Day 2 Arguments

March 28th 2019

A 5-judge Constitution Bench of the Supreme Court is hearing the petitions seeking the setting up of a nodal agency under the Ministry of Law and Justice to oversee the functioning of all central tribunals. It is also hearing the petitions challenging the provisions in the Finance Act, 2017, that define the functioning of central tribunals.

 

The Bench comprises CJI Ranjan Gogoi, Sanjiv Khanna, Deepak Gupta, DY Chandrachud and NV Ramana JJ.

 

In yesterday’s hearing, Senior Advocate Arvind Datar demonstrated how the Central Government had repeatedly failed to implement directions requesting the establishment of a nodal agency to administer all central tribunals. Further he emphasised that it was failing to fill up tribunal vacancies. In response, Attorney General KK Venugopal made submission on behalf of the Government, explaining why it had failed to do so and what steps it has been taking to address these two issues.
In today’s hearing, both Senior Advocate Arvind Datar and Attorney General KK Venugopal presented arguments. Mr. Datar argued that the Act was wrongly designated as a money bill by the Lok Sabha speaker and that this was subject to judicial review. Mr. KK Venugopal argued that the Act was both validly designated and that the Court did not have the power to review the speaker’s decision.

 

Mr. Arvind Datar

Mr. Arvind Datar resumed his arguments on the issue that the passing of the Finance Act as a money bill amounted to short circuiting procedure. He argued that Part XIV (14) of the Act was primarily concerned with a non-fiscal matter and as such, the Act did not constitute a money bill under Article 110 of the Constitution. Just as he did in the previous hearing, he extensively referred to Chandrachud J’s Aadhaar dissent. He submitted that a plain reading of Article 110 of the Constitution establishes that only those subject matters that explicitly fall within the scope of the Article’s clauses are characteristic of a money bill.

 

Mr. Datar drew a distinction between a money bill and a finance bill. He submitted that due to the inclusion of Part XIV, the Finance Act 2017 should qualify either as a category 1 or a category 2 finance bill, as defined under Article 117 of the Constitution. He submitted that the Act should not have been passed as a money bill, as this wrongfully excluded the Rajya Sabha being involved in the consultative process.

 

Next, Mr. Datar focused on whether the Lok Sabha speaker’s decisions are subject to judicial review, in the context of money bills. Is the speaker’s decision on a bill being a money bill amenable to judicial review? Relying on the minority opinions in Aadhaar, Mr. Datar submitted that the court had categorically observed that the decision of the speaker could be looked into by the Court, especially in cases where proper procedure had not been followed.

 

Further, Mr. Datar submitted that Part XIV and the amendments it brought to the functioning of tribunals amounted to excessive delegation. At this point, Justice Chandrachud also pointed out that the provisions under Part XIV did not lay down any criteria for the Central Government to prescribe conditions and terms of service under the rules notified by them by virtue of Section 184 of the Finance Act. Mr. Datar further argued that there is no unlimited right of delegation and the legislature must retain in its own hands any essential legislative functions. He emphasised that a constitutional authority entrusted with the power of legislation cannot relieve itself of the responsibility. Mr. Datar relied on the decisions in In re Delhi Laws and the decision in Subba Rao.

 

Finally, Mr. Datar argued that the provisions of Part XIV of the Finance Act were contrary to the decision in Union of India v. R Gandhi.

Mr. K.K. Venugopal

Mr. Venugopal informed the Bench that he would present his arguments on three aspects:

1. Any decision of the Speaker under Article 110 not subject to judicial review
2. Provisions pertaining to the payment of salaries, pension, etc. fall under the scope Article 110, even though they are not explicitly include in Article 110(2)
3. Part XIV cannot be looked at in isolation, but must be view in the context of the entire Act

 

Mr. Venugopal began by submitting that the decision of the speaker to categorise the Finance Bill, 2017 as a Money Bill cannot be subject to judicial review. He said that in view of separation of powers, it was not for the court to look into the decision of the speaker. Mr. Venugopal argued that Article 122 of the Constitution states that the conduct of business and proceedings of the parliament cannot be questioned before the Court. The Speaker being an officer of the parliament, his decision on the question of a bill being a money bill was a procedural one.

Mr. Venugopal quoted from the majority judgment in the Aadhaar case, arguing that the same did not go into the question whether the decision of a speaker on the question is open to judicial review, but rather proceeded on the basis that the Aadhaar Act had been passed validly as a money Bill. Thereby, he countered Mr. Datar’s reliance on the Aadhaar judgment to question the validity of the passing of the Finance Act as a money bill.

Dealing next with Article 110, Mr.Venugopal submitted that what is significantly omitted from clause (2) of Article 110 is payments of salaries, pensions and other allowances. He referred to the rules of interpretation and submitted that they should be deemed to be included. Next, he referred to clause (g), which states that provisions incidental to the other provisions that establish what a money bill is, can also be used to establish that a bill is a money bill. Further, he argued that there is a rational nexus between the provisions of the Act pertaining to payments and Article 110. He emphasised that the payment of salaries, pensions etc come from the Consolidated fund of India. Expenses of each one these tribunals that have been amalgamated under Part XIV of the Finance Act are borne by the Consolidated Fund. Therefore, he argued that the provisions, which provide for payments are within the scope of incidental matters under the finance act. The certification of the Act as money bill is perfectly valid.

Thirdly, Mr. Venugopal added that the challenge to the Bill cannot be selectively made on the restricted point of tribunals alone (i.e. Part XIV). He submitted that the money bill certification was provided to the Act as a whole. Hence he said that it was not permissible to sever a part of the Act and say that the certification is invalid to the extent of Part XIV.

Arguments concluded for the day and Mr. Venugopal will continue arguments on the aspect that the Finance Act is a Money Bill on Tuesday, April 2nd.