Madras Bar Association Vs Union of India UOI 25092s140880COM453442 PDF

MANU/SC/0875/2014
Equivalent Citation: 2015VI AD (S.C .) 182, AIR2015SC 1571, [2014]187C ompC as426(SC ), (2014)271C TR(SC )257, 2014(308)ELT209(S.C .),
[2014]29GSTR12(SC ), [2014]368ITR42(SC ), 2014(11)SC ALE166, (2014)10SC C 1, 2014 (8) SC J 553, 2015(1)SC T225(SC ),
[2014]227TAXMAN151(SC ), (2014)75VST12(SC )
IN THE SUPREME COURT OF INDIA

Transferred Case (C) Nos. 150, 116, 117 and 118 of 2006, Civil Appeal Nos. 3850,
3862, 3881, 3882, 4051 and 4052 of 2006 and Writ Petition (C) Nos. 621 and 697 of
2007 (Under Article 139 of the Constitution)
Decided On: 25.09.2014
Appellants: Madras Bar Association
Vs.
Respondent: Union of India (UOI)
Hon'ble Judges/Coram:
R.M. Lodha, C.J.I., J.S. Khehar, Jasti Chelameswar, A.K. Sikri and Rohinton Fali
Nariman, JJ.
Counsels:
For Appellant/Petitioner/Plaintiff: Ranjit Kumar, SG, Arvind P. Datar, Sr. Adv., Ambuj
Agrawal, Akanksha, Dhananjay Baijal, Nikhil Nayyar, Vikram Gulati, Binu Tamta,
Abhinav Mukherji, Aparajita Singh, Arijit Prasad, Advs. For B.V. Balram Das, Adv.,
B.D. Makheeja, B.K. Satija, K.C. Dua, Shibdshish Misra, Rustom B. Hathikhanawala
and E.C. Vidya Sagar, Advs.
For Respondents/Defendant: Mukul Rohatgi, AG, Ranjit Kumar, SG, K.V.
Vishwanathan, Arvind P. Datar, Pravin H. Parekh, Sr. Advs., Binu Tamata, Abhinav
Mukherji, Aparajita Singh, Arijit Prasad, Advs., for B.V. Balram Das, Adv., Pramod
Dayal, Nikunj Dayal, Payal Dayal, Gautham Bhardwaj, A.S. Kaushik, Mehul M. Gupta,
Adeeba Mojahid, K.C. Dua, Ardhendumauli Kumar Prasad, Aviral Shukla, Pankhuri
Bhardwaj, Amit Rai, Priyadarshi Chaitanyashil, Vikas Jain, Nikhil Nayyar, Satya Mitra
Garg, E.R. Kumar, Ritika Sethi, Abhishek Vinod Deshmukh, Priyanshi Chandarana,
Advs., for M/s. Parekh and Co., Rustom B. Hathikhanawala, Gagan Gupta, Parmanand
Gaur and Ajay Pal, Advs.
Head Note:
CONSTITUTION OF INDIA, 1950
• Constitutional validity - Constitution of National Tax Tribunal Whether affects
basic structure of constitution--Appellate powers vested in the High Court under
different statutory provisions, can definitely be transferred from the High Court to
other courts/tribunals, subject to the satisfaction of norms declared by Supreme
Court. Herein the jurisdiction transferred by the NTT Act was with regard to specified
subjects under tax related statutes. That, would be permissible. Has the NTT Act
transferred any power vested in courts by the Constitution? The answer is in the
negative. The power of "judicial review" vested in the High Court under articles 226
and 227 of the Constitution, has remained intact. This aspect of the matter, has a
substantial bearing, to the issue in hand. And will also lead to some important
inferences. Therefore, it must never be overlooked, that since the power of "judicial
review" exercised by the High Court under articles 226 and 227 of the Constitution
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has remained unaltered, the power vested in High Courts to exercise judicial
superintendence over the benches of the NTT within their respective jurisdiction, has
been consciously preserved. This position was confirmed by the Attorney General for
India, during the course of hearing. Since the above jurisdiction of the High Court
has not been ousted. Constitution of India, 1950 Article 226
--Constitutional validity--Transfer of power of superior court When can be made--In
every new constitution, which makes separate provisions for the legislature, the
executive and the judiciary, it is taken as acknowledged/conceded, that the basic
principle of "separation of powers" would apply. And that, the three wings of
governance would operate in their assigned domain/province. The power of
discharging judicial functions, which was exercised by members of the higher
judiciary, at the time when the constitution came into force, should ordinarily remain
with the court, which exercised the said jurisdiction, at the time of promulgation of
the new constitution.
But the judicial power could be allowed to be exercised by an analogous/similar
court/Tribunal, with a different name. However, by virtue of the constitutional
convention, while constituting the analogous court/Tribunal, it will have to be
ensured, that the appointment and security of tenure of judges of that court would be
the same, as of the court sought to be substituted. The newly constituted
court/Tribunal will be deemed to be invalidly constituted, till its members are
appointed in the same manner, and till its members are entitled to the same
conditions of service, as were available to the judges of the court sought to be
substituted. But whenever there is such transfer, all conventions/customs/practices of
the court sought to be replaced, have to be incorporated in the court/Tribunal
created. The newly created court/tribunal would have to be established, in
consonance with the salient characteristics and standards of the court which is sought
to be substituted.
NATIONAL TAX TRIBUNAL ACT, 2005
--National Tax Tribunal Act--Appearance by authorised representatives Eligibility of
appearance by CA and CS--The Members of the NTT would most definitely be
confronted with the legal issues emerging out of Family Law, Hindu Law,
Mohammedan Law, Company Law, Law of Partnership, Law related to Territoriality,
Law related to Trusts and Societies, Contract Law, Law relating to Transfer of
Property, Law relating to Intellectual Property, Interpretation of Statutes, and other
Miscellaneous Provisions of Law, from time to time. The NTT besides the aforesaid
statutes, will not only have to interpret the provisions of the three statutes, out of
which appeals will be heard by it, but will also have to examine a challenge to the
vires of statutory amendments made in the said provisions, from time to time. They
will also have to determine in some cases, whether the provisions relied upon had a
prospective or retrospective applicability. Keeping in mind the fact, that in terms of
section 15 of the NTT Act, the NTT would hear appeals from the Income Tax
Appellate Tribunal and the Customs, Excise and Service Tax Appellate Tribunal
(CESTAT) only on "substantial questions of law", it is difficult for court to appreciate
the propriety of representation, on behalf of a party to an appeal, through either
Chartered Accountants or Company Secretaries, before the NTT. The determination at
the hands of the NTT is shorn of factual disputes. It has to decide only "substantial
questions of law". In court's understanding, Chartered Accountants and Company
Secretaries would at best be specialists in understanding and explaining issues
pertaining to accounts. These issues would, fall purely within the realm of facts.

Court find it difficult to accept the prayer made by the Company Secretaries to allow
them, to represent a party to an appeal before the NTT. Even insofar as the Chartered
Accountants are concerned, court was constrained to hold that allowing them to
appear on behalf of a party before the NTT, would be unacceptable in law. Court
accordingly rejected the claim of Company Secretaries, to represent a party before
the NTT. While recording the above conclusion, court simultaneously held section
13(1), insofar as it allows Chartered Accountants to represent a party to an appeal
before the NTT, as unconstitutional and unsustainable in law.
National Tax Tribunal Act, 2005 Section 13
--National Tax Tribunal Act--Constitutional validity Constitutional validity of section 5
of National Tax Tribunal Act, 2005--Section 5(2) of the NTT Act mandates, that the
NTT would ordinarily have its sittings in the National Capital Territory of Delhi.
According to the petitioners, the aforesaid mandate would deprive the litigating
assessee, the convenience of approaching the jurisdictional High Court in the State,
to which he belongs. An assessee may belong to a distant/remote State, in which
eventuality, he would not merely have to suffer the hardship of traveling a long
distance, but such travel would also entail uncalled for financial expense. Likewise, a
litigant assessee from a far-flung State may find it extremely difficult and
inconvenient to identify an Advocate who would represent him before the NTT, since
the same is mandated to be ordinarily located in the National Capital Territory of
Delhi. Held: Section 5 of the NTT Act is not sustainable in law, as it does not ensure
that the alternative adjudicatory authority, is totally insulated from all forms of
interference, pressure or influence from co-ordinate branches of government. There
is therefore no alternative, but to hold that sub-sections (2), (3), (4) and (5) of
section 5 of the NTT Act are unconstitutional.
Held: Even though court has expressed the view, that it is open to the Parliament to
substitute the appellate jurisdiction vested in the jurisdictional High Courts and
constitute courts/tribunals to exercise the said jurisdiction, that while vesting
jurisdiction in an alternative court/tribunal, it is imperative for the legislature to
ensure, that redress should be available, with the same convenience and expediency,
as it was prior to the introduction of the newly created court/Tribunal. Thus viewed,
the mandate incorporated in section 5(2) of the NTT Act to the effect that the sittings
of the NTT would ordinarily be conducted in the National Capital Territory of Delhi,
would render the remedy inefficacious, and thus unacceptable in law. The instant
aspect of the matter was considered by this Court with reference to the
Administrative Tribunals Act, 1985, in S.P. Sampath Kumar case (supra) and L.
Chandra Kumar v. UOI (1997) 3 SCC 261, wherein it was held, that permanent
benches needed to be established at the seat of every jurisdictional High Court. And
if that was not possible, at least a circuit bench required to be established at every
place where an aggrieved party could avail of his remedy. The position on the above
issue, is no different in the present controversy. For the above reason, Section 5(2)
of the NTT Act is in clear breach of the law declared by this Court. One needs to also
examine sub-sections (2), (3), (4) and (5) of section 5 of the NTT Act, with pointed
reference to the role of the Central Government in determining the sitting of benches
of the NTT. The Central Government has been authorized to notify the area in relation
to which each bench would exercise jurisdiction, to determine the constitution of the
benches, and finally, to exercise the power of transfer of Members of one bench to
another bench. One cannot lose sight of the fact, that the Central Government will be
a stakeholder in each and every appeal/case, which would be filed before the NTT. It
cannot, therefore, be appropriate to allow the Central Government to play any role,

with reference to the places where the benches would be set up, the areas over which
the benches would exercise jurisdiction, the composition and the constitution of the
benches, as also, the transfer of the Members from one bench to another. It would be
inappropriate for the Central Government, to have any administrative dealings with
the NTT or its Members. In the jurisdictional High Courts, such power is exercised
exclusively by the Chief Justice, in the best interest of the administration of justice.
Allowing the Central Government to participate in the aforestated administrative
functioning of the NTT, would impinge upon the independence and fairness of the
Members of the NTT. For the NTT Act to be valid, the Chairperson and Members of
the NTT should be possessed of the same independence and security, as the judges
of the jurisdictional High Courts (which the NTT is mandated to substitute). Vesting
of the power of determining the jurisdiction, and the postings of different Members,
with the Central Government, would undermine the independence and fairness of the
Chairperson and the Members of the NTT, as they would always be worried to
preserve their jurisdiction based on their preferences/inclinations in terms of work,
and conveniences in terms of place of posting. An unsuitable/disadvantageous
Chairperson or Member could be easily moved to an insignificant jurisdiction, or to
an inconvenient posting. This could be done to chastise him, to accept a position he
would not voluntarily accede to. Court is therefore of the considered view, that
section 5 of the NTT Act is not sustainable in law, as it does not ensure that the
alternative adjudicatory authority, is totally insulated from all forms of interference,
pressure or influence from co-ordinate branches of government. There is therefore no
alternative, but to hold that sub-sections (2), (3), (4) and (5) of section 5 of the NTT
Act are unconstitutional.
--National Tax Tribunal Act--Constitutional validity Constitutional validity of section 6
of National Tax Tribunal Act, 2005--A perusal of Section 6 reveals, that a person
would be qualified for appointment as a Member, if he is or has been a Member of
the ITAT or of the Customs, Excise and Service Tax Appellate Tribunal for at least 5
years. While dealing with the historical perspective, with reference to the Income Tax
legislation, the Customs legislation, as also, the Central Excise legislation, court has
noticed the eligibility of those who can be appointed as Members of the Appellate
Tribunals constituted under the aforesaid legislations. Under the IT Act, a person who
has practiced in accountancy as a Chartered Accountant (under the Chartered
Accountants Act, 1949) for a period of 10 years, or has been a Registered Accountant
(or partly a Registered Accountant, and partly a Chartered Accountant) for a period of
10 years, is eligible to be appointed as an Accountant Member. Under the Customs
Act and the Excise Act, a person who has been a member of the Indian Customs and
Central Excise Service (Group A), subject to the condition, that such person has held
the post of Collector of Customs or Central Excise (Level I), or equivalent or higher
post, for at least 3 years, is eligible to be appointed as a Technical Member. It is
apparent from the narration recorded hereinabove, that persons with the above
qualifications, who were appointed as Accountant Members or Technical Members in
the respective Appellate Tribunals, are also eligible for appointment as Members of
the NTT, subject to their having rendered specified years' service as such. The
question to be determined is, whether persons with the aforesaid qualifications,
satisfy the parameters of law declared by Supreme Court, to be appointed as,
Members of the NTT? And do they satisfy the recognized constitutional conventions?
Held: It is difficult to appreciate how Accountant Members and Technical Members
would handle complicated questions of law relating to tax matters, and also
questions of law on a variety of subjects (unconnected to tax), in exercise of the
jurisdiction vested with the NTT. That would be a tall order. An arduous and
intimidating asking. Since the Chairperson/Members of the NTT will be required to

determine "substantial questions of law", arising out of decisions of the Appellate
Tribunals, it is difficult to appreciate how an individual, well-versed only in accounts,
would be able to discharge such functions. Likewise, it is also difficult to understand
how Technical Members, who may not even possess the qualification of law, or may
have no experience at all in the practice of law, would be able to deal with
"substantial questions of law", for which alone, the NTT has been constituted. The
composition of the NTT would have to be on the same parameters as judges of the
High Courts. Since the appointments of the Chairperson/Members of the NTT are not
on the parameters expressed hereinabove, the same are unsustainable under the
declared law. A perusal of section 6 of the NTT Act leaves no room for any doubt,
that none of the above parameters is satisfied insofar as the appointment of
Chairperson and other Members of the NTT is concerned. In the above view of the
matter, section 6(2)(b) of the NTT Act is liable to be declared unconstitutional.
Held: The NTT would be confronted with disputes arising out of Family Law, Hindu
Law, Mohammedan Law, Company Law, Law of Partnership, Law relating to
Territoriality, Law relating to Trusts and Societies, Contract Law, Law relating to
Transfer of Property, Law relating to Intellectual Property, Interpretation of
Statutes/Rules, and other Miscellaneous Provisions of Law. Besides the above, the
Members of the NTT will regularly have to interpret the provisions of the IT Act, the
Customs Act and the Excise Act. Court is of the considered opinion, that only a
person possessing professional qualification in law, with substantial experience in the
practice of law, will be in a position to handle the onerous responsibilities which a
Chairperson and Members of the NTT will have to shoulder. There seems to be no
doubt, whatsoever, that the Members of a court/tribunal to which adjudicatory
functions are transferred, must be manned by judges/members whose stature and
qualifications are commensurate to the court from which the adjudicatory process has
been transferred. This position is recognized the world over. Constitutional
conventions in respect of Jamaica, Ceylon, Australia and Canada, on this aspect of
the matter have been delineated above. The opinion of the Privy Council expressed by
Lord Diplock in Hind case (supra), has been shown as being followed in countries
which have constitutions on the Westminster model. The Indian Constitution is one
such Constitution. The position has been clearly recorded while interpreting
constitutions framed on the above model, namely, that even though the legislature
can transfer judicial power from a traditional court, to an analogous court/tribunal
with a different name, the court/tribunal to which such power is transferred, should
be possessed of the same salient characteristics, standards and parameters, as the
court the power whereof was being transferred. It is not possible to accept, that
Accountant Members and Technical Members have the stature and qualification
possessed by judges of High Courts. It was not disputed, that the NTT has been
created to handle matters which were earlier within the appellate purview of the
jurisdictional High Courts. Court is accordingly satisfied, that the appointment of
Accountant Members and Technical Members of the Appellate Tribunals to the NTT,
would be in clear violation of the constitutional conventions recognized by courts, the
world over. References on questions of law (under the three legislative enactments in
question), were by a legislative mandate, required to be adjudicated by a bench of at
least two judges of the jurisdictional High Court. When the remedy of reference
(before the High Court) was converted into an appellate remedy (under the three
legislative enactments in question), again by a legislative mandate, the appeal was to
be heard by a bench of at least two judges, of the jurisdictional High Court. One
cannot lose sight of the fact, that hitherto before, the issues which will vest in the
jurisdiction of the NTT, were being decided by a bench of at least two judges of the
High Court. The onerous and complicated nature of the adjudicatory process is clear.

Court may also simultaneously notice, that the power of "judicial review" vested in
the High Courts under Articles 226 and 227 of the Constitution has not been
expressly taken away by the NTT Act. During the course of hearing, court had
expressed there opinion in respect of the power of "judicial review" vested in the
High Courts under Articles 226 and 227 of the Constitution. The power stood
denuded, on account of the fact that, Section 24 of the NTT Act vested with an
aggrieved party, a remedy of appeal against an order passed by the NTT, directly to
the Supreme Court. section 24 aforementioned is being extracted hereunder: "24.
Appeal to Supreme Court.-
Any person including any department of the Government aggrieved by any decision
or order of the National Tax Tribunal may file an appeal to the Supreme Court within
sixty days from the date of communication of the decision or order of the National
Tax Tribunal to him: Provided that the Supreme Court may, if it is satisfied that the
appellant was prevented by sufficient cause from filing the appeal within the said
period, allow it to be filed within such time as it may deem fit." In view of the
aforestated appellate remedy, from an order passed by the NTT directly to the
Supreme Court, there would hardly be any occasion, to raise a challenge on a tax
matter, arising out of the provisions of the Income Tax Act, the Customs Act and the
Excise Act, before a jurisdictional High Court. Even though the learned Attorney
General pointed out, that the power of "judicial review" under Articles 226 and 227 of
the Constitution had not been taken away, yet he acknowledged, that there would be
implicit limitations where such power would be exercisable. Therefore, all the more,
the composition of the NTT would have to be on the same parameters as judges of
the High Courts. Since the appointments of the Chairperson/Members of the NTT are
not on the parameters expressed hereinabove, the same are unsustainable under the
declared law. A perusal of section 6 of the NTT Act leaves no room for any doubt,
that none of the above parameters is satisfied insofar as the appointment of
matter, section 6(2)(b) of the NTT Act is liable to be declared unconstitutional.
--National Tax Tribunal Act--Constitutional validity of section 7 of National Tax
Tribunal Act, 2005--NTT has been constituted as a replacement of High Courts. The
NTT is, therefore, in the real sense a tribunal substituting the High Courts. The
manner of appointment of Chairperson/Members to the NTT will have to be, by the
same procedure (or by a similar procedure), to that which is prevalent for
appointment of judges of High Courts. Insofar as the instant aspect of the matter is
concerned, the above proposition was declared by Supreme Court in UOI v. Madras
Bar Association, (2010) 11 SCC 1, wherein it was held, that the stature of the
Members who would constitute the Tribunal, would depend on the jurisdiction which
was being transferred to the tribunal. Accordingly, if the jurisdiction of the High
Courts is being transferred to the NTT, the stature of the Members of the tribunal had
to be akin to that of the judges of High Courts. So also the conditions of service of its
Chairperson/Members. And the manner of their appointment and removal, including
transfers. Including, the tenure of their appointments. Section 7 cannot even
otherwise, be considered to be constitutionally valid, since it includes in the process
of selection and appointment of the Chairperson and Members of the NTT, Secretaries
of Departments of the Central Government. In this behalf, it would also be pertinent
to mention, that the interests of the Central Government would be represented on
one side, in every litigation before the NTT. It is not possible to accept a party to a
litigation, can participate in the selection process, whereby the Chairperson and

Members of the adjudicatory body are selected. This would also be violative of the
recognized constitutional convention recorded by Lord Diplock in Hinds case (supra),
namely, that it would make a mockery of the constitution, if the legislature could
transfer the jurisdiction previously exercisable by holders of judicial offices, to
holders of a new court/Tribunal (to which some different name was attached) and to
provide that persons holding the new judicial offices, should not be appointed in the
manner and on the terms prescribed for appointment of Members of the judicature.
For all the reasons recorded hereinabove, section 7 of the NTT Act, as
unconstitutional.
--National Tax Tribunal Act--Constitutional validity of section 8 of National Tax
Tribunal Act, 2005--Insofar as the validity of section 8 of the NTT Act is concerned, it
clearly emerges from a perusal thereof, that a Chairperson/Member is appointed to
the NTT, in the first instance, for a duration of 5 years. Such Chairperson/Member is
eligible for reappointment, for a further period of 5 years. A provision for
reappointment would itself have the effect of undermining the independence of the
Chairperson/Members of the NTT. Every Chairperson/Member appointed to the NTT,
would be constrained to decide matters, in a manner that would ensure his
reappointment in terms of section 8 of the NTT Act. His decisions may or may not be
based on his independent understanding. Court is satisfied, that the above provision
would undermine the independence and fairness of the Chairperson and Members of
the NTT. Since the NTT has been vested with jurisdiction which earlier lay with the
High Courts, in all matters of appointment, and extension of tenure, must be shielded
from executive involvement. Court therefore hold, that section 8 of the NTT Act is
unconstitutional.
JUDGMENT
J.S. Khehar, J.
The Controversy:
1 . All the above cases are being disposed of by this common judgment. The issue
which arises for consideration before us, in the present bunch of cases, pertains to
the constitutional validity of the National Tax Tribunal Act, 2005 (hereinafter referred
to as, the NTT Act). Simultaneously, the constitutional validity of the Constitution
(Forty-second Amendment) Act, 1976 has been assailed, by asserting, that the same
violates the basic structure of the Constitution of India (hereinafter referred to as, the
Constitution), by impinging on the power of "judicial review" vested in the High
Court. In the event of this Court not acceding to the aforementioned prayers, a
challenge in the alternative, has been raised to various provisions of the NTT Act,
which has led to the constitution of the National Tax Tribunal (hereinafter referred to
as, the NTT). The NTT, according to the learned Counsel for the Petitioners, is styled
as a quasi-judicial appellate tribunal. It has been vested with the power of
adjudicating appeals arising from orders passed by Appellate Tribunals (constituted
under the Income Tax Act, the Customs Act, 1962, and the Central Excise Act, 1944).
Hitherto before, the instant jurisdiction was vested with High Courts. The pointed
issue canvassed in this behalf is, that High Courts which discharge judicial functions,
cannot be substituted by an extra-judicial body. Additionally, it is maintained that the
NTT in the manner of its constitution undermines a process of independence and

fairness, which are sine qua non of an adjudicatory authority.
The Historical Perspective:
The Income Tax Legislation, in India:
(i). Law relating to income tax dates back to 1860, when legislation pertaining to
levy of tax on income, was introduced in India for the first time. The original
enactment was replaced by subsequent legislations, enacted in 1865, 1886, 1918 and
1922. The Indian Income Tax Act, 1922 (hereinafter referred to as, the 1922 Act) was
brought about, as a result of the recommendations of the All India Tax Committee.
The 1922 Act can be described as a milestone in the evolution of direct tax laws in
India. Detailed reference needs to be made to the provisions of the 1922 Act.
(ii) After the procedure provided for assessment of tax had run its course, and tax
had been assessed, an executive-appellate remedy was provided for, before the
Appellate Assistant Commissioner of Income Tax (Under Section 30 of the 1922 Act).
A further quasi-judicial appellate remedy, from decisions rendered by the first
appellate authority, lay before an appellate tribunal (hereinafter referred to as the
Appellate Tribunal). Section 33A was inserted by the Indian Income Tax
(Amendment) Act, 1941. It provided for a remedy by way of revision before a
Commissioner of Income Tax.
(iii) The remedy before the Appellate Tribunal (provided Under Section 5A of the
1922 Act, by Section 85 of the Indian Income Tax (Amendment) Act, 1939), was
required to be exercised by a bench comprising of one Judicial Member and one
Accountant Member. It was permissible for the President of the Appellate Tribunal or
any other Member thereof, to dispose of appeals, sitting singly (subject to the
condition, that the total income of the Assessee, as computed by the assessing
officer, did not exceed Rs. 15,000/-). It was also open to the President of the
Appellate Tribunal to constitute larger benches of three Members (subject to the
condition, that the larger bench would comprise of at least one Judicial Member and
one Accountant Member).
(iv) Section 5A of the 1922 Act, laid down the conditions of eligibility for
appointment as a Judicial Member-a person who had served on a civil judicial post
for 10 years was eligible, additionally an Advocate who had been practicing before a
High Court for a period of 10 years, was also eligible. Under the 1922 Act, a person
who had practiced in accountancy as a Chartered Accountant (under the Chartered
Accountants Act, 1949) for a period of 10 years, or was a Registered Accountant (or
partly a Registered Accountant, and partly a Chartered Accountant) for a period of 10
years (under any law formerly enforced), was eligible for appointment as an
Accountant Member. Only a Judicial Member could be appointed as the President of
the Appellate Tribunal.
(v) Section 67 of the 1922 Act, barred suits in civil courts pertaining to income tax
related issues. Additionally, any prosecution suit or other proceedings could not be
filed, against an officer of the Government, for an act or omission, in furtherance of
anything done in good faith or intended to be done under the 1922 Act.
(vi) The 1922 Act, did not provide for an appellate remedy, before the jurisdictional
High Court. The only involvement of the jurisdictional High Court, was Under Section
66 of the 1922 Act. Under Section 66, either the Assessee or the Commissioner of
Income Tax, could move an application to the Appellate Tribunal, requiring it to refer

a question of law (arising out of an assessment order) to the jurisdictional High
Court. In case of refusal to make such a reference, the aggrieved Assessee or the
Commissioner of Income Tax, could assail the refusal by the Appellate Tribunal,
before the jurisdictional High Court. A case referred to the High Court Under Section
66, was to be heard by a bench of not less than two judges of the High Court
(Section 66A of the 1922 Act-inserted by the Indian Income Tax (Amendment) Act,
1926). Section 66 of the 1922 Act, was amended by the Indian Income Tax
(Amendment) Act, 1939, whereby the power to make a reference became
determinable by the Commissioner of Income Tax (in place of the Appellate
Tribunal).
(vii) In exercise of the reference jurisdiction, a question of law, which had arisen in
an appeal pending before the Appellate Tribunal, had to be determined by the High
Court. After the jurisdictional High Court had answered the reference, the Appellate
Tribunal would dispose of the pending appeal in consonance with the legal position
declared by the High Court.
(i). The 1922 Act was repealed by the Income Tax Act, 1961 (hereinafter referred to
as, the Income Tax Act). As in the repealed enactment, so also under the Income Tax
Act, an order passed by an assessing officer, was assailable through an executive-
appellate remedy. The instant appellate remedy, was vested with the Deputy
Commissioner (Appeals)/Commissioner (Appeals). The orders appealable before the
Deputy Commissioner (Appeals) were distinctly mentioned (in Section 246 of the
Income Tax Act). Likewise, the orders appealable before the Commissioner (Appeals)
were expressly enumerated (in Section 246A of the Income Tax Act).
(ii) As against the order passed by the executive-appellate authority, a further
appellate remedy was provided before a quasi-judicial appellate tribunal (hereinafter
referred to as, the Appellate Tribunal, Under Section 252 of the Income Tax Act).
Section 255(6) of the Income Tax Act provides as under:
6. The Appellate Tribunal shall, for the purpose of discharging its functions,
have all the powers which are vested in the income-tax authorities referred
to in Section 131, and any proceeding before the Appellate Tribunal shall be
deemed to be a judicial proceeding within the meaning of Sections 193 and
228 and for the purpose of Section 196 of the Indian Penal Code (45 of
1860), and the Appellate Tribunal shall be deemed to be a civil court for all
the purposes of Section 195 and Chapter XXXV of the Code of Criminal
Procedure, 1898 (5 of 1898).
By a deeming fiction of law, therefore, the Appellate Tribunal was considered as a
civil court, dealing with "judicial proceedings".
(iii) To be eligible for appointment as the President of the ITAT, the incumbent had to
be a sitting or retired judge of a High Court, with not less than 7 years of service as a
judge. Alternatively, the Central Government could appoint a Senior Vice President or
a Vice President of the Appellate Tribunal, as its President. It is, therefore apparent,
that the Appellate Tribunal was to be comprised of a President, Senior Vice
President(s), Vice President(s) and Members.
(iv) The benches of the Appellate Tribunal, under the Income Tax Act (was similar to
the one under the 1922 Act), were to be comprised of at least one Judicial Member
and one Accountant Member. The authority to constitute benches of the Appellate
Tribunal was vested with the President. The composition of the benches under the

Income Tax Act, was similar to that postulated under the 1922 Act. When authorized
by the Central Government, it was open to the Appellate Tribunal, to dispose of
appeals sitting singly (subject to the condition, that the appeal pertained to a
dispute, wherein the concerned Assessee's total income was assessed as not
exceeding Rs. 5 lakhs). The President of the Appellate Tribunal, had the authority to
constitute special benches, comprising of three or more Members (one of whom had
to be a Judicial Member, and one, an Accountant Member). In case of difference of
opinion, the matter was deemed to have been decided in terms of the opinion
expressed by the majority.
(v) An Assessee or the Commissioner, could move an application before the Appellate
Tribunal, Under Section 256 of the Income Tax Act, requiring it to make a reference
to the High Court on a question of law (arising in an appeal pending before the
Appellate Tribunal). In case the prayer made in the application was declined by the
Appellate Tribunal, the order (declining the prayer) was assailable before the High
Court.
(vi) Section 257 of the Income Tax Act provided for a reference directly to the
Supreme Court. The instant reference could be made by the Appellate Tribunal, if it
was of the opinion, that the question of law which had arisen before it, had been
interpreted differently, by two or more jurisdictional High Courts. (vii) Section 260A
was inserted in the Income Tax Act by the Finance (No. 2) Act, 1998, with effect from
1.10.1998. Under Section 260A, an appellate remedy was provided for, to raise a
challenge to orders passed by the Appellate Tribunal. The instant appellate remedy,
would lie before the jurisdictional High Court. In terms of the mandate contained in
Section 260B of the Income Tax Act, an appeal before the High Court was to be heard
by a bench of not less than two judges. The opinion of the majority, would constitute
the decision of the High Court. Where there was no majority, on the point(s) of
difference, the opinion of one or more judges of the High Court, was to be sought.
Thereupon, the majority opinion of the judges (including the judges who had
originally heard the case) would constitute the decision of the High Court.
(viii) A further appellate remedy was available as against a decision rendered by the
jurisdictional High Court. The instant appellate remedy was vested with the Supreme
Court Under Section 261 of the Income Tax Act.
The Customs Legislation, in India:
(i). The Customs Act, 1962 (hereinafter referred to as, the Customs Act) was enacted
to consolidate and amend the law relating to customs. The Customs Act vested the
power of assessment of customs duty, with the Deputy Collector of Customs or the
Collector of Customs. An executive-appellate remedy was provided Under Section 128
of the Customs Act, before a Collector of Customs (where the impugned order had
been passed by an officer, lower in rank to the Collector of Customs), and before the
Central Board of Excise and Customs (constituted under the Central Boards of
Revenue Act, 1963), where the impugned order had been passed by a Collector of
Customs. The Board had also been conferred with executive revisional powers (Under
Section 130 of the Customs Act), to suo moto, or on an application of an aggrieved
person, examine the record of any proceeding, pertaining to a decision or order
under the provisions of the Customs Act. Revisional powers, besides those expressly
vested in the Board (Under Section 130 of the Customs Act), were also vested with
the Central Government (Under Section 131 of the Customs Act).

(ii) By the Finance (No. 2) Act, 1980, Sections 128 to 131 of the original Act were
substituted. The power to entertain the first executive-appellate remedy, was now
vested with the Collector (Appeals), Under Sections 128 and 128A of the Customs
Act. On exhaustion of the above remedy, a further quasi-judicial appellate remedy
was provided for, Under Sections 129 and 129A before the Customs, Excise and Gold
(Control) Appellate Tribunal (hereinafter referred to as, the CEGAT/Appellate
Tribunal). CEGAT was also the appellate authority, against orders passed by the
Board. With introduction of Service Tax, under Chapter V of the Finance Act, 1994,
CEGAT was conferred the jurisdiction to hear appeals in cases pertaining to service
tax disputes as well. The Appellate Tribunal is now known as the Customs, Excise
and Service Tax Appellate Tribunal-the CESTAT. By Act 22 of 2003, the expression
"Gold (Control)" was substituted with "Service Tax" in the definition of the "Appellate
Tribunal" (w.e.f. 14.5.2003).
(iii) Section 129 of the Customs Act delineated the constitution of the CEGAT. It was
to comprise of as many Judicial and Technical Members, as the Central Government
thought fit. The instant provision, also laid down the conditions of eligibility for
appointment of Judicial/Technical Members. A Judicial Member could be chosen out
of persons, who had held a civil judicial post for at least 10 years, or out of persons
who had been in practice as an Advocate for at least 10 years, as also, from out of
Members of the Central Legal Service (not below Grade-I), who had held such post
for at least 3 years. A Technical Member could be appointed out of persons, who had
been members of the Indian Customs and Central Excise Service (Group A), subject
to the condition, that such persons had held the post of Collector of Customs or
Central Excise (Level I), or equivalent or higher post, for at least 3 years. The
Finance (No. 2) Act, 1996 amended Section 129(3) of the Customs Act, whereby it
enabled the Central Government to appoint a person to be the President of the
Appellate Tribunal. The Central Government could make such appointment, subject to
the condition, that the person concerned had been a judge of the High Court, or was
one of the Members of the Appellate Tribunal. Likewise, it was open to the Central
Government to appoint one or more Members of the Appellate Tribunal to be its Vice
President(s).
(iv) Powers and functions of the Appellate Tribunal were to be exercised through
benches constituted by its President, from amongst Members of the Appellate
Tribunal (in terms of Section 129C of the Customs Act). Each bench was required to
be comprised of at least one Judicial Member and one Technical Member. It was open
to the President to constitute a special bench of not less than three Members
(comprising of at least one Judicial and one Technical Member). The composition of
the bench, was modified by an amendment which provided, that a special bench of
the Appellate Tribunal was to consist of not less than two Members (instead of
three). It was also open to the President and/or Members (as authorized by the
President of the Appellate Tribunal) to dispose of appeals, sitting singly, subject to
the condition, that the value of goods confiscated, or the difference in duty involved,
or duty involved, or the amount of fine or penalty involved, did not exceed Rs.
10,000/- --the limit was first revised to Rs. 50,000/-, then to Rs. 1 lakh, later to Rs.
10 lakhs, and at present, the same is Rs. 50 lakhs. A case involving a dispute where
the determination of any question having a relation to the rate of duty of customs or
to the value of goods for purposes of assessment is the sole or one of the points in
issue, must however be heard by a bench comprising of a Judicial and a Technical
Member [Section 129C(4)(b)]. In case of difference of opinion on any point(s), the
opinion of the majority was to constitute the decision of the Appellate Tribunal. If
Members were equally divided, the appeal was to be referred by the President, for

hearing on such point(s), by one or more other Members of the Appellate Tribunal.
Whereupon, the majority opinion was to be considered as the decision of the
Appellate Tribunal. Sub-sections (7) and (8) of Section 129C provided as under:
(7) The Appellate Tribunal shall, for the purposes of discharging its
functions, have the same powers as are vested in a court under the Code of
Civil Procedure, 1908 (5 of 1908), when trying a suit in respect of the
following matters, namely:
(a) discovery and inspection;
(b) enforcing the attendance of any person and examining him on
oath;
(c) compelling the production of books of account and other
documents; and
(d) issuing commissions.
(8) Any proceeding before the Appellate Tribunal shall be deemed to be a
judicial proceeding within the meaning of Sections 193 and 228 and for the
purpose of Section 196 of the Indian Penal Code 945 of 1860) and the
Appellate Tribunal shall be deemed to be a Civil Court for all the purposes of
Section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973 (2 of
1974).
It is apparent from the above provision, that by a fiction of law, proceedings before
the Appellate Tribunal are treated as judicial proceedings.
(v) The Customs and Excise Revenues Appellate Tribunal Act, 1986 came into force
with effect from 23.12.1986. Section 26 of the instant enactment, excluded the
jurisdiction of courts except the Supreme Court. Section 28 thereof provided as
under:
28. Proceedings before the Appellate Tribunal to be judicial proceedings-All
proceedings before the Appellate Tribunal shall be deemed to be judicial
proceedings within the meaning of Sections 193, 219 and 228 of the Indian
Penal Code (45 of 1860).
A perusal of the above amendment reveals, that by a fiction of law, the Appellate
Tribunal was deemed to be discharging "judicial proceedings". Therefore, the
position prevailing prior to the amendment, was maintained, so far as the instant
aspect was concerned.
(vi) Just as in the case of the 1922 Act, which did not provide for an appellate
remedy, but allowed a reference to be made to a jurisdictional High Court, Under
Section 66, likewise, Section 130 of the Customs Act provided for a reference on a
question of law, to the High Court. A reference could be made, on an application by
the Collector of Customs or the person on whom customs duty has been levied, to
the Appellate Tribunal. If the Appellate Tribunal refused to make a reference, the
aggrieved party could assail the determination of the Appellate Tribunal, before the
jurisdictional High Court. Where a reference on a question of law was entertained, it
had to be heard by a bench of not less than two judges of the High Court. In case of
difference of opinion on any point(s), the opinion expressed by the majority, was to

be treated as the decision of the High Court. Where the opinion was equally divided,
on the point(s) of difference, the matter was to be heard by one or more other judges
of the High Court. Thereupon, the majority opinion of the judges (including the
judges who had originally heard the case) would constitute the decision of the High
Court. A decision of the High Court, would then be applied by the Appellate Tribunal,
for the disposal of the appeal wherefrom the reference had arisen.
(vii) The Appellate Tribunal was also authorized to make a reference directly to the
Supreme Court (Under Section 130A of the Customs Act). This could be done, in case
the Appellate Tribunal was of the view, that there was a conflict of decisions of High
Courts in respect of a question of law pending before it for decision. The decision of
the Supreme Court, would then be applied by the Appellate Tribunal, for the disposal
of the appeal out of which the reference had arisen.
(viii) The Finance (No. 32) Act, 2003 introduced a new Section 130. The remedy of a
reference to the jurisdictional High Court, was substituted by a remedy of an appeal
to the High Court. The amended Section 130 of the Customs Act provided, that an
appeal would lie to the High Court from every order passed by the Appellate Tribunal
(on or after 1.7.2003), subject to the condition, that the High Court was satisfied,
that the case involved a substantial question of law. In such an eventuality, the High
Court would formulate the substantial question(s) of law. It was open to the High
Court in exercise of its instant appellate jurisdiction, also to determine any issue
which had not been decided by the Appellate Tribunal, or had been wrongly decided
by the Appellate Tribunal. The appeal preferred before the High Court, could be heard
by a bench of not less than two judges.
(ix) After amendment to Section 130, Section 130E was also amended. The latter
amended provision, provided for an appeal to the Supreme Court, from a judgment of
the High Court, delivered on an appeal filed Under Section 130, or on a reference
made Under Section 130 by the Appellate Tribunal (before 1.7.2003), or on a
reference made Under Section 130A.
(x) The NTT Act omitted Sections 130, 130A, 130B, 130C and 130D of the Customs
Act. The instant enactment provided for an appeal from every order passed by the
Appellate Tribunal to the NTT, subject to the condition, that the NTT arrived at the
satisfaction, that the case involved a substantial question of law. On admission of an
appeal, the NTT would formulate the substantial question of law for hearing the
appeal. Section 23 of the NTT Act provided, that on and from the date, to be notified
by the Central Government, all matters and proceedings including appeals and
references, pertaining to direct/indirect taxes, pending before the High Court, would
stand transferred to the NTT. Section 24 of the NTT Act provides for an appeal from
an order passed by the NTT, directly to the Supreme Court.
The Central Excise Legislation, in India:
(i). The Central Excise and Salt Act, 1944 (hereinafter referred to as, the Excise Act)
was enacted to consolidate and amend, the law related to central duties on excise,
and goods manufactured and produced in India, and to salt. Under the said
enactment, the power to assess the duty, was vested with the Assistant Collectors of
Central Excise, and Collectors of Central Excise. An executive-appellate remedy was
provided for Under Section 35 before the Commissioner (Appeals).
(ii) The Board was vested with revisional jurisdiction. Revisional jurisdiction was
additionally vested with the Central Government. In 1972, the Board was empowered

Under Section 35A of the Excise Act, to exercise the power of revision, from a
decision/order/rule made/passed, under the Excise Act, subject to the condition, that
no revision would lie under the instant provision, as against an appellate order
passed Under Section 35 of the Excise Act, by the Commissioner (Appeals). The
Central Government was vested with revisional jurisdiction against appellate orders
passed by the Commissioner (Appeals) Under Section 35. In 1978, the revisional
jurisdiction which hitherto before lay with the Board, was vested with the Collector of
Central Excise.
(iii) On the exhaustion of the first executive-appellate remedy, a further quasi-
judicial appellate remedy was provided for, Under Section 35B of the Excise Act, to
an Appellate Tribunal. The remedy of appeal before the Appellate Tribunal, could be
availed of (a) against a decision or order passed by the Collector of Central Excise as
an adjudicating authority, (b) against an order passed by the Collector (Appeals)
Under Section 35A of the Excise Act (as substituted by the Finance (No. 2) Act,
1980), (c) against an order passed by the Board or the Appellate Collector of Central
Excise Under Section 35 (as it stood before 21.8.1980), and (d) against an order
passed by the Board or the Collector of Central Excise Under Section 35A (as it stood
before 21.8.1980).
(iv) The Appellate Tribunal was to be comprised of such number of Judicial/Technical
Members as the Central Government would think fit. Appointment of Judicial
Members could only be made from amongst persons who had held a judicial office in
India for at least 10 years, or who had been practicing as an Advocate for at least 10
years, or who had been a member of the Indian Legal Service (having held a post in
Grade I of the said service, or any equivalent or higher post) for at least 3 years.
Only such persons could be appointed as Technical Members who had been, members
of the Indian Customs and Central Excise Service, Group A, and had held the post of
Collector of Customs or Central Excise (or any equivalent or higher post) for at least
3 years. The Central Government had the power to appoint a person, who was or had
been a judge of a High Court, or who was one of the Members of the Appellate
Tribunal, as the President of the Appellate Tribunal. The functions of the Appellate
Tribunal were to be discharged through benches constituted by its President. The
Central Government also had the authority to appoint one or more Members of the
Appellate Tribunal as Vice-President(s). Each bench was to consist of at least one
Judicial Member and one Technical Member. In case of difference of opinion on any
point(s), the opinion of the majority would constitute the decision of the Appellate
Tribunal. If the Members of the bench were equally divided, the President was
required to refer the disputed opinion for hearing, on the point(s) of difference, by
one or more other Members of the Appellate Tribunal. The majority opinion after such
reference, would be the decision of the Appellate Tribunal. It was also permissible for
the President, and the Members (authorized by the President) of the Appellate
Tribunal, to hear and dispose of appeals, sitting singly (subject to the condition, that
the difference in duty or the duty involved, or the amount of fine or penalty involved,
did not exceed Rs. 10,000/- --the limit was first revised to Rs. 50,000/-, then to Rs.
1 lakh, later to Rs. 10 lakhs, and at present, the same is Rs. 50 lakhs). Similar
provision (as in respect of appeals to the Appellate Tribunal under Customs Act) with
regard to matters to be heard by a division bench, is enjoined in Section 35D(3)(a)
of the Excise Act.
(v) The Customs and Excise Revenues Appellate Tribunals Act, 1986, came into force
on 23.12.1986. Section 26 of the instant enactment excluded the jurisdiction of
courts except the Supreme Court. Section 14, provided for jurisdiction, powers and

authority of the Appellate Tribunal. Section 28 provided as under:
28. Proceedings before the Appellate Tribunal to be judicial proceedings-All
proceedings before the Appellate Tribunal shall be deemed to be judicial
proceedings within the meaning of Sections 193, 219 and 228 of the Indian
Penal Code (45 of 1860).
A perusal of the above amendment reveals, that by a fiction of law, the Appellate
Tribunal was deemed to be discharging "judicial proceedings".
(vi) Section 35G provided for a reference on any question of law, by the Appellate
Tribunal, to the High Court. The aforesaid remedy could be availed of by filing an
application before the Appellate Tribunal. Such an application could be filed by either
the Collector of Central Excise, or the person on whom the excise duty was levied. A
reference, on a question of law, made by the Appellate Tribunal, to the High Court,
would be heard by a bench of not less than two judges. On the Appellate Tribunal's
refusal to refer a question of law, the aggrieved party could assail the decision of the
Appellate Tribunal (declining to make a reference), before the High Court. The
jurisdictional High Court, on the acceptance of a reference, would render its decision,
on the question of law. In case of difference of opinion, the opinion expressed by the
majority would constitute the decision of the High Court. If the opinion by the bench
was equally divided, the point(s) of difference were to be heard by one or more other
judges of the High Court, whereafter, the opinion expressed by the majority would be
treated as the decision of the High Court. The Appellate Tribunal would thereupon,
decide the pending appeal, in consonance with the decision rendered by the High
Court.
(vii) Section 35H of the Excise Act provided for a reference, by the Appellate
Tribunal, directly to the Supreme Court. The instant reference by the Appellate
Tribunal, could be made after the Appellate Tribunal had arrived at the conclusion,
that the question of law arising for adjudication in an appeal pending before it, was
differently interpreted by two or more jurisdictional High Courts. The decision of the
Supreme Court, would then be applied by the Appellate Tribunal, to decide the
pending appeal. Section 35L provided for appeal to the Supreme Court against the
judgment rendered by the High Court (upon a reference made to the High Court by
the Appellate Tribunal). The decision of the Supreme Court would then be applied by
the Appellate Tribunal, in the disposal of the appeal pending before it.
(viii) The Finance (No. 32) Act, 2003 substituted Section 35G of the Excise Act and in
place of the remedy of reference, the amended provision provided for a direct appeal
to the jurisdictional High Court (after the cut-off date, i.e., 1.7.2003). The
jurisdictional High Court was to entertain an appeal from an order passed by the
Appellate Tribunal, on its being satisfied, that the appeal raised a substantial
question of law. In such an eventuality, the High Court would formulate the
substantial question(s) of law. It was open to the High Court in exercise of its instant
appellate jurisdiction, also to determine any issue which had not been decided by the
Appellate Tribunal, or had wrongly been decided by the Appellate Tribunal. The
appeal preferred before the High Court, would be heard by a bench of not less than
two judges. Section 35L of the Excise Act was also amended. The amended provision
provided for an appeal from any judgment of the High Court (in exercise of its
appellate jurisdiction Under Section 35G of the Excise Act, or on a reference made
Under Section 35G by the Appellate Tribunal before 1.7.2003, or on a reference made
Under Section 35H), to the Supreme Court.

(ix) The NTT Act omitted Sections 35G, 35H, 35I and 35J of the Excise Act. The
instant enactment provided for an appeal from every order passed by the Appellate
Tribunal to the NTT, subject to the condition, that the NTT was satisfied, that the case
involved a substantial question of law. On admission of an appeal, the NTT would
formulate the substantial question of law, for hearing the appeal. Section 23 of the
NTT Act provided, that on and from the date to be notified by the Central
Government, all matters and proceedings including appeals and references,
pertaining to direct/indirect taxes, pending before the jurisdictional High Courts,
would stand transferred to the NTT. Section 24 of the NTT Act provided for an appeal
from an order passed by the NTT, to the Supreme Court.
Facts leading to the promulgation of the NTT Act:
6 . The first Law Commission of independent India was established in 1955 for a
three year term under the chairmanship of Mr. M.C. Setalvad, who was also the first
Attorney General for India. The idea of constituting a "National Tax Court" was
mooted by the first Law Commission in its 12th Report, suggesting the abolition of
the existing appellate tribunal, under the framework of the Income Tax Act. It
recommended a direct appeal to the High Courts, from orders passed by appellate
Commissioners. This recommendation was not accepted.
7. A Direct Taxes Enquiry Committee was set up by the Government of India in 1970,
with Mr. K.N. Wanchoo a retired Chief Justice of the Supreme Court of India, as its
Chairman. The Enquiry Committee was assigned the following objectives: (1) to
recommend ways to check avoidance of tax, through various legal lacunae; (2) to
examine the exemptions allowed by tax laws, and evaluate scope of their reduction;
and (3) to suggest methods for better tax assessment, and improvements in tax
administration. The Wanchoo Committee recommended creation of a "National
Court", which would be comprised of judges with special knowledge of tax laws. The
recommendation made by the Wanchoo Committee, was for creation of permanent
"Tax Benches" in High Courts, and appointment of retired judges to such benches,
Under Article 224A of the Constitution. The suggestion was aimed at clearing the
backlog of tax cases. The Wanchoo Committee did not suggest the establishment of
any separate tax courts as that, according to the Committee, would involve an
amendment to the provisions of the Constitution, besides other statutory and
procedural changes.
8 . Another Direct Tax Laws Committee was constituted in 1977, under the
chairmanship of Mr. N.K. Palkhivala, an eminent jurist. The Committee was later
headed by Mr. G.C. Choksi. The Committee was constituted, to examine and suggest
legal and administrative measures, for simplification and rationalization of direct tax
laws. The Choksi Committee recommended the establishment of a "Central Tax Court"
with an all-India jurisdiction. It was suggested, that such a court be constituted
under a separate statute. Just like the recommendations of the Wanchoo Committee,
the recommendations of the Choksi Committee also necessitated amendments in the
provisions of the Constitution. As an interim measure to the above recommendation,
the Choksi Committee suggested, the desirability of constituting "Special Tax
Benches" in High Courts, to deal with the large number of pending tax cases, by
continuous sitting throughout the year. It was also suggested, that judges who sit on
the "Special Tax Benches", should be selected from those who had special
knowledge, to deal with matters relating to direct tax laws. The Choksi Committee
recommended, that the judges selected for the "Special Tax Benches" would be
transferred to the "Central Tax Court", as and when the same was constituted. It is,

therefore apparent, that according to the recommendations of the Choksi Committee,
the "Central Tax Court" was to comprise of judges of High Courts, or persons
qualified to be appointed as High Court Judges. The recommendations of the Choksi
Committee reveal, that the suggested "Central Tax Court" would be a special kind of
High Court, to deal with issues pertaining to direct tax laws. This was sought to be
clarified in paragraph 6.22 of the Choksi Committee's Report.
9 . None of the recommendations referred to hereinabove were implemented, till a
similar recommendation was again mooted in the early 1990s. After deliberating on
the issue for a few years, the Union of India promulgated the National Tax Tribunal
Ordinance, 2003. The Ordinance inter alia provided, for the transfer of appellate
jurisdiction (under direct tax laws) vested in High Courts, to the NTT. After the
Ordinance lapsed, the National Tax Tribunal Bill, 2004 was introduced. The said Bill
was referred to a Select Committee of the Parliament. The Select Committee granted
a personal hearing to a variety of stakeholders, including the representatives of the
Madras Bar Association (i.e., the Petitioner before this Court in Transferred Case (C)
No. 150 of 2006). The Committee presented its report on 2.8.2005. In its report, it
suggested serious reservations on the setting up of the NTT. The above Bill was
presented before the Lok Sabha in 2005. The Bill expressed four main reasons for
setting up the NTT: (1) to reduce pendency of huge arrears, that had mounted in
High Courts all over the country, (2) huge tax recovery was statedly held up, in tax
litigation before various High Courts, which directly impacted implementation of
national projects/welfare schemes of the Government of India, (3) to have a
uniformity in the interpretation of tax laws. In this behalf it was suggested, that
different opinions were expressed by different High Courts on identical tax issues,
resulting in the litigation process being tied up in higher Courts, and (4) the existing
judges dealing with tax cases, were from civil courts, and therefore, were not well-
versed to decide complicated tax issues.
The issues canvassed on behalf of the Petitioners:
1 0 . The submissions advanced on behalf of the Petitioners, for purposes of
convenience, deserve to be examined from a series of distinct and separate
perspectives. Each perspective is truly an independent submission. It is, therefore
necessary, in the first instance, to clearly describe the different submissions,
advanced at the hands of the learned Counsel for the Petitioners. The same are
accordingly being delineated hereunder:
The first contention: That the reasons for setting up the NTT, were fallacious
and non-existent. Since the foundational basis is untrue, the structure
erected thereupon, cannot be accepted as valid and justified. And therefore,
the same is liable to be struck down.
The second contention: It is impermissible for the legislature to
abrogate/divest the core judicial appellate functions, specially the functions
traditionally vested with the High Court. Furthermore, the transfer of such
functions to a quasi-judicial authority, devoid of essential ingredients of the
superior court, sought to be replaced was constitutionally impermissible, and
was liable to be set aside. Besides the appellate jurisdiction, the power of
judicial review vested in High Courts Under Articles 226 and 227 of the
Constitution, has also been negated by the NTT Act. And therefore, the same
be set aside.

