This Case Commentary is written by Jyoti Bhakta, a First Year Law Student of Vit School Of Law, Vellore Institute Of Technology, Vit Chennai

COURT NAME: Supreme Court of India

CITATION: (2020) 2 SCC 674

BENCH: Justice L. Nageswara Rao, Justice Hemant Gupta, and Justice S. Ravindra Bhat

DECIDE ON: November 27, 2020

CASE TYPE: Writ Petition (Civil) No. 804 of 2020

PARTIES:

PETITIONER: Madras Bar Association

RESPONDENT: Union of India & Anr.

1. Abstract:

In Madras Bar Association v. Union of India & Anr. In the case of Parliament & Ors vs. Shivakami, the Constitutionality of the Finance Act, 2017 & Tribunal & Appellate Tribunal & Other Authorities (Qualifications, Experience and Other Conditions of Service of Members) Rules, 2017 was to be decided by the Supreme Court of India in Writ Petition (Civil) No. 804 of 2020. The case touched cords of very important issues such as but not limited to; the independence of tribunals and the doctrine of separation of powers. In the current case, the petitioners appealed against the classification of the Finance Act concerning the Money Bill and accused the executive of intruding on the independence of the judiciary through meddling in the appointment of tribunals. The Court also said that changes that have been initiated through the Finance Act violated constitutionalism and particularly the independence of the Judiciary recommended the formation of an independent Tribunal Commission.

2. Introduction

Madras Bar Association v. Union of India & Anr. (Writ Petition (Civil) No. 804 of 2020) represents a landmark constitutional case on the issues of independence of tribunals in India, especially regarding the role of the executive in the administration of tribunals. At the heart of consideration by the Supreme Court was whether the changes made by the Finance Act, 2017, to the administrative regime about tribunals, would infringe upon the doctrine of separation of powers and independence of the judiciary. Significantly, perhaps, the case raises salient questions about judicial independence while decrying the situation, where judicial powers lie too much within the executive's embrace.

3. Facts of the Case:

Madras Bar Association filed a writ petition to challenge the constitutionality of the Finance Act, 2017, and the Tribunal, Appellate Tribunal, and Other Authorities (Qualifications, Experience, and Other Conditions of Service of Members) Rules, 2017, hereinafter referred to as Tribunal Rules, 2017. According to the petitioners, these changes in the tribunal system were brought about through the Finance Act, 2017, which was passed as a Money Bill. A Money Bill does not go through the Rajya Sabha and deals only with the Lok Sabha. The petitioners argued that the changes introduced through this Act involving tribunal appointments, qualifications, tenure, and conditions of service do not pertain to financial matters; consequently, the passage of this Act as a Money Bill was unconstitutional and a violation of legislative processes. The Madras Bar Association further contended that the Tribunal Rules, 2017 afforded the executive excessive control over the appointments, conditions of service, and functioning of members of the tribunals. Such alleged excessive control would compromise the independence of the tribunals and violate the principle of separation of powers. The petitioners further contended that different tribunals had divergent conditions of service. Consequently, such diversity should be discouraging and derogates the credibility of the tribunal system.

4. Issues raised before the Court

The problems are few and can be enumerated as follows:

4.1 Constitutionality of the Finance Act, 2017: The passing of substantial changes concerning appointments and conditions of service of tribunals by way of a Money Bill.

4.2 Independence of Tribunals: Whether the Tribunal Rules, 2017, which immensely articulates the power of the executive functioning in the appointment of and functioning of tribunals, indeed contravened the independence of the tribunals.

4.3 Disparity in Tribunal Rules: Whether the non-uniformity of service conditions in different tribunals compromises their independence and functioning.

5. Argument from Petitioners’ Side:

The petitioners, through the Madras Bar Association, argued that the Finance Act, 2017 was unconstitutional in so far as it was passed as a Money Bill and therefore did not require scrutiny of the Rajya Sabha. In this case, they submitted that the provisions of the Act regarding tribunals were not financial and must, therefore, not be brought under Article 110 of the Constitution. The petitioners also said that under the Tribunal Rules 2017, the Executive wielded TOO much influence on the appointment, terms of service, and term in office of the tribunal members which was unconstitutional as it erodes the doctrine of the separation of power and judicial independence. They also observed that conditions of services of tribunals were also inconsistent, which undermined the efficiency and integrity of the tribunal.

6. Argument from Respondents’ Side:

The Union of India to support the Finance Act, 2017 argued that the change it has brought into the bodies called tribunals was to ensure efficiency and not a violation of the independence of judiciary. Some of the respondents eagerly supported the position that the Finance Act was lawfully passed as a Money Bill and within the competence of the Lok Sabha. They argued that only executives could provide a degree of coherence to the operation of tribunals and that the control exercised by them did not influence the bias of the tribunals. Also, that flexibility was evident in the respondents’ remarks that the appointment processes were clear and followed constitutional procedures to promote the efficient operation of tribunals in line with the law.

