section the expressions “taxation”, “public money”, and “loan”respectively do not include any taxation, money, or loan raisedby local authorities or bodies for local purposes.”

A27. Two facets of the above definition merit emphasis: the firstis the use of the expression ‘means’ which indicates that the definitionis exhaustive; and second, that the content of Money Bill can have“only provisions” dealing with the subjects enunciated in the provision.Under Section 1(3), Money Bill sent to the House of Lords and toHer Majesty for assent should be endorsed with the certificate of theBSpeaker of the House of Commons that it is Money Bill. Section 3attributes finality to the decision of the Speaker, rendering it immunefrom judicial review :

“3. Certificate of Speaker.—Any certificate of the Speaker ofthe House of Commons given under this Act shall be conclusiveCfor all purposes, and shall not be questioned in any court oflaw.”

(Emphasis supplied)

The Treatise by Erskine May contains the following elaborationDof the procedure in passing Money Bill:

“A ‘Money Bill’ which has been passed by the House ofCommons and sent up to the House of Lords at least one monthbefore the end of the session, but is not passed by the House ofLords without amendment within one month after it is so sentEup, is, unless the House of Commons direct to the contrary, tobe presented for the Royal Assent and becomes an Act ofParliament on the Royal Assent being signified to it. ‘MoneyBill’, when it is sent up to the House of Lords and when it ispresented to Her Majesty, must be endorsed with the Speakers’certificate that it is such bill. Before giving this certificate theFSpeaker is directed to consult, if practicable, those two membersof the Panel of Chairs who are appointed for the purpose atthe beginning of each session by the Committee of Selection.

When the Speaker has certified bill to be ‘Money Bill’ this isrecorded in the journal; and Section 3 of the Parliament ActG1911 stipulates such certificate is conclusive for allpurposes and may not be questioned in court of law.

No serious practical difficulty normally arises in deciding whethera particular bill is or is not ‘Money Bill’; and criticism hasseldom been voiced of the Speaker’s action in giving orHwithholding certificate. bill which contains any of the

enumerated matters and nothing besides is indisputably a‘Money Bill’. If it contains any other matters, then, unlessthese are ‘subordinate matters incidental to’ and of theenumerated matters so contained in the bill, the bill is nota ‘Money Bill’. Furthermore, even if the main object of abill is to create new charge on the Consolidated Fundor on money provided by Parliament, the bill will not becertified if it is apparent that the primary purpose of thenew charge is not purely financial.

The Speaker does not consider the question of certifying billuntil it has reached the form in which it will leave the House ofCommons, and has declined to give an opinion on whether theacceptance of proposed amendment would prevent bill forbeing certified as Money bill. Similarly, in committee thechairman has declined to anticipate the Speaker’s decision in thismatter or to allow the effect of an amendment in this regard tobe raised as point of order.”

(Emphasis supplied)

28. Section 37 of the Government of India Act 1935 contained aspecial provision for Financial Bills:

“37. Special provisions as to financial Bills.—(1) Bill oramendment making provision—

(a) for imposing or increasing any tax; or

(b) for regulating the borrowing of money or the giving ofany guarantee by the Federal Government, or foramending the law with respect to any financialobligations undertaken or to be undertaken by theFederal Government; or

(c) for declaring any expenditure to be expenditure chargedon the revenues of the Federation, or for increasing theamount of any such expenditure, shall not be introducedGor moved except on the recommendation of theGovernor-General, and Bill making such provision shallnot be introduced in the Council of State.”

As the Bill could not be introduced or moved “except on therecommendation of the Governor General”, Section 38 authorized each

AHouse namely the Council of States and the Federal Assembly to makerules for regulating their procedure and the conduct of business.

During the course of the debates in the Constituent Assembly,one of the draft amendments moved to Article 90 was the deletion ofthe expression “only”. Explaining the rationale for moving the proposedBamendment, Shri Ghanshyam Singh Gupta stated thus :

“…This article is prototype of Section 37 of the Governmentof India Act which says that Bill or amendment providing forimposing or increasing tax or borrowing money, etc. shall notbe introduced or moved except on the recommendation of theCgovernor-General. This means that the whole Bill need not be amoney Bill: it may contain other provisions, but if there is anyprovision about taxation or borrowing, etc. It will come under thisSection 37 and the recommendation of the Governor-General isnecessary. Now article 90 says that Bill shall be deemed to bea money Bill if it contains only provisions dealing with theDimposition, regulation, etc., of any tax or the borrowing of money,etc. This can mean that if there is Bill which has otherprovisions and also provision about taxation or borrowing etc.,it will not become money Bill. If that is the intention I havenothing to say; but that if that is not the intention I must say theEword “only” is dangerous, because if the Bill does all these thingsand at the same time does something else also it will not be amoney Bill. I do not know what the intention of the DraftingCommittee is but I think this aspect of the article should be bornein mind.”[18]

FThe amendment was however negatived.

29. Article 110 of the Constitution defines Money Bill for thepurposes of the Chapter. Bill is deemed to be Money Bill “if itcontains only provisions” dealing with any of the matters described inclauses (a) to (g). The word “only” is of crucial significance. TheGconsequence of the use of the expression “only” is to impart exclusivity.In other words, Bill will be deemed to be Money Bill only if it fallswithin the description of the matters enunciated in clauses (a) to (g).If the Bill contains matters which are unrelated to or do not fall withinclauses (a) to (g), it is not Money Bill. Article 110 (2) supports this

H18 Constituent Assembly Debates (20 May 1949)

construction since it indicates that Bill shall not be deemed to be aMoney 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 forservices rendered; or

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

30. This is clear indicator of the constitutional position that whatmakes Bill Money Bill for the purposes of Chapter II of Part V ofthe Constitution is that it deals only with matters falling under thedescription provided in clauses (a) to (g) of Article 110 (1). Clause (g)of Article 110 (1) covers “any matter incidental to” what is specifiedin clauses (a) to (f). Clause (g) must not be understood as residuaryprovision or catch-all-phrase encompassing all other matters whichare not specified in clauses (a) to (f). If this construction were to beplaced on clause (g), the distinction between an Ordinary Bill and aMoney Bill would vanish. Hence, to be incidental within the meaningof clause (g), the Bill must cover only those matters which fall withinthe ambit of clauses (a) to (f). It is only matter which is incidental toany of the matters specified in clauses (a) to (f) which is contemplatedin clause (g).

Certification by the Speaker

31. The issue which needs analysis is whether certification ofa Bill as Money Bill by the Speaker is immune from judicial review.Article 110 (3) states that if any question arises as to whether Bill isa Money Bill or not, the decision of the Speaker of the House of thePeople thereon shall be final. In essence, the point for consideration iswhether the finality as stipulated in clause (3) to Article 110 excludesjudicial review.

32. During the course of the framing of the Constitution, Sir BN Rau, acting as the Constitutional Advisor, prepared memorandumof the draft Constitution for the Union Constitution Committee. ShivaRao makes reference to Article 75 of the draft which providedthat :

180SUPREME COURT REPORTS

A“if any question arises whether Bill is “Money Bill” or not,the decision of the Speaker of the House of the People thereonshall be final.”[19]

The draft provision bore resemblance to Article 22 of theConstitution of Ireland (1937) which provides thus:

“1. The Chairman of Dáil Éireann [Lower House in Ireland]shall certify any Bill which, in his opinion, is Money Billto be Money Bill, and his certificate shall, subject to thesubsequent provisions of this section, be final andconclusive.

2. Seanad Éireann [Upper House in Ireland], by resolution,passed at sitting at which not less than thirty membersare present, may request the President to refer the questionwhether the Bill is or is not Money Bill to Committeeof Privileges.

D3. If the President after consultation with the Council of Statedecides to accede to the request he shall appoint aCommittee of Privileges consisting of an equal number ofmembers of Dáil Éireann and of Seanad Éireann and aChairman who shall be Judge of the Supreme Court: theseappointments shall be made after consultation with theECouncil of State. In the case of an equality of votes butnot otherwise the Chairman shall be entitled to vote.

4. The President shall refer the question to the Committee ofPrivileges so appointed and the Committee shall report itsdecision thereon to the President within twenty-one daysFafter the day on which the Bill was sent to Seanad Éireann.

5. The decision of the Committee shall be final and conclusive.

6. If the President after consultation with the Council of Statedecides not to accede to the request of Seanad Éireann, orif the Committee of Privileges fails to report within the timeGhereinbefore specified the certificate of the Chairman ofDáil Éireann shall stand confirmed.”

(Emphasis supplied)

19 B. Shiva Rao, The Framing of India’s Constitution: Selected Documents, IndianHInstitution of Public Administration (2012), at p. 32

The Irish model contained provision for resolving dispute onthe certification of Bill as Money Bill. This part of the disputeresolution procedure was not adopted when our Constitution wasframed. Moreover, the clause on finality was adopted in modifiedform. Whereas clause (1) of Article 22 of the Irish Constitution usesthe expression “final and conclusive”, draft Article 75 provided for thedecision of the Speaker of the House of People being final. On 5December 1947, the Expert Committee on Financial Provisions suggestedan amendment to the draft provision, the gist of which is indicated byB Shiva Rao :

“When Money Bill is sent from the Lower House to the Upper,a certificate of the Speaker of the Lower House saying that it isa Money Bill should be attached to, or endorsed on, the Bill anda provision to that effect should be made in the Constitution onthe lines of the corresponding provision in the Parliament Act,1911. This will prevent controversies about the matteroutside the Lower House.”[20]

(Emphasis supplied)

The extract quoted above is clear indicator that the purposeof the certification by the Speaker was to prevent controversies in theUpper House of Parliament by incorporating an element of proceduralsimplicity.

Final but not conclusive

33 When the draft Article as proposed was accepted andeventually incorporated as Article 110, clause (3) incorporated theprinciple of finality without specific exclusion of judicial review. Section3 of the Parliament Act 1911 in Britain specifically excluded judicialreview by providing that certificate of the Speaker of the House ofCommons “shall be conclusive for all purposes and shall not bequestioned in any court of law”. These words imparted bothconclusiveness and immunity from judicial review to the certificate fromthe Speaker. This language was not adopted in the Indian Constitution.The draftspersons of the Constitution carefully did not incorporate anexclusion from judicial review, in respect of certificate issued by theSpeaker under clause (3) of Article 110. Finality, in other words, operates

20 B. Shiva Rao, The Framing of India’s Constitution: Selected Documents, IndianInstitution of Public Administration, at p. 281.

Aas between the Upper and the Lower Houses and does not excludejudicial review by constitutional court.

34. The interpretation that we have adopted is supported for yetanother reason. In contexts where the Constitution intends to conferimmunity from judicial review, specific words to that effect are used.BThe expression “shall not be called in question in any court” is, forinstance, utilized in Article 329 (a), Article 243-O and Article 243ZG.These Articles read thus:

“329. Bar to interference by courts in electoral matters.—Notwithstanding anything in this Constitution—

C(a) the validity of any law relating to the delimitation ofconstituencies or the allotment of seats to such constituencies,made or purporting to be made under Article 327 or Article 328,shall not be called in question in any court.”

D“243-O. Bar to interference by courts in electoralmatters.—Notwithstanding anything in this Constitution—(a) thevalidity of any law relating to the delimitation of constituenciesor the allotment of seats to such constituencies, made orpurporting to be made under Article 243-K, shall not be calledin question in any court.”

“243ZG. Bar to interference by courts in electoralmatters.—Notwithstanding anything in this Constitution—(a) thevalidity of any law relating to the delimitation of constituenciesor the allotment of seats to such constituencies, made orpurporting to be made under Article 243-ZA shall not be calledFin question in any court.”

(Emphasis supplied)

In N P Ponnuswami v Returning Office, NamakkalConstituency, Namakkal, Salem, Dist.[21], six judge BenchGof this Court construed Article 329 of the Constitution in thefollowing terms :

“5. … notable difference in the language used in Articles 327and 328 on the one hand, and Article 329 on the other, is that

while the first two articles begin with the words “subject to theprovisions of this Constitution”, the last article begins with thewords “notwithstanding anything in this Constitution”. It wasconceded at the Bar that the effect of this difference in languageis that whereas any law made by Parliament under Article 327,or by the State Legislature under Article 328, cannot exclude thejurisdiction of the High Court under Article 226 of the Constitution,that jurisdiction is excluded in regard to matters provided for inArticle 329.”

35. Distinct from the exclusion of judicial review by the aboveprovisions, there are other provisions of the Constitution where adecision is made “final”. Finality in such contexts has been held not toexclude judicial review. Articles 217 (3), 311 (3) and paragraph 6 (1)of the Tenth Schedule use the expression “final” :

“217. (3) If any question arises as to the age of Judge of aHigh Court, the question shall be decided by the President afterconsultation with the Chief Justice of India and the decision ofthe President shall be final.

“311. (3) If, in respect of any such person as aforesaid, questionarises whether it is reasonably practicable to hold such inquiryas is referred to in clause (2), the decision thereon of theauthority empowered to dismiss or remove such person or toreduce him in rank shall be final.

“6. Decision on questions as to disqualification on groundof defection.—(1) If any question arises as to whether amember of House has become subject to disqualification underthis Schedule, the question shall be referred for the decision ofthe Chairman, or, as the case may be, the Speaker of such Houseand his decision shall be final:

Provided that where the question which has arisen is as towhether the Chairman or the Speaker of House has becomesubject to such disqualification, the question shall be referred forthe decision of such member of the House as the House mayelect in this behalf and his decision shall be final.”

(Emphasis supplied)

AIn Union of India v Jyoti Prakash Mitter[22], six judge Benchof this Court held that under Article 217 (3), the President performs ajudicial function and decision rendered is subject to judicial reviewon stipulated grounds :

“32. … The President acting under Article 217(3) performs aBjudicial function of grave importance under the scheme of ourConstitution. He cannot act on the advice of his Ministers.Notwithstanding the declared finality of the order of the Presidentthe Court has jurisdiction in appropriate cases to set aside theorder, if it appears that it was passed on collateral considerationsor the rules of natural justice were not observed, or that theCPresident’s judgment was coloured by the advice orrepresentation made by the executive or it was founded on noevidence. … appreciation of evidence is entirely left to thePresident and it is not for the Courts to hold that on the evidenceplaced before the President on which the conclusion is founded,Dif they were called upon to decide the case they would havereached some other conclusion.”

36. In the context of Article 311 (3), Constitution Bench of thisCourt in Union of India v Tulsiram Patel[23]held that the finalityattributed to the decision of disciplinary authority that it is notEreasonably practical to hold an inquiry, does not render it immune fromjudicial review. In Kihoto Hollohan v Zachillhu[24], ConstitutionBench of this Court held that the finality attributed to the decision ofthe Speaker of the Lok Sabha or the Chairman of the Rajya Sabha inparagraph 6 (1) of the Tenth Schedule of the Constitution does notabrogate judicial review :F

“111. … That Paragraph 6(1) of the Tenth Schedule, to theextent it seeks to impart finality to the decision of the Speakers/Chairmen is valid. But the concept of statutory finality embodiedin Para 6(1) does not detract from or abrogate judicial reviewunder Articles 136, 226 and 227 of the Constitution insofar asGinfirmities based on violations of constitutional mandates, malafides, non-compliance with rules of natural justice and perversity,are concerned.”

22 (1971) 1 SCC 396

23 (1985) 3 SCC 398H24 1992 Supp. (2) SCC 651

The Constitution Bench held:

“101. … The principle that is applied by the courts is that in spiteof finality clause it is open to the court to examine whetherthe action of the authority under challenge is ultra vires thepowers conferred on the said authority. Such an action can beultra vires for the reason that it is in contravention of mandatoryprovision of the law conferring on the authority the power to takesuch an action. It will also be ultra vires the powers conferredon the authority if it is vitiated by mala fides or is colourableexercise of power based on extraneous and irrelevantconsiderations….”

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

Matters of procedure and substantive illegalities

37. Article 118 of the Constitution allows each of the Houses ofParliament to make rules for regulating their procedure and the conductof business, subject to the provisions of the Constitution. Article 118provides thus :

“118. Rules of procedure.—

(1) Each House of Parliament may make rules for regulating,subject to the provisions of this Constitution, itsprocedure and the conduct of its business.

(2) Until rules are made under clause (1), the rules ofprocedure and standing orders in force immediatelybefore the commencement of this Constitution withrespect to the legislature of the Dominion of India shallhave effect in relation to Parliament subject to suchmodifications and adaptations as may be made thereinby the Chairman of the Council of States or the Speakerof the House of the People, as the case may be.

(3) The President, after consultation with the Chairman ofthe Council of States and the Speaker of the House ofthe People, may make rules as to the procedure withrespect to joint sittings of, and communications between,the two Houses.

A(4) At joint sitting of the two Houses the Speaker of theHouse of the People, or in his absence such person asmay be determined by rules of procedure made underclause (3), shall preside.”

Article 122 of the Constitution provides thus:

“122. Courts not to inquire into proceedings of Parliament.—(1)The validity of any proceedings in Parliament shall not be calledin question on the ground of any alleged irregularity of procedure.

