SC Strikes Down Rules on Tribunals, Refers to Larger Bench Passage of Fin Act 2017 As Money Bill

The judgment said that a Money Bill can be introduced only in the Lok Sabha and the role of the Rajya Sabha is merely consultative.

New Delhi: In a blow to the government, the Supreme Court Wednesday struck down in entirety the rules formulated by the Centre on appointment and service conditions for members of various tribunals, and referred to a larger bench the issue of examining the validity of the passage of the Finance Act 2017 as Money Bill which was vigorously opposed in parliament by opposition parties.

The questions the apex court framed for consideration included 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.

The top court held that Section 184 of Finance Act, 2017, which empowers the Centre to frame rules relating to appointment and service conditions of members of various tribunals, does not suffer from the excessive delegation of legislative functions as there are adequate principles to guide its framing.

However, a five-judge constitution bench, headed by Chief Justice Ranjan Gogoi, said: “Tribunal, Appellate Tribunal and other Authorities (Qualifications, Experience and other Conditions of Service of Members) Rules, 2017 suffer from various infirmities as observed earlier.

“These rules formulated by the Central Government under Section 184 of 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 apex court directed the Centre to re-formulate the rules strictly in conformity and in accordance with the principles delineated by it.

The bench, also comprising Justices N.V. Ramana, D.Y. Chandrachud, Deepak Gupta and Sanjiv Khanna, said the new set of rules to be formulated by the government should ensure “non-discriminatory and uniform conditions of service, including assured tenure, keeping in mind the fact that the chairperson and members appointed after retirement and those who are appointed from the Bar or from other specialised professions/services, constitute two separate and distinct homogeneous classes”.

The bench said: “It would be open to Central government to provide in new set of Rules that the Presiding Officers or Members of the Statutory Tribunals shall not hold ‘rank’ and ‘status’ equivalent to that of the Judges of Supreme Court or High Courts, as case may be, only on basis of drawing equal salary or other perquisites.”

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It said there is a need-based requirement to conduct ‘Judicial Impact Assessment’ of all Tribunals referable to the Finance Act, 2017 to analyse the ramifications of the changes in the framework of Tribunals as provided under Finance Act, 2017.

“Thus, we find it appropriate to issue a writ of mandamus to the Ministry of Law and Justice to carry out such ‘Judicial Impact Assessment’ and submit the result of findings before competent legislative authority.

“The Central Government in consultation with Law Commission of India or any other expert body shall re-visit the provisions of the statutes referable to the Finance Act, 2017 or other Acts…and place appropriate proposals before Parliament for consideration of the need to remove direct appeals to Supreme Court from orders of Tribunals,” the bench said.

A decision in this regard by the Centre shall be taken within six months and it should carry out an appropriate exercise for “amalgamation of existing Tribunals adopting the test of homogeneity of the subject matters to be dealt with and thereafter constitute adequate number of Benches commensurate with the existing and anticipated volume of work,” it said.

As the Tribunal, Appellate Tribunal and other Authorities (Qualification, Experience and other Conditions of Service of Members) Rules, 2017 have been struck down and several directions have been issued vide the majority judgment for framing of a fresh set of Rules, we, as an interim order,

It also held terms and conditions of appointment shall be in terms of the respective statutes before the enactment of the Finance Bill, 2017.

“However, liberty is granted to the Union of India to seek a modification of this order after they have framed fresh Rules in accordance with majority judgment. However, in case any additional benefits concerning the salaries and emoluments have been granted under the Finance Act, they shall not be withdrawn and will be continued. These would equally apply to all new members,” the bench said.

While giving its finding in its 255-page judgment, the bench dealt with the difference with money bill and finance Bill.

The judgment said that Money Bill can be introduced only in Lok Sabha and the role of the Rajya Sabha is merely consultative.

“Unlike in case of ordinary bills where the Upper House can block the proposed legislation and act as a check on the power of the directly elected Lower House, in case of money bills, Rajya Sabha merely has the ability to recommend amendments, that too only within fourteen days.

“In case the Lok Sabha refuses to accept those recommendations or in case no recommendations are made by the Rajya Sabha within a period of 14 days, the money bill can be directly sent for Presidential ratification and thereafter it becomes valid law,” it said.

While Chief Justice Gogoi wrote the majority judgment for himself, Justice Ramana and Justice Khanna, the minority judgment was penned separately by Justices Chandrachud and Justice Gupta.