The third contention: Separation of powers, the rule of law, and judicial
review, constitute amongst others, the basic structure of the Constitution.
Article 323B inserted by the Constitution (Forty-second Amendment) Act,
1976, to the extent it is violative of the above mentioned components of the
basic structure of the Constitution, is liable to be declared ultra vires the
Constitution.
The fourth contention: A number of provisions including Sections 5, 6, 7, 8
and 13 of the NTT Act, undermine the independence of the adjudicatory
process vested in the NTT, and as such, are liable to be set aside in their
present format.
11. We shall now narrate each of the above contentions advanced by the learned
Counsel for the Petitioners, in the manner submissions were advanced before us.
The first contention:
12. As regards arrears of tax related cases before High Courts is concerned, it was
submitted, that the figures indicated by the Department were incorrect. In this behalf
it was asserted, that the stance adopted at the behest of the Revenue, that there were
about 80,000 cases pending in different courts, was untrue. It was the emphatic
contention of the learned Counsel for the Petitioners, that as of October, 2003 (when
the National Tax Tribunal Ordinance, was promulgated), the arrears were
approximately 29,000. of the total pendency, a substantial number was only before a
few High Courts, including the High Court of Bombay and the High Court of Delhi. In
the petition filed by the Madras Bar Association, it was asserted, that in the Madras
High Court, the pending appeals Under Section 260A of the Income Tax Act, were
less than 2,000. It was also sought to be asserted, that the pendency of similar
appeals in most southern States was even lesser. It was pointed out, that the
pendency of such appeals in the High Court of Karnataka and the High Court of
Kerala, was even lesser than 2,000.
13. In respect of the Revenue's assertion, that huge tax recovery was held up, in tax
litigation, before High Courts, it was submitted, that the figures projected at the
behest of the Department were incorrect. It was pointed out, that according to the
Revenue, the pending cases in the High Courts involved an amount of approximately
Rs. 80,000 crores (relatable to direct tax cases). It was submitted, that the figures
projected by the Department, included not only the basic tax, but interest and penalty
imposed thereon, as well. It was pointed out, that interest could be as high as 40%
per annum, under tax statutes, besides penal interest. It was accordingly sought to
be canvassed, that if the main appeals were set aside by the High Court, there would
hardly be any dues payable to the Government at all. Additionally, it was sought to
be asserted, that many tax appeals pending before the High Courts, were filed by
Assessees, and accordingly, in the event of the Assessees succeeding, the amount
could not be considered as having been held up, but may have to be refunded. It was
further asserted, that in most cases, the Revenue was able to recover a substantial
amount from the Assessees, by the time the matter reached the High Court (on
account of pre-deposits). It was, therefore sought to be submitted, that the figures
indicated by the Revenue, with reference to the amount of tax held up in pending
cases, before High Courts was wholly flawed and deceptive.
14. It was also the contention of the learned Counsel for the Petitioners, that the
mere establishment and creation of the NTT, would not result in uniformity of

decisions pertaining to tax laws. In this behalf it was sought to be asserted, that just
as in the manner two High Courts could differ with one another, so also, could two
tax benches, of the NTT. On the factual front, it was pointed out, that divergence of
opinion in High Courts was very rare. It was, as a matter of approximation,
suggested, that in most cases (approximately 99%), one High Court would follow the
view taken by another High Court. Learned Counsel, however pointed out, that in
High Courts an age-old mechanism, to resolve conflicts of views, by either placing
such matters before larger benches, or before a higher court, was in place. Pointing
out illustratively to the ITAT and the CESTAT, it was asserted, that there had been
many cases of divergence of opinion, which were resolved by larger benches. It was,
therefore sought to be canvassed, that the instant basis for constituting the NTT, was
also not based on a prudent or sensible rationale.
1 5 . On the subject of High Court Judges being not well-versed to determine
complicated interpretation of tax-law related issues, it was submitted, that the very
mention of the above as a basis, for creating the NTT, was extremely unfortunate. It
was submitted, that well before the independence of this country, and even
thereafter, High Courts have been interpreting and construing tax related disputes, in
a legitimate, tenable and lawful manner. The fairness and rationale of tax related
issues, according to learned Counsel, was apparent from the faith reposed in High
Courts both by the Revenue, as well as, by the Assessees. Furthermore, the veracity
and truthfulness, of the instant assertion, according to the learned Counsel, could be
gauged from the fact, that interference by the Supreme Court, in the orders passed
by the High Courts on tax matters, has been minimal.
16. During the course of hearing, our attention was also invited to the fact, that the
legislations of the instant nature would have a lopsided effect. In this behalf it was
sought to be pointed out, that while jurisdiction vested in High Courts was being
excluded, the burden was being transferred to the Supreme Court of India. This
assertion was sought to be substantiated by the learned Counsel for the Petitioners,
by inviting our attention to the legislations, wherein the power of judicial review
traditionally vested in the High Courts, has been excluded, and a remedy of appeal
has been provided from the tribunals constituted directly to the Supreme Court. In
this behalf, reference may illustratively be made to the following provisions:
(i) The Electricity Act, 2003
1 2 5 . Appeal to Supreme Court-Any person aggrieved by any
decision or order of the Appellate Tribunal, may, file an appeal to the
Supreme Court within sixty days from the date of communication of
the decision or order of the Appellate Tribunal to him, on any one or
more of the grounds specified in Section 100 of the Code of Civil
Procedure, 1908 (5 of 1908):
Provided that the Supreme Court may, if it is satisfied that the
Appellant was prevented by sufficient cause from filing the appeal
within the said period, allow it to be filed within a further period not
exceeding sixty days.
(ii) The National Green Tribunal Act, 2010
Section 22. Appeal to Supreme Court-Any person aggrieved by any
award, decision or order of the tribunal, may, file an appeal to the
Supreme Court, within ninety days from the date of communication

of the award, decision or order of Tribunal, to him, on any one or
more of the grounds specified in Section 100 of the Code of Civil
Procedure, 1908 (5 of 1908)
Provided that the Supreme Court may, entertain any appeal after the
expiry of ninety days, if it is satisfied that the Appellant was
prevented by sufficient cause from preferring the appeal.
(iii) The Telecom Regulatory Authority of India Act, 1997
Section 18. Appeal to Supreme Court-(1) Notwithstanding anything
contained in the Code of Civil Procedure, 1908 (5 of 1908) or in any
other law, an appeal shall lie against any order, not being an
interlocutory order, of the Appellate Tribunal to the Supreme Court
on one or more of the grounds specified in Section 100 of that code.
(2) No appeal shall lie against any decision or order made by the
Appellate Tribunal with the consent of the parties.
(3) Every appeal under this section shall be preferred within a period
of ninety days from the date of the decision or order appealed
against:
Provided that the Supreme Court may entertain the appeal
after the expiry of the said period of ninety days, if it is
satisfied that the Appellant was prevented by sufficient cause
from preferring the appeal in time.
(iv) The Securities and Exchange Board of India Act, 1992
Section 15Z. Appeal to Supreme Court.-Any person aggrieved by any
decision or order of the Securities Appellate Tribunal may file an
appeal to the Supreme Court within sixty days from the date of
communication of the decision or order of the Securities Appellate
Tribunal to him on any question of law arising out to such order:
Provided that the Supreme Court may, if it is satisfied that
the applicant was prevented by sufficient cause from filing
the appeal within the said period, allow it to be filed within
a further period not exceeding sixty days.
(v) Companies Act, 1956
Section 10GF. Appeal to Supreme Court.-Any person aggrieved by
any decision or order of the Appellate Tribunal may file an appeal to
the Supreme Court within sixty days from the date of communication
of the decision or order of the Appellate Tribunal to him on any
question of law arising out of such decision or order:
Provided that the Supreme Court may, if it is satisfied that
the Appellant was prevented by sufficient cause from filing
the appeal within the said period, allow it to be filed within
a further period not exceeding sixty days.
1 7 . It was also pointed out, that the enactment of the NTT Act per se lacks

bonafides. In this behalf the contention of the learned Counsel for the Petitioner was,
that there is a Parliamentary convention that if a Select Committee rejects a Bill, it is
normally not passed by the Parliament. At the very least, the reservations expressed
by the Select Committee are taken into account, and the Bill in question is
appropriately modified. It was submitted, that the bill under reference was presented
before the Lok Sabha on 29.11.2005, and the same was passed without making a
single amendment.
1 8 . It was, therefore, the vehement contention of the learned Counsel for the
Petitioners, that the foundational facts being incorrect, and the manner in which the
bill was passed, being devoid of bonafides, the legislation itself i.e., the NTT Act,
deserved to be set aside.
The second contention:
19. It was the emphatic contention of the learned Counsel for the Petitioners, that it
was impermissible for the legislature to abrogate/divest the core judicial appellate
functions traditionally vested with the High Court, and to confer/vest the same, with
an independent quasi-judicial authority, which did not even have the basic
ingredients of a superior Court, like the High Court (whose jurisdiction is sought to
be transferred). In conjunction with the instant contention, it was also the
submission of the learned Counsel, that the jurisdiction vested in the High Courts
Under Articles 226 and 227 of the Constitution, is not only in respect of the rightful
implementation of statutory provisions, but also of supervisory jurisdiction, over
courts and tribunals, cannot be curtailed under any circumstances.
2 0 . In order to supplement the instant contention, learned Counsel also placed
reliance on Article 225 of the Constitution which is being extracted hereunder:
225. Jurisdiction of existing High Courts-Subject to the provisions of this
Constitution and to the provisions of any law of the appropriate Legislature
made by virtue of powers conferred on that Legislature by this Constitution,
the jurisdiction of, and the law administered in, any existing High Court, and
the respective powers of the Judges thereof in relation to the administration
of justice in the Court, including any power to make rules of Court and to
regulate the sittings of the court and of members thereof sitting alone or in
Division Courts, shall be the same as immediately before the commencement
of this Constitution:
Provided that any restriction to which the exercise of original
jurisdiction by any of the High Courts with respect to any matter
concerning the revenue or concerning any act ordered or done in the
collection thereof was subject immediately before the
commencement of this Constitution shall no longer apply to the
exercise of such jurisdiction.
Inviting the Court's attention to the proviso to Article 225 of the Constitution it was
submitted, that the original jurisdiction of High Courts on matters pertaining to
revenue or the collection thereof, even if considered as barred, the said bar was
ordered to be expressly done away with, by the proviso to Article 225 of the
Constitution. In the present context, learned Counsel for the Petitioners invited our
attention to Section 226(1) of the Government of India Act, 1935. The said Section is
reproduced hereunder:
226(1) Until otherwise provided by Act of the appropriate Legislature, no

226(1) Until otherwise provided by Act of the appropriate Legislature, no
High Court shall have any original Jurisdiction in any matter concerning the
revenue, or concerning any act ordered or done in the collection thereof
according to the usage and practice of the country or the law for the time
being in force.
It was submitted, that under the above statutory provision, a High Court could not
issue a writ in the nature of mandamus, to call upon a Revenue authority to discharge
its statutory obligations, in respect of the assessment of tax. Likewise, it was not
open to the High Court, to issue a writ in the nature of certiorari or certiorarified
mandamus, in order to set aside or modify an order of assessment, passed in
violation of or in contravention of any statutory provision(s). It was submitted, that
the proviso to Article 225 of the Constitution, as has been extracted hereinabove, was
omitted by the Constitution (Forty-second Amendment) Act, 1976 (with effect from
1.2.1977). It was, however pointed out, that the Parliament having realized its
mistake, restored the proviso to Article 225 of the Constitution, as was originally
enacted by the Constitution (Forty-fourth Amendment) Act, 1978 (with effect from
20.6.1979). Thus viewed, according to the learned Counsel for the Petitioners, under
the provisions of the Constitution, prevailing at the present juncture, the original
jurisdiction of the High Court (i.e., the jurisdiction Under Articles 226 and 227 of the
Constitution), as also, the law administered by a High Court at the time of enactment
of the Constitution, cannot be restricted. Accordingly, it was asserted, that on matters
pertaining to revenue or the collection thereof, the adjudication authority of High
Courts, could not be curtailed.
21. Articles 226 and 227 of the Constitution, on which emphatic reliance has been
placed by the learned Counsel, are being reproduced hereunder:
226. Power of High Courts to issue certain writs-
(1) Notwithstanding anything in Article 32, every High Court shall
have power, throughout the territories in relation to which it
exercises jurisdiction, to issue to any person or authority, including
in appropriate cases, any Government, within those territories
directions, orders or writs, including writs in the nature of habeas
corpus, mandamus, prohibition, quo warranto and certiorari, or any
of them, for the enforcement of any of the rights conferred by Part
III and for any other purpose.
(2) The power conferred by Clause (1) to issue directions, orders or
writs to any Government, authority or person may also be exercised
by any High Court exercising jurisdiction in relation to the territories
within which the cause of action, wholly or in part, arises for the
exercise of such power, notwithstanding that the seat of such
Government or authority or the residence of such person is not
within those territories.
(3) Where any party against whom an interim order, whether by way
of injunction or stay or in any other manner, is made on, or in any
proceedings relating to, a petition Under Clause (1), without-
(a) furnishing to such party copies of such petition and all
documents in support of the plea for such interim order; and

(b) giving such party an opportunity of being heard, makes
an application to the High Court for the vacation of such
order and furnishes a copy of such application to the party
in whose favour such order has been made or the counsel of
such party, the High Court shall dispose of the application
within a period of two weeks from the date on which it is
received or from the date on which the copy of such
application is so furnished, whichever is later, or where the
High Court is closed on the last day of that period, before
the expiry of the next day afterwards on which the High
Court is open; and if the application is not so disposed of,
the interim order shall, on the expiry of that period, or, as
the case may be, the expiry of the aid next day, stand
vacated.
(4) The power conferred on a High Court by this article shall not be
in derogation of the power conferred on the Supreme Court by
Clause (2) of Article 32.
227. Power of superintendence over all courts by the High Court-
(1) Every High Court shall have superintendence over all courts and
tribunals throughout the territories in relation to which it exercises
jurisdiction.
(2) Without prejudice to the generality of the foregoing provisions,
the High Court may -
(a) call for returns from such courts;
(b) make and issue general rules and prescribe forms for
regulating the practice and proceedings of such courts; and
(c) prescribe forms in which books, entries and accounts
shall be kept by the officers of any such courts.
(3) The High Court may also settle tables of fees to be allowed to the
sheriff and all clerks and officers of such courts and to attorneys,
advocates and pleaders practising therein:
Provided that any rules made, forms prescribed or tables
settled Under Clause (2) or Clause (3) shall not be
inconsistent with the provision of any law for the time being
in force, and shall require the previous approval of the
Governor.
(4) Nothing in this article shall be deemed to confer on a High Court
powers of superintendence over any court or tribunal constituted by
or under any law relating to the Armed Forces.
It was submitted, that the above original jurisdiction vested in the High Court to
issue prerogative writs, has been shown to have been consciously preserved, for
matters pertaining to levy and collection of tax. It was also submitted, that the
enactment of the NTT Act has the clear and explicit effect, of excluding the

jurisdiction of the High Courts. This was sought to be explained by indicating, that
the jurisdiction to adjudicate appeals, traditionally determined by jurisdictional High
Courts, from orders passed by Appellate Tribunals under the Income Tax Act, the
Customs Act and the Excise Act (all taxing legislations) have been taken out of the
purview of the High Courts, and have been vested with the NTT, by the NTT Act. It
was further submitted, that even the jurisdiction vested in High Courts Under Articles
226 and 227 of the Constitution, has been practically done away with. In this behalf
the explanation was, that by providing for an appellate remedy against an order
passed by the NTT, directly to the Supreme Court, the above original jurisdiction of
the High Courts, had practically been frustrated and effectively neutralized. It is
pointed out, that the curtailment of the jurisdiction of the High Courts Under Articles
226 and 227 of the Constitution, must be viewed as submission, distinct and separate
from the one emerging out of the substitution of, the jurisdiction of the High Courts
Under Section 260A of the Income Tax Act, 1961, Section 130 of the Customs Act,
and Section 35G of the Excise Act. Whilst the former contention is based on a clear
constitutional right, the submission based on the provisions of the taxing statutes,
emerges from a well accepted constitutional convention, coupled with the clear intent
expressed in the proviso to Article 225 of the Constitution.
2 2 . In order to support the second contention advanced by the Petitioners, the
following decisions were relied upon:
(i) Reliance was first of all, placed on the decision of the Privy Council in Hinds v.
The Queen Director of Public Prosecutions V. Jackson Attorney General of Jamaica
(Intervener) 1976 All ER Vol. (1) 353. The factual/legal position which arose for
determination in the cited case pertained to the Gun Court Act, 1974, enacted by the
Parliament of Jamaica. The aforesaid enactment was made, without following the
special procedure prescribed by Section 49 of the Constitution of Jamaica (to alter
the provisions of the Constitution of Jamaica). The Gun Court Act, 1974, had the
effect of creating a new Court-"the Gun Court", to sit in three different kinds of
divisions: A Resident Magistrate's Division, a Full Court Division and a Circuit Court
Division. One or the other of these divisions, was conferred with the jurisdiction to
try, different categories of offenders of criminal offences. Prior to the passing of the
Act, and at the date of coming into force of the Constitution, these offences were
cognizable only before a Resident Magistrate's Court, or before the Circuit Court of
the Supreme Court of Jamaica. The Gun Court Act, 1974, also laid down the
procedure to be followed (in each of the divisions). For certain specified offences
relating to unauthorized possession, acquisition or disposal of firearms and
ammunition, "the Gun Court" was required to mandatorily impose a sentence of
detention on hard labour. A detenue could only be discharged, at the direction of the
Governor-General, acting in accordance with the advice of the Review Board. The
Review Board was a non-judicial body under the Gun Court Act, 1974.
Lord Diplock while recording the majority view in Hinds case (supra), observed as
under:
...In seeking to apply to the interpretation of the Constitution of Jamaica
what has been said in particular cases about other constitutions, care must
be taken to distinguish between judicial reasoning which depended on the
express words used in the particular constitution under consideration and
reasoning which depended on what, though not expressed, is nonetheless a
necessary implication from the subject-matter and structure of the
constitution and the circumstances in which it had been made. Such caution

is particularly necessary in cases dealing with a federal constitution in which
the question immediately in issue may have depended in part on the
separation of the judicial power from the legislative or executive power of
the federation or of one of its component states and in part upon the division
of judicial power between the federation and a component state.
Nevertheless all these constitutions have two things in common which have
an important bearing on their interpretation. They differ fundamentally in
their nature from ordinary legislation passed by the parliament of a sovereign
state. They embody what is in substance an agreement reached between
representatives of the various shades of political opinion in the state as to
the structure of the organs of government through which the plenitude of the
sovereign power of the state is to be exercised in future. All of them were
negotiated as well as drafted by persons nurtured in the tradition of that
branch of the common law of England that is concerned with public law and
familiar in particular with the basic concept of separation of legislative,
executive and judicial power as it had been developed in the unwritten
constitution of the United Kingdom. As to their subject-matter, the peoples
for whom new constitutions were being provided were already living under a
system of public law in which the local institutions through which
government was carried on, the legislature, the executive and the courts,
reflected the same basic concept. The new constitutions, particularly in the
case of unitary states, were evolutionary not revolutionary. They provided for
continuity of government through successor institutions, legislative,
executive and judicial, of which the members were to be selected in a
different way, but each institution was to exercise powers which, although
enlarged, remained of a similar character to those that had been exercised by
the corresponding institution that it had replaced.
Because of this a great deal can be, and in drafting practice often is, left to
necessary implication from the adoption in the new constitution of a
governmental structure which makes provision for a legislature, an executive
and a judicature. It is taken for granted that the basic principle of separation
of powers will apply to the exercise of their respective functions by these
three organs of government. Thus the constitution does not normally contain
any express prohibition on the exercise of legislative powers by the executive
or of judicial powers by either the executive or the legislature. As respects
the judicature, particularly if it is intended that the previously existing courts
shall continue to function, the constitution itself may even omit any express
provision conferring judicial power upon the judicature. Nevertheless it is
well established as a rule of construction applicable to constitutional
instruments under which this governmental structure is adopted that the
absence of express words to that effect does not prevent the legislative, the
executive and the judicial powers of the new state being exercisable
exclusively by the legislature, by the executive and by the judicature
respectively. To seek to apply to constitutional instruments the canons of
construction applicable to ordinary legislation in the fields of substantive
criminal or civil law would, in their Lordships' view, be misleading-
particularly those applicable to taxing statutes as to which it is a well-
established principle that express words are needed to impose a charge on
the subject.
In the result there can be discerned in all those constitutions which have

their origin in an Act of the Imperial Parliament at Westminster or in an
Order in Council, a common pattern and style of draftsmanship which may
conveniently be described as 'the Westminster model.'
Before turning to those express provisions of the Constitution of Jamaica
upon which the Appellants rely in these appeals, their Lordships will make
some general observations about the interpretation of constitutions which
follow the Westminster model.
All Constitutions on the Westminster model deal under separate Chapter
headings with the legislature, the executive and the judicature. The Chapter
dealing with the judicature invariably contains provisions dealing with the
method of appointment and security of tenure of the members of the
judiciary which are designed to assure to them a degree of independence
from the other two branches of government. It may, as in the case of the
Constitution of Ceylon, contain nothing more. To the extent to which the
Constitution itself is silent as to the distribution of the plenitude of judicial
power between various courts it is implicit that it shall continue to be
distributed between and exercised by the courts that were already in
existence when the new Constitution came into force; but the legislature, in
the exercise of its power to make laws for the 'peace, order and good
government' of the state, may provide for the establishment of new courts
and for the transfer to them of the whole or part of the jurisdiction
previously exercisable by an existing court. What, however, is implicit in the
very structure of a Constitution on the Westminster model is that judicial
power, however it be distributed from time to time between various courts, is
to continue to be vested in persons appointed to hold judicial office in the
manner and on the terms laid down in the Chapter dealing with the
judicature, even though this is not expressly stated in the Constitution
(Liyanage v. R. [1966] 1 All ER 650 at 658 : [1967] A.C. 259 at 287, 288).
The more recent constitutions on the Westminster model, unlike their earlier
prototypes, include a Chapter dealing with fundamental rights and freedoms.
The provisions of this Chapter form part of the substantive law of the state
and until amended by whatever special procedure is laid down in the
Constitution for this purpose, impose a fetter upon the exercise by the
legislature, the executive and the judiciary of the plenitude of their respective
powers. The remaining Chapters of the Constitutions are primarily concerned
not with the legislature, the executive and the judicature as abstractions, but
with the persons who shall be entitled collectively or individually to exercise
the plenitude of legislative, executive or judicial powers-their qualifications
for legislative, executive or judicial office, the methods of selecting them,
their tenure of office, the procedure to be followed where powers are
conferred on a class of persons acting collectively and the majorities required
for the exercise of those powers. Thus, where a constitution on the
Westminster model speaks of a particular 'court' already in existence when
the Constitution comes into force it uses this expression as a collective
description of all those individual judges who, whether sitting alone or with
other judges or with a jury, are entitled to exercise the jurisdiction exercised
by that court before the Constitution came into force. Any express provision
in the constitution for the appointment or security of tenure of judges of that
court will apply to all individual judges subsequently appointed to exercise
an analogous jurisdiction, whatever other name may be given to the 'court' in

which they sit (Attorney-General for Ontario v. Attorney-General for Canada)
[1925] A.C. 750.
Where, under a constitution on the Westminster model, a law is made by the
Parliament which purports to confer jurisdiction on a court described by a
new name, the question whether the law conflicts with the provisions of the
constitution dealing with the exercise of the judicial power does not depend
upon the label (in the instant case 'The Gun Court') which the Parliament
attaches to the judges when exercising the jurisdiction conferred on them by
the law whose constitutionality is impugned. It is the substance of the law
that must be regarded, not the form. What is the nature of the jurisdiction to
be exercised by the judges who are to compose the court to which the new
label is attached? Does the method of their appointment and the security of
their tenure conform to the requirements of the constitution applicable to
judges who, at the time the constitution came into force, exercised
jurisdiction of that nature? (Attorney-General for Australia v. R. and
Boilermakers' Society of Australia [1957] A.C. 288, 309-310).
xxx
...So in deciding whether any provisions of a law passed by the Parliament of
Jamaica as an ordinary law are inconsistent with the Constitution of Jamaica,
neither the courts of Jamaica nor their Lordships' Board are concerned with
the propriety or expediency of the law impugned. They are concerned solely
with whether those provisions, however reasonable and expedient, are of
such a character that they conflict with an entrenched provision of the
Constitution and so can be validly passed only after the Constitution has
been amended by the method laid down by it for altering that entrenched
provision.
The question examined by the Privy Council in the background of the factual/legal
position expressed above, was recorded in the following words:
The attack on the constitutionality of the Full Court Division of the Gun Court
may be based on two grounds. The first is that the Gun Court Act 1974
purports to confer on a court consisting of persons qualified and appointed
as resident magistrates a jurisdiction which under the provisions of Chapter
VII of the Constitution is exercisable only by a person qualified and
appointed as a judge of the Supreme Court. The second ground is much less
fundamental. It need only be mentioned briefly, for it arises only if the first
ground fails. It is that even if the conferment of jurisdiction on a Full Court
Division consisting of three resident magistrates is valid, Section 112 of the
Constitution requires that any assignment of a resident magistrate to sit in
that division should be made by the Governor-General acting on the
recommendation of the Judicial Service Commission and not by the Chief
Justice as the 1974 Act provides.
The question was dealt with, by opining as under:
Chapter VII of the Constitution, 'The Judicature,' was in their Lordships' view
intended to deal with the appointment and security of tenure of all persons
holding any salaried office by virtue of which they are entitled to exercise
civil or criminal jurisdiction in Jamaica. For this purpose they are divided into
two categories: (i) a higher judiciary, consisting of judges of the Supreme

Court and judges of the Court of Appeal, and (ii) a lower judiciary, consisting
of those described in Section 112(2), viz.:
... Resident magistrate, judge of the Traffic Court, Registrar of the
Supreme Court, Registrar of the Court of Appeal and such other
offices connected with the courts of Jamaica as, subject to the
provisions of this Constitution, may be prescribed by Parliament.
Apart from the offices of judge and registrar of the Court of Appeal which
were new, these two categories embraced all salaried members of the
judiciary who exercised civil or criminal jurisdiction in Jamaica at the date
when the Constitution came into force. A minor jurisdiction, particularly in
relation to juveniles, was exercised by justices of the peace but, as in
England, they sat part-time only, were unpaid and were not required to
possess any professional qualification.
Common to both categories, with the exception of the Chief Justice of the
Supreme Court and the President of the Court of Appeal, is the requirement
under the Constitution that they should be appointed by the Governor-
General on the recommendation of the Judicial Service Commission-a body
established Under Section 111 whose composition is different from that of
the Public Service Commission and consists of persons likely to be qualified
to assess the fitness of a candidate for judicial office.
The distinction between the higher judiciary and the lower judiciary is that
the former are given a greater degree of security of tenure than the latter.
There is nothing in the Constitution to protect the lower judiciary against
Parliament passing ordinary laws (a) abolishing their office (b) reducing their
salaries while they are in office or (c) providing that their appointments to
judicial office shall be only for a short fixed term of years. Their
independence of the good-will of the political party which commands a bare
majority in the Parliament is thus not fully assured. The only protection that
is assured to them by Section 112 is that they cannot be removed or
disciplined except on the recommendation of the Judicial Service Commission
with a right of appeal to the Privy Council. This last is a local body
established Under Section 82 of the Constitution whose members are
appointed by the Governor-General after consultation with the Prime Minister
and hold office for a period not exceeding three years.
In contrast to this, judges of the Supreme Court and of the Court of Appeal
are given a more firmly rooted security of tenure. They are protected by
entrenched provisions of the Constitution against Parliament passing ordinary
laws (a) abolishing their office (b) reducing their salaries while in office or
(c) providing that their tenure of office shall end before they attain the age of
65 years. They are not subject to any disciplinary control while in office.
They can only be removed from office on the advice of the Judicial
Committee of Her Majesty's Privy Council in the United Kingdom given on a
reference made on the recommendation of a tribunal of inquiry consisting of
persons who hold or have held high judicial office in some part of the
Commonwealth.
The manifest intention of these provisions is that all those who hold any
salaried judicial office in Jamaica shall be appointed on the recommendation

of the Judicial Service Commission and that their independence from political
pressure by Parliament or by the Executive in the exercise of their judicial
functions shall be assured by granting to them such degree of security of
tenure in their office as is justified by the importance of the jurisdiction that
they exercise. A clear distinction is drawn between the security of tenure
appropriate to those judges who exercise the jurisdiction of the higher
judiciary and that appropriate to those judges who exercise the jurisdiction
of the lower judiciary.
Their Lordships accept that there is nothing in the Constitution to prohibit
Parliament from establishing by an ordinary law a court under a new name,
such as the "Revenue Court," to exercise part of the jurisdiction that was
being exercised by members of the higher judiciary or by members of the
lower judiciary at the time when the Constitution came into force. To do so is
merely to change the label to be attached to the capacity in which the
persons appointed to be members of the new court exercise a jurisdiction
previously exercised by the holders of one or other of the judicial offices
named in Chapter VII of the Constitution. In their Lordships' view, however,
it is the manifest intention of the Constitution that any person appointed to
be a member of such a court should be appointed in the same manner and
entitled to the same security of tenure as the holder of the judicial office
named in Chapter VII of the Constitution which entitled him to exercise the
corresponding jurisdiction at the time when the Constitution came into force.
Their Lordships understand the Attorney-General to concede that salaried
judges of any new court that Parliament may establish by an ordinary law
must be appointed in the manner and entitled to the security of tenure
provided for members of the lower judiciary by Section 112 of the
Constitution. In their Lordships' view this concession was rightly made. To
adopt the familiar words used by Viscount Simonds in Attorney-General of
Australia v. R. and Boilermakers' Society of Australia [1957] A.C. 288, 309-
310, it would make a mockery of the Constitution if Parliament could transfer
the jurisdiction previously exercisable by holders of the judicial offices
named in Chapter VII of the Constitution to holders of new judicial offices to
which some different name was attached and to provide that persons holding
the new judicial offices should not be appointed in the manner and on the
terms prescribed in Chapter VII for the appointment of members of the
judicature. If this were the case there would be nothing to prevent Parliament
from transferring the whole of the judicial power of Jamaica (with two minor
exceptions referred to below) to bodies composed of persons who, not being
members of 'the Judicature,' would not be entitled to the protection of
Chapter VII at all.
What the Attorney-General does not concede is that Parliament is prohibited
by Chapter VII from transferring to a court composed of duly appointed
members of the lower judiciary jurisdiction which, at the time the
Constitution came into force, was exercisable only by a court composed of
duly appointed members of the higher judiciary.
In their Lordships' view Section 110 of the Constitution makes it apparent
that in providing in Section 103(1) that: 'There shall be a Court of Appeal for
Jamaica ...' the draftsman treated this form of words as carrying with it by
necessary implication that the judges of the court required to be established

Under Section 103 should exercise an appellate jurisdiction in all substantial
civil cases and in all serious criminal cases; and that the words that follow,
viz. 'which shall have such jurisdiction and powers as may be conferred upon
it by this Constitution or any other law,' do not entitle Parliament by an
ordinary law to deprive the Court of Appeal of a significant part of such
appellate jurisdiction or to confer it on judges who do not enjoy the security
of tenure which the Constitution guarantees to judges of the Court of Appeal.
Section 110(1) of the Constitution which grants to litigants wide rights of
appeal to Her Majesty in Council but only from 'decisions of the Court of
Appeal,' clearly proceeds on this assumption as to the effect of Section 103,
Section 110 would be rendered nugatory if its wide appellate jurisdiction
could be removed from the Court of Appeal by an ordinary law without
amendment of the Constitution.
Their Lordships see no reason why a similar implication should not be drawn
from the corresponding words of Section 97. The Court of Appeal of Jamaica
was a new court established under the Judicature (Appellate Jurisdiction)
Law 1962, which came into force one day before the Constitution, viz. on 5
August, 1962. The Supreme Court of Jamaica had existed under that title
since 1880. In the judges of that court there had been vested all that
jurisdiction in Jamaica which in their Lordships' view was characteristic of a
court to which in 1962 the description 'a Supreme Court' was appropriate in
a hierarchy of courts which was to include a separate 'Court of Appeal.' The
three kinds of jurisdiction that are characteristic of a Supreme Court where
appellate jurisdiction is vested in a separate court are: (1) unlimited original
jurisdiction in all substantial civil cases; (2) unlimited original jurisdiction in
all serious criminal offences; (3) supervisory jurisdiction over the
proceedings of inferior courts (viz. of the kind which owes its origin to the
prerogative writs of certiorari, mandamus and prohibition).
That Section 97(1) of the Constitution was intended to preserve in Jamaica a
Supreme Court exercising this characteristic jurisdiction is, in their Lordships'
view, supported by the provision in Section 13(1) of the Jamaica
(Constitution) Order in Council 1962, that 'the Supreme Court in existence
immediately before the commencement of this Order shall be the Supreme
Court for the purposes of the Constitution.' This is made an entrenched
provision of the Constitution itself by Section 21(1) of the Order in Council,
and confirms that the kind of court referred to in the words 'There shall be a
Supreme Court for Jamaica' was a court which would exercise in Jamaica the
three kinds of jurisdiction characteristic of a Supreme Court that have been
indicated above.
If, as contended by the Attorney-General, the words italicised above in
Section 97(1) entitled Parliament by an ordinary law to strip the Supreme
Court of all jurisdiction in civil and criminal cases other than that expressly
conferred upon it by Section 25 and Section 44, what would be left would be
a court of such limited jurisdiction that the label 'Supreme Court' would be a
false description; so too if all its jurisdiction (with those two exceptions)
were exercisable concurrently by other courts composed of members of the
lower judiciary. But more important, for this is the substance of the matter,
the individual citizen could be deprived of the safeguard, which the makers
of the Constitution regarded as necessary, of having important questions
affecting his civil or criminal responsibilities determined by a court, however

named, composed of judges whose independence from all local pressure by
Parliament or by the executive was guaranteed by a security of tenure more
absolute than that provided by the Constitution for judges of inferior courts.
Their Lordships therefore are unable to accept that the words in Section
97(1), upon which the Attorney-General relies, entitle Parliament by an
ordinary law to vest in a new court composed of members of the lower
judiciary a jurisdiction that forms a significant part of the unlimited civil,
criminal or supervisory jurisdiction that is characteristic of a 'Supreme Court'
and was exercised by the Supreme Court of Jamaica at the time when the
Constitution came into force, at any rate where such vesting is accompanied
by ancillary provisions, such as those contained in Section 6(1) of the Gun
Court Act 1974, which would have the consequence that all cases falling
within the jurisdiction of the new court would in practice be heard and
determined by it instead of by a court composed of judges of the Supreme
Court.
xxx
In their Lordships' view the provisions of the 1974 Act, in so far as they
provide for the establishment of a Full Court Division of the Gun Court
consisting of three resident magistrates, conflict with Chapter VII of the
Constitution and are accordingly void by virtue of Section 2.
xxx
Thus Parliament, in the exercise of its legislative power, may make a law
imposing limits upon the discretion of the judges who preside over the
courts by whom offences against that law are tried to inflict on an individual
offender a custodial sentence the length of which reflects the judge's own
assessment of the gravity of the offender's conduct in the particular
circumstance of his case. What Parliament cannot do, consistently with the
separation of powers, is to transfer from the judiciary to any executive body
whose members are not appointed under Chapter VII of the Constitution, a
discretion to determine the severity of the punishment to be inflicted upon an
individual member of a class of offenders. Whilst none would suggest that a
Review Board composed as is provided in Section 22 of the Gun Court Act
1974 would not perform its duties responsibly and impartially, the fact
remains that the majority of its members are not persons qualified by the
Constitution to exercise judicial powers. A breach of a constitutional
restriction is not excused by the good intentions with which the legislative
power has been exceeded by the particular law. If, consistently with the
Constitution, it is permissible for the Parliament to confer the discretion to
determine the length of custodial sentences for criminal offences on a body
composed as the Review Board is, it would be equally permissible to a less
well-intentioned Parliament to confer the same discretion on any other
person or body of persons not qualified to exercise judicial powers, and in
this way, without any amendment of the Constitution, to open the door to the
exercise of arbitrary power by the executive in the whole field of criminal
law.
xxx
Their Lordships would hold that the provisions of Section 8 of the Act

relating to the mandatory sentence of detention during the Governor-
General's pleasure and the provisions of Section 22 relating to the Review
Board are a law made after the coming into force of the Constitution which is
inconsistent with the provisions of the Constitution relating to the separation
of powers. They are accordingly void by virtue of Section 2 of the
Constitution.
(ii) In the same sequence, learned Counsel for the Petitioners invited our attention to
Liyanage v. Reginam (1966) 1 All ER 650. It is first necessary to record the
factual/legal matrix, in the cited judgment. All the 11 Appellants in the matter before
the Privy Council, were charged with offences arising out of an abortive coup d'e'tat
on 27.1.1962. The factum of the said coup d'e'tat, was set out in a White Paper
issued by the Government of Ceylon on 13.2.1962. The White Paper gave the names
of 13 alleged conspirators including the Appellants. The White Paper concluded by
observing, that a deterrent punishment of a severe character ought to be imposed, on
all those who were guilty. On 16.3.1962, the Criminal Law (Special Provisions) Act,
No. 1 of 1962 was passed. It was given retrospective effect from 1.1.1962. It was
limited in operation to those who were accused of offences against the State, on or
around 27.1.1962. The above Act legalized imprisonment of the Appellants, while
they were awaiting trial. It modified a section of the Penal Code, so as to enact ex
post facto, a new offence, to meet the circumstance of the abortive coup. It altered
ex post facto, the law of evidence, regarding settlements made by an accused, while
in custody. It enacted a minimum punishment, accompanied by forfeiture of property,
for the offences for which the Appellants were tried. Under Section 440A of the Code
of Criminal Procedure, trial in case of sedition, could be directed to be before three
judges without a jury. The instant provision was amended by the above Act, so as to
extend the same, to the offences for which the Appellants were charged. Under
Section 9 of the above Act, the Minister of Justice was empowered to nominate the
three judges. In exercise of his powers Under Section 9, the Minister of Justice had
nominated three judges, to try the Appellants without a jury. The Supreme Court
upheld the objection raised by the Appellants, that Section 9 was ultra vires the
Constitution of Ceylon, and that, the nomination was invalid. Thereafter, the Criminal
Law Act, No. 31 of 1962 was passed. It repealed Section 9 of the earlier Act. It
amended the power of nomination, in that, the power was conferred on the Chief
Justice. On appeal by the Appellants, against the conviction and sentence from their
trial before a Court of three judges nominated under the Act, it was held, that the
Criminal Law (Special Provisions) Act, No. 1 of 1962, as well as, the Criminal Law
Act, No. 31 of 1962, were invalid for the two reasons. Firstly, under the Constitution
of Ceylon, there was a separation of powers. The power of the judicature, while the
Constitution stood, could not be usurped or infringed by the executive or the
legislature. Secondly, the Criminal Law (Special Provisions) Act, No. 1 of 1962, as
well as, the Criminal Law Act, No. 31 of 1962 were aimed at individuals concerned in
an abortive coup, and were not legislation effecting criminal law of general
application. Although not every enactment ad hominem, and ex post facto,
necessarily infringed the judicial power, yet there was such infringement in the
present case, by the above two Acts. In addition to the above conclusions, it was also
held, that the joint effect of the Ceylon Constitution Order in Council 1946, and the
Ceylon Independence Act, 1947, was intended to, and resulted in, giving the Ceylon
Parliament, full legislative powers of an independent sovereign State. Consequently,
the legislative power of the Ceylon Parliament, was not limited by inability to pass
laws, which offended fundamental principles of justice. The Privy Council while
examining the above controversy, rendered the following opinion:
In Ceylon, however, the position was different. The change of sovereignty

In Ceylon, however, the position was different. The change of sovereignty
did not in itself produce any apparent change in the constituents or the
functioning of the Judicature. So far as the courts were concerned their work
continued unaffected by the new Constitution, and the Ordinances under
which they functioned remained in force. The judicial system had been
established in Ceylon by the Charter of Justice in 1833. Clause 4 of the
Charter read:
And to provide for the administration of justice hereafter in Our said
Island Our will and pleasure is, and We do hereby direct that the
entire administration of justice, civil and criminal therein, shall be
vested exclusively in the courts erected and constituted by this Our
Charter... and it is Our pleasure and We hereby declare, that it is
not, and shall not be competent to the Governor of Our said Island
by any Law or Ordinance to be by him made, with the advice of the
Legislative Council thereof or otherwise howsoever, to constitute or
establish any court for the administration of justice in any case civil
or criminal, save as hereinafter is expressly saved and provided.
Clause 5 established the Supreme Court and Clause 6 a Chief Justice and two
puisne judges. Clause 7 gave the Governor powers of appointing their
successors. There follow many clauses with regard to administrative,
procedural and jurisdictional matters. Some half a century later Ordinances
(in particular the Courts Ordinance) continued the jurisdiction and procedure
of the courts. Thereunder the courts have functioned continuously up to the
present day.
xxx
The Constitution is significantly divided into parts-"Part 2 The Governor-
General," "Part 3 The Legislature," "Part 4 Delimitation of Electoral Districts,"
"Part 5 The Executive," "Part 6 The Judicature," "Part 7 The Public Service,"
"Part 8 Finance." And although no express mention is made of vesting in the
judicature the judicial power which it already had and was wielding in its
daily process under the Courts Ordinance, there is provision under Part 6 for
the appointment of judges by a Judicial Service Commission which shall not
contain a member of either House, but shall be composed of the Chief Justice
and a judge and another person who is or shall have been a judge. Any
attempt to influence any decision of the Commission is made a criminal
offence. There is also provision that judges shall not be removable except by
the Governor-General on an address of both Houses.
These provisions manifest an intention to secure in the judiciary a freedom
from political, legislative and executive control. They are wholly appropriate
in a Constitution which intends that judicial power shall be vested only in the
judicature. They would be inappropriate in a Constitution by which it was
intended that judicial power should be shared by the executive or the
legislature. The Constitution's silence as to the vesting of judicial power is
consistent with its remaining, where it had lain for more than a century, in
the hands of the judicature. It is not consistent with any intention that
henceforth it should pass to or be shared by, the executive or the legislature.
Counsel for the Appellants succinctly summarises his attack on the Acts in
question as follows. The first Act was wholly bad in that it was a special

direction to the judiciary as to the trial of particular prisoners who were
identifiable (in view of the White Paper) and charged with particular offences
on a particular occasion. The pith and substance of both Acts was a
legislative plan ex post facto to secure the conviction and enhance the
punishment of those particular individuals. It legalised their imprisonment
while they were awaiting trial. It made admissible their statements
inadmissibly obtained during that period. It altered the fundamental law of
evidence so as to facilitate their conviction. and finally it altered ex post
facto the punishment to be imposed on them.
In their Lordships' view that cogent summary fairly describes the effect of the
Acts. As has been indicated already, legislation ad hominem which is thus
directed to the course of particular proceedings may not always amount to an
interference with the functions of the judiciary. But in the present case their
Lordships have no doubt that there was such interference; that it was not
only the likely but the intended effect of the impugned enactments; and that
it is fatal to their validity. The true nature and purpose of these enactments
are revealed by their conjoint impact on the specific proceedings in respect
of which they were designed, and they take their colour, in particular, from
the alterations they purported to make as to their ultimate objective, the
punishment of those convicted. These alterations constituted a grave and
deliberate incursion into the judicial sphere. Quite bluntly, their aim was to
ensure that the judges in dealing with these particular persons on these
particular charges were deprived of their normal discretion as respects
appropriate sentences. They were compelled to sentence each offender on
conviction to not less than ten years' imprisonment, and compelled to order
confiscation of his possessions, even though his part in the conspiracy might
have been trivial.
The trial court concluded its long and careful judgment with these words
((1965), 67 CNLR at p. 424):
But we must draw attention to the fact that the Act of 1962 radically
altered ex post facto the punishment to which the Defendants are
rendered liable. The Act removed the discretion of the court as to the
period of the sentence to be imposed, and compels the court to
impose a term of 10 years' imprisonment, although we would have
wished to differentiate in the matter of sentence between those who
organised the conspiracy and those who were induced to join it. It
also imposes a compulsory forfeiture of property. These amendments
were not merely retroactive: they were also ad hoc, applicable only
to the conspiracy which was the subject of the charges we have
tried. We are unable to understand this discrimination. To the courts,
which must be free of political bias, treasonable offences are equally
heinous, whatever be the complexion of the Government in power or
whoever be the offenders.
Their Lordships sympathise with that protest and wholly agree with it.
One might fairly apply to these Acts the words of Chase J., in the Supreme
Court of the United States in Calder v. Bull: "These acts were legislative
judgments; and an exercise of judicial power."

Blackstone in his Commentaries, Vol. I (4th Edition), p. 44, wrote:
Therefore a particular act of the legislature to confiscate the goods of
Titius, or to attaint him of high treason does not enter into the idea
of a municipal law: for the operation of this act is spent upon Titius
only and has no relation to the community in General: it is rather a
sentence than a law.
If such Acts as these were valid the judicial power could be wholly absorbed
by the legislature and taken out of the hands of the judges. It is appreciated
that the legislature had no such general intention. It was beset by a grave
situation and it took grave measures to deal with it, thinking, one must
presume, that it had power to do so and was acting rightly; But that
consideration is irrelevant, and gives no validity to acts which infringe the
Constitution. What is done once, if it be allowed, may be done again and in a
lesser crisis and less serious circumstances; and thus judicial power may be
eroded. Such an erosion is contrary to the clear intention of the Constitution.
In their Lordships' view the Acts were ultra vires and invalid.
xxx
It was agreed between the parties that if the Acts were ultra vires and
invalid, the convictions cannot stand. Their Lordships have therefore humbly
advised Her Majesty that this appeal should be allowed and that the
convictions should be quashed.
(iii) Reference was then made to Director of Public Prosecutions of Jamaica v.
Mollison (2003) 2 AC 411. The factual controversy which led to the above cited
decision of the Privy Council may be noticed. On 16.3.1994, when Kurt Mollison was
merely 16 years old, he committed a murder in furtherance of a robbery. His offence
was described as a "capital murder", under the law of Jamaica. After his trial, he was
convicted on 21.4.1997, when he was 19 years old. On 25.4.1997, he was sentenced
Under Section 29(1) of the Juveniles Act, 1951, to be detained during the Governor-
General's pleasure. On 16.2.2000, although the Court of Appeal refused his prayer for
leave to appeal against his conviction, it agreed to examine his contention, whether
the sentence imposed on him was compatible with the provisions of the Constitution
of Jamaica. The Court of Appeal accepted his contention. The sentence of detention,
during the Governor-General's pleasure, was set aside. In its place, he was sentenced
to life imprisonment, with the recommendation that, he be not considered for parole
till he had served a term of 20 years' imprisonment. In the controversy which came
up for consideration before the Privy Council, there were two main issues. Firstly,
whether the sentence of detention during the Governor-General's pleasure authorized
by Section 29(1), was a power exercised by him in his executive capacity. And
secondly, whether the power to determine the measure for punishment to be inflicted
on an offender, is compatible with the Constitution. The Privy Council, while
examining the controversy, opined as under:
Section 29 of the Juveniles Act 1951
[3] Section 3 of the Offences against the Person Act 1864, as amended,
provides that every person convicted of capital murder shall be sentenced to
death. But special provision has been made for those who commit this crime
when aged under 18. Following a number of amendments made pursuant to

S ecti o n 4 of the Jamaica (Constitution) Order in Council 1962 (SI
1962/1500), Section 29 of the Juveniles Act 1951 now provides, so far as
material to the main issue in this appeal, as follows:
(1) Sentence of death shall not be pronounced on or recorded
against a person convicted of an offence if it appears to the court
that at the time when the offence was committed he was under the
age of 18 years, but in place thereof the court shall sentence him to
be detained during Her Majesty's pleasure, and, if so sentenced, he
shall, notwithstanding anything in the other provisions of this Law,
be liable to be detained in such place (including, save in the case of
a child, an adult correctional centre) and under such conditions as
the Minister may direct, and while so detained shall be deemed to be
in legal custody.
(4) The Governor-General may release on licence any person
detained Under Sub-section (1) or (3) of this section. Such licence
shall be in such form and contain such conditions as the Governor-
General may direct, and may at any time be revoked or varied by the
Governor-General. Where such licence is revoked the person to
whom it relates shall return forthwith to such place as the Governor-
General may direct, and if he fails to do so may be arrested by any
constable without warrant and taken to such place.
[4] Section 29 as originally enacted was amended in 1964 to substitute
"Minister" for "Governor" in Sub-section (1) and "Governor General" for
"Governor" in each of the four references originally made to the Governor in
Sub-section (4). In 1975 Sub-section (1) was further amended to make
plain, reversing the effect of Baker v. The Queen [1975] AC 774 : [1975] 3
All ER 55, that the statutory prohibition on pronouncement of the death
sentence applied to those appearing to be aged under 18 at the time when
they had committed the offence, not at the time of sentence. In 1985, the
reference to "an adult correctional centre" was substituted for the previous
reference to "a prison". The enacted reference to "Her Majesty's pleasure"
has not, however, been amended, no doubt because Section 68(2) of the
Constitution of Jamaica provides that the executive authority of Jamaica may
be exercised on behalf of Her Majesty by the Governor-General. In
recognition of this constitutional reality, it appears to be the practice where
Section 29(1) applies, as was done in this case, to call the sentence one of
detention during the Governor-General's pleasure, and in this opinion that
usage will be adopted.
xxx
The Constitution
xxx
The first question: is Section 29 compatible with the Constitution of Jamaica?
[11] Both the Director and the Solicitor-General, who appeared with him,
accepted at the hearing that, subject to their argument based on Section
26(8) of the Constitution, Section 29 of the Juveniles Act 1951 infringes the
rights guaranteed by, and so is inconsistent with, Sections 15(1)(b) and

20(1) of the Constitution. Given this concession, rightly made, it is
unnecessary to do more than note the reason for it. A person detained during
the Governor-General's pleasure is deprived of his personal liberty not in
execution of the sentence or order of a court but at the discretion of the
executive. Such a person is not afforded a fair hearing by an independent
and impartial court, because the sentencing of a criminal Defendant is part of
the hearing and in cases such as the present sentence is effectively passed
by the executive and not by a court independent of the executive.
xxx
[13]...It does indeed appear that the sentencing provisions under challenge
in the Hinds case were held to be unconstitutional not because of their
repugnancy to any of the rights guaranteed by sections in Chapter III of the
Constitution but because of their incompatibility with a principle on which
the Constitution itself was held to be founded. There appears to be no reason
why (subject to the other arguments considered below) the reasoning in the
Hinds case does not apply to the present case. It would no doubt be open to
the Board to reject that reasoning, but it would be reluctant to depart from a
decision which has stood unchallenged for 25 years, the more so since the
decision gives effect to a very important and salutary principle. Whatever
overlap there may be under constitutions on the Westminster model between
the exercise of executive and legislative powers, the separation between the
exercise of judicial powers on the one hand and legislative and executive
powers on the other is total or effectively so. Such separation, based on the
rule of law, was recently described by Lord Steyn as "a characteristic feature
of democracies": R (Anderson) v. Secretary of State for the Home
Department [2002] 4 All ER 1089 : [2002] 3 WLR 1800, at pp. 1821-1822,
para 5 of the latter report. In the opinion of the Board, Mr. Fitzgerald has
made good his challenge to Section 29 based on its incompatibility with the
constitutional principle that judicial functions (such as sentencing) must be
exercised by the judiciary and not by the executive.
xxx
...The nature and purpose of the sentence of detention during the Governor-
General's pleasure are clear, as explained above. The only question is who
should decide on the measure of punishment the detainee should suffer.
Since the vice of Section 29 is to entrust this decision to the executive
instead of the judiciary, the necessary modification to ensure conformity with
the Constitution is (as in Browne v. The Queen [2000] 1 AC 45) to substitute
"the court's" for "Her Majesty's" in Sub-section (1) and "the court" for each
reference to "the Governor-General" in Sub-section (4).
(iv) Our attention was also invited to Harry Brandy v. Human Rights and Equal
Opportunity Commission (1995) 183 CLR 245. The instant judgment was rendered by
the High Court of Australia. The factual controversy which led to the above
determination is being narrated first. The Plaintiff Harry Brandy was engaged as an
officer of the Aboriginal and Torres Strait Islander Commission. The third Defendant
John Bell was also an officer of the said Commission. The Plaintiff and the third
Defendant continued to serve the Commission until the Commission itself ceased to
exist. On 13.3.1990, John Bell lodged a complaint with the Human Rights and Equal
Opportunity Commission, wherein he alleged, verbal abuse and threatening behaviour

on the part of Harry Brandy, while both were in the employment of the Commission.
Thereafter, John Bell issued a notice Under Section 24 of the Racial Discrimination
Act, 1975. And accordingly, the Commissioner referred the complaint to the
Commission. The power of the Commission, to hold an enquiry under the Racial
Discrimination Act, 1975 against Harry Brandy, was exercised by the second
Defendant. The second Defendant had been appointed Under Section 24 of the Racial
Discrimination Act, 1975, which empowered the Minister, to appoint a person to
perform and discharge the functions of the Commissioner. The second Defendant
returned his findings Under Section 25Z of the Racial Discrimination Act, 1975 on
22.12.1993. The Defendant's complaint was found to be substantiated. In disposing
of the controversy, the second Defendant required Harry Brandy, the Plaintiff, to do
the following acts/course of conduct:
(1) that the Plaintiff do apologies to the Third Defendant, the form of the
apology being annexed to the determination;
(2) that the Plaintiff do pay the sum of $2500 to the Third Defendant by way
of damages for the pain, humiliation, distress and loss of personal dignity
suffered by the Third Defendant;
(3) that ATSIC do take disciplinary action against the Plaintiff, in relation to
the conduct which he perpetrated against the Third Defendant;
(4) that ATSIC do apologies to the Third Defendant in relation to the
handling of his complaint, the form of the apology being annexed to the
determination;
(5) that ATSIC do pay the sum of $10000 to the Third Defendant by way of
damages for the pain, humiliation, distress and loss of personal dignity
suffered by the Third Defendant.
In order to contest the determination rendered by the second Defendant, Harry
Brandy raised a challenge to the provisions of the Racial Discrimination Act, 1975.
The challenge raised by him came to be formulated in the following words:
In consequence of the amendments embodied in the Sex Discrimination and
other Legislation Amendment Act 1992 and/or the Law and Justice
Legislation Amendment Act 1993 as they affect the Racial Discrimination Act
1975 are any, and if so which, of the provisions of Part III of the Racial
Discrimination Act invalid?
While adjudicating upon the matter, the High Court of Australia held as under:
The Plaintiff's challenge to the Act-
1 5 . The Plaintiff's challenge to particular provisions of the Act is
based upon the proposition that they provide for an exercise of
judicial power otherwise than in conformity with Ch. III of the
Commonwealth Constitution in that the power is exercised by the
Commission which is not a court established pursuant to Section 71
and constituted in accordance with Section 72 of the Constitution.
The Plaintiff further argues that the correctness of this proposition is
not affected by the provisions for review by the Federal Court.

xxx
2 1 . Although many decision-making functions may take their
character as an exercise of judicial, executive or legislative power
from their legislative setting, the character of the decision-maker and
the nature of the decision-making process, some decision-making
functions are exclusive and inalienable exercises of judicial power
(34 Reg. v. Davison (1954) 90 CLR at 368-370 per Dixon CJ and
McTiernan J). As Dixon CJ and McTiernan J observed in Reg. v.
Davison (35 ibid. at 369):
The truth is that the ascertainment of existing rights by the
judicial determination of issues of fact or law falls
exclusively within judicial power so that the Parliament
cannot confide the function to any person or body but a
court constituted Under Sections 71 and 72 of the
Constitution.
In that statement, the expression "judicial determination" means an
authoritative determination by means of the judicial method, that is,
an enforceable decision reached by applying the relevant principles
of law to the facts as found.
xxx
2 5 . Turning to the case before the Court, whatever might be the
enforceability of a declaration that the Plaintiff "do apologies", a
declaration that the Plaintiff "do pay the sum of $2 500" to the third
Defendant, once registered, attracts the operation of Section 53 of
the Federal Court of Australia Act 1976 (Cth). By that section, a
person in whose favour a judgment is given is entitled to the same
remedies for enforcement, by execution or otherwise, as are allowed
by the laws of the State or Territory applicable. In the present case,
this means New South Wales. Section 53 does not affect the
operation of any provision made by or under any other Act or the
Rules of Court for the execution and enforcement of judgments of
the Court (40 Section 53(2)).
26. But Section 25ZAB goes beyond providing the machinery for the
enforcement of a determination. It purports to give a registered
determination effect "as if it were an order made by the Federal
Court". A judicial order made by the Federal Court takes effect as an
exercise of Commonwealth judicial power, but a determination by
the Commission is neither made nor registered in the exercise of
judicial power. An exercise of executive power by the Commission
and the performance of an administrative function by the Registrar of
the Federal Court simply cannot create an order which takes effect as
an exercise of judicial power; conversely, an order which takes effect
as an exercise of judicial power cannot be made except after the
making of a judicial determination. Thus, Section 25ZAB purports to
prescribe what the Constitution does not permit.
(v) Our attention was then invited to Reference Re Residential Tenancies Act 123 DLR
(3d) 554. The factual matrix, in furtherance of which the above judgment was

rendered by the Supreme Court of Canada, is as follows. The provisions of the
Residential Tenancies Act, 1979 (Ontario), by which the Residential Tenancy
Commission was empowered to order eviction of tenants, as also, could require
landlords and tenants to comply with the obligations imposed under the said Act,
were assailed, as offending against the limitation contained in Section 96 of the
British North America Act, 1867, and therefore, ultra vires. In recording its
conclusions on a similar analogy, as in the judgments noticed above, the Supreme
Court of Canada observed as under:
Under Section 92(14) of the British North America Act, 1867, the provincial
Legislatures have the legislative power in relation to the administration of
justice in the Province. This is a wide power but subject to subtraction of
Sections 96 to 100 in favour of the federal authority. Under Section 96 the
Governor General has the sole power to appoint the judges of the Superior,
District and County Courts in each Province. Under Section 97 the Judges
who are to be appointed to the Superior, District and County Courts are to be
selected from the respective bars of each Province. Under Section 100 the
Parliament of Canada is obliged to fix and provide for their salaries. Section
92(14) and Sections 96 to 100 represent one of the important compromises
of the Fathers of Confederation. It is plain that what was sought to be
achieved through this compromise, and the intended effect of Section 96,
would be destroyed if a Province could pass legislation creating a tribunal,
appoint members thereto, and then confer on the tribunal the jurisdiction of
the Superior Courts. What was conceived as a strong constitutional base for
national unity, through a unitary judicial system, would be gravely
undermined. Section 96 has thus come to be regarded as limiting provincial
competence to make appointments to a tribunal exercising Section 96 judicial
powers and therefore as implicitly limiting provincial competence to endow a
provincial tribunal with such powers.
IV
The belief that any function which in 1867 had been vested in a Section 96
Court must forever remain in that Court reached its apogee in the judgment
of Lord Atkin in Toronto Corporation v. York Tp. Et. Al. (1938) 1 DLR 593 :
(1938) AC 415 : (1938) 1 WWR 452. Describing Section 96 as one of the
"three principal pillars in the temple of justice... not to be undermined", Lord
Atkin held that the Ontario Municipal Board could not validly receive "judicial
authority". At the same time, he held that the Municipal Board was in 'pith
and substance' an administrative body, and the impugned 'judicial functions'
were severable from the administrative powers given to the Board under its
enabling legislation. There was no analysis of the interrelationship between
the judicial and administrative features of the legislative scheme; the
assumption was that any attempt to confer a Section 96 function on a
provincially-appointed tribunal was ultra vires the Legislature. This sweeping
interpretation of Section 96, with its accompanying restrictive view of
provincial legislative authority Under Section 92, was limited almost
immediately by the judgment of this Court in the Reference re Adoption Act
and Other Act, etc., (1938) 3 DLR 497 : 71 CCC 110 : (1938) SCR 398. Chief
Justice Duff held that the jurisdiction of inferior Courts was not "fixed forever
as it stood at the date of Confederation". On his view, it was quite possible
to remove jurisdiction from a Superior Court and vest it in a Court of
summary jurisdiction. The question which must be asked was whether "the

jurisdiction conferred upon Magistrates under these statutes broadly
conforms to a type of jurisdiction generally exercisable by Courts of
summary jurisdiction rather than the jurisdiction of Courts within the purview
of Section 96" (p. 514). In the Adoption Reference, Duff C.J. looked to the
historical practice in England and concluded that the jurisdiction conferred on
Magistrates under the legislation before the Court in the Reference was
analogous to the jurisdiction under the English Poor Laws, a jurisdiction
which had belonged to courts of summary nature rather than to Superior
Courts. On this basis, the legislation was upheld. The Adoption Reference
represented a liberalization of the view of Section 96 adopted by the Privy
Council in Toronto v. York, at least in the context of a transfer of jurisdiction
from a Superior Court to an inferior Court.
The same process of liberalization, this time in the context of a transfer of
jurisdiction from a Superior Court to an administrative tribunal, was initiated
by the Privy Council in Labour Relations Board of Saskatchewan v. John East
Iron Works, Limited MANU/PR/0115/1948 : (1948) 4 DLR 673 : (1949) AC
134 : (1948) 2 WWR 1055. Lord Simonds proposed a two-fold test. The first
limb of the test is to ask whether the board or tribunal exercises "judicial
power". Lord Simonds did not propose a 'final' answer to the definition of
"judicial power", but he suggested at p. 680 DLR, p. 149 AC, that:
...the conception of the judicial function is inseparably bound up
with the idea of a suit between parties, whether between Crown and
subject or between subject and subject, and that it is the duty of the
Court to decide the issue between those parties, with whom alone it
rests to initiate or defend or compromise the proceedings.
If the answer to the initial question as to "judicial power" is in the negative, then that
concludes the matter in favour of the provincial board.
If, however, the power is in fact a judicial power, then it becomes necessary to ask a
second question: in the exercise of that power, is the tribunal analogous to a
Superior, District or County Court?
xxx
Step two involves consideration of the function within its institutional setting to
determine whether the function itself is different when viewed in that setting. In
particular, can the function still be considered to be a 'judicial' function? In
addressing the issue, it is important to keep in mind the further statement by Rand J.
in Dupont v. Inglis (at p. 424 DLR, p. 543 SCR) that "...it is the subject-matter rather
than the apparatus of adjudication that is determinative". Thus the question of
whether any particular function is 'judicial' is not to be determined simply on the
basis of procedural trappings. The primary issue is the nature of the question which
the tribunal is called upon to decide. Where the tribunal is faced with a private
dispute between parties, and is called upon to adjudicate through the application of a
recognized body of rules in a manner consistent with fairness and impartiality, then,
normally, it is acting in a 'judicial capacity'. To borrow the terminology of Professor
Ronald Dworkin, the judicial task involves questions of 'principle', that is,
consideration of the competing rights of individuals or groups. This can be contrasted
with questions of 'policy' involving competing views of the collective good of the
community as a whole. (See Dworkin, Taking Rights Seriously (1977) at pp. 82-90