(2) No officer or member of Parliament in whom powers arevested by or under this Constitution for regulating procedure orCthe conduct of business, or for maintaining order, in Parliamentshall be subject to the jurisdiction of any court in respect of theexercise by him of those powers.”

Article 122 of the Constitution is similar to Section 41 of theGovernment of India Act 1935[25]. In the Commentary on the GovernmentDof India Act 1935 by N Rajagopala Aiyangar[26], there is an eloquentdistinction made between matters of procedure and those of substancein the context of Section 41 (1):

“This sub-section seeks to cure defects arising fromirregularity of procedure in the Legislature. The activitiesEof chamber may be divided into internal and external, theinternal activities being the sphere of procedure, while theexternal are subject to the law of the constitution. It is toirregularities in the domain of the former class that thissub-section addresses itself. Under the latter head wouldFfall defects arising from want of legislative competence,which is matter external to the assembly and not matterof procedure.”

(Emphasis supplied)

25 41. – (1) The validity of any proceedings in the Federal Legislature shall not beGcalled in question on the ground of any alleged irregularity of procedure.(2) No officer or other member of the Legislature in whom powers are vested byor under this Act for regulating procedure or the conduct of business, or formaintaining order, in the Legislature shall be subject to the jurisdiction of anycourt in respect of the exercise by him of those powers.

26 N Rajagopala Aiyangar, Government of India Act 1935, Madras Law Journal OfficeH(1937) at page 63.

38. In the decision of Constitution Bench in Babulal Parate vState of Bombay[27], this Court noted the distinction between an issuewhich pertains to the validity of proceedings in Parliament and violationof constitutional provision. This was in the context of the provisionscontained in clauses (a) to (e) of Article 3. The Constitution Bench held:

“11. It is advisable, perhaps, to add few more words aboutArticle 122(1) of the Constitution. Learned counsel for theappellant has posed before us the question as to what would bethe effect of that Article if in any Bill completely unrelated toany of the matters referred to in clauses (a) to (e) of Article 3an amendment was to be proposed and accepted changing (forexample) the name of State. We do not think that we needanswer such hypothetical question except merely to say thatif an amendment is of such character that it is not really anamendment and is clearly violative of Article 3, the question thenwill be not the validity of proceedings in Parliament but theviolation of constitutional provision. That, however, is not theposition in the present case.”

39. Article 122 (1) provides immunity to proceedings beforeParliament being called into question on the ground of “any allegedirregularities of procedure”. In several decisions of this Court whichconstrued the provisions of Article 122 and the corresponding provisionscontained in Article 212 for the state legislatures, distinction has beendrawn between an irregularity of procedure and an illegality. Immunityfrom judicial review attaches to the former but not to the latter. Thisdistinction found expression in seven judge Bench decision of this Courtin Special Reference No. 1 of 1964[28](“Special Reference”). ThisCourt held :

“61. … Article 212(2) confers immunity on the officers andmembers of the legislature in whom powers are vested by orunder the Constitution for regulating procedure or the conductof business, or for maintaining order, in the legislature from beingsubject to the jurisdiction of any court in respect of the exerciseby him of those powers. Article 212(1) seems to make it possiblefor citizen to call in question in the appropriate Court of law

27 (1960) 1 SCR 605

28 Powers, Privileges and Immunities of State Legislatures, In re (Special ReferenceNo. 1 of 1964), AIR 1965 SC 745

Athe validity of any proceedings inside the Legislative Chamber ifhis case is that the said proceedings suffer not from mereirregularity of procedure, but from an illegality. If the impugnedprocedure is illegal and unconstitutional, it would be opento be scrutinised in Court of law, though such scrutinyis prohibited if the complaint against the procedure is noBmore than this that the procedure was irregular...”

(Emphasis supplied)

This formulation was applied in the context of Article 122 by theConstitution Bench in Ramdas Athawale v Union of India[29]C(“Ramdas Athawale”):

“36. This Court under Article 143, Constitution of India In re(Special Reference No. 1 of 1964) [Powers, Privileges andImmunities of State Legislatures, In re (Special Reference No.1 of 1964), AIR 1965 SC 745] (also known as Keshav Singh case)Dwhile construing Article 212(1) observed that it may be possiblefor citizen to call in question in the appropriate court of law,the validity of any proceedings inside the legislature if his caseis that the said proceedings suffer not from mere irregularity ofprocedure, but from an illegality. If the impugned procedure isillegal and unconstitutional, it would be open to be scrutinised inEa court of law, though such scrutiny is prohibited if the complaintagainst the procedure is no more than this that the procedurewas irregular. The same principle would equally be applicable inthe matter of interpretation of Article 122 of the Constitution.”

subsequent Constitution Bench decision in Raja Ram Pal vFHon’ble Speaker, Lok Sabha[30] emphasized the distinction betweena procedural irregularity and an illegality:

“386. … Any attempt to read limitation into Article 122 so asto restrict the court’s jurisdiction to examination of theParliament’s procedure in case of unconstitutionality, as opposedGto illegality would amount to doing violence to the constitutionaltext. Applying the principle of “expressio unius est exclusioalterius” (whatever has not been included has by implication been

29 (2010) 4 SCC 1H30 (2007) 3 SCC 184

excluded), it is plain and clear that prohibition againstexamination on the touchstone of “irregularity ofprocedure” does not make taboo judicial review onfindings of illegality or unconstitutionality.

398. … the court will decline to interfere if the grievance broughtbefore it is restricted to allegations of “irregularity of procedure”.But in case gross illegality or violation of constitutionalprovisions is shown, the judicial review will not be inhibitedin any manner by Article 122, or for that matter by Article105…”

(Emphasis supplied)

40. The fundamental constitutional basis for the distinctionbetween an irregularity of procedure and an illegality is that unlike inthe United Kingdom where Parliamentary sovereignty governs, Indiais governed by constitutional supremacy. The legislative, executive andjudicial wings function under the mandate of written Constitution. Theambit of their powers is defined by the Constitution. The Constitutionstructures the powers of Parliament and the state legislatures. Theirauthority is plenary within the field reserved to them. Judicial review ispart of the basic structure of the Constitution. Any exclusion of judicialreview has to be understood in the context in which it has beenmandated under specific provision of the Constitution. Hence theprovisions contained in Article 122 which protect an alleged irregularityof procedure in the proceedings in Parliament being questioned cannotextend to substantive illegality or violation of constitutionalmandate.

41. Mr K K Venugopal, learned Attorney General for India reliedon three decisions in support of his submission that the certificate issuedby the Speaker of the Lok Sabha that Bill is Money Bill is immunefrom judicial review :

(I) Mangalore Ganesh Beedi Works v State of Mysore[31](“Mangalore Beedi”);

(II) Mohd. Saeed Siddiqui v State of Uttar Pradesh[32](“Mohd. Saeed Siddiqui”); and

31 AIR 1963 SC 58932 (2014) 11 SCC 415

A(III) Yogendra Kumar Jaiswal v State of Bihar[33](“YogendraKumar”).

Mangalore Beedi was case where new system of coinagehad introduced naya paisa (one hundred naya paisas being equivalentto rupee) instead of the erstwhile legal tender of sixteen annas orBsixty-four pice, which continued to remain legal tender. The appellantwhich was subjected to an additional amount as sales tax due to thechange in currency urged that as result of the substitution of thecoinage, there was change in tax imposed under the Mysore SalesTax Act 1948 which could have been effectuated only by passing aMoney Bill under Articles 198, 199 and 207 of the Constitution. RejectingCthis submission, the Constitution Bench held that the substitution of anew coinage did not amount to an enhancement of tax. Consequently,there was no requirement of taking recourse to the provisions forenacting Money Bill. However, Justice J L Kapur, speaking for theCourt held:

D“5. … Even assuming that it is taxing measure its validitycannot be challenged on the ground that it offends Articles 197to 199 and the procedure laid down in Article 202 of theConstitution. Article 212 prohibits the validity of any proceedingsin legislature of State from being called in question on theground of any alleged irregularity of procedure and Article 255Elays down that requirements as to recommendation and previoussanction are to be regarded as matters of procedure only.”

42. The ratio of the decision in Mangalore Beedi is that thesubstitution of coinage did not amount to an enhancement of tax. Hence,the provisions of Article 199 pertaining to Money Bill were notFattracted. Once that was the finding, it was not necessary for thedecision to rule on whether the certificate of Speaker under Article199 (3) (corresponding to Article 110 (3)) is immune from judicialreview. The ratio of the decision is that new coinage does not amountto an enhancement of tax and hence Bill providing for the substitutionof coinage is not Money Bill. The observations which are extractedGabove proceed on an assumption, namely that even assuming that itwas taxing measure, its validity could not be challenged on the groundof an alleged irregularity of procedure. This part of the observations isevidently not the ratio of Mangalore Beedi.

H33 (2016) 3 SCC 183

43. Subsequently in Mohd. Saeed Siddiqui, three judge Benchof this Court dealt with an amendment brought about by the statelegislature to statute governing the Lokayukta and Up-Lokayukta soas to provide for an extension of the term from six years to eight yearsor until the successor enters office. The amendment was challengedon the ground that the Bill could not have been introduced as MoneyBill. Relying on the decision in Mangalore Beedi, three judge Benchheld that the issue as to whether Bill was Money Bill could only beraised by Member before the legislative assembly before it waspassed. Chief Justice P Sathasivam, speaking for the Bench formulatedthe following principles:

“ (i) the validity of an Act cannot be challenged on the groundthat it offends Articles 197 to 199 and the procedure laiddown in Article 202;

(ii) Article 212 prohibits the validity of any proceedings in alegislature of State from being called in question on theDground of any alleged irregularity of procedure; and

(iii) Article 255 lays down that the requirements as torecommendation and previous sanction are to be regardedas matter of procedure only.

It is further held that the validity of the proceedings inside thelegislature of State cannot be called in question on the allegationthat the procedure laid down by the law has not been strictlyfollowed and that no court can go into those questions which arewithin the special jurisdiction of the legislature itself, which hasthe power to conduct its own business.”

The decision adverted to Article 212 (1) (which corresponds toArticle 122(1)) and to Article 255[34] of the Constitution. While the

34 Article 255 : No Act of Parliament or of the Legislature of State and noprovision in any such Act, shall be invalid by reason only that somerecommendation or previous sanction required by this Constitution was not given,Gif assent to that Act was given—

(a) where the recommendation required was that of the Governor, either by theGovernor or by the President;

(b) where the recommendation required was that of the Rajpramukh, either by theRajpramukh or by the President;

(c) where the recommendation or previous sanction required was that of thePresident, by the President.

Adecision also adverted to Raja Ram Pal, this Court held that anyinfirmity of procedure was protected by Article 255.

44. The subsequent decision of two judge Bench of this Courtin Yogendra Kumar dealt with the constitutional validity of the OrissaSpecial Courts Act 2006, enacted to provide special courts for offencesBinvolving the accumulation of properties disproportionate to their known-sources of income by persons who have held or hold high political andpublic offices. Repelling the challenge that the law could not have beenintroduced as Money Bill in the legislative assembly, this Court,speaking through Justice Dipak Misra (as the than was) held thus:

“43. In our considered opinion, the authorities cited by the learnedCcounsel for the appellants do not render much assistance, for theintroduction of Bill, as has been held in Mohd. Saeed Siddiqui[Mohd. Saeed Siddiqui v. State of U.P., (2014) 11 SCC 415] ,comes within the concept of “irregularity” and it does come withthe realm of substantiality. What has been held in SpecialDReference No. 1 of 1964 [Powers, Privileges and Immunities ofState Legislatures, In re (Special Reference No. 1 of 1964), AIR1965 SC 745] has to be appositely understood. The factual matrixtherein was totally different than the case at hand as we findthat the present controversy is wholly covered by thepronouncement in Mohd. Saeed Siddiqui and hence, weEunhesitatingly hold that there is no merit in the submission soassiduously urged by the learned counsel for the appellants.”

45. The three judge Bench decision in Mohd Saeed Siddiquirelied on Mangalore Beedi as laying down the principle that acertificate of the Speaker that Bill is Money Bill is immune fromFjudicial review. The decision in Mangalore Beedi, as we have seen,was based on finding by the Constitution Bench that the substitutionof new coinage did not constitute an enhancement of tax and hencedid not attract the requirements of Money Bill. But the three judgeBench decision in Mohd. Saeed Siddiqui also adverts to the provisionsof the Article 255 in attributing immunity to the certificate of the SpeakerGthat Bill is Money Bill. Now Article 255 applies in situation where“some recommendation or previous sanction” required by theConstitution was not given though the Act of Parliament or thelegislature of state has since received assent. Thus, where therecommendation required is that of the Governor, the assent of thePresident or of the Governor and where the recommendation orHprevious sanction required is that of the President, the assent by thePresident will protect the legislation being called into question. Thesubsequent assent to the law cures the absence of recommendation,or as the case may be, sanction. Article 255 does not deal with thecertificate of the Speaker under Article 110 (3) or Article 199 (3), whichis neither recommendation nor previous sanction within the meaningof Article 255.

46. Mohd Saeed Siddiqui proceeds on an incorrect constructionof the decision in Mangalore Beedi and on an erroneous understandingof Article 255. The decision in Pandit MSM Sharma v Dr ShreeKrishna Sinha[35]which was adverted to in Mohd Syed Siddiqui wasdiscussed in the Special Reference to hold that the validity of theproceedings in legislative chamber can be questioned on the groundof illegality. The decisions in the Special Reference, RamdasAthawale and Raja Ram Pal clearly hold that the validity of theproceedings before Parliament or state legislature can be subject tojudicial review on the ground of an illegality (as distinguished from anirregularity of procedure) or constitutional violation. Hence, thedecisions in Mohd Syed Siddiqui and Yogendra Kumar on the aboveaspect do not lay down the correct position in law and are overruled.

Puttaswamy: Judicial review of the certificate of theSpeaker

47. The Aadhaar (Targeted Delivery of Financial and OtherSubsidies, Benefits and Services) Bill 2016 was certified as MoneyBill under Article 110 by the Speaker of the Lok Sabha. The exclusionof the Rajya Sabha from the legislative process consequent upon thecertification by the Speaker under Article 110(3) was one of the specificchallenges addressed before the Constitution Bench (K S Puttaswamyv Union of India).[36] Justice K Sikri, speaking for three of the fivejudges of the Constitution Bench, analysed the provisions of the AadhaarAct 2016 on the basis of two fundamental precepts: first, the importanceof the Rajya Sabha in bicameral legislature as “succinctlyexemplified”[37] by the decision in Kuldip Nayar v Union of India[38](“Kuldip Nayar”) and second, the Rajya Sabha as an “importantinstitution signifying the constitutional federalism”[39].

35 AIR 1960 SC 1186

36 (2019) 1 SCC 1 (“Puttaswamy“)

37 Puttaswamy at para 462

38 (2006) 7 SCC 1

39 Puttaswamy at para 463

A48. Having enunciated these principles, Justice Sikri emphasisedthe need for the passage of Bill by both the Houses of Parliamentwhich, according to the learned Judge, is “constitutional mandate”[40].The only exception, the majority observed, is contained in Article 110.As result, Article 110 being an exception to the scheme ofbicameralism had to be given “strict construction”[41]. The majority heldBthus:

“463. The Rajya Sabha, therefore, becomes an importantinstitution signifying constitutional federalism. It is precisely forthis reason that to enact any statute, the Bill has to be passedby both the Houses, namely, Lok Sabha as well as Rajya Sabha.CIt is the constitutional mandate. The only exception to theaforesaid Parliamentary norm is Article 110 of the Constitutionof India. Having regard to this overall scheme of bicameralismenshrined in our Constitution, strict interpretation has to beaccorded to Article 110. Keeping in view these principles, weDhave considered the arguments advanced by both the sides.”

The above extract clearly indicates that the arguments wereconsidered on the touchstone of the requirement that for Bill to be aMoney Bill, strict adherence to the provisions of Article 110 is necessary.

49. On the issue of justiciability[42] Justice Sikri rejected specificallyEthe submissions urged on behalf of the Union of India that thecertification of the Speaker was not subject to judicial review. Themajority held:

“464. We would also like to observe at this stage that insofar assubmission of the respondents about the justiciability of theFdecision of the Speaker of the Lok Sabha is concerned, we areunable to subscribe to such contention. Judicial review wouldbe admissible under certain circumstances having regard to thelaw laid down by this Court in various judgments which have beencited by Mr P. Chidambaram, learned senior counsel appearingGfor the petitioners, and taken note of in paragraph 455.”The decisions which were adverted to in para 455 referred to inthe above extract are:

40 Puttaswamy at para 46341 Puttaswamy at para 463H42 Puttaswamy at para 455

“455.1.Sub-Committee on Judicial Accountability v. Union ofIndia (1991) 4 SCC 699].

455.2.S.R. Bommai v. Union of India, (1994) 3 SCC 1] .455.3.Raja Ram Pal v. Lok Sabha (Supra)

455.4.Ramdas Athawale (5) v. Union of India (Supra)

455.5.Kihoto Hollohan v. Zachillhu (Supra).”

