Key takeaways from Supreme Court Judgment on Tribunals and Finance Act 2017

The Supreme Court yesterday passed a significant judgment on the functioning of Tribunals in the Country. In the process, it ruled on the validity of the Finance Act, 2017 and the Rules framed under the same..Below are the major takeaways from the judgment rendered by a Constitution Bench comprising CJI Ranjan Gogoi and Justices NV Ramana, DY Chandrachud, Deepak Gupta and Sanjiv Khanna..Finance Act 2017 as Money Bill and the Aadhaar Judgment.The question before the Court was “Whether The ‘Finance Act, 2017’ Insofar As It Amends Certain Other Enactments And Alters Conditions Of Service Of Persons Manning Different Tribunals Can Be Termed As A ‘Money Bill’ Under Article 110 And Consequently Is Validly Enacted?.The major implication of this question was that the Supreme Court will now reconsider the correctness of the 2018 judgment in Aadhaar case..The Finance Act 2017 which brought in provisions concerning the functioning of tribunals was challenged on the ground that it was passed a money bill..It was the argument of the petitioners that the same was not a money bill and passing the same couching it as a money bill was done to circumvent the Rajya Sabha..The Central government had, in turn, placed reliance on the Aadhaar judgment to make its case. This led to the Court examining the Aadhaar judgment in detail particularly in relation to Article 110 of the constitution which defines “money bills”.On the majority judgment in Aadhaar, the Court stated that it did not elucidate and explain the scope and ambit of sub-clauses (a) to (f) to clause (1) of Article 110 of the Constitution, a legal position and facet which arises for consideration in the present case and assumes considerable importance..The Court concluded that the majority judgment in the Aadhaar case pronounced the nature of the Aadhaar act without first delineating the scope of Article 110(1) and principles for interpretation or the repercussions of such process. The majority dictum in Aadhaar judgment did not substantially discuss the effect of the word ‘only’ in Article 110(1) and offers little guidance on the repercussions of a finding when some of the provisions of an enactment passed as a “Money Bill” does not conform to Article 110(1)(a) to (g), the Court ruled..Since the Aadhaar judgment was passed by a Bench of coordinate strength, it held that the correctness of the said judgment and the question regarding the passage of the Finance Act as a Money Bill will have to be decided by a larger Bench..It, therefore, directed that the matter be placed before the Chief Justice of India for consideration by a larger Bench..One Nodal Ministry for all Tribunals.This is another issue that will now be determined by the larger Bench. In L Chandra Kumar v. Union of India, the Supreme Court had observed that different tribunals constituted under different enactments are administered by the Central and the State Governments, yet there was no uniformity in administration. The Court, in that case, was of the view that until a wholly independent agency for such tribunals can be set up, it is desirable that all such tribunals should be, as far as possible, under a single nodal Ministry which will be in a position to oversee the working of these tribunals. For a number of reasons, the Court had also observed that the Ministry of Law would be the appropriate ministry..The Ministry of Law and Justice, in turn, was required to appoint an independent supervisory body to oversee the working of the Tribunals.However, the Court noted that this has not happened. Hence, it held that it would appropriate if these aspects and questions are looked into by a Bench of seven Judges.Validity of Section 184 .The second challenge against Part XIV of the Finance Act, 2017 was predicated on the assertion that this is a case of excessive delegation as it falters on the anvil of “essential legislative functions” and “policy and guidelines” tests..Section 184 empowers Central Government to frame Rules to provide for qualifications, appointment, the 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 the Tribunal and Appellate Tribunal..On examining the Constitutional scheme, the statutes which had created tribunals and the precedents of the Supreme Court laying down attributes of independence of tribunals in different facets, the Court held that the power to prescribe qualifications, selection procedure and service conditions of members and other office holders of the tribunals is intended to vest solely with the Legislature for all times and purposes..“Policy and guidelines exist. Subject to aforesaid, the submission of learned Attorney General that Section 184 was inserted to bring uniformity and with a view to harmonise the diverse and wide-ranging qualifications and methods of appointment across different tribunals carries weight and, in our view, needs to be accepted.” .This, it concluded that a mere possibility or eventuality of abuse of delegated powers in the absence of any evidence supporting such claim, cannot be a ground for striking down the provisions of the Finance Act, 2017. It is always open to a Constitutional court on a challenge made to the delegated legislation framed by the Executive to examine whether it conforms to the parent legislation and other laws, and apply the “policy and guideline” test and if found contrary, can be struck down, the Court held..Validity of Tribunal, Appellate Tribunal And Other Authorities (Qualifications, Experience And Other Conditions Of Service Of Members) Rules, 2017 .The rules provide for various aspects concerning the functioning of tribunals – Composition of the Search-cum-Selection Committees, Qualifications of members and presiding officers, Term of Office and Maximum Age of Tribunal members, Procedure for removal of Tribunal members etc..The Court held that the