CASE BRIEF: ROJER MATHEW V SOUTH INDIAN BANK LTD. AND ORS.
Court: The Supreme Court of India
Coram – CJI Ranjan Gogoi, N.V. Ramana, Dr. D.Y. Chandrachud, Deepak Gupta and Sanjiv Khanna, J.J
Theme- Judicial Independence
Subject: Constitutional law
This case was a combined hearing by the Hon’ble Supreme Court. The constitutionality of Part XIV of the Finance Act, 2017 and of the rules framed in consonance of section 184 of the Finance Act was constitutionally challenged before the court. Part XIV of the Finance Act 2017 gave sweeping powers to the Union Government to administer the Tribunals, especially the conditions of service, mode of appointment, security of tenure and requisite qualifications of members and presiding officers of various Tribunals.
First matter was before the Hon’ble High Court of Madras, Writ Petition (Civil) No. 267 of 2012.A three-judge Bench of the Madras High Court took consideration of two landmark judgements, Union of India vs. R. Gandhi, President, Madras Bar Association and L. Chandra Kumar vs. Union of India. In both the judgements, courts gave paramount consideration to the doctrine of separation of powers and independence of the judiciary. The court had ordered the Government to form an independent committee which will be responsible for the functioning of all the tribunals.
During the pendency of the aforementioned writ petition, SLP(C) No. 15804/2017 was filed by Rojer Mathew, assailing the final judgment and order of the High Court of Kerala. Tt was brought to the notice of the Court that the appointments to the Debt Recovery Tribunals was not in consonance with the Constitutional spirit of judicial independence.
The third matter to be taken note of was Writ Petition (Civil) No. 279/2017 where the petitioner, Kudrat Sandhu, has filed a Public Interest Litigation challenging the vires of Part XIV of the Finance Act, 2017 by which the provisions of twenty-five different enactments were amended to effect sweeping changes to the requisite qualifications, method of appointment, terms of office, salaries and allowances, and various other terms and conditions of service of the members and presiding officers of different statutory Tribunals.
ISSUES & ARGUMENTS
Whether the ‘Finance Act, 2017’ insofar as it amends certain other enactments and alters conditions of service of persons manning different Tribunals can be termed as a ‘money bill’ under Article 110 and consequently is validly enacted?
Whether the court has jurisdiction to hear the present matter.
As per K.S. Puttaswamy ‘finality’ of decisions under the Constitution has been subject to judicial review by the Courts. Article 122(1) which prohibits review by the courts in matters of ‘irregularity of procedure’ cannot operate as a bar when a challenge is made on the ground of illegality or unconstitutionality under the Constitutional scheme. Determining whether an impugned action or breach is an exempted irregularity or a justiciable illegality is a matter of judicial interpretation and would undoubtedly fall within the ambit of Courts and cannot be left to the sole authority of the Parliament to decide.
The Union government had relied upon the finality accorded to the certification by the terminology of Article 110(3) which provides that in case of any dispute as to the nature of a bill, “the decision of the Speaker of the House of the People thereon shall be final.”
Further, the Union also placed emphasis on Article 122(1) of the Constitution which provides that the validity of any proceedings in Parliament shall not be called in question on the ground of any alleged irregularity of procedure.”
Certification of the Speaker of the Finance Bill, 2017 as a ‘money bill’ and its consequent passage without the assent of the Rajya Sabha would at best amount to an ‘irregularity of procedure’ of ‘proceedings in Parliament’ and hence cannot be inquired into by this Court.
A heavy reliance was made on Mohd. Saeed Siddiqui vs. State of Uttar Pradesh, where a three-judge bench refused to judicially review the speaker’s certification of the Uttar Pradesh Lokayukta and Up-Lokayuktas (Amendment) Bill as a Money bill.
Whether Finance Act 2017 can be termed as a ‘money bill’ under Article 110.
The word ‘only’ appearing in Article 110 plays a very crucial role in determining a money bill. legislative intent for the substantive provision is any or all of the sub-clauses from (a) to (f). If any Act which is not covered by sub-clauses (a) to (f), the bill cannot be said to be a “Money Bill”. Money Bill must deal with the declaration of any expenditure to be charged on the Consolidated Fund of India (or increasing the amount of expenditure).