The majority then proceeded to analyse whether the provisionscontained in the Act could validly pass muster under Article 110. Inthe view of the majority, Section 7 which makes the receipt of subsidy,benefit or service conditional on the identity of the recipient beingestablished by the process of authentication under Aadhaar wasreferable to Article 110 since these financial benefits were “extendedwith the support of the Consolidated Fund of India”[43]. The provisionsof Section 23(2)(h) and Section 54 were held to be incidental to themain provision and covered by Article 110(g). Section 57, whichpermitted the use of Aadhaar by private entities for other purposes, washeld to be unconstitutional. Having thus analysed the provisions of theBill, the majority held:

“472. For all the aforesaid reasons, we are of the opinion thatBill was rightly introduced as Money Bill. Accordingly, it is notnecessary for us to deal with other contentions of thepetitioners, namely, whether certification by the Speakerabout the Bill being Money Bill is subject to judicialreview or not, whether provision which does not relate toMoney Bill is severable or not. We reiterate that main provisionis part of Money Bill and other are only incidental and,therefore, covered by clause (g) of Article 110 of theConstitution.”

(Emphasis supplied).

50. Both Mr Arvind Datar, learned amicus curiae and the learnedAttorney General for India have highlighted the apparent inconsistencyamong the observations contained in paragraphs 463, 464 and 472 ofthe judgment. For, paragraph 464 rejects the submissions of the Unionof India that the Speaker’s decision is not justiciable in the aftermath

Aof the earlier discussion that Article 110 must receive strictconstruction, while para 472 holds that it was not necessary for themajority to deal with whether certification by the Speaker of Bill asa Money Bill is subject to judicial review. However, in the course ofthe conclusion in paragraph 515, the issue to which answers wereframed was:B“515.(6). Whether the Aadhaar Act could be passed as “MoneyBill” within the meaning of Article 110 of the Constitution?”

The answer in paragraph 515.1 is in the following terms:

“515.1. We do recognise the importance of Rajya Sabha (UpperCHouse) in bicameral system of the Parliament. The significanceand relevance of the Upper House has been succinctlyexemplified by this Court in Kuldip Nayar’s case [Kuldip Nayarv. Union of India, (2006) 7 SCC 1]. The Rajya Sabha, therefore,becomes an important institution signifying constitutionalDfederalism. It is precisely for this reason that to enact any statute,the Bill has to be passed by both the Houses, namely, Lok Sabhaas well as Rajya Sabha. It is the constitutional mandate. The onlyexception to the aforesaid Parliamentary norm is Article 110 ofthe Constitution of India. Having regard to this overall schemeof bicameralism enshrined in our Constitution, strict interpretationEhas to be accorded to Article 110. Keeping in view theseprinciples, we have considered the arguments advanced by boththe sides.”

51. On merits, Section 7 was held to be core provision, satisfyingthe conditions of Article 110 while the others were held to be incidentalFin nature. Section 57 had been held to be unconstitutional. Hence theconclusion was in the following terms:

“467…Section 7 is the core provision of the Aadhaar Act andthis provision satisfies the conditions of Article 110 of theConstitution. Upto this stage, there is no quarrel between theGparties.

515.5. On examining of the other provisions pointed out by thepetitioners in an attempt to take it out of the purview of MoneyBill, we are of the view that those provisions are incidental innature which have been made in the proper working of the Act.H

In any case, part of Section 57 has already been declaredunconstitutional. We, thus, hold that the Aadhaar Act is validlypassed as ‘Money Bill’.

52. holistic reading of the decision of the majority would indicatethat: (i) Article 110 has been construed to be an exception to theprinciple of bicameralism and, therefore, the provision must (it has beenheld) receive strict interpretation; (ii) Section 7 constituted the coreprovision of the Aadhaar Bill which was referable to Article 110 whilethe other provisions were incidental; and (iii) Section 57 was held tobe unconstitutional in so far as it allowed the use of the Aadhaarplatform by private entities including corporate bodies. The observationsin para 472 cannot, therefore, be construed to mean that the majoritydesisted from expressing final view on justiciability.

53. The judgment of Justice DY Chandrachud specifically holdsthat the decision of the Speaker to certify Bill as Money Bill is notimmune from judicial review. After tracing the constitutional historyof Article 110 including the provisions of the Parliament Act 1911 inBritain and Section 37 of the Government of India Act 1935, thejudgment places reliance on the construction placed on the provisionsof Article 122 and the corresponding provision in Article 212 in (i)Special Reference; (ii) Ramdas Athawale ; and (iii) Raja Ram Pal.In coming to the conclusion that the decision of the Speaker is amenableto judicial review if it suffers from illegality or from violation ofconstitutional provisions, the decisions in Mohd Saeed Siddiqui andYogendra Kumar Jaiswal were disapproved. Distinguishing theprinciple of Parliamentary sovereignty in the UK from the position ofconstitutional supremacy in India, the decision observes:“1067. The purpose of judicial review is to ensure thatconstitutional principles prevail in interpretation and governance.Institutions created by the Constitution are subject to its norms.No constitutional institution wields absolute power. No immunityhas been attached to the certificate of the Speaker of the LokSabha from judicial review, for this reason. The Constitutionmakers have envisaged role for the judiciary as the expounderof the Constitution. The provisions relating to the judiciary,particularly those regarding the power of judicial review, wereframed, as Granville Austin observed, with “idealism” [GranvilleAustin, The Indian Constitution: Cornerstone of Nation, Oxford

AUniversity Press (1966), at p. 205.] Courts of the country areexpected to function as guardians of the Constitution and itsvalues. Constitutional courts have been entrusted with the dutyto scrutinise the exercise of power by public functionaries underthe Constitution. No individual holding an institutional officecreated by the Constitution can act contrary to constitutionalBparameters. Judicial review protects the principles and the spiritof the Constitution. Judicial review is intended as check againstarbitrary conduct of individuals holding constitutional posts. Itholds public functionaries accountable to constitutional duties. Ifour Constitution has to survive the vicissitudes of politicalCaggrandisement and to face up to the prevailing cynicism aboutall constitutional institutions, notions of power and authority mustgive way to duties and compliance with the rule of law.Constitutional institutions cannot be seen as focal points for theaccumulation of power and privilege. They are held in trust byall those who occupy them for the moment. The impermanenceDof power is sombre reflection for those who occupyconstitutional offices. The Constitution does not contemplate adebasement of the institutions which it creates. The office of theSpeaker of the House of People, can be no exception. Thedecision of the Speaker of the Lok Sabha in certifying Bill asEa Money Bill is liable to be tested upon the touchstone of itscompliance with constitutional principles. Nor can such decisionof the Speaker take leave of constitutional morality.”

54. Justice Ashok Bhushan, in his separate opinion, specificallyheld that the decision of the Speaker in certifying Bill as MoneyFBill is capable of judicial review. The learned judge held thus:

“901. We have noticed the Constitution Bench judgments inKihoto Hollohan [Kihoto Hollohan v. Zachillhu, 1992 Supp (2)SCC 651] and Raja Ram Pal [Raja Ram Pal v. Lok Sabha, (2007)3 SCC 184] that finality of the decision of the Speaker is notGimmuned from Judicial Review. All Bills are required to be passedby both Houses of Parliament. Exception is given in case ofMoney Bills and in the case of joint sitting of both Houses. Inevent, we accept the submission of learned Attorney General thatcertification by Speaker is only matter of procedure and cannotbe questioned by virtue of Article 122(1), any Bill, which doesHnot fulfil the essential constitutional condition under Article 110can be certified as Money Bill by-passing the Upper House.There is clear difference between the subject“irregularity of procedure” and “substantive illegality”.When Bill does not fulfil the essential constitutionalcondition under Article 110(1), the said requirement cannotbe said to be evaporated only on certification by Speaker.Accepting the submission that certification immunes thechallenge on the ground of not fulfilling the constitutionalcondition, Court will be permitting constitutionalprovisions to be ignored and by-passed. We, thus, are ofthe view that decision of the Speaker certifying the Billas Money Bill is not only matter of procedure and inevent, any illegality has occurred in the decision and thedecision is clearly in breach of the constitutionalprovisions, the decision is subject to Judicial Review. Weare, therefore, of the view that the Three Judge Bench judgmentof this Court in Mohd. Saeed Siddiqui [Mohd. Saeed Siddiqui v.State of U.P., (2014) 11 SCC 415] and Two Judge Benchjudgment of this Court in Yogendra Kumar Jaiswal [YogendraKumar Jaiswal v. State of Bihar, (2016) 3 SCC 183 : (2016) 2SCC (Cri) 1] do not lay down the correct law. We, thus, concludethat the decision of the Speaker certifying the Aadhaar Bill asMoney Bill is not immuned from Judicial Review.”

(Emphasis supplied)

Justice Ashok Bhushan then held on merits that the Bill had beencorrectly passed as Money Bill.

55. From the above analysis, it is evident that the judgments ofboth Justice Y Chandrachud and Justice Ashok Bhushan categoricallyheld that the decision of the Speaker to certify Bill as Money Billis not immune from judicial review. There is clear distinction betweenan irregularity of procedure under Article 122(1) and substantiveillegality. The certificate of the Speaker under Article 110(3) is notconclusive in so far as judicial review is concerned. Judicial review candetermine whether the conditions requisite for Bill to be validly passedas Money Bill were fulfilled. The point of difference between themajority (represented by the decisions of Justice Sikri and Justice Ashok

ABC

ABhushan) and Justice Chandrachud was that on merits, the majoritycame to the conclusion that the Aadhaar Bill is Money Bill within themeaning of Article 110(1) while the dissent held otherwise.

56. On an overall reading of the judgment of Justice Sikri, it isnot possible to accede to the submission of the learned Attorney GeneralBthat the issue of the reviewability of the certificate of the Speaker isleft at large by the decision of the majority. In any event, in view ofthe issue having arisen in the present case, we have dealt with the aspectof judicial review independently of the decision in Puttaswamy.

Role of the Rajya SabhaC57. The Rajya Sabha consists of not more than two hundred andfifty members, twelve nominated by the President (from persons withspecial knowledge or practical experience in literature, science, art andsocial service) and not more than two hundred and thirty eightrepresentatives of the States and Union Territories[44]. The FourthDSchedule specifies the manner in which allocation of seats is made inthe Rajya Sabha. The elected members of the legislative assembly ofevery state elect the representatives of the state in the Rajya Sabha inaccordance with “the system of proportional representation by meansof the single transferable vote”. Representation of the Union TerritoriesEis provided by law enacted by Parliament.

4480 (1) The Council of States] shall consist of—

(a) twelve members to be nominated by the President in accordance with theprovisions of clause (3); and(b) not more than two hundred and thirty-eight representatives of the States 3[andFof the Union territories.]

(2) The allocation of seats in the Council of States to be filled by representativesof the States and of the Union territories] shall be in accordance with the provisionsin that behalf contained in the Fourth Schedule.

(3) The members to be nominated by the President under sub-clause (a) of clause(1) shall consist of persons having special knowledge or practical experience inrespect of such matters as the following, namely:-GLiterature, science, art and social service.

(4) The representatives of each State in the Council of States shall be elected bythe elected members of the Legislative Assembly of the State in accordance withthe system of proportional representation by means of the single transferablevote.

(5) The representatives of the [Union territories] in the Council of States shall beHchosen in such manner as Parliament may by law prescribe.

58. The Rajya Sabha, unlike the Lok Sabha, is not subject todissolution but one-third of its members retire by rotation[45]. The LokSabha, unless sooner dissolved, has life span of five years. In contrast,the Constitution envisages that the Rajya Sabha is an institutionpossessed of constitutional continuity with third of its members retiringby rotation at stipulated intervals. In line with the principle ofconstitutional continuity, Article 107(4) stipulates that Bill which ispending in the Rajya Sabha which has not been passed by the LokSabha shall not lapse on the dissolution of the Lok Sabha. On the otherhand, under Clause (5), Bill which is pending in the Lok Sabha orupon being passed by the Lok Sabha is pending in the Rajya Sabha,shall lapse on dissolution of the Lok Sabha, subject to Article 108[46].The role of the Rajya Sabha in respect of Money Bills has, however,been substantially curtailed. Money Bills can originate only in the LokSabha. Moreover, the Rajya Sabha has only recommendatory power,as noticed earlier, in regard to Money Bills.

Bicameralism

59. Bicameralism emerged in 14[th] century Britain. The Houseof Lords represented chamber where debate took place with feudallords, while the House of Commons was where citizens wererepresented. The House of Lords comprised of hereditary peers whilethe House of Commons in their historical origin comprised of personspossessed of property as required. Across the Atlantic, the Constitutionof the United States adopted bicameralism. The ConstitutionalConvention of 1787 represented constitutional compromise where theHouse of Representatives comprised of directly elected legislatures,each voter possessed of an equal vote in the elections and the Senate,where each state could send two members elected indirectly. In the

4583. (1) The Council of States shall not be subject to dissolution, but as nearly aspossible one-third of the members thereof shall retire as soon as may be on theexpiration of every second year in accordance with the provisions made in thatbehalf by Parliament by law.

(2) The House of the People, unless sooner dissolved, shall continue for 1[fiveyears] from the date appointed for its first meeting and no longer and the expirationof the said period of 1[five years] shall operate as dissolution of the House:Provided that the said period may, while Proclamation of Emergency is inoperation, be extended by Parliament by law for period not exceeding one yearat time and not extending in any case beyond period of six months after theProclamation has ceased to operate.

46Article 108 contains provisions for joint sitting of two Houses of Parliament.

AFederalist Papers, James Madison underscored the importance of theSenate as an indirectly elected Upper House of bicameral legislature:

“First … senate, as second branch of the legislative assembly,distinct from, and dividing the power with, first, must be in allcases salutary check on the government. It doubles the securityBto the people, by requiring the concurrence of two distinct bodiesin schemes of usurpation or perfidy, where the ambition orcorruption of one would otherwise be sufficient. …

Second: The necessity of senate is not less indicated by thepropensity of all single and numerous assemblies to yield to theCimpulse of sudden and violent passions, and to be seduced byfactious leaders into intemperate and pernicious resolutions. …

Third: Another defect to be supplied by senate lies in wantof due acquaintance with the objects and principles of legislation.It is not possible that an assembly of men called for the mostDpart from pursuits of private nature, continued in appointmentfor short time, and led by no permanent motive to devote theintervals of public occupation to study of the laws, the affairs,and the comprehensive interests of their country, should, if leftwholly to themselves, escape variety of important errors in theexercise of their legislative trust. …

good government implies two things: first, fidelity to the objectof government, which is the happiness of the people; secondly,a knowledge of the means by which that object can be bestattained. …

FFourth: The mutability in the public councils arising from rapidsuccession of new members, however qualified they may be,points out, in the strongest manner, the necessity of some stableinstitution in the government.”

60. Madison conceived of the Senate as body which imposesa salutary check on government. To Madison, the requirement ofGconcurrence of two legislative bodies ensured against usurpation ofpublic power. The Senate was conceived of as body capable of calmdeliberation, isolated from the governing passions of the day. As asobering voice, the Senate, it was conceived would reflect an expertisein framing legislation. It was an institution which symbolises stability inHconstitutional governance.

HM Seervai in his classical text, Constitutional Law of India[47]emphasises the position of the Rajya Sabha as critical ingredient inthe federal structure:

“First and foremost, Parliament (the Central Legislature) isdependent upon the States, because one of its Houses, the Councilof States, is elected by the Legislative Assemblies of the States.Where the ruling party, or group of parties, in the House of thePeople has majority but not an overwhelming majority, theCouncil of States can have very important voice in the passageof legislation other than financial Bills. Secondly, Bill to amendthe Constitution requires to be passed by each House ofParliament separately by an absolute majority in that House andby not less than two-thirds of those present and voting. Sincethe Council of States is indirectly elected by the State Legislatures,the State Legislatures have an important say in the amendmentof the Constitution because of the requirement of specialmajorities in each House. Thirdly, the very important mattersmentioned in the proviso to Article 368 (Amendment of theConstitution) cannot be amended unless the amendments passedby Parliament are ratified by not less than half the number ofLegislatures of the States … Fourthly, the amendment of Article352 by the 44th Amendment gives the Council of States mostimportant voice in the declaration of Emergency, because aproclamation of emergency must be approved by each Houseseparately by majorities required for an amendment of theConstitution … Fifthly, the executive power of the Union is vestedin the President of India who is not directly elected by the peoplebut is elected by an electoral college consisting of (a) the electedMembers of the Legislative Assemblies of the States, and (b)the elected members of both Houses of Parliament … Directlythe State Legislatures have substantial voting power in electingthe President; that power is increased indirectly through theCouncil of States, which is elected by the Legislative Assembliesof States.”