Rules impinge upon the independence of judiciary and suffer from various other infirmities. It, therefore, directed that the Rules would require a second look..Financial independence.The Court held that it is of paramount importance that every Tribunal enjoys adequate financial independence for the purpose of its day to day functioning including the expenditure to be incurred on (a) recruitment of staff; (b) creation of infrastructure; (c) modernisation of infrastructure; (d) computerisation; (e) perquisites and other facilities admissible to the Presiding Authority or the Members of such Tribunal..It may not be very crucial as to which Ministry or Department performs the duties of Nodal Agency for a Tribunal, but what is of utmost importance is that the Tribunal should not be expected to look towards such Nodal Agency for its day to day requirements..The expenditure to be incurred on the functioning of each Tribunal has to be necessarily a charge on the 104 Consolidated Fund of India. Thus, the Court directed that the Ministry of Finance shall, in consultation with the Nodal Ministry/Department, earmark separate and dedicated funds for the Tribunals. This, the Court observed, will not only ensure that the Tribunals are not under the financial control of the Department, who is a litigant before them, but it may also enhance the public faith and trust in the mechanism of Tribunals..Judicial Impact Assessment.The petitioners had contended that there is an imminent need for conducting a Judicial Impact Assessment of all the Tribunals referable to the Finance Act, 2017. It was argued that neither the Legislature nor the Executive had conducted any assessment to analyse the adverse repercussions of the changes brought in the framework of Tribunals in India, if any, by the legislative exercises carried out from time to time..The Court agreed with it while observing that no attempt has been made by the Legislature to assess the ramifications of the Finance Act, 2017. It was of the opinion that multifarious amendments in relation to merger and reorganisation of Tribunals may result in a massive increase in litigation which, in absence of adequate infrastructure, or budgetary grants, will overburden the Judiciary..Thus, it directed the Union of India to carry out a financial impact assessment in respect of all the Tribunals referable to Sections 158 to 182 of the Finance Act, 2017 and undertake an exercise to assess the need-based requirements and make available sufficient resources for each Tribunal established by the Parliament..On Direct Statutory Appeals from Tribunals to Supreme Court.Presently, there are more than two dozen statutes that provide direct appeals to the Supreme Court from various Tribunals and High Courts..Such statutory appeals, the Court stated, take away the inherent ability of the Supreme Court, as envisaged in the Constitution, to regulate cases before it by confining its consideration to cases involving the most egregious of wrongs and/or having the greatest impact on public interest..Further, in providing for appeals directly from Tribunals, the jurisdiction of High Courts is in effect curtailed to a great extent. Not only does this hamper access to justice, but it also takes away the much-needed exposure for High Court judges, earnestly needed in a vibrant and ever-evolving judiciary. Since the majority of the judges of the Supreme Court are elevated from the High Courts, their lack of exposure to these specialised areas of law hinders their efficacy in adjudicating the direct statutory appeals from specialised Tribunals..Further, it increases the burden on the Supreme Court as a result of which matters involving significant Constitutional questions remain untouched for years..Consequently, the ability of the Supreme Court to keep in check the legislative and executive encroachments is significantly compromised. The Court noted that cases heard by the Constitution Bench comprising of five or more judges have fallen significantly from over 15% in the 1950s to an average of 0.1 – 0.2% during the last two decades..Considering that such direct appeals have become serious impediments in the discharge of Constitutional functions by the Supreme Court and also affects access to justice for citizens, the Court held that it is high time that the Union of India, in consultation with either the Law Commission or any other expert body, revisit such provisions under various enactments providing for direct appeals to the Supreme Court against orders of Tribunals, and instead provide appeals to Division Benches of High Courts..The Union government has to undertake such an exercise expeditiously, preferably within a period of six months at the maximum, and place the findings before Parliament for appropriate action, the Court ordered..Amalgamation of Existing Tribunals and Setting up of Benches.The petitioners had submitted that while some tribunals have exorbitant pendency, other tribunals are hardly seized of any matters, and are exclusively situated in one location..Given that jurisdiction of High Courts and District Courts is affected by the constitution of Tribunals, it is necessary that benches of the Tribunals be established across the country, the Court said..However, owing to the small number of cases, many of these Tribunals do not have the critical mass of cases required for setting up of multiple benches. On the other hand, it is evident that other Tribunals are pressed for resources and personnel..This ‘imbalance’ in distribution of case-load and inconsistencies in nature, location and functioning of Tribunals require urgent attention. Thus, the Court ordered that after conducting a Judicial Impact Assessment, such ‘niche’ Tribunals should be amalgamated with other tribunals dealing with similar areas of law, to ensure effective utilisation of resources and to facilitate access to justice..[Read Judgment]