By virtue of inclusion of Part XIV, the entirety of the Finance Act, 2017 was contended to have lost its colour as a ‘money bill’ under Article 110 and hence its passage without the assent of the Rajya Sabha as required under Article 107 renders it ultra vires to the legislative scheme contemplated in the Constitution.
The act should be read in entirety and not in peace mile manner. The dominion nature test shall be done while considering the bill to be a money bill or not. It is a settled principle of Constitutional interpretation that terms of the Constitution, including Clauses (a) to (g) of Article 110(1), must be interpreted in their widest amplitude, with the result that when the principal enactment had the dominant character of a ‘money bill’, all matters incidental thereto and inserted therein would also draw the colour and characteristic of a ‘money bill’.
Further reliance was upon an order passed by the Supreme Court in Rajiv Garg vs. Union of Indiaon 08th February, 2013 directing the Central Government to bring uniformity in service conditions in various tribunals. Therefore, the Govt. has not acted arbitrarily and has acted only in accordance with order passed by the Hon’ble Supreme Court.
Whether Section 184 of the Finance Act, 2017 is unconstitutional on account of Excessive Delegation?
Section 184 of the Finance Act 2017 empowers the central Govt. to make provide rules for Qualifications, appointment, term and conditions of service, salary and allowances, etc., of Chairperson, Vice-Chairperson and Members, etc., of the Tribunal, Appellate Tribunal and other Authorities.
Section 186 of the Finance Act 2017 General Power to make rules. — Without prejudice to any other power to make rules contained elsewhere in this Part, the Central Government may, by notification, make rules generally to carry out the provisions of this Part.”
Section 184 imposes a potential threat of misuse by the executive. Any desecration by the Executive of such powers threatens and poses a risk to the independence of the tribunals. The legislation must ensure certainty of the powers of the delegate. The court must run the scrutiny of the policy and guidelines test to prevent future misuse of the provisions.
The objects of the parent enactments as well as the law laid down by this Court in R.K. Jain v. Union of India, L Chandra Kumar v. Union of India, Union of India vs. R. Gandhi, President, Madras Bar Association, Madras Bar Association v. Union of India and Gujarat Urja Vikas Ltd. vs. Essar Power Ltd. undoubtedly bind the delegate and mandatorily requires the delegate under Section 184 to act strictly in conformity with these decisions and the objects of delegated legislation stipulated in the statutes.
The law laid down by this Court in R.K. Jain (supra), L Chandra Kumar (supra), R. Gandhi (supra), Madras Bar Association (supra) and Gujarat Urja Vikas (supra) undoubtedly bind the delegate and mandatorily requires the delegate under Section 184 to act strictly in conformity with these decisions and the objects of delegated legislation stipulated in the statutes. It must also be emphasised that the Finance Act, 2017 nowhere indicates that the legislature had intended to differ from, the Finance Act. Part XIV was inserted with a view to harmonise the diverse and wide-ranging qualifications and methods of appointment across different tribunals.
If Section 184 is valid, Whether Tribunal, Appellate Tribunal and other Authorities (Qualifications, Experience and other Conditions of Service of Members) Rules, 2017 are in consonance with the Principal Act and various decisions of this Court on functioning of Tribunals?
Composition of a Search-cum-Selection Committee is contemplated in a manner whereby appointments of Member, Vice-President and President are predominantly made by nominees of the Central Government and the role of the judiciary is virtually absent.
Independence of judiciary is the only means to maintain a system of checks and balances on the working of Legislature and the Executive. The Executive is a litigating party in most of the litigation and hence cannot be allowed to be a dominant participant in judicial appointments. In Madras Bar Assn. v. Union of India (supra), a five-judge Bench of this Court reiterated the urgent need to monitor the pressure and/or influence of the executive on the Members of the Tribunals.
The rules are only framed to bring uniformity between the various tribunals. This will help in faster appointments of members of the tribunals and strengthen the judicial system. Delay and backlogs in the administration of justice is of paramount concern for any country governed by the rule of law. In our present judicial setup, disputes often take many decades to attain finality, travelling across a series of lower courts to the High Court and ending with an inevitable approach to the Supreme Court. The ratio of judges against the country’s population is one of the lowest in the world and the manpower (support staff) and infrastructure provided is dismal.