61. The Rajya Sabha Secretariat has, in its publication titled“Second Chamber in Indian Parliament: Role and Studies of Rajya

47HM Seervai, Constitutional Law of India, Universal Law Co Pvt Ltd, Vol I, (1991),at pp.299-300

ASabha”, emphasised the position of the Rajya Sabha as an institutionsensitive to the aspirations of the states, contributing in that capacity tostrengthening the federal structure of the nation. The publicationemphasises some of the special powers possessed by the Rajya Sabha:

“(i) Article 249 of the Constitution provides that Rajya SabhaBmay pass resolution, by majority of not less than two-thirds of the Members present and voting to the effectthat it is necessary or expedient in the national interestthat Parliament should make law with respect to anymatter enumerated in the State List. Then, Parliamentis empowered to make law on the subject specifiedCin the resolution for the whole or any part of the territoryof India. Such resolution remains in force for amaximum period of one year but this period can beextended by one year at time by passing furtherresolution;

D(ii) Under Article 312 of the Constitution, if Rajya Sabhapasses resolution by majority of not less than two-thirds of the Members present and voting declaring thatit is necessary or expedient in the national interest tocreate one or more All India Services common to theUnion and the States, Parliament has the power toEcreate by law such services; and

(iii) Under the Constitution, the President is empowered toissue Proclamations in the event of national emergency(Article 352), in the event of failure of constitutionalmachinery in State (Article 356), or in the case ofFfinancial emergency (Article 360). Normally, every suchProclamation has to be approved by both Houses ofParliament within stipulated period. Under certaincircumstances, however, Rajya Sabha enjoys specialpowers in this regard. If Proclamation is issued at atime when the dissolution of the Lok Sabha takes placeGwithin the period allowed for its approval, then theProclamation can remain effective if resolutionapproving it, is passed by Rajya Sabha.”

62. In Kuldip Nayar, Chief Justice Y K Sabharwal speaking forthe Constitution Bench emphasised the role of the Rajya Sabha in theHfollowing observations:

“47. The Rajya Sabha is forum to which experienced publicfigures get access without going through the din and bustle of ageneral election which is inevitable in the case of the Lok Sabha.It acts as revising chamber over the Lok Sabha. The existenceof two debating chambers means that all proposals andprogrammes of the Government are discussed twice. As arevising chamber, the Rajya Sabha helps in improving Bills passedby the Lok Sabha.”

The significance of the role of the Rajya Sabha was alsoemphasised by Justice K Sikri (writing on behalf of himself and twoother judges) in Puttaswamy. Complementing those observations, thejudgment of Justice DY Chandrachud places the position of the RajyaSabha, in the context of federalism being part of the basic featuresof the Constitution:

“1106. The institutional structure of the Rajya Sabha has beendeveloped to reflect the pluralism of the nation and its diversityof language, culture, perception and interest. The Rajya Sabhawas envisaged by the makers of the Constitution to ensure awider scrutiny of legislative proposals. As second chamber ofParliament, it acts as check on hasty and ill-conceivedlegislation, providing an opportunity for scrutiny of legislativebusiness. The role of the Rajya Sabha is intrinsic to ensuringexecutive accountability and to preserving balance of power.The Upper Chamber complements the working of the LowerChamber in many ways. The Rajya Sabha acts as an institutionof balance in relation to the Lok Sabha and represents the federalstructure [ In S.R. Bommai v. Union of India, (1994) 3 SCC 1: AIR 1994 SC 1998] of India. Both the existence and the roleof the Rajya Sabha constitute part of the basic structure ofthe Constitution. The architecture of our Constitution envisionsthe Rajya Sabha as an institution of federa bicameralism andnot just as part of simple bicameral legislature. Itsnomenclature as the “Council of States” rather than the “Senate”appropriately justifies its federal importance.”

63. Bicameral legislatures have significant constitutional roleparticularly in the context of federal structures. The Rajya Sabha, asour Constitution emphasises, represents the aspirations of the states andis hence critical element in the constitutional design of the federal

Astructure. The Rajya Sabha is an institution possessed of constitutionalcontinuity. The body is not dissolved like the House of the People andits members retire by rotation. The exclusion of the Rajya Sabha hasbeen contemplated in the context of Money Bills. However, this is anexception to the overarching principle that Bills have to be passed byboth Houses of Parliament.B

64. There is significant difference between the provisions ofArticle 110(1) which defines Money Bills and the provisions of Article117(1) which enunciates special provisions as to Financial Bills. Article117(1) provides that Bill or amendment making provision for any ofthe matters specified in sub-clauses (a) to (f) of Article 110(1) shallCnot be introduced or moved except on the recommendation of thePresident of India and the Bill making such provision shall not beintroduced in the Council of States. The word ‘only’ which is employedin Article 110(1) in the definition of Money Bills is absent in Article117(1). The Legislative Procedure in the Rajya Sabha[48] explains thatDFinancial Bills are comprised in categories I and II respectively:

“b. Financial Bills – Category-I

Bill falling under clause (1) of article 117 of the Constitutionis called Financial Bill. It is Bill which seeks to makeprovision for any of the matters specified in sub-clauses(a) toE(f) of clause (1) of article 110 as also other matters. It is, so tosay, Bill which has characteristics both of Money Bill…firstly, it cannot be introduced in Rajya Sabha, and secondly, itcannot be introduced except on the recommendations of thePresident. Except these two points of difference, Financial BillFin all other respects is just like any other ordinary Bill.

(c). Financial Bills – Category-II

There is yet another class of Bills which are also Financial Billsunder article 117(3). Such Bills are more in the nature of ordinaryGBills rather than the Money Bills and Financial Bills mentionedearlier. The only point of difference between this category ofFinancial Bills and the ordinary Bills is that such Financial Bill,if enacted and brought into operation, involves expenditure fromthe Consolidated Fund of India and cannot be passed by either

H48 Legislative Procedure in the Rajya Sabha,: Rajya Sabha Secretariat at p. 17

House of Parliament unless the President has recommended tothat House the consideration of the Bill. In all other respects thiscategory of Bills is, just like ordinary Bills, so that such FinancialBill can be introduced in Rajya Sabha, amended by it or jointsitting can be introduced in Rajya Sabha, amended by it or jointsitting can be held in case of disagreement between the Housesover such Bill. There is, in other words, no limitation on thepower of Rajya Sabha in respect of such Financial Bills.”

The above classification re-emphasises the distinction of aFinancial Bill with Money Bill, which is Bill which contains ‘only’provisions of the description specified in sub-clauses (a) to (g) of Article110(1).

65. The Rajya Sabha reflects the pluralism of the nation andensures balance of power. It is an indispensable constitutive unit ofthe federal backbone of the Constitution. Potential differences betweenthe two houses of the Parliament cannot be resolved by simply ignoringthe Rajya Sabha. In federal polity such as ours, the efficacy of aconstitutional body created to subserve the purpose of deliberatedialogue, cannot be defeated by immunising from judicial review thedecision of the Speaker to certify Bill as Money Bill.

Merits of the challenge

F.1 Passage as Money Bill

66. On 19 February 2014, the Appellate Tribunals and OtherAuthorities (Conditions of Service) Bill 2014 was introduced in the RajyaSabha to provide “uniform conditions of service of the Chairman andMembers” of 26 tribunals. Clause 3 of the Bill provides:

“3. Notwithstanding anything to the contrary contained in theprovisions of the specified Acts, the provisions of this Act shallapply to the Chairman and Members appointed under the specifiedActs:

Provided that the provisions of this Act shall not apply to theChairman and other Members, as the case may be, holding suchoffice immediately before the commencement of the said Act.”

‘Specified Acts’ were enunciated in the First Schedule to the Bill.The Bill was referred to the Department related Standing Committee

Awhich submitted its Seventy Fourth Report on 26 February 2015. TheBill was withdrawn on 11 April 2017.

67. The Finance Bill 2017 was introduced as Money Bill inthe Lok Sabha with recommendation of the President under clauses(1) and (3) of Article 117 of the Constitution. At the time of theBintroduction of the Bill on 1 February 2017, the Finance Bill 2017comprised of 150 clauses together with seven schedules “to give effectto the financial proposals of the Central Government for the financialyear 2017-18”. The Bill contained proposals inter alia to amend, addto and modify legislation dealing with taxation – direct, indirect andservice taxes and other fiscal aspects. Part VIII of the Finance BillC2017 sought to expand the jurisdiction of the Securities AppellateTribunal[49] established under the SEBI Act 1992[50] and to make changesin the existing provisions for the appointments to the SAT. The FinanceBill was taken up for discussion on 21 March 2017 and was passed bythe Lok Sabha on 22 March 2017 with 29 government amendments.D

68. On 21 March 2017, the Union Finance Minister proposed anamendment to incorporate Part XI (subsequently renumbered as PartXIV in the Finance Act) containing 34 new clauses and two schedulesto the Finance Bill. Rule 80(i) of the Rules of Procedure for theConduct of Business in the Lok Sabha stipulates that:E“80. Admissibility of amendments.

The following conditions shall govern the admissibility ofamendments to clauses or schedules of Bill:

(i) An amendment shall be within the scope of the Bill andFrelevant to the subject-matter of the clause to which it relates.”

During the course of the discussion, the Speaker overruled theobjection against the inclusion of the proposed amendments dealing withnon-fiscal subjects. The Lok Sabha Debates elucidate:

“Hon. Members would recall that during last year when similarGobjections were raised at the time of consideration of the FinanceBill, 2016, I had observed that as per rule 219, the primary objectof Finance Bill is to give effect to the financial proposals ofthe Government. There is no doubt about it. At the same time,

49 “SAT”H50 “SEBI Act 1992”

this Rule does not rule out the possibility of inclusion of non-taxation proposals. Therefore, I have accepted this. The FinanceBill may contain non-taxation proposals also…

So, incidental provisions can be made. That is why, keeping inview that rule 2019 does not specifically bar inclusion of non-taxation proposals in Finance Bill, I rule out the Point of Oder.”

69. The Lok Sabha suspended the operation of Rule 80(1) so asto allow the proposed amendments to be incorporated in the FinanceBill. On 22 March 2017, the House adopted the Finance Bill 2017 alongwith an amendment to insert Part XI (renumbered as Part XIV in theFinance Act). The Bill was transmitted to the Rajya Sabha under Article109(2) together with the certification of the Speaker. The Rajya Sabhareturned the Bill with its recommendations on 29 March 2017. On 30March 2017, the Lok Sabha rejected the recommendations. Resultantlythe Finance Bill was deemed to have been passed by both the Houses.

70. Upon the passage of the Finance Bill 2017, the Rules werenotified by the Union of India in the Ministry of Finance on 1 June 2017.In terms of Section 184 of the Finance Act 2017, the Rules specify: (i)criteria of eligibility; (ii) procedure of selection; (iii) provisions forresignation and removal; (iv) salaries and emoluments; (v) term andtenure; and (vi) other service conditions such as leave and allowancesto members of scheduled tribunals.

Part XIV of the Finance Act 2017 is titled: “Amendments tocertain Acts to provide for Merger of Tribunals and OtherAuthorities and Conditions of Service of Chairpersons,Members etc.”

71. Section 158 effects amendments to several Parliamentaryenactments:

i. The Industrial Disputes Act,1947

ii. The Employees’ Provident Funds and MiscellaneousProvisions Act 1952G

iii. The Copyright Act 1957

iv. The Trade Marks Act 1999

v. The Railway Claims Tribunal Act 1987

vi. The Railways Act 1989

Avii. The Smugglers and Foreign Exchange Manipulators(Forfeiture of Property) Act 1976

viii. The Foreign Exchange Management Act 1999

ix. The Airports Authority of India Act 1994

x. The Control of National Highways (Land and Traffic)Act 2002

xi. The Telecom Regulatory Authority of India Act 1997

xii. The Information Technology Act 2000

xiii. The Airports Economic Regulatory Authority of IndiaAct 2008

xiv. The Competition Act 2002

xv. The Companies Act 2013

xvi. The Cinematograph Act 1952

xvii. The Income Tax Act 1961

xviii. The Customs Act 1962

xix. The Administrative Tribunals Act 1985

xx. The Consumer Protection Act 1986

xxi. The Securities and Exchange Board of India Act 1992

xxii. The Recovery of Debts Due to Banks and FinancialInstitutions Act 1993

xxiii. The Armed Forces Tribunal Act 2007F

xxiv. The National Green Tribunal Act 2010

72. Section 183 provides:

“183. Notwithstanding anything to the contrary contained in theprovisions of the Acts specified in column (3) of the EighthSchedule, on and from the appointed day, provisions of section184 shall apply to the Chairperson, Vice-Chairperson, Chairman,Vice- Chairman, President, Vice-President, Presiding Officer orMember of the Tribunal, Appellate Tribunal or, as the case maybe, other Authorities as specified in column (2) of the saidSchedule:

Provided that the provisions of section 184 shall not apply to theChairperson, Vice Chairperson, Chairman, Vice-Chairman,President, Vice-President, Presiding Officer or, as the case maybe, Member holding such office as such immediately before theappointed day.”

The Eighth Schedule contains list of 19 Tribunals together withthe corresponding enactments under which they were constituted. Theeffect of Section 183 is to override the provisions of those enactmentsand to stipulate that from the appointed day, the provisions of Section184 shall apply to Chairpersons, Vice Chairpersons, Presidents, VicePresidents, Presiding Officers and Members of the Tribunals or, as thecase may be, Appellate Tribunals. Those who hold office immediatelybefore the appointed day have been excluded.

Section 184 stipulates:

“184. (1) The Central Government may, by notification, makerules to provide for qualifications, appointment, term of office,salaries and allowances, resignation, removal and the other termsand conditions of service of the Chairperson, Vice-Chairperson,Chairman, Vice-Chairman, President, Vice-President, PresidingOfficer or Member of the Tribunal, Appellate Tribunal or, as thecase may be, other Authorities as specified in column (2) of theEighth Schedule:

Provided that the Chairperson, Vice-Chairperson, Chairman, Vice-Chairman, President, Vice-President, Presiding Officer orMember of the Tribunal, Appellate Tribunal or other Authorityshall hold office for such term as specified in the rules made bythe Central Government but not exceeding five years from thedate on which he enters upon his office and shall be eligible forreappointment:

Provided further that no Chairperson, Vice-Chairperson,Chairman, Vice-Chairman, President, Vice-President, PresidingOfficer or Member shall hold office as such after he has attainedsuch age as specified in the rules made by the CentralGovernment which shall not exceed,—

(a) in the case of Chairperson, Chairman or President, theage of seventy years;

A(b) in the case of Vice-Chairperson, Vice-Chairman, Vice-President, Presiding Officer or any other Member, theage of sixty-seven years:

(2) Neither the salary and allowances nor the other terms andconditions of service of Chairperson, Vice-Chairperson,BChairman, Vice-Chairman, President, Vice-President, PresidingOfficer or Member of the Tribunal, Appellate Tribunal or, as thecase may be, other Authority may be varied to his disadvantageafter his appointment.”

73. Section 184 has conferred rule making power on the CentralCGovernment to provide for the (i) qualifications; (ii) appointment; (iii)terms of office; (iv) salaries and allowances; (iv) resignation; (vi)removal; and (viii) other terms and conditions of service. The provisostipulates that the term of office shall be such as is prescribed in theRules made by the Central Government not exceeding five years andthat Member would be eligible for reappointment. An upper age limitDis prescribed by the second proviso. Section 185 (1) stipulates thatChairpersons, Presidents or Vice Chairpersons, Vice Presidents,Presiding Officers and Members of the Tribunals or Appellate Tribunalswho hold office before the appointed day shall cease to do so and beentitled to compensation not exceeding three months’ pay andallowances for the premature termination of the term of office or theEcontract of service.

74. The learned Attorney General for India submitted that PartXIV of the Finance Act 2017 is sustainable with reference to sub-clauses (c), (d) and (g) of clause (1) of Article 110. The submission isthat the certification by the Speaker is of the entire Finance Bill whenFit was transmitted to the Rajya Sabha. The Attorney General urged thatpayment of salaries is made out of the Consolidated Fund of India. Oncethis be the position, the other provisions of Part XIV are, it was urged,incidental in nature. It is argued that salaries, allowances and pensionwill have direct nexus with the Consolidated Fund of India and areGincidental to the provisions contained in the Finance Act 2017. In thiscontext, reliance was placed on: (i) the presumption of constitutionalvalidity (State of West Bengal v Anwar Ali Sarkar[51], R.K. Garg vUnion of India[52] and Subramanian Swamy v Director, Central

51 (1952) SCR 284H52 (1981) 4 SCC 675

Bureau of Investigation[53]); (ii) the importance of the doctrine ofseparation of powers (Bhim Singh v Union of India[54]).

75. The provisions of Part XIV of the Finance Act 2017 amend,first and foremost, the legislative enactments under which diversetribunals, including appellate tribunals were constituted. By and as aresult of the amendments, the statutory provisions relating toqualifications for appointment, the process of appointment, terms ofoffice and the terms and conditions of service including salaries,allowances, resignation and removal are overridden and are to begoverned by the provisions of Section 184. Section 184 confers rulemaking power on the Central Government to stipulate all the aboveaspects in regard to the adjudicatory personnel appointed to thesetribunals. By this process, the governing statutory provisions embodiedin the parent legislation are overridden and authority is conferred uponthe Central Government to formulate other aspects of the process fromqualifications for office and the process of appointment to the terms ofservice, through delegated legislation.