(Duckworth).
A perusal of the conclusions recorded by the Supreme Court of Canada reveals, that
the court evolved a three step test to determine the constitutional validity of a
provision which vested adjudicatory functions in an administrative tribunal. The first
step was determined in the light of the historical conditions existing in 1867, i.e.
before the British North America Act, 1867 was enacted. The first step required a
determination whether at the time of Confederation, the power or jurisdiction now
vested in an administrative tribunal, was exercised through a judicial court process.
If the answer to the first step was in the negative, the constitution of the
administrative tribunal would be valid. If historical evidence indicated, that the
power, now vested with an administrative tribunal, was identical or analogous to a
power exercised Under Section 96 Courts at Confederation, then the matter needed to
be examined further. The second step was to determine, whether the power to be
exercised by the administrative tribunal, should be considered as a judicial function.
Insofar as the instant aspect of the matter is concerned, it was illustratively
concluded, that where power vested in the administrative tribunal was in respect of
adjudication of disputes between the parties, which required to be settled through an
application of a recognized body of rules, in a manner consistent with fairness and
impartiality, then the said power could be classified as judicial power/function. If,
however, while applying the second step, the answer was in the negative, it was not
necessary to proceed with the matter further, and the vesting of the power with the
administrative tribunal should be considered as valid. If the power or jurisdiction is
exercised in a judicial manner, then it is imperative to proceed to the third and final
step. The third step contemplates analysis and review of the administrative tribunal's
functions as a whole, and to examine the same in its entire institutional context. It
contemplated an examination of the interrelationship between the administrative
tribunal's judicial powers, and the other powers and jurisdiction conferred by the
legislative enactment. If a judicial hearing is a must, whereafter a judgment was
required to be rendered, the administrative tribunal would be deemed to be
exercising jurisdiction which is ordinarily vested in a Court. It is after recording a
finding in the affirmative on all the three steps, that it will be possible to conclude,
whether judicial functions have been required to be exercised by the concerned
administrative tribunal. Having examined the controversy in Reference Re Residential
Tenancies Act (supra), the Supreme Court of Canada arrived at the conclusion, that
the Residential Tenancy Commission could have been authorized to grant orders for
possession to a landlord or to grant orders for specific performance of a tenancy.
23. Finally, learned Counsel for the Petitioners placed reliance on "Constitutional Law
of Canada", by Peter W. Hogg (third edition, 1992, by Carswell, Thomson
Professional Publishing) in order to assert, that even under Constitutions where the
separation of power rule has not been explicitly provided for, there would be
limitations in delegation of Court functions to tribunals. Relevant text on the subject,
from the above treatise is being reproduced hereunder:
7.3 Implications of Constitution's judicature sections
(a) Separation of powers
There is no general "separation of powers" in the Constitution Act, 1867. The
Act does not separate the legislative, executive and judicial functions and
insist that each branch of government exercise only "its own" function. As
between the legislative and executive branches, any separation of powers

would make little sense in a system of responsible government; and it is
clearly established that the Act does not call for any such separation. As
between the judicial and the two political branches, there is likewise no
general separation of powers. Either the Parliament or the Legislatures may
by appropriate legislation confer non-judicial functions on the courts and
(with one important exception, to be discussed) may confer judicial functions
on bodies that are not courts.
Each Canadian jurisdiction has conferred non-judicial functions on its courts,
by enacting a statute which enables the government to refer a question of
law to the courts for an advisory opinion. The rendering of advisory opinions
to government is traditionally an "executive" function, performed by the law
officers of the government. For that reason, the supreme Court of the United
States and the High Court of Australia have refused to render advisory
opinions, reasoning that a separation of powers doctrine in their
Constitutions confines the courts to the traditional judicial function of
adjudicating upon genuine controversies. But in the Reference Appeal
(1912), A-G Ont. V.A.-G. Can. (Reference Appeal) (1912) AC 571, the Privy
Council refused to read any such limitation into Canada's Constitution. Their
lordships upheld the federal reference statute, apparently as a law in relation
to the supreme court of Canada (Section 101). The provincial reference
statutes are also valid as laws in relation to the administration of justice in
the province (Section 92(14)).
The conferral of judicial functions on bodies which are not courts is likewise
subject to no general prohibition. However, here there is an important
qualification to be made. The courts have held that the provincial
Legislatures may not confer on a body other than a superior, district or
county court judicial functions analogous to those performed by a superior,
district or county court. This little separation of powers doctrine has been
developed to preclude evasion of the stipulations of Sections 96 to 100 of
the constitution Act, 1867.
If Sections 96 to 100 of the constitution Act, 1867 were read literally, they
could easily be evaded by a province which wanted to assume control of its
judicial appointments. The province could increase the jurisdiction of its
inferior courts so that they assumed much of the jurisdiction of the higher
courts; or the province could best higher-court jurisdiction in a newly-
established tribunal, and call that tribunal an inferior court or an
administrative tribunal. It is therefore not surprising that the courts have
added a gloss to Section 96 and the associated constitutional provisions.
What they have said is this: if a province invests a tribunal with a jurisdiction
of a kind that ought property to belong to a superior, district or county court,
then that tribunal, whatever its official name, is for constitutional purposes a
superior, district or county court and must satisfy the requirements of
Section 96 and the associated provisions of the constitution Act, 1867. This
means that such a tribunal will be invalidly constituted, unless its members
(1) are appointed by the federal government in conformity with Section 96,
(2) are drawn from the bar of the province in conformity with Sections 97
and 98, and (3) receive salaries that are fixed and provided by the federal
parliament in conformity with Section 100.
So far the law is clear, and the policy underlying it is comprehensible. But

the difficulty lies in the definition of those functions that ought properly to
belong to a superior, district or county court. The courts have attempted to
fashion a judicially enforceable rule which would separate "Section 96
functions" from other adjudicatory functions. The attempt has not been
successful, and it is difficult to predict with confidence how the courts will
characterize particular adjudicatory functions. The uncertainty of the law,
with its risk of nullification, could be a serious deterrent to the conferral of
new adjudicatory functions on inferior courts or administrative tribunals, and
a consequent impediment to much new regulatory or social policy. For the
most part, the courts have exercised restraint in reviewing the provincial
statutes which create new adjudicatory jurisdictions, so that the difficulty has
not been as serious as it could have been. However, in the last two decades,
there has been a regrettable resurgence of Section 96 litigation: five
challenges to the powers of inferior courts or tribunals based on Section 96
have succeeded in the Supreme Court of Canada, A.G. Que. v. Farrah [1978]
2 S.C.R. 638; Re Residential Tenancies Act [1981] 1 S.C.R. 714; Crevier v.
A.G. Que. [1981] 2 S.C.R. 220; Re B.C. Family Relations Act [1982] 1.
S.C.R. 62; McEvoy v. A.G.N.B. [1983] 1 S.C.R. 704. Since the abolition of
Privy Council appeals, two other challenges have also been successful,
namely, A.G. Ont. v. Victoria medical building [1960] S.C.R. 32; Seminary of
Chicoutimi v. A.G. Que. [1973] S.C.R. 681, and these decisions have
spawned many more challenges. These developments are described in the
text that follows.
24. It was also the submission of the learned Counsel for the Petitioners, that the
proposition of law highlighted hereinabove on the basis of the provisions of
constitutions of different countries (Jamaica, Ceylon, Australia and Canada) decided
either by the Privy Council or the highest courts of the concerned countries, is fully
applicable to India as well. In order to demonstrate this, he placed reliance on State
of Maharashtra v. Labour Law Practitioners' Association MANU/SC/0121/1998 :
(1998) 2 SCC 688. The controversy in the cited case originated with the filing of a
writ petition by the Respondent Association challenging the appointment of Assistant
Commissioners of Labour (i.e., Officers discharging executive functions under the
Labour Department). The above appointments had been made, consequent upon
amendments to the provisions of the Bombay Industrial Relations Act, and the
Industrial Disputes (Maharashtra Amendment) Act. The submission advanced at the
hands of the Respondent Association was, that Labour Courts had been constituted in
the State of Maharashtra, under the Industrial Disputes Act, the Bombay Industrial
Relations Act, as also, the Maharashtra Recognition of Trade Unions and Prevention of
Unfair Labour Practices, Act. Qualifications of persons to be appointed as a judge of
the Labour Court under the Industrial Disputes Act, was stipulated in Section 7,
which provided as under:
(a) that he was or had been a Judge of a High Court; or
(b) that he had for a period of not less than three years been a District Judge
or an Additional District Judge; or
(c) that he had held the office of the Chairman or any other Member of the
Labour Appellate Tribunal or of any Tribunal for a period of not less than two
years; or
(d) that he had held any judicial office in India for not less than seven years;

or
(e) that he had been the Presiding Officer of a Labour Court constituted
under any provincial Act for not less than five years.
By the Industrial Disputes (Maharashtra Amendment) Act, 1974, Section7 was
amended, and three more sources of recruitment for the post of judge of the Labour
Court were added. These were:
(d-1) he has practiced as an advocate or attorney for not less than seven
years in the High Court, or any court, subordinate thereto, or any Industrial
Court or Tribunal or Labour Court, constituted under any law for the time
being in force; or
(d-2) he holds a degree in law of a University established by law in any part
of India and is holding or has held an office not lower in rank than that of a
Deputy Registrar of any such Industrial Court or Tribunal for not less than
five years; or
(d-3) he holds a degree in law of University established by law in any part of
India and is holding or has held an office not lower in rank than that of
Assistant Commissioner of Labour under the State Government for not less
than five years.
Under the Bombay Industrial Relations Act, as it originally stood, Section 9 provided,
that only such persons would be eligible for appointment as a judge of the Labour
Court, who possessed the qualifications laid down Under Article 234 of the
Constitution, for being eligible to enter judicial service in the State of Maharashtra.
By the Maharashtra Act 47 of 1977, Section 9 of the Bombay Industrial Relations Act
was amended by substituting a new Sub-section (2), which replaced the original
Sub-section (2) of Section 9. The amended Sub-section (2) was as follows:
9. (2) A person shall not be qualified for appointment as the presiding officer
of a Labour Court, unless:
(a) he has held any judicial office in India for not less than five
years; or
(b) he has practiced as an Advocate or Attorney for not less than
seven years in the High Court or any court subordinate thereto, or in
any Industrial Court, Tribunal or Labour Court constituted under any
law for the time being in force; or
(c) he holds a degree in law of a University established by law in any
part of India and is holding or has held an office not lower in rank
than that of Deputy Registrar of any such Industrial Court or
Tribunal, or of Assistant Commissioner of Labour under the State
Government, in both cases for not less than five years.
In the first instance, this Court for the first time declared the salient components of
the functions exercised by a civil court, as under:
6. In the case of The Bharat Bank Ltd. v. Employees MANU/SC/0030/1950 :
AIR 1950 SC 188, this Court considered whether an Industrial Tribunal was a
court. It said that one cannot go by mere nomenclature. One has to examine

the functions of a Tribunal and how it proceeds to discharge those functions.
It held that an Industrial Tribunal had all the trappings of a court and
performed functions which cannot but be regarded as judicial. The Court
referred to the Rules by which proceedings before the Tribunal were
regulated. The Court dwelt on the fact that the powers vested in it are similar
to those exercised by civil courts under the Code of Civil Procedure when
trying a suit. It had the power of ordering discovery, inspection etc. and
forcing the attendance of witnesses, compelling production of documents and
so on. It gave its decision on the basis of evidence and in accordance with
law. Applying the test laid down in the case of Cooper v. Wilson (1937) 2
K.B. 309 at p.340, this Court said that "a true judicial decision presupposes
an existence of dispute between two or more parties and then involves four
requisites-(1) the presentation of their case by the parties; (2) ascertainment
of facts by means of evidence adduced by the parties often with the
assistance of argument; (3) if the dispute relates to a question of law,
submission of legal arguments by the parties; and (4) by decision which
disposes of the whole matter by findings on fact and application of law to
facts so found. Judged by the same tests, a Labour Court would undoubtedly
be a court in the true sense of the term. The question, however, is whether
such a court and the presiding officer of such a court can be said to hold a
post in the judicial service of the State as defined in Article 236 of the
Constitution.
The other relevant observations recorded in the above cited judgment are reproduced
below:
13. Reliance has been placed upon this judgment as showing that judicial
service is interpreted narrowly to cover only the hierarchy of civil courts
headed by the District Judge. This Court, however, was not considering the
position of other civil courts, in the context of the extensive definition given
to the term "district judge". This Court was concerned with preserving
independence of the judiciary from the executive and making sure that
persons from non-judicial services, such as, the police, excise or revenue
were not considered as eligible for appointment as District Judges. That is
why the emphasis is on the fact that the judicial service should consist
exclusively of judicial officers. This judgment should not be interpreted
narrowly to exclude from judicial service new hierarchies of civil courts being
set up which are headed by a judge who can be considered as a District
Judge bearing in mind the extensive definition of that term in Article 236.
14. The High Court has, therefore, correctly interpreted the observations of
this Court in Chandra Mohan v. State of U.P. MANU/SC/0052/1966 : AIR
1966 SC 1987, as giving paramount importance to the enforcement of the
constitutional scheme providing for independence of the judiciary. The
concern of the court was to see that this independence was not destroyed by
an indirect method.
xxx
1 8 . In the case of Shri Kumar Padma Prasad v. Union of India and Ors.
MANU/SC/0227/1992 : (1992) 2 SCC 428, this Court had to consider
qualifications for the purpose of appointment as a Judge of the High Court
Under Article 217 of the Constitution. While interpreting the expression

"judicial office" Under Article 217(2)(a), this Court held that the expression
"judicial office" must be interpreted in consonance with the scheme of
Chapters v. and VI of Part VI of the Constitution. So construed it means a
judicial office which belongs to the judicial service as defined Under Article
236(b). Therefore, in order to qualify for appointment as a judge of a High
Court, a person must hold a judicial office which must be a part of the
judicial service of the State. After referring to the cases of Chandra Mohan
(supra) and Statesman (Private) Ltd. v. H.R. Deb MANU/SC/0123/1968 : AIR
1968 SC 1495, this Court said that the term "judicial office" in its generic
sense may include a wide variety of offices which are connected with the
administration of justice in one way or the other. Officers holding various
posts under the executive are often vested with magisterial power to meet a
particular situation. The Court said,
Did the framers of the Constitution have this type of 'offices' in mind
when they provided a source of appointment to the high office, of a
judge of the High Court from amongst the holders of a 'judicial
office'? The answer, has to be in the negative. We are of the view
that holder of judicial office Under Article 217(2)(a) means the
person who exercises only judicial functions, determines causes
inter-parties and renders decisions in a judicial capacity. He must
belong to the judicial service which as a class is free from executive
control and is disciplined to uphold the dignity, integrity and
independence of the judiciary.
Going by these tests laid down as to what constitutes judicial service Under
Article 236 of the Constitution, the Labour Court judges and the judges of the
Industrial Court can be held to belong to judicial service. The hierarchy
contemplated in the case of Labour Court judges is the hierarchy of Labour
Court judges and Industrial Court judges with the Industrial Court judges
holding the superior position of District Judges. The Labour Courts have also
been held as subject to the High Court's power of superintendence Under
Article 227.
xxx
20. The constitutional scheme under Chapter V of Part VI dealing with the
High Courts and Chapter VI of Part VI dealing with the subordinate courts
shows a clear anxiety on the part of the framers of the Constitution to
preserve and promote independence of the judiciary from the executive. Thus
Article 233 which deals with appointment of District Judges requires that
such appointments shall be made by the Governor of the State in
consultation with the High Court. Article 233(2) has been interpreted as
prescribing that "a person in the service of the Union or the State" can refer
only to a person in the judicial service of the Union or the State. Article 234
which deals with recruitment of persons other than District Judges to the
judicial service requires that their appointments can be made only in
accordance with the Rules framed by the Governor of the State after
consultation with the State Public Service Commission and with the High
Court. Article 235 provides that the control over district courts and courts
subordinate thereto shall be vested in the High Court; and Article 236 defines
the expression "District Judge" extensively as covering judges of a City Civil
Court etc. as earlier set out, and the expression "judicial service" as meaning

a service consisting exclusively of persons intended to fill the post of the
District Judge and other civil judicial posts inferior to the post of District
Judge. Therefore, bearing in mind the principle of separation of powers and
independence of the judiciary, judicial service contemplates a service
exclusively of judicial posts in which there will be a hierarchy headed by a
District Judge. The High Court has rightly come to the conclusion that the
persons presiding over Industrial and Labour Courts would constitute a
judicial service so defined. Therefore, the recruitment of Labour Court judges
is required to be made in accordance with Article 234 of the Constitution.
25. According to the learned Counsel for the Petitioners, the judgments and text cited
hereinabove, are fully applicable on the subject of administration of justice through
courts in India. Insofar as the instant aspect of the matter is concerned, learned
Counsel placed reliance on Article 50 of the Constitution, which is reproduced
hereunder:
50. Separation of judiciary from executive-The State shall take steps to
separate the judiciary from the executive in the public services of the State.
Based on Article 50 aforementioned, it was the contention of the learned Counsel for
the Petitioners, that the Constitution itself mandates a separate judicial hierarchy of
courts distinct from the executive.
26. Coupled with the above mandate, it was the contention of the learned Counsel
for the Petitioners, that the provisions of the Income Tax Act, the Customs Act, and
the Excise Act prior to independence of this country, and even thereafter, vested the
High Courts with an exclusive jurisdiction to settle "questions of law" emerging out of
tax disputes. It was further contended, that even after the enforcement of the
Constitution, with effect from 26.11.1949, the adjudicatory power to decide
substantial questions of law, continued to be vested in the High Courts, inasmuch as,
the jurisdictional High Courts continued to exercise appellate jurisdiction. The
position has remained unaltered till date. It is, therefore, the contention of the
learned Counsel for the Petitioners, that historically, constitutionally and legally, the
appellate jurisdiction in direct/indirect tax matters, has remained with the High
Courts, and it is not permissible either by way of an amendment to the Constitution
itself, or by enacting a legislation, to transfer the said appellate jurisdiction exercised
by the High Courts to a quasi-judicial tribunal.
The third contention:
2 7 . In the course of the submissions advanced by the learned Counsel for the
Petitioners on the third contention, wherein it was sought to be submitted, that
"separation of powers", the "rule of law" and "judicial review" constitute amongst
others, the "basic structure" of the Constitution, it was submitted, that Article 323B
inserted by the Constitution (Forty-second Amendment) Act, 1976 was violative of
the above mentioned components of the basic structure of the Constitution. Article
323B is being extracted hereunder:
B. Tribunals for other matters-(1) The appropriate Legislature may, by law,
provide for the adjudication or trial by tribunals of any disputes, complaints,
or offences with respect to all or any of the matters specified in Clause (2)
with respect to which such Legislature has power to make laws.
(2) The matters referred to in Clause (1) are the following, namely:

(a) levy, assessment, collection and enforcement of any tax;
(b) foreign exchange, import and export across customs frontiers;
(c) industrial and labour disputes;
(d) land reforms by way of acquisition by the State of any estate as
defined in Article 31A or of any rights therein or the extinguishment
or modification of any such rights or by way of ceiling on
agricultural land or in any other way;
(e) ceiling on urban property;
(f) elections to either House of Parliament or the House or either
House of the Legislature of a State, but excluding the matters
referred to in Article 329 and Article 329A;
(g) production, procurement, supply and distribution of foodstuffs
(including edible oilseeds and oils) and such other goods as the
President may, by public notification, declare to be essential goods
for the purpose of this article and control of prices of such goods;
(h) rent, its Regulation and control and tenancy issues including the
rights, title and interest of landlords and tenants;
(i) offences against laws with respect to any of the matters specified
in Sub-clauses (a) to (h) and fees in respect of any of those matters;
(j) any matter incidental to any of the matters specified in Sub-
clauses (a) to (i).
(3) A law made Under Clause (1) may-
(a) provide for the establishment of a hierarchy of tribunals;
(b) specify the jurisdiction, powers (including the power to punish
for contempt) and authority which may be exercised by each of the
said tribunals;
(c) provide for the procedure (including provisions as to limitation
and rules of evidence) to be followed by the said tribunals;
(d) exclude the jurisdiction of all courts except the jurisdiction of the
Supreme Court Under Article 136, with respect to all or any of the
matters falling within the jurisdiction of the said tribunals;
( e ) provide for the transfer to each such tribunal of any cases
pending before any court or any other authority immediately before
the establishment of such tribunal as would have been within the
jurisdiction of such tribunal if the causes of action on which such
suits or proceedings are based had arisen after such establishment;
( f ) contain such supplemental, incidental and consequential
provisions (including provisions as to fees) as the appropriate
Legislature may deem necessary for the effective functioning of, and

for the speedy disposal of cases by, and the enforcement of the
orders of, such tribunals.
(4) The provisions of this article shall have effect notwithstanding anything
in any other provision of this Constitution or in any other law for the time
being in force.
Explanation.--In this article, "appropriate Legislature", in relation to any
matter, means Parliament or, as the case may be, a State Legislature
competent to make laws with respect to such matter in accordance with the
provisions of Part XI.
Insofar as the aforesaid provision is concerned it was submitted, that Clause (3) of
Article 323B clearly violated all the above mentioned ingredients of the "basic
structure" theory. In this behalf it was sought to be asserted, that establishment of a
hierarchy of tribunals implicitly led to the inference, that the existing judicial process,
where adjudication was before a court of law, was to be substituted in its entirety.
Thereby, even the existing appellate process which was vested in High Courts was
sought to be substituted by tribunals. It was submitted, that creation of a parallel
judicial system, was alien to the provisions of the Constitution, which recognized the
judiciary as an independent component, separate from the executive and the
legislature. It was accordingly vehemently asserted, that the process of justice was
being substituted, by tribunalization of justice, which was clearly unacceptable under
the Constitution. Sub-clause (d) of Article 323B(3), according to the learned Counsel
for the Petitioners, divested jurisdiction vested in all civil courts for the adjudication
of the matters on the subjects referred to in Article 323B(2), including not only the
appellate jurisdiction of High Courts, but also, the power of "judicial review" vested
in High Courts Under Articles 226 and 227, of the Constitution. It was also the
contention of the learned Counsel for the Petitioners, that despite decisions rendered
by this Court, the legislature has repeated and reiterated what had been found to be
unsustainable in law.
2 8 . While canvassing the aforesaid contention learned Counsel for the Petitioners
pointed out, that the above mentioned Article 323B was introduced by the
Constitution (Forty-second Amendment) Act, 1976, which was part of an overall
scheme, to drastically curtail the power of "judicial review" vested with the higher
judiciary. It was pointed out, that all other objectionable provisions were deleted,
and powers earlier vested in superior courts were restored. However, Part XIV A of
the Constitution, inserting Articles 323A and 323B was allowed to remain. It was
submitted that Articles 323A and 323B, enabled the creation of parallel judiciary
under executive control. In order to support his aforestated contention, learned
Counsel invited the Court's attention to the expressions "adjudication or trial",
"disputes, complaints or offences", "transfer of suits or proceedings", etc. which
could be fashioned in a manner different from that which presently prevailed. It was
pointed out, that the aforestated mandate contained in Article 323B of the
Constitution, was incompatible with the "basic structure" of the Constitution, which
mandates "separation of powers".
29. In view of the aforementioned submissions, it was the vehement contention of
the learned Counsel for the Petitioners, that Article 323B(4) should be struck down. It
was submitted, that if the instant prayer of the Petitioners does not find favour with
this Court, the alternative prayer of the Petitioners was, that Article 323B must be
purposefully interpreted, so as to bestow equivalence commensurate to the Court

sought to be substituted by the tribunal. It was submitted, that it was imperative to
provide for measures to ensure independence in the functioning of tribunals
substituting functions carried out by courts. This could be done, according to learned
Counsel for the Petitioners, by extending the conditions of service applicable to
judges of the court sought to be substituted. In order to support his aforestated
contention, learned Counsel for the Petitioners placed reliance on judgments rendered
by this Court, laying down the limits and parameters within which such tribunals
could be created. Despite the declaration of law by this Court it was submitted, that
the NTT Act, has been enacted, which suffers from the same vices, which had already
been found to be unconstitutional. For reasons of brevity, it is considered
inappropriate, to refer to all the judgments relied upon by the rival parties on the
instant issue. Suffice it to state, that the same will be examined, only while recording
conclusions.
The fourth contention:
3 0 . While advancing the fourth contention, learned Counsel for the Petitioners
referred to various provisions of the NTT Act, which would have the effect of
compromising the independence of the NTT. We may briefly refer to the provisions of
the said Act, highlighted by the learned Counsel for the Petitioners, during the course
of hearing, as under:
(i) First and foremost, reference was made to Section 5 of the NTT Act. The
same is being extracted hereunder:
5 . Constitution and jurisdiction of Benches- (1) the jurisdiction of
the National Tax Tribunal may be exercised by the Benches thereof
to be constituted by the Chairperson.
(2) The Benches of the National Tax Tribunal shall ordinarily sit at
any place in the National Capital Territory of Delhi or such other
places as the Central Government may, in consultation with the
Chairperson, notify:
Provided that the Chairperson may for adequate reasons
permit a Bench to hold its temporary sitting for a period not
exceeding fifteen days at a place other than its ordinary
place of seat.
(3) The Central Government shall notify the areas in relation to
which each bench of the National Tax Tribunal may exercise its
jurisdiction.
(4) The Central Government shall determine the number of Benches
and each Bench shall consist of two members.
( 5 ) The Central Government may transfer a Member from
headquarters of one Bench in one State to the headquarters of
another Bench in another State or to the headquarters of any other
Bench within a State:
Provided that no member shall be transferred without the
concurrence of the Chairperson.

Referring to Sub-section (2) of Section 5 it was sought to be asserted, that
benches of the NTT are ordinarily to function in the National Capital Territory
of Delhi. This, according to the learned Counsel for the Petitioners, would
deprive the litigating Assessee, the convenience of approaching the High
Court of the State to which he belongs. In this behalf it was sought to be
asserted, that in every tax related dispute, there is an Assessee on one side,
and the Revenue on the other. Accordingly, if the NTT is mandated to sit
ordinarily in the National Capital Territory of Delhi, Assessees from far flung
States would have to suffer extreme hardship for the redressal of their
grievance, especially at the appellate stage. Besides the hardships, it was
pointed out, that each Assessee would be subjected to unfathomable
financial expense. Referring to Sub-section (5) of Section 5 of the NTT Act, it
was the submission of the learned Counsel for the Petitioners, that the
Central Government was vested with the power to transfer a Member from
the headquarters of one bench in one State, to the headquarters of another
bench in another State. It was also open to the Central Government to
transfer a Member from one bench to another bench in the same State. It
was submitted, that in case of High Courts, such power is exercised
exclusively by the Chief Justice, in the best interest of the administration of
justice. It was submitted, that the Central Government, which is a
stakeholder, could exercise the above power of transfer for harassment and
exploitation of sitting Members of the NTT. In other words, an inconvenient
Member could be moved away, and replaced by one who would tow the
desired line.
(ii) Likewise, learned Counsel for the Petitioners referred to Section 6 of the
NTT Act to demonstrate, that the same would also have an undermining
effect on the adjudicatory process. Section 6 of the NTT Act is reproduced
hereunder:
6. Qualifications for appointment of Chairperson and other Members-
(1) The Chairperson of the National Tax Tribunal shall be a
person who has been a Judge of the Supreme Court or the
Chief Justice of a High Court.
( 2 ) A person shall not be qualified for appointment as
Member unless he-
(a) is, or has been, or is eligible to be, a Judge of a High
Court; or
(b) is, or has been, a Member of the Income-tax Appellate
Tribunal or of the Customs, Excise and Service Tax Appellate
Tribunal for at least five years.
Learned Counsel for the Petitioners pointed out, that Sub-section (2),
aforementioned, laid down the qualifications for appointment as Member of
the NTT. Referring to Clause (a) of Sub-section (2) of Section 6 of the NTT
Act it was submitted, that a person who is eligible to be a judge of a High
Court, is to be treated as eligible as a member of the NTT. Inviting our
attention to Article 217 of the Constitution it was submitted, that a person
who is a citizen of India and has, for at least 10 years, practiced as an
Advocate before one or the other High Court, has been treated as eligible for

being appointed as a Member of the NTT. Referring to Section 8 of the NTT
Act it was pointed out, that a Member of the NTT is provided with a tenure of
five years, from the date of his appointment as Member of the NTT. It was
pointed out, that in terms of Article 217 of the Constitution, a person would
easily become eligible for appointment as a judge at or around the age of
35-40 years, and as such, if he is assured a tenure of only five years, it
would not be possible for him to discharge his duties without fear or favour,
inasmuch as, he would always have a larking uncertainty in his mind about
his future, after the expiry of the prescribed term of five years, in the event
of not being granted an extension. Relying on Clause (b) of Section 6(2) of
the NTT Act, it was also the submission of the learned Counsel for the
Petitioners, that Members of the Appellate Tribunals constituted under the
Income Tax Act, the Customs Act, and the Excise Act, are also eligible for
being appointed as Members of the NTT. In this behalf it was sought to be
asserted, that there are Accountant Members of the Income Tax Appellate
Tribunal, who too would become eligible for appointment as Members of the
NTT. It was submitted, that judicial experience on the niceties of law,
specially on the different aspects, which need to be dealt with while
adjudicating tax matters, would be alien to them, inasmuch as they can only
be experts on the subject of accountancy. It was pointed out, that the
jurisdiction vested in the NTT, is an alternative jurisdiction to that of the
High Court, and as such, it is difficult to appreciate how an Accountant
Member of the Income Tax Appellate Tribunal can be expected to discharge
duties relating to settling substantial questions of law in the manner judges
of the High Court dispense with the aforesaid responsibilities.
(iii) Learned Counsel for the Petitioners then invited our attention to Section
7 of the NTT Act. The said section is reproduced hereunder:
7 . Appointment of Chairperson and other Members-(1) Subject to
the provisions of Sub-section (2), the Chairperson and every other
Member shall be appointed by the Central Government.
(2) The Chairperson and the other Members shall be appointed by
the Central Government on the recommendations of a Selection
Committee consisting of-
( a) the Chief Justice of India or a Judge of the Supreme
Court nominated by him;
( b ) the Secretary in the Ministry of Law and Justice
(Department of Legal Affairs);
(c) the Secretary in the Ministry of Finance (Department of
Revenue).
(3) No appointment of the Chairperson or of any other Member shall
be invalidated merely by reason of any vacancy or any defect in the
constitution of the Selection Committee.
A perusal of Sub-section (2) of Section 7 reveals the composition of the
selection committee for selection of the Chairperson and Members of the
NTT. It was sought to be pointed out, that there were two representatives of
the executive, out of three member selection committee, and only one

member in the selection committee was from the judiciary. Accordingly it
was asserted, that the two representatives belonging to the executive would
control the outcome of every selection process. Since the NTT was, an
alternative to the jurisdiction earlier vested with the High Court, it was
submitted, that the same process of selection, as was prevalent for
appointment of judges of the High Court, should be adopted for selection of
Chairperson and Members of the NTT. All that is imperative and essential is,
that the selection process should be the same, as is in place, for the court
sought to be substituted. It was also the contention of the learned Counsel
for the Petitioners, that a provision similar to Section 7(2) of the NTT Act,
had been struck down by this Court, in State of Maharashtra v. Labour Law
Practitioners' Association (supra).
(iv) Learned Counsel for the Petitioners then invited our attention to Section
8 of the NTT Act. Section 8 is being reproduced hereunder:
8 . Terms of office of Chairperson and other Members-The
Chairperson and every other Member shall hold office as such for a
term of five years from the date on which he enters upon his office
but shall be eligible for re-appointment:
Provided that no Chairperson or other Member shall hold
office as such after he has attained, -
(a) in the case of Chairperson, the age of sixty-eight years;
and
(b) in the case of any other Member, the age of sixty-five
years.
According to learned Counsel, a perusal of Section 8 reveals, that a
Chairperson and a Member of the NTT would hold office for a term of five
years, from the date of his/her appointment to the NTT. It was, however
sought to be pointed out, that a person appointed as such, is clearly eligible
for reappointment. It was sought to be asserted, that a provision for
reappointment, would itself have the effect of undermining the independence
of the Members of the NTT. It was sought to be asserted, that each one of
the appointees to the NTT would be prompted to appease the Revenue, so as
to solicit reappointment contemplated Under Section 8 of the NTT Act. In this
behalf it was submitted, that the tenure of appointment to a tribunal, which
is to substitute a High Court, should be akin to that of a judge of High Court.
(v) Our attention was then invited to Section 13 of the NTT Act, which is
reproduced hereunder:
1 3 . Appearance before National Tax Tribunal-(1) A party to an
appeal other than Government may either appear in person or
authorize one or more chartered accountants or legal practitioners to
present his or its case before the National Tax Tribunal.
(2) The Government may authorize one or more legal practitioners
or any of its officers to present its case before the National Tax
Tribunal.

Explanation-For the purposes of this Section,-
(a) "chartered accountant" means a chartered accountant as
defined in Clause (b) of Sub-section (1) of Section 2 of the
Chartered Accountants Act, 1949 (38 of 1949) and who has
obtained a certificate of practice Under Sub-section (1) of
Section 6 of that Act;
(b) "legal practitioner" means an advocate, a vakil or any
attorney of any High Court, and includes a pleader in
practice.
It was submitted, that besides allowing the Assessee to represent himself
before the NTT, Section 13 allows him to be represented through one or
more Chartered Accountants or legal practitioners. Thus far, according to
learned Counsel for the Petitioners, there seemed to be no difficulty in
Section 13(1) of the NTT Act. However, allowing "any person duly
authorized" by the Assessee to represent him before the NTT, is clearly un-
understandable. It was submitted, that the main function of the NTT would
be to settle substantial questions of law on tax issues, and as such, Under
Section 13(1), it would be open to an Assessee to engage an individual to
represent him, even though he is totally unqualified in the fields on which
the adjudicatory process is to be conducted. Likewise, it is the contention of
the learned Counsel for the Petitioners, besides legal practitioners, the
Revenue is allowed to be represented through any of its officers. It was
sought to be asserted, that an understanding of the text of the provision is
one thing, whereas interpreting it in the contemplated context, quite another.
As such, it was submitted, that officers of the Revenue, who lack in
interpretative skills, would be wholly unsuited for representing the Revenue
before the NTT.
Submissions in opposition, by the Respondents/interveners:
The first contention:
31. In response to the first contention, namely, that the reasons for setting up the
NTT were fallacious and non-existent, and as such, the legislative enactment under
reference creating the NTT as an independent appellate forum to decide appeals on
"substantial questions" of law, from orders passed by the Appellate Tribunals
constituted under the Income Tax Act, the Customs Act, and the Excise Act deserves
to be set aside; it was the contention of the learned Counsel for the Respondents,
that the submissions advanced at the hands of the Petitioners, were premised on an
improper understanding of the factual background. In this behalf, it is sought to be
asserted, that the tax receipts are the primary source of revenue in India. The
Government of India meets its budgetary requirements from revenue receipts. It is
sought to be explained, that tax is collected by an established administrative and
legal structure. On the one hand, while fastening of a tax liability would reduce the
profits of an Assessee, it would enhance the revenue receipts of the Government. On
the other hand, exemption from a tax liability would increase profits of an Assessee,
but would reduce the revenue receipts of the Government. In view of the above profit
and loss scenario, administration of tax loss, has an inherent tendency to result in
disputes and litigation. The process of litigation is primarily based on adoption of
innovative means of interpretation of law, both by the revenue and by the tax payers.

As a result, significant amount of time is spent, on long drawn litigation, wherein tax
payers and the Government lock horns against one another. Naturally, this impacts
revenue earnings as levy of tax of thousands of crores of rupees, remains embroiled
in such litigation. It was sought to be pointed out, that as per the Centre for
Monitoring Indian Economy Database, Indian companies have a vast amount locked
in disputed taxes. As per the above report, during the Financial Year 2011-2012; 30
companies that make up the Bombay Stock Exchange sensex, had money locked in
disputed taxes estimated at Rs. 42,388 crores. The above disputed tax liability,
according to the learned Counsel for the Respondents, was a 27% increase from the
amount of the preceding year, which was estimated at Rs. 33,339 crores.
32. In respect of disputes on direct taxes, it was submitted, that in a written reply
submitted by the Minster of State for Finance, the Lok Sabha was informed in April,
2012, that 5,943 tax cases were pending with the Supreme Court, and 30,213 direct
tax cases were pending with High Courts. It was submitted that the Lok Sabha was
additionally informed, that the disputed amount of tax, at various levels, was
estimated at Rs. 4,36,741 crores, as on 31.12.2011. It was further sought to be
asserted, that in the preceding year, the estimate in respect of the disputed amount
at various levels, was to the tune of Rs. 2,43,603 crores. Accordingly it was sought to
be pointed out, that with each succeeding year, not only the tax related litigation was
being progressively enhanced, there was also a significant increase in the finance
blocked in such matters.
33. It was likewise pointed out, that the number of cases involving levy of indirect
taxes, projected a similar unfortunate reflection. In this behalf, it was sought to be
pointed out, that as on 31.12.2012, the number of pending customs disputes were
approximately 17,800, wherein an amount of approximately Rs. 7,400 crores was
involved. Insofar as the number of pending central excise cases as on 31.10.2012 is
concerned, the figure was approximately 19,800 and the amount involved was
approximately Rs. 21,450 crores. By adding the figures reflected hereinabove, in
respect of the disputes pertaining to indirect taxes, it was suggested that a total of
about 37,600 cases were pending, involving an amount of approximately Rs. 28,850
crores. Additionally it was submitted, that out of the 17,800 customs cases,
approximately 6,300 cases had been pending for adjudication for periods ranging
from one to three years, and approximately 2,800 customs cases had been pending
adjudication for over three years. Likewise, out of the 19,800 central excise cases,
1,600 cases were pending for decision for a period between one to three years; and
240 cases had been pending for decision for over three years.
3 4 . It was pointed out at the behest of the Respondents, that several reasons
contributed to the prolonged continuation of tax disputes. The main reason however
was, that there was a lack of clarity in law in tax litigation. It was submitted, that the
above lack of clarity resulted in multiple interpretations. Added to that, according to
the learned Counsel for the Respondents, existence of multiple appellate levels, and
independent jurisdictional High Courts, resulted in the existence of conflicting
opinions at various appellate forums across the country, contributing in unfathomable
delay and multiplicity of proceedings.
3 5 . Based on the factors narrated above, it was the submission of the learned
Counsel for the Respondents, that the burden of high volume of disputes had had the
effect of straining the adjudicatory, as well as, the judicial system. It was pointed
out, that the judicial system was already heavily burdened by the weight of
significant number of unresolved cases. It was submitted, that the addition of cases

each year, added not only to the inconvenience of the taxpayer, but also to the
revenue earned by the government. It was pointed out, that the instant state of
affairs created an uncertain and destabilized business environment, with taxpayers
not being able to budget, for tax costs. Importantly such uncertainty, according to
the learned Counsel, emerged out of the two factors. Firstly, the law itself was
complex, and therefore, uncertain. And secondly, for an interpretation of the law to
achieve a degree of certainty at the Supreme Court level, required several rounds of
litigation. It was submitted, that in view of the above, the current scenario called for
reforms in the dispute resolution mechanism, and the introduction of, conscious
practices and procedures, aimed at limiting the initiation, as well as, the prolongation
of tax disputes. It is, therefore, the submission of the learned Counsel for the
Respondents, that the assertions made at the hands of the Petitioners, while
projecting the first contention, were wholly misconceived, and as such, are liable to
be rejected.
The second contention:
36. In response to the second contention, namely, that it is impermissible for the
legislature to abrogate the core judicial appellate functions, traditionally vested with
the High Court, or that it is impermissible to vest the same with an independent,
parallel quasi-judicial hierarchy of tribunals, it was submitted, that the Petitioners
had not been able to appreciate the matter in its correct perspective. It was pointed
out, that the NTT Act is a legislation which creates an appellate forum, in a hierarchy
of for a, as a remedy for ventilation of grievances emerging out of taxing statutes. To
fully appreciate the purport of the special remedy created by the statute, the nature
of the right and/or the liability created by the taxing statutes, and the enforcement
for which these remedies have been provided, needed to be understood in the correct
perspective. Accordingly, in order to debate the rightful cause, learned Counsel drew
our attention to the proposition, in the manner, as was understood by the
Respondents. The submissions advanced in this behalf are being summarized
hereinafter.
3 7 . It was the contention of the learned Counsel for the Respondents, that the
Income Tax Act, the Customs Act, and the Excise Act, as also, other taxing statutes
create a statutory liability. The said statutory liability has no existence, de hors the
statute itself. The said statutory liability, has no existence in common law. It was
further submitted, that it had been long well settled, that where a right to plead
liability had no existence in common law, but was the creation of a statute, which
simultaneously provided for a special and particular remedy for enforcing it, the
remedy provided by the statute was bound to be followed. In respect of such
statutory liability, it was not competent for the party to proceed, by action at
common law. In this behalf, our attention was invited to the observations recorded
by this Court in Dhulabhai v. State of M.P. MANU/SC/0157/1968 : (1968) 3 SCR 662
wherein the Court observed as under:
9 . The question that arises in these appeals has been before this Court in
relation to other statutes and has been answered in different ways. These
appeals went before a Divisional Bench of this Court but in view of the
difficulty presented by the earlier rulings of this Court, they were referred to
the Constitution Bench and that is how they are before us. At the very start
we may observe that the jurisdiction of the Civil Courts is all embracing
except to the extent it is excluded by an express provision of law or by clear
intendment arising from such law. This is the purport of Section 9 of the

Code of Civil Procedure. How Section 9 operates is perhaps best illustrated
by referring to the categories of cases, mentioned by Willes, J. in
Wolverhampton New Waterworks Co. v. Hawkesford [1859] 6 C.B. (NS) 336-
They are:
One is where there was a liability existing at common law, and that
liability is affirmed by a statute which gives a special and peculiar
form of remedy different from the remedy which existed at common
law: there, unless the statute contains words which expressly or by
necessary implication exclude the common law remedy the party
suing has his election to pursue either that or the statutory remedy.
The second class of cases is, where the statue gives the right to sue
merely, but provides, no particular form of remedy: there, the party
can only proceed by action at common law. But there is a third class,
viz., where a liability not existing at common law is created by a
statute which at the same time gives a special and particular remedy
for enforcing it...The remedy provided by the statute must be
followed and it is not competent to the party to pursue the course
applicable to cases of the second class.
This view of Willes, J. was accepted by the House of Lords in Neville v.
London 'Express' Newspaper Ltd. [1919] A.C. 368.
xxx
35. Neither of the two cases of Firm of Illuri Subayya or Kamla Mills can be
said to run counter to the series of cases earlier noticed. The result of this
inquiry into the diverse views expressed in this Court may be stated as
follows:
( 1) Where the statute gives a finality to the orders of the special
tribunals the Civil Courts' jurisdiction must be held to be excluded if
there is adequate remedy to do what the Civil Courts would normally
do in a suit. Such provision, however, does not exclude those cases
where the provisions of the particular Act have not been complied
with or the statutory tribunal has not acted in conformity with the
fundamental principles of judicial procedure.
(2) Where there is an express bar of the jurisdiction of the court, an
examination of the scheme of the particular Act to find the adequacy
or the sufficiency of the remedies provided may be relevant but is
not decisive to sustain the jurisdiction of the civil court.
Where there is no express exclusion the examination of the remedies
and the scheme of the particular Act to find out the intendment
becomes necessary and the result of the inquiry may be decisive. In
the latter case it is necessary to see if the statute creates a special
right or a liability and provides for the determination of the right or
liability and further lays down that all questions about the said right
and liability shall be determined by the tribunals so constituted, and
whether remedies normally associated with actions in Civil Courts
are prescribed by the said statue or not.
(3) Challenge to the provisions of the particular Act as ultra vires

cannot be brought before Tribunals constituted under that Act. Even
the High Court cannot go into that question on a revision or
reference from the decision of the Tribunals.
(4) When a provision is already declared unconstitutional or the
constitutionality of any provision is to be challenged, a suit is open.
A writ of certiorari may include a direction for refund if the claim is
clearly within the time prescribed by the Limitation Act but it is not a
compulsory remedy to replace a suit.
(5) Where the particular Act contains no machinery for refund of tax
collected in excess of constitutional limits or illegally collected a suit
lies.
(6) Questions of the correctness of the assessment apart from its
constitutionality are for the decision of the authorities and a civil suit
does not lie if the orders of the authorities are declared to be final or
there is an express prohibition in the particular Act. In either case
the scheme of the particular Act must be examined because it is a
relevant enquiry.
(7) An exclusion of the jurisdiction of the Civil Court is not readily to
be inferred unless the conditions above set down apply.
3 8 . In addition to the above submissions, it was sought to be asserted that the
Income Tax Act expressly barred the jurisdiction of civil courts. Reference in this
behalf was made to Section 293 of the Income Tax Act, which is being extracted
hereunder:
293. Bar of suits in civil courts.-No suit shall be brought in any civil court to
set aside or modify any proceeding taken or order made under this Act, and
no prosecution, suit or other proceeding shall lie against the Government or
any officer of the Government for anything in good faith done or intended to
be done under this Act.
39. It has been further held by this Court following the dictum at Barraclough v.
Brown (1897) AC 615, that if a statute confers a right and in the same breath
provides for enforcement of such right the remedy provided by such a statute is an
exclusive one. Applying this doctrine, in Premier Automobiles v. Kamlekar Shantaram
Wadke MANU/SC/0369/1975 : (1976) 1 SCC 496 at 513, this Court held as under:
23. To sum up, the principles applicable to the jurisdiction of the Civil Court
in relation to an industrial dispute may be stated thus:
(1) If the dispute is not an industrial dispute, nor does it relate to
enforcement of any other right under the Act the remedy lies only in
the civil Court.
(2) If the dispute is an industrial dispute arising out of a right or
liability under the general or common law and not under the Act, the
jurisdiction of the civil Court is alternative, leaving it to the election
of the suitor concerned to choose his remedy for the relief which is
competent to be granted in a particular remedy.

(3) If the industrial dispute relates to the enforcement of a right or
an obligation created under the Act, then the only remedy available
to the suitor is to get an adjudication under the Act.
( 4) If the right which is sought to be enforced is a right created
under the Act such as Chapter VA then the remedy for its
enforcement is either Section 33C or the raising of an industrial
dispute, as the case may be.
In paragraph 12 of the Premier Automobiles case (supra), this Court quoted the
words of Lord Watson in Barraclough v. Brown (supra) to the following effect:
the right and the remedy are given uno flatu and the one cannot be
disassociated from the other
40. It is for this reason, according to learned Counsel for the Respondents, that civil
courts, even the High Court having original jurisdiction, would not entertain suits on
matters covered by such special statutes creating rights and providing remedies. [See
Argosam Finance Co. Ltd. v. Oxby (1964) 1 All E.R. 791 at 796-H].
The principle underlying those passages seem to me to be applicable to the
present case Section 341 of the Income Tax Act, 1952, confers the right, the
right to an adjustment tax liability by reference to loss; that right does not
exist independently of the section; the section uno flatu in the breath gives a
specific remedy and appoints a specific tribunal for its enforcement, namely
the General Commission or Special Commissioners. In those circumstances
in my judgment, the taxpayer must resort to that remedy and that tribunal.
In due course if dissatisfied with the decision of the commissioners
concerned he can appeal to the high court by way Case Stated, but any
original jurisdiction of the high court by declaration or otherwise, is, in my
judgment, excluded.
The contentions of the Petitioners, that substituting Section 260A of the Income Tax
Act and divesting the High Court of the appellate remedy and vesting it in the NTT, is
unconstitutional as it constitutes an inroad into the principles of the rule of law and
independence of judiciary, according to learned Counsel, are fallacious.
4 1 . According to the learned Counsel for the Respondents, the fallacy in the
Petitioners' argument is, that they are overlooking the fact that as far as the NTT Act
is concerned, there is no common law remedy which has now been divested. Section
260A of the Income Tax Act and Section 35(g), (h), (i) of the Excise Act were all
statutorily vested appeals, in the High Court, and as such, as has been held in the
above mentioned cases can be completely divested. According to learned Counsel,
the NTT Act, was on a surer and sounder footing, than the provisions of the
Companies Act, which came up for consideration in Union of India v. Madras Bar
Association MANU/SC/0375/2010 : (2010) 11 SCC 87. Accordingly, as no common
law remedy has been substituted under the present Act, it was submitted, that the
contentions advanced on behalf of the Petitioners had no legs to stand. Even when
the Companies Act set up, the Company Law Tribunal and the Company Law
Appellate Tribunal, substituting the jurisdiction of the High Courts, this Court in
Union of India v. Madras Bar Association (supra), held that the said provisions were
valid and were not unconstitutional. This Court held as under:
8 7 . The Constitution contemplates judicial power being exercised by both

courts and tribunals. Except the powers and jurisdictions vested in superior
courts by the Constitution, powers and jurisdiction of courts are controlled
and regulated by Legislative enactments. The High Courts are vested with the
jurisdiction to entertain and hear appeals, revisions and references in
pursuance of provisions contained in several specific legislative enactments.
If jurisdiction of the High Courts can be created by providing for appeals,
revisions and references to be heard by the High Courts, jurisdiction can also
be taken away by deleting the provisions for appeals, revisions or references.
It also follows that the legislature has the power to create tribunals with
reference to specific enactments and confer jurisdiction on them to decide
disputes in regard to matters arising from such special enactments. Therefore
it cannot be said that legislature has no power to transfer judicial functions
traditionally performed by courts to tribunals.
88. The argument that there cannot be "whole-sale transfer of powers" is
misconceived. It is nobody's case that the entire functioning of courts in the
country is transferred to tribunals. The competence of the Parliament to make
a law creating tribunals to deal with disputes arising under or relating to a
particular statute or statutes cannot be disputed. When a Tribunal is
constituted under the Companies Act, empowered to deal with disputes
arising under the said Act and the statute substitutes the word "tribunal" in
place of "the High Court" necessarily there will be "whole-sale transfer" of
company law matters to the tribunals. It is an inevitable consequence of
creation of a tribunal, for such disputes, and will no way affect the validity of
the law creating the tribunal.
42. Similarly, statutory provisions providing for a revision to the District Judge, with
the finality clauses, have been interpreted to exclude the revisionary powers of the
High Court Under Section 115 of Code of Civil Procedure. In this behalf reference was
made to, Aundal Ammal v. Sadasivan Pilai MANU/SC/0527/1986 : (1987) 1 SCC 183,
wherein it was held as under:
1 5 . Under the scheme of the Act it appears that a landlord who wants
eviction of his tenant has to move for eviction and the case has to be
disposed of by the Rent Control Court. That is provided by Sub-section (2) of
Section 11 of the Act. From the Rent Control Court, an appeal lies to the
Appellate Authority under the conditions laid down Under Sub-section (1)(b)
of Section 18 of the Act. From the Appellate Authority a revision in certain
circumstances lies in case where the appellate authority is a Subordinate
Judge to the District Court and in other cases to the High Court. In this case
as mentioned hereinbefore the appeal lay from Rent Control Court to the
appellate authority who was the Subordinate Judge and therefore the revision
lay to the District Judge. Indeed it is in disputed that the Respondent has in
this case taken resort to all these provisions. After the dismissal of the
revision by the District Judge from the appellate decision of the Subordinate
Judge who confirmed the order of the Rent Controller, the Respondent-
landlord chose again to go before the High Court Under Section 115 of the
Code of Civil Procedure. The question, is, can he have a second revision to
the High Court? Shri Poti submitted that he cannot. We are of the opinion
that he is right. This position is clear if Sub-section (5) of Section 18 of the
Act is read in conjunction with Section 20 of the Act. Sub-section (5) of
Section 18, as we have noted hereinbefore, clearly stipulates that the
decision of the appellate authority and subject to such decision, an order of

the Rent Controller 'shall be final' and 'shall not be liable to be called in
question in any court of law', except as provided in Section 20. By Section
20, a revision is provided where the appellate authority is Subordinate Judge
to the District Judge and in other cases, that is to say, where the appellate
authority is District Judge, to the High Court. The ambits of revisional powers
are well-settled and need not be re-stated. It is inconceivable to have two
revisions. The scheme of the Act does not warrant such a conclusion. In our
opinion, the expression 'shall be final' in the Act means what it says.
20. The learned judge referred to the decision of the Judicial Committee in
the case of Maung Ba Thaw and Anr.--Insolvents v. Ma Pin
MANU/PR/0147/1934 : AIR 1934 PC 81. The learned judge also referred to a
decision of this Court in South Asia Industries (P) Ltd. v. S.B. Sarup Singh
and Ors. (supra). The learned judge concluded that so long as there was no
specific provision in the statute making the determination by the District
Court final and excluding the supervisory power of the High Court Under
Section 115 of the Code of Civil Procedure, it had to be held that the decision
rendered by the District Court Under Section 20(1) of the Act being a
decision of a court subordinate to the High Court to which an appeal lay to
the High Court was liable to be revised by the High Court Under Section 115
of the Code of Civil Procedure. In that view of the matter, the Full Bench
rejected the view of the division bench of the Kerala High Court in Kurien v.
Chacko MANU/KE/0425/1960 : [1960] KLT 1248. With respect, we are
unable to sustain the view of the Full Bench of the High Court on this aspect
of the matter. In our opinion, the Full Bench misconstrued the provisions of
Sub-section (5) of Section 18 of the Act. Sub-section (5) of Section 18
clearly states that such decision of the appellate authority as mentioned in
Section 18 of the Act shall not be liable to be questioned except in the
manner Under Section 20 of the Act. There was thereby an implied
prohibition or exclusion of a second revision Under Section 115 of the Code
of Civil Procedure to the High Court when a revision has been provided Under
Section 20 of the Act in question. When Section 18(5) of the Act specifically
states that "shall not be liable to be called in question in any Court of law"
except in the manner provided Under Section 20, it cannot be said that the
High Court which is a court of law and which is a civil court under the Code
of Civil Procedure Under Section 115 of the Code of Civil Procedure could
revise again an order once again after revision Under Section 20 of the Act.
That would mean there would be a trial by four courts, that would be
repugnant to the scheme manifest in the different sections of the Act in
question. Public policy or public interest demands curtailment of law's delay
and justice demands finality within quick disposal of case. The language of
the provisions of Section 18(5) read with Section 20 inhibits further revision.
The courts must so construe.
Likewise, our attention was invited to Jetha Bai and Sons v. Sunderdas Rathenai
MANU/SC/0311/1988 : (1988) 1 SCC 722, and reliance was placed on the following:
15. Even without any discussion it may be seen from the narrative given
above that there is really no conflict between the two decisions because the
provisions in the two Acts are materially different. However, to clarify
matters further we may point put the differences between the two Acts in
greater detail and clarity. Under the Kerala Act, against an order passed by a
Rent Control Court presided over by a District Munsif, the aggrieved party is

conferred a right of appeal Under Section 18. The Appellate Authority has to
be a judicial officer not below the rank of a subordinate Judge. The appellate
Authority has been conferred powers co-extensive with those of the Rent
Control Court but having over-riding effect. Having these factors in mind, the
Legislature has declared that in so far as an order of a Rent Control Court is
concerned it shall be final subject only to any modification or revision by an
Appellate Authority; and in so far as the Appellate Authority is concerned, its
decision shall be final and shall not be liable to be called in question in any
Court of law except as provided in Section 20. As regards Section 20, a
division of the powers of revision exercisable thereunder has been made
between the High Court and the District Court. In all those cases where a
revision is preferred against a decision of an Appellate Authority of the rank
of a Subordinate Judge Under Section 18, the District Judge has been
constituted the revisional authority. It is only in other cases i.e. where the
decision sought to be revised is that of a judicial officer of a higher rank than
a Subordinate Judge, the High Court has been constituted the Revisional
authority. The revisional powers conferred Under Section 20, whether it be
on the District Judge or the High Court as the case may be are of greater
amplitude than the powers of revision exercisable by a High Court Under
Section 115 Code of Civil Procedure Under Section 20 the Revisional
Authority is entitled to satisfy itself about the legality regularity, or propriety
of the orders sought to be revised. Not only that, the Appellate Authority and
the Revisional Authority have been expressly conferred powers of remand
Under Section 20A of the Act. Therefore, a party is afforded an opportunity to
put forth his case before the Rent Control Court and then before the
Appellate Authority and there after if need be before the Court of Revision
viz. the District Court if the Appellate Authority is of the rank of a
Subordinate Judge. The Legislature in its wisdom has thought that on
account of the ample opportunity given to a party to put forth his case before
three courts, viz. the Trial Court, the Appellate Court and the Revisional
Court, there was no need to make the revisional order of the District Court
subject to further scrutiny by the High Court by means of a second revision
either under the Act or under the Code of Civil Procedure. It has been pointed
out in Aundal Ammal's case (supra) that the full Bench of the Kerala High
Court had failed to construe the terms of Section 20 read with Section 18(5)
in their proper perspective and this failing had effected its conclusion
According to the Full Bench, a revisional order of a District, Court Under
Section 20 laid itself open for further challenge to the High Court Under
Section 115 Code of Civil Procedure because of two factors viz. (1) there was
no mention in the Act that the order would be final and (2) there was no
provision in the Act for an appeal being filed against a revisional order Under
Section 20. The full Bench failed to notice certain crucial factors. In the first
place, Section 20 is a composite section and refers to the powers of revision
exercisable under that Section by a District Judge as well as by the High
Court. Such being the case if it is to be taken that an order passed by a
District Court Under Section 20 will not have finality because the Section
does not specifically say so, then it will follow that a revisional order passed
by the High Court Under Section 20(1) also will not have finality Surely it
cannot be contended by anyone that an order passed by a High Court in
exercise of its powers of revision Under Section 20(1) can be subjected to
further revision because Section 20(1) has not expressly conferred finality to
an order passed under that Section. Secondly, the terms of Section 20(1)

have to be read in conjunction with Section 18(5). Section 18(5) as already
seen, declares that an order of a Rent Control Court shall be final subject to
the decision of the Appellate Authority and an order of an Appellate Authority
shall be final and shall not be liable to be called in question in any court of
law except as provided for in Section 20. When the Legislature has declared
that even an order of the Rent Control Court and the decision of the Appellate
Authority shall be final at their respective stages unless the order is modified
by the Appellate Authority or the Revisional Authority as the case may be,
there is no necessity for the legislature to declare once ever again that an
order passed in revision Under Section 20(1) by the District Judge or the
High Court as the case may be will also have the seal of finality. The third
aspect is that the Legislature has not merely conferred finality to the decision
of an Appellate Authority but has further laid down that the decision shall not
be liable to be called in question in any court of law except as provided for in
Section 20. These additional words clearly spell out the prohibition or
exclusion of a second revision Under Section 115 Code of Civil Procedure to
the High Court against a revisional order passed by a District Court Under
Section 20 of the Act. This position has been succinctly set out in para 20 of
the judgment in Aundal Ammal's case (supra). As was noticed in Vishesh
Kumar's case, the intent behind the bifurcation of the jurisdiction is to reduce
the number of revision petitions filed in the High Court and for determining
the legislative intent, the Court must as far as possible construe a statute in
such a manner as would advance the object of the legislation and suppress
the mischief sought to be cured by it.
4 3 . Most importantly, a nine-Judge constitution bench judgment of this Court, in
Mafatlal Industries v. Union of India MANU/SC/1203/1997 : (1997) 5 SCC 536, while
dealing with the validity of Section 11B(3) of the Excise Act, held as follows:
7 7 . Hereinbefore, we have referred to the provisions relating to refund
obtaining from time to time under the Central Excise and Salt Act. Whether it
is Rule 11 (as it stood from time to time) or Section 11B (as it obtained
before 1991 or subsequent thereto), they invariably purported to be
exhaustive on the question of refund. Rule 11, as in force prior to August 6,
1977, stated that "no duties and charges which have been paid or have been
adjusted...shall be refunded unless the claimant makes an application for
such refund under his signature and lodges it to the proper officers within
three months from the date of such payment or adjustment, as the case may
be". Rule 11, as in force between 6.8.1977 and 17.11.1980 contained Sub-
rule (4) which expressly declared: "(4) Save as otherwise provided by or
under this rule, no claim of refund of any duty shall be entertained". Section
11B, as in force prior to April, 1991 contained Sub-section (4) in identical
words. It said: "(4) Save as otherwise provided by or under this Act, no
claim for refund of any duty of excise shall be entertained". Sub-section (5)
was more specific and emphatic. It said:
Notwithstanding anything contained in any other law, the provisions
of this Section shall also apply to a claim for refund of any amount
collected as duty of excise made on the ground that the goods in
respect of which such amount was collected were not excisable or
were entitled to exemption from duty and no court shall have any
jurisdiction in respect of such claim.

