Finance Act: Tribunal rules struck down, Govt told to draw fresh norms

Apurva Vishwanath
The Bench, also comprising Justices N V Ramana, D Y Chandrachud, Deepak Gupta and Sanjiv Khanna, said the amendments are struck down in entirety as these are “contrary to the principles envisaged in the Constitution as interpreted by this Court”. (File)

In a setback to the government, a five-judge Constitution Bench, headed by Chief Justice of India Ranjan Gogoi, Wednesday struck down provisions of the amended 2017 Finance Act, passed as a money Bill which altered the structure and functioning of various tribunals. It directed the government to formulate fresh norms on the appointment of tribunal members.

The Bench, also comprising Justices N V Ramana, D Y Chandrachud, Deepak Gupta and Sanjiv Khanna, said the amendments are struck down in entirety as these are “contrary to the principles envisaged in the Constitution as interpreted by this Court”.

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On the issue of whether the amendments could have been passed as a money Bill, the court referred the matter to a larger bench for consideration.

It directed the government to re-formulate the rules in conformity with the principles delineated by the court and ensue that rules are non-discriminatory and have uniform conditions of service, including assured tenure. Until the new rules are formulated, the appointments, the Bench said, will be as per existing laws, and not under the Finance Act, 2017.

In February 2018, the court had stayed the amendments and said appointments to all the tribunals would be made as per earlier rules until pleas challenging the provision of the Act were decided. The amendments gave the Centre the power to govern appointments and modify service terms and conditions of members of tribunals. After the amendment, the government merged eight tribunals, bringing down the total number of tribunals from 24 to 19.

The Bench also directed the government to undertake a ‘Judicial Impact Assessment’ of all 24 tribunals referable to the Finance Act, 2017 in order to analyse the ramifications of the changes in the framework of tribunals as provided under the Finance Act, 2017.

NGO Social Action for Forest and Environment (SAFE) had challenged the amendments to the Finance Act as illegal and had argued that it would adversely affect the functioning and independence of tribunals, particularly the National Green Tribunal.

While CJI Gogoi wrote the majority opinion, Justices Chandrachud and Gupta wrote separate opinions concurring with the majority.

Justice Chandrachud said that an overarching statutory organisation be constituted through legislative intervention to oversee the working of tribunals called the National Tribunals Commission. He also said that there is an urgent need to set up an All India Tribunal Service in the interests of the effective functioning of the tribunal system.

Justice Gupta summarised the challenge before the court as “whether tribunals are an effective alternative to Courts; if yes, who should man them.”

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“Some of the tribunals are virtually subjugated to the departments as far as the administrative matters are concerned and this also affects the independence of the judiciary,” Justice Gupta said.

He also lamented the state of tribunals, citing the National Green Tribunal as an example. “NGT was to have its Principal Bench at Delhi and 4 Zonal Benches and 4 Circuit Benches. It was expected that in the future more benches would be added. Sadly, the reverse has taken place.”

“Day in and day out, we all talk about pollution and the environment but the harsh reality is that as against a Chairperson and 40 members, at present the Chairperson has the assistance of only 5 members. The result is that no hearings are taking place in the Zonal Benches or the Circuit Benches. We have been informed that cases are taken up by video conferencing,” he said.