Supreme Court Strikes Down Rules On Tribunals; Questions Aadhaar Judgment View On Money Bill

The Supreme Court of India today struck down the restructuring of various tribunals in the country done through the Finance Act, 2017.

A five-judge bench, comprising Chief Justice of India Justice Ranjan Gogoi, and Justices DY Chandrachud, NV Ramanna, Deepak Gupta and Sanjeev Khanna, ordered the central government to reframe the rules.

The changes in Section 184 of the Finance Act gave the central government the authority to decide the qualifications, terms and other service conditions of tribunal members. The rules were challenged on the grounds that the bill was passed as a Money Bill whereas these specific provisions pertaining to tribunals did not meet the definition of a Money Bill. Also, that they infringed on the independence of the judiciary.

The central government had argued that the salaries of the tribunal members are withdrawn from the Consolidated Fund of India and therefore the bill qualifies as a Money Bill. Attorney General KK Venugopal argued that the decision of the Speaker on whether a bill qualifies as a Money Bill cannot be a subject to judicial scrutiny by the courts.

In striking down the rules, on grounds of being unconstitutional, the Supreme Court judgment said the search and selection committee envisaged under the rules, for making appointments to tribunals, consists predominantly of central government appointees and the Chief Justice of India has been given a “token representation”.

“The composition of the Search-cum-Selection Committees under the rules amounts to excessive interference of the executive in appointment of members and presiding officers of statutory tribunals and would undoubtedly be detrimental to the independence of judiciary besides being an affront to the doctrine of separation of powers,’’ the top court said.

But the bench did not decide on the issue of whether the Speaker had correctly certified the bill as a Money Bill, referring that to a larger bench.

The Money Bill Arguments

A Money Bill does not need the assent of the Rajya Sabha to be passed and enacted as law. And though the upper house can recommend changes, they are not binding. The decision to recognise a bill as a Money Bill rests with the Speaker of the Lok Sabha.

Article 110 of the Indian Constitution says a bill shall be a Money Bill if it contains only provisions dealing with all or any of the following matters, namely -

(a) the imposition, abolition, remission, alteration or regulation of any tax;

(b) the regulation of the borrowing of Money or the giving of any guarantee by the Government of India, or the amendment of the law with respect to any financial obligations undertaken or to be undertaken by the Government of India;

(c) the custody of the Consolidated Fund or the Contingency Fund of India, the payment of moneys into or the withdrawal of moneys from any such fund;

(d) the appropriation of moneys out of the Consolidated Fund of India;

(e) the declaring of any expenditure to be expenditure charged on the Consolidated Fund of India or the increasing of the amount of any such expenditure;

(f) the receipt of money on account of the Consolidated Fund of India or the public account of India or the custody or issue of such money or the audit of the accounts of the Union or of a state; or

(g) any matter incidental to any of the matters specified in sub-clauses (a) to (f).

The central government argued that the definition has to be widely interpreted, and if the main Act qualifies as a Money Bill (in this case the Finance Act, 2017), then the other incidental provisions (ones dealing with tribunals in this case) would also be covered under the Money Bill. The government also argued that Article 110 also makes it clear that the decision of the Speaker to certify a bill as a Money Bill is final and not subject to judicial review. It relied on a previous decision by the Supreme Court in the Aadhaar case.

But this five-judge bench pointed out that the majority decision in the Aadhaar did not delineate the scope of Article 110 and the effect of the word ‘only’ when listing the criteria.

The Aadhaar majority decision offers “little guidance on the repercussions of a finding when some of the provisions of an enactment passed as a “Money Bill” do not conform to Article 110,” the Supreme Court said today.

Noting that the petitioners’ argued that the Aadhaar decision, on the scope of a Money Bill, was not convincingly reasoned, and might not be in accord with the bicameral Parliamentary system envisaged under India’s constitutional scheme, the bench decided to refer the case to a larger one.

When there is a conflict between two benches of similar strength on a question of law, the court refers the issue to be decided by a larger bench.