It started with a non-obstante clause; it took in every kind of refund and
every claim for refund and it expressly barred the jurisdiction of courts in
respect of such claim. Sub-section (3) of Section 11B, as it now stands, it's
to the same effect-indeed, more comprehensive and all-encompassing. It
says:
( 3 ) Notwithstanding anything to the contrary contained in any
judgment, decree, order or direction of the Appellate Tribunal or any
court or in any other provision of this Act or the rules made
thereunder or in any law for the time being in force, no refund shall
be made except as provided in Sub-section.
The language could not have been more specific and emphatic. The
exclusivity of the provision relating to refund is not only express and
unambiguous but is in addition to the general bar arising from the fact that
the Act creates new rights and liabilities and also provides forums and
procedures for ascertaining and adjudicating those rights and liabilities and
all other incidental and ancillary matters, as will be pointed out presently.
This is a bar upon a bar-an aspect emphasised in Para 23 (supra), and has to
be respected so long as it stands. The validity of these provisions has never
been seriously doubted. Even though in certain writ petitions now before us,
validity of the 1991 (Amendment) Act including the amended Section 11B is
questioned, no specific reasons have been assigned why a provision of the
nature of Sub-section (3) of Section 11B (amended) is unconstitutional.
Applying the propositions enunciated by a seven-Judge Bench of this Court in
Kamala Mills case MANU/SC/0291/1965 : AIR 1965 SC 1942, it must be held
that Section 11B (both before and after amendment) is valid and
constitutional. In Kamala Mills, this Court upheld the constitutional validity of
Section 20 of the Bombay Sales Tax Act (set out hereinbefore) on the ground
that the Bombay Act contained adequate provisions for refund, for appeal,
revision, rectification of mistake and for condonation of delay in filing
appeal/revision. The Court pointed out that had the Bombay Act not provided
these remedies and yet barred the resort to civil court, the constitutionality
of Section 20 may have been in serious doubt, but since it does provide such
remedies, its validity was beyond challenge, to repeat-and it is necessary to
do so-so long as Section 11B is constitutionally valid, it has to be followed
and given effect to. We can see no reason on which the constitutionality of
the said provision-or a similar provision-can be doubted. It must also be
remembered that Central Excises and Salt Act is a special enactment creating
new and special obligations and rights, which at the same time prescribes
the procedure for levy, assessment, collection, refund and all other incidental
and ancillary provisions. As pointed out in the Statement of Objects and
Reasons appended to the Bill which became the Act, the Act along with the
Rules was intended to "form a complete central excise code". The idea was
"to consolidate in a single enactment all the laws relating to central duties of
excise". The Act is a self-contained enactment. It contains provisions for
collecting the taxes which are due according to law but have not been
collected and also for refunding the taxes which have been collected contrary
to law, viz., Sections 11-A and 11B and its allied provisions. Both provisions
contain a uniform rule of limitation, viz., six months, with an exception in
each case. Sections 11-A and 11B are complimentary to each other. To such
a situation, Proposition No. 3 enunciated in Kamala Mills becomes applicable,
viz., where a statute creates a special right or a liability and also provides

the procedure for the determination of the right or liability by the Tribunals
constituted in that behalf and provides further that all questions about the
said right and liability shall be determined by the Tribunals so constituted,
the resort to civil court is not available -except to the limited extent pointed
out in Kamala Mills. Central Excise Act specifically provides for refund. It
expressly declares that no refund shall be made except in accordance
therewith. The jurisdiction of a civil Court is expressly barred-vide Sub-
section (5) of Section 11B, prior to its amendment in 1991, and Sub-section
(3) of Section 11B, as amended in 1991. It is relevant to notice that the Act
provides for more than one appeal against the orders made Under Section
11B /Rule 11. Since 1981, an appeal is provided to this Court also from the
orders of the Tribunal. While Tribunal is not a departmental organ, this Court
is a civil court. In this view of the matter and the express and additional bar
and exclusivity contained in Rule 11/Section 11B, at all points of time, it
must be held that any and every ground including the violation of the
principles of natural justice and infraction of fundamental principles of
judicial procedure can be urged in these appeals, obviating the necessity of a
suit or a writ petition in matters relating to refund. Once the constitutionality
of the provisions of the Act including the provisions relating to refund is
beyond question, they constitute "law" within the meaning of Article 265 of
the Constitution. It follows that any action taken under and in accordance
with the said provisions would be an action taken under the "authority of
law", within the meaning of Article 265. In the face of the express provision
which expressly declares that no claim for refund of any duty shall be
entertained except in accordance with the said provisions, it is not
permissible to resort to Section 72 of the Contract Act to do precisely that
which is expressly prohibited by the said provisions. In other words, it is not
permissible to claim refund by invoking Section 72 as a separate and
independent remedy when such a course is expressly barred by the
provisions in the Act, viz., Rule 11 and Section 11B. For this reason, a suit
for refund would also not lie. Taking any other view would amount to
nullifying the provisions in Rule 11/Section 11B, which, it needs no
emphasis, cannot be done. It, therefore, follows that any and every claim for
refund of excise duty can be made only under and in accordance with Rule
11 or Section 11B, as the case may be, in the forums provided by the Act. No
suit can be filed for refund of duty invoking Section 72 of the Contract Act.
So far as the jurisdiction of the High Court Under Article 226 -or for that
matter, the jurisdiction of this Court Under Article 32 -is concerned, it is
obvious that the provisions of the Act cannot bar and curtail these remedies.
It is, however, equally obvious that while exercising the power Under Article
226/ Article 32, the Court would certainly take note of the legislative intent
manifested in the provisions of the Act and would exercise their jurisdiction
consistent with the provisions of the enactment.
It was submitted, that a perusal of the above paragraph shows, that this Court
noticed, that against the order of the tribunal an appeal was provided for to this
Court. The Court declared, that the tribunal was not a departmental organ and the
Supreme Court was a civil court as it was hearing a statutory appeal. More
importantly it held, that every ground including violation and infraction of judicial
procedure could be urged in these appeals, obviating the necessity of a suit or a writ
petition in matters relating to refund. This Court took care to hold, that so far as the
jurisdiction of High Courts Under Article 226 or this Court Under Article 32 are
concerned, they cannot be curtailed. It further held, that it was equally obvious that

while exercising the power Under Article 226/32 the Court would certainly take note
of the legislative intent manifested in the provisions of the Act and would exercise
their jurisdiction consistent with the provisions of the enactment. It was accordingly
submitted, that in view of the conclusions drawn, in the above judgment, all the
contentions urged by the Petitioners, needed to be rejected.
The third contention:
44. Learned Counsel for the Respondents, vehemently controverted the submissions
advanced at the hands of the Petitioners, that the NTT Act was ultra vires the
provisions of the Constitution. Insofar as the instant aspect of the matter is
concerned, learned Counsel for the Respondents, first placed reliance on Article 246
of the Constitution. Article 246 is being extracted hereunder:
246. Subject-matter of laws made by Parliament and by the Legislatures of
States-(1) Notwithstanding anything in Clauses (2) and (3), Parliament has
exclusive power to make laws with respect to any of the matters enumerated
in List I in the Seventh Schedule (in this Constitution referred to as the
"Union List").
(2) Notwithstanding anything in Clause (3), Parliament and, subject to
Clause (1), the Legislature of any State also, have power to make laws with
respect to any of the matters enumerated in List III in the Seventh Schedule
(in this Constitution referred to as the "Concurrent List").
(3) Subject to Clauses (1) and (2), the Legislature of any State has exclusive
power to make laws for such State or any part thereof with respect to any of
the matters enumerated in List II in the Seventh Schedule (in this
Constitution referred to as the 'State List').
(4) Parliament has power to make laws with respect to any matter for any
part of the territory of India not included (in a State) notwithstanding that
such matter is a matter enumerated in the State List.
Based on the aforesaid provision, it was sought to be asserted that the Parliament
had the unqualified and absolute jurisdiction, power and authority to enact laws in
respect of matters enumerated in Lists I and III of the Constitution. Additionally,
placing reliance on Article 246(4), it was asserted, that even on subjects not
expressly provided for in the three Lists of the Seventh Schedule to the Constitution,
the Parliament still had the absolute and untrammeled right to enact legislation.
Insofar as the instant aspect of the matter is concerned, learned Counsel for the
Respondents placed reliance on entries 77 to 79, 82 to 84, 95 and 97 of List I. The
above entries are being extracted hereunder:
List I-Union List
77. Constitution, organisation, jurisdiction and powers of the Supreme Court
(including contempt of such Court), and the fees taken therein; persons
entitled to practise before the Supreme Court.
78. Constitution and organisation (including vacations) of the High Courts
except provisions as to officers and servants of High Courts; persons entitled
to practise before the High Courts.

79. Extension of the jurisdiction of a High Court to, and exclusion of the
jurisdiction of a High Court from, any Union territory.
82. Taxes on income other than agricultural income.
83. Duties of customs including export duties.
84. Duties of excise on tobacco and other goods manufactured or produced
in India except-
(a) alcoholic liquors for human consumption.
(b) opium, Indian hemp and other narcotic drugs and narcotics, but
including medicinal and toilet preparations containing alcohol or any
substance included in sub-paragraph (b) of this entry.
95. Jurisdiction and powers of all courts, except the Supreme Court, with
respect to any of the matters in this List; admiralty jurisdiction.
97. Any other matter not enumerated in List II or List III including any tax
not mentioned in either of those Lists.
Based on the entries reproduced hereinabove, especially entries 77 to 79, it was
submitted, that Parliament had the jurisdiction to enact legislation even in respect of
the Supreme Court and the High Courts. Additionally, it had the power to legislate,
and thereby, to extend or exclude the jurisdiction of a High Court. Relying on entries
82 to 84, it was the submission of the learned Counsel for the Respondents, that on
matters of income-tax, customs duty and excise duty, the power to legislate was
unequivocally vested with the Parliament. Reliance was placed on entry 95, to
contend, that the extent of the jurisdiction of all courts including the High Court, in
respect of matters expressed in List I could also be laid down by the Parliament.
Referring again to entries 82 to 84 it was submitted, that the extension or exclusion
of jurisdiction on tax matters, was also within the domain of Parliament. So as to
assert, that in case this Court was of the view, that the subject of the legislation
contained in the NTT Act did not find mention, in any of the three Lists of the
Seventh Schedule of the Constitution, the submission on behalf of the Respondents
was, that Parliament would still have the authority to legislate thereon, under entry
97 contained in List I of the Seventh Schedule.
45. Learned Counsel for the Respondents, also placed reliance on entries 11A and 46
contained in List III of Seventh Schedule. The above entries are being extracted
hereunder:
List III-Concurrent List
A. Administration of justice; constitution and organisation of all
courts, except the Supreme Court and the High Courts.
xxx
46. Jurisdiction and powers of all courts, except the Supreme Court,
with respect to any of the matters in this List.
Referring to the above entries, it was the contention of the learned Counsel for the
Respondents that Parliament had the authority to enact legislation, in respect of the

extent of jurisdiction and powers of courts, including the High Court. It was, however
pointed out, that this power extended only to such matters and subjects, that found
mention in List III of the Seventh Schedule. It was, therefore, that reliance was
placed on entry 11A in List III, to contend that administration of justice, constitution
and organization of all courts (except the Supreme Court and the High Courts) would
lead to the inevitable conclusion that the NTT Act was promulgated, well within the
power vested with the Parliament, Under Article 246(2) of the Constitution.
46. Additionally, reliance was placed by the learned Counsel for the Respondents, on
Article 247 of the Constitution, which is reproduced hereunder:
247. Power of Parliament to provide for the establishment of certain
additional courts.-Notwithstanding anything in this Chapter, Parliament may
by law provide for the establishment of any additional courts for the better
administration of laws made by Parliament or of any existing laws with
respect to a matter enumerated in the Union List.
Referring to the above provision, it was the assertion of the learned Counsel for the
Respondents, that power was expressly vested with the Parliament, to establish
additional courts, for better administration of laws. It was submitted, that this was
exactly what the Parliament had chosen to do, while enacting the NTT Act. Referring
to the objects and reasons, indicating the basis of the enactment of the NTT Act, it
was the categoric assertion at the hands of the learned Counsel, that the impugned
enactment was promulgated with the clear understanding, that the NTT would provide
better adjudication of legal issues, arising out of direct/indirect tax laws.
4 7 . Besides Articles 246 and 247 of the Constitution, learned Counsel for the
Respondents asserted, that Articles 323A and 323B were inserted into the
Constitution, by the Constitution (Forty-second Amendment) Act, 1976. The above
provisions were included in the newly enacted Part XIV A of the Constitution. It was
asserted, that the instant amendment of the Constitution was made for achieving two
objectives. Firstly, to exclude the power of judicial review of the High Courts and the
Supreme Court, totally. Thus excluding judicial review in its entirety. And secondly,
to create independent specialized tribunals, with power of judicial review, which
would ease the burden of the High Courts and the Supreme Court. It was however
acknowledged by learned Counsel representing the Respondents, that the first of the
above mentioned objectives, was interpreted by this Court in L. Chandra Kumar v.
Union of India MANU/SC/0261/1997 : (1997) 3 SCC 261, which struck down Clause
(2)(d) of Article 323A and Clause (3)(d) of Article 323B, to the extent the amended
provisions introduced by the Forty-second Amendment to the Constitution, excluded
the jurisdiction of the High Courts and the Supreme Court Under Articles 226/227 and
32/136 respectively. Insofar as the second objective is concerned, placing reliance in
L. Chandra Kumar case (supra), it was the contention of the learned Counsel for the
Respondents, that this Court had clearly concluded, that as long as the power of
judicial review continue with the High Courts and the Supreme Court, under the
provisions referred to hereinabove, the enactment under reference would be
constitutionally valid. Therefore, in response to the submissions advanced at the
hands of the learned Counsel for the Petitioners (as have been noticed hereinabove),
it was the contention of the learned Counsel for the Respondents, that the power to
enact the NTT Act, was clearly vested with the Parliament even Under Article 323B of
the Constitution. Furthermore, since the impugned enactment did not exclude the
jurisdiction of the High Courts Under Articles 226 and 227 of the Constitution, and
also, did not exclude the jurisdiction of the Supreme Court Under Articles 32 and 136

of the Constitution, the challenge to the constitutional validity of the NTT Act was
wholly unjustified.
4 8 . Learned Counsel for the Respondents was at pains to emphasise, that the
jurisdictional road of Courts, as final interpreter of the law, was clearly preserved.
Firstly, because a statutory appeal was provided for under the NTT Act to the
Supreme Court. And secondly because, judicial review vested in the High Courts
Under Articles 226 and 227 of the Constitution, and in the Supreme Court Under
Articles 32 and 136 of the Constitution, had been kept intact. It is, therefore, the
submission of the learned Counsel for the Respondents, that no fault can be found in
the vesting of appellate jurisdiction from orders passed by Appellate Tribunals
(constituted under the Income Tax Act, Customs Act and the Excise Act) with the
NTT.
49. While acknowledging the fact, that the jurisdiction vested in the High Courts to
hear appeals from the Appellate Tribunals, under the Income Tax Act (vide Section
260A), the Customs Act (vide Section 130), and the Excise Act (vide Section35G),
has been transferred from the jurisdictional High Court to the NTT, it was submitted
that appellate jurisdiction vested in a High Court under a statute, could be taken
away by an amendment of the statute. Stated simply, the submission at the behest of
the Respondents was, whatever is vested by a statutory enactment, can likewise be
divested in the same manner. It was therefore sought to be asserted, that the
grounds of challenge to the NTT Act raised, at the behest of the Petitioners, were
misconceived and unacceptable.
50. Besides the submissions noticed hereinabove, it was also contended on behalf of
the Respondents, that the assertion made by the Petitioners, that appellate
jurisdiction on "substantial questions of law" could not be vested with the NTT, was
fallacious. In this behalf, it was sought to be reiterated, that jurisdiction of civil
courts (including the original side of the High Court) was barred in respect of tax
related issues. It was sought to be explained, that a case could involve questions of
fact, as well as, questions of law right from the stage of the initial adjudicatory
authority. But, it was pointed out, that only cases involving "substantial questions of
law" would qualify for adjudication at the hands of the NTT. As such, placing reliance
on the decision in Mafatlal Industries Ltd. v. Union of India MANU/SC/1203/1997 :
(1997) 5 SCC 536, it was submitted, that the above contention raised by the
Petitioners had no legs to stand. Furthermore, it was sought to be pointed out, that
the phrase "substantial questions of law" has been interpreted by this Court to mean,
not only questions of general public importance, but also questions which would
directly and substantially affect the rights of the parties to the litigation. It was also
asserted, that a question of law would also include, a legal issue not previously
settled, subject to the condition, that it had a material bearing on the determination
of the controversy to be settled, between the parties. It is accordingly contended,
that no limited interpretation could be placed on the term "substantial questions of
law". Accordingly, it was submitted, that a challenge to the constitution of the NTT on
the premise that the NTT was vested with the jurisdiction to settle "substantial
questions of law" was unsustainable.
51. In order to support his above submission, learned Counsel for the Respondents
placed emphatic reliance on a few judgments rendered by this Court. The same are
being noticed hereunder:
(i) Reliance was also placed on L. Chandra Kumar v. Union of India

MANU/SC/0261/1997 : (1997) 3 SCC 261. Learned Counsel for the Respondents,
while relying on the instant judgment, made a reference to various observations
recorded therein. We wish to incorporate hereunder all the paragraphs on which
reliance was placed by the learned Counsel:
80. However, it is important to emphasise that though the subordinate
judiciary or Tribunals created under ordinary legislations cannot exercise the
power of judicial review of legislative action to the exclusion of the High
Courts and the Supreme Court, there is no constitutional prohibition against
their performing a supplemental--as opposed to a substitutional--role in this
respect. That such a situation is contemplated within the constitutional
scheme becomes evident when one analyses Clause (3) of Article 32 of the
Constitution which reads as under:
32. Remedies for enforcement of rights conferred by this Part.-
(1) ...
(2) ...
( 3 ) Without prejudice to the powers conferred on the
Supreme Court by Clauses (1) and (2), Parliament may by
law empower any other court to exercise within the local
limits of its jurisdiction all or any of the powers exercisable
by the Supreme Court Under Clause (2).
8 1 . If the power Under Article 32 of the Constitution, which has been
described as the "heart" and "soul" of the Constitution, can be additionally
conferred upon "any other court", there is no reason why the same situation
cannot subsist in respect of the jurisdiction conferred upon the High Courts
Under Article 226 of the Constitution. So long as the jurisdiction of the High
Courts Under Articles 226/227 and that of this Court Under Article 32 is
retained, there is no reason why the power to test the validity of legislations
against the provisions of the Constitution cannot be conferred upon
Administrative Tribunals created under the Act or upon Tribunals created
Under Article 323B of the Constitution. It is to be remembered that, apart
from the authorisation that flows from Articles 323A and 323B, both
Parliament and the State Legislatures possess legislative competence to
effect changes in the original jurisdiction of the Supreme Court and the High
Courts. This power is available to Parliament under Entries 77, 78, 79 and 95
of List I and to the State Legislatures under Entry 65 of List II; Entry 46 of
List III can also be availed of both by Parliament and the State Legislatures
for this purpose.
8 2 . There are pressing reasons why we are anxious to preserve the
conferment of such a power on these Tribunals. When the Framers of our
Constitution bestowed the powers of judicial review of legislative action upon
the High Courts and the Supreme Court, they ensured that other
constitutional safeguards were created to assist them in effectively
discharging this onerous burden. The expectation was that this power would
be required to be used only occasionally. However, in the five decades that
have ensued since Independence, the quantity of litigation before the High
Courts has exploded in an unprecedented manner. The decision in Sampath
Kumar's case MANU/SC/0851/1987 : AIR 1987 SC 386, was rendered against

such a backdrop. We are conscious of the fact that when a Constitution
Bench of this Court in Sampath Kumar's case (supra) adopted the theory of
alternative institutional mechanisms, it was attempting to remedy an
alarming practical situation and the approach selected by it appeared to be
most appropriate to meet the exigencies of the time. Nearly a decade later,
we are now in a position to review the theoretical and practical results that
have arisen as a consequence of the adoption of such an approach.
83. We must, at this stage, focus upon the factual position which occasioned
the adoption of the theory of alternative institutional mechanisms in Sampath
Kumar's case (supra). In his leading judgment, R. Misra, J. refers to the fact
that since Independence, the population explosion and the increase in
litigation had greatly increased the burden of pendency in the High Courts.
Reference was made to studies conducted towards relieving the High Courts
of their increased load. In this regard, the recommendations of the Shah
Committee for setting up independent Tribunals as also the suggestion of the
Administrative Reforms Commission that Civil Service Tribunals be set up,
were noted. Reference was also made to the decision in K.K. Dutta v. Union
of India MANU/SC/0429/1980 : (1980) 4 SCC 38, where this Court had,
while emphasising the need for speedy resolution of service disputes,
proposed the establishment of Service Tribunals.
84. The problem of clearing the backlogs of High Courts, which has reached
colossal proportions in our times is, nevertheless, one that has been the
focus of study for close to a half century. Over time, several Expert
Committees and Commissions have analysed the intricacies involved and
have made suggestions, not all of which have been consistent. of the several
studies that have been conducted in this regard, as many as twelve have
been undertaken by the Law Commission of India (hereinafter referred to as
"the LCI") or similar high-level committees appointed by the Central
Government, and are particularly noteworthy. (Report of the High Court
Arrears Committee, 1949; LCI, 14th Report on Reform of Judicial
Administration (1958); LCI, 27th Report on Code of Civil Procedure, 1908
(1964); LCI, 41st Report on Code of Criminal Procedure, 1898 (1969); LCI,
54th Report of Code of Civil Procedure, 1908 (1973); LCI, 57th Report on
Structure and Jurisdiction of the Higher Judiciary (1974); Report of High
Court Arrears Committee, 1972; LCI, 79th Report on Delay and Arrears in
High Courts and other Appellate Courts (1979); LCI, 99th Report on Oral
Arguments and Written Arguments in the Higher Courts (1984); Satish
Chandra's Committee Report 1986; LCI, 124th Report on the High Court
Arrears - A Fresh Look (1988); Report of the Arrears Committee (1989-90).
85. An appraisal of the daunting task which confronts the High Courts can be
made by referring to the assessment undertaken by the LCI in its 124th
Report which was released sometime after the judgment in Sampath Kumar's
case (supra). The Report was delivered in 1988, nine years ago, and some
changes have occurred since, but the broad perspective which emerges is
still, by and large, true:
...The High Courts enjoy civil as well as criminal, ordinary as well as
extraordinary, and general as well as special jurisdiction. The source

of the jurisdiction is the Constitution and the various statutes as well
as letters patent and other instruments constituting the High Courts.
The High Courts in the country enjoy an original jurisdiction in
respect of testamentary, matrimonial and guardianship matters.
Original jurisdiction is conferred on the High Courts under the
Representation of the People Act, 1951, Companies Act, 1956, and
several other special statutes. The High Courts, being courts of
record, have the power to punish for its contempt as well as
contempt of its subordinate courts. The High Courts enjoy
extraordinary jurisdiction Under Articles 226 and 227 of the
Constitution enabling it to issue prerogative writs, such as, the one
in the nature of habeas corpus, mandamus, prohibition, quo
warranto and certiorari. Over and above this, the High Courts of
Bombay, Calcutta, Delhi, Himachal Pradesh, Jammu and Kashmir and
Madras also exercise ordinary original civil jurisdiction. The High
Courts also enjoy advisory jurisdiction, as evidenced by Section 256
of the Indian Companies Act, 1956, Section 27 of the Wealth Tax
Act, 1957, Section 26 of the Gift Tax Act, 1958, and Section 18 of
the Companies (Profits) Surtax Act, 1964. Similarly, there are
parallel provisions conferring advisory jurisdiction on the High
Courts, such as, Section 130 of the Customs Act, 1962, and Section
354 of the Central Excises and Salt Act, 1944. The High Courts have
also enjoyed jurisdiction under the Indian Divorce Act, 1869, and the
Parsi Marriage and Divorce Act, 1936. Different types of litigation
coming before the High Court in exercise of its wide jurisdiction bear
different names. The vast area of jurisdiction can be appreciated by
reference to those names, viz., (a) first appeals; (b) appeals under
the letters patent; (c) second appeals; (d) revision petitions; (e)
criminal appeals; (f) criminal revisions; (g) civil and criminal
references; (h) writ petitions; (i) writ appeals; (j) references under
direct and indirect tax laws; (k) matters arising under the Sales Tax
Act; (l) election petitions under the Representation of the People Act;
(m) petitions under the Companies Act, Banking Companies Act and
other special Acts and (n) wherever the High Court has original
jurisdiction, suits and other proceedings in exercise of that
jurisdiction. This varied jurisdiction has to some extent been
responsible for a very heavy institution of matters in the High
Courts.
86. After analysing the situation existing in the High Courts at length, the
LCI made specific recommendations towards the establishment of specialist
Tribunals thereby lending force to the approach adopted in Sampath Kumar's
case (supra). The LCI noted the erstwhile international judicial trend which
pointed towards generalist courts yielding their place to specialist Tribunals.
Describing the pendency in the High Courts as "catastrophic, crisis-ridden,
almost unmanageable, imposing ... an immeasurable burden on the system",
the LCI stated that the prevailing view in Indian Jurisprudence that the
jurisdiction enjoyed by the High Court is a holy cow required a review. It,
therefore, recommended the trimming of the jurisdiction of the High Courts
by setting up specialist courts/Tribunals while simultaneously eliminating the
jurisdiction of the High Courts.
8 7 . It is important to realise that though the theory of alternative

institutional mechanisms was propounded in Sampath Kumar's case (supra)
in respect of the Administrative Tribunals, the concept itself -- that of
creating alternative modes of dispute resolution which would relieve High
Courts of their burden while simultaneously providing specialised justice -- is
not new. In fact, the issue of having a specialised tax court has been
discussed for several decades; though the Report of the High Court Arrears
Committee (1972) dismissed it as "ill-conceived", the LCI, in its 115th Report
(1986) revived the recommendation of setting up separate Central Tax
Courts. Similarly, other Reports of the LCI have suggested the setting up of
'Gram Nyayalayas' [LCI, 114th Report (1986)], Industrial/Labour Tribunals
[LCI, 122nd Report (1987)] and Education Tribunals [LCI, 123rd Report
(1987)].
88. I n R.K Jain's case MANU/SC/0291/1993 : (1993) AIR SCW 1899, this
Court had, in order to understand how the theory of alternative institutional
mechanisms had functioned in practice, recommended that the LCI or a
similar expert body should conduct a survey of the functioning of these
Tribunals. It was hoped that such a study, conducted after gauging the
working of the Tribunals over a sizeable period of more than five years
would provide an answer to the questions posed by the critics of the theory.
Unfortunately, we do not have the benefit of such a study. We may, however,
advert to the Report of the Arrears Committee (1989-90), popularly known as
the Malimath Committee Report, which has elaborately dealt with the aspect.
The observations contained in the Report, to this extent they contain a review
of the functioning of the Tribunals over a period of three years or so after
their institution, will be useful for our purpose. Chapter VIII of the second
volume of the Report, "Alternative Modes and Forums for Dispute Resolution",
deals with the issue at length. After forwarding its specific recommendations
on the feasibility of setting up 'Gram Nyayalayas', Industrial Tribunals and
Educational Tribunals, the Committee has dealt with the issue of Tribunals
set up Under Articles 323A and 323B of the Constitution. The relevant
observations in this regard, being of considerable significance to our
analysis, are extracted in full as under:
Functioning of Tribunals
8.63 Several tribunals are functioning in the country. Not all of them,
however, have inspired confidence in the public mind. The reasons
are not far to seek. The foremost is the lack of competence,
objectivity and judicial approach. The next is their constitution, the
power and method of appointment of personnel thereto, the inferior
status and the casual method of working. The last is their actual
composition; men of calibre are not willing to be appointed as
presiding officers in view of the uncertainty of tenure, unsatisfactory
conditions of service, executive subordination in matters of
administration and political interference in judicial functioning. For
these and other reasons, the quality of justice is stated to have
suffered and the cause of expedition is not found to have been
served by the establishment of such tribunals.
8.6 4 Even the experiment of setting up of the Administrative
Tribunals under the Administrative Tribunals Act, 1985, has not been

widely welcomed. Its members have been selected from all kinds of
services including the Indian Police Service. The decision of the
State Administrative Tribunals are not appealable except Under
Article 136 of the Constitution. On account of the heavy cost and
remoteness of the forum, there is virtual negation of the right of
appeal. This has led to denial of justice in many cases and
consequential dissatisfaction. There appears to be a move in some of
the States where they have been established for their abolition.
Tribunals -- Tests for Including High Court's Jurisdiction
8.6 5 A Tribunal which substitutes the High Court as an alternative
institutional mechanism for judicial review must be no less
efficacious than the High Court. Such a tribunal must inspire
confidence and public esteem that it is a highly competent and expert
mechanism with judicial approach and objectivity. What is needed in
a tribunal, which is intended to supplant the High Court, is legal
training and experience, and judicial acumen, equipment and
approach. When such a tribunal is composed of personnel drawn
from the judiciary as well as from services or from amongst experts
in the field, any weightage in favour of the service members or
expert members and value-discounting the judicial members would
render the tribunal less effective and efficacious than the High Court.
The Act setting up such a tribunal would itself have to be declared as
void under such circumstances. The same would not at all be
conducive to judicial independence and may even tend, directly or
indirectly, to influence their decision-making process, especially
when the Government is a litigant in most of the cases coming
before such tribunal. (See S.P. Sampath Kumar's case (supra)). The
protagonists of specialist tribunals, who simultaneously with their
establishment want exclusion of the writ jurisdiction of the High
Courts in regard to matters entrusted for adjudication to such
tribunals, ought not to overlook these vital and important aspects. It
must not be forgotten that what is permissible to be supplanted by
another equally effective and efficacious institutional mechanism is
the High Courts and not the judicial review itself. Tribunals are not an
end in themselves but a means to an end; even if the laudable
objectives of speedy justice, uniformity of approach, predictability of
decisions and specialist justice are to be achieved, the framework of
the tribunal intended to be set up to attain them must still retain its
basic judicial character and inspire public confidence. Any scheme of
decentralisation of administration of justice providing for an
alternative institutional mechanism in substitution of the High Courts
must pass the aforesaid test in order to be constitutionally valid.
8.6 6 The overall picture regarding the tribunalisation of justice in
our country is not satisfactory and encouraging. There is a need for a
fresh look and review and a serious consideration before the
experiment is extended to new areas of fields, especially if the
constitutional jurisdiction of the High Courts is to be simultaneously
ousted. Not many tribunals satisfying the aforesaid tests can possibly
be established.

Having expressed itself in this manner, the Malimath Committee specifically
recommended that the theory of alternative institutional mechanisms be
abandoned. Instead, it recommended that institutional changes be carried out
within the High Courts, dividing them into separate divisions for different
branches of law, as is being done in England. It stated that appointing more
Judges to man the separate divisions while using the existing infrastructure
would be a better way of remedying the problem of pendency in the High
Courts.
8 9 . In the years that have passed since the Report of the Malimath
Committee was delivered, the pendency in the High Courts has substantially
increased and we are of the view that its recommendation is not suited to our
present context. That the various Tribunals have not performed up to
expectations is a self-evident and widely acknowledged truth. However, to
draw an inference that their unsatisfactory performance points to their being
founded on a fundamentally unsound principle would not be correct. The
reasons for which the Tribunals were constituted still persist; indeed, those
reasons have become even more pronounced in our times. We have already
indicated that our constitutional scheme permits the setting up of such
Tribunals. However, drastic measures may have to be resorted to in order to
elevate their standards to ensure that they stand up to constitutional scrutiny
in the discharge of the power of judicial review conferred upon them.
9 0 . We may first address the issue of exclusion of the power of judicial
review of the High Courts. We have already held that in respect of the power
of judicial review, the jurisdiction of the High Courts Under Articles 226/227
cannot be excluded. It has been contended before us that the Tribunals
should not be allowed to adjudicate upon matters where the vires of
legislations is questioned, and that they should restrict themselves to
handling matters where constitutional issues are not raised. We cannot bring
ourselves to agree to this proposition as that may result in splitting up
proceedings and may cause avoidable delay. If such a view were to be
adopted, it would be open for litigants to raise constitutional issues, many of
which may be quite frivolous, to directly approach the High Courts and thus
subvert the jurisdiction of the Tribunals. Moreover, even in these special
branches of law, some areas do involve the consideration of constitutional
questions on a regular basis; for instance, in service law matters, a large
majority of cases involve an interpretation of Articles 14, 15 and 16 of the
Constitution. To hold that the Tribunals have no power to handle matters
involving constitutional issues would not serve the purpose for which they
were constituted. On the other hand, to hold that all such decisions will be
subject to the jurisdiction of the High Courts Under Articles 226/227 of the
Constitution before a Division Bench of the High Court within whose
territorial jurisdiction the Tribunal concerned falls will serve two purposes.
While saving the power of judicial review of legislative action vested in the
High Courts Under Articles 226/227 of the Constitution, it will ensure that
frivolous claims are filtered out through the process of adjudication in the
Tribunal. The High Court will also have the benefit of a reasoned decision on
merits which will be of use to it in finally deciding the matter.
91. It has also been contended before us that even in dealing with cases
which are properly before the Tribunals, the manner in which justice is
dispensed by them leaves much to be desired. Moreover, the remedy

provided in the parent statutes, by way of an appeal by special leave Under
Article 136 of the Constitution, is too costly and inaccessible for it to be real
and effective. Furthermore, the result of providing such a remedy is that the
docket of the Supreme Court is crowded with decisions of Tribunals that are
challenged on relatively trivial grounds and it is forced to perform the role of
a first appellate court. We have already emphasised the necessity for
ensuring that the High Courts are able to exercise judicial superintendence
over the decisions of the Tribunals Under Article 227 of the Constitution. In
R.K. Jain's case (supra), after taking note of these facts, it was suggested
that the possibility of an appeal from the Tribunal on questions of law to a
Division Bench of a High Court within whose territorial jurisdiction the
Tribunal falls, be pursued. It appears that no follow-up action has been taken
pursuant to the suggestion. Such a measure would have improved matters
considerably. Having regard to both the aforestated contentions, we hold that
all decisions of Tribunals, whether created pursuant to Article 323A or Article
323B of the Constitution, will be subject to the High Court's writ jurisdiction
Under Articles 226/227 of the Constitution, before a Division Bench of the
High Court within whose territorial jurisdiction the particular Tribunal falls.
92. We may add here that under the existing system, direct appeals have
been provided from the decisions of all Tribunals to the Supreme Court
Under Article 136 of the Constitution. In view of our above-mentioned
observations, this situation will also stand modified. In the view that we have
taken, no appeal from the decision of a Tribunal will directly lie before the
Supreme Court Under Article 136 of the Constitution; but instead, the
aggrieved party will be entitled to move the High Court Under Articles
226/227 of the Constitution and from the decision of the Division Bench of
the High Court the aggrieved party could move this Court Under Article 136
of the Constitution.
93. Before moving on to other aspects, we may summarise our conclusions
on the jurisdictional powers of these Tribunals. The Tribunals are competent
to hear matters where the vires of statutory provisions are questioned.
However, in discharging this duty, they cannot act as substitutes for the High
Courts and the Supreme Court which have, under our constitutional set-up,
been specifically entrusted with such an obligation. Their function in this
respect is only supplementary and all such decisions of the Tribunals will be
subject to scrutiny before a Division Bench of the respective High Courts. The
Tribunals will consequently also have the power to test the vires of
subordinate legislations and rules. However, this power of the Tribunals will
be subject to one important exception. The Tribunals shall not entertain any
question regarding the vires of their parent statutes following the settled
principle that a Tribunal which is a creature of an Act cannot declare that
very Act to be unconstitutional. In such cases alone, the High Court
concerned may be approached directly. All other decisions of these Tribunals,
rendered in cases that they are specifically empowered to adjudicate upon by
virtue of their parent statutes, will also be subject to scrutiny before a
Division Bench of their respective High Courts. We may add that the
Tribunals will, however, continue to act as the only courts of first instance in
respect of the areas of law for which they have been constituted. By this, we
mean that it will not be open for litigants to directly approach the High
Courts even in cases where they question the vires of statutory legislations
(except, as mentioned, where the legislation which creates the particular

Tribunal is challenged) by overlooking the jurisdiction of the concerned
Tribunal.
94. The directions issued by us in respect of making the decisions of
Tribunals amenable to scrutiny before a Division Bench of the respective
High Courts will, however, come into effect prospectively i.e. will apply to
decisions rendered hereafter. To maintain the sanctity of judicial
proceedings, we have invoked the doctrine of prospective overruling so as
not to disturb the procedure in relation to decisions already rendered.
Based on the decisions of this Court referred to above, it was the contention of the
learned Counsel for the Respondents, that the submissions advanced on behalf of the
Petitioners, are liable to outright rejection.
(ii) Reliance was placed first of all on Union of India v. Delhi High Court Bar
Association MANU/SC/0194/2002 : (2002) 4 SCC 275. Insofar as the controversy
raised in the instant judgment is concerned, it would be relevant to mention, that
banks and financial institutions had been experiencing considerable difficulties in
recovery of loans, and enforcement of securities. The procedure for recovery of debts
due to banks and financial institutions, which was being followed, had resulted in the
funds being blocked. To remedy the above situation, Parliament enacted the Recovery
of Debts Due to Banks and Financial Institutions Act, 1993. The Act, inter alia,
provided for establishment of tribunals and Appellate Tribunals. The said tribunals
were given jurisdiction, powers and authority, to entertain and decide, applications
from banks and financial institutions, for recovery of debts, due to banks and
financial institutions. The Appellate Tribunal, was vested with the jurisdiction and
authority, to entertain appeals. The procedure to be followed by the tribunals, as
also, the Appellate Tribunals, was provided for under the above enactment. The
legislation also provided for modes of recovery of debts through Recovery Officers
(appointed under the Act). The constitutional validity of the Recovery of Debts Due to
Banks and Financial Institutions Act, 1993 was raised on the ground, that the
legislation was unreasonable and violative of Article 14 of the Constitution. It was
also the claim of those who raised the said challenge, that the enactment was beyond
the legislative competence of the Parliament. The controversy came to be examined,
in the first instance, by the Delhi High Court (in Delhi High Court Bar Association v.
Union of India AIR 1975 Delhi 323). The Delhi High Court held, that even though the
tribunal could be constituted by the Parliament, and even though the constitution of
the tribunal was within the purview of Articles 323A and 323B of the Constitution,
and despite the fact that, the expression "administration of justice" appearing in entry
11A of List III of the Seventh Schedule to the Constitution, would also include
tribunals administering justice, yet the impugned Act was unconstitutional, as it had
the effect of eroding the independence of the judiciary, besides being irrational,
discriminatory, unreasonable and arbitrary. As such it was held, that the provisions of
the enactment were violative of the mandate contained in Article 14 of the
Constitution. The High Court, in its judgment, also quashed the appointment of
Presiding Officers of the tribunal. While adjudicating upon the above controversy in
reference to some of the issues that have been raised before us, our pointed attention
was invited to the following observations:
21...Sub-section (20) of Section 19 provides that after giving the applicant
and the Defendant an opportunity of being heard, the Tribunal may pass such
interim or final order as it thinks fit to meet the ends of justice. It is after
this order that a certificate is issued by the Presiding Officer to the Recovery

Officer for recovery of money. Section 22 of the Act has not been amended.
Therefore, reading Sections 19 and 22 of the Act together, it appears that the
Tribunal and the Appellate Tribunal are to be guided by the principles of
natural justice while trying the matter before them. Section 22(1) of the Act
stipulates that the Tribunal and the Appellate Tribunal, while being guided by
the principles of natural justice, are to be subjected to the other provisions
of the Act and the Rules. Rule 12(7) provides that if a Defendant denies his
liability to pay the claim made by the applicant, the Tribunal may act upon
the affidavit of the applicant who is acquainted with the facts of the case. In
this Rule, which deals with the consideration of the applicant's bank
application, there is no reference to the examination of witnesses. This Sub-
rule refers only to the affidavit of the applicant. Rule 12(6), on the other
hand, provides that the Tribunal may, at any time, for sufficient reason order
a fact to be proved by affidavit or may pass an order that the affidavit of any
witness may be read at the hearing. It is in the proviso to this Sub-rule that
a reference is made to the cross-examination of witnesses.
22. At the outset, we find that Rule 12 is not happily worded. The reason for
establishing Banking Tribunals being to expedite the disposal of the claims
by the banks, Parliament thought it proper only to require the principles of
natural justice to be the guiding factor for the Tribunals in deciding the
applications, as is evident from Section 22 of the Act. While the Tribunal has,
no doubt, been given the power of summoning and enforcing the attendance
of any witness and examining him on oath, but the Act does not contain any
provision which makes it mandatory for the witness to be examined, if such a
witness could be produced. Rule 12(6) has to be read harmoniously with the
other provisions of the Act and the Rules. As we have already noticed, Rule
12(7) gives the Tribunal the power to act upon the affidavit of the applicant
where the Defendant denies his liability to pay the claims. Rule 12(6), if
paraphrased, would read as follows:
1. the Tribunal may, at any time for sufficient reason, order that any
particular fact or facts may be proved by affidavit ... on such
conditions as the Tribunal thinks reasonable;
2. the Tribunal may, at any time for sufficient reason, order ... that
the affidavit of any witness may be read at the hearing, on such
conditions as the Tribunal thinks reasonable.
23. In other words, the Tribunal has the power to require any particular fact
to be proved by affidavit, or it may order that the affidavit of any witness
may be read at the hearing. While passing such an order, it must record
sufficient reasons for the same. The proviso to Rule 12(6) would certainly
apply only where the Tribunal chooses to issue a direction on its own, for
any particular fact to be proved by affidavit or the affidavit of a witness being
read at the hearing. The said proviso refers to the desire of an applicant or a
Defendant for the production of a witness for cross-examination. In the
setting in which the said proviso occurs, it would appear to us that once the
parties have filed affidavits in support of their respective cases, it is only
thereafter that the desire for a witness to be cross-examined can legitimately
arise. It is at that time, if it appears to the Tribunal, that such a witness can
be produced and it is necessary to do so and there is no desire to prolong
the case that it shall require the witness to be present for cross-examination

and in the event of his not appearing, then the affidavit shall not be taken
into evidence. When the High Courts and the Supreme Court in exercise of
their jurisdiction Under Article 226 and Article 32 can decide questions of
fact as well as law merely on the basis of documents and affidavits filed
before them ordinarily, there should be no reason as to why a Tribunal,
likewise, should not be able to decide the case merely on the basis of
documents and affidavits before it. It is common knowledge that hardly any
transaction with the bank would be oral and without proper documentation,
whether in the form of letters or formal agreements. In such an event the
bona fide need for the oral examination of a witness should rarely arise.
There has to be a very good reason to hold that affidavits, in such a case,
would not be sufficient.
24. The manner in which a dispute is to be adjudicated upon is decided by
the procedural laws which are enacted from time to time. It is because of the
enactment of the Code of Civil Procedure that normally all disputes between
the parties of a civil nature would be adjudicated upon by the civil courts.
There is no absolute right in anyone to demand that his dispute is to be
adjudicated upon only by a civil court. The decision of the Delhi High Court
proceeds on the assumption that there is such a right. As we have already
observed, it is by reason of the provisions of the Code of Civil Procedure that
the civil courts had the right, prior to the enactment of the Debts Recovery
Act, to decide the suits for recovery filed by the banks and financial
institutions. This forum, namely, that of a civil court, now stands replaced by
a Banking Tribunal in respect of the debts due to the bank. When in the
Constitution Articles 323A and 323B contemplate establishment of a Tribunal
and that does not erode the independence of the judiciary, there is no reason
to presume that the Banking Tribunals and the Appellate Tribunals so
constituted would not be independent, or that justice would be denied to the
Defendants or that the independence of the judiciary would stand eroded.
25. Such Tribunals, whether they pertain to income tax or sales tax or excise
or customs or administration, have now become an essential part of the
judicial system in this country. Such specialised institutions may not strictly
come within the concept of the judiciary, as envisaged by Article 50, but it
cannot be presumed that such Tribunals are not an effective part of the
justice delivery system, like courts of law. It will be seen that for a person to
be appointed as a Presiding Officer of a Tribunal, he should be one who is
qualified to be a District Judge and, in case of appointment of the Presiding
Officer of the Appellate Tribunal he is, or has been, qualified to be a Judge of
a High Court or has been a member of the Indian Legal Service who has held
a post in Grade I for at least three years or has held office as the Presiding
Officer of a Tribunal for at least three years. Persons who are so appointed as
Presiding Officers of the Tribunal or of the Appellate Tribunal would be well
versed in law to be able to decide cases independently and judiciously. It has
to be borne in mind that the decision of the Appellate Tribunal is not final, in
the sense that the same can be subjected to judicial review by the High Court
Under Articles 226/227 of the Constitution.
2 6 . With the establishment of the Tribunals, Section 31 provides for the
transfer of pending cases from civil courts to the Tribunal. We do not find
such a provision being in any way bad in law. Once a Debts Recovery
Tribunal has been established, and the jurisdiction of courts barred by

Section 18 of the Act, it would be only logical that any matter pending in the
civil court should stand transferred to the Tribunal. This is what happened
when the Central Administrative Tribunal was established. All cases pending
in the High Courts stood transferred. Now that exclusive jurisdiction is vested
in the Banking Tribunal, it is only in that forum that bank cases can be tried
and, therefore, a provision like Section 31 was enacted.
27. With regard to the observations of the Delhi High Court in relation to the
pecuniary jurisdiction of the Tribunals and of the Delhi High Court, the Act
has been enacted for the whole of India. In most of the States, the High
Courts do not have original jurisdiction. In order to see that the Tribunal is
not flooded with cases where the amounts involved are not very large, the
Act provides that it is only where the recovery of the money is more than Rs.
10 lakhs that the Tribunal will have the jurisdiction to entertain the
application Under Section 19. With respect to suits for recovery of money
less than Rs. 10 lakhs, it is the subordinate courts which would continue to
try them. In other words, for a claim of Rs. 10 lakhs or more, exclusive
jurisdiction has been conferred on the Tribunal but for any amount less than
Rs. 10 lakhs, it is the ordinary civil courts which will have jurisdiction. The
bifurcation of original jurisdiction between the Delhi High Court and the
subordinate courts is a matter which cannot have any bearing on the validity
of the establishment of the Tribunal. It is only in those High Courts which
have original jurisdiction that an anomalous situation arises where suits for
recovery of money less than Rs. 10 lakhs have to be decided by the High
Courts while the Tribunals have jurisdiction to decide suits for recovery of
more than Rs. 10 lakhs. This incongruous situation, which can be remedied
by the High Court divesting itself of the original jurisdiction in regard to such
claims and vesting the said jurisdiction with the subordinate courts or vice
versa, cannot be a ground for holding that the Act is invalid.
xxx
30. By virtue of Section 29 of the Act, the provisions of the Second and
Third Schedules to the Income Tax Act, 1961 and the Income Tax (Certificate
Proceedings) Rules, 1962, have become applicable for the realisation of the
dues by the Recovery Officer. Detailed procedure for recovery is contained in
these Schedules to the Income Tax Act, including provisions relating to arrest
and detention of the defaulter. It cannot, therefore, be said that the Recovery
Officer would act in an arbitrary manner. Furthermore, Section 30, after
amendment by the Amendment Act, 2000, gives a right to any person
aggrieved by an order of the Recovery Officer, to prefer an appeal to the
Tribunal. Thus now an appellate forum has been provided against any orders
of the Recovery Officer which may not be in accordance with law. There is,
therefore, sufficient safeguard which has been provided in the event of the
Recovery Officer acting in an arbitrary or an unreasonable manner. The
provisions of Sections 25 and 28 are, therefore, not bad in law.
31. For the aforesaid reasons, while allowing the appeals of the Union of
India and the Banks, we hold that the Recovery of Debts Due to Banks and
Financial Institutions Act, 1993 is a valid piece of legislation. As a result
thereof, the writ petitions or appeals filed by various parties challenging the
validity of the said Act or some of the provisions thereof, are dismissed. It
would be open to the parties to raise other contentions on the merits of their

cases before the authority constituted under the Act and, only thereafter,
should a High Court entertain a petition Under Articles 226/227 of the
Constitution. Transferred cases stand disposed of accordingly. Parties to bear
their own costs.
(iii) Reliance was next placed on State of Karnataka v. Vishwabharathi House Building
Cooperative Society and Ors. MANU/SC/0033/2003 : (2003) 2 SCC 412. The primary
question which arose for consideration was the constitutional validity of the
Consumer Protection Act, 1986. The challenge was raised on the ground, that
Parliament was not empowered to establish a hierarchy of courts like the District
Fora, the State Commission and the National Commission, as this would constitute a
parallel hierarchy of courts, in addition to the courts established under the
Constitution, namely, District Courts, High Courts and the Supreme Court. In this
behalf the pointed submission was, that Parliament could only establish courts, with
power to deal with specific subjects, but not such a court which would run parallel to
the civil courts. It was sought to be asserted, that even Under Articles 323A and 323B
of the Constitution, Parliament could not enact a legislation, by which it could
establish tribunals, in substitution of civil courts including the High Court. This,
according to those who raised the challenge, would strike at the independence of the
judiciary. As against the above assertions, the legislative competence of the
Parliament and the State Legislatures, to provide for creation of courts and tribunals,
reliance was placed on entries 77, 78 and 79 in List I of the Seventh Schedule, as
also, entries 11A and 46 contained in List III of the Seventh Schedule to the
Constitution. While examining the challenge raised to the Consumer Protection Act,
1986, on the grounds referred to above, this Court held as under:
1 2 . A bare perusal of the aforementioned provisions does not leave any
manner of doubt as regard the legislative competence of Parliament to
provide for creation of Special Courts and Tribunals. Administration of
justice; constitution and organization of all courts, except the Supreme Court
and the High Courts is squarely covered by Entry 11-A of List III of the
Constitution of India. The said entry was originally a part of Entry 3 of List
II. By reason of the Constitution (Forty-second Amendment) Act, 1976 and
by Section 57(a)(vi) thereof, it was inserted into List III as Item 11-A.
13. By virtue of Clause (2) of Article 246 of the Constitution, Parliament has
the requisite power to make laws with respect of constitution of organization
of all courts except the Supreme Court and the High Court.
1 4 . The learned Counsel appearing on behalf of the Petitioners could not
seriously dispute the plenary power of Parliament to make a law as regard
constitution of courts but as noticed supra, merely urged that it did not have
the competence to create parallel civil courts.
15. The said submission has been made purported to be relying on or on the
basis of the following observations made by Shinghal, J. while delivering a
partially dissenting judgment in Special Courts Bill, 1978, In re:
MANU/SC/0039/1978 : (1979) 1 SCC 380 (SCC at p. 455, para 152)
152. The Constitution has thus made ample and effective provision
for the establishment of a strong, independent and impartial judicial
administration in the country, with the necessary complement of civil
and criminal courts. It is not permissible for Parliament or a State

Legislature to ignore or bypass that scheme of the Constitution by
providing for the establishment of a civil or criminal court parallel to
a High Court in a State, or by way of an additional or extra or a
second High Court, or a court other than a court subordinate to the
High Court. Any such attempt would be unconstitutional and will
strike at the independence of the judiciary which has so nobly been
enshrined in the Constitution and so carefully nursed over the years.
1 6 . The argument of the learned Counsel is fallacious inasmuch as the
provisions of the said Act are in addition to the provisions of any other law
for the time being in force and not in derogation thereof as is evident from
Section 3 thereof.
17. The provisions of the said Act clearly demonstrate that it was enacted
keeping in view the long-felt necessity of protecting the common man from
wrongs wherefor the ordinary law for all intent and purport had become
illusory. In terms of the said Act, a consumer is entitled to participate in the
proceedings directly as a result whereof his helplessness against a powerful
business house may be taken care of.
18. This Court in a large number of decisions considered the purport and
object of the said Act. By reason of the said statute, quasi-judicial authorities
have been created at the district, State and Central levels so as to enable a
consumer to ventilate his grievances before a forum where justice can be
done without any procedural wrangles and hyper technicalities.
1 9 . One of the objects of the said Act is to provide momentum to the
consumer movement. The Central Consumer Protection Council is also to be
constituted in terms of Section 4 of the Act to promote and protect the rights
of the consumers as noticed hereinbefore.
xxx
2 4 . In terms of Section 10, the President of a District Forum shall be a
person who is, or has been, or is qualified to be a District Judge and the
Forum shall also consist of two other members who are required to be
persons of ability, integrity and standing and have adequate knowledge or
experience of, or have shown capacity in dealing with, problems relating to
economics, law, commerce, accountancy, industry, public affairs or
administration and one of them shall be a woman. The tenure of the
members of the District Forum is fixed.
25. Section 13 of the said Act lays down a detailed procedure as regards the
mode and manner in which the complaints received by the District Forum are
required to be dealt with. Section 14 provides for the directions which can be
issued by the District Forum on arriving at a satisfaction that the goods
complained against suffer from any of the defects specified in the complaint
or that any of the allegations contained in the complaint about the
deficiencies in services have been proved.
26. Section 15 provides for an appeal from the order made by the District
Forum to the State Commission.
2 7 . Section 16 provides for composition of the State Commission which

reads thus:
16. (1) Each State Commission shall consist of --
(a) a person who is or has been a Judge of a High Court,
appointed by the State Government, who shall be its
President: Provided that no appointment under this clause
shall be made except after consultation with the Chief
Justice of the High Court;
(b) two other members, who shall be persons of ability,
integrity and standing and have adequate knowledge or
experience of, or have shown capacity in dealing with,
problems relating to economics, law, commerce,
accountancy, industry, public affairs or administration, one
of whom shall be a woman:
Provided that every appointment under this clause shall be
made by the State Government on the recommendation of a
Selection Committee consisting of the following, namely:
(i) President of the State Commission: Chairman
(ii) Secretary of the Law Department of the State: Member
(iii) Secretary in charge of the Department dealing with
consumer affairs in the State: Member
(2) The salary or honorarium and other allowances payable
to, and the other terms and conditions of service of the
members of the State Commission shall be such as may be
prescribed by the State Government.
(3) Every member of the State Commission shall hold office
for a term of five years or up to the age of sixty-seven
years, whichever is earlier and shall not be eligible for
reappointment.
(4) Notwithstanding anything contained in Sub-section (3),
a person appointed as a President or as a member before the
commencement of the Consumer Protection (Amendment)
Act, 1993, shall continue to hold such office as President or
member, as the case may be, till the completion of his term.
The members of the State Commission are to be selected by a Selection
Committee, the Chairman whereof would be the President of the State
Commission.
2 8 . Section 19 provides for an appeal from a decision of the State
Commission to the National Commission. Section 20 deals with the
composition of the National Commission, the President whereof would be a
person who is or has been a Judge of the Supreme Court and such
appointment shall be made only upon consultation with the Chief Justice of
India. So far as the members of the National Commission are concerned, the
same are also to be made on the recommendation of the Selection

Committee, the Chairman whereof would be a person who is a Judge of the
Supreme Court to be nominated by the Chief Justice of India. The tenure of
the office of the National Commission is also fixed by reason of Sub-section
(3) of Section 20.
2 9 . By reason of the provisions of the said Act, therefore, independent
authorities have been created.
30. Sections 15, 19 and 23 provide for the hierarchy of appeals. By reason
of Sub-sections (4), (5) and (6) of Section 13, the District Forum shall have
the same powers as are vested in the civil courts for the purposes mentioned
therein. Sub-sections (2) and (2-A) of Section 14 mandate that the
proceedings shall be conducted by the President of the District Forum and at
least one member thereof sitting together. Only in the event of any difference
between them on any point or points, the same is to be referred to the other
member for hearing thereon and the opinion of the majority shall be the
order of the District Forum. By reason of Section 18, the provisions of
Sections 12, 13 and 14 and the rules made thereunder would mutatis
mutandis be applicable to the disposal of disputes by the State Commission.
31. Section 23 provides for a limited appeal to the Supreme Court from an
order made by the National Commission i.e. when the same is made in
exercise of its original power as conferred by Sub-clause (i) of Clause (a) of
Section 21.
This Court then, having placed reliance on Union of India v. Delhi High Court Bar
Association (supra), Navinchandra Mafatlal, Bombay v. The Commissioner of Income
Tax, Bombay City MANU/SC/0070/1954 : AIR 1955 SC 58, and Union of India v.
Harbhajan Singh Dhillon MANU/SC/0062/1971 : (1971) 2 SCC 779, concluded as
under:
37. Once it is held that Parliament had the legislative competence to enact
the said Act, the submissions of the learned Counsel that the relevant
provisions of the Constitution required amendments must be neglected.
38. The scope and object of the said legislation came up for consideration
before this Court in Common Cause, A Registered Society v. Union of India
MANU/SC/0362/1997 : (1997) 10 SCC 729. It was held: (SCC p. 730, para
2)
2. The object of the legislation, as the preamble of the Act
proclaims, is 'for better protection of the interests of consumers'.
During the last few years preceding the enactment there was in this
country a marked awareness among the consumers of goods that
they were not getting their money's worth and were being exploited
by both traders and manufacturers of consumer goods. The need for
consumer redressal fora was, therefore, increasingly felt.
Understandably, therefore, legislation was introduced and enacted
with considerable enthusiasm and fanfare as a path-breaking
benevolent legislation intended to protect the consumer from
exploitation by unscrupulous manufacturers and traders of consumer
goods. A three-tier fora comprising the District Forum, the State
Commission and the National Commission came to be envisaged
under the Act for redressal of grievances of consumers.