76. This, in our view, completely transgresses the conditionsstipulated in Article 110(1) for constituting Money Bill. Article 110does not bar the inclusion of non-fiscal proposals in Money Bill. Butwhile permitting the inclusion of non-fiscal subjects, sub-clause (g) ofArticle 110(1) embodies the requirement that such matter must beincidental to any of the matters specified in sub-clauses (a) to (f). Inother words, the inclusion of non-fiscal matter is permissible in aMoney Bill only if it is incidental or ancillary to matter specified insub-clauses (a) to (f). Part XIV has repealed and replaced substantiveprovisions contained in the enactments specified in the Eighth and NinthSchedules which are not referable to sub-clauses (a) to (f) of Article110(1). Part XIV of the Finance Act 2017 is thus not incidental withinthe meaning of sub-clause (g). The plain consequence is that by adoptingthe special procedure contained in Article 109, the substantive proceduregoverning Ordinary Bills under Articles 107 and 108 has been renderedotiose. If the provisions contained in Part XIV were to be enacted inthe form of an Ordinary Bill, the Rajya Sabha would have vital voicein deliberating and discussing on the nature of the legislative proposals.Part XIV contains provisions which lie outside the domain permissibleunder Article 110.

53 (2014) 8 SCC 682

54 (2010) 5 SCC 538

A77. We are unimpressed with the submissions of the learnedAttorney General that since salaries are payable out of the ConsolidatedFund, Part XIV of the Finance Act bears nexus with sub-clauses (c)and (d) of Article 110(1) and that the other provisions are merelyincidental. That the amendment has bearing on the financial burdenon the Consolidated Fund of India cannot be the sole basis of briningBthe amendment within the purview of Article 110(1). On close analysisof the provisions, it is evident that what is claimed to be incidental hasswallowed up the entire legislative exercise. The provisions of Part XIVof the Finance Act 2017 canvass range of amendments which includequalifications and process for appointment terms of office and termsCand conditions of service including salaries, allowances, resignation andremoval which cannot be reduced to only question of the financialburden on the Consolidated Fund of India. The effect of Part XIV isto amend and supersede the provisions contained in the parentenactments governing all aspects of the appointment and terms ofservice of the adjudicatory personnel of the tribunals specified in theDEighth and Ninth Schedules. This exercise cannot be construed as alegitimate recourse to the power of enacting Money Bill.78. The Attorney General for India urged that the provisions ofPart XIV of the Finance Act 2017, in so far as they have financialbearing on the Consolidated Fund of India, are sustainable withEreference to sub-clauses (c), (d), (e) and (g) of clause (1) of Article110.

79. Sub-clause (c) deals, inter alia, with the withdrawal of moneyfrom either the Consolidated Fund of India or the Contingency Fund ofIndia. Sub-clause (d) deals with the appropriation of money out of theFConsolidated Fund of India. Sub-clause (e) stipulates either thedeclaration of any expenditure or the increase in the amount ofexpenditure charged on the Consolidated Fund of India. It wascontended that Part XIV of the Finance Act 2017, in so far as it has abearing on the Consolidated Fund of India, is incidental to the mattersGreferred in sub-clauses (c), (d) and (e) of Article 110(1).

80. Sub-clause (g) stipulates that provisions dealing with anymatter incidental to the matters specified in sub-clauses (a) to (f) fallwithin the purview of Article 110(1). However, this is distinct fromcontending that where bill contains provisions not referable to the sub-Hclauses (a) to (f) stipulated in clause (1) of Article 110 but has an

incidental bearing on the Consolidated Fund of India, this by itself wouldbring such bill within the purview of sub-clause (g) of Article 110(1).

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

82. Part XIV of the Finance Act 2017 canvasses range ofamendments which include qualifications and process for appointmentof members of tribunals, terms of office and terms and conditions ofservice including salaries, allowances, resignation and removal whichare not referable to sub-clauses (a) to (f) of clause (1) of Article 110.Almost every government action involves an increase or decrease ofexpenditure which may be relatable to the Consolidated Fund of India.Accepting the argument urged would amount to inverting sub-clause(g) and allowing any bill which is not referable to the matters enumeratedin Article 110(1) to be passed as Money Bill so long as it can beshown that the provisions may have some bearing on the ConsolidatedFund of India.

83. Further, the contention urged that the transfer of the powerto determine salaries has direct nexus with the Consolidated Fund ofIndia glosses over the distinction between the power to determine ofmodify salaries and the determination or modification of the salary. Thetransfer of the power to determine or modify salaries does not, by itself,lead to the conclusion that such transfer of authority to the rule makingfunction by the Central Government is referable to the ConsolidatedFund of India in the manner contemplated in the sub-clauses referredto above.

A84. The transfer of authority to determine qualifications andprocess for appointments, terms of office and terms and conditions ofservice including salaries, allowances, resignation and removal oftribunal members from the statutory provisions determined by thelegislature to the executive is the transfer of substantive right whichhas bearing on constitutional design as well as the independence ofBadjudicatory tribunals. They are not referable to sub-clauses (c), (d)and (e) of Article 110(1) and do not amount to matters incidental toany of the matters enumerated in sub-clauses (a) to (f) of clause (1)of Article 110.

85. There is undoubtedly presumption of constitutionality whichCattaches to legislation. The presumption is founded on the principle thatthe legislature in parliamentary democracy understands the needs andconditions of the time and that the executive government which pilotslegislation through the competent legislature is accountable to both thelegislature and to the people whom the elected arm of governmentDrepresents. But the presumption of constitutionality is what it is, namely,a presumption. The presumption can be displaced on clear violationof constitutional mandate or infraction being established. Where aBill which contains provisions which are not referable to sub-clauses(a) to (g) of clause (1) of Article 110 is passed as Money Bill, thatconstitutes clear violation of the mandate of Article 110. TheEpresumption of constitutionality stands displaced.

86. The learned Attorney General urged that the doctrine ofseparation of powers would require this Court to tread with caution sincecertification of Bill as Money Bill, as he submits, pertains to theinternal functioning of Parliament. Judicial review, it was submitted,Fwould violate the separation of powers. The submission overlooks thefundamental position that the certification of Bill as Money Bill andthe invocation of the provisions of Article 110 is an exception whichhas been carved out by the Constitution to the constitutionalrequirements accompanying the passage of ordinary legislation. InGpassing the Bill as Money Bill, the immediate impact is to denude theRajya Sabha of the legislative role which is assigned to it in the passageof legislation.

87. The Rajya Sabha as legislative institution represents thevoice, concerns and aspirations of Indian federalism. The reduction ofHthe role of the Rajya Sabha in the case of Money Bill was engrafted

by the draftspersons of the Constitution with specific purpose. In theirview, Money Bills should appropriately be reserved for the authority ofthe Lower House which consists of directly elected representatives ofthe people. But to regard Bill which is not Money Bill as one whichpasses muster under Article 110 is breach of substantiveconstitutional provision, violation of constitutional process and hence,an illegality.

88. The basic postulate of our Constitution is that every authorityis subservient to constitutional supremacy. No authority can assume toitself the ultimate power to decide the limits of its own constitutionalmandate. Judicial review is intended to ensure that every constitutionalauthority keeps within the bounds of its constitutional functions andauthority. In holding constitutional institution within its bounds, judicialreview does not trench upon the doctrine of separation of powers. Theadjudicatory power vests in the Supreme Court as constitutional court.In adjudicating on whether there has been violation of constitutionalmandate in passing Bill as Money Bill, judicial review does nottraverse beyond the limit set by the separation of powers. On thecontrary, the independence of judicial tribunals has been consistentlyrecognised by this Court as an inviolable feature of the basic structureof the Constitution. Determination of the norms of eligibility, the processof selection, conditions of service, and those regulating the impartialitywith which the members of the tribunals discharge their functions andtheir effectiveness as adjudicatory bodies is dependent on their isolationfrom the executive. By leaving the rule making power to the unchartedwisdom of the executive, there has been self-effacement byParliament. The conferment of the power to frame rules on theexecutive has direct impact on the independence of the tribunals.Allowing the executive controlling authority over diverse facets ofthe tribunals would be destructive of judicial independence whichconstitutes basic feature of the Constitution.

F.2 Violation of directions issued by this Court

89. The Rules under Section 184 of the Finance Act 2017, termedthe Tribunal, Appellate Tribunal and Other Authorities (Qualifications,Experience and Other Conditions of Service of Members) Rules 2017were notified on 1 June 2017. Rule 1 (3) provides for the applicabilityof the rules in the following terms:

218SUPREME COURT REPORTS

A“(3) These rules shall apply to the Chairman, Vice-Chairman,Chairperson, Vice- Chairperson, President, Vice- President,Presiding Officer, Accountant Member, Administrative Member,Judicial Member, Expert Member, Law Member, RevenueMember, Technical Member, Member of the Tribunal, AppellateBTribunal or, as the case may be, Authority as specified in column(2) of the Eighth Schedule of the Finance Act, 2017 (7 of 2017).”

90. Rule 3 prescribes the qualifications for appointment to thosetribunals which are specified in Column 3 of the Schedule. Rule 4provides that the method of recruitment is specified in Column 4 of theCSchedule. Rule 7 provides for the removal of member from officeby the Central Government “on the recommendation of committeeconstituted by it in this behalf”. Rule 8 provides for the procedure forenquiry into an alleged misbehaviour or incapacity of member. Itcontemplates preliminary scrutiny by the Ministry or the Departmentof the Government of India under which the tribunal or appellate tribunalDis constituted or established. Upon finding that there are reasonablegrounds in an inquiry, reference is made to the committee constitutedunder Rule 7. After the conclusion of the enquiry, the committee is tosubmit its report to the Central Government with its findings. Rule 9provides for the term of office as specified in Column 5 of the ScheduleEwith cap on age as specified in Column 6. Rule 11 provides for afixed salary of Rs 2.50 lakhs together with allowances and benefitsadmissible to Central Government officer holding an office carryingthe same pay in the case of the Chairperson or President or PresidingOfficer of SAT. consolidated salary of Rs 2.25 lakhs is payable toVice Chairpersons, Vice Presidents and Members.FColumn 4 of the Schedule stipulates the composition of theSearch-cum-Selection Committee for the various tribunals. The Search-cum-Selection Committee of the Industrial Tribunal is as follows:

“Search-cum-Selection Committee for the post of the PresidingGOfficer, - (i) person to be nominated by the Central Governmentchairperson; (ii) Secretary to the Government of India, Ministryof Labour and Employment- member; (iii) Secretary to theGovernment of India to be nominated by the Central Government-member; (iv) two experts to be nominated by the CentralHGovernment- members.”

It is evident that the Search-cum-Selection Committee isconstituted entirely from personnel within or nominated by the CentralGovernment. Barring the National Company Law Appellate Tribunal,the Search-cum-Selection Committee for all other seventeen tribunalsspecified in the Schedule is constituted either entirely from personnelwithin or nominated by the Central Government or comprises majorityof personnel from the Central Government. The Search-cum-SelectionCommittee of the National Company Law Appellate Tribunal consistsof an equal number of members from the judiciary as well as from theCentral Government with no casting vote to the Chief Justice of Indiaor their nominee:

“(B) Search-cum-Selection Committee for the post of the JudicialMember and Technical Member of the Appellate Tribunal, - (i)Chief Justice of India or his nominee -chairperson; (ii) seniorJudge of the Supreme Court or Chief Justice of High Court-member; (iii) Secretary to the Government of India, Ministry ofCorporate Affairs- member; (iv) Secretary to the Governmentof India, Ministry of Law and Justice-member.”

The procedure for selection is fundamentally destructive ofjudicial independence. The Union Government has vital status in thedisputes before many tribunals. Even otherwise, conferring upon thegovernment such dominating and overwhelming voice in makingappointments is negation of judicial independence.

91. Sub-rule 2 of Rule 4 of the 2017 Rules stipulates that theSecretary to the Government of India in the Ministry or Departmentshall be the Convener of the Search-cum-Selection Committee. In RGandhi, the Court specifically issued the following directions in regardto the constitution of the Selection Committees:

“(viii) Instead of five-member Selection Committee with theChief Justice of India (or his nominee) as Chairperson and twoSecretaries from the Ministry of Finance and Company Affairsand the Secretary in the Ministry of Labour and the Secretaryin the Ministry of Law and Justice as members mentioned inSection 10-FX, the Selection Committee should broadly be on thefollowing lines:

(a) Chief Justice of India or his nominee—Chairperson(with casting vote);

DEF

A(b) Senior Judge of the Supreme Court or Chief Justiceof High Court—Member;

(c) Secretary in the Ministry of Finance and CompanyAffairs—Member; and

(d) Secretary in the Ministry of Law and Justice—BMember.”

(Emphasis supplied)

Significantly, Section 10 (FX) which was inserted into theCompanies Act 1956 by the Companies (Second Amendment) Act 2002Crelating to the Constitution of NCLT and NCLAT contained the followingprovision:

“10-FX. Selection Committee.—(1) The Chairperson andMembers of the Appellate Tribunal and President and Membersof the Tribunal shall be appointed by the Central Government onDthe recommendations of Selection Committee consisting of—

(a) Chief Justice of India or

his nomineeChairperson;(b) Secretary in the Ministry ofFinance and Company AffairsMember;(c) Secretary in the Ministry of LabourMember;

(d) Secretary in the Ministry of Lawand Justice (Department of Legal

Affairs or Legislative Department)Member;

F(e) Secretary in the Ministry of

Finance and Company Affairs

(Department of Company Affairs)”Member

92. In Madras Bar Association, Section 7 of the National TaxTribunal Act 2005 provided for the process of selection and appointmentGof the Chairperson and members of the NTT. The Court observed thatas the jurisdiction of the High Courts was being transferred to theTribunal, the stature of the members, conditions of service, and mannerof appointment and removal of members must be akin to that of thejudges of High Courts. Section 7 was held to be invalid (among otherprovisions). The leading judgment of the majority by Justice J S KheharH(as the learned Judge then was) held:

“131. Section 7 cannot even otherwise be considered to beconstitutionally valid, since it includes in the process of selectionand appointment of the Chairperson and Members of NTT,Secretaries of Departments of the Central Government. In thisbehalf, it would also be pertinent to mention that the interests ofthe Central Government would be represented on one side inevery litigation before NTT. It is not possible to accept partyto litigation can participate in the selection process wherebythe Chairperson and Members of the adjudicatory body areselected. This would also be violative of the recognisedconstitutional convention recorded by Lord Diplock in Hinds case[Hinds v. R., 1977 AC 195 : (1976) 2 WLR 366 : (1976) 1 AllER 353 (PC)] , namely, that it would make mockery of theConstitution, if the legislature could transfer the jurisdictionpreviously exercisable by holders of judicial offices to holders ofa new court/tribunal (to which some different name wasattached) and to provide that persons holding the new judicialoffices should not be appointed in the manner and on the termsprescribed for appointment of members of the judicature. For allthe reasons recorded hereinabove, we hereby declare Section 7of the NTT Act, as unconstitutional.”93. The constitution of the Search-cum-Selection committees asstipulated in the Schedule to the 2017 Rules cannot pass constitutionalmuster under system governed by the rule of law that accordsprimacy to the independence of the judiciary. Independence of thejudiciary requires that judicial functioning be free from interference bythe other two organs of the state. The Central Government is the largestlitigant before the tribunals constituted under various statutes. Theindependent functioning of the tribunals stands compromised where theexecutive has the controlling authority in the selection of members tothe tribunals. The executive is often litigant before and has an interestin the disputes which are adjudicated by the tribunals. The constitutionof the Search-cum-Selection committees stipulated in the 2017 Rulesviolates the principle of judicial independence and the directions issuedby this Court in R Gandhi and Madras Bar Association.

94. Column 5 of the Schedule to the 2017 Rules stipulates thatthe term of office shall be three years for all tribunals. This disregardsthe principle enunciated by this Court in R Gandhi. By the judgmentof this Court, the following direction was issued:

ABC

A“(ix) The term of office of three years shall be changed to aterm of seven or five years subject to eligibility for appointmentfor one more term. This is because considerable time is requiredto achieve expertise in the field concerned. term of three yearsis very short and by the time the members achieve the requiredknowledge, expertise and efficiency, one term will be over.BFurther the said term of three years with the retirement age of65 years is perceived as having been tailor-made for persons whohave retired or shortly to retire and encourages these Tribunalsto be treated as post-retirement havens. If these Tribunals areto function effectively and efficiently they should be able toCattract younger members who will have reasonable period ofservice.”

Rule 18(2) stipulates that members who have been appointed totribunals shall not practice before the tribunal, appellate tribunal or theauthority after retirement. We are in agreement with the viewsDexpressed by this Court in R Gandhi. Inherent in the efficientfunctioning of tribunals is that appointment to tribunals is made attractiveto practicing individuals who are guaranteed reasonable period ofservice.

