Amended Finance Act: Supreme Court strikes down rules on tribunal postings

Centre’s ‘control’ of functioning of tribunals would affect judicial independence, it says

November 13, 2019 02:50 pm | Updated November 14, 2019 12:19 am IST - New Delhi

A view of the Supreme Court of India. File

A view of the Supreme Court of India. File

A Constitution Bench of the Supreme Court on Wednesday struck down in entirety Rules framed by the government under the Finance Act of 2017 to alter the appointments to 19 key judicial tribunals, including the Central Administrative Tribunal.

The Bench led by Chief Justice Ranjan Gogoi held that the Tribunal, Appellate Tribunal and other Authorities (Qualifications, Experience and other Conditions of Service of Members) Rules, 2017 suffered from “various infirmities”.

“These Rules formulated by the Central Government under Section 184 of the Finance Act, 2017 being contrary to the parent enactment and the principles envisaged in the Constitution as interpreted by this Court, are hereby struck down in entirety,” the Bench declared.

In his majority opinion, Chief Justice Gogoi referred to a larger Bench the issue and question whether the 2017 Act could have been passed as a money bill. 

The court said a seven-judge Bench should also decide the question whether the Lok Sabha Speaker acted in the right by certifying it as money bill, thus allowing it to circumvent Rajya Sabha.

One of the petitioners in the case and Rajya Sabha MP, Jairam Ramesh, said the passing of the Finance Act 2017 as a money bill was deliberately done to “extend executive control over these institutions (tribunals) by altering the composition of the selection committees and vastly downgrading the qualifications and experience required to staff these bodies”.

Another reason for referring the ‘money bill’ question to a seven-judge Bench was the court’s dissatisfaction with the way the Aadhaar judgment in the K. Puttuswamy case had dealt with the issue of what could be certified as a money bill. The Constitution Bench said the Puttuswamy verdict in the Aadhaar case was not comprehensive enough to be set as a precedent on the issue of money bills.

However, in his minority opinion on the Bench, Justice D.Y. Chandrachud held that the 2017 Act could not have been enacted as a money bill and that Part XIV of the Act amounted to a “substantive irregularity”.

The court nevertheless did not agree with the petitioners that Section 184 of the Finance Act, 2017 suffered from excessive delegation of legislative functions. It was under Section 184 that the 2017 Rules regarding appointment of tribunals were framed.

The court ordered the Centre to re-formulate the Rules within six months strictly in conformity with the principles delineated by the Supreme Court. “The new set of Rules to be formulated by the Central Government shall ensure non-discriminatory and uniform conditions of service, including assured tenure, keeping in mind the fact that the Chairperson and Members appointed after retirement and those who are appointed from the Bar or from other specialised professions/services, constitute two separate and distinct homogeneous classes,” the Supreme Court directed.

The court further ordered the Union Ministry of Law and Justice to conduct a ‘Judicial Impact Assessment’ of tribunals to analyse the ramifications of the changes caused by the Finance Act, 2017.

The court also directed the Centre to “carry out an appropriate exercise for amalgamation of existing tribunals adopting the test of homogeneity of the subject matters to be dealt with and thereafter constitute adequate number of Benches commensurate with the existing and anticipated volume of work”.

For now, as an interim measure, the Bench directed that the terms and conditions of appointment to the tribunals would be in accordance with the respective statutes which were in place before the enactment of the Finance Bill, 2017.

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