A Constitution Bench of the Supreme Court struck down in entirety Rules framed by the government under the Finance Act of 2017 to alter the appointments to 19 key judicial tribunals, including the Central Administrative Tribunal.

What the court said

  1. The Bench led by Chief Justice Ranjan Gogoi held that the Tribunal, Appellate Tribunal and other Authorities (Qualifications, Experience and other Conditions of Service of Members) Rules, 2017 suffered from “various infirmities”. As the centre’s ‘control’ of functioning of tribunals would affect judicial independence.
  2. These Rules formulated by the Central Government under the Finance Act, 2017 being contrary to the parent enactment and the principles envisaged in the Constitution as interpreted by this Court.
  3. In his majority opinion, Chief Justice Gogoi referred to a larger Bench the issue and question whether the 2017 Act could have been passed as a money bill. 
  • The reason for referring the ‘money bill’ question to a seven-judge Bench was the court’s dissatisfaction with the way the Aadhaar judgment in the K. Puttuswamy case had dealt with the issue of what could be certified as a money bill. The Constitution Bench said the Puttuswamy verdict in the Aadhaar case was not comprehensive enough to be set as a precedent on the issue of money bills.
  • In his minority opinion on the Bench, Justice D.Y. Chandrachud held that the 2017 Act could not have been enacted as a money bill and the Act amounted to a “substantive irregularity”.
  1. The court ordered the Centre to re-formulate the Rules within six months strictly in conformity with the principles delineated by the Supreme Court. 

The Supreme Court directed

The new set of Rules to be formulated by the Central Government shall 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 specialized professions/services, constitute two separate and distinct homogeneous classes. 

  1. The court further ordered the Union Ministry of Law and Justice to conduct a ‘Judicial Impact Assessment’ of tribunals to analyze the ramifications of the changes caused by the Finance Act, 2017.
  2. The court also directed the Centre to “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”.
  3. For now, as an interim measure, the Bench directed that the terms and conditions of appointment to the tribunals would be in accordance with the respective statutes which were in place before the enactment of the Finance Bill, 2017.

The Finance Act,2017

  • The cut down of tribunal autonomy by the finance act 2017 has been a controversy.
  • Finance act 2017 was passed as a money bill and Raja Sabha cannot make any decisions on the bill.
  • It is a bulk bill of 40 amendments to different laws, such as variety of existing taxation laws, use of Aadhaar, income tax returns and raids, caps in cash transaction.
  • It laid the foundations for the merger of several tribunals.
  • The Bill included amendments to legislation on multiple subjects, in an attempt to rationalize the functioning of multiple tribunals.

Issues with Provisions of the act

  1. Taxes cannot be paid without an Aadhaar card.
  2. The corporates will not be required to name the beneficiary political party in the balance sheets to which they are funding.
  3. Cash transaction was limited to Rs 2 lakh per person per day per event.
  4. Income tax raids to take place without furnishing a reasonable explanation as was required under the IT Act, 1961, and without needing a court order.

What are decisions on tribunals?

  • There used to be 26 tribunals but now they are down to 19.
  • The Competition Appellate Tribunal will be merged with the National Company Law Tribunal.
  • The Telecom Dispute Appellate Tribunal will also do the work of the Cyber Law Appellate Tribunal.
  • The Airports Economic Regulatory Authority Appellate Tribunal.
  • The tribunal relating to the Employees’ Provident Fund will be subsumed in the Industrial Tribunal.
  • The qualifications, tenure, conditions of service, removal and emoluments of the chairpersons and members of these tribunals will all be under the control of the Centre.

Issues with the decisions on tribunals

  • There’s no clear rationale behind this replacement, and seems to be rather arbitrary.
  • The amendments make the independence of the tribunals questionable.
  • Adjudicatory bodies under different laws cannot be abolished by a money bill.
  • The reconstitution of the tribunals will be determined by the outcome of the legal challenge.
  • The doctrine of separation of powers has been violated and the independence of judicial bodies compromised by the Finance Act.

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Source 2