39. The rights of the parties have adequately been safeguarded by reason of
the provisions of the said Act inasmuch as although it provides for an
alternative system of consumer jurisdiction on summary trial, they are
required to arrive at a conclusion based on reasons. Even when quantifying
damages, they are required to make an attempt to serve the ends of justice
aiming not only at recompensing the individual but also to bring about a
qualitative change in the attitude of the service provider. Assignment of
reasons excludes or at any rate minimizes the chances of arbitrariness and
the higher forums created under the Act can test the correctness thereof.
40. The District Forum, the State Commission and the National Commission
are not manned by lay persons. The President would be a person having
judicial background and other members are required to have the expertise in
the subjects such as economics, law, commerce, accountancy, industry,
public affairs, administration etc. It may be true that by reason of Sub-
section (2-A) of Section 14 of the Act, in a case of difference of opinion
between two members, the matter has to be referred to a third member and,
in rare cases, the majority opinion of the members may prevail over the
President. But, such eventuality alone is insufficient for striking down the Act
as unconstitutional, particularly, when provisions have been made therein for
appeal there against to a higher forum.
41. By reason of the provisions of the said Act, the power of judicial review
of the High Court, which is a basic feature of the Constitution, has not been
nor could be taken away.
xxx
49. The question as regards the applicability or otherwise of Articles 323A
and 323B of the Constitution in the matter of constitution of such Tribunals
came up for consideration before this Court in L. Chandra Kumar v. Union of
India MANU/SC/0261/1997 : (1997) 3 SCC 261. This Court therein clearly
held that the constitutional provisions vest Parliament and the State
Legislatures, as the case may be, with powers to divest the traditional courts
of a considerable portion of their judicial work. It was observed that the
Parliament and the State Legislatures possess legislative competence to
effect changes in the original jurisdiction of the Supreme Court and High
Court apart from the authorisation that flows from Articles 323A and 323B in
terms of Entries 77, 78, 79 and 95 of List I so far as the Parliament is
concerned, and in terms of Entry 65 of List II and Entry 46 of List III so far
as the State Legislatures are concerned. It was further held that power of
judicial review being the basic structure of the Constitution cannot be taken
away.
50. We, therefore, are clearly of the opinion that the said Act cannot be said
to be unconstitutional.
The fourth contention:
(i). In response to the fourth contention, namely, the challenge raised by the learned
Counsel for the Petitioners, to the various provisions of the NTT Act, it was the
submission of the learned Counsel for the Respondents, that in view of the
submissions advanced in respect of the third contention, it is apparent that the
Parliament had the legislative competence to enact the NTT Act. It was submitted,

that the NTT Act was enacted keeping in mind the parameters laid down by this
Court, by preserving the power of judicial review vested in the High Courts Under
Articles 226 and 227 of the Constitution, as also, by preserving the power of judicial
review vested in this Court Under Articles 32 and 136 of the Constitution. It is,
therefore, submitted that the final word in respect of the instant adjudicatory process,
stands preserved with courts of law. And therefore, the submissions advanced at the
hands of the learned Counsel for the Petitioners on the individual provisions of the
NTT Act, pertaining to the independence of the adjudicatory process, were being
exaggerated out of proportion.
(ii) Despite having made the above submissions, the Attorney General for India, was
fair and candid in stating, that if this Court felt that there was need to make certain
changes in the provisions referred to by the Petitioners, he had the instructions to
state, that any suggestion made by this Court will be viewed positively, and
necessary amendments in the NTT Act would be carried out.
The debate, and the consideration:
I . Constitutional validity of the NTT Act - Does the NTT Act violate the "basic
structure" of the Constitution?
53. The principal contention advanced at the hands of the learned Counsel for the
Petitioners was premised on the submission, that Article 323B, inserted by the
Constitution (Forty-second Amendment) Act 1976, to the extent that it violated the
principles of, "separation of powers", "rule of law", and "judicial review", was liable
to be struck down. This striking down was founded on an alleged violation of the
"basic structure" doctrine. Similarly, various provisions of the NTT Act, were sought
to be assailed. The provisions of the NTT Act were challenged, on the premise, that
they had trappings of executive control, over the adjudicatory process vested with the
NTT, and therefore, were liable to be set aside as unconstitutional.
54. In the context of the foregoing submissions advanced at the hands of the learned
Counsel for the Petitioners, it is essential for us to examine the exact contours of
"judicial review", in the framework and scheme, of the concepts of "rule of law" and
"separation of powers", which have been held to constitute the "basic structure" of
the Constitution. And also, the essential ingredients, of an independent adjudicatory
process. It is, therefore, that we would travel the ladder of history and law, to
determine the exact scope of the "judicial review", which constitutes the "basic
structure" of the Constitution. This would lead us to unravel the salient ingredients of
an independent adjudicatory process. Based thereon, we will record our conclusions.
The analysis:
55. Reference must first of all be made to the decision rendered by this Court in
Kesavananda Bharati v. State of Kerala MANU/SC/0445/1973 : (1973) 4 SCC 225. In
the above cited case, this Court was engaged with the validity of the Constitution
(Twenty-fourth Amendment) Act, 1971, as also, the Constitution (Twenty-fifth
Amendment) Act, 1971. The former Act related to the amendments of Articles 13 and
368 of the Constitution, whereas the latter, pertained to the amendment of Article 31
of the Constitution. The instant judgment was rendered by a constitution bench of 13
Judges. Seven of the Judges expressed the majority view. The observations recorded
by this Court recognising "judicial review" as a component of the "basic structure" of
the Constitution, were made by four Judges. Reference is first of all being made, to
the view expressed by S.M. Sikri, CJ.:

2 9 2 . The learned Attorney-General said that every provision of the
Constitution is essential; otherwise it would not have been put in the
Constitution. This is true. But this does not place every provision of the
Constitution in the same position. The true position is that every provision of
the Constitution can be amended provided in the result the basic foundation
and structure of the constitution remains the same. The basic structure may
be said to consist of the following features:
(1) Supremacy of the Constitution;
(2) Republican and Democratic form of Government;
(3) Secular character of the Constitution;
(4) Separation of powers between the legislature, the executive and
the judiciary;
(5) Federal character of the Constitution.
293. The above structure is built on the basic foundation i.e. the dignity and
freedom of the individual. This is of supreme importance. This cannot by any
form of amendment be destroyed.
It is also imperative to refer to the view expressed by J.M. Shelat and A.N. Grover,
JJ., who delivered a common judgment:
487...The Rule of Law has been ensured by providing for judicial review.".
xxx
577...Judicial review is undertaken by the courts "not out of any desire to
tilt at legislative authority in a crusader's spirit, but in discharge of a duty
plainly laid down upon them by the Constitution". The Respondents have also
contended that to let the court have judicial review over constitutional
amendments would mean involving the court in political questions. To this
the answer may be given in the words of Lord Porter in Commonwealth of
Australia v. Bank of New South Wales 1950 AC 235 at 310,:
The problem to be solved will often be not so much legal as political,
social or economic, yet it must be solved by a Court of law. For
where the dispute is, as here, not only between Commonwealth and
citizen but between Commonwealth and intervening States on the
one hand and citizens and States on the other, it is only the Court
that can decide the issue, it is vain to invoke the voice of Parliament.
There is ample evidence in the Constitution itself to indicate that it creates a
system of checks and balances by reason of which powers are so distributed
that none of the three organs it sets up can become so pre-dominant as to
disable the others from exercising and discharging powers and functions
entrusted to them. Though the Constitution does not lay down the principle
of separation of powers in all its rigidity as is the case in the United States
Constitution but it envisages such a separation to a degree as was found in
Ranasinghe's case, 1965 AC 172. The judicial review provided expressly in
our Constitution by means of Articles 226 and 32 is one of the features upon
which hinges the system of checks and balances. Apart from that, as already

stated, the necessity for judicial decision on the competence or otherwise of
an Act arises from the very federal nature of a Constitution (per Haldane,
L.C. in Attorney-General for the Commonwealth of Australia v. Colonial Sugar
Refining Co. 1914 AC 237 and Ex parte Walsh & Johnson; In re Yates (1925)
37 CLR 36 at page 58. The function of interpretation of a Constitution being
thus assigned to the judicial power of the State, the question whether the
subject of a law is within the ambit of one or more powers of the Legislature
conferred by the Constitution would always be a question of interpretation of
the Constitution. It may be added that at no stage the Respondents have
contested the proposition that the validity of a constitutional amendment can
be the subject of review by this Court. The Advocate-General of Maharashtra
has characterized judicial review as undemocratic. That cannot, however, be
so in our Constitution because of the provisions relating to the appointment
of Judges, the specific restriction to which the fundamental rights are made
subject, the deliberate exclusion of the due process clause in Article 21 and
the affirmation in Article 141 that Judges declare but not make law. To this
may be added the none too rigid amendatory process which authorizes
amendment by means of 2/3 majority and the additional requirement of
ratification.
xxx
582. The basic structure of the Constitution is not a vague concept and the
apprehensions expressed on behalf of the Respondents that neither the
citizen nor the Parliament would be able to understand it are unfounded. If
the historical background, the preamble, the entire scheme of the
Constitution, relevant provisions thereof including Article 368 are kept in
mind there can be no difficulty in discerning that the following can be
regarded as the basic elements of the constitutional structure. (These cannot
be catalogued but can only be illustrated):
(1) The supremacy of the Constitution.
(2) Republican and Democratic form of government and sovereignty
of the country.
(3) Secular and federal character of the Constitution.
(4) Demarcation of power between the Legislature, the executive and
the judiciary.
(5) The dignity of the individual secured by the various freedoms
and basic rights in Part III and the mandate to build a welfare State
contained in Part IV.
(6) The unity and the integrity of the Nation.
In this behalf it is also imperative for us to record the observations of P. Jaganmohan
Reddy, J., who observed as under:
1104...There is no constitutional matter which is not in some way or the
other involved with political, social or economic questions, and if the
Constitution-makers have vested in this Court a power of Judicial review, and
while so vesting, have given it a prominent place describing it as the heart

and soul of the Constitution, we will not be deterred from discharging that
duty, merely because the validity or otherwise of the legislation will affect
the political or social policy underlying it. The basic approach of this Court
has been, and must always be, that the Legislature has the exclusive power
to determine the policy and to translate it into law, the constitutionality of
which is to be presumed, unless there are strong and cogent reasons for
holding that it conflicts with the constitutional mandate. In this regard both
the Legislature, the executive, as well as the judiciary are bound by the
paramount instrument, and, therefore, no court and no Judge will exercise
the judicial power dehors that instrument, nor will it function as a supreme
legislature above the Constitution. The bona fides of all the three of them has
been the basic assumption, and though all of them may be liable to error, it
can be corrected in the manner and by the method prescribed under the
Constitution and subject to such limitations as may be inherent in the
instrument.
Some of the observations of H.R. Khanna, J., are also relevant to the issue in hand.
The same are placed hereunder:
1529...The power of judicial review is, however, confined not merely to
deciding whether in making the impugned laws the Central or State
Legislatures have acted within the four corners of the legislative lists
earmarked for them; the courts also deal with the question as to whether the
laws are made in conformity with and not in violation of the other provisions
of the Constitution. Our Constitution-makers have provided for fundamental
rights in Part III and made them justiciable. As long as some fundamental
rights exist and are a part of the Constitution, the power of judicial review
has also to be exercised with a view to see that the guarantees afforded by
those rights are not contravened. Dealing with draft Article 25
(corresponding to present Article 32 of the Constitution) by which a right is
given to move the Supreme Court for enforcement of the fundamental rights,
Dr. Ambedkar speaking in the Constituent Assembly on December 9, 1948
observed:
If I was asked to name any particular article in this Constitution as
the most important an article without which this Constitution would
be a nullity -- I could not refer to any other article except this one It
is the very soul of the Constitution and the very heart of it and I am
glad that the House has realised its importance (Constituent
Assembly Debates, Vol VII, p. 953).
Judicial review has thus become an integral part of our constitutional system
and a power has been vested in the High Courts and the Supreme Court to
decide about the constitutional validity of provisions of statutes.
Our Constitution postulates rule of law in the sense of supremacy of the
Constitution and the laws as opposed to arbitrariness. The vesting of power
of exclusion of judicial review in a legislature, including State Legislature,
contemplated by Article 31C, in my opinion, strikes at the basic structure of
the Constitution. The second part of Article 31C thus goes beyond the
permissible limit of what constitutes amendment Under Article 368.
xxx

1533. The position as it emerges is that it is open to the authority amending
the Constitution to exclude judicial review regarding the validity of an
existing statute. It is likewise open to the said authority to exclude judicial
review regarding the validity of a statute which might be enacted by the
legislature in future in respect of a specified subject. In such an event,
judicial review is not excluded for finding whether the statute has been
enacted in respect of the specified subject. Both the above types of
constitutional amendments are permissible Under Article 368. What is not
permissible, however, is a third type of constitutional amendment, according
to which the amending authority not merely excludes judicial review
regarding the validity of a statute which might be enacted by the legislature
in future in respect of a specified subject but also excludes judicial review for
finding whether the statute enacted by the legislature is in respect of the
subject for which judicial review has been excluded.
xxx
1537. I may now sum up my conclusions relating to power of amendment
Under Article 368 of the Constitution as it existed before the amendment
made by the Constitution (Twenty-fourth Amendment) Act as well as about
the validity of the Constitution (Twenty-fourth Amendment) Act, the
Constitution (Twenty-fifth Amendment) Act and the Constitution (Twenty-
ninth Amendment) Act:
(i) Article 368 contains not only the procedure for the amendment of
the Constitution but also confers the power of amending the
Constitution.
(ii) Entry 97 in List I of the Seventh Schedule of the Constitution
does not cover the subject of amendment of the Constitution.
(iii) The word "law" in Article 13(2) does not include amendment of
the Constitution. It has reference to ordinary piece of legislation. It
would also in view of the definition contained in Clause (a) of Article
13(3) include an ordinance, order, bye-law, rule, Regulation,
notification, custom or usage having in the territory of India the
force of law.
xxx
(vii) The power of amendment Under Article 368 does not include
the power to abrogate the Constitution nor does it include the power
to alter the basic structure or framework of the Constitution. Subject
to the retention of the basic structure or framework of the
Constitution, the power of amendment is plenary and includes within
itself the power to amend the various articles of the Constitution,
including those relating to fundamental rights as well as those which
may be said to relate to essential features. No part of a fundamental
right can claim immunity from amendatory process by being
described as the essence, or core of that right. The power of
amendment would also include within itself the power to add, alter
or repeal the various articles.
xxx

(xiv) The second part of Article 31C contains the seed of national
disintegration and is invalid on the following two grounds:
(1) It gives a carte blanche to the legislature to make any
law violative of Articles 14, 19 and 31 and make it immune
from attack by inserting the requisite declaration. Article 31C
taken along with its second part gives in effect the power to
the legislature including a State Legislature, to amend the
Constitution in important respects.
( 2 ) The legislature has been made the final authority to
decide as to whether the law made by it is for the objects
mentioned in Article 31C. The vice of second part of Article
31C lies in the fact that even if the law enacted is not for the
object mentioned in Article 31C, the declaration made by the
legislature precludes a party from showing that the law is
not for that object and prevents a court from going into the
question as to whether the law enacted is really for that
object. The exclusion by the legislature, including a State
Legislature, of even that limited judicial review strikes at the
basic structure of the Constitution. The second part of Article
31C goes beyond the permissible limit of what constitutes
amendment Under Article 368.
The second part of Article 31C can be severed from the
remaining part of Article 31C and its invalidity would not
affect the validity of the remaining part. I would, therefore,
strike down the following words in Article 31C -
and no law containing a declaration that it is for giving
effect to such policy shall be called in question in any court
on the ground that it does not give effect to such policy.
(i). The next judgment having a bearing on the subject is Smt. Indira Nehru Gandhi
v. Shri Raj Narain MANU/SC/0304/1975 : 1975 Supp. SCC 1. In the instant
judgment, this Court examined the constitutional validity of the Constitution (Thirty-
ninth Amendment) Act, 1975. The issue under reference included the insertion of
Article 329A (and more particularly, the second clause thereof), which had the effect
of taking out from the purview of "judicial review", the validity of the election of a
person who was holding, either the office of the Prime Minister or of the Speaker, or
had come to be appointed/chosen as the Prime Minister or the Speaker, after such
election. Insofar as the instant aspect of the matter is concerned, it would be relevant
to mention, that the election of the Appellant from the Rae Bareli constituency in the
General Parliamentary Elections of 1971, was set aside by the High Court of
Judicature at Allahabad (hereinafter referred to as, the High Court), on 12.6.1975.
The Appellant had assailed the order passed by the High Court before this Court.
During the pendency of the above appeal, on 10.8.1975, the Constitution (Thirty-
ninth Amendment) Act was passed, which introduced two new Articles, namely,
Articles 71 and 329A of the Constitution. The controversy arising out of the above
referred appeal, therefore, virtually came to be rendered infructuous. It was, by way
of a cross-appeal, that the constitutional validity of the amended provisions was
assailed.

(ii) In the above cross-appeal, it was asserted at the hands of the Respondent, that
"judicial review" was an essential feature of the "basic structure" of the Constitution.
This assertion was under the doctrine of "separation of powers". The pointed
submission at the hands of the learned Counsel for the Respondent was, that "judicial
review", in matters of election was imperative. The issue canvassed was, that
"judicial review" would ensure free, fair and pure elections. It was sought to be
asserted, that the power of "judicial review" in the context referred to hereinabove,
was available both under the American Constitution, as also, the Australian
Constitution. And therefore, even though there was no express/clear provision on the
subject under the Indian Constitution, since the executive, the legislature and the
judiciary were earmarked respective spheres of activity (by compartmentalising them
into separate parts and chapters), the charge and onus of "judicial review" fell within
the sphere of activity of the judiciary. It was sought to be asserted, that Under Article
136 of the Constitution, all tribunals and courts are amenable to the jurisdiction of
this Court. The corollary sought to be drawn was, that if Under Clause 4 of Article
329A of the Constitution, the power of "judicial review" was taken away, it would
amount to a destruction of the "basic structure" of the Constitution. The relevant
observations made in the instant judgment rendered by a constitution bench of 5
Judges of this Court are being extracted hereunder. First and foremost reference may
be made to the following observations of A.N. Ray, CJ:
1 6 . It should be stated here that the hearing has proceeded on the
assumption that it is not necessary to challenge the majority view in
Kesavananda Bharati's case MANU/SC/0445/1973 : (1973) 4 SCC 225. The
contentions of the Respondent are these: First, Under Article 368 only
general principles governing the organs of the State and the basic principles
can be laid down. An amendment of the Constitution does not contemplate
any decision in respect of individual cases. Clause (4) of Article 329A is said
to be exercise of a purely judicial power which is not included in the
constituent power conferred by Article 368.
xxx
20. Fifth, Clause (4) destroys not only judicial review but also separation of
power. The order of the High Court declaring the election to be void is
declared valid (lie void). The cancellation of the judgment is denial of
political justice which is the basic structure of the Constitution.
xxx
52. Judicial review in election disputes is not a compulsion. Judicial review
of decisions in election disputes may be entrusted by law to a judicial
tribunal. If it is to a tribunal or to the High Court the judicial review will be
attracted either under the relevant law providing for appeal to this Court or
Article 136 may be attracted. Under Article 329(b) the contemplated law may
vest the power to entertain election petitions in the House itself which may
determine the dispute by a resolution after receiving a report from a special
committee. In such cases judicial review may be eliminated without involving
amendment of the Constitution. ..... If judicial review is excluded the court is
not in a position to conclude that principles of equality have been violated.
xxx
153. The contentions of the Respondent that the Amendment Acts of 1974

and 1975 are subject to basic features or basic structure or basic framework
fails on two grounds. First, legislative measures are not subject to the theory
of basic features or basic structure or basic framework. Second, the majority
view in Kesavananda Bharati's case (supra) is that the Twenty-ninth
Amendment which put the two statutes in the Ninth Schedule and Article 31B
is not open to challenge on the ground of either damage to or destruction of
basic features, basic structure or basic framework or on the ground of
violation of fundamental rights.
The views expressed by H.R. Khanna, J. are now being reproduced below:
175. The proposition that the power of amendment Under Article 368 does
not enable Parliament to alter the basic structure of framework of the
Constitution was laid down by this Court by a majority of 7 to 6 in the case
of His Holiness Kesavananda Bharati v. State of Kerala MANU/SC/0445/1973
: (1973) 4 SCC 225. Apart from other reasons which were given in some of
the judgments of the learned Judges who constituted the majority, the
majority dealt with the connotation of the word "amendment". It was held
that the words "amendment of the Constitution" in Article 368 could not have
the effect of destroying or abrogating the basic structure of the Constitution.
Some of us who were parties to that case took a different view and came to
the conclusion that the words "amendment of the Constitution" in Article 368
did not admit of any limitation. Those of us who were in the minority in
Kesavananda Bharati's case (supra) may still hold the same view as was
given expression to in that case. For the purpose of the present case, we
shall have to proceed in accordance with the law as laid down by the
majority in that case.
1 7 6 . Before dealing with the question as to whether the impugned
amendment affects the basic structure of the Constitution, I may make it
clear that this Court is not concerned with the wisdom behind or the
propriety of the impugned constitutional amendment. These are matters
essentially for those who are vested with the authority to make the
constitutional amendment. All that this Court is concerned with is the
constitutional validity of the impugned amendment.
xxx
210. It has been argued in support of the constitutional validity of Clause
(4) that as a result of this amendment, the validity of one election has been
preserved. Since the basic structure of the Constitution, according to the
submission, continues to be the same, Clause (4) cannot be said to be an
impermissible piece of constitutional amendment. The argument has a
seeming plausibility about it, but a deeper reflection would show that it is
vitiated by a basic fallacy. Law normally connotes a rule or norm which is of
general application. It may apply to all the persons or class of persons or
even individuals of a particular description. Law prescribes the abstract
principles by the application of which individual cases are decided. Law,
however, is not what Blackstone called "a sentence". According to Roscoe
Pound, law, as distinguished from laws, is the system of authoritative
materials for grounding or guiding judicial and administrative action
recognised or established in a politically organized society (see p. 106,
Jurisprudence, Vol. III). Law is not the same as judgment. Law lays down

the norm in abstract terms with a coercive power and sanction against those
guilty of violating the norm, while judgment represents the decision arrived
at by the application of law to the concrete facts of a case. Constitutional law
relates to the various organs of a State; it deals with the structure of the
Government, the extent of distribution of its powers and the modes and
principles of its operation. The Constitution of India is so detailed that some
of the matters which in a brief Constitution like that of the United States of
America are dealt with by statutes form the subject-matter of various articles
of our Constitution. There is, however, in a constitutional law, as there is in
the very idea of law, some element of generality or general application. It
also carries with it a concept of its applicability in future to situations which
may arise in that context. If there is amendment of some provision of the
Constitution and the amendment deals with matters which constitute
constitutional law, in the normally accepted sense, the court while deciding
the question of the validity of the amendment would have to find out, in view
of the majority opinion in Kesavananda Bharati's case (supra), as to whether
the amendment affects the basic structure of the Constitution. The
constitutional amendment contained in Clause (4) with which we are
concerned in the present case is, however, of an altogether different nature.
Its avowed object is to confer validity on the election of the Appellant to the
Lok Sabha in 1971 after that election had been declared to be void by the
High Court and an appeal against the judgment of the High Court was
pending in this Court. In spite of our query, we were not referred to any
precedent of a similar amendment of any Constitution of the world. The
uniqueness of the impugned constitutional amendment would not, however,
affect its validity. If the constituent authority in its wisdom has chosen the
validity of a disputed election as the subject-matter of a constitutional
amendment, this Court cannot go behind that wisdom. All that this Court is
concerned with is the validity of the amendment. I need not go into the
question as to whether such a matter, in view of the normal concept of
constitutional law, can strictly be the subject of a constitutional amendment.
I shall for the purpose of this case assume that such a matter can validly be
the subject-matter of a constitutional amendment. The question to be
decided is that if the impugned amendment of the Constitution violates a
principle which is part of the basic structure of the Constitution, can it enjoy
immunity from an attack on its validity because of the fact that for the future,
the basic structure of the Constitution remains unaffected. The answer to the
above question, in my opinion, should be in the negative. What has to be
seen in such a matter is whether the amendment contravenes or runs counter
to an imperative rule or postulate which is an integral part of the basic
structure of the Constitution. If so, it would be an impermissible amendment
and it would make no difference whether it relates to one case or a large
number of cases. If an amendment striking at the basic structure of the
Constitution is not permissible, it would not acquire validity by being related
only to one case. To accede to the argument advanced in support of the
validity of the amendment would be tantamount to holding that even though
it is not permissible to change the basic structure of the Constitution,
whenever the authority concerned deems it proper to make such an
amendment, it can do so and circumvent the bar to the making of such an
amendment by confining it to one case. What is prohibited cannot become
permissible because of its being confined to one matter.
On the issue in hand, K.K. Mathew, J.'s views were as under:

318. The major problem of human society is to combine that degree of
liberty without which law is tyranny with that degree of law without which
liberty becomes licence; and, the difficulty has been to discover the practical
means of achieving this grand objective and to find the opportunity for
applying these means in the ever-shifting tangle of human affairs. A large
part of the effort of man over centuries has been expended in seeking a
solution of this great problem. A region of law, in contrast to the tyranny of
power, can be achieved only through separating appropriately the several
powers of the Government. If the lawmakers should also be the constant
administrators and dispensers of law and justice, then, the people would be
left without a remedy in case of injustice since no appeal can lie under the
fiat against such a supremacy. And, in this age-old search of political
philosophers for the secret of sound Government, combined with individual
liberty, it was Montesquieu who first saw the light. He was the first among
the political philosophers who saw the necessity of separating judicial power
from the executive and legislative branches of Government. Montesquieu was
the first to conceive of the three functions of Government as exercised by
three organs, each juxtaposed against others. He realised that the efficient
operation of Government involved a certain degree of overlapping and that
the theory of checks and balances required each organ to impede too great
an aggrandizement of authority by the other two powers. As Holdsworth
says, Montesquieu convinced the world that he had discovered a new
constitutional principle which was universally valid. The doctrine of
separation of governmental powers is not a mere theoretical, philosophical
concept. It is a practical, work-a-day principle. The division of Government
into three branches does not imply, as its critics would have us think, three
watertight compartments. Thus, legislative impeachment of executive officers
or judges, executive veto over legislation, judicial review of administrative or
legislative actions are treated as partial exceptions which need explanation.
(See generally: "the Doctrine of Separation of Powers and its present day
significance" by T. Vanderbilt.)
xxx
3 4 3 . I think Clause (4) is bad for the reasons which I have already
summarised. Clauses (1) to (3) of Article 329A are severable but I express
no opinion on their validity as it is not necessary for deciding this case.
xxx
361. I therefore hold that these Acts are not liable to be challenged on any
of the grounds argued by Counsel.
57. Insofar as the third judgment in the series of judgments is concerned, reference
may be made to Minerva Mills Ltd. and Ors. v. Union of India and Ors.
MANU/SC/0075/1980 : (1980) 2 SCC 591, as also, Minerva Mills Ltd. and Ors. v.
Union of India and Ors. MANU/SC/0075/1980 : (1980) 3 SCC 625. Insofar as the
former of the above two judgments is concerned, the same delineates the pointed
controversy dealt with by a constitution bench of 5 Judges of this Court. The issue
adjudicated upon, pertained to the constitutional validity of the Constitution (Forty-
second Amendment) Act, 1976, and more particularly, Sections 4 and 55 thereof,
whereby Articles 31C and 368 of the Constitution, came to be amended. The majority
view was expressed in the ratio of 4:1, P.N. Bhagwati, J. (as he then was) having

rendered the dissent. The majority arrived at the conclusion, that Section 4 of the
Constitution (Forty-second Amendment) Act, 1976 was beyond the amending power
of the Parliament and was void, as it had the effect of violating the basic or essential
features of the Constitution and destroying the "basic structure" of the Constitution,
by a total exclusion of a challenge to any law, even on the ground that it was
inconsistent with, or had taken away, or had abridged any of the rights, conferred by
Articles 14 or 19 of the Constitution. Likewise, Section 55 of the Constitution (Forty-
second Amendment) Act was struck down as unconstitutional, as the same was
beyond the amending power of the Parliament. Relevant observations recorded in the
instant judgment pertaining to the issue in hand, are being extracted hereunder. The
opinion expressed by Y.V. Chandrachud, CJ, A.C. Gupta, N.L. Untawalia and P.S.
Kailasam, JJ. on the subject in hand, was to the following effect:
68. We must ... mention, what is perhaps not fully realised, that Article 31C
speaks of laws giving effect to the "policy of the State", "towards securing all
or any of the principles laid down in Part IV". In the very nature of things it
is difficult for a court to determine whether a particular law gives effect to a
particular policy. Whether a law is adequate enough to give effect to the
policy of the State towards securing a directive principle is always a
debatable question and the courts cannot set aside the law as invalid merely
because, in their opinion, the law is not adequate enough to give effect to a
certain policy. In fact, though the clear intendment of Article 31C is to shut
out all judicial review, the argument of the learned Additional Solicitor-
General calls for a doubly or trebly extensive judicial review than is even
normally permissible to the courts. Be it remembered that the power to
enquire into the question whether there is a direct and reasonable nexus
between the provisions of a law and a directive principle cannot confer upon
the courts the power to sit in judgment over the policy itself of the State. At
the highest, courts can, Under Article 31C, satisfy themselves as to the
identity of the law in the sense whether it bears direct and reasonable nexus
with a directive principle. If the court is satisfied as to the existence of such
nexus, the inevitable consequence provided for by Article 31C must follow.
Indeed, if there is one topic on which all the 13 Judges in Kesavananda
Bharati, MANU/SC/0445/1973 : (1973) 4 SCC 225, were agreed, it is this:
that the only question open to judicial review under the unamended Article
31C was whether there is a direct and reasonable nexus between the
impugned law and the provisions of Article 39(b) and (c) Reasonableness is
evidently regarding the nexus and not regarding the law. It is therefore
impossible to accept the contention that it is open to the courts to undertake
the kind of enquiry suggested by the Additional Solicitor General. The
attempt therefore to drape Article 31C into a democratic outfit under which
an extensive judicial review would be permissible must fail.
xxx
73. It was finally urged by the learned Attorney General that if we uphold
the challenge to the validity of Article 31C, the validity of Clauses (2) to (6)
of Article 19 will be gravely imperilled because those clauses will also then
be liable to be struck down as abrogating the rights conferred by Article
19(1) which are an essential feature of the Constitution. We are unable to
accept this contention. Under Clauses (2) to (6) of Article 19, restrictions can
be imposed only if they are reasonable and then again, they can be imposed
in the interest of a stated class of subjects only. It is for the courts to decide

whether restrictions are reasonable and whether they are in the interest of
the particular subject. Apart from other basic dissimilarities, Article 31C takes
away the power of judicial review to an extent which destroys even the
semblance of a comparison between its provisions and those of Clauses (2)
to (6) of Article 19. Human ingenuity, limitless though it may be, has yet not
devised a system by which the liberty of the people can be protected except
through the intervention of courts of law.
xxx
7 5 . These then are our reasons for the Order (See Minerva Mills Ltd. v.
Union of India MANU/SC/0075/1980 : (1980) 2 SCC 591) which we passed
on May 9, 1980 to the following effect: (SCC pp. 592-593, paras 1 & 2)
Section 4 of the Constitution (Forty-second Amendment) Act is
beyond the amending power of the Parliament and is void since it
damages the basic or essential features of the Constitution and
destroys its basic structure by a total exclusion of challenge to any
law on the ground that it is inconsistent with, or takes away or
abridges any of the rights conferred by Article 14 or Article 19 of the
Constitution, if the law is for giving effect to the policy of the State
towards securing all or any of the principles laid down in Part IV of
the Constitution.
Section 55 of the Constitution (Forty-second Amendment) Act is
beyond the amending power of the Parliament and is void since it
removes all limitations on the power of the Parliament to amend the
Constitution and confers power upon it to amend the Constitution so
as to damage or destroy its basic or essential features or its basic
structure.
In order to appreciate the minority view on the issue, reference may be made to the
following observations of P.N. Bhagwati, J.:
87. It is a fundamental principle of our constitutional scheme, and I have
pointed this out in the preceding paragraph, that every organ of the State,
every authority under the Constitution, derives its power from the
Constitution and has to act within the limits of such power. But then the
question arises as to which authority must decide what are the limits on the
power conferred upon each organ or instrumentality of the State and whether
such limits are transgressed or exceeded. Now there are three main
departments of the State amongst which the powers of government are
divided; the executive, the legislature and the judiciary. Under our
Constitution we have no rigid separation of powers as in the United States of
America, but there is a broad demarcation, though, having regard to the
complex nature of governmental functions, certain degree of overlapping is
inevitable. The reason for this broad separation of powers is that "the
concentration of powers in any one organ may" to quote the words of
Chandrachud, J., (as he then was) in Indira Gandhi case
MANU/SC/0304/1975 : 1975 Supp SCC 1, "by upsetting that fine balance
between the three organs, destroy the fundamental premises of a democratic
government to which we are pledged". Take for example, a case where the
executive which is in charge of administration acts to the prejudice of a

citizen and a question arises as to what are the powers of the executive and
whether the executive has acted within the scope of its powers. Such a
question obviously cannot be left to the executive to decide and for two very
good reasons. First, the decision of the question would depend upon the
interpretation of the Constitution and the laws and this would pre-eminently
be a matter fit to be decided by the judiciary, because it is the judiciary
which alone would be possessed of expertise in this field and secondly, the
constitutional and legal protection afforded to the citizen would become
illusory, if it were left to the executive to determine the legality of its own
action. So also if the legislature makes a law and a dispute arises whether in
making the law the legislature has acted outside the area of its legislative
competence or the law is violative of the fundamental rights or of any other
provisions of the Constitution, its resolution cannot, for the same reasons, be
left to the determination of the legislature. The Constitution has, therefore,
created an independent machinery for resolving these disputes and this
independent machinery is the judiciary which is vested with the power of
judicial review to determine the legality of executive action and the validity
of legislation passed by the legislature. It is the solemn duty of the judiciary
under the Constitution to keep the different organs of the State such as the
executive and the legislature within the limits of the power conferred upon
them by the Constitution. This power of judicial review is conferred on the
judiciary by Articles 32 and 226 of the Constitution. Speaking about draft
Article 25, corresponding to present Article 32 of the Constitution, Dr.
Ambedkar, the principal architect of our Constitution, said in the Constituent
Assembly on December 9, 1948:
If I was asked to name any particular Article in this Constitution as
the most important -- an Article without which this Constitution
would be a nullity -- I could not refer to any other Article except this
one. It is the very soul of the Constitution and the very heart of it
and I am glad that the House has realised its importance. (CAD, Vol.
7, p.953)
It is a cardinal principle of our Constitution that no one howsoever highly
placed and no authority however lofty can claim to be the sole judge of its
power under the Constitution or whether its action is within the confines of
such power laid down by the Constitution. The judiciary is the interpreter of
the Constitution and to the judiciary is assigned the delicate task to
determine what is the power conferred on each branch of government,
whether it is limited, and if so, what are the limits and whether any action of
that branch transgresses such limits. It is for the judiciary to uphold the
constitutional values and to enforce the constitutional limitations. That is the
essence of the rule of law, which inter alia requires that "the exercise of
powers by the government whether it be the legislature or the executive or
any other authority, be conditioned by the Constitution and the law". The
power of judicial review is an integral part of our constitutional system and
without it, there will be no government of laws and the rule of law would
become a teasing illusion and a promise of unreality. I am of the view that if
there is one feature of our Constitution which, more than any other, is basic
and fundamental to the maintenance of democracy and the rule of law, it is
the power of judicial review and it is unquestionably, to my mind, part of the
basic structure of the Constitution. of course, when I say this I should not be
taken to suggest that effective alternative institutional mechanisms or

