#4: Tribunals and the Finance Act
Petitions challenging Part XIV of the Finance Act, 2017 as violative of the basic structure of the Constitution.
This post is a part of our 10 Cases the Shaped India in 2019 series.
Over the course of the last few years, numerous petitions have been filed to ensure that certain directions of the Court in relation to the independent functioning and streamlining of tribunals are followed by the executive. These petitions were tagged with the challenges to Part XIV of the Finance Act, 2017 (‘Act’). Part XIV brought about amendments to certain legislations governing the structure, organization and functioning of tribunals.
Specifically, the petitions challenged the passage of the Act as a Money Bill, which typically otherwise only contains purely fiscal measures (passing of Money Bills do not require the consent of the upper house – Rajya Sabha). The petitioners argued that Part XIV violated certain basic features of the Constitution, including the independence of the judiciary and the separation of powers.
Did the Court strike down Part XIV?
The bench unanimously held that it was unclear as to what fell within the sweep of a Money Bill as defined under Article 110 of the Constitution of India. Given this uncertainty, it chose to refer this broader question first to a larger bench before deciding the constitutionality of Part XIV.
A number of other issues were also determined by the Bench in the following manner, with Justices Chandrachud and Deepak Gupta partly disagreeing on few of the issues:
|Deepak Gupta J.
|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
|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
What does the decision mean for Lok Sabha’s power to pass Money Bills?
As per a study by IndiaSpend, Money Bill has been Lok Sabha’s most favoured mode of transacting legislative business in the preceding three tenures of the House. As compared to ordinary bills, Money Bills were 21% more in number between 2004 and 2018. A number of crucial laws – including amendments to the Foreign Contributions Regulations Act, 1976, introduction of the Electoral Bonds Scheme through amendment to the Representation of People’s Act, 1951 and the Aadhaar biometric project through the Aadhaar Act, 2016 – were all enacted as Money Bills.
Source: Business Standard
Although the passage of Aadhaar Act as a Money Bill was upheld by the Supreme Court, the decision in Rojer Mathew reopens the possibility of challenging the validity of the Aadhaar decision. If the referral bench decides to toe the approach taken by the dissenting opinion in Aadhaar (which is also resonated in Chandrachud J’s part dissent in Rojer Mathew), it may mean that the Lok Sabha’s powers to enact Money Bills may become narrower in scope.
What does it mean for the functioning of re-organised tribunals?
A number of tribunals were merged by way of the Finance Act. Moreover, the Tribunal, Appellate Tribunal and other Authorities (Qualification, Experience and other Conditions of Service of Members) Rules, 2017 (‘Rules’) were issued to regulate the selection and service conditions of such tribunal members. Since the Act has not been struck down, the mergers will continue to hold ground. Nevertheless, with the Rules struck down, the Bench issued an interim direction to the effect that terms and conditions of appointment to the tribunals shall be in terms of the respective statutes before the enactment of the Finance Bill, 2017.
Source: Bloomberg Quint
- Prashant Reddy argues that the Finance Act is problematic at many levels. Specifically, he points out that it transfers an undue amount of power to the Executive in the selection and appointment process of tribunal members.
- In the context of the Aadhaar decision, Prasanna S argues how the tendency to resort to the Money Bill route may be adverse to due process.
- Malavika Prasad breaks down the dissenting judgment of Chandrachud J on the issue of Money Bill in the Aadhaar decision.
- Gautam Bhatia contends that the Tribunals decision was a course correction on the Money Bill question.
- Using the example of the Intellectual Property Appellate Board, Balu Nair and Pankhuri Agarwal examine the implications of the decision for appointments to the tribunals till fresh rules are framed.