7. Applicable Laws

7.1 Article 110 of the Indian Constitution: Clarifies what constitutes a Money Bill focusing on taxes, appropriations, and government expenditures; other matters cannot be a Money Bill.

7.2 Doctrine of Separation of Powers: The broad principle under constitutional law by which an improper blending of powers among the legislature, executive, and judiciary leads to overstepping, and in this process loses the independence of each other.

7.3 Independence of Judiciary: The Constitution ensures the independence of the judiciary from the executive and legislative branches in India so that justice is impartially done without any coercion-, bias, or outside influence.

8. Judgment and its Analysis

The Supreme Court quashed certain provisions of the Tribunal Rules 2017 for violating the Constitution by seeking to vest too much powers in the executive to the prejudice of the tribunals. The Court declared that major structural alterations of the tribunal system were impermissible by way of a Money Bill because it avoids passing through a regular legislative process. The Court said that they suggested increasing the independence of the Tribunal through the creation of the Tribunal Commission which would be in charge of appointments and service conditions to prevent tribunals from being manipulated by the executive. It also required that there should be standardization on the service conditions of members of a tribunal across the various tribunals. This judgment strengthened the principle of the separation of powers as well as judicial freedoms as of paramount importance for the state of the rule of law in India.

8.1 Constitutionality of the Finance Bill: The Madras Bar Association contended that the Finance Act, 2017 should not have been passed as a Money Bill because the changes it made to the tribunal system were unrelated to finance-related matters. Money Bills are confined to matters related to taxes, appropriations, and other fiscal matters. By using a Money Bill to effect changes ranging from standard advocacy to stricter sentencing, nothing would have prevented the Rajya Sabha from voicing out its contentions, thus undermining legislative procedure. The Supreme Court agreed with the contentions of the petitioner and held that the most significant structural changes related to tribunals by the Money Bill route were prima facie inappropriate and transgressed legislative procedure. The Court reiterated that any significant structural changes had to go through the ordinary legislative process requiring both houses of Parliament.

8.2 Independence of Tribunals: The petitioners argued that the Tribunal Rules, 2017 accorded excessive power to the executive in the appointment of tribunal members, their tenures, and the conditions of service. They had stated this amounted to contravention of the separation of powers doctrine, which calls for an independence of the judiciary, including quasi-judicial bodies like tribunals, from the executive in their procedures. The Supreme Court reiterated that enormous control over the appointment of, and services rendered by, tribunal members, along with the dismissal of such members, was diminishing the autonomy and impartiality of the tribunal. It contended that, as the adjudicating authority, nobody ought to interfere with tribunal operations on behalf of the executive. The Supreme Court struck down the provisions in question, which mutilated the independence of the Tribunals in being controlled and directed by the Executive.

8.3 Lack of Uniformity of Tribunal Rules: An equally important problem was that conditions of service differed from tribunal to tribunal. The petitioners contended that where uniformity of service was not maintained, there were bound to be inconsistencies that impair the efficiency of the tribunal system. The Supreme Court observed a valid ground in this argument and imposed a condition that a uniform system of service conditions, tenure, and appointments if determined, must be adhered to in all tribunals to ensure consistency, fairness, and independence.

8.4 Constitution of a Tribunal Commission: To set things right, the Supreme Court recommended that an independent tribunal commission be constituted, which would assure the appointment of members to the tribunals, service conditions, and numerous other administrative functions where the executive would not be able to interfere with the way the tribunals would administer their work. This step was viewed as a crucial one for ensuring independence and transparency in functioning.

9. Conclusion

This historic decision of the Supreme Court of India, by striking down certain provisions of the Tribunal Rules, 2017, has declared them unconstitutional. The Court reiterated the principle of judicial independence, especially about the working of quasi-judicial bodies such as tribunals. It emphasized that the tribunals can function independently of executive control so that justice is rendered distinctly. Additionally, the ruling reiterated the importance of legislative scrutiny, especially when introducing significant changes to the structure and functioning of judicial bodies. The Court ruled that using the Money Bill route to pass changes to tribunal governance was inappropriate and violated constitutional principles. Recommended Tribunal Commission as an independent body and uniformity in tribunal rules to the extent necessary were the recommendations of the Court, thereby providing a modus vivendi to ensure that tribunals retain independence, constancy, and effectiveness in the delivery of justice. The judgment reaffirmed the constitutional principles of separation of powers and independence of the judiciary to safeguard the rule of law in India.

Reference

· Madras Bar Association v. Union of India & Anr., (2020) 2 SCC 674 (you can verify this exact SCC citation for accuracy in a legal database).

· Indian Kanoon: Madras Bar Association v. Union of India & Anr.