Any Appointments to 19 Tribunals Under Finance Act Would be Subject to Outcome of Challenge: Madras HC

The Madras High Court on Wednesday reportedly observed that all appointments to the 19 odd tribunals, under the purview of the impugned Finance Act and Rules, would be subject to the final order in the writ petition filed by the Madras Bar Association (MBA).

The Bench comprising Chief Justice Indira Banerjee and Justice Bhavani Subbarayan, however, refused to stay the provisions. The matter has now been listed for final hearing on July 24.

The Court had earlier, on 16 June, issued notice to the Central Government on the Petition challenging Sections 156 to 189 of the Finance Act, 2017 and the Tribunal, Appellate and other Authorities (Qualifications, Experience and other conditions of Service of Members) Rules, 2017.

Sections 156 to 189 of the impugned Act amend provisions relating to structuring and re-organisation of tribunals. The Petition contends that these provisions are not matters relating to Money Bill and hence, should have been legislated through separate legislations and bills, with the assent of Rajya Sabha.

“In other words, the Lok Sabha has firstly certified a Financial Bill as a Money Bill and thereafter adopted the special procedure laid down for Money Bills in Article 107 of the Constitution and effectively negating any sort of interference from the Rajya Sabha and Council of States. It is thus submitted that when proceedings which are tainted on account of substantive illegality or unconstitutionality, the same cannot be immune from judicial scrutiny and review. Since the Finance Bill, 2017 was wrongly voted as a Money Bill despite the fact that it is not, the passing of the Finance Bill, 2017 is illegal, invalid and a fraud on the Constitution,” it contends.

The Petition submits that the Rules pertaining to the appointment, qualification and removal and other terms of services of members of tribunals amount to excessive delegation of legislative functions. It points out the fact that the parent legislations for the Tribunals permit amendments to be carried out by the Parliament. Section 184 of the Finance Act, however, empowers the Centre to frame new Rules in this regard, and amend the same by way of notification. This has been termed as “delegation of essential judicial functions”.

Rules 7 and 8 provide for removal of retired Judges of High Court and Supreme Court, who are appointed to tribunals, by the Central Government after a departmental inquiry. This, the Petitioner contends, is violative of Article 50 of the Indian Constitution, which provides for separation of powers of the judiciary and the executive.

Further, the tenure of Presidents of all Tribunals has been reduced to three years. This has been contended to be in violation of the Supreme Court judgment in the case of Union of India v. R Gandhi.

The Rules have, therefore, been challenged on the ground that they are “void, defective and unconstitutional, being violative of doctrines of separation of powers and independence of judiciary which are parts of the basic structure of the Constitution.”

Therefore, praying for quashing of the provisions and the Rules, the Petition contends, “The present Finance Act, 2017 insofar as it amends the structure and re-organisation of various Tribunals including the 19 Tribunals set out in the Schedule of the Impugned Rules, 2017 is unconstitutional and violative of the basic structure of the Constitution. The impugned provisions and the Impugned Rules, 2017 violate the principles of separation of powers which is not only part of basic structure but also an elementary component of the rule of law.”

The Gujarat High Court has also directed the Centre to respond to a similar petition filed before it by a CA, Mr. Nipun Singhvi. The Petition contends that the changes in various laws through the Finance Act should be declared defective, unconstitutional and in violation of the doctrine of separation of powers and independence of judiciary. It will be next heard on 12 July.