95. Section 184 stipulates that the Chairperson, Vice-Chairperson,EChairman, Vice-Chairman, President, Vice-President, Presiding Officeror Member of the Tribunal, Appellate Tribunal or other Authority iseligible for reappointment. This is restated in Rule 9. This is in violationof the direction issued by this Court in Madras Bar Association whereSection 8 which provided for reappointment was struck down in thefollowing terms:F

“132. Insofar as the validity of Section 8 of the NTT Act isconcerned, it clearly emerges from perusal thereof that aChairperson/Member is appointed to NTT, in the first instance,for duration of 5 years. Such Chairperson/Member is eligiblefor reappointment for further period of 5 years. We have noGhesitation to accept the submissions advanced at the handsof the learned counsel for the petitioners, that provisionfor reappointment would itself have the effect ofundermining the independence of the Chairperson/Members of NTT. Every Chairperson/Member appointedHto NTT would be constrained to decide matters in manner that would ensure his reappointment in terms ofSection 8 of the NTT Act. His decisions may or may notbe based on his independent understanding. We aresatisfied that the above provision would undermine theindependence and fairness of the Chairperson andMembers of NTT. Since NTT has been vested with jurisdictionwhich earlier lay with the High Courts, in all matters ofappointment, and extension of tenure, must be shielded fromexecutive involvement. The reasons for our instant conclusionsare exactly the same as have been expressed by us while dealingwith Section 5 of the NTT Act. We therefore hold that Section8 of the NTT Act is unconstitutional.”

(Emphasis supplied)

Rule 20 vests the Central Government with vast powers to relaxthe provisions of the applicable rules:

“Where the Central Government is of the opinion that it isnecessary or expedient so to do, it may, by order for reasons tobe recorded in writing relax any of the provisions of these ruleswith respect to any class or category of persons.”

96. The Central Government to whom rule making authoritywas conferred by Section 184 has not observed the principles whichwere enunciated in R Gandhi and Madras Bar Association either inletter or in spirit. The dangers inherent in conferring such an unguidedpower on the executive to frame rules governing the selection,appointment and conditions of service of the members of the tribunalsis evident from the rules which have been framed. The rules disregardbinding principles enunciated in decisions of this court. The rules aredestructive of judicial independence and are unconstitutional.

97. Before concluding, it is necessary to advert to two pre-eminentauthorities which were adverted to in the decisions in R Gandhi andin the concurring judgment in Madras Bar Association. In R Gandhi,Justice RV Raveendran observed:

“112. What is matter of concern is the gradual erosion of theindependence of the judiciary, and shrinking of the spaceoccupied by the judiciary and gradual increase in the number ofpersons belonging to the civil service discharging functions andexercising jurisdiction which was previously exercised by the High

ACourt. There is also gradual dilution of the standards andqualification prescribed for persons to decide cases which wereearlier being decided by the High Courts.”

The learned Judge referred to the cautionary words of JusticeWilliam O Douglas, distinguished judge of the US Supreme Court:

“52.The need for vigilance in jealously guarding the independenceof courts and Tribunals against dilution and encroachment, findsan echo in an advice given by Justice William O. Douglas toyoung lawyers (The Douglas Letters: Selections from the PrivatePapers of William Douglas, edited by Melvin L. Urofsky, 1987CEdn., p. 162, Adler and Adler):

“… The Constitution and the Bill of Rights were designed to getGovernment off the backs of people—all the people. Those greatdocuments did not give us the welfare State. Instead, theyguarantee to us all the rights to personal and spiritual self-Dfulfilment.

But that guarantee is not self-executing. As nightfall does notcome all at once, neither does oppression. In both instances, thereis twilight when everything remains seemingly unchanged. Andit is in such twilight that we all must be most aware of changeEin the air—however slight—lest we become unwitting victims ofthe darkness.”

In Madras Bar Association, Justice Rohinton Nariman, in thecourse of his concurring judgment, adverted to decision of Lord Atkin:

F“178. In Proprietary Articles Trades Assn. v. Attorney Generalfor Canada [1931 AC 310 (PC)] , Lord Atkin said: (AC p. 317)

“… Their Lordships entertain no doubt that time alone willnot validate an Act which when challenged is found to be ultravires; nor will history of gradual series of advances tillGthis boundary is finally crossed avail to protect the ultimateencroachment.”

98. We find that though the decision in R Gandhi was deliveredin 2010 and in Madras Bar Association in 2014, the same anomalieshave persisted. An attempt has been made to dilute judicial independenceHby creeping assertion of executive power. This is unconstitutional.

F.3 Severability

99. The learned Attorney General submitted that the certificationof the Speaker of the Bill as Money Bill attaches to the entirety ofthe Finance Bill. Hence, it was urged, that the consequence of acceptingthe submission of the petitioners would result in the invalidation of theentire Finance Act. We are of the view that this Court should applythe doctrine of severability to Part XIV of the Finance Act 2017.Severability was applied in judgment of this Court in R.M.D.Chamarbaugwalla v Union of India (“Chamarbaugwalla”)[55].Justice Venkatarama Ayyar, speaking for Constitution Bench of thisCourt observed:

“12. The question whether statute which is void in part is tobe treated as void in toto, or whether it is capable of enforcementas to that part which is valid, is one which can arise only withreference to laws enacted by bodies which do not possessunlimited powers of legislation, as, for example, the legislaturesin Federal Union. The limitation on their powers may be oftwo kinds: It may be with reference to the subject-matter onwhich they could legislate, as, for example, the topics enumeratedin the Lists in the Seventh Schedule in the Indian Constitution,Sections 91 and 92 of the Canadian Constitution, and Section 51of the Australian Constitution; or it may be with reference to thecharacter of the legislation which they could enact in respect ofsubjects assigned to them, as for example, in relation to thefundamental rights guaranteed in Part III of the Constitution andsimilar constitutionally protected rights in the American and otherConstitutions. When legislature whose authority is subject tolimitations aforesaid enacts law which is wholly in excess ofits powers, it is entirely void and must be completely ignored.But where the legislation falls in part within the area allotted toit and in part outside it, it is undoubtedly void as to the latter; butdoes it on that account become necessarily void in its entirety?The answer to this question must depend on whether what isvalid could be separated from what is invalid, and that is aquestion which has to be decided by the court on considerationof the provisions of the Act.”

DEFG

AAdverting to the decision in State of Bombay v N Balsara[56],the Constitution Bench observed:

“This decision is clear authority that the principle of severabilityis applicable even when the partial invalidity of the Act arisesby reason of its contravention of constitutional limitations.”

100. In State of Bombay v United Motors (India) Ltd.[57],Chief Justice Patanjali Sastri held that the doctrine of severability shouldbe extended in dealing with taxing statutes. After adverting to thesedecisions in Chamarbaugwalla, Justice Venkatarama Ayyar concluded:

“21…The resulting position may thus be stated: When statuteCis in part void, it will be enforced as regards the rest, if that isseverable from what is invalid. It is immaterial for the purposeof this rule whether the invalidity of the statute arises by reasonof its subject-matter being outside the competence of thelegislature or by reason of its provisions contraveningDconstitutional prohibitions.”The principles which govern the exercise of the doctrine ofseverability have been formulated thus:

1. In determining whether the valid parts of statute areEseparable from the invalid parts thereof, it is the intentionof the legislature that is the determining factor. The testto be applied is whether the legislature would haveenacted the valid part if it had known that the rest of thestatute was invalid. Vide Corpus Juris Secundum, Vol. 82,Fp. 156; Sutherland on Statutory Construction, Vol. 2 pp.176-177.

2. If the valid and invalid provisions are so inextricablymixed up that they cannot be separated from one another,then the invalidity of portion must result in the invalidityGof the Act in its entirety. On the other hand, if they areso distinct and separate that after striking out what isinvalid, what remains is in itself complete codeindependent of the rest, then it will be upheld

56 1951 SCR 682H57 1953 SCR 1069

notwithstanding that the rest has become unenforceable.Vide Cooley’s Constitutional Limitations, Vol. I at pp. 360-361; Crawford on Statutory Construction, pp. 217-218.

3. Even when the provisions which are valid are distinct andseparate from those which are invalid, if they all formpart of single scheme which is intended to be operativeBas whole, then also the invalidity of part will result inthe failure of the whole. Vide Crawford on StatutoryConstruction, pp. 218-219.

4. Likewise, when the valid and invalid parts of statuteare independent and do not form part of scheme butwhat is left after omitting the invalid portion is so thin andtruncated as to be in substance different from what it waswhen it emerged out of the legislature, then also it willbe rejected in its entirety.

5. The separability of the valid and invalid provisions of astatute does not depend on whether the law is enactedin the same section or different sections; (Vide Cooley’sConstitutional Limitations, Vol. I, pp. 361-362); it is notthe form, but the substance of the matter that is material,and that has to be ascertained on an examination of theAct as whole and of the setting of the relevant provisiontherein.

6. If after the invalid portion is expunged from the statutewhat remains cannot be enforced without makingalterations and modifications therein, then the whole ofit must be struck down as void, as otherwise it willamount to judicial legislation. Vide Sutherland on StatutoryConstruction, Vol. 2, p. 194.

7. In determining the legislative intent on the question ofseparability, it will be legitimate to take into account thehistory of the legislation, its object, the title and thepreamble to it. Vide Sutherland on Statutory Construction,Vol. 2, pp. 177-178.”

101. In the present case, applying these principles enunciatedabove, Part XIV of the Finance Act 2017 is severable. The intent ofthe legislature is the guiding principle under the first of the above

Aprinciples. Parliament would, in any event, have enacted the valid partsof the Finance Act 2017 if it had known that Part XIV is invalid. Thevalid and invalid parts are not so inextricably linked that the invalidityof Part XIV should result in the invalidity of the rest. Nor is Part XIVa part of composite scheme linked to the other parts of the FinanceAct 2017. Even after the excision of Part XIV the remaining part ofBthe Finance Act would still survive on its own. Hence, Part XIV ofthe Finance Act 2017 can be excised from the Act.102. Finally, fervent plea was made by the learned AttorneyGeneral to the effect that even though some provisions contained inthe Rules framed on 1 June 2017 may run contrary to the principlesCenunciated by this Court in R Gandhi and Madras Bar Association,the Central Government would be willing to proceed on the basis ofthe interim orders which were passed by this Court during the pendencyof the proceedings with certain modifications. We are unable to acceptthe submission. Part XIV of the Finance Act 2017 could not have beenDenacted in the form of Money Bill. The rules framed by the CentralGovernment are unconstitutional on the ground that they violate theprinciples of judicial independence set out in judgments of this Court.

Conclusion

103. Part XIV of the Finance Act 2017 could not have beenEenacted in the form of Money Bill. The rules which have been framedpursuant of the rule making power under Section 184 are held to beunconstitutional. However, since during the pendency of theseproceedings, certain steps were taken in pursuance of the interim ordersand appointments have been made, we direct that those appointmentsFshall not be affected by the declaration of unconstitutionality. The termsand conditions governing the personnel so appointed shall however abideby the parent enactments. Upon the declaration of unconstitutionality,the conditions specified in all corresponding aspects in the parentenactments shall continue to operate.

G104. This Court has repeatedly emphasised the need for settingup an independent statutory body to oversee the working of tribunals.Despite the directions issued by this Court in Chandra Kumar nearlytwo decades ago, no action has been taken by the legislature to put inplace an umbrella organisation which would be tasked with addressingthe drawbacks of the system to which we have adverted above. TheHlack of single authority to ensure competence and uniform service

conditions has led to fragmented tribunal system that defeats thepurpose for which the system was constituted. Moreover, the co-ordinating authority for all tribunals must be the Department of Justice.Vesting that function in individual ministries has led to haphazardevolution of the tribunal structure, besides posing serious dangers to theindependence of tribunals.

105. It is imperative that an overarching statutory organisationbe constituted through legislative intervention to oversee the workingof tribunals. We recommend the constitution of an independent statutorybody called the “National Tribunals Commission”[58] to oversee theselection process of members, criteria for appointment, salaries andallowances, introduction of common eligibility criteria, for removal ofChairpersons and Members as also for meeting the requirement ofinfrastructural and financial resources. The legislation should aim atprescribing uniform service conditions for members. The Commissionshould comprise the following members:

(i) Three serving judges of the Supreme Court of Indianominated by the Chief Justice of India;

(ii) Two serving Chief Justices or judges of the High Courtnominated by the Chief Justice of India;

(iii) Two members to be nominated by the CentralGovernment from amongst officers holding at least therank to Secretary to the Union Government: one ofthem shall be the Secretary to the Department of Justicewho will be the ex-officio convener; and

(iv) Two independent expert members to be nominated bythe Union government in consultation with the ChiefJustice of India.

106. The senior-most among the Judges nominated by the ChiefJustice of India shall be designated as the Chairperson of the NTC.

107. While the setting up of the NTC is within the competenceof the legislature, it must be ensured that the guidelines that have beenlaid down by this Court to ensure the independence and efficientfunctioning of the tribunal system in India are observed. The

58 “NTC”

Aindependence of judicial tribunals is an inviolable feature of the basicstructure of the Constitution. The procedure of selection, appointment,removal of members and prescription of the service conditions oftribunal members determine the independence of the tribunals. As wehave held, in preserving the independence of the tribunals as facetof judicial independence, the adjudicatory body must be robust:Bsubservient to none and accountable to the need to render justice inthe context of specialized adjudication. This is reflected in the need forvigilance in guarding the independence of courts and tribunals.

108. Competence, professionalism and specialisation areindispensable facets of robust tribunal system designed to deliverCspecialised justice. The Commission must be vested with the power tooversee the administration of all tribunals established under theenactments of Parliament to ensure the adequate manning of thetribunals with the infrastructure and staff required to meet the exigenciesof the system. The Union government should also consider formulatingDa law to ensure the constitution of an All India Tribunal Servicegoverning the recruitment and conditions of service of the non-adjudicatory personnel for tribunals. At present, the administrative staffof the tribunals is by and large brought on deputation. The tribunals arewoefully short of an adequate complement of trained administrativeEpersonnel. Hence, there is an urgent need to set up an All India TribunalService in the interests of the effective functioning of the tribunalsystem.

Though the present judgment analyses the ambit of the word“only” in Article 110(1) and the interpretation of sub-clauses (a) to (g)Fof clause (1) of Article 110 and concludes that Part XIV of the FinanceAct 2017 could not have been validly enacted as Money Bill, I am inagreement with the reasons which have been set out by the learnedChief Justice of India to refer the aspect of money bill to larger Benchand direct accordingly.GI am in agreement with the observations of brother JusticeDeepak Gupta that the qualifications of members to tribunals constitutean essential legislative function and cannot be delegated. Tribunals havebeen conceptualized as specialized bodies with domain-specificknowledge expertise. Indispensable to this specialized adjudicatoryHfunction is the selection of members trained in their discipline. Keeping

this in mind, the prescription of qualifications for members of tribunalsis legislative function in its most essential character.

The qualifications for appointment to adjudicatory bodiesdetermine the character of the body. The adjudicatory tribunals areintended to fulfil the objects of legislation enacted by Parliament, be itin the area of consumer protection, environmental adjudication, industrialdisputes and in diverse aspects of economic regulation. Defining thequalifications necessary for appointment of members constitutes thecore, the very essence of the tribunal. This is an essential legislativefunction and cannot be delegated to the rule making authority of thecentral government. It is for the legislature to define the conditionswhich must be fulfilled for appointment after assessing the need fordomain specific knowledge.

DEEPAK GUPTA, J.

1. I have had the privilege of going through the detailed anderudite judgments of the Chief Justice and brother Chandrachud, J.

2. Since the entire gamut of facts, submissions and laws havebeen dealt with in the judgment of Chief Justice, for the sake of brevity,it would not be necessary to set out all the facts and contentions indetail.

3. Reference in this judgment to ‘Tribunal’ will include tribunal,appellate tribunal or other authorities referred to in Part XIV of theFinance Act, 2017. Reference to ‘Chairpersons/Members’ will includeChairperson, Vice-Chairperson, Chairman, Vice-Chairman, President,Vice-President or other members referred to in Section 184 of theFinance Act, 2017. Some tribunals have both regulatory as well asadjudicatory roles. Most of the discussion hereinafter relates to theadjudicatory role of tribunals.

4. The order dated 27.03.2019 quoted in the judgment of theChief Justice clearly sets out the issues with which the present benchis concerned. To put it in nutshell, the issue before this Court is whethertribunals are an effective alternative to Courts; if yes, who should manthem. Keeping in view the ever-changing developments in law and theprovisions of Articles 323-A and 323-B of the Constitution of India,tribunals as an alternative to Courts, have come to stay. The main issue

Ais how to ensure that these tribunals function effectively, fearlessly andefficiently.

5. The Chief Justice in his judgment has culled out the followingissues for determination:-

I. Whether the ‘Finance Act, 2017’ insofar as it amendsBcertain other enactments and alters conditions of serviceof persons manning different Tribunals can be termedas ‘money bill’ under Article 110 and consequently isvalidly enacted?

