Case Description

The Supreme Court is assessing whether Part XIV of the Finance Act, 2017 - pertaining to tribunals - was unconstitutionally enacted by the Lok Sabha.


A 7 Judge Bench of the Supreme Court will assess the constitutional validity of the Finance Act, 2017. In particular, it is evaluating provisions of the Act which pertain to the structure and organization of tribunals.


The Finance Act, 2017 was enacted by the Parliament on March 31, 2017 after the Finance Bill, introduced in the Lok Sabha as a Money Bill, received presidential assent. Under Part XIV of the Finance Act, 2017 certain amendments were carried out to merge together the provisions regarding the structure and organization, as well as the conditions of service of tribunals. Section 184 of the Finance Act in particular authorizes the Central Government to notify rules governing persons appointed to tribunals on the following matters: qualification, appointment, terms of office, salaries and allowances, resignation, removal, and other terms and conditions of service.


Note, tribunals resolve administrative and tax-related disputes. They run in parallel to the courts and generally are less formal, less expensive and less time consuming.


After the Act was passed, several petitions (17 in total) were filed challenging the constitutional validity of the Act by individuals, Lawyers Unions and Bar Associations of tribunals. Notably, the Income Tax Appellate Tribunal, the National Green Tribunal and the Central Administrative Tribunal filed petitions. 


The petitioners have challenged the passage of the Act as a Money Bill. They argue that Part XIV of the Act deals with issues that cannot qualify as purely fiscal measures (or as provisions enacted purely on financial considerations). Part XIV deals with various matter that deal primarily with matters of the administration of justice, the courts' jurisdiction and powers and the access to justices. Part XIV deals with the appointment, selection, eligibility and other service conditions of members of Scheduled Tribunals. Therefore, the petitioners have asked the Court to strike down the Finance Act, 2017 as null and void for violating Articles 107, 110 and 117 of the Constitution of India.


Further, the petitioners argue that Part XIV of the Act violates certain basic features of the Constitution, namely the independence of the judiciary and the separation of powers. They have requested the Court to declare Part XIV of Finance Act, 2017 as ultra vires Articles 14, 21, 50 and 323B of the Constitution. One of the petitions filed by the Revenue Bar Association states that the delegation of critical aspects affecting independence of tribunals is arbitrary.


Finally, the petitioners have also challenged the provisions under Part XIV of the Act in view of the decision of the Constitution Bench in Madras Bar Association v. Union of India (2010). The 5 Judge Bench in Madras Bar Association held that though the legislature can legislate which disputes will be decided by courts and which disputes will be decided by tribunals, this legislation is subject to constitutional limitations. The Bench held that such legislation cannot encroach upon the independence of the judiciary and must respect the principles of the rule of law and the separation of powers. It held that if tribunals are to be vested with judicial power hitherto vested in or exercised by courts, such tribunals should possess the independence, security and capacity associated with courts.


In Madras Bar Association (2010), the Bench made observation on when tribunals can include technical non-judicial members. It stated that if a tribunals  is intended to serve an area which requires specialised knowledge or expertise, technical members in addition to judicial members should be allowed. However, it emphasised that when a category of cases is transferred from the courts to the tribunals merely to either expedite cases, then there is no need for non-judicial technical member. It emphasised that in such non-technical tribunals, only members of the judiciary should be the Presiding Officers/Members. 


On 2 April 2019, the Bench reserved judgment in the matter. On 13 November 2019, the Bench delivered its judgment. It referred the question of whether Part XIV of the Act was validly passed as a money bill to a larger Bench. However, it did resolve that the Court has the power to review the decision of the Lok Sabha speaker to certify a bill as a Money Bill. 

Parties Involved

1) Does the Finance Act, 2017 violate Articles 14 and 21 of the Constitution?

2) Was the Finance Act erroneously passed as a Money Bill under the special procedure listed in Article 109 of the Constitution?

3) Do sections 182, 183, 184 and 185 of the Finance Act dilute the independence of the judiciary? Should they be struck down?