arrangements for judicial review cannot be made by Parliament. But what I
wish to emphasise is that judicial review is a vital principle of our
Constitution and it cannot be abrogated without affecting the basic structure
of the Constitution. If by a constitutional amendment, the power of judicial
review is taken away and it is provided that the validity of any law made by
the legislature shall not be liable to be called in question on any ground,
even if it is outside the legislative competence of the legislature or is
violative of any fundamental rights, it would be nothing short of subversion
of the Constitution, for it would make a mockery of the distribution of
legislative powers between the Union and the States and render the
fundamental rights meaningless and futile. So also if a constitutional
amendment is made which has the effect of taking away the power of judicial
review and providing that no amendment made in the Constitution shall be
liable to be questioned on any ground, even if such amendment is violative
of the basic structure and, therefore, outside the amendatory power of
Parliament, it would be making Parliament sole judge of the constitutional
validity of what it has done and that would, in effect and substance, nullify
the limitation on the amending power of Parliament and affect the basic
structure of the Constitution. The conclusion must therefore inevitably follow
that Clause (4) of Article 368 is unconstitutional and void as damaging the
basic structure of the Constitution.
88. That takes us to Clause (5) of Article 368. This clause opens with the
words "for the removal of doubts" and proceeds to declare that there shall be
no limitation whatever on the amending power of Parliament Under Article
368. It is difficult to appreciate the meaning of the opening words "for the
removal of doubts" because the majority decision in Kesavananda Bharati
case (supra) clearly laid down and left no doubt that the basic structure of
the Constitution was outside the competence of the amendatory power of
Parliament and in Indira Gandhi case (supra), all the judges unanimously
accepted theory of the basic structure as a theory by which the validity of the
amendment impugned before them, namely, Article 329A(4) was to be
judged. Therefore, after the decisions in Kesavananda Bharati case (supra)
and Indira Gandhi case (supra), there was no doubt at all that the
amendatory power of Parliament was limited and it was not competent to
Parliament to alter the basic structure of the Constitution and Clause (5)
could not remove the doubt which did not exist. What Clause (5) really
sought to do was to remove the limitation on the amending power of
Parliament and convert it from a limited power into an unlimited one. This
was clearly and indubitably a futile exercise on the part of Parliament. I fail
to see how Parliament which has only a limited power of amendment and
which cannot alter the basic structure of the Constitution can expand its
power of amendment so as to confer upon itself the power of repeal or
abrogate the Constitution or to damage or destroy its basic structure. That
would clearly be in excess of the limited amending power possessed by
Parliament. The Constitution has conferred only a limited amending power on
Parliament so that it cannot damage or destroy the basic structure of the
Constitution and Parliament cannot by exercise of that limited amending
power convert that very power into an absolute and unlimited power. If it
were permissible to Parliament to enlarge the limited amending power
conferred upon it into an absolute power of amendment, then it was
meaningless to place a limitation on the original power of amendment. It is
difficult to appreciate how Parliament having a limited power of amendment
can get rid of the limitation by exercising that very power and convert it into
an absolute power. Clause (5) of Article 368 which sought to remove the
limitation on the amending power of Parliament by making it absolute must
therefore be held to be outside the amending power of Parliament. There is
also another ground on which the validity of this clause can be successfully
assailed. This clause seeks to convert a controlled Constitution into an
uncontrolled one by removing the limitation on the amending power of
Parliament which, as pointed out above, is itself an essential feature of the
Constitution and it is therefore violative of the basic structure. I would in the
circumstances hold Clause (5) of Article 368 to be unconstitutional and void.
58. Reference may now be made to another decision of this Court rendered by a
bench of 7 Judges, namely, S.P. Gupta v. Union of India MANU/SC/0080/1981 : 1981
(Supp.) SCC 87. P.N. Bhagwati, J. (as he then was) opined as under:
Concept of Independence of the Judiciary
27. Having disposed of the preliminary objection in regard to locus standi of
the Petitioners, we may now proceed to consider the questions which arise
for determination in these writ petitions. The questions are of great
constitutional significance affecting the principle of independence of the
judiciary which is a basic feature of the Constitution and we would therefore
prefer to begin the discussion by making a few prefatory remarks
highlighting what the true function of the judiciary should be in a country
like India which is marching along the road to social justice with the banner
of democracy and the rule of law, for the principle of independence of the
judiciary is not an abstract conception but it is a living faith which must
derive its inspiration from the constitutional charter and its nourishment and
sustenance from the constitutional values. It is necessary for every Judge to
remember constantly and continually that our Constitution is not a non-
aligned national charter. It is a document of social revolution which casts an
obligation on every instrumentality including the judiciary, which is a
separate but equal branch of the State, to transform the status quo ante into
a new human order in which justice, social, economic and political will
inform all institutions of national life and there will be equality of status and
opportunity for all. .....Now this approach to the judicial function may be
alright for a stable and static society but not for a society pulsating with
urges of gender justice, worker justice, minorities justice, dalit justice and
equal justice, between chronic unequals. Where the contest is between those
who are socially or economically unequal, the judicial process may prove
disastrous from the point of view of social justice, if the Judge adopts a
merely passive or negative role and does not adopt a positive and creative
approach. The judiciary cannot remain a mere bystander or spectator but it
must become an active participant in the judicial process ready to use law in
the service of social justice through a proactive goal-oriented approach. But
this cannot be achieved unless we have judicial cadres who share the
fighting faith of the Constitution and who are imbued with the constitutional
values. The necessity of a judiciary which is in tune with the social
philosophy of the Constitution has nowhere been better emphasised than in
the words of Justice Krishna Iyer which we quote:
Appointment of Judges is a serious process where judicial expertise,
legal learning, life's experience and high integrity are components,
but above all are two indispensables -- social philosophy in active
unison with the socialistic articles of the Constitution, and second,
but equally important, built-in resistance to pushes and pressures by
class interests, private prejudices, government threats and
blandishments, party loyalties and contrary economic and political
ideologies projecting into pronouncements. (Mainstream, November
22, 1980)
Justice Krishna Iyer goes on to say in his inimitable style:
Justice Cardozo approvingly quoted President Theodore Roosevelt's
stress on the social philosophy of the Judges, which shakes and
shapes the course of a nation and, therefore, the choice of Judges
for the higher Courts which makes and declares the law of the land,
must be in tune with the social philosophy of the Constitution. Not
mastery of the law alone, but social vision and creative
craftsmanship are important inputs in successful justicing.
(Mainstream, November 22, 1980)
What is necessary is to have Judges who are prepared to fashion new tools,
forge new methods, innovate new strategies and evolve a new jurisprudence,
who are judicial statesmen with a social vision and a creative faculty and
who have, above all, a deep sense of commitment to the Constitution with an
activist approach and obligation for accountability, not to any party in power
nor to the opposition nor to the classes which are vociferous but to the half-
hungry millions of India who are continually denied their basic human rights.
We need Judges who are alive to the socio-economic realities of Indian life,
who are anxious to wipe every tear from every eye, who have faith in the
constitutional values and who are ready to use law as an instrument for
achieving the constitutional objectives. This has to be the broad blueprint of
the appointment project for the higher echelons of judicial service. It is only
if appointments of Judges are made with these considerations weighing
predominantly with the appointing authority that we can have a truly
independent judiciary committed only to the Constitution and to the people
of India. The concept of independence of the judiciary is a noble concept
which inspires the constitutional scheme and constitutes the foundation on
which rests the edifice of our democratic polity. If there is one principle
which runs through the entire fabric of the Constitution, it is the principle of
the rule of law and under the Constitution, it is the judiciary which is
entrusted with the task of keeping every organ of the State within the limits
of the law and thereby making the rule of law meaningful and effective. It is
to aid the judiciary in this task that the power of judicial review has been
conferred upon the judiciary and it is by exercising this power which
constitutes one of the most potent weapons in armory of the law, that the
judiciary seeks to protect the citizen against violation of his constitutional or
legal rights or misuse or abuse of power by the State or its officers. The
judiciary stands between the citizen and the State as a bulwark against
executive excesses and misuse or abuse of power by the executive and
therefore it is absolutely essential that the judiciary must be free from
executive pressure or influence and this has been secured by the
Constitution-makers by making elaborate provisions in the Constitution to
which detailed reference has been made in the judgments in Union of India
v. Sankalchand Himmatlal Sheth MANU/SC/0065/1977 : (1977) 4 SCC 193.
But it is necessary to remind ourselves that the concept of independence of
the judiciary is not limited only to independence from executive pressure or
influence but it is a much wider concept which takes within its sweep
independence from many other pressures and prejudices. It has many
dimensions, namely, fearlessness of other power centres, economic or
political, and freedom from prejudices acquired and nourished by the class to
which the Judges belong. If we may again quote the eloquent words of
Justice Krishna Iyer:
Independence of the Judiciary is not genuflexion; nor is it opposition
to every proposition of Government. It is neither Judiciary made to
Opposition measure nor Government's pleasure. (Mainstream,
November 22, 1980)
The tycoon, the communalist, the parochialist, the faddist, the
extremist and radical reactionary lying coiled up and subconsciously
shaping judicial mentations are menaces to judicial independence
when they are at variance with Parts III and IV of the Paramount
Parchment.
Judges should be of stern stuff and tough fibre, unbending before power,
economic or political, and they must uphold the core principle of the rule of
law which says, "Be you ever so high, the law is above you." This is the
principle of independence of the judiciary which is vital for the establishment
of real participatory democracy, maintenance of the rule of law as a dynamic
concept and delivery of social justice to the vulnerable sections of the
community. It is this principle of independence of the judiciary which we
must keep in mind while interpreting the relevant provisions of the
Constitution.
S. Murtaza Fazal Ali, J., on the issue of "judicial review" and the "basic structure",
opined as under:
332. It would appear that our Constitution has devised a wholesome and
effective mechanism for the appointment of Judges which strikes a just
balance between the judicial and executive powers so that while the final
appointment vests in the highest authority of the executive, the power is
subject to a mandatory consultative process which by convention is entitled
to great weight by the President. Apart from these safety valves, checks and
balances at every stage, where the power of the President is abused or
misused or violates any of the constitutional safeguards it is always subject
to judicial review. The power of judicial review, which has been conceded by
the Constitution to the judiciary, is in our opinion the safest possible
safeguard not only to ensure independence of judiciary but also to prevent it
from the vagaries of the executive. Another advantage of the method adopted
by our Constitution is that by vesting the entire power in the President, the
following important elements are introduced:
(1) a popular element in the matter of administration of justice,
(2) linking with judicial system the dynamic goals of a progressive
society by subjecting the principles of governance to be guided by
the Directive Principles of State Policy,
(3) in order to make the judiciary an effective and powerful
machinery, the Constitution contains a most onerous and
complicated system by which Judges can be removed Under Article
124(4), which in practice is almost an impossibility,
(4) in order to create and subserve democratic processes the power
of appointment of the judiciary in the executive has been so vested
that the head of the executive which functions through the Council of
Ministers, which is a purely elected body, is made accountable to the
people.
xxx
336. This Court has in several cases held that the condition of consultation
which the Governor has to exercise implies that he would have to respect the
recommendations of the High Court and cannot turn it down without cogent
reasons and even if he does so, it is manifest that his order is always subject
to judicial review on the ground of mala fide or exceeding his jurisdiction.
xxx
345. This, therefore, disposes of all the contentions of the counsel for the
parties so far as the various aspects of interpretation of Article 222 are
concerned. On a consideration, therefore, of the facts, circumstances and
authorities the position is as follows:
(1) that Article 222 expressly excludes 'consent' and it is not
possible to read the word 'consent' into Article 222 and thereby
whittle down the power conferred on the President under this Article,
(2) that the transfer of a Judge or a C.J. of a High Court Under
Article 222 must be made in public interest or national interest,
(3) that non-consensual transfer does not amount to punishment or
involve any stigma,
(4) that in suitable cases where mala fide is writ large on the face of
it, an order of transfer made by the President would be subject to
judicial review,
(5) that the transfer of a Judge from one High Court to another does
not amount to a first or fresh appointment in any sense of the term,
(6) that a transfer made Under Article 222 after complying with the
conditions and circumstances mentioned above does not mar or
erode the independence of judiciary.
xxx
402. It has been vehemently argued by Mr. Seervai as also by Mr. Sorabjee
who followed him that their main concern is that independence of judiciary
should be maintained at all costs. Indeed, if they are really concerned that
we should build up an independent judiciary then it is absolutely essential
that new talents from outside should be imported in every High Court either
to man it or to head it so that they may generate much greater confidence in
the people than the local Judges. The position of a C.J. is indeed a very high
constitutional position and our Constitution contains sufficient safeguards to
protect both his decision-making process and his tenure. It is a well-known
saying that power corrupts and absolute power corrupts absolutely. As man
is not infallible, so is a Chief Justice, though a person holding a high judicial
post is likely to be incorruptible because of the quality of sobriety and
restraint that the judicial method contains. Even so, if a C.J. is from outside
the State, the chances of his misusing his powers are reduced to the absolute
minimum. We have pointed out that the power to formulate or evolve this
policy clearly lies within the four-corners of Article 222 itself which contains
a very wide power conditioned only by consultation with C.J.I. who is the
highest judicial authority in the country. It is always open to the President,
which in practice means the Central Government, to lay down a policy,
norms and guidelines according to which the presidential powers are to be
exercised and once these norms are followed, the powers of the President
would be beyond judicial review.
On the issue in hand, V.D. Tulzapurkar, J. expressed the following view:
6 2 4 . As regards the constitutional convention or practice and the
undertaking which have been pressed into service in relation to Bar recruits
as Additional Judges for basing their right to be considered for their
continuance on the expiry of their initial term, the learned Attorney-General
appearing for the Union of India raised a two fold contention. Regarding the
former he urged that a constitutional convention or practice, howsoever
wholesome, cannot affect, alter or control the plain meaning of Article
224(1) which according to him gives absolute power and complete discretion
to the President in the matter of continuance of sitting Additional Judges on
the expiry of their initial term, the pendency of arrears being relevant only
for deciding whether or not Additional Judges should be appointed and not
relevant with regard to a particular person to be appointed. As regards the
undertaking he pointed out that the usual undertaking obtained from a
Member of the Bar in all High Courts -- and for that matter even the
additional undertaking that is being obtained in the Bombay High Court if
properly read will show that it merely creates a binding obligation on the
concerned Member of the Bar but does not create any obligation or
commitment on the part of the appointing authority to make the offer of
permanent Judgeship to him. It is difficult to accept either of these
contentions of the learned Attorney General. It was not disputed before us
that constitutional conventions and practices have importance under
unwritten as well as written Constitutions and the position that conventions
have a role to play in interpreting articles of a Constitution is clear from
several decided cases. In U.N.R. Rao v. Indira Gandhi MANU/SC/0059/1971 :
(1971) 2 SCC 63, Chief Justice Sikri observed thus: (SCC p. 64, para 3)
It was said that we must interpret Article 75(3) according to its own
terms regardless of the conventions that prevail in the United
Kingdom. If the words of an Article are clear, notwithstanding any
relevant convention, effect will no doubt be given to the words. But
it must be remembered that we are interpreting a Constitution and
not an Act of Parliament, a Constitution which establishes a
Parliamentary system of Government with a Cabinet. In trying to
understand one may well keep in mind the conventions prevalent at
the time the Constitution was framed.
In State of Rajasthan v. Union of India MANU/SC/0370/1977 : (1977) 3 SCC
592, also the importance of a constitutional convention or practice by way of
crystallising the otherwise vague and loose content of a power to be found in
certain article has been emphasised. In the State of W.B. v. Nripendra Nath
Bagchi MANU/SC/0310/1965 : AIR 1966 SC 447, the entire interpretation of
the concept of 'vesting of control' over District Courts and Courts subordinate
thereto in the High Court was animated by conventions and practices having
regard to the history, object and purpose that lay behind the group of
relevant articles, the principal purpose being, the securing of the
independence of the subordinate judiciary. It is true that no constitutional
convention or practice can affect, alter or control the operation of any article
if its meaning is quite plain and clear but here Article 224(1) merely provides
for situations when Additional Judges from duly qualified persons could be
appointed to a High Court and at the highest reading the article with Section
14 of the General Clauses Act it can be said that the power conferred by that
article may be exercised from time to time as occasion requires but on the
question as to whether when the occasion arises to make appointment on
expiry of the term of a sitting Additional Judge whether he should be
continued or a fresher or outsider could be appointed by ignoring the
erstwhile incumbent even when arrears continue to obtain in that High Court
the article is silent and not at all clear and hence the principle invoked by the
learned Attorney-General will not apply. On the other hand, it will be proper
to invoke in such a situation the other well-settled principle that in
construing a constitutional provision the implications which arise from the
structure of the Constitution itself or from its scheme may legitimately be
made and looking at Article 224(1) from this angle a wholesome
constitutional convention or practice that has grown because of such
implications will have to be borne in mind especially when it serves to
safeguard one of the basic features which is the cardinal faith underlying our
Constitution, namely, independence of the judiciary. In other words a
limitation on the otherwise absolute power and discretion contained in Article
224(1) is required to be read into it because of the clear implication arising
from the said cardinal faith which forms a fundamental pillar supporting the
basic structure of the Constitution, as otherwise the exercise of the power in
the absolute manner as suggested will be destructive of the same. That it is
not sound approach to embark upon 'a strict literal reach' of any
constitutional provision in order to determine its true ambit and effect is
strikingly illustrated in the case of Article 368 which came up for
consideration before this Court in Kesavananda Bharati case
MANU/SC/0445/1973 : (1973) 4 SCC 225, where this Court held that the
basic or essential features of the Constitution do act as fetters or limitations
on the otherwise wide amending power contained in that article. In Australia
limitations on the law-making powers of the Parliament of the Federal
Commonwealth over the States were read into the concerned provisions of
the Constitution because of implications arising from the very federal nature
of the Constitution: (vide Lord Mayor Councillors and Citizens of the City of
Melbourne v. Commonwealth 74 Commonwealth LR 31, and the State of
Victoria v. Commonwealth of Australia 122 Commonwealth LR 353). As
regards the undertakings of the types mentioned above, it is true that strictly
and legally speaking these undertakings only create a binding obligation on
the concerned Member of the Bar and not on the appointing authority but it
cannot be forgotten that when such undertakings were thought of, the
postulate underlying the same was that there was no question of the
appointing authority not making the offer of permanent Judgeship to the
concerned Member of the Bar but that such an offer would be made and upon
the same being made the sitting Additional Judge recruited from the Bar
should not decline to accept it and revert to the Bar. I am therefore clearly of
the view that the aforesaid convention or practice and the undertaking serve
the cause of public interest in two respects as indicated above and those two
aspects of public interest confer upon these sitting Additional Judges
recruited from the Bar a legitimate expectancy and the enforceable right not
to be dropped illegally or at the whim or caprice of the appointing authority
but to be considered for continuance in that High Court either by way of
extending their term or making them permanent in preference to freshers or
outsiders and it is impossible to construe Article 224(1) as conferring upon
the appointing authority absolute power and complete discretion in the
matter of appointment of Additional Judges to a High Court as suggested and
the suggested construction has to be rejected. In view of the above
discussion it is clear that there is a valid classification between proposed
appointees for initial recruitment and the sitting Additional Judges whose
cases for their continuance after the expiry of their initial term are to be
decided and the two are not in the same position.
The observations of D.A. Desai, J. are expressed hereunder:
696. It may be briefly mentioned here that Writ Petition No. 274 of 1981
filed in this Court and Transferred Cases Nos. 2, 6 and 24 of 1981 were listed
to be heard along with the present batch of cases with a view to avoiding the
repetition of the arguments on points common to both sets of cases. In the
first group of cases the question of construction of Articles 217, 224 and
other connected articles prominently figured in the context of circular of the
Law Minister dated March 18, 1981, seeking consent of Additional Judges for
being appointed as permanent Judges in other High Courts and the short-
term extensions given to Shri O.N. Vohra, Shri S.N. Kumar and Shri S.B.
Wad, Additional Judges of Delhi High Court and the final non-appointment of
Shri O.N. Vohra and Shri S.N. Kumar. The submission was that the circular of
the Law Minister manifests a covert attempt to transfer Additional Judges
from one High Court to other High Court without consulting the Chief Justice
of India as required by Article 222(1) and thereby circumventing the majority
decision in Union of India v. Sankalchand Himatlal Sheth
MANU/SC/0065/1977 : (1977) 4 SCC 193. The central theme was the scope,
ambit and content of consultation which the President must have with the
three constitutional functionaries set out in Article 217(1). In the second
group of cases, the question arose in the context of transfer of Shri K.B.N.
Singh, Chief Justice of Patna High Court as Chief Justice of Madras High
Court consequent upon the transfer of Shri M.M. Ismail, Chief Justice of
Madras High Court as Chief Justice of Kerala High Court by Presidential
Notification dated January 19, 1981, in exercise of the power conferred upon
him by Article 222. The controversy centred down the scope, ambit and
content of consultation that the President must have with the Chief Justice of
India before exercising the power to transfer Under Article 222. Thus, the
scope, ambit and content of consultation Under Article 217 as also one of
Article 222 which, as Mr. Seervai stated, was more or less the same though
the different facets on which consultation must be focussed may differ in the
case of transfer and in the case of appointment, figured prominently in both
the groups of cases. The parameters of scope, ambit and content of
consultation both Under Articles 217(1), 222 and 224, were drawn on a wide
canvas to be tested on the touchstone of independence of judiciary being the
fighting faith and fundamental and basic feature of the Constitution. It was
stated that if the consultation itself is to provide a reliable safeguard against
arbitrary and naked exercise of power against judiciary, the procedure of
consultation must be so extensive as to cover all aspects of the matter and it
must be made so firm and rigid that any contravention or transgression of it
would be treated as mala fide or subversive of independence of judiciary and
the decision can be corrected by judicial review. Therefore, at the outset it is
necessary to be properly informed as to the concept of independence of
judiciary as set out in the Constitution.
6 9 7 . The entire gamut of arguments revolved principally round the
construction of Articles 217 and 224 in one batch of petitions and Article 222
in another batch but the canvas was spread wide covering various other
articles of the Constitution, analogous provisions in previous Government of
India Acts, similar provisions in other democratic constitutions and reports of
Law Commission. Rival constructions canvassed centred upon the pivotal
assumption that independence of judiciary is a basic and fundamental feature
of the Constitution which has its genesis in the power of judicial review
which enables the court to declare executive and legislative actions ultra
vires the Constitution. In this connection we are not starting on a clean slate
as the contention in this very form and for an avowed object was widely
canvassed in Sankalchand Himatlal Sheth v. Union of India
MANU/GJ/0167/1976 : (1976) 17 Guj LR 1017 (FB), and in Union of India v.
Sankalchand Himatlal Sheth (supra). Some additional dimensions were
added to this basic concept of independence of judiciary while both the
parties vied with each other as in the past (see statement of Shri S.V. Gupte,
then Attorney-General in Sheth case (supra), on proclaiming their
commitment to independence of judiciary though in its scope and content
and approach there was a marked divergence.
xxx
7 7 1 . Now, power is conferred on the President to make appointment of
Judge of Supreme Court after consultation with such of the Judges of the
Supreme Court and of the High Courts in the States as the President may
deem necessary. The submission is that the expression 'may deem necessary'
qualifies the expression 'consultation' and that if he deems otherwise the
President can proceed to make appointment of the Chief Justice of India
without consultation with any of the Judges of the Supreme Court and of the
High Courts. In other words, it was submitted on behalf of the Respondents,
the President has a discretion to consult or not to consult Judges of the
Supreme Court and High Courts before making appointment of Chief Justice
of India. It was pointed out that where consultation is obligatory it is
specifically provided and reference was made to the proviso extracted
hereinabove wherein it is stated that it would be obligatory upon the
President to consult the Chief Justice of India before making appointment of
a Judge of the Supreme Court other than the Chief Justice of India.
Undoubtedly, the proviso leaves no option to the President but to consult the
Chief Justice of India while making appointment of a Judge of the Supreme
Court other than the Chief Justice of India, but it is rather difficult to accept
the construction as suggested on behalf of the Respondents that in making
appointment of the Chief Justice of India the President is at large and may
not consult any functionary in the judicial branch of the State before making
appointment of Chief Justice of India. The expression 'may deem necessary'
qualifies the number of Judges of the Supreme Court and High Courts to be
consulted. What is optional is selection of number of Judges to be consulted
and not the consultation because the expression 'shall be appointed after
consultation' would mandate consultation. An extreme submission that the
President may consult High Court Judges for appointment of the Chief Justice
of India omitting altogether Supreme Court Judges does not commend to us,
because the consultation with 'such of the Judges of the Supreme Court and
of the High Courts' would clearly indicate that the consultation has to be with
some Judges of the Supreme Court and some Judges of the High Courts. The
conjunction 'and' is clearly indicative of the intendment of the framers of the
Constitution. If there was disjunctive 'or' between Supreme Court and High
Courts in Sub-article (2) of Article 124 there could have been some force in
the submission that the President may appoint Chief Justice of India ignoring
the Supreme Court and after consulting some High Court Judges.
Undoubtedly, Sub-article (2) does not cast an obligation to consult all Judges
of the Supreme Court and all Judges of the High Courts but in practical
working the President in order to discharge his function of selecting the best
suitable person to be the Chief Justice of India must choose such fair
sprinkling of Supreme Court and High Court Judges as would enable him to
gather enough and relevant material which would help him in decision-
making process. Mr. Seervai submitted that this Court must avoid such
construction of Article 124 which would enable the President to appoint Chief
Justice of India without consultation with any judicial functionaries. That is
certainly correct. But then he proceeded to suggest a construction where, by
a constitutional convention, any necessity of consultation would be obviated
and yet the executive power to be choosy and selective in appointment of
Chief Justice of India can be controlled or thwarted. He said that a
constitutional convention must be read that the senior most amongst the
puisne Judges of the Supreme Court should as a rule be appointed as Chief
Justice of India except when he is physically unfit to shoulder the
responsibilities. This constitutional convention, it was said, when read in
Article 124(2) would obviate any necessity of consultation with any
functionary in the judicial branch before making appointment of Chief Justice
of India and yet would so circumscribe the power of the President as not to
enable the executive to choose a person of its bend and thinking. In this very
context it was pointed out that Article 126 permits the President to appoint
even the junior most Judge of the Supreme Court to be an acting Chief
Justice of India and it was said that such an approach or such construction of
Article 126 would be subversive of the independence of judiciary. It was said
that if the juniormost can be appointed acting Chief Justice of India, every
Judge in order to curry favour would decide in favour of executive. And as
far as Article 124 is concerned it was said that if the convention of seniority
is not read in Article 124(2), every Judge of the Supreme Court would be a
possible candidate for the office of Chief Justice of India and on account of
personal bias would be disqualified from being consulted. There is no
warrant for such an extreme position and the reflection on the Judges of the
Supreme Court is equally unwarranted. On the construction as indicated
above there will be positive limitation on the power of the President while
making appointment of Chief Justice of India and it is not necessary to read
any limitation on the power of the President Under Article 126 while making
appointment of a Judge of the Supreme Court as acting Chief Justice of
India. But the observation is incidental to the submission and may be
examined in an appropriate case. And the question of construction is kept
open.
xxx
775. It was also stated that the expression 'obtain' in the circular has the
element of coercion and a consent ceases to be consent if it is obtained
under coercion. It was said that consent and coercion go ill together because
forced assent would not be consent in the eye of law. It was said that the
threat implicit in the circular becomes evident because the Chief Minister, the
strong arm of the executive is being asked to obtain consent. If every little
thing is looked upon with suspicion and as an attack on the independence of
judiciary, it becomes absolutely misleading. Law Minister, if he writes
directly to the Chief Justice or the Judge concerned, propriety of the action
may be open to question. Chandrachud, J., has warned in Sheth case (supra)
that the executive cannot and ought not to establish rapport with Judges
(SCR p. 456 CD: SCC p. 230, para 43). Taking this direction in its letter and
spirit, the Law Minister wrote to the Chief Ministers. The Chief Minister in
turn was bound to approach the Chief Justice. This is also known to be a
proper communication channel with Judges of High Court. In this context the
expression 'obtain' would only mean request the Judge to give consent if he
so desires. If he gives the consent, well and good, and if does not give, no
evil consequences are likely to ensue. I am not impressed by the submission
of the learned Attorney-General that one who gives consent may have some
advantage over the one who does not. I do not see any remote advantage
and if any such advantage is given and if charge of victimisation is made out
by the Judge not giving consent, the arm of judicial review is strong enough
to rectify the executive error.
xxx
815. The public interest like public policy is an unruly horse and is incapable
of any precise definition and, therefore, it was urged that this safeguard is
very vague and of doubtful utility. It was urged that these safeguards failed
to checkmate the arbitrary exercise of power in 1976. This approach
overlooks the fact that the Lakshman Rekha drawn by the safeguards when
transgressed or crossed, the judicial review will set at naught the mischief.
True it is that it is almost next to impossible for individual Judge of a High
Court to knock at the doors of the Courts because access to justice is via the
insurmountable mountain of costs and expenses. This need not detain us
because we have seen that in time of crisis the Bar has risen to the occasion
twice over in near past though it must be conceded that judicial review is
increasingly becoming the preserve of the high, mighty and the affluent. But
the three safeguards, namely, full and effective consultation with the Chief
Justice of India, and that the power to transfer can be exercised in public
interest, and judicial review, would certainly insulate independence of
judiciary against an attempt by the executive to control it.
Last of all, reference may be made to the observations of E.S. Venkataramiah, J., (as
he then was) who held as under:
1245. The question of policy is a matter entirely for the President to decide.
Even though the Chief Justice of India is consulted in that behalf by the
President since the policy relates to the High Courts, his opinion is not
binding on the President. It is open to the President to adopt any policy
which is subject only to the judicial review by the Court. Under Article 222 of
the Constitution the Chief Justice of India has to be consulted on the
question whether a particular Judge should be transferred and where he
should be transferred while implementing the said policy. If the Government
requests the Chief Justice of India to give his opinion on a transfer to
implement the said policy which is really in the public interest he cannot
decline to do so. Even though the Chief Justice was opposed to the
'wholesale transfers' of Judges there is no bar for the Government treating
the recommendation for transfers made by the Chief Justice of India as a part
of the implementation of its policy. That the transfer of Shri K.B.N. Singh
was on account of the policy of the Government can be gathered from the
following statements in the affidavits filed before this Court: In para 8 of the
affidavit dated September 16, 1981 of Shri K.B.N. Singh it is stated: "When
the deponent wanted to know why he might be transferred to Madras, the
Hon'ble Chief Justice of India merely said that it was the Government policy,
but gave no clue as to what necessitated his transfer from Patna to Madras."
In para 2(g) of the affidavit of the Chief Justice of India he has stated: "I
deny that when Shri K.B.N. Singh wanted to know over the telephone on
January 5, 1981, I stated merely that it was the 'Government policy'....". In
paragraph 8 of the rejoinder-affidavit dated October 16, 1981 of Shri K.B.N.
Singh, it is stated "at one point he also said that it was Government policy to
effect transfer in batches of two or three.
59. The sequence of judgments would now lead us to the judgment of this Court in
S.P. Sampath Kumar v. Union of India MANU/SC/0851/1987 : (1987) 1 SCC 124. The
view expressed by a bench of 5 Hon'ble Judges of this Court in the above case, was
in respect of a controversy quite similar to the one in hand. In the instant judgment,
the constitutional vires of the Administrative Tribunals Act, 1985 was under
challenge. The above Act was framed Under Article 323A of the Constitution. Article
323A was introduced in the Constitution by the Constitution (Forty-second
Amendment) Act, 1976. The main judgment was delivered by Ranganath Misra, J. (as
he then was) on behalf of himself and V. Khalid, G.L. Oza and M.M. Dutt, JJ. Insofar
as the concurring view rendered by P.N. Bhagwati, CJ is concerned, the conclusion
recorded in the following paragraphs has a bearing on the present controversy.
3. It is now well settled as a result of the decision of this Court in Minerva
Mills Ltd. v. Union of India MANU/SC/0075/1980 : (1980) 3 SCC 625, that
judicial review is a basic and essential feature of the Constitution and no law
passed by Parliament in exercise of its constituent power can abrogate it or
take it away. If the power of judicial review is abrogated or taken away the
Constitution will cease to be what it is. It is a fundamental principle of our
constitutional scheme that every organ of the State, every authority under
the Constitution, derives its power from the Constitution and has to act
within the limits of such power. It is a limited government which we have
under the Constitution and both the executive and the legislature have to act
within the limits of the power conferred upon them under the Constitution.
Now a question may arise as to what are the powers of the executive and
whether the executive has acted within the scope of its power. Such a
question obviously cannot be left to the executive to decide and for two very
good reasons. First the decision of the question would depend upon the
interpretation of the Constitution and the laws and this would pre-eminently
be a matter fit to be decided by the judiciary, because it is the judiciary
which alone would be possessed of expertise in this field and secondly, the
constitutional and legal protection afforded to the citizen would become
illusory, if it were left to the executive to determine the legality of its own
action. So also if the legislature makes a law and a dispute arises whether in
making the law, the legislature has acted outside the area of its legislative
competence or the law is violative of the fundamental rights or of any other
provisions of the Constitution, its resolution cannot, for the same reasons, be
left to the determination of the legislature. The Constitution has, therefore
created an independent machinery for resolving these disputes and this
independent machinery is the judiciary which is vested with the power of
judicial review to determine the legality of executive action and the validity
of legislation passed by the legislature. The judiciary is constituted the
ultimate interpreter of the Constitution and to it is assigned the delicate task
of determining what is the extent and scope of the power conferred on each
branch of government, what are the limits on the exercise of such power
under the Constitution and whether any action of any branch transgresses
such limits. It is also a basic principle of the rule of law which permeates
every provision of the Constitution and which forms its very core and
essence that the exercise of power by the executive or any other authority
must not only be conditioned by the Constitution but also be in accordance
with law and it is the judiciary which has to ensure that the law is observed
and there is compliance with the requirements of law on the part of the
executive and other authorities. This function is discharged by the judiciary
by exercise of the power of judicial review which is a most potent weapon in
the hands of the judiciary for maintenance of the Rule of Law. The power of
judicial review is an integral part of our constitutional system and without it,
there will be no government of laws and the Rule of Law would become a
teasing illusion and a promise of unreality. That is why I observed in my
judgment in Minerva Mills Ltd. case (supra) at p. 287 and 288: (SCC p. 678,
para 87)
I am of the view that if there is one feature of our Constitution
which, more than any other, is basic and fundamental to the
maintenance of democracy and the rule of law, it is the power of
judicial review and it is unquestionably, to my mind, part of the
basic structure of the Constitution. of course, when I say this I
should not be taken to suggest that effective alternative institutional
mechanisms or arrangements for judicial review cannot be made by
Parliament. But what I wish to emphasise is that judicial review is a
vital principle of our Constitution and it cannot be abrogated without
affecting the basic structure of the Constitution. If by a constitutional
amendment, the power of judicial review is taken away and it is
provided that the validity of any law made by the legislature shall
not be liable to be called in question on any ground, even if it is
outside the legislative competence of the legislature or is violative of
any fundamental rights, it would be nothing short of subversion of
the Constitution, for it would make a mockery of the distribution of
amendment is made which has the effect of taking away the power
of judicial review and providing that no amendment made in the
Constitution shall be liable to be questioned on any ground, even if
such amendment is violative of the basic structure and, therefore,
outside the amendatory power of Parliament, it would be making
Parliament sole judge of the constitutional validity of what it has
done and that would, in effect and substance, nullify the limitation
on the amending power of Parliament and affect the basic structure
of the Constitution. The conclusion must therefore inevitably follow
that Clause (4) of the Article 368 is unconstitutional and void as
damaging the basic structure of the Constitution.
It is undoubtedly true that my judgment in Minerva Mills Ltd. case (supra)
was a minority judgment but so far as this aspect is concerned, the majority
Judges also took the same view and held that judicial review is a basic and
essential feature of the Constitution and it cannot be abrogated without
affecting the basic structure of the Constitution and it is equally clear from
the same decision that though judicial review cannot be altogether abrogated
by Parliament by amending the Constitution in exercise of its constituent
power, Parliament can certainly, without in any way violating the basic
structure doctrine, set up effective alternative institutional mechanisms or
arrangements for judicial review. The basic and essential feature of judicial
review cannot be dispensed with but it would be within the competence of
Parliament to amend the Constitution so as to substitute in place of the High
Court, another alternative institutional mechanism or arrangement for judicial
review, provided it is no less efficacious than the High Court. Then, instead
of the High Court, it would be another institutional mechanism or authority
which would be exercising the power of judicial review with a view to
enforcing the constitutional limitations and maintaining the rule of law.
Therefore, if any constitutional amendment made by Parliament takes away
from the High Court the power of judicial review in any particular area and
vests it in any other institutional mechanism or authority, it would not be
violative of the basic structure doctrine, so long as the essential condition is
fulfilled, namely, that the alternative institutional mechanism or authority set
up by the parliamentary amendment is no less effective than the High Court.
4 . Here, in the present case, the impugned Act has been enacted by
Parliament in exercise of the power conferred by Clause (1) of Article 323A
which was introduced in the Constitution by Constitution (42nd Amendment)
Act, 1976. Clause (2)(d) of this article provides that a law made by
Parliament Under Clause (1) may exclude the jurisdiction of courts, except
the jurisdiction of the Supreme Court Under Article 136, with respect to the
disputes or complaints referred to in Clause (1). The exclusion of the
jurisdiction of the High Court Under Articles 226 and 227 by any law made
by Parliament Under Clause (1) of Article 323A is, therefore, specifically
authorised by the constitutional amendment enacted in Clause (2)(d) of that
article. It is clear from the discussion in the preceding para that this
constitutional amendment authorising exclusion of the jurisdiction of the
High Court Under Articles 226 and 227 postulates for its validity that the law
made Under Clause (1) of Article 323A excluding the jurisdiction of the High
Court Under Articles 226 and 227 must provide for an effective alternative
institutional mechanism or authority for judicial review. If this constitutional
amendment were to permit a law made Under Clause (1) of Article 323A to
exclude the jurisdiction of the High Court Under Articles 226 and 227 without
setting up an effective alternative institutional mechanism or arrangement for
judicial review, it would be violative of the basic structure doctrine and
hence outside the constituent power of Parliament. It must, therefore, be
read as implicit in this constitutional amendment that the law excluding the
jurisdiction of the High Court Under Articles 226 and 227 permissible under it
must not leave a void but it must set up another effective institutional
mechanism or authority and vest the power of judicial review in it.
Consequently, the impugned Act excluding the jurisdiction of the High Court
Under Articles 226 and 227 in respect of service matters and vesting such
jurisdiction in the Administrative Tribunal can pass the test of
constitutionality as being within the ambit and coverage of Clause (2)(d) of
Article 323A, only if it can be shown that the Administrative Tribunal set up
under the impugned Act is equally efficacious as the High Court, so far as the
power of judicial review over service matters is concerned. We must,
therefore, address ourselves to the question whether the Administrative
Tribunal established under the impugned Act can be regarded as equally
effective and efficacious in exercising the power of judicial review as the
High Court acting Under Articles 226 and 227 of the Constitution.
Extracts from the judgment rendered by Ranganath Misra, J. (as he then was) are
first of all being reproduced hereunder:
1 0 . In the writ applications as presented, the main challenge was to the
abolition of the jurisdiction of this Court Under Article 32 in respect of
specified service disputes. Challenge was also raised against the taking away
of the jurisdiction of the High Court Under Articles 226 and 227. It was
further canvassed that establishment of Benches of the Tribunal at Allahabad,
Bangalore, Bombay, Calcutta, Gauhati, Madras and Nagpur with the principal
seat at Delhi would still prejudice the parties whose cases were already
pending before the respective High Courts located at places other than these
places and unless at the seat of every High Court facilities for presentation of
applications and for hearing thereof were provided the parties and their
lawyers would be adversely affected. The interim order made on October 31,
1985, made provision to meet the working difficulties. Learned Attorney-
General on behalf of the Central Government assured the court that early
steps would be taken to amend the law so as to save the jurisdiction Under
Article 32, remove other minor anomalies and set up a Bench of the Tribunal
at the seat of every High Court. By the Administrative Tribunals
(Amendment) Ordinance, 1986, these amendments were brought about and
by now an appropriate Act of Parliament has replaced the Ordinance. Most of
the original grounds of attack thus do not survive and the contentions that
were canvassed at the hearing by the counsel appearing for different parties
are these:
(1) Judicial review is a fundamental aspect of the basic structure of
our Constitution and bar of the jurisdiction of the High Court Under
Articles 226 and 227 as contained in Section 28 of the Act cannot be
sustained;
( 2) Even if the bar of jurisdiction is upheld, the Tribunal being a
substitute of the High Court, its constitution and set up should be
such that it would in fact function as such substitute and become an
institution in which the parties could repose faith and trust;
(3) Benches of the Tribunal should not only be established at the
seat of every High Court but should be available at every place
where the High Courts have permanent Benches;
(4) So far as Tribunals set up or to be set up by the Central or the
State Governments are concerned, they should have no jurisdiction
in respect of employees of the Supreme Court or members of the
subordinate judiciary and employees working in such establishments
inasmuch as exercise of jurisdiction of the Tribunal would interfere
with the control absolutely vested in the respective High Courts in
regard to the judicial and other subordinate officers Under Article
235 of the Constitution.
1 1 . After oral arguments were over, learned Attorney-General, after
obtaining instructions from the Central Government filed a memorandum to
the effect that Section 2(q) of the Act would be suitably amended so as to
exclude officers and servants in the employment of the Supreme Court and
members and staff of the subordinate judiciary from the purview of the Act.
In the same memorandum it has also been said that Government would
arrange for sittings of the Benches of the Tribunal at the seat or seats of each
High Court on the basis that 'sittings' will include 'circuit sittings' and the
details thereof would be worked out by the Chairman or the Vice-Chairman
concerned.
12. With these concessions made by the learned Attorney-General, only two
aspects remain to be dealt with by us, namely, those covered by the first and
the second contentions.
13. Strong reliance was placed on the judgment of Bhagwati, J. (one of us -
presently the learned Chief Justice) in Minerva Mills Ltd. v. Union of India
MANU/SC/0075/1980 : (1980) 3 SCC 625, where it was said: (SCC p. 678,
para 87)
The power of judicial review is an integral part of our constitutional
system and without it, there will be no government of laws and the
rule of law would become a teasing illusion and a promise of
unreality. I am of the view that if there is one feature of our
Constitution which, more than any other, is basic and fundamental to
the maintenance of democracy and the rule of law, it is the power of
judicial review and it is unquestionably, to my mind, part of the
basic structure of the Constitution. of course, when I say this I
should not be taken to suggest that effective alternative institutional
mechanisms or arrangements for judicial review cannot be made by
Parliament. But what I wish to emphasise is that judicial review is a
vital principle of our Constitution and it cannot be abrogated without
affecting the basic structure of the Constitution. If by a constitutional
amendment, the power of judicial review is taken away and it is
provided that the validity of any law made by the legislature shall
not be liable to be called in question on any ground, even if it is
outside the legislative competence of the legislature or is violative of
any fundamental rights, it would be nothing short of subversion of
the Constitution, for it would make a mockery of the distribution of
amendment is made which has the effect of taking away the power
of judicial review....
14. Article 32 was described by Dr. Ambedkar in course of the debate in the
Constituent Assembly as the 'soul' and 'heart' of the Constitution and it is in
recognition of this position that though Article 323A(2)(d) authorised
exclusion of jurisdiction Under Article 32 and the original Act had in Section
28 provided for it, by amendment jurisdiction Under Article 32 has been left
untouched. The Act thus saves jurisdiction of this Court both Under Article 32
in respect of original proceedings as also Under Article 136 for entertaining
appeals against decisions of the Tribunal on grant of special leave. Judicial
review by the Apex Court has thus been left intact.
15. The question that arises, however, for consideration is whether bar of
jurisdiction Under Articles 226 and 227 affects the provision for judicial
review. The right to move the High Court in its writ jurisdiction - unlike the
one Under Article 32 - is not a fundamental right. Yet, the High Courts, as
the working experience of three-and-a-half decades shows have in exercise
of the power of judicial review played a definite and positive role in the
matter of preservation of fundamental and other rights and in keeping
administrative action under reasonable control. In these thirty-six years
following the enforcement of the Constitution, not only has India's
population been more than doubled but also the number of litigations before
the courts including the High Courts has greatly increased. As the pendency
in the High Courts increased and soon became the pressing problem of
backlog, the nation's attention came to be bestowed on this aspect. Ways
and means to relieve the High Courts of the load began to engage the
attention of the government at the Centre as also in the various States. As
early as 1969, a Committee was set up by the Central Government under the
chairmanship of Mr. Justice Shah of this Court to make recommendations
suggesting ways and means for effective, expeditious and satisfactory
disposal of matters relating to service disputes of government servants as it
was found that a sizeable portion of pending litigations related to this
category. The Committee recommended the setting up of an independent
Tribunal to handle the pending cases before this Court and the High Courts.
While this report was still engaging the attention of government, the
Administrative Reforms Commission also took note of the situation and
recommended the setting up of Civil Services Tribunals to deal with appeals
of Government servants against disciplinary action. In certain States,
Tribunals of this type came into existence and started functioning. But the
Central Government looked into the matter further as it transpired that the
major chunk of service litigations related to matters other than disciplinary
action. In May 1976, a Conference of Chief Secretaries of the States
discussed this problem. Then came the Forty-second Amendment of the
Constitution bringing in Article 323A which authorized Parliament to provide
by law "for the adjudication or trial by Administrative Tribunals of disputes
and complaints with respect to recruitment and conditions of service of
persons appointed to public services and posts in connection with the affairs
of the Union or of any State or of any local or other authority within the
territory of India or under the control of the Government of India or of any
Corporation owned or controlled by the government". As already stated this
article envisaged exclusion of the jurisdiction of all courts, except the
jurisdiction of the Supreme Court Under Article 136, with respect to the
disputes or complaints referred to in Clause (1). Though the Constitution
now contained the enabling power, no immediate steps were taken to set up
any Tribunal as contemplated by Article 323A. A Constitution Bench of this
Court in K.K. Dutta v. Union of India MANU/SC/0429/1980 : (1980) 4 SCC
38, observed: [SCC p. 39, para 1: SCC (L & S) p. 486]
There are few other litigative areas than disputes between members
of various services inter se, where the principle that public policy
requires that all litigation must have an end can apply with greater
force. Public servants ought not to be driven or required to dissipate
their time and energy in courtroom battles. Thereby their attention is
diverted from public to private affairs and their inter se disputes
affect their sense of oneness without which no institution can
function effectively. The constitution of Service Tribunals by State
Governments with an apex Tribunal at the Centre, which, in the
generality of cases, should be the final arbiter of controversies
relating to conditions of service, including the vexed question of
seniority, may save the courts from the avalanche of writ petitions
and appeals in service matters. The proceedings of such Tribunals
can have the merit of informality and if they will not be tied down to
strict rules of evidence, they might be able to produce solutions
which will satisfy many....
In the meantime the problem of the backlog of cases in the High Courts
became more acute and pressing and came to be further discussed in
Parliament and in conferences and seminars. Ultimately in January 1985,
both Houses of Parliament passed the Bill and with the Presidential assent on
February 27, 1985, the law enabling the long awaited Tribunal to be
constituted came into existence. As already noticed, the Central Government
notified the Act to come into force with effect from November 1, 1985.
16. Exclusion of the jurisdiction of the High Courts in service matters and its
propriety as also validity have thus to be examined in the background
indicated above. We have already seen that judicial review by this Court is
left wholly unaffected and thus there is a forum where matters of importance
and grave injustice can be brought for determination or rectification. Thus
exclusion of the jurisdiction of the High Court does not totally bar judicial
review. This Court in Minerva Mills' case (supra) did point out that "effective
alternative institutional mechanisms or arrangements for judicial review" can
be made by Parliament. Thus it is possible to set up an alternative institution
in place of the High Court for providing judicial review. The debates and
deliberations spread over almost two decades for exploring ways and means
for relieving the High Courts of the load of backlog of cases and for assuring
quick settlement of service disputes in the interest of the public servants as
also the country cannot be lost sight of while considering this aspect. It has
not been disputed before us and perhaps could not have been-that the
Tribunal under the scheme of the Act would take over a part of the existing
backlog and a share of the normal load of the High Courts. The Tribunal has
been contemplated as a substitute and not as supplemental to the High Court
in the scheme of administration of justice. To provide the Tribunal as an
additional forum from where parties could go to the High Court would
certainly have been a retrograde step considering the situation and
circumstances to meet which the innovation has been brought about. Thus
barring of the jurisdiction of the High Court can indeed not be a valid ground
of attack.
17. What, however, has to be kept in view is that the Tribunal should be a
real substitute of the High Court-not only in form and de jure but in content
and de facto. As was pointed out in Minerva's Mills case (supra), the
alternative arrangement has to be effective and efficient as also capable of
upholding the constitutional limitations. Article 16 of the Constitution
guarantees equality of opportunity in matters of public employment. Article
15 bars discrimination on grounds of religion, race, caste, sex or place of
birth. The touch-stone of equality enshrined in Article 14 is the greatest of
guarantees for the citizen. Centering around these articles in the Constitution
a service jurisprudence has already grown in this country. Under Sections 14
and 15 of the Act all the powers of the Courts except those of this Court in
regard to matters specified therein vest in the Tribunal - either Central or
State. Thus the Tribunal is the substitute of the High Court and is entitled to
exercise the powers thereof.
18. The High Courts have been functioning over a century and a quarter and
until the Federal Court was established under the Government of India Act,
1935, used to be the highest courts within their respective jurisdictions
subject to an appeal to the Privy Council in a limited category of cases. In
this long period of about six scores of years, the High Courts have played
their role effectively, efficiently as also satisfactorily. The litigant in this
country has seasoned himself to look upto the High Court as the unfailing
protector of his person, property and honour. The institution has served its
purpose very well and the common man has thus come to repose great
confidence therein. Disciplined, independent and trained Judges well versed
in law and working with all openness in an unattached and objective manner
have ensured dispensation of justice over the years. Aggrieved people
approach the Court-the social mechanism to act as the arbiter -not under
legal obligation but under the belief and faith that justice shall be done to
them and the State's authorities would implement the decision of the Court.
It is, therefore, of paramount importance that the substitute institution-the
Tribunal-must be a worthy successor of the High Court in all respects. That is
exactly what this Court intended to convey when it spoke of an alternative
mechanism in Minerva Mills' case (supra).
60. Reference may also be made to the decision rendered by this Court in L. Chandra
Kumar v. Union of India MANU/SC/0261/1997 : (1997) 3 SCC 261. The instant
decision was rendered by a constitution bench of 7 Judges. The question which arose
for determination in the instant judgment was, whether the power conferred upon the
Parliament and the State legislatures vide Articles 323A(2)(d) and 323B(3)(d) totally
excluding the jurisdiction of "all courts" except the Supreme Court, Under Article 136
of the Constitution, violated the "basic structure" of the Constitution. In other words,
the question was, whether annulling/retracting the power of "judicial review"
conferred on High Courts (Under Articles 226 and 227 of the Constitution) and on the
Supreme Court (Under Articles 32 of the Constitution), was violative of the "basic
structure" of the Constitution. Furthermore, whether the tribunals constituted Under
Articles 323A and 323B of the Constitution, possess the competence to test the
constitutional validity of statutory provisions/rules? And also, whether Tribunals
constituted Under Articles 323A and 323B of the Constitution could be said to be
effective substitutes of the jurisdiction vested in the High Courts? And if not, what
changes were required? The above controversy came to be referred to the
constitution bench in furtherance of an order passed in L. Chandra Kumar v. Union of
India MANU/SC/0227/1995 : (1995) 1 SCC 400, on account of the decisions rendered
in post S.P. Sampath Kumar cases (supra), namely, J.B. Chopra v. Union of India
MANU/SC/0459/1986 : (1987) 1 SCC 422, M.B. Majumdar v. Union of India
MANU/SC/0404/1990 : (1990) 4 SCC 501, Amulya Chandra Kalita v. Union of India
MANU/SC/0503/1991 : (1991) 1 SCC 181, R.K. Jain v. Union of India
MANU/SC/0291/1993 : (1993) 4 SCC 119, and Dr. Mahabal Ram v. Indian Council of
Agricultural Research MANU/SC/0638/1994 : (1994) 2 SCC 410. On the issues which
are relevant to the present controversy, this Court observed as under:
76. To express our opinion on the issue whether the power of judicial review
vested in the High Courts and in the Supreme Court Under Articles 226/227
and 32 is part of the basic structure of the Constitution, we must first
attempt to understand what constitutes the basic structure of the
Constitution. The doctrine of basic structure was evolved in Kesavananda
Bharati case MANU/SC/0445/1973 : (1973) 4 SCC 225. However, as already
mentioned, that case did not lay down that the specific and particular
features mentioned in that judgment alone would constitute the basic
structure of our Constitution. Indeed, in the judgments of Shelat and Grover,
JJ., Hegde and Mukherjea, JJ. and Jaganmohan Reddy, J., there are specific
observations to the effect that their list of essential features comprising the
basic structure of the Constitution are illustrative and are not intended to be
exhaustive. In Indira Gandhi case MANU/SC/0304/1975 : 1975 Supp. SCC 1,
Chandrachud, J. held that the proper approach for a Judge who is confronted
with the question whether a particular facet of the Constitution is part of the
basic structure, is to examine, in each individual case, the place of the
particular feature in the scheme of our Constitution, its object and purpose,
and the consequences of its denial on the integrity of our Constitution as a
fundamental instrument for the governance of the country. (supra at pp. 751-
752). This approach was specifically adopted by Bhagwati, J. in Minerva Mills
case MANU/SC/0075/1980 : (1980) 3 SCC 625, (at pp. 671-672) and is not
regarded as the definitive test in this field of Constitutional Law.
7 7 . We find that the various factors mentioned in the test evolved by
Chandrachud, J. have already been considered by decisions of various
Benches of this Court that have been referred to in the course of our
analysis. From their conclusions, many of which have been extracted by us in
toto, it appears that this Court has always considered the power of judicial
review vested in the High Courts and in this Court Under Articles 226 and 32
respectively, enabling legislative action to be subjected to the scrutiny of
superior courts, to be integral to our constitutional scheme. While several
judgments have made specific references to this aspect [Gajendragadkar,
C.J. in Keshav Singh case MANU/SC/0048/1964 : AIR 1965 SC 745, Beg, J.
and Khanna, J. in Kesavananda Bharati case (supra), Chandrachud, C.J. and
Bhagwati, J. in Minerva Mills (supra), Chandrachud, C.J. in Fertilizer Kamgar
MANU/SC/0010/1980 : (1981) 1 SCC 568, K.N. Singh, J. inDelhi Judicial
Service Assn. MANU/SC/0478/1991 : (1991) 4 SCC 406]the rest have made
general observations highlighting the significance of this feature.
78. The legitimacy of the power of courts within constitutional democracies
to review legislative action has been questioned since the time it was first
conceived. The Constitution of India, being alive to such criticism, has, while
conferring such power upon the higher judiciary, incorporated important
safeguards. An analysis of the manner in which the Framers of our
Constitution incorporated provisions relating to the judiciary would indicate
that they were very greatly concerned with securing the independence of the
judiciary. These attempts were directed at ensuring that the judiciary would
be capable of effectively discharging its wide powers of judicial review.
While the Constitution confers the power to strike down laws upon the High
Courts and the Supreme Court, it also contains elaborate provisions dealing
with the tenure, salaries, allowances, retirement age of Judges as well as the
mechanism for selecting Judges to the superior courts. The inclusion of such
elaborate provisions appears to have been occasioned by the belief that,
armed by such provisions, the superior courts would be insulated from any
executive or legislative attempts to interfere with the making of their
decisions. The Judges of the superior courts have been entrusted with the
task of upholding the Constitution and to this end, have been conferred the
power to interpret it. It is they who have to ensure that the balance of power
envisaged by the Constitution is maintained and that the legislature and the
executive do not, in the discharge of their functions, transgress constitutional
limitations. It is equally their duty to oversee that the judicial decisions
rendered by those who man the subordinate courts and tribunals do not fall
foul of strict standards of legal correctness and judicial independence. The
constitutional safeguards which ensure the independence of the Judges of the
superior judiciary, are not available to the Judges of the subordinate
judiciary or to those who man tribunals created by ordinary legislations.
Consequently, Judges of the latter category can never be considered full and
effective substitutes for the superior judiciary in discharging the function of
constitutional interpretation. We, therefore, hold that the power of judicial
review over legislative action vested in the High Courts Under Article 226 and
in this Court Under Article 32 of the Constitution is an integral and essential
feature of the Constitution, constituting part of its basic structure. Ordinarily,
therefore, the power of High Courts and the Supreme Court to test the
constitutional validity of legislations can never be ousted or excluded.
7 9 . We also hold that the power vested in the High Courts to exercise
judicial superintendence over the decisions of all courts and tribunals within
their respective jurisdictions is also part of the basic structure of the
Constitution. This is because a situation where the High Courts are divested
of all other judicial functions apart from that of constitutional interpretation,
is equally to be avoided.
xxx
96. It has been brought to our notice that one reason why these Tribunals
have been functioning inefficiently is because there is no authority charged
with supervising and fulfilling their administrative requirements. To this end,
it is suggested that the Tribunals be made subject to the supervisory
jurisdiction of the High Courts within whose territorial jurisdiction they fall.
We are, however, of the view that this may not be the best way of solving
the problem. We do not think that our constitutional scheme requires that all
adjudicatory bodies which fall within the territorial jurisdiction of the High
Courts should be subject to their supervisory jurisdiction. If the idea is to
divest the High Courts of their onerous burdens, then adding to their
supervisory functions cannot, in any manner, be of assistance to them. The
situation at present is that different Tribunals constituted under different
enactments are administered by different administrative departments of the
Central and the State Governments. The problem is compounded by the fact
that some Tribunals have been created pursuant to Central Legislations and
some others have been created by State Legislations. However, even in the
case of Tribunals created by parliamentary legislations, there is no uniformity
in administration. We are of the view that, until a wholly independent agency
for the administration of all such Tribunals can be set up, it is desirable that
all such Tribunals should be, as far as possible, under a single nodal ministry
which will be in a position to oversee the working of these Tribunals. For a
number of reasons that Ministry should appropriately be the Ministry of Law.
It would be open for the Ministry, in its turn, to appoint an independent
supervisory body to oversee the working of the Tribunals. This will ensure
that if the President or Chairperson of the Tribunal is for some reason unable
to take sufficient interest in the working of the Tribunal, the entire system
will not languish and the ultimate consumer of justice will not suffer. The
creation of a single umbrella organisation will, in our view, remove many of
the ills of the present system. If the need arises, there can be separate
umbrella organisations at the Central and the State levels. Such a
supervisory authority must try to ensure that the independence of the
members of all such Tribunals is maintained. To that extent, the procedure
for the selection of the members of the Tribunals, the manner in which funds
are allocated for the functioning of the Tribunals and all other consequential
details will have to be clearly spelt out.
9 7 . The suggestions that we have made in respect of appointments to
Tribunals and the supervision of their administrative function need to be
considered in detail by those entrusted with the duty of formulating the
policy in this respect. That body will also have to take into consideration the
comments of expert bodies like the LCI and the Malimath Committee in this
regard. We, therefore, recommend that the Union of India initiate action in
this behalf and after consulting all concerned, place all these Tribunals under
one single nodal department, preferably the Legal Department.
98. Since we have analysed the issue of the constitutional validity of Section
5(6) of the Act at length, we may now pronounce our opinion on this aspect.
Though the vires of the provision was not in question in Dr. Mahabal Ram
case MANU/SC/0638/1994 : (1994) 2 SCC 401, we believe that the approach
adopted in that case, the relevant portion of which has been extracted in the
first part of this judgment, is correct since it harmoniously resolves the
manner in which Sections 5(2) and 5(6) can operate together. We wish to
make it clear that where a question involving the interpretation of a statutory
provision or rule in relation to the Constitution arises for the consideration of
a Single Member Bench of the Administrative Tribunal, the proviso to Section
5(6) will automatically apply and the Chairman or the Member concerned
shall refer the matter to a Bench consisting of at least two Members, one of
whom must be a Judicial Member. This will ensure that questions involving
the vires of a statutory provision or rule will never arise for adjudication
before a Single Member Bench or a Bench which does not consist of a
Judicial Member. So construed, Section 5(6) will no longer be susceptible to
charges of unconstitutionality.
99. In view of the reasoning adopted by us, we hold that Clause 2(d) of
Article 323A and Clause 3(d) of Article 323B, to the extent they exclude the
jurisdiction of the High Courts and the Supreme Court Under Articles
226/227 and 32 of the Constitution, are unconstitutional. Section 28 of the
Act and the "exclusion of jurisdiction" clauses in all other legislations
enacted under the aegis of Articles 323A and 323B would, to the same
extent, be unconstitutional. The jurisdiction conferred upon the High Courts
Under Articles 226/227 and upon the Supreme Court Under Article 32 of the
Constitution is a part of the inviolable basic structure of our Constitution.
While this jurisdiction cannot be ousted, other courts and Tribunals may
perform a supplemental role in discharging the powers conferred by Articles
226/227 and 32 of the Constitution. The Tribunals created Under Article 323A
and Article 323B of the Constitution are possessed of the competence to test
the constitutional validity of statutory provisions and rules. All decisions of
these Tribunals will, however, be subject to scrutiny before a Division Bench
of the High Court within whose jurisdiction the Tribunal concerned falls. The
Tribunals will, nevertheless, continue to act like courts of first instance in
respect of the areas of law for which they have been constituted. It will not,
therefore, be open for litigants to directly approach the High Courts even in
cases where they question the vires of statutory legislations (except where
the legislation which creates the particular Tribunal is challenged) by
overlooking the jurisdiction of the Tribunal concerned. Section 5(6) of the
Act is valid and constitutional and is to be interpreted in the manner we have
indicated.
6 1 . Reference was then made to Union of India v. Madras Bar Association
MANU/SC/0378/2010 : (2010) 11 SCC 1. The instant decision was rendered by a
constitution bench of 5 Judges. The controversy adjudicated upon in this case related
to a challenge to the constitutional validity of Parts 1B and 1C of the Companies Act,
1956. These parts were inserted into the Companies Act, by the Companies (Second
Amendment) Act, 2002. Thereby, provision was made for the constitution of the
National Company Law Tribunal and the National Company Law Appellate Tribunal.
The relevant questions raised in the present controversy, are being noticed. Firstly,
whether Parliament does not have the jurisdiction/legislative competence, to vest
intrinsic judicial functions, that have been traditionally performed by High Courts, in
any tribunal outside the judiciary? Secondly, whether transferring of the entire
company law jurisdiction, hitherto before vested in High Courts, to the National
Company Law Tribunal, which was not under the control of the judiciary, was
violative of the principles of "separation of powers" and "independence of judiciary"?
Thirdly, whether Sections 10FB, 10FD, 10FE, 10FF, 10FL(2), 10FO, 10FR(3), 10FT,
10FX contained in Parts I-B and I-C of the Companies Act, by virtue of the above
amendment, were unconstitutional being in breach of the principles of the "rule of
law", "separation of powers" and "independence of judiciary"? The relevant narration
and conclusions recorded by this Court are being reproduced hereunder:
Section 10FD(3)(f): Appointment of Technical Member to NCLT
1 6 . The High Court has held that appointment of a member under the
category specified in Section 10FD(3)(f), can have a role only in matters
concerning revival and rehabilitation of sick industrial companies and not in
relation to other matters. The High Court has therefore virtually indicated
that NCLT should have two divisions, that is an Adjudication Division and a
Rehabilitation Division and persons selected under the category specified in
Clause (f) should only be appointed as Members of the Rehabilitation
Division.
17. The Union Government contends that similar provision exists in Section
4(3) of the Sick Industrial Companies (Special Provisions) Act, 1985; that
the provision is only an enabling one so that the best talent can be selected
by the Selection Committee headed by the Chief Justice of India or his
nominee; and that it may not be advisable to have division or limit or place
restrictions on the power of the President of the Tribunal to constitute
appropriate benches. It is also pointed out that a technical member would
always sit in a Bench with a judicial member.
Section 10FD(3)(g): Qualification for appointment of Technical Member
18. The High Court has observed that in regard to the Presiding Officers of
the Labour Courts and the Industrial Tribunals or the National Industrial
Tribunal, a minimum period of three to five years' experience should be
prescribed, as what is sought to be utilised is their expert knowledge in
labour laws.
19. The Union Government submits that it may be advisable to leave the
choice of selection of the most appropriate candidate to the Committee
headed by the Chief Justice of India or his nominee.
2 0 . The High Court has also observed that as persons who satisfy the
qualifications prescribed in Section 10FD(3)(g) would be persons who fall
Under Section 10FD(2)(a), it would be more appropriate to include this
qualification in Section 10FD(2)(a). It has also observed in Section 10FL
dealing with "Benches of the Tribunal", a provision should be made that a
"judicial member" with this qualification shall be a member of the Special
Bench referred to in Section 10FL(2) for cases relating to rehabilitation,
restructuring or winding up of companies.
2 1 . The Union Government has not accepted these findings and contends
that the observations of the High Court would amount to judicial legislation.
Section 10FD(3)(h): Qualification of Technical Member of NCLT
22. The High Court has observed that Clause (h) referring to the category of
persons having special knowledge of and experience in matters relating to
labour, for not less than 15 years is vague and should be suitably amended
so as to spell out with certainty the qualification which a person to be
appointed Under Clause (h) should possess.
2 3 . The Union Government contends that in view of the wide and varied
experience possible in labour matters, it may not be advisable to set out the
nature of experience or impose any restrictions in regard to the nature of
experience. It is submitted that the Selection Committee headed by the Chief
Justice of India or his nominee would consider each application on its own
merits.
24. The second observation of the High Court is that the member selected
under the category mentioned in Clause (h) must confine his participation
only to the Benches dealing with revival and rehabilitation of sick companies
and should also be excluded from functioning as a single-Member Bench for
any matter.
25. The Union Government contends that it may not be advisable to fetter
the prerogative of the President of the Tribunal to constitute benches by
making use of available members. It is also pointed out that it may not be
proper to presume that a person well versed in labour matters will be
unsuitable to be associated with a judicial member in regard to adjudication
of winding-up matters.
xxx
Section 10FX: Selection process for President/Chairperson
3 1 . The High Court has expressed the view that the selection of the
President/Chairperson should be by a Committee headed by the Chief Justice
of India in consultation with two senior Judges of the Supreme Court.
32. The Union Government has submitted that it would not be advisable to
make such a provision in regard to appointment of the President/Chairperson
of statutory tribunals. It is pointed out that no other legislation constituting
tribunals has such a provision.
In order to assail the challenge to the provisions extracted hereinabove, the Union of
India asserted, that the Madras High Court (the judgment whereof was, also under
challenge) having held that the Parliament had the competence and the power to
establish the National Company Law Tribunal and the National Company Law
Appellate Tribunal, ought to have dismissed the writ petition. The assertion at the
hands of the Union of India was, that some of the directions contained in the
judgment rendered by the Madras High Court, reframed and recast Parts 1B and 1C
introduced by the Amendment Act and amounted to converting "judicial review" into
judicial legislation. It was, however noticed, that the Union of India having agreed to
rectify several of the defects pointed out by the High Court, the appeal of the Union
of India was restricted to the findings of the High Court relating to Sections 10FD(3)
(f), (g), (h) and 10-FX. To understand the tenor of the issue which was the subject
matter before this Court, it is relevant to extract some of the provisions of the
Companies Act, 1956 as amended by the Companies (Second Amendment) Act, 2002,
relating to the constitution of the National Company Law Tribunal and the National
Company Law Appellate Tribunal). The same are reproduced hereunder:
PART I-B
NATIONAL COMPANY LAW TRIBUNAL
-FB. Constitution of National Company Law Tribunal.-The Central Government
shall, by notification in the Official Gazette, constitute a Tribunal to be
known as the National Company Law Tribunal to exercise and discharge such
powers and functions as are, or may be, conferred on it by or under this Act
or any other law for the time being in force.
-FC. Composition of Tribunal.-The Tribunal shall consist of a President and
such number of judicial and technical members not exceeding sixty-two, as
the Central Government deems fit, to be appointed by that Government, by
notification in the Official Gazette.
-FD. Qualifications for appointment of President and Members.-
(1) The Central Government shall appoint a person who has been, or
is qualified to be, a Judge of a High Court as the President of the
Tribunal.
(2) A person shall not be qualified for appointment as judicial
member unless he-
(a) has, for at least fifteen years, held a judicial office in the
territory of India; or
(b) has, for at least ten years been an advocate of a High
Court, or has partly held judicial office and has been partly
in practice as an advocate for a total period of fifteen years;
or
(c) has held for at least fifteen years a Group A post or an
equivalent post under the Central Government or a State
Government including at least three years of service as a
Member of the Indian Company Law Service (Legal Branch)
in Senior Administrative Grade in that service; or
(d) has held for at least fifteen years a Group A post or an
equivalent post under the Central Government (including at
least three years of service as a Member of the Indian Legal
Service in Grade I of that service).
(3) A person shall not be qualified for appointment as technical
member unless he-
(a) has held for at least fifteen years a Group A post or an
equivalent post under the Central Government or a State
Government [including at least three years of service as a
Member of the Indian Company Law Service (Accounts
Branch) in Senior Administrative Grade in that service]; or
(b) is, or has been, a Joint Secretary to the Government of
India under the Central Staffing Scheme, or held any other
post under the Central Government or a State Government
carrying a scale of pay which is not less than that of a Joint
Secretary to the Government of India, for at least five years
and has adequate knowledge of, and experience in, dealing
with problems relating to company law; or
(c) is, or has been, for at least fifteen years in practice as a
chartered accountant under the Chartered Accountants Act,
1949 (38 of 1949); or
(d) is, or has been, for at least fifteen years in practice as a
cost accountant under the Cost and Works Accountants Act,
1959 (23 of 1959); or
(e) is, or has been, for at least fifteen years working
experience as a Secretary in wholetime practice as defined in
Clause (45-A) of Section 2 of this Act and is a member of
the Institute of the Company Secretaries of India constituted
under the Company Secretaries Act, 1980 (56 of 1980); or
(f) is a person of ability, integrity and standing having
special knowledge of, and professional experience of not
less than twenty years in science, technology, economics,
banking, industry, law, matters relating to industrial finance,
industrial management, industrial reconstruction,
administration, investment, accountancy, marketing or any
other matter, the special knowledge of, or professional
experience in, which would be in the opinion of the Central
Government useful to the Tribunal; or
(g) is, or has been, a Presiding Officer of a Labour Court,
Tribunal or National Tribunal constituted under the Industrial
Disputes Act, 1947 (14 of 1947); or
(h) is a person having special knowledge of, and experience
of not less than fifteen years in, the matters relating to
labour.
Explanation.-For the purposes of this Part -
(i) 'judicial member' means a Member of the Tribunal
appointed as such Under Sub-section (2) of Section 10FD
and includes the President of the Tribunal;
(ii) 'technical member' means a Member of the Tribunal
appointed as such Under Sub-section (3) of Section 10FD.
-FE. Term of office of President and Members.-The President and every other
Member of the Tribunal shall hold office as such for a term of three years
from the date on which he enters upon his office, but shall be eligible for
reappointment:
Provided that no President or other Member shall hold office as such
after he has attained-
(a) in the case of the President, the age of sixty-seven
years;
(b) in the case of any other Member, the age of sixty-five
years: Provided further that the President or other Member
may retain his lien with his parent cadre or Ministry or
Department, as the case may be, while holding office as
such.
- F F. Financial and administrative powers of Member Administration.-The
Central Government shall designate any judicial member or technical member
as Member (Administration) who shall exercise such financial and
administrative powers as may be vested in him under the rules which may be
made by the Central Government:
Provided that the Member (Administration) shall have authority to
delegate such of his financial and administrative powers as he may
think fit to any other officer of the Tribunal subject to the condition
that such officer shall, while exercising such delegated powers
continue to act under the direction, superintendence and control of
the Member (Administration).
***
-FK. Officers and employees of Tribunal.-(1) The Central Government shall
provide the Tribunal with such officers and other employees as it may deem
fit.
(2) The officers and other employees of the Tribunal shall discharge their
functions under the general superintendence of the Member Administration.
(3) The salaries and allowances and other terms and conditions of service of
the officers and other employees of the Tribunal shall be such as may be
prescribed.
-FL. Benches of Tribunal.-(1) Subject to the provisions of this section, the
powers of the Tribunal may be exercised by Benches, constituted by the
President of the Tribunal, out of which one shall be a judicial member and
another shall be a technical member referred to in Clauses (a) to (f) of Sub-
section (3) of Section 10FD:
Provided that it shall be competent for the Members authorised in
this behalf to function as a Bench consisting of a single Member and
exercise the jurisdiction, powers and authority of the Tribunal in
respect of such class of cases or such matters pertaining to such
class of cases, as the President of the Tribunal may, by general or
special order, specify:
Provided further that if at any stage of the hearing of any
such case or matter, it appears to the Member of the
Tribunal that the case or matter is of such a nature that it
ought to be heard by a Bench consisting of two Members,
the case or matter may be transferred by the President of the
Tribunal or, as the case may be, referred to him for transfer
to such Bench as the President may deem fit.
(2) The President of the Tribunal shall, for the disposal of any case relating
to rehabilitation, restructuring or winding up of the companies, constitute
one or more special Benches consisting of three or more Members, each of
whom shall necessarily be a judicial member, a technical member appointed
under any of the Clauses (a) to (f) of Sub-section (3) of Section 10FD, and a
Member appointed Under Clause (g) or Clause (h) of Sub-section (3) of
Section 10FD:
Provided that in case a Special Bench passes an order in respect of a
company to be wound up, the winding-up proceedings of such
company may be conducted by a Bench consisting of a single
Member.
(3) If the Members of a Bench differ in opinion on any point or points, it
shall be decided according to the majority, if there is a majority, but if the
Members are equally divided, they shall state the point or points on which
they differ, and the case shall be referred by the President of the Tribunal for
hearing on such point or points by one or more of the other Members of the
Tribunal and such point or points shall be decided according to the opinion
of the majority of Members of the Tribunal who have heard the case,
including those who first heard it.
(4) There shall be constituted such number of Benches as may be notified by
the Central Government.
(5) In addition to the other Benches, there shall be a Principal Bench at New
Delhi presided over by the President of the Tribunal.
(6) The Principal Bench of the Tribunal shall have powers of transfer of
proceedings from any Bench to another Bench of the Tribunal in the event of
inability of any Bench from hearing any such proceedings for any reason:
Provided that no transfer of any proceedings shall be made under
this Sub-section except after recording the reasons for so doing in
writing.
***
-FO. Delegation of powers.-The Tribunal may, by general or special order,
delegate, subject to such conditions and limitations, if any, as may be
specified in the order, to any Member or officer or other employee of the
Tribunal or other person authorized by the Tribunal to manage any industrial
company or industrial undertaking or any operating agency, such powers and
duties under this Act as it may deem necessary.
PART I-C
APPELLATE TRIBUNAL
***
-FR. Constitution of Appellate Tribunal.-(1) The Central Government shall, by
notification in the Official Gazette, constitute with effect from such date as
may be specified therein, an Appellate Tribunal to be called the 'National
Company Law Appellate Tribunal' consisting of a Chairperson and not more
than two Members, to be appointed by that Government, for hearing appeals
against the orders of the Tribunal under this Act.
(2) The Chairperson of the Appellate Tribunal shall be a person who has
been a Judge of the Supreme Court or the Chief Justice of a High Court.
(3) A Member of the Appellate Tribunal shall be a person of ability, integrity
and standing having special knowledge of, and professional experience of
not less than twenty-five years in, science, technology, economics, banking,
industry, law, matters relating to labour, industrial finance, industrial
management, industrial reconstruction, administration, investment,
accountancy, marketing or any other matter, the special knowledge of, or
professional experience in which, would be in the opinion of the Central
Government useful to the Appellate Tribunal.
***
- F T. Term of office of Chairperson and Members.-The Chairperson or a
Member of the Appellate Tribunal shall hold office as such for a term of three
years from the date on which he enters upon his office, but shall be eligible
for reappointment for another term of three years:
Provided that no Chairperson or other Member shall hold office as
such after he has attained -
(a) in the case of the Chairperson, the age of seventy years;
(b) in the case of any other Member, the age of sixty-seven
years.
***
-FX. Selection Committee.-(1) The Chairperson and Members of the Appellate
Tribunal and President and Members of the Tribunal shall be appointed by
the Central Government on the recommendations of a Selection Committee
consisting of-
(2) The Joint Secretary in the Ministry or Department of the Central

