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Rojer Mathew v. South Indian Bank Limited

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Rojer Mathew v. South Indian Bank Limited

This case deals with the classification of the Finance Act, 2017 as a money bill given that it also dealt with issues relating to administration of tribunals.

Petitioners Arguments
A bill must only contain provisions that pertain to the matters mentioned under Article 110 (1) (a) to (g) for it to be classified as a money bill. The provisions under Part XIV of the Finance Act legislated on several aspects of tribunals that did not pertain to any subject matter under Article 110(1) (for eg, the conditions of service of presiding officers of tribunals). Therefore it couldn’t be classified as a money bill. The Finance Act, 2017 lost its ‘money bill characteristic’ by virtue of the inclusion of Part XIV. Therefore, passing it without the assent of the Rajya Sabha was ultra vires of the Constitution. The Parliament draws its power to legislate on tribunals from Entry 11(a) of List III, Seventh Schedule , which deals with ‘administration of justice’, and has no nexus with financial matters. Thus passing Part XIV of the Finance Act, 2017 as part of a money bill was in direct violation of this. Through Part XIV, (specifically through Section 184) the legislature empowered the Central Government (Executive) to make rules for terms, salaries (violating the “doctrine of excessive delegation”) thus making tribunals amenable to the “whims and fancies” of the largest litigant, the State. This would interfere not only with the independence of the judiciary and separation of powers, which is integral to the basic structure of the Constitution but also with the administration of justice. Citing the minority opinion in K.S. Puttaswamy v. Union of India [(2019) 1 SCC 1] , the petitioners argued that the Court could look into the Speaker’s decision and the power to determine whether a breach amounted to “irregularity in procedure” or “illegality” lies with the Court.
Responders Arguments
It is well settled that the parameters for a bill to qualify as a money bill had to be interpreted in the widest amplitude and that the same principle should be extended to the Finance Act, 2017. The Act had the “dominant character” of a money bill and the related matters (here, Part XIV) would, by extension, have characteristics of a money bill. A part of the bill could not be isolated from being a “money bill”. The certification is provided to the entire bill. The Speaker of the Lok Sabha is the only constitutional authority to determine whether a particular bill was a money bill (under Article 110(3)) and the Speaker’s decision is final and not subject to judicial review. In the alternative, the Speaker’s decision on whether a bill was a money bill, was a procedural one in the nature of “proceedings in Parliament” and therefore, as per Article 122 (a) of the Constitution , it cannot be called into question in this court. Administration of tribunals through their respective enactments lead to several inconsistencies and anomalies, pointing to the difference in status, terms of service, age of superannuation etc. Part XVI of the Act was introduced to resolve these discrepancies. The practice of according ranks equivalent to judges of constitutional Courts to the presiding officers of tribunals (followed before the introduction of the Finance Act) was inherently contradictory considering the difference in their functions. Further, this practice has created problems in the administration of justice. The Finance Act, 2017 was brought in to rid the system of said problems arising out of the system of ranks and status. The Government was merely giving effect to directions and recommendations by the Court to bring about uniformity in the service conditions of tribunals and the Act was not arbitrary. Introducing individual amendments for each tribunal would have been impractical and a single enactment was made to harmoniously bring uniformity.
Last Listed On
2023-10-12
Start Date
2019-11-13
Card Stage Date
2019-11-13
Review Petition No
Civil Appeal No. 8588/2019
Case Status
Pending
Bench Status
To be reconstituted
Subject Matter
Constitution
Pendency
6 years, 7 months, 17 days

7 Judge Bench

Awaiting bench reconstitution

Consider As Stage Of Pendency
true

Date of institution of case

Date of reference to 5 Judge Bench

Date of reference to 7 Judge Bench

This case dealt with the rights and duties of a bank during the auction of secured assets, as part of the debt recovery process. The decision of the Kerala High Court in the matter was appealed in front of the Supreme Court. During the Supreme Court hearings, it was discovered that the appointment norms and functioning of the Debt Recovery Tribunal were not in consonance with the principle of judicial independence. The norms for appointment and functioning of the Debt Recovery Tribunal were found to be non-compliant with observations made in relevant Supreme Court precedents. In light of this, the Court felt the need to revisit the structure and functioning of tribunals. Meanwhile, the Legislature enacted the Finance Act, 2017 ; Part XIV of this Act introduced changes to the administration of tribunals. Though a significant portion of the Act (Part XIV) did not pertain to matters of finance, the government introduced these changes and enacted the statute as a money bill in parliament. This resulted in questions over the scope of the money bill and whether the process for enacting the money bill was used to bypass parliamentary procedures in this case. Matters regarding the reform of tribunals were clubbed along with issues pertaining to modalities of the Finance Act, 2017 and were decided upon by the Five Judge Bench of the Supreme Court. The Supreme Court, while suggesting certain reforms to the Tribunals system struck down the rules framed to govern tribunals. The five-judge bench however referred to the issue of the scope of a money bill under Article 110 , and by extension, whether the Finance Act could have been enacted as a money bill to a seven-judge bench of the Court.

Does the Finance Act, 2017 satisfy the test to be classified as a “money bill”’? Is Section 184 of the Finance Act, 2017 unconstitutional on account of Excessive Delegation? Are Tribunal, Appellate Tribunal, and other Authorities (Qualifications, Experience and other Conditions of Service of Members) Rules, 2017 in consonance with the Finance Act, 2017 and various decisions of this Court on the functioning of Tribunals? Should there be a Single Nodal Agency for the administration of all Tribunals? Is there a need for conducting a Judicial Impact Assessment of all Tribunals in India? Are judges of Tribunals set up by Acts of Parliament under Articles 323-A and 323-B of the Constitution equal in rank and status with Constitutional functionaries? Do direct statutory appeals from Tribunals to the Supreme Court ought to be detoured? Is there a need for amalgamation of existing Tribunals and setting up of benches?

Part XIV of The Finance Act, 2017

The Court observed that in Justice K.S. Puttaswamy v. Union of India , (2019) 1 SCC 1 , the majority ruled that the Aadhar Act was a money bill without laying down interpretation of relevant provisions and the scope of Article 110(1) . Considering that this bench was of the same strength as that of the Puttaswamy judgement (5 judge bench), the Court deferred this particular issue to a larger bench. It additionally felt that questions of the jurisdictional relationship between the High Courts and tribunals, the appointment of a nodal ministry/independent supervisory body to oversee tribunals or the lack thereof addressed by the seven-judge bench L. Chandra Kumar v. Union of India, (1997) 3 SCC 261 had to be looked at again. Therefore it had to be referred to a seven-judge bench.

Justice K.S Puttaswamy v. Union of India [(2019) 1 SCC 1]

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