II. If the answer to the above is in the affirmative thenCwhether Section 184 of the Finance Act, 2017 isunconstitutional on account of Excessive Delegation?

III. If Section 184 is valid, Whether Tribunal, AppellateTribunal and other Authorities (Qualifications,Experience and other Conditions of Service ofDMembers) Rules, 2017 are in consonance with thePrincipal Act and various decisions of this Court onfunctioning of Tribunals?

IV. Whether there should be Single Nodal Agency foradministration of all Tribunals?

V. Whether there is need for conducting Judicial ImpactAssessment of all Tribunals in India?

VI. Whether judges of Tribunals set up by Acts ofParliament under Articles 323-A and 323-B of theFConstitution can be equated in ‘rank’ and ‘status’ withConstitutional functionaries?

VII. Whether direct statutory appeals from Tribunals to theSupreme Court ought to be detoured?

VIII. Whether there is need for amalgamation of existingGTribunals and setting up of benches.

6. By and large I am in agreement with the reasoning andconclusions arrived at by the Chief Justice, especially on issues 1 and3 to 8. I am, however, unable to persuade myself to agree with theChief Justice that Section 184 of the Finance Act of 2017 does notHsuffer from the vice of excessive delegation. I am also of the view

that though the issue with regard to the Money Bill may be referred toa larger bench of 7 judges, since the correctness of the law laid downin L. Chandrakumar v. Union of India[1] has not been doubted, thereis no need to refer this matter to bench of 7 judges.

7. I also feel that some specific directions need to be given forappointment of body to carry out judicial impact assessment. It mayalso be necessary to lay down some parameters or reference pointsfor such body to look into. I am of the view that since the Governmenttill date has not followed the recommendation of 7-Judge Bench of thisCourt in L. Chandra Kumar (supra) that there should be whollyindependent agency for the administration of all tribunals, some directionsin this regard are required. Lastly, I feel that direction needs to begiven to constitute body to select the Chairpersons/Members of theTribunals.8. Before entering into detailed discussion on the issuesinvolved, I would like to highlight that there are some glaring errors inPart XIV which clearly show non-application of mind.

9. Section 9A of the Armed Forces Tribunal Act, 2007 wasintroduced by Section 181 of the Finance Act, 2017 and reads as follows:

“9A. Notwithstanding anything contained in this Act, thequalifications, appointment, term of office, salaries and allowances,resignation, removal and terms and conditions of service of theChairperson and other Members of the Appellate Tribunalappointed after the commencement of Part XIV of Chapter VIof the Finance Act, 2017, shall be governed by the provisions ofsection 184 of that Act:

Provided that the Chairperson and Member appointed before thecommencement of Part XIV of Chapter VI of the Finance Act,2017, shall continue to be governed by the provisions of this Act,and the rules made thereunder as if the provisions of section 184of the Finance Act, 2017 had not come into force.”

(emphasis supplied)

This provides the qualifications, terms and conditions of serviceetc. of Chairpersons and Members of the appellate tribunal. Thisprovision shows total non-application of mind because the Armed Forces

1 (1997) 3 SCC 261

ATribunal Act, 2007 has no provision for an appellate tribunal. In fact,Section 6 of the Armed Forces Tribunal Act, 2007 itself provides thequalifications for appointment for Chairperson and other members andit is not clear what was sought to be achieved by introducing Section9A by the Finance Act, 2017.

BBackground

10. On 26.11.1949, we, the people of India gave unto ourselvesthe Constitution, the basic features of which amongst others are judicialreview[2], democracy, separation of powers[3] etc. These basic featuresof the Constitution are an inherent part of our Constitution and polity.

C11. Part III of the Constitution which sets out the fundamentalrights has often been referred to as the heart and soul of theConstitution. In my view, the essence of the Constitution was beautifullycaptured by our founding fathers in the Preamble of the Constitutionwhere we promised to ourselves Justice, Liberty, Equality and Fraternity.The first and foremost attribute of the Preamble is Justice. India shouldDbe democratic republic is also part of the Preamble. The ultimatepower under our Constitution resides with the people and not thoseholding positions of power.

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

13. One of the essential ingredients of both democracy and ruleof law is an independent and fearless judiciary. free and vibrant

2 Minerva Mills Ltd. v. Union of India, (1980) 2 SCC 591; L. Chandra Kumar v.Union of India, (1997) 3 SCC 261H3 Kesavananda Bharati v. State of Kerala, (1973) 4 SCC 225

country is one where there is freedom of expression and governanceby the rule of law. There can be rule of law only when we have judgesand adjudicators who can take decisions independent of any extraneousinfluence. If rule of law is absent, there is no accountability, there isabuse of power and corruption. When the rule of law disappears, weare ruled not by laws but by the idiosyncrasies and whims of those inpower.

14. Tribunals have come to stay. Both the Chief Justice andbrother Chandrachud, J. have dealt with the issue of tribunalisation ingreat detail. One aspect which needs to be highlighted and also comesout from the judgments of my learned brothers is that the men whoman the tribunals should command the same respect as the Judges ofCourts and they should, as far as possible, have the same qualificationsand attributes. This is absolutely necessary because if the people ofthis country are to have faith in tribunals then it is the duty of allconcerned to ensure that these tribunals function fairly andindependently like Courts are expected to. With the increase inspecialisation in different branches of law, it would not be possible tourge that we do not need specialised tribunals. No human being canbe expected to know the entire law. As judges we are trained to workin various fields of law. At the same time, it cannot be denied that thefast-changing face of technology and ever-growing demands of thepeople have led to the introduction of thousands of new legislations andsome of these require specialised knowledge of certain branches of lawcombined with technology.

15. The courts in India were successfully handling all jurisdictions.The problem was not lack of talent. The problem was not lack ofknowledge[4]. The main problem was extremely low number of judgesas compared to the population and very high vacancy position.Tribunalisation of justice was done not because the courts wereincapable of handling the matters but mainly because there were hugedelays in settling matters. Now even for complex commercial matters,specialised commercial courts have been set up. However, at the sametime, one cannot deny that in the fast-expanding technological world,there is need to have expert adjudicators. Therefore, there is needto have specialised tribunals. These tribunals being substitutes for courtsmust also meet the expectations of our founding fathers and be totallyindependent and fearless.

4 Union of India v. Madras Bar Association, (2010) 11 SCC 1

A16. Unfortunately, the working of some of the tribunals leavesmuch to be desired. Not all the problems arise because of the personswho run the tribunals. Many difficulties arise because of hugevacancies, few benches, financial crunch and dependence of thetribunals on the departments, which sadly administer the tribunals. Someof the tribunals are virtually subjugated to the departments as far asBthe administrative matters are concerned and this also affects theindependence of the judiciary. Judicial independence not only meansindependence to take the right decisions but functional independenceis equally important. Perceptions are also very important. What doesthe litigating public appearing before the tribunal feel? Is the tribunalCfunctioning like wing of the government or as an independent body?If there has to be separation of powers then these tribunals must havefunctional autonomy to run themselves as they best feel like.

17. In this background, I shall deal with the various issues culledout by the Chief Justice.

DIssue No.1

18. I am in total agreement with the Chief Justice in as much ashe has held that the decision of the Hon’ble Speaker of the House ofPeople under Article 110 (3) of the Constitution is not beyond judicialreview. I also agree with his views that keeping in view of the highEoffice of the Speaker, the scope of judicial review in such matters isextremely restricted. If two views are possible then there can be nomanner of doubt that the view of the Speaker must prevail. Keeping inview the lack of clarity as to what constitutes Money Bill, I agreewith the Hon’ble Chief Justice that the issue as to whether Part XIVof the Finance Act, 2017, is Money Bill or not may be referred to aFlarger bench.

Issue no. 2

19. As far as Issue No.2 is concerned, I am unable to agree withthe conclusion of Chief Justice. There can be no doubt that Parliamentis not expected to deal with all matters and it can delegate certain “non-Gessential” matters to the executive. Every condition need not be laiddown by the Legislature.

20. In his judgment the Chief Justice has referred to catenaof judgments dealing with limits of delegation. It is not necessary torepeat all that has been said in those judgments but reference may beHmade to few.

21. 7-Judge Bench of this Court in Re Article 143,Constitution of India and Delhi Laws Act (1912) etc.[5]held that thelegislature cannot be expected to legislate on all issues and has the powerto delegate non-essential functions to delegatee. At the same time, aclose reading of the judgment indicates that it was clearly held that the“essential legislative functions” cannot be delegated. There can be noquarrel with the proposition that delegation of non-essential legislativefunctions can be done. Even to this there is caveat. The legislaturemust have control and functional powers over the delegatee. One ofthe known methods of exercising such powers is for the delegatee toplace the rules/orders passed by it in exercise of powers delegated toit before the legislature. There should always be legislative control overdelegated legislation.

22. In Gwalior Rayon Mills v. Assistant Commissioner, SalesTax[6], Khanna, J. dealt with this matter in his inimitable style. Paras 24and 25 of the judgment have been quoted in the opinion of the ChiefJustice but I think Para 26 is also very relevant and it reads as follows:

“26. We are also unable to subscribe to the view that if thelegislature can repeal an enactment, as it normally can, it retainsenough control over the authority making the subordinatelegislation and, as such, it is not necessary for the legislature tolay down legislative policy, standard or guidelines in the statute.The acceptance of this view would lead to startling results.Supposing the Parliament tomorrow enacts that as the crimesituation in the country has deteriorated, criminal law to beenforced in the country from particular date would be such asis framed by an officer mentioned in the enactment. Can it besaid that there has been no excessive delegation of legislativepower even though the Parliament omits to lay down in thestatute any guideline or legislative policy for the making of suchcriminal law? The vice of such an enactment cannot, in ouropinion, be ignored or lost sight of on the ground that if theParliament does not approve the law made by the officerconcerned, it can repeal the enactment by which that officer wasauthorised to make the law.”

5 AIR (38) 1951 SC 332

6 AIR 1974 SC 1660

AThis makes it clear that merely because the subordinate legislationhas to be placed before the legislature does not mean that there iseffective control in all cases.

23. In Harishankar Bagla v. M.P. State[7], the test laid downwas that there should be reasonably clear statement of policy whichBshould guide formulation of delegated legislation.

24. In Ramesh Birch v. Union of India[8], Bench of this Courtclearly held that the legislature cannot wash their hands of their essentiallegislative functions. It held as follows.

“19…A different way in which the second of the above viewsChas been enunciated — and it is this view which has dominatedsince — is by saying that the legislatures cannot wash their handsof their essential legislative function. Essential legislative functionconsists in laying down the legislative policy with sufficientclearness and in enunciating the standards which are to beDenacted into rule of law. This cannot be delegated. What canbe delegated is only the task of subordinate legislation which isby its very nature ancillary to the statute which delegates thepower to make it and which must be within the policy andframework of the guidance provided by the legislature.”

EBy the Finance Act, 2017 the number of tribunals were reducedto 19. It is the case of the Government that the tribunals are necessaryso that technically qualified people can man the tribunal. The nature ofwork done by different tribunals is totally different. The essentialqualifications for filling up the posts of members of administrativeFtribunals, company law tribunals or the National Green Tribunal wouldbe totally different. This function, in my opinion, being an essentiallegislative function, could not have been delegated especially withoutlaying down any guidelines.

25. Section 184 empowers the Central Government to make rulesGto provide for qualification, appointment term of office, salaries andallowances etc. of various Chairperson, Vice-Chairperson, Chairman,Vice-Chairman, President, Vice-President, Presiding Officer or Memberof the Tribunal, Appellate Tribunal or, as the case may be, other

7 AIR 1954 SC 465H8 1989 Supp (1) SCC 430

Authorities as specified in column (2) of the Eighth Schedule. Section184 of the Finance Act, 2017 reads as follows :-

184. (1) The Central Government may, by notification, make rulesto provide for qualifications, appointment, term of office, salaries andallowances, resignation, removal and the other terms and conditions ofservice of the Chairperson, Vice-Chairperson, Chairman, Vice-Chairman, President, Vice-President, Presiding Officer or Member ofthe Tribunal, Appellate Tribunal or, as the case may be, other Authoritiesas specified in column (2) of the Eighth Schedule:

Provided that the Chairperson, Vice-Chairperson, Chairman, Vice-Chairman, President, Vice-President, Presiding Officer or Member ofthe Tribunal, Appellate Tribunal or other Authority shall hold office forsuch term as specified in the rules made by the Central Governmentbut not exceeding five years from the date on which he enters uponhis office and shall be eligible for reappointment:

Provided further that no Chairperson, Vice-Chairperson,Chairman, Vice-Chairman, President, Vice-President, Presiding Officeror Member shall hold office as such after he has attained such age asspecified in the rules made by the Central Government which shall notexceed,—

(a) in the case of Chairperson, Chairman or President, theage of seventy years;

(b) in the case of Vice-Chairperson, Vice-Chairman, Vice-President, Presiding Officer or any other Member, theage of sixty-seven years:

(2) Neither the salary and allowances nor the other terms andconditions of service of Chairperson, Vice-Chairperson, Chairman, Vice-Chairman, President, Vice-President, Presiding Officer or Member ofthe Tribunal, Appellate Tribunal or, as the case may be, other Authoritymay be varied to his disadvantage after his appointment.

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

A27. We are in the present case dealing with the appointment ofChairpersons/Members to various Tribunals. They are enjoined uponto discharge constitutional function of delivering justice to the people.What should be the established qualifications and attributes of personsselected to man such high posts is, in my view, an essential part oflegislative functions. I have no doubt, in my mind, that the ConstitutionBcould not have provided that the qualifications of the Judges of theSupreme Court of India or of the High Courts could be fixed by theGovernment. If these tribunals are to replace the High Courts, whyshould the same principles not apply to them. In my view, laying downthe qualifications of the persons eligible to hold these high posts wasCan essential aspect of the legislation keeping in view the importance ofthe tribunals, the importance of rule of law and the importance of anindependent and fearless judiciary.

28. As far as providing the qualifications for appointment areconcerned, as discussed above, I am of the view that these qualificationsDhave to be provided in the legislation and could not be delegated.However, as far as the other terms and conditions such as pay andallowances are concerned, these can be delegated.

29. For the sake of argument, even if it was to be said that layingdown the qualifications is not an essential function then also, in viewEof the law laid down by this Court, the guidelines should have beenfound in the legislation itself. It is paradoxical that there are no guidelinesfor the essential qualifications, even though there are some guidelineswith regard to the terms and conditions of services of Chairpersons/Members of the Tribunals.F 30. I am in respectful disagreement with the Chief Justice thatthe objects of the parent enactments and the law laid down by this Courtin R. K. Jain v. Union of India[9], L. Chandra Kumar (supra), Unionof India v. Madras Bar Association[10], Madras Bar Association v.Union of India[11], Madras Bar Association v. Union of India[12],Gujarat Urja Vikas Nigam Ltd. v. Essar Power Ltd.[13] in essenceGshould be read as the guidelines. One would expect the Union

9 (1993) 4 SCC 11910 (2010) 11 SCC 111 (2014) 10 SCC 112 (2015) 8 SCC 583H13 (2016) 9 SCC 103

Government to abide by the directions of this Court. However, thisexpectation has been belied by this very enactment which violates everyprinciple of law laid down by this Court and, as held in the judgmentsof both my brothers, the Rules framed by the delegatee are violativeof the law laid down by this Court. In this background, it is apparentthat both the delegator and the delegatee felt that they were not boundby these judgments. This is also apparent from the fact that the Rulesframed by the delegatee have not been brought in consonance with thelaw by the delegator.31. The previous enactments were repealed in so far as matterscovered by Part XIV of the Finance Act are concerned. Therefore, itcannot be expected that the delegatee would again refer to the repealedenactments to seek the guidelines for fixing the terms and conditions,etc. of those to be appointed as Chairpersons/Members. If we excludethe judgments of this Court and the terms and conditions laid down inthe repealed enactments then there are no guidelines whatsoever leftfor the delegatee to fall back on. The Finance Act provides no guidelinesin this regard. It is absolutely silent with regard to the qualification, theeligibility criteria, experience etc. required for those who are to beappointed as Chairpersons/Members of the Tribunals. These powershave been delegated to the government.

32. There being no guidelines, unfettered and unguided powershave been vested in the delegatee and, therefore, in my opinion, thereis excessive delegation. As such, I would hold that Section 184 of theFinance Act, 2017 insofar as it delegates the powers to lay down thequalifications of Chairperson, Vice-Chairperson, Chairman, Vice-Chairman, President, Vice-President, Presiding Officer or Member ofthe Tribunal, Appellate Tribunal or, as the case may be, other Authoritiesas specified in column (2) of the Eighth Schedule, suffers from the viceof excessive delegation and is accordingly struck down.

Issue Nos. 3 & 6

33. I agree with the Chief Justice and I do not want to addanything.

Issue Nos. 4, 5, 7 & 8

34. I agree with the Chief Justice both on the reasoning andconclusions on these issues. However, as already pointed out above, Iam of the view that since nobody has raised challenge to the

Acorrectness of the law laid down by 7-Judge Bench in L. ChandraKumar (supra) that there should be one wholly independent agencyfor the administration of all the tribunals. There is no need to refer thisissue to Bench of 7 Judges.