Government dealing with this Act shall be the Convenor of the Selection
Committee.
***
(5) Before recommending any person for appointment as the Chairperson
and Members of the Appellate Tribunal and President and Members of the
Tribunal, the Selection Committee shall satisfy itself that such person does
not have financial or other interest which is likely to affect prejudicially his
functions as such Chairperson or Member of the Appellate Tribunal or
President or Member of the Tribunal, as the case may be.
(6) No appointment of the Chairperson and Members of the Appellate
Tribunal and President and Members of the Tribunal shall be invalidated
merely by reason of any vacancy or any defect in the constitution of the
Selection Committee.
***
- G . Power to punish for contempt.-The Appellate Tribunal shall have the
same jurisdiction, powers and authority in respect of contempt of itself as
the High Court has and may exercise, for this purpose under the provisions
of the Contempt of Courts Act, 1971 (70 of 1971), which shall have the effect
subject to modifications that-
(a) the reference therein to a High Court shall be construed as
including a reference to the Appellate Tribunal;
(b) the reference to Advocate General in Section 15 of the said Act
shall be construed as a reference to such law officers as the Central
Government may specify in this behalf.
***
- G B . Civil court not to have jurisdiction.-(1) No civil court shall have
jurisdiction to entertain any suit or proceeding in respect of any matter which
the Tribunal or the Appellate Tribunal is empowered to determine by or
under this Act or any other law for the time being in force and no injunction
shall be granted by any court or other authority in respect of any action
taken or to be taken in pursuance of any power conferred by or under this
Act or any other law for the time being in force.
***
- G F. Appeal to Supreme Court.-Any person aggrieved by any decision or
order of the Appellate Tribunal may file an appeal to the Supreme Court
within sixty days from the date of communication of the decision or order of
the Appellate Tribunal to him on any question of law arising out of such
decision or order:
Having noticed the relevant statutory provisions, this Court made detailed
observations relating to "difference between Courts and Tribunals", "Re:
independence of judiciary", "separation of powers", and "whether the Government
can transfer judicial functions traditionally performed by Courts, to Tribunals", as
under:
7 0 . But in India, unfortunately tribunals have not achieved full
independence. The Secretary of the "sponsoring department" concerned sits
in the Selection Committee for appointment. When the tribunals are formed,
they are mostly dependent on their sponsoring department for funding,
infrastructure and even space for functioning. The statutes constituting
tribunals routinely provide for members of civil services from the sponsoring
departments becoming members of the tribunal and continuing their lien with
their parent cadre. Unless wide ranging reforms a s were implemented in
United Kingdom and as were suggested by L. Chandra Kumar v. Union of
India MANU/SC/0261/1997 : (1997) 3 SCC 261, are brought about, tribunals
in India will not be considered as independent.
Whether the Government can transfer the judicial functions traditionally
performed by courts to tribunals?
71. It is well settled that courts perform all judicial functions of the State
except those that are excluded by law from their jurisdiction. Section 9 of the
Code of Civil Procedure, for example, provides that the courts shall have
jurisdiction to try all suits of a civil nature excepting suits of which their
cognizance is either expressly or impliedly barred.
72. Article 32 provides that without prejudice to the powers conferred on the
Supreme Court by Clauses (1) and (2) of the said Article, Parliament may by
law, empower any other court to exercise within the local limits of its
jurisdiction all or any of the powers exercisable by the Supreme Court Under
Clause (2) of Article 32.
73. Article 247 provides that notwithstanding anything contained in Chapter
I of Part XI of the Constitution, Parliament may by law provide for the
establishment of any additional courts for the better administration of laws
made by Parliament or of any existing laws with respect to a matter
enumerated in the Union List. Article 245 provides that subject to the
provisions of the Constitution, Parliament may make laws for the whole or
any part of the territory of India, and the legislature of a State may make
laws for the whole or any part of the State.
74. Article 246 deals with the subject-matter of laws made by Parliament and
by the legislatures of States. The Union List (List I of the Seventh Schedule)
enumerates the matters with respect to which Parliament has exclusive
powers to make laws. Entry 77 of List I refers to constitution, organisation,
jurisdiction and powers of the Supreme Court. Entry 78 of List I refers to
constitution and organisation of the High Courts. Entry 79 of List I refers to
extension or exclusion of the jurisdiction of a High Court, to or from any
Union Territory. Entry 43 of List I refers to incorporation, Regulation and
winding up of trading corporations and Entry 44 of List I refers to
incorporation, Regulation and winding up of corporations. Entry 95 of List I
refers to jurisdiction and powers of all courts except the Supreme Court, with
respect to any of the matters in the Union List.
75. The Concurrent List (List III of the Seventh Schedule) enumerates the
matters with respect to which Parliament and the Legislature of a State will
have concurrent power to make laws. Entry 11-A of List III refers to
administration of justice, constitution and organization of all courts except
the Supreme Court and the High Courts. Entry 46 of List III refers to
jurisdiction and powers of all courts, except the Supreme Court, with respect
to any of the matters in List III.
76. Part XIV-A was inserted in the Constitution with effect from 3-1 -1977 by
the Constitution (Forty-second Amendment) Act, 1976. The said part contains
two articles. Article 323A relates to Administrative Tribunals and empowers
Parliament to make a law, providing for the adjudication or trial by
Administrative Tribunals of disputes and complaints with respect to
recruitment and conditions of service of persons appointed to public services
and posts in connection with the affairs of the Government or of any State or
of any local or other authority within the territory of India or under the
control of the Government of India or of any corporation owned or controlled
by the Government.
xxx
8 0 . The legislative competence of Parliament to provide for creation of
courts and tribunals can be traced to Entries 77, 78, 79 and Entries 43, 44
read with Entry 95 of List I, Entry 11-A read with Entry 46 of List III of the
Seventh Schedule. Referring to these articles, this Court in two cases,
namely, Union of India v. Delhi High Court Bar Assn. MANU/SC/0194/2002 :
(2002) 4 SCC 75, and State of Karnataka v. Vishwabharathi House Building
Coop. Society MANU/SC/0033/2003 : (2003) 2 SCC 412, held that Articles
323A and 323B are enabling provisions which enable the setting up of
tribunals contemplated therein; and that the said articles, however, cannot
be interpreted to mean that they prohibited the legislature from establishing
tribunals not covered by those articles, as long as there is legislative
competence under the appropriate entry in the Seventh Schedule.
xxx
90. But when we say that the legislature has the competence to make laws,
providing which disputes will be decided by courts, and which disputes will
be decided by tribunals, it is subject to constitutional limitations, without
encroaching upon the independence of the judiciary and keeping in view the
principles of the rule of law and separation of powers. If tribunals are to be
vested with judicial power hitherto vested in or exercised by courts, such
tribunals should possess the independence, security and capacity associated
with courts. If the tribunals are intended to serve an area which requires
specialised knowledge or expertise, no doubt there can be technical members
in addition to judicial members. Where however jurisdiction to try certain
category of cases are transferred from courts to tribunals only to expedite the
hearing and disposal or relieve from the rigours of the Evidence Act and
procedural laws, there is obviously no need to have any non-judicial
technical member. In respect of such tribunals, only members of the
judiciary should be the Presiding Officers/Members. Typical examples of such
special tribunals are Rent Tribunals, Motor Accidents Claims Tribunals and
Special Courts under several enactments. Therefore, when transferring the
jurisdiction exercised by courts to tribunals, which does not involve any
specialised knowledge or expertise in any field and expediting the disposal
and relaxing the procedure is the only object, a provision for technical
members in addition to or in substitution of judicial members would clearly
be a case of dilution of and encroachment upon the independence of the
judiciary and the rule of law and would be unconstitutional.
In R.K. Jain v. Union of India MANU/SC/0291/1993 : (1993) 4 SCC 119, this
Court observed: (SCC pp. 169-70, para 67)
67. The tribunals set up Under Articles 323A and 323B of the
Constitution or under an Act of legislature are creatures of the
statute and in no case claim the status as Judges of the High Court
or parity or as substitutes. However, the personnel appointed to hold
those offices under the State are called upon to discharge judicial or
quasi-judicial powers. So they must have judicial approach and also
knowledge and expertise in that particular branch of constitutional,
administrative and tax laws. The legal input would undeniably be
more important and sacrificing the legal input and not giving it
sufficient weightage and teeth would definitely impair the efficacy
and effectiveness of the judicial adjudication. It is, therefore,
necessary that those who adjudicate upon these matters should have
legal expertise, judicial experience and modicum of legal training as
on many an occasion different and complex questions of law which
baffle the minds of even trained Judges in the High Court and
Supreme Court would arise for discussion and decision.
92. Having held that legislation can transfer certain areas of litigation from
courts to tribunals and recognising that the legislature can provide for
technical members in addition to judicial members in such tribunals, let us
turn our attention to the question as to who can be the members.
93. If the Act provides for a tribunal with a judicial member and a technical
member, does it mean that there are no limitations upon the power of the
legislature to prescribe the qualifications for such technical member? The
question will also be whether any limitations can be read into the
competence of the legislature to prescribe the qualification for the judicial
member? The answer, of course, depends upon the nature of jurisdiction that
is being transferred from the courts to tribunals. Logically and necessarily,
depending upon whether the jurisdiction is being shifted from a High Court,
or a District Court or a Civil Judge, the yardstick will differ. It is for the court
which considers the challenge to the qualification, to determine whether the
legislative power has been exercised in a manner in consonance with the
constitutional principles and constitutional guarantees.
xxx
1 0 1 . Independent judicial tribunals for determination of the rights of
citizens, and for adjudication of the disputes and complaints of the citizens,
is a necessary concomitant of the rule of law. The rule of law has several
facets, one of which is that disputes of citizens will be decided by Judges
who are independent and impartial; and that disputes as to legality of acts of
the Government will be decided by Judges who are independent of the
executive. Another facet of the rule of law is equality before law. The essence
of the equality is that it must be capable of being enforced and adjudicated
by an independent judicial forum. Judicial independence and separation of
judicial power from the executive are part of the common law traditions
implicit in a Constitution like ours which is based on the Westminster model.
102. The fundamental right to equality before law and equal protection of
laws guaranteed by Article 14 of the Constitution, clearly includes a right to
have the person's rights, adjudicated by a forum which exercises judicial
power in an impartial and independent manner, consistent with the
recognised principles of adjudication. Therefore wherever access to courts to
enforce such rights is sought to be abridged, altered, modified or substituted
by directing him to approach an alternative forum, such legislative Act is
open to challenge if it violates the right to adjudication by an independent
forum. Therefore, though the challenge by MBA is on the ground of violation
of principles forming part of the basic structure, they are relatable to one or
more of the express provisions of the Constitution which gave rise to such
principles. Though the validity of the provisions of a legislative Act cannot be
challenged on the ground it violates the basic structure of the Constitution, it
can be challenged as violative of constitutional provisions which enshrine the
principles of the rule of law, separation of powers and independence of the
judiciary.
xxx
106. We may summarise the position as follows:
(a) A legislature can enact a law transferring the jurisdiction
exercised by courts in regard to any specified subject (other than
those which are vested in courts by express provisions of the
Constitution) to any tribunal.
(b) All courts are tribunals. Any tribunal to which any existing
jurisdiction of courts is transferred should also be a judicial tribunal.
This means that such tribunal should have as members, persons of a
rank, capacity and status as nearly as possible equal to the rank,
status and capacity of the court which was till then dealing with such
matters and the members of the tribunal should have the
independence and security of tenure associated with judicial
tribunals.
(c) Whenever there is need for "tribunals", there is no presumption
that there should be technical members in the tribunals. When any
jurisdiction is shifted from courts to tribunals, on the ground of
pendency and delay in courts, and the jurisdiction so transferred
does not involve any technical aspects requiring the assistance of
experts, the tribunals should normally have only judicial members.
Only where the exercise of jurisdiction involves inquiry and decisions
into technical or special aspects, where presence of technical
members will be useful and necessary, tribunals should have
technical members. Indiscriminate appointment of technical
members in all tribunals will dilute and adversely affect the
independence of the judiciary.
(d) The legislature can reorganise the jurisdictions of judicial
tribunals. For example, it can provide that a specified category of
cases tried by a higher court can be tried by a lower court or vice
versa (a standard example is the variation of pecuniary limits of the
courts). Similarly while constituting tribunals, the legislature can
prescribe the qualifications/eligibility criteria. The same is however
subject to judicial review. If the court in exercise of judicial review is
of the view that such tribunalisation would adversely affect the
independence of the judiciary or the standards of the judiciary, the
court may interfere to preserve the independence and standards of
the judiciary. Such an exercise will be part of the checks and
balances measures to maintain the separation of powers and to
prevent any encroachment, intentional or unintentional, by either the
legislature or by the executive.
xxx
113. When the Administrative Tribunals were constituted, the presence of
members of civil services as Technical (Administrative) Members was
considered necessary, as they were well versed in the functioning of
government departments and the rules and procedures applicable to
government servants. But the fact that senior officers of civil services could
function as Administrative Members of the Administrative Tribunals, does not
necessarily make them suitable to function as technical members in the
Company Law Tribunals or other tribunals requiring technical expertise. The
tribunals cannot become providers of sinecure to members of civil services,
by appointing them as technical members, though they may not have
technical expertise in the field to which the tribunals relate, or worse, where
purely judicial functions are involved. While one can understand the presence
of the members of the civil services being technical members in
Administrative Tribunals, or Military Officers being members of the Armed
Forces Tribunals, or electrical engineers being members of the Electricity
Appellate Tribunal, or telecom engineers being members of TDSAT, we find
no logic in members of the general civil services being members of the
Company Law Tribunals.
114. Let us now refer to the dilution of independence. If any member of the
tribunal is permitted to retain his lien over his post with the parent cadre or
ministry or department in the civil service for his entire period of service as
member of the tribunal, he would continue to think, act and function as a
member of the civil services. A litigant may legitimately think that such a
member will not be independent and impartial. We reiterate that our
observations are not intended to cast any doubt about the honesty and
integrity or capacity and capability of the officers of civil services in
particular those who are of the rank of Joint Secretary or for that matter even
junior officers. What we are referring to is the perception of the litigants and
the public about the independence or conduct of the members of the tribunal.
Independence, impartiality and fairness are qualities which have to be
nurtured and developed and cannot be acquired overnight. The independence
of members discharging judicial functions in a tribunal cannot be diluted.
xxx
120. We may tabulate the corrections required to set right the defects in
Parts I-B and I-C of the Act:
(i) Only Judges and advocates can be considered for appointment as
judicial members of the Tribunal. Only High Court Judges, or Judges
who have served in the rank of a District Judge for at least five years
or a person who has practised as a lawyer for ten years can be
considered for appointment as a judicial member. Persons who have
held a Group A or equivalent post under the Central or State
Government with experience in the Indian Company Law Service
(Legal Branch) and the Indian Legal Service (Grade I) cannot be
considered for appointment as judicial members as provided in Sub-
sections (2)(c) and (d) of Section 10FD. The expertise in Company
Law Service or the Indian Legal Service will at best enable them to
be considered for appointment as technical members.
(ii) As NCLT takes over the functions of the High Court, the members
should as nearly as possible have the same position and status as
High Court Judges. This can be achieved, not by giving the salary
and perks of a High Court Judge to the members, but by ensuring
that persons who are as nearly equal in rank, experience or
competence to High Court Judges are appointed as members.
Therefore, only officers who are holding the ranks of Secretaries or
Additional Secretaries alone can be considered for appointment as
technical members of the National Company Law Tribunal. Clauses
(c) and (d) of Sub-section (2) and Clauses (a) and (b) of Sub-
section (3) of Section 10FD which provide for persons with 15 years
experience in Group A post or persons holding the post of Joint
Secretary or equivalent post in the Central or the State Government,
being qualified for appointment as Members of Tribunal, are invalid.
(iii) A "technical member" presupposes an experience in the field to
which the Tribunal relates. A member of the Indian Company Law
Service who has worked with Accounts Branch or officers in other
departments who might have incidentally dealt with some aspect of
company law cannot be considered as "experts" qualified to be
appointed as technical members. Therefore Clauses (a) and (b) of
Sub-section (3) are not valid.
(IV) The first part of Clause (f) of Sub-section (3) providing that any
person having special knowledge or professional experience of 20
years in science, technology, economics, banking, industry could be
considered to be persons with expertise in company law, for being
appointed as technical members in the Company Law Tribunal, is
invalid.
(v) Persons having ability, integrity, standing and special knowledge
and professional experience of not less than fifteen years in
industrial finance, industrial management, industrial reconstruction,
investment and accountancy, may however be considered as persons
having expertise in rehabilitation/revival of companies and therefore,
eligible for being considered for appointment as technical members.
(vi) In regard to category of persons referred in Clause (g) of Sub-
section (3) at least five years' experience should be specified.
(vii) Only Clauses (c), (d), (e), (g), (h), and the latter part of Clause
(f) in Sub-section (3) of Section 10FD and officers of civil services
of the rank of the Secretary or Additional Secretary in the Indian
Company Law Service and the Indian Legal Service can be
considered for purposes of appointment as technical members of the
Tribunal.
(viii) Instead of a five-member Selection Committee with the Chief
Justice of India (or his nominee) as Chairperson and two Secretaries
from the Ministry of Finance and Company Affairs and the Secretary
in the Ministry of Labour and the Secretary in the Ministry of Law
and Justice as members mentioned in Section 10FX, the Selection
Committee should broadly be on the following lines:
(a) Chief Justice of India or his nominee-Chairperson (with a
casting vote);
(b) A Senior Judge of the Supreme Court or Chief Justice of
High Court-Member;
(c) Secretary in the Ministry of Finance and Company
Affairs-Member; and
(d) Secretary in the Ministry of Law and Justice-Member.
(ix) The term of office of three years shall be changed to a term of
seven or five years subject to eligibility for appointment for one
more term. This is because considerable time is required to achieve
expertise in the field concerned. A term of three years is very short
and by the time the members achieve the required knowledge,
expertise and efficiency, one term will be over. Further the said term
of three years with the retirement age of 65 years is perceived as
having been tailor-made for persons who have retired or shortly to
retire and encourages these Tribunals to be treated as post-
retirement havens. If these Tribunals are to function effectively and
efficiently they should be able to attract younger members who will
have a reasonable period of service.
(x) The second proviso to Section 10FE enabling the President and
members to retain lien with their parent cadre/ministry/department
while holding office as President or Members will not be conducive
for the independence of members. Any person appointed as member
should be prepared to totally disassociate himself from the
executive. The lien cannot therefore exceed a period of one year.
(xi) To maintain independence and security in service, Sub-section
(3) of Section 10FJ and Section 10FV should provide that suspension
of the President/Chairman or member of a Tribunal can be only with
the concurrence of the Chief Justice of India.
(xii) The administrative support for all Tribunals should be from the
Ministry of Law and Justice. Neither the Tribunals nor their members
shall seek or be provided with facilities from the respective
sponsoring or parent Ministries or Department concerned.
(xiii) Two-member Benches of the Tribunal should always have a
judicial member. Whenever any larger or special Benches are
constituted, the number of technical members shall not exceed the
judicial members.
62. Before venturing to examine the controversy in hand it needs to be noticed, that
some of the assertions raised at the hands of the Petitioners in the present
controversy have since been resolved. These have been noticed in an order passed by
this Court in Madras Bar Association v. Union of India MANU/SC/0375/2010 : (2010)
11 SCC 67, which is being extracted hereunder:
1 . In all these petitions, the constitutional validity of the National Tax
Tribunal Act, 2005 ("the Act", for short) is challenged. In TC No. 150 of
2006, additionally there is a challenge to Section 46 of the Constitution
(Forty-second Amendment) Act, 1976 and Article 323B of the Constitution of
India. It is contended that Section 46 of the Constitution (Forty-second
Amendment) Act, is ultra vires the basic structure of the Constitution as it
enables proliferation of the tribunal system and makes serious inroads into
the independence of the judiciary by providing a parallel system of
administration of justice, in which the executive has retained extensive
control over matters such as appointment, jurisdiction, procedure, etc. It is
contended that Article 323B violates the basic structure of the Constitution as
it completely takes away the jurisdiction of the High Courts and vests them in
the National Tax Tribunal, including trial of offences and adjudication of pure
questions of law, which have always been in the exclusive domain of the
judiciary.
2 . When these matters came up on 9-1-2007 before a three-Judge Bench,
the challenge to various sections of the Act was noticed.
3 . The first challenge was to Section 13 which permitted "any person" duly
authorised to appear before the National Tax Tribunal. The Union of India
submitted that the appropriate amendment will be made in the Act to ensure
that only lawyers, chartered accountants and parties in person will be
permitted to appear before the National Tax Tribunal.
4. The second challenge was to Section 5(5) of the Act which provided that:
5. (5) The Central Government may in consultation with the
Chairperson transfer a member from headquarters of one Bench in
one State to the headquarters of another Bench in another State or
to the headquarters of any other Bench within a State:
5 . The Union of India submitted that having regard to the nature of the
functions to be performed by the Tribunal and the constitutional scheme of
separation of powers and independence of judiciary, the expression
"consultation with the Chairperson" occurring in Section 5(5) of the Act
should be read and construed as "concurrence of the Chairperson".
6 . The third challenge was to Section 7 which provided for a Selection
Committee comprising of (a) the Chief Justice of India or a Judge of the
Supreme Court nominated by him, (b) Secretary in the Ministry of Law and
Justice, and (c) Secretary in the Ministry of Finance. It was contended by the
Petitioners that two of the members who are Secretaries to the Government
forming the majority may override the opinion of the Chief Justice or his
nominee which was improper. It was stated on behalf of the Union of India
that there was no question of two Secretaries overriding the opinion of the
Chief Justice of India or his nominee since primacy of the Chairperson was
inbuilt in the system and this aspect will be duly clarified.
7 . In regard to certain other defects in the Act, pointed out by the
Petitioners, it was submitted that the Union Government will examine them
and wherever necessary suitable amendments will be made.
8 . In view of these submissions, on 9-1-2007, this Court made an order
reserving liberty to the Union Government to mention the matter for listing
after the appropriate amendments were made in the Act.
9. On 21-1-2009, when arguments in CA No. 3067 of 2004 and CA No. 3717
of 2005, which related to the challenge to Parts I-B and I-C of the Companies
Act, 1956 were in progress before the Constitution Bench, it was submitted
that these matters involved a similar issue and they could be tagged and
disposed of in terms of the decision in those appeals. Therefore the
Constitution Bench directed these cases to be listed with those appeals, even
though there is no order of reference in these matters. CA No. 3067 of 2004
and CA No. 3717 of 2005 were subsequently heard at length and were
reserved for judgment. These matters which were tagged were also reserved
for judgment.
10. We have disposed of CA No. 3067 of 2004 and CA No. 3717 of 2005
today (Union of India v. Madras Bar Association MANU/SC/0378/2010 :
(2010) 11 SCC 1), by a separate order. Insofar as these cases are concerned,
we find that TC (Civil) No. 150 of 2006 involves the challenge to Article 323B
of the Constitution. The said article enables appropriate legislatures to
provide by law, for adjudication or trial by tribunals or any disputes,
complaints, or offences with respect to all or any of the matters specified in
Clause (2) thereof. Sub-clause (i) of Clause (2) of Article 323B enables such
tribunals to try offences against laws with respect to any of the matters
specified in Sub-clauses (a) to (h) of Clause (2) of the said article.
11. One of the contentions urged in support of the challenge to Article 323B
relate to the fact that tribunals do not follow the normal rules of evidence
contained in the Evidence Act, 1872. In criminal trials, an accused is
presumed to be innocent till proved guilty beyond reasonable doubt, and the
Evidence Act plays an important role, as appreciation of evidence and
consequential findings of facts are crucial. The trial would require experience
and expertise in criminal law, which means that the Judge or the adjudicator
to be legally trained. Tribunals which follow their own summary procedure,
are not bound by the strict rules of evidence and the members will not be
legally trained. Therefore it may lead to convictions of persons on evidence
which is not sufficient in probative value or on the basis of inadmissible
evidence. It is submitted that it would thus be a retrograde step for
separation of executive from the judiciary.
12. Appeals on issues on law are traditionally heard by the courts. Article
323B enable constitution of tribunals which will be hearing appeals on pure
questions of law which is the function of the courts. In L. Chandra Kumar v.
Union of India MANU/SC/0261/1997 : (1997) 3 SCC 261, this Court
considered the validity of only Clause (3)(d) of Article 323B but did not
consider the validity of other provisions of Article 323B.
13. The appeals relating to constitutional validity of the National Company
Law Tribunals under the Companies Act, 1956 did not involve the
consideration of Article 323B. The constitutional issues raised in TC (Civil)
No. 150 of 2006 were not touched on as the power to establish Company
Tribunals was not traceable to Article 323B but to several entries of Lists I
and III of the Seventh Schedule and consequently there was no challenge to
this article.
14. The basis of attack in regard to Parts I-B and I-C of the Companies Act
and the provisions of the NTT Act are completely different. The challenge to
Parts I-B and I-C of the Companies Act, 1956 seeks to derive support from
Article 323B by contending that Article 323B is a bar for constitution of any
tribunal in respect of matters not enumerated therein. On the other hand the
challenge to the NTT Act is based on the challenge to Article 323B itself.
15. We therefore find that these petitions relating to the validity of the NTT
Act and the challenge to Article 323B raise issues which did not arise in the
two civil appeals. Therefore these cases cannot be disposed of in terms of
the decision in the civil appeals but require to be heard separately. We
accordingly direct that these matters be delinked and listed separately for
hearing.
(i). A perusal of the judgment rendered in Kesavananda Bharati case (supra) reveals,
that "separation of powers" creates a system of checks and balances, by reasons of
which, powers are so distributed, that none of the three organs transgresses into the
domain of the other. The concept ensures the dignity of the individual. The power of
"judicial review" ensures, that executive functioning confines itself within the
framework of law enacted by the legislature. Accordingly, the demarcation of powers
between the legislature, the executive and the judiciary, is regarded as the basic
element of the constitutional scheme. When the judicial process is prevented by law,
from determining whether the action taken, was or was not, within the framework of
the legislation enacted, it would amount to the transgression of the
adjudicatory/determinatory process by the legislature. Therefore, the exclusion of the
power of "judicial review", would strike at the "basic structure" of the Constitution.
(ii) In Indira Nehru Gandhi case (supra), this Court arrived at the conclusion, that
Clause (4) of Article 329A of the Constitution, destroyed not only the power of
"judicial review", but also the rule of "separation of powers". By the above legislative
provision, an election declared void, on the culmination of an adjudicatory process,
was treated as valid. Meaning thereby, that the judicial process was substituted by a
legislative pronouncement. It was held, that the issue to be focused on was, whether
the amendment which was sought to be assailed, violated a principle which
constituted the "basic structure" of the Constitution. The argument raised in
opposition was, that a determination which had a bearing on just one (or a few)
individual(s) would not raise such an issue. The query was answered by concluding,
that it would make no difference whether it related to one case, or a large number of
cases. Encroachment on the "basic structure" of the Constitution would be invalid,
irrespective of whether, it related to a limited number of individuals or a large
number of people. The view expressed was, that if lawmakers were to be assigned
the responsibility of administering those laws, and dispensing justice, then those
governed by such laws would be left without a remedy in case they were subjected to
injustice. For the above reason, Clause (4) of Article 329A was declared invalid. This
Court by majority held, that Clauses (4) and (5) of Article 329A were unconstitutional
and void.
(iii) In Minerva Mills Ltd. case (supra), first and foremost, this Court confirmed the
view expressed in Kesavananda Bharati case (supra) and Indira Nehru Gandhi case
(supra), that the amending power of the Parliament, was not absolute. The
Parliament, it was maintained, did not have the power to amend the "basic structure"
of the Constitution. A legislative assertion, that the enacted law had been made, for
giving effect to a policy to secure the provisions made in Part IV of the Constitution,
had the effect of excluding the adjudicatory process. In the case on hand, this Court
arrived at the conclusion, that Section 4 of the Constitution (Forty-second
Amendment) Act was beyond the amending power of the Parliament, and the same
was void, because it had the effect of damaging the basic and essential features of
the Constitution and destroying its "basic structure", by totally excluding any
challenge to any law, even on the ground, whether it was inconsistent with or it had
abridged, any of the rights conferred by Articles 14 and 19 of the Constitution.
Furthermore, Section 55 of the Constitution (Forty-second Amendment), Act was held
to be beyond the amending power of the Parliament. It was held to be void, as it had
the effect of removing all limitations on the powers of Parliament, to amend the
Constitution including, the power to alter its basic and essential features, i.e., its
"basic structure". According to this Court, the reason for a broad "separation of
powers" under the Constitution was, because concentration of powers in any one of
the organs of the Government, would destroy the foundational premise of a
democratic Government. The illustrations narrated in the judgment are of some
relevance. We shall therefore, narrate them hereunder, in our own words:
(a) Take for example a case where the executive, which is in-charge of
administration, acts to the prejudice of a citizen. And a question arises, as to
what are the powers of the executive, and whether the executive had acted
within the scope of its powers. Such a question obviously, cannot be left to
the executive to decide, for two very good reasons. Firstly, because the
decision would depend upon the interpretation of the Constitution or the
laws, which are, pre-eminently fit to be decided by the judiciary, as it is the
judiciary alone which would be possessed of the expertise in decision
making. And secondly, because the legal protection afforded to citizens by
the Constitution or the laws would become illusory, if it were left to the
executive to determine the legality, of its own actions.
(b) Take for example, a case where the legislature makes a law, which is to
the prejudice of a citizen. And a dispute arises, whether in making the law
the legislature had acted outside the area of its legislative competence, or
whether the law was violative of the fundamental rights of the citizen, or of
some other provision(s) of law. Its resolution cannot be left to the legislature
to decide, for two very good reasons. Firstly, because the decision would
depend upon the interpretation of the Constitution or the laws, which are,
preeminently fit to be decided by the judiciary, as it is the judiciary alone
which would be possessed of the expertise in decision making. And secondly,
because the legal protection afforded to citizens, by the Constitution or the
laws would become illusory, if it were left to the legislature to determine the
legality of its own actions.
On the basis of the examples cited above, this Court concluded, that the creation of
an independent machinery, for resolving disputes, was constitutionally vested with
the judiciary. The judiciary was vested with the power of "judicial review", to
determine the legality of executive action, and the validity of laws enacted by
legislature. It was further held, that it was the solemn duty of the judiciary under the
Constitution, to keep the different organs of the State, such as the executive and the
legislature, within the limits of the powers conferred upon them by the Constitution.
It was accordingly also held, that the power of "judicial review" was an integral part
of India's constitutional system, and without it, the "rule of law" would become a
teasing illusion, and a promise of unreality. Premised on the aforesaid inferences,
this Court finally concluded, that if there was one feature of the Indian Constitution,
which more than any others, was its "basic structure" fundamental to the
maintenance of democracy and the "rule of law", it was the power of "judicial
review". While recording the aforementioned conclusion, this Court also recorded a
clarificatory note, namely, that it should not be taken, that an effective alternative
institutional mechanism or arrangement for "judicial review" could not be made by
Parliament. It was, however, clearly emphasized, that "judicial review" was a vital
principle of the Indian Constitution, and it could not be abrogated, without affecting
the "basic structure" of the Constitution. It is therefore, that it came to be held, that a
constitutional amendment, which had the effect of taking away the power of "judicial
review", by providing, that it would not be liable to be questioned, on any ground,
was held to be beyond the amending power of the Parliament. For, that would make
the Parliament the sole judge, of the constitutional validity, of what it had done, and
thereby, allow it to determine the legality of its own actions. In the above judgment,
the critical reflection, in our considered view was expressed by the words, "Human
ingenuity, limitless though it may be, has yet not devised a system, by which the
liberty of the people can be protected, except for the intervention of the courts of
law".
(iv) In S.P. Gupta case (supra), the concept of "independence of judiciary" came up
for consideration before this Court. This Court having examined the issue, arrived at
certain conclusions with reference to High Court and Supreme Court Judges. It was
held, that their appointment and removal, as also their transfer, deserved to be
preserved, within the framework of the judicial fraternity. Likewise, the foundation of
appointment of outside Chief Justices, was made with a similar objective. Based on
the same, parameters were also laid down, in respect of appointment of Judges to
the Supreme Court. The consideration even extended to the appointment of the Chief
Justice of the Supreme Court. All this, for ensuring judicial autonomy. It was felt that
independence of the judiciary, could be preserved only if primacy in the above causes
rested with the judiciary itself, with a minimal involvement of the executive and the
legislature. It needs to be highlighted, that independence of judges of the High
Courts and the Supreme Court was considered as salient, to ensure due exercise of
the power of "judicial review". It would be pertinent to mention, that the judgment
rendered by this Court in S.P. Gupta case (supra) came to be doubted in Subhash
Sharma v. Union of India MANU/SC/0643/1990 : (1991) Suppl. 1 SCC 574.
Thereupon, the matter was reconsidered by a constitution bench of nine Judges in,
Supreme Court Advocates on Record Association v. Union of India
MANU/SC/0073/1994 : (1993) 4 SCC 441. On the subject of preserving independence
in respect of appointment of judges of the High Courts, as also their transfer, the
position recorded earlier in S.P. Gupta case (supra) remained substantially unaltered.
So also, of appointments of Chief Justices of High Courts and the Supreme Court. It
was reiterated, that to ensure judicial independence, primacy in all these matters
should be with the judiciary.
(v) Having recorded the determination rendered by this Court to the effect that
"separation of powers", "rule of law" and "judicial review" at the hands of an
independent judiciary, constitute the "basic structure" of the Constitution, we are in a
position now to determine, how the aforesaid concepts came to be adopted by this
Court, while adjudicating upon the validity of provisions similar to the ones, which
are subject of consideration, in the case on hand. The first controversy arose with
reference to the Administrative Tribunals Act, 1985, which was enacted Under Article
323A of the Constitution. In S.P. Sampath Kumar case (supra), it was sought to be
concluded, that the power of "judicial review" had been negated by the
aforementioned enactment, inasmuch as, the avenue of redress Under Articles 226
and 227 of the Constitution before the High Court, was no longer available. It was
also sought to be asserted, that the tribunal constituted under the enactment, being a
substitute of the High Court, ought to have been constituted in a manner, that it
would be able to function in the same manner as the High Court itself. Since
insulation of the judiciary from all forms of interference, even from the coordinate
branches of the Government, was by now being perceived as a basic essential feature
of the Constitution, it was felt that the same independence from possibility of
executive pressure or influence, needed to be ensured for the Chairman, Vice
Chairman and Members of the administrative tribunal. In recording its conclusions,
even though it was maintained, that "judicial review" was an integral part of the
"basic structure" of the Constitution, yet it was held, that Parliament was competent
to amend the Constitution, and substitute in place of the High Court, another
alternative institutional mechanism or arrangement. This Court, however cautioned,
that it was imperative to ensure, that the alternative arrangement, was no less
independent, and no less judicious, than the High Court (which was sought to be
replaced) itself. This was conveyed by observing, "if any constitutional amendment
made by the Parliament takes away from the High Court the power of "judicial
review" in any particular area, and vests it in any other institutional mechanism or
authority, it would not be violative of the basic structure doctrine so long as the
essential condition is fulfilled, namely, that the alternative institutional mechanism or
authority set up by the Parliament by amendment is no less effective than the High
Court". The exclusion of the High Courts' jurisdiction Under Articles 226 and 227 of
the Constitution, it was held, would render the Administrative Tribunals Act, 1985
unconstitutional, unless the amendments to the provisions of Sections 4, 6 and 8
thereof, as suggested by this Court, were carried out. Insofar as Section 4 is
concerned, it was suggested that it must be amended so as not to confer absolute
and unfettered discretion on the executive in matters of appointment of the
Chairman, Vice Chairman and Members of the administrative tribunals. Section 6(1)
(c) was considered to be invalid, and as such, needed to be deleted. It was also
indicated, that appointment of Chairman, Vice Chairman and Administrative Members
should be made by the executive, only in consultation with the Chief Justice of India,
and that, such consultation had to be meaningful and effective, inasmuch as,
ordinarily the recommendation of the Chief Justice of India ought to be accepted,
unless there were cogent reasons not to. If there were any reasons, for not accepting
the recommendation, they needed to be disclosed to the Chief Justice. Alternatively,
it was commended, that a high powered Selection Committee headed by the Chief
Justice or a sitting Judge of the Supreme Court, or of the concerned High Court
(nominated by the Chief Justice of India), could be set up for such selection. If either
of these two modes of appointment was adopted, it was believed, that the impugned
Act would be saved from invalidation. It was mentioned, that Section 6(2) also
needed to be amended, so as to make a District Judge or an Advocate, who fulfilled
the qualifications for appointment as a judge of the High Court, eligible for
appointment as Vice Chairman. With reference to Section 8 it was felt, that a term of
five years of office, would be too short and ought to be suitably extended. It was so
felt, because the presently prescribed tenure would neither be convenient to the
persons selected for the job, nor expedient to the scheme of adjudication
contemplated under the Administrative Tribunals Act. It was also opined, that the
Government ought to set up a permanent bench wherever there was a seat of the
High Court. And if that was not feasible, at least a circuit bench of the administrative
tribunal, wherever there is a seat of the High Court. That would alleviate the
hardship, which would have to be faced by persons, who were not residing close to
the places at which the benches of the tribunal were set up. In this behalf, it may
only be stated that all the suggestions made by this Court were adopted.
(vi) Post S.P. Sampath Kumar case (supra), divergent views came to be expressed in
a number of judgments rendered by this Court. It is therefore, that the judgment in
S.P. Sampath Kumar case (supra), came up for reconsideration in L. Chandra Kumar
case (supra). On reconsideration, this Court declared, that the power of "judicial
review" over legislative action was vested in the High Courts Under Article 226, and
in the Supreme Court Under Article 32 of the Constitution. "Judicial review" was
again held to be an integral and essential feature of the Constitution, constituting its
"basic structure". It was further concluded, that ordinarily the power of High Courts
and the Supreme Court, to test the constitutional validity of legislations, could never
be ousted or excluded. It was also held, that the power vested in the High Courts of
judicial superintendence over all Courts and tribunals within their respective
jurisdictions, was also part of the "basic structure" of the Constitution. And that, a
situation needed to be avoided where High Courts were divested from their judicial
functions, besides the power of constitutional interpretation. Referring to the
inappropriate and ineffective functioning of the tribunals, this Court observed, that
the above malady was on account of lack of the responsibility, of fulfilling the
administrative requirements of administrative tribunals. It was opined, that the
malady could be remedied by creating a single umbrella organization, to ensure the
independence of the members of such tribunals, and to provide funds for the
fulfillment of their administrative requirements. Although the determination of the
governmental organization, to discharge such a role was left open, it was
recommended, that it should preferably be vested with the Law Department. With
reference to the controversies which arose before the tribunals, it was held, that
matters wherein interpretation of statutory provisions or rules, or where the
provisions of the Constitution were expected to be construed, the same would have
to be determined by a bench consisting of at least two Members, one of whom must
be a Judicial Member. Having found that the provisions of the Administrative
Tribunals Act, had impinged on the power of "judicial review" vested in the High
Court, Clause (2)(d) of Article 323A and Clause (3)(d) of Article 323B, to the extent
they excluded the jurisdiction of the High Courts and the Supreme Court Under
Articles 226/227 and 32 of the Constitution, were held to be unconstitutional.
Likewise, the "exclusion of jurisdiction" clauses in all other legislations enacted under
the aegis of Articles 323A and 323B, were also held to be unconstitutional. In view of
the above, it was concluded, that the jurisdiction conferred upon the High Court
Under Articles 226/227, and upon the Supreme Court Under Article 32 of the
Constitution, was a part of the inviolable "basic structure" of the Constitution. Since
the said jurisdiction could not be ousted, jurisdiction vested in the tribunals would be
deemed to be discharging a supplemental role, in the exercise of the powers
conferred by Articles 226/227 and 32 of the Constitution. Although it was affirmed,
that such tribunals would be deemed to be possessed of the competence to test the
constitutional validity of the statutory provisions and rules, it was provided, that all
decisions of tribunals would be subject to scrutiny before a division bench of the
High Court, within whose jurisdiction the concerned tribunal had passed the order. In
the above view of the matter, it was held that the tribunals would act like courts of
first instance, in respect of the areas of law, for which they had been constituted.
After adjudication at the hands of the tribunals, it would be open for litigants to
directly approach the High Courts. Section 5(6) of the Administrative Tribunals Act,
interpreted in the manner indicated above, was bestowed with validity.
(vii) In Union of India v. Madras Bar Association case (supra), all the
conclusions/propositions narrated above, were reiterated and followed, whereupon
the fundamental requirements, which need to be kept in mind while transferring
adjudicatory functions from courts to tribunals, were further crystalised. It came to
be unequivocally recorded that tribunals vested with judicial power (hitherto before
vested in, or exercised by courts), should possess the same independence, security
and capacity, as the courts which the tribunals are mandated to substitute. The
Members of the tribunals discharging judicial functions, could only be drawn from
sources possessed of expertise in law, and competent to discharge judicial functions.
Technical Members can be appointed to tribunals where technical expertise is
essential for disposal of matters, and not otherwise. Therefore it was held, that where
the adjudicatory process transferred to tribunals, did not involve any specialized skill,
knowledge or expertise, a provision for appointment of Technical Members (in
addition to, or in substitution of Judicial Members) would constitute a clear case of
delusion and encroachment upon the independence of the judiciary, and the "rule of
law". The stature of the members, who would constitute the tribunal, would depend
on the jurisdiction which was being transferred to the tribunal. In other words, if the
jurisdiction of the High Court was transferred to a tribunal, the stature of the
members of the newly constituted tribunal, should be possessed of qualifications akin
to the judges of the High Court. Whereas in case, the jurisdiction and the functions
sought to be transferred were being exercised/performed by District Judges, the
Members appointed to the tribunal should be possessed of equivalent qualifications
and commensurate stature of District Judges. The conditions of service of the
members should be such, that they are in a position to discharge their duties in an
independent and impartial manner. The manner of their appointment and removal
including their transfer, and tenure of their employment, should have adequate
protection so as to be shorn of legislative and executive interference. The functioning
of the tribunals, their infrastructure and responsibility of fulfilling their administrative
requirements ought to be assigned to the Ministry of Law and Justice. Neither the
tribunals nor their members, should be required to seek any facilities from the parent
ministries or department concerned. Even though the legislature can reorganize the
jurisdiction of judicial tribunals, and can prescribe the qualifications/eligibility of
members thereof, the same would be subject to "judicial review" wherein it would be
open to a court to hold, that the tribunalization would adversely affect the
adjudicatory standards, whereupon it would be open to a court to interfere therewith.
Such an exercise would naturally be, a part of the checks and balances measures,
conferred by the Constitution on the judiciary, to maintain the rule of "separation of
powers" to prevent any encroachment by the legislature or the executive.
6 4 . The position of law summarized in the foregoing paragraph constitutes a
declaration on the concept of the "basic structure", with reference to the concepts of
"separation of powers", the "rule of law", and "judicial review". Based on the
conclusions summarized above, it will be possible for us to answer the first issue
projected before us, namely, whether "judicial review" is a part of the "basic
structure" of the Constitution. The answer has inevitably to be in the affirmative.
From the above determination, the Petitioners would like us to further conclude, that
the power of "judicial review" stands breached with the promulgation of the NTT Act.
This Court in Minerva Mills Ltd.. case (supra) held, that it should not be taken, that
an effective alternative institutional mechanism or arrangement for "judicial review"
could not be made by Parliament. The same position was reiterated in S.P. Sampath
Kumar case (supra), namely, that "judicial review" was an integral part of the "basic
structure" of the Constitution. All the same it was held, that Parliament was
competent to amend the Constitution, and substitute in place of the High Court,
another alternative institutional mechanism (court or tribunal). It would be pertinent
to mention, that in so concluding, this Court added a forewarning, that the alternative
institutional mechanism set up by Parliament through an amendment, had to be no
less effective than the High Court itself. In L. Chandra Kumar case (supra), even
though this Court held that the power of "judicial review" over legislative action
vested in High Courts, was a part of the "basic structure", it went on to conclude that
"ordinarily" the power of High Courts to test the constitutional validity of legislations
could never be ousted. All the same it was held, that the powers vested in High
Courts to exercise judicial superintendence over decisions of all courts and tribunals
within their respective jurisdictions, was also a part of the "basic structure" of the
Constitution. The position that Parliament had the power to amend the Constitution,
and to create a court/tribunal to discharge functions which the High Court was
discharging, was reiterated, in Union of India v. Madras Bar Association case (supra).
It was concluded, that the Parliament was competent to enact a law, transferring the
jurisdiction exercised by High Courts, in regard to any specified subject, to any
court/tribunal. But it was clarified, that Parliament could not transfer power vested in
the High Courts, by the Constitution itself. We therefore have no hesitation in
concluding, that appellate powers vested in the High Court under different statutory
provisions, can definitely be transferred from the High Court to other
courts/tribunals, subject to the satisfaction of norms declared by this Court. Herein
the jurisdiction transferred by the NTT Act was with regard to specified subjects
under tax related statutes. That, in our opinion, would be permissible in terms of the
position expressed above. Has the NTT Act transferred any power vested in courts by
the Constitution? The answer is in the negative. The power of "judicial review" vested
in the High Court Under Articles 226 and 227 of the Constitution, has remained
intact. This aspect of the matter, has a substantial bearing, to the issue in hand. And
will also lead to some important inferences. Therefore, it must never be overlooked,
that since the power of "judicial review" exercised by the High Court Under Articles
226 and 227 of the Constitution has remained unaltered, the power vested in High
Courts to exercise judicial superintendence over the benches of the NTT within their
respective jurisdiction, has been consciously preserved. This position was confirmed
by the learned Attorney General for India, during the course of hearing. Since the
above jurisdiction of the High Court has not been ousted, the NTT will be deemed to
be discharging a supplemental role, rather than a substitutional role. In the above
view of the matter, the submission that the NTT Act violates the "basic structure" of
the Constitution, cannot be acquiesced to.
65. Even though we have declined to accept the contention advanced on behalf of
the Petitioners, premised on the "basic structure" theory, we feel it is still essential
for us, to deal with the submission advanced on behalf of the Respondents in
response. We may first record the contention advanced on behalf of the Respondents.
It was contended, that a legislation (not being an amendment to the Constitution),
enacted in consonance of the provisions of the Constitution, on a subject within the
realm of the concerned legislature, cannot be assailed on the ground that it violates
the "basic structure" of the Constitution. For the present controversy, the
Respondents had placed reliance on Articles 245 and 246 of the Constitution, as also,
on entries 77 to 79, 82 to 84, 95 and 97 of the Union List of the Seventh Schedule,
and on entries 11A and 46 of the Concurrent List of the Seventh Schedule. Based
thereon it was asserted, that Parliament was competent to enact the NTT Act. For
examining the instant contention, let us presume it is so. Having accepted the above,
our consideration is as follows. The Constitution regulates the manner of governance
in substantially minute detail. It is the fountainhead distributing power, for such
governance. The Constitution vests the power of legislation at the Centre, with the
Lok Sabha and the Rajya Sabha, and in the States with the State Legislative
Assemblies (and in some States, the State Legislative Councils, as well). The instant
legislative power is regulated by "Part XI" of the Constitution. The submission
advanced at the hands of the learned Counsel for the Respondents, insofar as the
instant aspect of the matter is concerned, is premised on the assertion that the NTT
Act has been enacted strictly in consonance with the procedure depicted in "Part XI"
of the Constitution. It is also the contention of the learned Counsel for the
Respondents, that the said power has been exercised strictly in consonance with the
subject on which the Parliament is authorized to legislate. Whilst dealing with the
instant submission advanced at the hands of the learned Counsel for the
Respondents, all that needs to be stated is, that the legislative power conferred under
"Part XI" of the Constitution has one overall exception, which undoubtedly is, that the
"basic structure" of the Constitution, cannot be infringed, no matter what. On the
instant aspect, some relevant judgments, rendered by constitutional benches of this
Court, have been cited hereinabove. It seems to us, that there is a fine difference in
what the Petitioners contend, and what the Respondents seek to project. The
submission advanced at the hands of the learned Counsel for the Petitioners does not
pertain to lack of jurisdiction or inappropriate exercise of jurisdiction. The
submission advanced at the hands of the learned Counsel for the Petitioners pointedly
is, that it is impermissible to legislate in a manner as would violate the "basic
structure" of the Constitution.
This Court has repeatedly held, that an amendment to the provisions of the
Constitution, would not be sustainable if it violated the "basic structure" of the
Constitution, even though the amendment had been carried out, by following the
procedure contemplated under "Part XI" of the Constitution. This leads to the
determination, that the "basic structure" is inviolable. In our view, the same would
apply to all other legislations (other than amendments to the Constitution) as well,
even though the legislation had been enacted by following the prescribed procedure,
and was within the domain of the enacting legislature, any infringement to the "basic
structure" would be unacceptable.
Such submissions advanced at the hands of the learned Counsel for the Respondents
are, therefore, liable to be disallowed. And are accordingly declined.
II. Whether the transfer of adjudicatory functions vested in the High Court to the NTT
violates recognized constitutional conventions?
I I I. Whether while transferring jurisdiction to a newly created court/tribunal, it is
essential to maintain the standards and the stature of the court replaced?
66. In addition to the determination on the adjudication of the present controversy
on the concept of basic structure, the instant matter calls for a determination on the
sustainability of the NTT Act, from other perspectives also. We shall now advert to
the alternative contentions. First and foremost, it was the submission of the learned
Counsel for the Petitioners, that it is impermissible for legislature to abrogate/divest
the core judicial appellate functions, specially, the functions traditionally vested in a
superior court, to a quasi judicial authority devoid of essential ingredients of the
superior court. The instant submission was premised on the foundation, that such
action is constitutionally impermissible.
67. In order to determine whether or not the appellate functions which have now
been vested with the NTT, constituted the core judicial appellate function traditionally
vested with the jurisdictional High Courts, we have recorded under the heading -
"The Historical Perspective", legislative details, pertaining to the Income Tax Act, the
Customs Act and the Excise Act. We had to do so, for that was the only manner to
deal with the instant aspect of the controversy. A perusal of the historical perspective
reveals, that as against the initial assessment of tax/duty liability, the first forum for
challenge has traditionally been with an executive appellate adjudicatory authority.
Legislative details reveal, that for some time there was a power of reference,
exercisable on "questions of law". The adjudication thereof rested with the
jurisdictional High Courts. The second appellate remedy has always been before a
quasi-judicial appellate authority, styled as an Appellate Tribunal. Across the board,
under all the enactments which are relevant for the present controversy, proceedings
before the Appellate Tribunal have been legislatively described as "judicial
proceedings". It is, therefore apparent, that right from the beginning, the clear
legislative understanding was, that from the stage of the proceedings before the
Appellate Tribunal, the proceedings were of the nature of "judicial proceedings".
Again across the board, under all the enactments, relevant for the present
controversy, questions of law were originally left to be adjudicated by the
jurisdictional High Courts. The reference jurisdiction, was substituted in all the
enactments, and converted into appellate jurisdiction. The instant appellate
jurisdiction was vested with the jurisdictional High Court. Under the Income Tax Act,
1961, Section 260A, provided an appellate remedy from an order passed by the
Appellate Tribunal, to the jurisdictional High Court. Similarly Section 129A of the
Customs Act, 1962, and Section 35G of the Central Excise Act, 1944, provided for an
appellate remedy from the concerned Appellate Tribunal to the High Court. The
jurisdictional High Court would hear appeals on questions of law, against orders
passed by the Appellate Tribunals. It is, therefore apparent, that right from the
beginning, well before the promulgation of the Constitution, the core judicial
appellate functions, for adjudication of tax related disputes, were vested with the
jurisdictional High Courts. The High Courts have traditionally, been exercising the
jurisdiction to determine questions of law, under all the above tax legislations. In this
view of the matter, it is not possible for us to conclude, that it was not justified for
the learned Counsel for the Petitioners to contend, that the core judicial appellate
function in tax matters, on questions of law, has uninterruptedly been vested with the
jurisdictional High Courts.
68. Before we proceed with the matter further, it is necessary to keep in mind the
composition of the adjudicatory authorities which have historically dealt with the
matters arising out of tax laws. First, we shall deal with the composition of the
Appellate Tribunals. All Appellate Tribunals which are relevant for the present
controversy were essentially comprised of Judicial Members, besides Accountant or
Technical Members. To qualify for appointment as a Judicial Member, it was essential
that the incumbent had held a judicial office in India for a period of 10 years, or had
practiced as an Advocate for a similar period. It is the above qualification, which
enabled the enactments to provide, by a fiction of law, that all the said Appellate
Tribunals were discharging "judicial proceedings". The next stage of appellate
determination, has been traditionally vested with the High Courts. The income-tax
legislation, the customs legislation, as well as, the central excise legislation
uniformly provided, that in exercise of its appellate jurisdiction, the jurisdictional
High Court would adjudicate appeals arising out of orders passed by the respective
Appellate Tribunals. The said appeals were by a legislative determination, to be heard
by benches comprising of at least two judges of the High Court. Adjudication at the
hands of a bench consisting of at least two judges, by itself is indicative of the legal
complications, insofar as the appellate adjudicatory role, of the jurisdictional High
Court was concerned. It would, therefore, not be incorrect to conclude, by accepting
the submissions advanced at the hands of the learned Counsel for the Petitioners,
that before and after promulgation of the Constitution, till the enactment of the NTT
Act, all legislative provisions vested the appellate power of adjudication, arising out
of the Income Tax Act, the Customs Act and the Excise Act, on questions of law, with
the jurisdictional High Courts.
6 9 . Having recorded the above conclusion, the next issue to be determined is
whether the adjudication of the disputes arising out of the provisions under
reference, must remain within the realm of the jurisdictional High Courts? The instant
proposition has two perspectives. Firstly, whether constitutional interpretation in the
manner accepted the world over (details whereof have been narrated by us under the
heading - "The Issues canvassed on behalf of the Petitioners", under the sub-title -
"The second contention"), would be a constitutional mandate, for the appellate
jurisdiction pertaining to tax matters, to remain with the High Court? Secondly,
whether the express provisions of the Constitution mandate, that tax issues should be
decided by the concerned jurisdictional High Court?
7 0 . We shall first deal with the first perspective, namely, whether constitutional
interpretation in the manner accepted the world over, would be a constitutional
mandate for appellate jurisdiction on tax matters, to remain with the jurisdictional
High Court. Insofar as the instant aspect of the matter is concerned, reliance was
placed on judgments emerging out of the Constitutions of Jamaica, Ceylon, Australia
and Canada, rendered either by the Privy Council or the highest Courts of the
concerned countries. The contention of the learned Counsel for the Petitioners was,
that the constitutions of the above countries were based on the Westminster model.
It was further pointed out, that the Indian Constitution was also based on the
Westminster model, and that, the instant position stands recognized in the judgment
rendered by this Court in Union of India v. Madras Bar Association case (supra).
Incidentally, it may be mentioned that we have extracted paragraph 101 of the above
judgment hereinabove, wherein it is so recorded. It is accordingly the contention of
the learned Counsel for the Petitioners, that the judgments relied upon by the
Petitioners on the instant aspect of the matter, would be fully applicable to the
controversy in hand. Under the constitutional convention, adverted to in the
judgments referred to on behalf of the Petitioners, it was submitted, that judicial
power which rested with definite courts at the time of enactment of the constitutions
based on the Westminster model, had to remain with the same courts, even after the
