Plain English Summary of the Judgment
On 13 November, a Constitution Bench comprising the Chief Justice Ranjan Gogoi, Justices NV Ramana, DY Chandrachud, Deepak Gupta and Sanjiv Khanna delivered its decision on the constitutional validity of Part XIV of Finance Act, 2017. Part XIV, passed as a Money Bill, had amended a number of existing legislations governing the functioning of tribunals and provided for the formulation of a fresh set of rules to govern them. Other than the validity of Part XIV, the Court was also asked to examine the larger issues surrounding the financial independence and jurisdiction of tribunals.
Although the judgment was unanimous on most questions (with all five judges having signed the majority judgment authored by the CJI), there were two separate part-concurring, part-dissenting opinions by Justice DY Chandrachud and Justice Deepak Gupta.
Themes of Analysis
The Court’s analysis may be broadly broken down into the following questions/themes:
The table below gives an overview of how the Court answered each of the above questions:
|
Issues |
Majority Opinion |
Chandrachud J. |
Deepak Gupta J. |
|
1 |
Yes |
Yes |
Yes |
|
2 |
Referred the question to a larger bench |
Although agreed with the majority on reference, separately held that it was not a valid Money Bill |
Agreed with the majority |
|
3 |
No |
Yes |
Yes |
|
4 |
No |
No |
No |
|
5 |
Judicial Impact Assessment and a number of other directions |
Setting up of a National Tribunals Commission and All India Tribunals Service |
Setting up of a National Tribunals Commission |
As will be evident from above, the majority has left open the core issue before it – whether Part XIV could have been validly enacted as a Money Bill. It is interesting to note the way in which the Court arrived at its decision to make a reference to the larger bench. It observed that the Aadhaar judgment (cited by both petitioners and respondents to buttress their claims) did not delineate the scope of Article 110 (it defines what a Money Bill is), and thus the Aadhaar majority’s decision to classify the Aadhaar Act as a Money Bill was dubious. Given that the Aadhaar decision was also pronounced by a bench of similar strength, Court held that there was a need to refer the question of the scope of Article 110 to a larger bench.
An issue-wise breakdown is provided below.
Speaker’s decision is subject to Judicial Review
A preliminary objection taken by the Union of India was that the no court of law is empowered to examine the decision of the Speaker to certify a bill as a Money Bill. For this, it relied on Articles 110 (3) and 122. While Article 110 (3) states that the decision of the Speaker in regard to a Money Bill is final, Article 122 provides that a court shall not inquire into the proceedings of Parliament on the ground that there is an irregularity of procedure.
Both the majority opinion and the separate analysis provided by Chandrachud J. were emphatic in their rejection of this argument by the Union. Their reasoning was that the finality attached to the Speaker’s decision was only qua the members of the Parliament, i.e., only the members shall be prohibited from questioning its finality. In so far as the Court is concerned, it held that their power of Judicial Review was not ousted. To buttress its holding, the Court pointed out how Article 110 did not explicitly bar judicial review, unlike certain other provisions in the Constitution as well as similar provisions in other constitutions.
As far as Article 122 is concerned, Court held that if the Union’s argument were to be accepted, it would be akin to extinguishing Court’s power of Judicial Review. Thus, although the Court should not normally interfere with a Parliamentary proceeding on the ground of mere irregularity, if such irregularity rose to the level of a gross constitutional violation, Court is allowed to step-in.
On these grounds, the Court rejected the preliminary objection of the Union.
Reference to larger bench on Money Bill question
One of the fundamental issues surrounding Article 110 – the provision which defines Money Bill – is the use of the word ‘only’ in clause 1 of the provision. Thus, the provision states that a bill is a Money Bill if it only contains one of the subject-matters contained sub-clauses (a) to (g). These sub-clauses, specifically (a) to (f), in themselves are fairly straightforward – they deal with fiscal matters which involve money being either taken out of or deposited into the Consolidated Fund of India. The complexity of Article 110 is exacerbated by clause (g), which brings within the ambit of the provision even those matters which are incidental to clauses (a) to (e).
The Court was confronted with answering whether Part XIV qualifies to be a Money Bill because, among other things, it also provides for the payment of salaries, emoluments, compensation etc. of the tribunal members. The petitioners had argued that Part XIV can in no way qualify to be a Money Bill as its dominant objective was to amend the existing legislations providing for tribunals and bring in a whole new regime to govern them. Respondents on the other hand had argued that the objective of the Part was to pay salaries, compensation etc. to the tribunal members. Even failing that, Respondents submitted that the provisions in Part XIV are incidental to the fiscal provisions in the Finance Act and thus saved by clause (g).