35. However, I would like to add few words because I feelBthat it is important to highlight the problems being faced and the issueswhich need to be resolved by the body which will carry out the judicialimpact assessment of the tribunals in the form of Judicial ImpactAssessment Committee. I am clearly of the view that as laid down inL. Chandra Kumar (supra), there must be single independent nodalagency for administering all the tribunals. The 7-Judge Bench of thisCCourt held that all tribunals should as far as possible be under singlenodal agency. Until such nodal agency is set up it was felt that theMinistry of Law and Justice would be the most appropriate Ministryfor this purpose.36. There are various reasons why there should be one nodalDagency. Tribunals are facing many problems like lack of manpower,very few benches, vacancies lying unfilled for long period, financialdependence on the department which may be litigating before thetribunal etc. These are ills which can be avoided if Tribunals fall underone umbrella organisation. One umbrella organisation will be betterEequipped to understand the problems faced by all the Tribunals. Thiscould lead to standardization of Tribunals and uniform approach tothe needs of each tribunal. large number of tribunals, especially thosecast with the duty of discharging adjudicatory functions have beenconstituted with view to replace the courts and in many cases theFjurisdiction earlier exercised by the High Courts has been vested in suchtribunals. It is, therefore, imperative that these tribunals must be mannedby persons of impeccable integrity, high intellect and having vastexperience in the field in which they will exercise jurisdiction. Thesetribunals also must have functional autonomy. This cannot be achievedunless there is nodal body which shall look after the administrativeGneeds of the tribunals. For more than 2 decades the Government hasnot thought it fit to comply with the 7-Judge Bench judgment of thisCourt in L. Chandra Kumar (supra). These matters cannot bepermitted to linger on indefinitely. Therefore, in my view, directionmust be given to the Government to set up single nodal agency withinHa period of 6 months from today till which time the present system may

continue. Merely giving financial autonomy to the tribunals will not doaway with the need of having one common umbrella organisation tosupervise all the tribunals.

37. Even without carrying out any judicial impact assessment itis clear, as held in Madras Bar Association, 2010 (supra) that tribunalsin India have unfortunately not achieved full independence. Whentribunals are established, they depend upon the sponsoring departmentfor funds, infrastructure and even space for functioning. Administrativemembers of the tribunal are, more often than not, drawn from thisdepartment. This, in my opinion, strikes at the very root of judicialindependence because the biggest litigant or stakeholder itself becomespart and parcel of the adjudicating body which is supposed to be free,independent and fearless.

38. The need for carrying out judicial impact assessment of allthe tribunals in India cannot be over emphasised. Experience has shownthat the tribunals are not fully independent and more often than not,the number of vacancies in the tribunals are so high as to make thetribunals dysfunctional if not non-functional. The promised benchesremain mirage in the air and the litigants from remote areas of thecountry have to come to the State capitals or the National Capital forredressal of their grievances.

39. Access to justice is fundamental right[14]. Denial of accessto justice also takes place when litigant has to spend too much money,time and effort to approach the adjudicating authority to get justice. InIndia where delays plague the tribunals, client will not hurriedlyapproach tribunal even if he has genuine grievance. Amongst themany tribunals set up, the tax tribunals have been probably the mostsuccessful. In my view, one of the reasons why the tax tribunals havebeen successful is that the recruitment of members of these tax tribunalsis normally done at younger age and there is scope of careerprogression not only within the tribunal but also from the tribunals tothe High Courts. This can only happen if we recruit younger andcompetent people rather than retired persons. Another reason for thesuccess of the tax tribunals is that the litigant is either the revenue oran assessee, both of whom have the wherewithal to fight cases.Similarly, in administrative tribunals it is government servants mainly who

14 Anita Kushwaha v. Pushap Sudan, (2016) 8 SCC 509

Aare involved. Commercial tribunals also deal with the litigants whonormally have sufficient finances. But now we have other tribunals likethe NGT which may be approached by poor villagers.

40. The Central Administrative Tribunal (CAT) was set up in theyear 1985. It can definitely be termed as one of the better functioningBtribunals. However, even this tribunal has only 17 regular benchesincluding the Principal Bench at Delhi and 4 Circuit Benches. Prior tothe establishment of the CAT, Central Government employee had aright to move the Civil Courts for grant of relief. This meant that suchemployee could even approach Sub-Judge for grant of relief. Thatjurisdiction has been taken away. In L. Chandra Kumar (supra), whileCupholding the constitution of the tribunals, 7-Judge Bench of this Courtheld that the orders of the tribunals would be amenable to judicial reviewunder Article 226 of the Constitution albeit with caveat that thesematters would be decided by Division Bench.

41. The vacancy position even in the CAT is very high. Out ofDa total strength of 65 members, the CAT is short by 25 members – 12administrative members and 13 judicial members. This is shortage ofabout 38%. The Chandigarh Bench of the tribunal is supposed to have4 members. However, presently there is only 1 judicial member and assuch there is no bench available in Chandigarh. The Chandigarh BenchEhas jurisdiction over the States of Punjab, Haryana, Himachal Pradeshand Union Territories of Jammu and Kashmir, Ladakh and Chandigarh.The Central Government employees in these areas have virtually beenleft remediless. It is easy for the members of the All India Civil Servicesholding high positions to approach the Principal Bench at Delhi, but onecannot even imagine the plight of lowly placed peon or clerk who isFexpected to travel long distances to New Delhi, spend huge amount ofmoney, pay the extremely high fees of the lawyers of metropolis likeDelhi to file case in Delhi. Such litigant is financially boarded outof the litigation process.

42. To give another example, the NGT was to have its PrincipalGBench at Delhi and 4 Zonal Benches and 4 Circuit Benches. It wasexpected that in the future more benches would be added. Sadly, thereverse has taken place. At the present moment, only the PrincipalBench is functioning with only one Chairperson and 3 judicial members(as against the sanctioned strength of 20 judicial members), and twoHexpert members (as against the total sanctioned strength of 20 expert

members). The situation is extremely grim. Day in and day out we alltalk about pollution and the environment but the harsh reality is that asagainst Chairperson and 40 members, at present the Chairperson hasthe assistance of only 5 members. The result is that no hearings aretaking place in the Zonal Benches or the Circuit Benches. We havebeen informed that cases are taken up by video conferencing. Videoconferencing can definitely be used as tool to hold hearings in somecases but initial filing and hearings must as far as possible be done inopen Court if the public is to have faith in the institution. Open hearingsare essential to build trust and confidence in the community. Membersof the public will have faith only in those tribunals and courts whichare open to the public. Presently, the situation is such that if someonefrom Andaman and Nicobar Islands wants to raise some issue beforethe NGT he will have to come at least to Calcutta to file case,whereas earlier he could have filed case before the Circuit Bench ofthe Calcutta High Court at Port Blair. Here also, the hearing, if any,will be conducted through video conferencing. There is no bench ofthe NGT functioning in the North-East covering as many as 8 States.Similarly, there is no bench functioning in the environmentally andecologically fragile States of Himachal Pradesh and Uttarakhand andthe Union Territories of Ladakh and Jammu and Kashmir. This clearlyshows that functioning of the tribunals leaves much to be desired.

43. The committee which carries out the judicial impactassessment of the functioning of the tribunals has to deal with wholelot of issues. It is neither feasible nor proper to lay down all the issuesin this judgment but I am highlighting some of them. Another importantissue which must be dealt with is whether the tribunals have reallyhelped in early disposal of the cases. The time spent for disposal mayvary from case to case but we are mainly dealing with the cases whichend in the High Courts or at the Supreme Court. This must be donenot only on an all India basis but also on State to State basis. Thereare many smaller States in the country where the Civil Courts and theHigh Courts are not overburdened with work. In these States, the casesare decided much faster than in many other larger States. Normally, itis these smaller States which do not get permanent benches, sometimesnot even Circuit Benches. It is paradox that the States which arejudicially well administered and where disposal is quick, do not get thepermanent benches and the litigants suffer whereas States which arevery slow in disposing of the cases get more benches. Even when

ACircuit Benches come to these States there is huge time gap betweentwo sittings. The whole purpose of providing cheaper and faster justicegets lost because the Circuit Benches come rarely and many times theconstitution of the Circuit Benches changes on every visit resulting inmatters being reheard every time.

B44. Having tribunals without benches in at least the capitals ofStates and Union Territories amounts to denial of justice to citizens ofthose States and Union Territories. It also makes the justice deliverysystem very metropolis centric. This has many adverse effects. Thebench and the bar in smaller district towns and capitals of smaller Stateswhich were handling these matters in competent manner are deprivedCof handling these types of cases. This also makes access to justiceexpensive for the litigants. It also leads to situation where the benchand the bar in these areas would not have any experience of handlingmatters relating to jurisdictions transferred to tribunals which they usedto handle earlier. Therefore, the local bench and bar will never developDand the entire bulk of work will be captured by those practicing in Delhior in those State capitals where benches of the tribunals are set up.Instead of taking justice to the common man, we are forcing thecommon man to spend more money, spend more time and travel longdistances in his quest for justice, which is his fundamental right.E

45. The litigants cannot wait for judicial impact assessment andaction by the Government which may or may not take place. Experiencehas shown that the judgments right from L. Chandra Kumar (supra)to Madras Bar Association, 2010 (supra) have not been complied withby the Union in letter and spirit. Citizens of this country cannot be deniedFjustice which is the first promise made in the Preamble. Therefore, Iam of the view that in whichever State/Union Territory the bench of aparticular tribunal is not established or functioning, the litigants of thatState will have right to invoke the extraordinary writ jurisdiction ofthe jurisdictional High Court under Article 226 of the Constitution forredressal of their grievances. They cannot be expected to go to far offGdistant places and spend huge amounts of money, much beyond theirmeans to ventilate their grievances. The alternative remedy ofapproaching tribunal is an illusory remedy and not an efficaciousalternative remedy. The self-imposed bar or restraint of an alternativeefficacious remedy would not apply. Such litigants are entitled to fileHpetitions under Article 226 of the Constitution of India before the

jurisdictional High Court. In L. Chandra Kumar (supra) it was clearlyheld that the right of judicial review is part of the basic structure ofthe Constitution and this right must be interpreted in manner that it istruly available to the litigants and should not be an illusory right.

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

47. Recruitment to the lower tribunal should be done on the basisof an objective criteria like the written test conducted for the post ofDistrict Judges. The persons selected to the lower tribunals can be madeeligible for promotion to the appellate tribunals. In fact, there can becommon service to man more than one or more tribunals. To give anexample, there can be common service for all the tax tribunals. Therecan also be common service for the State administrative tribunals,the Central Administrative Tribunal and for the judicial members of theArmed Forces Tribunal. This will obviously require setting up ofseparate tribunal services. If this is done, we will have tribunal servicesfrom which people will rise to man these tribunals, the appellate tribunalsand also to the posts of Chairpersons of tribunals. The body carryingout the judicial impact assessment should also look into the issue as towhether it would be better to have tribunal service rather thanappointing retired judges. If members of the bar or from theadministration or from the State judiciary are appointed at the lowestrung of the tribunal and they have long tenure knowing that they willretire after 15 or 20 years, one would be able to attract better talentand more committed workforce. long tenure for members is alsoessential for maintaining judicial independence. They shall also haveaspirations of reaching the higher levels, which would be an inducementfor better work culture.

48. If there are tribunal services and there is provision for appealwithin the hierarchy of the tribunals and the High Courts exercise theirwrit jurisdiction or if in some matters appeals are provided to the HighCourts in the first instance, many of the ills which plague the systemmay be overcome. If the aforesaid system is followed then the questionof appointing retired Judges or bureaucrats will not arise. Learned

Aamicus curiae in his note has raised an issue that tribunals should notbecome haven for retired persons. In my view, there should normallybe no post retiral sinecures. Though the ideal situation would be to haveno appointments from retired judges or bureaucrats, this may not bepossible in the near future because we have no tribunal services andmost of the posts at this stage may have to be filled from amongst retiredBpersons. At the same time, an effort has to be made to ensure that inthe foreseeable future the number of retired persons being reappointedis brought down and more persons from within the tribunal servicesare appointed up to the highest level in the tribunal.49. There may be some posts which require retired judges to beCappointed such as Lokpal, Lokayukta, Chairpersons of the HumanRights Commission, Chairman of the Law Commission of India, etc.But this should not become matter of routine especially when theappointments are being made by the executive. If the administrationmakes appointments and judges, serving or newly retired judges, areDunder consideration for such posts then the independence of the judiciaryis likely to be compromised. The public of this country still reposes greatfaith in the judiciary. That faith will be eroded in case it is felt that theappointments are made for extraneous reasons. Most judges live up tothe expectations of the high standards of integrity and propriety expectedEfrom them but we cannot shut our eyes to the harsh reality that thereare few black sheep. One cannot expect justice from those who, onthe verge of retirement, throng the corridors of power looking for postretiral sinecures. Therefore, I am of the considered opinion that themajority of members of the selecting body must comprise of the ChiefJustice of India and/or his/her nominees and the views of the ChiefFJustice and/or his/her nominees must be given precedence over theviews of other members.

50. If retired judges of the High Courts or the Supreme Courtare good enough to man the tribunals after retirement, I do not see anyreasons why the retirement age of the High Court Judges should notGbe increased to make it at par with the retirement age of the Judges ofthe Supreme Court. This would take care of the vacancies which wouldotherwise arise in the next 3 years. As of 01.09.2019 as against thesanctioned strength of 1079 judges there were 414 vacancies in theHigh Courts. Given the slow pace at which these vacancies are beingHfilled up, the number of vacancies is bound to rise. Though we are

discussing tribunals, even the independence and functioning of the HighCourts is threatened by this humungous vacancy position.

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

52. The Judicial Impact Assessment Committee can also afterassessment recommend that some tribunal(s) should be wound up andthe jurisdiction of that tribunal(s) be given back to civil courts or to theHigh Courts or to some other tribunal. It can also suggest the mergerof two or more tribunals.

53. The next issue is who should carry out the judicial impactassessment. In my view, the Judicial Impact Assessment Committeeshould comprise of two retired judges of the Supreme Court, the seniorbeing the Chairperson of the Committee, and one retired Chief Justiceof 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 ormembers of tribunals. Two members of the Executive, not below therank of Secretary, to the Government of India, one from the Ministryof Law and Justice and one from some other branch can also bemembers but these members should be appointed in consultation withthe Chief Justice of India.54. The last issue is whether there should be Commission or abody to oversee the appointment of members of various tribunals. Inmy view it is necessary to have such Commission which is itself anindependent body manned by honest and competent persons. This bodyis required to select those persons who man the specialised tribunals in

Aterms of the law laid down in various judgments of this Court. We needpersons who not only have grassroot experience but judicious mix ofjudicial members and those with grassroot experience[15]. We needpersons who have an independent outlook, integrity, character and goodreputation[16]. We need people who are totally free from the influenceor pressure from the Government[17]. It is only then that the people willBhave faith in the adjudicating mechanism of the tribunals.

55. In my view, serving Judges of the Supreme Court or theChief Justice of the High Courts are already overburdened and haveno time to spare. It would be much better if they could spend their timeand energy in filling up the vacancies in the High Courts rather thanCventuring into the field of tribunals.

56. I also feel that having very large committee would notserve the purpose. smaller committee comprising of competent peopleis better solution and, in my view, such commission should compriseof 2 retired Supreme Court Judges with the senior most being theDChairman and one retired Chief Justice of High Court to be appointedby the Chief Justice of India. There must be one member representingthe executive to be nominated by the Central Government from amongstofficers holding the rank of Secretary to the Government of India orequivalent. This member shall be the ex-officio convener. One expertEmember can be co-opted by the by full time members. This expertmember must have expertise and experience in the field/jurisdictioncovered by the tribunal to which appointments are to be made.

57. At the end I would like to quote what Dr. B. R. Ambedkarsaid while addressing the Constituent Assembly on 25.11.1949. In hiswords:-F

“Because I feel, however good Constitution may be, it is sureto turn out bad because those who are called to work it, happento be bad lot. However bad Constitution may be, it may turnout to be good if those who are called to work it, happen to beGa good lot. The working of Constitution does not depend whollyupon the nature of the Constitution. The Constitution can provideonly the organs of State such as the Legislature, the Executive

15 L. Chandra Kumar v. Union of India, (1997) 3 SCC 261

16 Union of India v. Madras Bar Association, (2010) 11 SCC 1

H17 R.K. Jain v. Union of India, (1993) 4 SCC 119

and the Judiciary. The factors on which the working of thoseorgans of the State depend are the people and the political partiesthey will set up as their instruments to carry out their wishes andtheir politics.”

One can only hope that keeping these thoughts in mind systemis developed which ensures selection of people having impeccableintegrity, who are totally independent, have good character andreputation, are free from influence or pressure, and have requisiteexperience in the jurisdictions they would deal with as Chairpersons/Members of Tribunals.

Ankit Gyan

Petitions disposed of.