The rise of specialization and increase of complex regulatory and commercial aspects, require esoteric appraisal and adjudication.
Whether there should be a Single Nodal Agency for administration of all Tribunals?
Ld. Amicus submitted that tribunals established under different Central and State enactments are administered by their sponsoring or parent Ministry or concerned department. Thus, when Tribunals or members thereof have to seek financial, administrative or any other facility from a department who is also the litigant before them, their fairness or independence is likely to be compromised. Such an anomalous situation can only be remedied by the establishment of a single nodal agency, overseeing the entire Tribunal system in the country, bringing all such Tribunals to parity.
Whether there is a need for conducting a Judicial Impact Assessment of all Tribunals in India?
There is an imminent need for conducting a Judicial Impact Assessment of all the Tribunals referable to the Finance Act, 2017. Salem Advocate Bar Assn. (II) v. Union of India, whereby it was observed that it is imperative for the Legislature to perform a Judicial Impact Assessment of the enactment passed to assess its ramifications on the judiciary. This Court had directed for a committee to be constituted to assess the need for Judicial Impact Assessment in the Indian context
Whether direct statutory appeals from Tribunals to the Supreme Court ought to be detoured?
Providing appeals directly from Tribunals, the jurisdiction of High Courts is in effect curtailed to a great extent. Not only does this hamper access to justice, but it also takes away the much needed exposure for High Court judges, earnestly needed in a vibrant and ever-evolving judiciary. Since majority of the judges of the Supreme Court are elevated from the High Courts, their lack of exposure to these specialised areas of law hinders their efficacy in adjudicating the direct statutory appeals from specialised Tribunals.
The jurisdiction under Article 226, being part of the basic structure, can neither be tampered with nor diluted. Instead, it has to be zealously-protected.
The court referred the issue and question of Money Bill, as defined under Article 110(1) of the Constitution, and certification accorded by the Speaker of the Lok Sabha in respect of Part-XIV of the Finance Act, 2017 is referred to a larger Bench.
The court held that the Section 184 of the Finance Act, 2017 did not suffer from excessive delegation of legislative functions as there are adequate principles to guide framing of delegated legislation, which would include the binding dictums of this Court and thus it rules out the possibility of uncertainty.
The 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 Central Government was directed to re-formulate the Rules strictly in conformity and in accordance with the principles delineated by this Court.
The court issued a writ of mandamus to the Ministry of Law and Justice to carry out ‘Judicial Impact Assessment’ and submit the result of the findings before the competent legislative authority. The Central Government in consultation with the Law Commission of India or any other expert body shall re-visit the provisions of the statutes referable to the Finance Act, 2017 and place appropriate proposals before the Parliament for consideration of the need to remove direct appeals to the Supreme Court from orders of Tribunals. A decision in this regard by the Union of India shall be taken within six months.
The present case is considered to be a landmark judgment to ensure the independence of the judiciary. The court has made sure the constitutional spirit is given priority and all the organs of the state function in accordance with principals like separation of power and basics structure doctrine. The author completely concurs with the submissions made by the petitioner before the court. Constitutional courts can’t be substituted with parallels courts which are established by the Parliament and executive intervention. The very fact of the executive being party to various matters before the court it because paramount to ensure the independence of the judiciary. The strong stand taken up by the judiciary in the present case lies in the footing of an impartial and independent court.
Abiding by the judgment passed by the court, the Union government made new rules for the appointment of the judges of the tribunals as ‘Tribunal, Appellate Tribunal, and other Authorities (Qualifications, Experience and other Conditions of Service of Members) Rules, 2020.’ The government has fully abided by the observation of the court while drafting the rules.
The author believes that the government in spites of the creating parallel court should have invested in strengthening the existing courts. Our court lacks finances to execute its functioning and lacks infrastructure. The Government should have aimed to strengthen the foundation first and not burden the existing system with additional developments.
Contributed by: Deepak Thakur (Student, Christ (Deemed to be University), Bengaluru)
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Contributed by: Deepak Thakur (Student, Christ (Deemed to be University), Bengaluru)