Madras Bar Association V. Union of India & Anr.

WRIT PETITION (CIVIL) No. 804 of 2020

1. 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 pertaining to 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.

2. 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 between 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 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.

3. Issues

The problems are few and can be enumerated as follows:

3.1 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.

3.2 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.

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

4. Applicable Laws

4.1 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.

4.2 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.

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

5. Analysis

5.1 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.

5.2 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 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.

5.3 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 was 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.

5.4 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.

6. Case Summary

This case does not have a specific crime number as it is a constitutional case focused on tribunal administration and independence. The petition was filed to challenge certain provisions in the Finance Act, 2017 and the Tribunal, Appellate Tribunal, and Other Authorities (Qualifications, Experience, and Other Conditions of Service of Members) Rules, 2017

The Principal Finance Act passed by the Parliament of India in 2017 incorporated the proposed provisions changing the rules of various tribunals’ operation, which included qualifications, appointment conditions like tenures, and those with service conditions for tribunal members. A core issue in the case was that the Finance Act, 2017 was passed as a Money Bill. As per the Indian Constitution, a Money Bill need only the approval of the Lok Sabha while bypassing scrutiny from the Rajya Sabha. The petitioner, Madras Bar Association, contended, regarding these provisions having been passed as a Money Bill, they bypassed the requisite legislative scrutiny. The petitioner voiced allegations that by no means does a Finance Act express the establishment of the Tribunal Rules, 2017, in favor of such executive authority in appointing and determining the period of service and the service conditions of tribunal members. The execution of judicial bodies was unsatisfactory, alleged the Madras Bar Association, as it posed a threat to the independence of tribunals concerning quasi-judicial functions that were meant to act independently of the executive branch itself. They contended that being alternative forums for resolving disputes, tribunals need protection from interference by the executive to ensure their independence and impartiality. As a result, the rules threatened to dilute the principle of judicial independence, particularly in their allowance for the executive to influence the composition and functioning of the tribunals. The petitioner also pointed out the divergence in the service conditions accorded to the tribunal members of different tribunals, arguing that different sets of rules and tenure arrangements led to the varying conditions for the tribunal’s authority and credibility. 

The petitioner argued that the Finance Act, 2017, which introduced changes in the functioning of the tribunal framework, had been passed as a Money Bill. This they contended to be unconstitutional as a Money Bill, under Article 110 of the Constitution, could only deal with things related to taxes, appropriations, and financial matters. The petitioner submitted that changes in the structure and other aspects of the functioning of tribunals were not any of the items in that Money Bill, and thus their passage by a Money Bill constituted a violation of legislative procedure, circumventing proper scrutiny by the Rajya Sabha.

While explaining the Tribunal Rules, 2017, the petitioner pointed out that the provisions on appointments, tenure, and service conditions, practically put the executive in total control. They claimed this contravened the constitutional principle on the independence of the judiciary. For instance, by assigning the power to determine the salaries and service conditions of tribunal members to the executive, it opened grounds for the risk of executive influence on, or pressure by, the government on the tribunals.

In their opinion, the overwhelming influence of the executive on the functioning of tribunals contravenes the doctrine of separation among the three powers, which stands as a basic principle of the Indian Constitution. Tribunals, which are an alternative forum for judicial review, must function independently of the executive so that the independence and impartiality of such tribunals are there. Any interference or control by the executive in the working of the tribunal compromises its status as an independent and impartial body with adjudicatory attributes.

The petitioner cited the differences in the members’ service conditions of tribunals, which further compromised their independence. Different tribunals worked under different rules concerning appointments, tenure, and service conditions, with manifold diversities making the working of the tribunals even more difficult. The absence of a uniformity system, the petitioner argued, undermines the credibility as well as the autonomy of the tribunal system in the eyes of the general public. 

The respondent (Union of India) argued that the Finance Act, 2017, has been legislated to do away with the hiccups that plague the functioning of the tribunals and augment their effectiveness. It was further argued that the Act was indeed valid legislation and the passing of a Money Bill was well within the legislative powers of the legislature. The respondent maintained that such changes in the workings of the tribunal needed to be made on the administrative side, and such changes did come within the ambit of governmental powers.

The respondent contended that it was necessary for executive control over the appointments and service conditions of members to ensure economical disposal of justice. It was argued that since such control was in place, the independence of the tribunal was not at all compromised but it must maintain its administrative coherence and consistency. According to the respondent, the way the government was operating the tribunals ensured they worked within the framework of the general legal system.

Respondent denied that provisions of the Tribunal Rules, 2017 damaged judicial independence. The respondent contended that the tribunals did work efficiently within the new scheme, and the changes proposed under the Finance Act were meant to enhance the efficiency of the tribunal system. It was further contended by the respondent that the tribunal is a quasi-judicial body and that the need for executive control over the administration does not affect their independence, provided that control is exercised within the framework of the law.

The respondent also laid stress on how the appointments are made in a transparent manner, following due process. The government added that those procedures comply with the constitutional provisions, and thus are free from any undue influence or interference that would impair the integrity or independence of tribunals. 

The Supreme Court in India annulled a few provisions from the Tribunal Rules of 2017, naming them unconstitutional. These provisions allowed too much power to be conferred on the executive regarding the appointment and the service conditions of tribunal members, which violated the constitutional founding principle of judicial independence. The judicial independence of tribunals, being free from the control of an executive, would enable them to function impartially and effectively.

The Court held that the changes brought about in the functioning of the tribunals under the Finance Act of 2017 could not be disguised by the legislative pretext of a Money Bill. Concerned with the unwarranted use of the Money Bill statutory route to introduce major reforms into the tribunal system-a way that bypasses genuine legislative scrutiny-the Court held that such changes should have been made through ordinary legislative processes lying open to the control of both Houses of Parliament.

The Court directed the Union of India to institute an independent Tribunal Commission. The commission would exercise powers over the appointments, functioning, and personnel matters of the tribunal members. It would take responsibility to hold the appointment of the tribunal member and their functions and functioning free from executive influence to bolster independence.

The Court also made it clear that a uniform set of rules for the service conditions, appointments, and tenures of tribunal members had to be established. These discrepancies in the manner of functioning of the tribunals; over time, they would lead to erosion of tribunal autonomy in both concept and form. The Court directed the establishment and subsequent modification of the Tribunal Rules by the government in unison with all the tribunals. 

Reiterating the doctrine of separation of powers, the Court observed that judicial and quasijudicial organizations should remain immune to the influence of the executive. The Court highlighted the relevance of tribunals maintaining their independence, as they hold a vital place within the overall judicial apparatus. The judgment reiterated that the independence of tribunals would be necessary in order to sustain the rule of law and ensure that judgments were delivered in a fair and unbiased manner.

7. 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 with regard to the working of quasi-judicial bodies such as tribunals. It emphasized that the tribunals are able to 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 in order to safeguard the rule of law in India.

Reference(s):

• 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..