Majority opinion attempted to answer this question by referring to a speech given by GV Mavalankar (former Lok Sabha speaker) on the floor of the Parliament. As per Mavalankar, as long as the predominant objective of a bill is to impose/abolish a tax, it will fall under the scope of a Money Bill. Nevertheless, the Court pointed out that a legislation can have multiple objectives and went on to observe how it is difficult to determine what the dominant objective is.
The Court thereafter took recourse to the Aadhaar judgment to determine what may fall within the scope of a Money Bill. But, it found that the majority in Aadhaar judgment had classified Aadhaar Act as a Money Bill without first delineating the scope of Article 110 and the principles involved in interpreting it.
Given this, the Court referred the question to a larger bench.
Chandrachud J’s finding
Although Chandrachud J was in agreement on referring the question of what falls under the ambit of a Money Bill, he held that Part XIV did not qualify to be one.
He observed that the crux of Part XIV was to repeal the substantive provisions related to appointment and service conditions of tribunal personnel. Thus, merely because the amendment has a bearing on consolidated fund will not be sufficient to make it a Money Bill, held Chandrachud J. For a provision to be incidental as per clause (g), he held that even if it is non-fiscal in nature, it has to directly pertain to one of the other sub-clauses - (a) to (f).
Part XIV does not suffer from excessive delegation
Excessive delegation doctrine essentially states that the legislature shall not delegate its essential legislative functions to the executive. Numerous judgments have attempted to outline what will amount to excessive delegation and have broadly held that as long as the legislature lays down the policy/guidelines for the executive to follow while making executive rule making, it will not suffer from the vice of excessive delegation. The question before the Court was whether Section 184 excessively delegated legislative powers to the executive to frame rules regarding the eligibility, appointment and service conditions of tribunal personnel.
After tracing a long line of cases, Court held that the failure of the legislature to lay down the eligibility qualifications of tribunal personnel, although important, should not be seen as per se un-delegatable (page 72). Moreover, Finance Act, 2017 does not indicate that the legislature intended to deviate from the dicta in RK Jain, L Chandrakumar, Madras Bar Association etc., all of which laid down the standards for qualification, appointments and service conditions of tribunals (page 73). Thus, the Court held that since policy and guidelines already exist in terms of the above judicial decisions, the submission of Union that S.184 was introduced to only streamline the conditions of tribunals was accepted.
Justice Gupta’s dissent
Deepak Gupta J. though did not agree with the reasoning of the majority on the delegation question. He held that although non-essential functions can be delegated, even within such delegation, Parliament had to retain a certain amount of control over the executive. Thus, in case of delegation, he held that such rules had to be eventually tabled in the Parliament. Moreover, it was held that given the difference in subject matter and other expertise of the members manning different tribunals, allowing the executive to determine the eligibility qualifications without laying down any guidelines amounts to excessive delegation (page 14 of dissent).
Chandrachud J. too agreed with the opinion of Gupta J. on the question of excessive delegation and held that the qualifications of members to tribunals constitute an essential function, which could not have been delegated.
Tribunal Rules struck down
Pursuant to its rule making power under Section 184, the Central Government had enacted the Appellate Tribunal and Other Authorities (Qualifications, Experience and Other Conditions of Service of Members) Rules 2017. As the title indicates, these rules provided for the eligibility qualifications, appointment, and service conditions of various tribunal members. Both the majority and Justice Chandrachud pointed out a number of infirmities with them and struck them down in their entirety.
Some of the defects identified include: (a) search-cum-selection committee for tribunal personnel was composed predominantly of nominees of the Central Government (page 83). Such a lack of judicial dominance is in violation of separation of powers (page 84) and in negation of judicial independence; (b) technical members have not been mandated any prior adjudicatory experience, this goes against the dicta of the Court in Madras Bar Association judgment (page 88); (c) the role of judiciary in the procedure for removal of tribunal members has been completely taken away; (d) lack of uniform age of superannuation for different tribunal members and short tenure (page 98), paved way for increased executive interference; (e) re-appointment of tribunal members will erode independence of the tribunal members and thus erode public faith in the system.
Streamlining of functioning of tribunals
One of the key prayers of the petitioners was to look into the functioning of tribunals by undertaking a Judicial Impact Assessment. A number of observations/directions were made in both majority and the separate opinions in relation to streamlining the functioning, composition and jurisdiction of tribunals.
Some of them included:
Additionally Justice Chandrachud suggested the following:
Similarly, he also directed the creation of an All India Tribunal Service for non-adjudicatory members.