constitutions had become effective and operational. Furthermore, it was submitted,
that the judicial power had to be exercised in the same manner as before, i.e.,
whether by a judge sitting singly, or with other judges. And therefore it was asserted,
that on constitutional conventions well recognized the world over, appellate
jurisdiction in respect of tax matters, would have to remain with the jurisdictional
High Courts, and would have to be determined by a bench of at least two judges of
the High Court, as was the position before the enactment of the Constitution, and, as
has been the position thereafter, till the promulgation of the NTT Act.
71. We have given our thoughtful consideration to the submission advanced at the
hands of the learned Counsel for the Petitioners, insofar as the first perspective is
concerned. We find substance in the submission advanced at the hands of the learned
Counsel for the Petitioners, but not exactly in the format suggested by the learned
Counsel. A closer examination of the judgments relied upon lead us to the
conclusion, that in every new constitution, which makes separate provisions for the
legislature, the executive and the judiciary, it is taken as acknowledged/conceded,
that the basic principle of "separation of powers" would apply. And that, the three
wings of governance would operate in their assigned domain/province. The power of
discharging judicial functions, which was exercised by members of the higher
judiciary, at the time when the constitution came into force, should ordinarily remain
with the court, which exercised the said jurisdiction, at the time of promulgation of
the new constitution. But the judicial power could be allowed to be exercised by an
analogous/similar court/tribunal, with a different name. However, by virtue of the
constitutional convention, while constituting the analogous court/tribunal, it will have
to be ensured, that the appointment and security of tenure of judges of that court
would be the same, as of the court sought to be substituted. This was the express
conclusion drawn in Hinds case (supra). In Hinds case it was acknowledged, that
Parliament was not precluded from establishing a court under a new name, to
exercise the jurisdiction that was being exercised by members of the higher judiciary,
at the time when the constitution came into force. But when that was done, it was
critical to ensure, that the persons appointed to be members of such a court/tribunal,
should be appointed in the same manner, and should be entitled to the same security
of tenure, as the holder of the judicial office, at the time when the constitution came
into force. Even in the treatise "Constitutional Law of Canada" by Peter W. Hogg, it
was observed; if a province invested a tribunal with a jurisdiction of a kind, which
ought to properly belong to a superior, district or county Court, then that
court/tribunal (created in its place), whatever is its official name, for constitutional
purposes has to, while replacing a superior, district or county Court, satisfy the
requirements and standards of the substituted court. This would mean, that the newly
constituted court/tribunal will be deemed to be invalidly constituted, till its members
are appointed in the same manner, and till its members are entitled to the same
conditions of service, as were available to the judges of the court sought to be
substituted. In the judgments under reference it has also been concluded, that a
breach of the above constitutional convention could not be excused by good intention
(by which the legislative power had been exercised, to enact a given law). We are
satisfied, that the aforesaid exposition of law, is in consonance with the position
expressed by this Court, while dealing with the concepts of "separation of powers",
the "rule of law" and "judicial review". In this behalf, reference may be made to the
judgments in L. Chandra Kumar case (supra), as also, in Union of India v. Madras Bar
Association case (supra). Therein, this Court has recognized, that transfer of
jurisdiction is permissible, but in effecting such transfer, the court to which the
power of adjudication is transferred, must be endured with salient characteristics,
which were possessed by the court from which the adjudicatory power has been
transferred. In recording our conclusions on the submission advanced as the first
perspective, we may only state, that our conclusion is exactly the same as was drawn
by us while examining the Petitioners' previous submission, namely, that it is not
possible for us to accept, that under recognized constitutional conventions, judicial
power vested in superior courts cannot be transferred to coordinate courts/tribunals.
The answer is, that such transfer is permissible. But whenever there is such transfer,
all conventions/customs/practices of the court sought to be replaced, have to be
incorporated in the court/tribunal created. The newly created court/tribunal would
have to be established, in consonance with the salient characteristics and standards
of the court which is sought to be substituted.
72. Now we shall deal with the second perspective, namely, whether the provisions
of the Indian Constitution itself mandate, that tax issues at the appellate level, must
be heard by the concerned jurisdictional High Court. Insofar as the instant aspect of
the matter is concerned, learned Counsel for the Petitioners placed reliance on
Articles 50 and 225 of the Constitution. Article 50 of the Constitution was relied upon
to demonstrate the intent of the framers of the Constitution, namely, that they wished
to ensure the exclusivity and the separation of the judiciary, from the executive. It is
not necessary for us to deal with the instant aspect of the matter, for the reason that,
in the judgments rendered by this Court which have been referred to by us
hereinabove, the issue has already been debated with reference to Article 50 of the
Constitution.
7 3 . The other provision relied upon by the learned Counsel for the Petitioners is
Article 225 of the Constitution. The tenor of the submission advanced by the learned
Counsel for the Petitioners, has been recorded by us while dealing with the second
contention (advanced on behalf of the Petitioners). The same may be adverted to.
There can be no doubt whatsoever, that Article 225 of the Constitution does expressly
provide, that the jurisdiction of existing High Courts and the respective powers of the
judges thereof "shall be the same as immediately before the commencement of the
Constitution". It is also apparent, that the proviso thereto expressly mandates, "that
any restriction to which the exercise of original jurisdiction by any of the High Courts
with respect to any matter concerning the revenue or concerning any act ordered or
done in collection thereof was subject immediately before the commencement of the
Constitution shall no longer apply to the exercise of such jurisdiction". Insofar as the
contention emerging out of the proviso is concerned, it needs to be pointed out, that
the same pertains to "the exercise of original jurisdiction by any of the High Courts".
It is, therefore apparent, that the issue in hand, namely, the appellate jurisdiction
vested with the jurisdictional High Courts, under the provisions of the Income Tax
Act, the Customs Act and the Excise Act, has no bearing to the proviso under
reference. We may therefore conclude by recording, that the instant submission
advanced on behalf of the Petitioners, is not made out from Article 225 of the
Constitution.
I V. Whether Company Secretaries should be allowed to appear before the NTT to
represent a party to an appeal in the same fashion, and on parity with, Accountants?
V. Whether Section 13(1) of the NTT Act insofar as it allows Accountants to represent
a party to an appeal before the NTT is valid?
74. We may first take up for consideration, Writ Petition (Civil) No. 621 of 2007. The
same has been filed by members of the Institute of Company Secretaries of India,
seeking the right to appear before the NTT, as representatives of a party to an
appeal. Respondent No. 5 in the said Writ Petition, is the Institute of Chartered
Accountants. It has entered appearance and canvassed that the claim of Company
Secretaries and Chartered Accountants is not comparable. While indicating the
permissibility of Chartered Accountants to represent a party to an appeal before the
NTT on account of their special acumen, their claim is, that this issue raised on
behalf of the Company Secretaries is a matter of policy. And therefore, it would not
be open to this Court to bestow, on account of parity, the right to represent a party
to an appeal, before the NTT, on Company Secretaries.
75. While examining the above contention, we will indeed be dealing with Section 13
of the NTT Act, which has already been extracted while recording the submissions
advanced on behalf of the Petitioners, with reference to the fourth contention. A
perusal of the said provision reveals, that a party to an appeal (other than the
Revenue) may appear either in person, or may authorize one or more Chartered
Accountants, or legal practitioners, or any person duly authorized by him, to present
his case before the NTT. The pointed submission advanced on behalf of the Institute
of Chartered Accountants of India was, that Under Section 13 of the NTT Act,
Chartered Accountants are entitled to appear before the NTT, because of their
recognized acumen. It was submitted, that it is the prerogative of the legislature and
a matter of policy, to determine persons who are entitled to appear before the NTT. It
was pointed out, that courts should not ordinarily interfere in such policy matters. It
is therefore, that learned Counsel for the Institute of Chartered Accountants of India,
has placed reliance on the decision rendered by this Court in Delhi Pradesh
Registered Medical Practitioners v. Director of Health, Delhi Administration Services
MANU/SC/1841/1997 : (1997) 11 SCC 687, wherefrom our pointed attention was
invited to the following observations:
2 . The propriety and validity of the public notice issued by the Director,
Health Services, Delhi Administration indicating that the Indian Medicine
Central Council had recognized Ayurveda Ratna and Vaid Visharada degrees
awarded by the Hindi Sahitya Sammelan, Prayag, Allahabad only up to 1967
and the certificate of Ayurveda Ratna and Vaid Visharada given by the said
organization after 1967 not being recognized under the said Act, registration
obtained by any person as a medical practitioner on the basis of such
degrees therefore would not be recognized and any person having such
qualification would not be entitled to practise in Delhi are impugned in these
appeals. It was also indicated in the said public notice that no Indian
university or Board conducts one year's course for giving the bachelor's
degree in Ayurvedic Medicine or through correspondence course no M.D.
Degree in Ayurveda was conferred by any university or Board. The public at
large was cautioned by the said public notice published in the newspaper
about such position in law.
xxx
5 . We are, however, unable to accept such contention of Mr. Mehta. Sub-
section (3) of Section 17 of the Indian Medicine Central Council Act, 1970, in
our view, only envisages that where before the enactment of the said Indian
Medicine Central Council Act, 1970 on the basis of requisite qualification
which was then recognized, a person got himself registered as medical
practitioner in the disciplines contemplated under the said Act or in the
absence of any requirement for registration such person had been practising
for five years or intended to be registered and was also entitled to be
registered, the right of such person to practise in the discipline concerned
including the privileges of a registered medical practitioner stood protected
even though such practitioner did not possess requisite qualification under
the said Act of 1970. It may be indicated that such view of ours is reflected
from the Objects and Reasons indicated for introducing Sub-section (3) of
Section 17 in the Act. In the Objects and Reasons, it was mentioned:
[T]he Committee are of the opinion that the existing rights and
privileges of practitioners of Indian Medicine should be given
adequate safeguards. The Committee, in order to achieve this object,
have added three new paragraphs to Sub-section (3) of the clause
protecting (i) the rights to practise of those practitioners of Indian
Medicine who may not, under the proposed legislation, possess a
recognized qualification subject to the condition that they are already
enrolled on a State Register of Indian Medicine on the date of
commencement of this Act, (ii) the privileges conferred on the
practitioners of Indian Medicine enrolled on a State Register, under
any law in force in that State, and (iii) the right to practise in a State
of those practitioners who have been practising Indian. Medicine in
that State for not less than five years where no register of Indian
Medicine was maintained earlier.
As it is not the case of any of the writ Petitioners that they had acquired the
degree in between 1957 (sic 1967) and 1970 or on the date of enforcement
of provisions of Section 17(2) of the said Act and got themselves registered
or acquired right to be registered, there is no question of getting the
protection Under Sub-section (3) of Section 17 of the said Act. It is to be
stated here that there is also no challenge as to the validity of the said
Central Act, 1970. The decision of the Delhi High Court therefore cannot be
assailed by the Appellants. We may indicate here that it has been submitted
by Mr. Mehta and also by Ms. Sona Khan appearing in the appeal arising out
of Special Leave Petition No. 6167 of 1993 that proper consideration had not
been given to the standard of education imparted by the said Hindi Sahitya
Sammelan, Prayag and expertise acquired by the holders of the aforesaid
degrees awarded by the said institution. In any event, when proper medical
facilities have not been made available to a large number of poorer sections
of the society, the ban imposed on the practitioners like the writ Petitioners
rendering useful service to the needy and poor people was wholly
unjustified. It is not necessary for this Court to consider such submissions
because the same remains in the realm of policy decision of other
constitutional functionaries. We may also indicate here that what constitutes
proper education and requisite expertise for a practitioner in Indian Medicine,
must be left to the proper authority having requisite knowledge in the
subject. As the decision of the Delhi High Court is justified on the face of
legal position flowing from the said Central Act of 1970, we do not think that
any interference by this Court is called for. These appeals therefore are
dismissed without any order as to costs.
Reliance was also placed on State of Rajasthan v. Lata Arun MANU/SC/0591/2002 :
(2002) 6 SCC 252, wherein it was held as under:
4 . The question which arises for determination in this case is whether the
Respondent had the eligibility qualification for admission in General Nursing
and Midwifery and Staff Nurse Course (hereinafter referred to as "Nursing
Course") commencing in the year 1990. The Director, Medical and Health
Services had invited applications by 15-12-1989 from eligible candidates for
admission in the Nursing Course to be started from January 1990. It was
stated in the notification that the candidates should have passed first year of
three years' degree course (TDC) or 10+2; and that the candidates with
Science subjects (Biology, Chemistry, Physics) will be given preference.
During the period, the Indian Nursing Council had issued a set of Syllabi and
Regulations for courses in General Nursing and Midwifery in which the
prescribed minimum educational qualification for all candidates was 12th
class-pass or its equivalent preferably with Science subjects.
xxx
10. The points involved in the case are twofold: one relating to prescription
of minimum educational qualification for admission to the course and the
other relating to recognition of the Madhyama Certificate issued by the Hindi
Sahitya Sammelan, Allahabad as equivalent to or higher than +2 or 1st year
of TDC for the purpose of admission. Both these points relate to matters in
the realm of policy decision to be taken by the State Government or the
authority vested with power under any statute. It is not for courts to
determine whether a particular educational qualification possessed by a
candidate should or should not be recognized as equivalent to the prescribed
qualification in the case. That is not to say that such matters are not
justiciable. In an appropriate case the court can examine whether the policy
decision or the administrative order dealing with the matter is based on a
fair, rational and reasonable ground; whether the decision has been taken on
consideration of relevant aspects of the matter; whether exercise of the
power is obtained with mala fide intention; whether the decision serves the
purpose of giving proper training to the candidates admitted or it is based on
irrelevant and irrational considerations or intended to benefit an individual or
a group of candidates.
7 6 . In addition to the above submissions it was contended, that the Chartered
Accountants are permitted to appear before a large number of tribunals/fora.
Illustratively it was submitted, that Under Section 288 of the Income Tax Act, 1961,
read with Rule 50 of the Income Tax Rules, 1962, Chartered Accountants are
permitted to appear in income tax matters. Likewise, it was asserted that Chartered
Accountants are entitled to appear in Central Excise matters Under Section 35Q of the
Central Excise Act, 1944. They are also permitted to appear in matters arising out of
the Customs Act, 1962 (wherefor reliance was placed on Section 146A of the
Customs Act, 1962, read with Rule 9(a), Customs (Appeals) Rules, 1982). Besides
the aforesaid provisions, it was contended, that Chartered Accountants were entitled
to appear before various tribunals/fora under different statutory provisions, such as,
under the Securities and Exchange Board of India Act, 1992, the Securities Contracts
(Regulation) Act, 1956, the Telecom Regulatory Authority of India Act, 1991, the
Companies Act, 2013, the Company Law Board Regulations, 1991, the Competition
(Amendment) Act, 2007, and the Special Economic Zone Rules, 2006. We were
informed, that Chartered Accountants were also entitled to appear before the Central
Electricity Regulatory Commission vide Notification dated 27.8.1999. It was
submitted, that if Chartered Accountants are competent to canvass complicated
disputes which arise under the provisions referred to hereinabove, there should be no
difficulty in allowing them to appear before the NTT, as also, to consider them
eligible for being appointed as Members of the NTT. It was therefore asserted, that
Section 13 of the NTT Act rightly permitted Chartered Accountants to represent a
party to an appeal before the NTT. The submission on behalf of the Institute of
Chartered Accountants was, that Company Secretaries were not comparable with
them, and therefore, as a matter of policy, they had no legitimate claim for being
allowed to represent a party before the NTT.
7 7 . It is pertinent to record, that during the course of hearing we had required
learned Counsel representing the Petitioners, to file a compilation of cases, wherein
provisions of different laws on diverse subjects had to be taken into consideration,
while deciding tax related disputes. In compliance, learned Counsel have submitted a
compilation on behalf of the Madras Bar Association (in Transferred Case (Civil) No.
150 of 2006), tabulating by way of illustration, reported cases on tax disputes, which
also involved provisions of different laws on different subjects. The compilation
brought to our notice is summarized hereunder:
It is apparent from the compilation extracted hereinabove, that the Members of the
NTT would most definitely be confronted with the legal issues emerging out of Family
Law, Hindu Law, Mohammedan Law, Company Law, Law of Partnership, Law related
to Territoriality, Law related to Trusts and Societies, Contract Law, Law relating to
Transfer of Property, Law relating to Intellectual Property, Interpretation of Statutes,
and other Miscellaneous Provisions of Law, from time to time. The NTT besides the
aforesaid statutes, will not only have to interpret the provisions of the three statutes,
out of which appeals will be heard by it, but will also have to examine a challenge to
the vires of statutory amendments made in the said provisions, from time to time.
They will also have to determine in some cases, whether the provisions relied upon
had a prospective or retrospective applicability.
78. Keeping in mind the fact, that in terms of Section 15 of the NTT Act, the NTT
would hear appeals from the Income Tax Appellate Tribunal and the Customs, Excise
and Service Tax Appellate Tribunal (CESTAT) only on "substantial questions of law",
it is difficult for us to appreciate the propriety of representation, on behalf of a party
to an appeal, through either Chartered Accountants or Company Secretaries, before
the NTT. The determination at the hands of the NTT is shorn of factual disputes. It
has to decide only "substantial questions of law". In our understanding, Chartered
Accountants and Company Secretaries would at best be specialists in understanding
and explaining issues pertaining to accounts. These issues would, fall purely within
the realm of facts. We find it difficult to accept the prayer made by the Company
Secretaries to allow them, to represent a party to an appeal before the NTT. Even
insofar as the Chartered Accountants are concerned, we are constrained to hold that
allowing them to appear on behalf of a party before the NTT, would be unacceptable
in law. We accordingly reject the claim of Company Secretaries, to represent a party
before the NTT. Accordingly the prayer made by Company Secretaries in Writ Petition
(Civil) No. 621 of 2007 is hereby declined. While recording the above conclusion, we
simultaneously hold Section 13(1), insofar as it allows Chartered Accountants to
represent a party to an appeal before the NTT, as unconstitutional and unsustainable
in law.
VI. The constitutional validity of Sections 5, 6, 7, 8 and 13 of the NTT Act:
7 9 . We shall now endeavour to deal with the validity of some other individual
provisions of the NTT Act, based on the parameters laid down by constitutional
benches of this Court and on the basis of recognized constitutional conventions
referable to constitutions framed on the Westminster model. While dealing with the
prayers made in Writ Petition (Civil) No. 621 of 2007, we have already dealt with
Section 13 of the NTT Act, and have held, the same to be partly unconstitutional. We
shall now proceed chronologically, and examine the validity of Sections 5, 6, 7 and 8
of the NTT Act.
80. We shall first examine the validity of Section 5 of the NTT Act. The basis of
challenge to the above provision, has already been narrated by us while dealing with
the submissions advanced on behalf of the Petitioners, with reference to the fourth
contention. According to the learned Counsel for the Petitioners, Section 5(2) of the
NTT Act mandates, that the NTT would ordinarily have its sittings in the National
Capital Territory of Delhi. According to the Petitioners, the aforesaid mandate would
deprive the litigating Assessee, the convenience of approaching the jurisdictional
High Court in the State, to which he belongs. An Assessee may belong to a
distant/remote State, in which eventuality, he would not merely have to suffer the
hardship of traveling a long distance, but such travel would also entail uncalled for
financial expense. Likewise, a litigant Assessee from a far-flung State may find it
extremely difficult and inconvenient to identify an Advocate who would represent him
before the NTT, since the same is mandated to be ordinarily located in the National
Capital Territory of Delhi. Even though we have expressed the view, that it is open to
the Parliament to substitute the appellate jurisdiction vested in the jurisdictional High
Courts and constitute courts/tribunals to exercise the said jurisdiction, we are of the
view, that while vesting jurisdiction in an alternative court/tribunal, it is imperative
for the legislature to ensure, that redress should be available, with the same
convenience and expediency, as it was prior to the introduction of the newly created
court/tribunal. Thus viewed, the mandate incorporated in Section 5(2) of the NTT Act
to the effect that the sittings of the NTT would ordinarily be conducted in the National
Capital Territory of Delhi, would render the remedy inefficacious, and thus
unacceptable in law. The instant aspect of the matter was considered by this Court
with reference to the Administrative Tribunals Act, 1985, in S.P. Sampath Kumar case
(supra) and L. Chandra Kumar case (supra), wherein it was held, that permanent
benches needed to be established at the seat of every jurisdictional High Court. And
if that was not possible, at least a circuit bench required to be established at every
place where an aggrieved party could avail of his remedy. The position on the above
issue, is no different in the present controversy. For the above reason, Section 5(2)
of the NTT Act is in clear breach of the law declared by this Court.
81. One needs to also examine Sub-sections (2), (3), (4) and (5) of Section 5 of the
NTT Act, with pointed reference to the role of the Central Government in determining
the sitting of benches of the NTT. The Central Government has been authorized to
notify the area in relation to which each bench would exercise jurisdiction, to
determine the constitution of the benches, and finally, to exercise the power of
transfer of Members of one bench to another bench. One cannot lose sight of the fact,
that the Central Government will be a stakeholder in each and every appeal/case,
which would be filed before the NTT. It cannot, therefore, be appropriate to allow the
Central Government to play any role, with reference to the places where the benches
would be set up, the areas over which the benches would exercise jurisdiction, the
composition and the constitution of the benches, as also, the transfer of the Members
from one bench to another. It would be inappropriate for the Central Government, to
have any administrative dealings with the NTT or its Members. In the jurisdictional
High Courts, such power is exercised exclusively by the Chief Justice, in the best
interest of the administration of justice. Allowing the Central Government to
participate in the aforestated administrative functioning of the NTT, in our view,
would impinge upon the independence and fairness of the Members of the NTT. For
the NTT Act to be valid, the Chairperson and Members of the NTT should be
possessed of the same independence and security, as the judges of the jurisdictional
High Courts (which the NTT is mandated to substitute). Vesting of the power of
determining the jurisdiction, and the postings of different Members, with the Central
Government, in our considered view, would undermine the independence and
fairness of the Chairperson and the Members of the NTT, as they would always be
worried to preserve their jurisdiction based on their preferences/inclinations in terms
of work, and conveniences in terms of place of posting. An
unsuitable/disadvantageous Chairperson or Member could be easily moved to an
insignificant jurisdiction, or to an inconvenient posting. This could be done to
chastise him, to accept a position he would not voluntarily accede to. We are,
therefore of the considered view, that Section 5 of the NTT Act is not sustainable in
law, as it does not ensure that the alternative adjudicatory authority, is totally
insulated from all forms of interference, pressure or influence from co-ordinate
branches of Government. There is therefore no alternative, but to hold that Sub-
sections (2), (3), (4) and (5) of Section 5 of the NTT Act are unconstitutional.
8 2 . We shall now examine the validity of Section 6 of the NTT Act. The above
provision has already been extracted in an earlier part of this judgment, while dealing
with the submissions advanced on behalf of the Petitioners, with reference to the
fourth contention. A perusal of Section 6 reveals, that a person would be qualified for
appointment as a Member, if he is or has been a Member of the Income Tax Appellate
Tribunal or of the Customs, Excise and Service Tax Appellate Tribunal for at least 5
years. While dealing with the historical perspective, with reference to the Income Tax
legislation, the Customs legislation, as also, the Central Excise legislation, we have
noticed the eligibility of those who can be appointed as Members of the Appellate
Tribunals constituted under the aforesaid legislations. Under the Income Tax Act, a
person who has practiced in accountancy as a Chartered Accountant (under the
Chartered Accountants Act, 1949) for a period of 10 years, or has been a Registered
Accountant (or partly a Registered Accountant, and partly a Chartered Accountant) for
a period of 10 years, is eligible to be appointed as an Accountant Member. Under the
Customs Act and the Excise Act, a person who has been a member of the Indian
Customs and Central Excise Service (Group A), subject to the condition, that such
person has held the post of Collector of Customs or Central Excise (Level I), or
equivalent or higher post, for at least 3 years, is eligible to be appointed as a
Technical Member. It is apparent from the narration recorded hereinabove, that
persons with the above qualifications, who were appointed as Accountant Members or
Technical Members in the respective Appellate Tribunals, are also eligible for
appointment as Members of the NTT, subject to their having rendered specified years'
service as such. The question to be determined is, whether persons with the
aforesaid qualifications, satisfy the parameters of law declared by this Court, to be
appointed as, Members of the NTT? And do they satisfy the recognized constitutional
conventions?
83. This Court has declared the position in this behalf in L. Chandra Kumar case
(supra) and in Union of India v. Madras Bar Association case (supra), that Technical
Members could be appointed to the tribunals, where technical expertise is essential
for disposal of matters, and not otherwise. It has also been held, that where the
adjudicatory process transferred to a tribunal does not involve any specialized skill,
knowledge or expertise, a provision for appointment of non-Judicial Members (in
addition to, or in substitution of Judicial Members), would constitute a clear case of
delusion and encroachment upon the "independence of judiciary", and the "rule of
law". It is difficult to appreciate how Accountant Members and Technical Members
would handle complicated questions of law relating to tax matters, and also
questions of law on a variety of subjects (unconnected to tax), in exercise of the
jurisdiction vested with the NTT. That in our view would be a tall order. An arduous
and intimidating asking. Since the Chairperson/Members of the NTT will be required
to determine "substantial questions of law", arising out of decisions of the Appellate
Tribunals, it is difficult to appreciate how an individual, well-versed only in accounts,
would be able to discharge such functions. Likewise, it is also difficult for us to
understand how Technical Members, who may not even possess the qualification of
law, or may have no experience at all in the practice of law, would be able to deal
with "substantial questions of law", for which alone, the NTT has been constituted.
84. We have already noticed hereinabove, from data placed on record by the learned
Counsel for the Petitioners, that the NTT would be confronted with disputes arising
out of Family Law, Hindu Law, Mohammedan Law, Company Law, Law of Partnership,
Law relating to Territoriality, Law relating to Trusts and Societies, Contract Law, Law
relating to Transfer of Property, Law relating to Intellectual Property, Interpretation of
Statutes/Rules, and other Miscellaneous Provisions of Law. Besides the above, the
Members of the NTT will regularly have to interpret the provisions of the Income Tax
Act, the Customs Act and the Excise Act. We are of the considered opinion, that only
a person possessing professional qualification in law, with substantial experience in
the practice of law, will be in a position to handle the onerous responsibilities which
a Chairperson and Members of the NTT will have to shoulder.
85. There seems to be no doubt, whatsoever, that the Members of a court/tribunal to
which adjudicatory functions are transferred, must be manned by judges/members
whose stature and qualifications are commensurate to the court from which the
adjudicatory process has been transferred. This position is recognized the world over.
Constitutional conventions in respect of Jamaica, Ceylon, Australia and Canada, on
this aspect of the matter have been delineated above. The opinion of the Privy
Council expressed by Lord Diplock in Hind case (supra), has been shown as being
followed in countries which have constitutions on the Westminster model. The Indian
Constitution is one such Constitution. The position has been clearly recorded while
interpreting constitutions framed on the above model, namely, that even though the
legislature can transfer judicial power from a traditional court, to an analogous
court/tribunal with a different name, the court/tribunal to which such power is
transferred, should be possessed of the same salient characteristics, standards and
parameters, as the court the power whereof was being transferred. It is not possible
for us to accept, that Accountant Members and Technical Members have the stature
and qualification possessed by judges of High Courts.
86. It was not disputed, that the NTT has been created to handle matters which were
earlier within the appellate purview of the jurisdictional High Courts. We are
accordingly satisfied, that the appointment of Accountant Members and Technical
Members of the Appellate Tribunals to the NTT, would be in clear violation of the
constitutional conventions recognized by courts, the world over. References on
questions of law (under the three legislative enactments in question), were by a
legislative mandate, required to be adjudicated by a bench of at least two judges of
the jurisdictional High Court. When the remedy of reference (before the High Court)
was converted into an appellate remedy (under the three legislative enactments in
question), again by a legislative mandate, the appeal was to be heard by a bench of
at least two judges, of the jurisdictional High Court. One cannot lose sight of the fact,
that hitherto before, the issues which will vest in the jurisdiction of the NTT, were
being decided by a bench of at least two judges of the High Court. The onerous and
complicated nature of the adjudicatory process is clear. We may also simultaneously
notice, that the power of "judicial review" vested in the High Courts Under Articles
226 and 227 of the Constitution has not been expressly taken away by the NTT Act.
During the course of hearing, we had expressed our opinion in respect of the power
of "judicial review" vested in the High Courts Under Articles 226 and 227 of the
Constitution. In our view, the power stood denuded, on account of the fact that,
Section 24 of the NTT Act vested with an aggrieved party, a remedy of appeal against
an order passed by the NTT, directly to the Supreme Court. Section 24
aforementioned is being extracted hereunder:
24. Appeal to Supreme Court.-Any person including any department of the
Government aggrieved by any decision or order of the National Tax Tribunal
may file an appeal to the Supreme Court within sixty days from the date of
communication of the decision or order of the National Tax Tribunal to him:
within the said period, allow it to be filed within such time as it may
deem fit.
In view of the aforestated appellate remedy, from an order passed by the NTT directly
to the Supreme Court, there would hardly be any occasion, to raise a challenge on a
tax matter, arising out of the provisions of the Income Tax Act, the Customs Act and
the Excise Act, before a jurisdictional High Court. Even though the learned Attorney
General pointed out, that the power of "judicial review" Under Articles 226 and 227
of the Constitution had not been taken away, yet he acknowledged, that there would
be implicit limitations where such power would be exercisable. Therefore, all the
more, the composition of the NTT would have to be on the same parameters as
judges of the High Courts. Since the appointments of the Chairperson/Members of the
NTT are not on the parameters expressed hereinabove, the same are unsustainable
under the declared law. A perusal of Section 6 of the NTT Act leaves no room for any
doubt, that none of the above parameters is satisfied insofar as the appointment of
matter, Section 6(2)(b) of the NTT Act is liable to be declared unconstitutional. We
declare it to be so.
87. We would now deal with the submissions advanced by the learned Counsel for
the Petitioners in respect of Section 7 of the NTT Act. It seems to us, that Section 7
has been styled in terms of the decision rendered by this Court in L. Chandra Kumar
case (supra). Following the above judgment for determining the manner of selection
of the Chairperson and Members of the NTT, is obviously a clear misunderstanding of
the legal position declared by this Court. It should not have been forgotten, that
under the provisions of the Administrative Tribunals Act, 1985, which came up for
consideration in L. Chandra Kumar case (supra), the tribunals constituted under the
said Act, are to act like courts of first instance. All decisions of the tribunal are
amenable to challenge Under Articles 226/227 of the Constitution before, a division
bench of the jurisdictional High Court. In such circumstances it is apparent, that
tribunals under the Administrative Tribunals Act, 1985, were subservient to the
jurisdictional High Courts. The manner of selection, as suggested in L. Chandra
Kumar case (supra) cannot therefore be adopted for a tribunal of the nature as the
NTT. Herein the acknowledged position is, that the NTT has been constituted as a
replacement of High Courts. The NTT is, therefore, in the real sense a tribunal
substituting the High Courts. The manner of appointment of Chairperson/Members to
the NTT will have to be, by the same procedure (or by a similar procedure), to that
which is prevalent for appointment of judges of High Courts. Insofar as the instant
aspect of the matter is concerned, the above proposition was declared by this Court
in Union of India v. Madras Bar Association case (supra), wherein it was held, that
the stature of the Members who would constitute the tribunal, would depend on the
jurisdiction which was being transferred to the tribunal. Accordingly, if the
jurisdiction of the High Courts is being transferred to the NTT, the stature of the
Members of the tribunal had to be akin to that of the judges of High Courts. So also
the conditions of service of its Chairperson/Members. And the manner of their
appointment and removal, including transfers. Including, the tenure of their
appointments.
88. Section 7 cannot even otherwise, be considered to be constitutionally valid, since
it includes in the process of selection and appointment of the Chairperson and
Members of the NTT, Secretaries of Departments of the Central Government. In this
behalf, it would also be pertinent to mention, that the interests of the Central
Government would be represented on one side, in every litigation before the NTT. It
is not possible to accept a party to a litigation, can participate in the selection
process, whereby the Chairperson and Members of the adjudicatory body are
selected. This would also be violative of the recognized constitutional convention
recorded by Lord Diplock in Hinds case (supra), namely, that it would make a
mockery of the constitution, if the legislature could transfer the jurisdiction
previously exercisable by holders of judicial offices, to holders of a new
court/tribunal (to which some different name was attached) and to provide that
persons holding the new judicial offices, should not be appointed in the manner and
on the terms prescribed for appointment of Members of the judicature. For all the
reasons recorded hereinabove, we hereby declare Section 7 of the NTT Act, as
unconstitutional.
8 9 . Insofar as the validity of Section 8 of the NTT Act is concerned, it clearly
emerges from a perusal thereof, that a Chairperson/Member is appointed to the NTT,
in the first instance, for a duration of 5 years. Such Chairperson/Member is eligible
for reappointment, for a further period of 5 years. We have no hesitation to accept
the submissions advanced at the hands of the learned Counsel for the Petitioners,
that a provision for reappointment would itself have the effect of undermining the
independence of the Chairperson/Members of the NTT. Every Chairperson/Member
appointed to the NTT, would be constrained to decide matters, in a manner that
would ensure his reappointment in terms of Section 8 of the NTT Act. His decisions
may or may not be based on his independent understanding. We are satisfied, that
the above provision would undermine the independence and fairness of the
Chairperson and Members of the NTT. Since the NTT has been vested with
jurisdiction which earlier lay with the High Courts, in all matters of appointment, and
extension of tenure, must be shielded from executive involvement. The reasons for
our instant conclusions are exactly the same as have been expressed by us while
dealing with Section 5 of the NTT Act. We therefore hold, that Section 8 of the NTT
Act is unconstitutional.
90. Sections 5, 6, 7, 8 and 13 of the NTT Act have been held by us (to the extent
indicated hereinabove) to be illegal and unconstitutional on the basis of the
parameters laid down by decisions of constitutional benches of this Court and on the
basis of recognized constitutional conventions referable to constitutions framed on
the Westminster model. In the absence of the aforesaid provisions which have been
held to be unconstitutional, the remaining provisions have been rendered otiose and
worthless, and as such, the provisions of the NTT Act, as a whole, are hereby set
aside.
Conclusions:
(i) The Parliament has the power to enact legislation, and to vest adjudicatory
functions, earlier vested in the High Court, with an alternative court/tribunal. Exercise
of such power by the Parliament would not per se violate the "basic structure" of the
Constitution.
(ii) Recognized constitutional conventions pertaining to the Westminster model, do
not debar the legislating authority from enacting legislation to vest adjudicatory
functions, earlier vested in a superior court, with an alternative court/tribunal.
Exercise of such power by the Parliament would per se not violate any constitutional
convention.
(iii) The "basic structure" of the Constitution will stand violated, if while enacting
legislation pertaining to transfer of judicial power, Parliament does not ensure, that
the newly created court/tribunal, conforms with the salient characteristics and
standards, of the court sought to be substituted.
(iv) Constitutional conventions, pertaining to constitutions styled on the Westminster
model, will also stand breached, if while enacting legislation, pertaining to transfer of
judicial power, conventions and salient characteristics of the court sought to be
replaced, are not incorporated in the court/tribunal sought to be created.
(v) The prayer made in Writ Petition (C) No. 621 of 2007 is declined. Company
Secretaries are held ineligible, for representing a party to an appeal before the NTT.
(vi) Examined on the touchstone of conclusions (iii) and (iv) above, Sections 5, 6, 7,
8 and 13 of the NTT Act (to the extent indicated hereinabove), are held to be
unconstitutional. Since the aforesaid provisions, constitute the edifice of the NTT Act,
and without these provisions the remaining provisions are rendered ineffective and
inconsequential, the entire enactment is declared unconstitutional.
Rohinton Fali Nariman, J.
92. In these cases, essentially four contentions have been urged on behalf of the
Petitioners. The first contention is that the reason for setting up a National Tax
Tribunal is non-existent as uniformity of decisions pertaining to tax laws is hardly a
reason for interposing another tribunal between an appellate Tribunal and the
Supreme Court, as High Court decisions are more or less uniform, since they follow
the law laid down by each other. Since this is so, the Act must be struck down. The
second contention is that it is impermissible for the legislature to divest superior
courts of record from the core judicial function of deciding substantial questions of
law. The third contention is as regards the Constitutional validity of Article 323B
being violative of the separation of powers doctrine, the rule of law doctrine and
judicial review. The fourth contention concerns itself with the nitty gritty of the Act,
namely, that various sections undermine the independence of the adjudicatory
process and cannot stand judicial scrutiny in their present form. Since I am accepting
the second contention urged by the Petitioners, this judgment will not deal with any
of the other contentions.
93. "It is emphatically the province and duty of the judicial department to say what
the law is. Those who apply the rule to particular cases, must of necessity expound
and interpret that rule."
What was said over 200 years ago by Chief Justice John Marshall in the celebrated
case of Marbury v. Madison, holds true even today in every great republican system
of Government.
These words take their colour from Alexander Hamilton's famous federalist Paper No.
78 which ran thus:
Whoever attentively considers the different departments of power must
perceive, that, in a government in which they are separated from each other,
the judiciary, from the nature of its functions, will always be the least
dangerous to the political rights of the Constitution; because it will be least in
a capacity to annoy or injure them. The Executive not only dispenses the
honors, but holds the sword of the community. The legislature not only
commands the purse, but prescribes the rules by which the duties and rights
of every citizen are to be regulated. The judiciary, on the contrary, has no
influence over either the sword or the purse; no direction either of the
strength or of the wealth of the society; and can take no active resolution
whatever. It may truly be said to have neither FORCE nor WILL, but merely
judgment; and must ultimately depend upon the aid of the executive arm
even for the efficacy of its judgments.
This simple view of the matter suggests several important consequences. It
proves incontestably, that the judiciary is beyond comparison the weakest of
the three departments of power, that it can never attack with success either
of the other two; and that all possible care is requisite to enable it to defend
itself against their attacks. It equally proves, that though individual
oppression may now and then proceed from the courts of justice, the general
liberty of the people can never be endangered from that quarter, I mean so
long as the judiciary remains truly distinct from both the legislature and the
Executive. For I agree, that "there is no liberty, if the power of judging be not
separated from the legislative and executive powers. And it proves, in the last
place, that as liberty can have nothing to fear from the judiciary alone, but
would have everything to fear from its union with either of the other
departments; that as all the effects of such a union must ensue from a
dependence of the former on the latter, notwithstanding a nominal and
apparent separation; that as, from the natural feebleness of the judiciary, it is
in continual jeopardy of being overpowered, awed, or influenced by its co-
ordinate branches; and that as nothing can contribute so much to its firmness
and independence as permanency in office, this quality may therefore be
justly regarded as an indispensable ingredient in its constitution, and, in a
great measure, as the citadel of the public justice and the public security.
(Emphasis supplied)
94. The precise question arising in these appeals concerns the constitutional validity
of the National Tax Tribunals Act, 2005. The question raised on behalf of the
Petitioners is one of great public importance and has, therefore, been placed before
this Constitution Bench. Following upon the heels of the judgment in Union of India
v. R. Gandhi MANU/SC/0378/2010 : (2010) 11 SCC 1, these matters were delinked
and ordered to be heard separately vide judgment and order dated 11th May 2010
reported in MANU/SC/0375/2010 : (2010) 11 SCC 67. The precise question
formulated on behalf of the Petitioners is whether a tribunal can substitute the High
Court in its appellate jurisdiction, when it comes to deciding substantial questions of
law.
95. Sections 15 and 24 of National Tax Tribunal Act state:
15. (1) An appeal shall lie to the National Tax Tribunal from every order
passed in appeal by the Income-tax Appellate Tribunal and the Customs,
Excise and Service Tax appellate Tribunal, if the National Tax Tribunal is
satisfied that the case involves a substantial question of law.
(2) The Chief Commissioner or the Commissioner of Income-tax or the Chief
Commissioner or Commissioner of Customs and Central Excise, as the case
may be, or an Assessee aggrieved by any order passed by the Income-tax
Appellate Tribunal or any person aggrieved by any order passed by the
Customs, Excise and Service Tax Appellate Tribunal (hereinafter referred to as
aggrieved person), may file an appeal to the National Tax Tribunal and such
appeal under this Sub-section shall-
(a) be filed within one hundred and twenty days from the date on
which the order appealed against is received by the assessee or the
aggrieved person or the Chief Commissioner or Commissioner, as the
case may be;
(b) be in the form of a memorandum of appeal precisely stating
therein the substantial question of law involved; and
(c) be accompanied by such fees as may be prescribed: Provided that
separate form of memorandum of appeal shall be filed for matters
involving direct and indirect taxes:
Provided further that the National Tax Tribunal may entertain
the appeal within sixty days after the expiry of the said
period of one hundred and twenty days, if it is satisfied that
the Appellant was prevented by sufficient cause from
preferring an appeal in time.
(3) Where an appeal is admitted Under Sub-section (1), the National Tax
Tribunal.-
(a) shall formulate the question of law for hearing the appeal; and
(b) may also determine any relevant issue in connection with the
question so formulated-
(i) which has not been so determined by the Income-tax
Appellate Tribunal or by the Customs, Excise and Service Tax
Appellate Tribunal or
(ii) which has been wrongly determined by the income-tax
Appellate Tribunal or by the Customs, Excise and Service Tax
Appellate Tribunal, and shall decide the question of law so
formulated and the other relevant issue so determined and
deliver such judgment thereon containing the grounds on
which such decision is founded and may award such cost as
it deems fit.
(4) Where in any appeal under this section, the decision of the income-tax
Appellate Tribunal or the Customs, Excise and Service Tax Appellate Tribunal
involves the payment of any tax or duties, the Assessee or the aggrieved
person, as the case may be, shall not be allowed to prefer such appeal unless
he deposits at least twenty-five per cent of such tax or duty payable on the
basis of the order appealed against:
Provided that where in a particular case the National Tax Tribunal is
of the opinion that the deposit of tax or duty under this Sub-section
would case undue hardship to such person, it may dispense with
such deposit subject to such conditions as it may deem fit to impose
so as to safeguard the interest of revenue.
24. Appeal to Supreme Court.-Any person including any department
of the Government aggrieved by any decision or order of the National
tax Tribunal may file an appeal to the Supreme Court within sixty
days from the date of communication of the decision or order of the
National Tax Tribunal to him;
within the said period, allow it to be filed within such time as it may
deem fit.
96. According to the Petitioners, deciding substantial questions of law, even if they
arise from specialized subject matters, would be a core function of the superior
courts of India, and cannot be usurped by any other forum. To test the validity of this
argument, we need to go to some constitutional fundamentals.
97. It has been recognized that unlike the U.S. Constitution, the Constitution of India
does not have a rigid separation of powers. Despite that, the Constitution contains
several separate chapters devoted to each of the three branches of Government.
Chapter IV of part v. deals exclusively with the Union judiciary and Chapter V of part
VI deals with the High Courts in the States.
98. Article 50 of the Constitution states:
50. Separation of judiciary from executive: The State shall take steps to
separate the judiciary from the executive in the public services of the State.
99. Article 129 states that the Supreme Court shall be a court of record and shall
have all the powers of such a court including the power to punish for contempt of
itself. Article 131 vests the Supreme Court with original jurisdiction in disputes
arising between the Government of India and the States. Article 132 to 134A vest an
appellate jurisdiction in civil and criminal cases from the High Courts. Article 136
vests the Supreme Court with an extraordinary discretionary jurisdiction to grant
special leave to appeal from any judgment, decree, determination, sentence or order
in any cause or matter passed or made by any court or tribunal in the territory of
India. Under Article 137, the Supreme Court is given power to review any judgment
or order made by it. By Article 141, the law declared by the Supreme Court shall be
binding on all courts within the territory of India. And by virtue of Article 145(3)
substantial questions as to the interpretation of the Constitution of India are vested
exclusively in a bench of at least 5 Hon'ble Judges.
100. Similarly, Under Article 214 High Courts for each State are established and
Under Article 215 like the Supreme Court, High Courts shall be courts of record and
shall have all the powers of such courts including the power to punish for contempt.
Under Article 225, the jurisdiction of, and the law administered in any existing High
Courts, is preserved. Article 226 vests the High Court with power to issue various
writs for the protection of fundamental rights and for any other purpose to any
person or authority. Under Article 228 questions involving interpretation of the
constitution are to be decided by the High Court alone when a court subordinate to it
is seized of such question. Further, the importance of these provisions is further
highlighted by Article 368 proviso which allows an amendment of all the aforesaid
Articles only if such amendment is also ratified by the legislatures of not less than
one half of the States.
101. The Code of Civil Procedure also contains provisions which vest the High Court
with the power to decide certain questions of law Under Section 113 and, when they
relate to jurisdictional errors, Section 115.
1 0 2 . Article 227 is of ancient vintage. It has its origins in Section 107 of the
Government of India Act 1915 which reads as follows:
Each of the High Courts has superintendence over all courts for the time
being subject to its appellate jurisdiction, and may do any of the following
things, that is to say.-
(a) Call for returns;
(b) Direct the transfer of any suit or appeal from any such court to
any other court of equal or superior jurisdiction;
(c) Make and issue general rules and prescribe forms for regulating
the practice and proceedings of such courts;
(d) Prescribe forms in which books, entries and accounts shall be
kept by the officers of any such courts; and settle tables of fees to be
allowed to the sheriff, attorneys and all clerks and officers of courts:
Provided that such rules, forms and tables shall not be
inconsistent with the provisions of law for the time being in
force, and shall require the previous approval, in the case of
the high court at Calcutta, of the Governor-General in
Council, and in other cases of the local government.
103. Section 224 of the Government of India Act 1935 more or less adopted Section
107 of the Act of 1915 with a few changes.
(1) Every High Court shall have superintendence over all courts in India for
the time being subject to its appellate jurisdiction, and may do any of the
following thing, that is to say,-
(a) call for returns;
(b) make and issue general rules and prescribe forms for regulating
the practice and proceedings of such courts;
(c) prescribe forms in which books, entries and accounts shall be
kept by the officers of any such courts; and
(d) settle tables of fees to be allowed to the sheriff, attorneys, and all
clerks and officers of courts:
Provided that such rules, forms and tables shall not be
inconsistent with the provision of any law for the time being
in force, and shall require the previous approval of the
Governor.
(2) Nothing in this section shall be construed as giving to a High Court any
jurisdiction to question any judgment of any inferior Court which is not
otherwise subject to appeal or revision.
Article 227 of the Constitution states:
227. Power of superintendence over all courts by the High Court
(1) Every High Court shall have superintendence over all courts and tribunals
throughout the territories in relation to which it exercises jurisdiction
(2) Without prejudice to the generality of the foregoing provisions, the High
Court may
(a) call for returns from such courts;
(b) make and issue general rules and prescribe forms for regulating
the practice and proceedings of such courts; and
(c) prescribe forms in which books, entries and accounts shall be
kept by the officers of any such courts
(3) The High Court may also settle tables of fees to be allowed to the sheriff
and all clerks and officers of such courts and to attorneys, advocates and
pleaders practising therein: Provided that any rules made, forms prescribed or
tables settled Under Clause (2) or Clause (3) shall not be inconsistent with
the provision of any law for the time being in force, and shall require the
previous approval of the Governor
(4) Nothing in this article shall be deemed to confer on a High Court powers
of superintendence over any court or tribunal constituted by or under any law
relating to the Armed Forces.
104. It will be noticed that Article 227 adds the words "and tribunals" and contains
no requirement that the superintendence over subordinate courts and tribunals
should be subject to its appellate jurisdiction.
105. In Waryam Singh v. Amarnath MANU/SC/0121/1954 : 1954 SCR 565, Das,
J. stated the High Courts power Under Article 227:
This power of superintendence conferred by Article 227 is, as pointed out by
Harries C.J., in Dalmia Jain Airways Ltd. v. Sukumar Mukherjee, to be
exercised most sparingly and only in appropriate cases in order to keep the
Subordinate Courts within the bounds of their authority and not for correcting
mere errors. As rightly pointed out by the Judicial Commissioner in the case
before us the lower courts in refusing to make an order for ejectment acted
arbitrarily. The lower courts realized the legal position but in effect declined to
do what was by Section 13(2) (i) incumbent on them to do and thereby
refused to exercise jurisdiction vested in them by law. It was, therefore, a
case which called for interference by the court of the Judicial Commissioner
and it acted quite properly in doing so. (at 571)
106. It is axiomatic that the superintending power of the High Courts Under Article
227 is to keep courts and tribunals within the bounds of the law. Hence, errors of law
that are apparent on the face of the record are liable to be corrected. In correcting
such errors, the High Court has necessarily to state what the law is by deciding
questions of law, which bind subordinate courts and tribunals in future cases. Despite
the fact that there is no equivalent of Article 141 so far as High Courts are concerned,
i n East India Commercial Co. Ltd. Calcutta v. The Collector of Customs
MANU/SC/0179/1962 : (1963) 3 SCR 338, Subba Rao, J. stated:
This raises the question whether an administrative tribunal can ignore the law
declared by the highest court in the State and initiate proceedings in direct
violation of the law so declared. Under Article 215, every High Court shall be
a court of record including the power to punish for contempt of itself. Under
Article 226, it has a plenary power to issue orders or writs for the
enforcement of the fundamental rights and for any other purpose to any
person or authority, including in appropriate cases any Government, within its
territorial jurisdiction. Under Article 227 it has jurisdiction over all courts and
tribunals throughout the territories in relation to which it exercise jurisdiction.
It would be anomalous to suggest that a tribunal over which the High Court
has superintendent can ignore the law declared by that court and start
proceedings in direct violation of it. If a tribunal can do so, all the sub-
ordinate courts can equally do so, for there is no specific provision, just like
in the case of Supreme Court, making the law declared by the High Court
binding on subordinate courts. It is implicit in the power of supervision
conferred on a superior tribunal that all the tribunals subject to its supervision
should conform to the law laid down by it. Such obedience would also be
conducive to their smooth working: otherwise there would be confusion in the
administration of law and respect for law would irretrievably suffer. We,
therefore, hold that the law declared by the highest court in the State is
binding on authorities or tribunals under its superintendence, and that they
cannot ignore it either in initiating a proceeding or deciding on the rights
involved in such a proceeding. (at 366)
107. The aforesaid analysis shows that the decision by superior courts of record of
questions of law and the binding effect of such decisions are implicit in the
constitutional scheme of things. It is obvious that it is emphatically the province of
the superior judiciary to answer substantial questions of law not only for the case at
hand but also in order to guide subordinate courts and tribunals in future. That this is
the core of the judicial function as outlined by the constitutional provisions set out
above.
108. As to what is a substantial question of law has been decided way back in Sir
Chunilal V. Mehta v. The Century Spinning and Manufacturing Co. Ltd.
MANU/SC/0056/1962 : (1962) Suppl. 3 SCR 549 at pages 557-558 thus:
...The proper test for determining whether a question of law raised in the
case is substantial would, in our opinion, be whether it is of general public
importance or whether it directly and substantially affects the rights of the
parties and if so whether it is either an open question in the sense that it is
not finally settled by this Court or by the Privy Council or by the Federal Court
or is not free from difficulty or calls for discussion of alternative views. If the
question is settled by the highest Court or the general principles to be applied
in determining the question are well settled and there is a mere question of
applying those principles or that the plea raised is palpably absurd the
question would not be a substantial question of law.
109. It is clear, therefore, that the decision of a substantial question of law is a
matter of great moment. It must be a question of law which is of general public
importance or is not free from difficulty and/or calls for a discussion of alternative
views. It is clear, therefore, that a judicially trained mind with the experience of
deciding questions of law is a sine qua non in order that such questions be decided
correctly. Interestingly enough, our attention has been drawn to various Acts where
appeals are on questions of law/substantial questions of law.
i) The Electricity Act, 2003
125. Appeal to Supreme Court-Any person aggrieved by any decision or order
of the Appellate Tribunal, may, file an appeal to the Supreme Court within
sixty days from the date of communication of the decision or order of the
Appellate Tribunal to him, on any one or more of the grounds specified in
Section 100 of the Code of Civil Procedure, 1908 (5 of 1908): Provided that
the Supreme Court may, if it is satisfied that the Appellant was prevented by
sufficient cause from filing the appeal within the said period, allow it to be
filed within a further period not exceeding sixty days.
(ii) The National Green Tribunal Act, 2010
Section 22. Appeal to Supreme Court-Any person aggrieved by any award,
decision or order of the tribunal, may, file an appeal to the Supreme Court,
within ninety days from the date of communication of the award, decision or
order of Tribunal, to him, on any one or more of the grounds specified in
Section 100 of the Code of Civil Procedure, 1908 (5 of 1908).
Provided that the Supreme Court, entertain any appeal after the expiry of
ninety days, if it is satisfied that the Appellant was prevented by sufficient
cause from preferring the appeal.
(iii) The Telecom Regulatory Authority of India Act, 1997 Section 18. Appeal
to Supreme Court-(1) Notwithstanding anything contained in the Code of Civil
Procedure, 1908 (5 of 1908) or in any other law, an appeal shall lie against
any order, not being an interlocutory order, of the Appellate Tribunal to the
Supreme Court on one or more of the grounds specified in Section 100 of
that code.
(2) No appeal shall lie against any decision or order made by the Appellate
Tribunal with the consent of the parties.
(3) Every appeal under this section shall be preferred within a period of
ninety days from the date of the decision or order appealed against:
Provided that the Supreme Court may entertain the appeal after the
expiry of the said period of ninety days, if it is satisfied that the
Appellant was prevented by sufficient cause from preferring the
appeal in time.
(iv) The Securities and Exchange Board of India Act, 1992 Section 15Z.
Appeal to Supreme Court.-Any person aggrieved by any decision or order of
the Securities Appellate Tribunal may file an appeal to the Supreme Court
within sixty days from the date of communication of the decision or order of
the Securities Appellate Tribunal to him on any question of law arising out to
such order:
applicant was prevented by sufficient cause from filing the appeal
(v) Companies Act, 1956
Section 10GF. Appeal to Supreme Court.-Any person aggrieved by any
decision or order of the Appellate Tribunal may file an appeal to the Supreme
Court within sixty days from the date of communication of the decision or
order of the Appellate Tribunal to him on any question of law arising out of
such decision or order:
110. Whether one looks at the old Section 100 of the Code of Civil Procedure or
Section 100 of the Code of Civil Procedure as substituted in 1976, the result is that
the superior courts alone are vested with the power to decide questions of law.
Section 100 (Before amendment)
100(1). Save where otherwise expressly provided in the body of this Code or
by any other law for the time being in force, an appeal shall lie to the High
Court from every decree passed in appeal by any court subordinate to a High
Court on any of the following grounds, namely:
(a) the decision being contrary to law or to some usage having the
force of law;
(b) the decision having failed to determine some material issue of law
or usage having the force of law;
(c) a substantial error or defect in the procedure provided by this
Code or by any other law for the time being in force, which may
possibly have produced error or defect in the decision of the case
upon the merits.
(2) An appeal may lie under this section from an appellate decree passed ex-
parte.
Section 100 (After amendment)
100. Second appeal
(1) Save as otherwise expressly provided in the body of this Code or by any
other law for the time being in force, an appeal shall lie to the High Court
from every decree passed in appeal by any Court subordinate to the High
Court, if the High Court is satisfied that the case involves a substantial
question of law.
(2) An appeal may lie under this section from an appellate decree passed ex-
parte.
(3) In an appeal under this section, the memorandum of appeal shall
precisely state the substantial question of law involved in the appeal.
(4) Where the High Court is satisfied that a substantial question of law is
involved in any case, it shall formulate that question.
(5) The appeal shall be heard on the question so formulated and the
Respondent shall, at the hearing of the appeal, be allowed to argue that the
case does not involve such question: Provided that nothing in this Sub-
section shall be deemed to take away or abridge the power of the Court to
hear, for reasons to be recorded, the appeal on any other substantial question
of law, not formulated by it, if it is satisfied that the case involves such
question.
111. It is obvious that hitherto Parliament has entrusted a superior court of record
with decisions on questions of law/substantial questions of law. Also, as has been
pointed in Khehar, J.'s judgment traditionally, such questions were always decided by
the High Courts in the country. The present Act is a departure made for the first time
by Parliament.
1 1 2 . In this regard, the Respondents argued that since taxation is a specialised
subject and there is a complete code laid down for deciding this subject, the present
impugned Act being part of that code is constitutionally valid. For this purpose, the
Respondents have relied on a passage from the nine Judge Bench in Mafatlal
Industries v. Union of India MANU/SC/1203/1997 : (1997) 5 SCC 536 at para 77.
1 1 3 . This Court in Mafatlal's case was faced with whether Kanhaiya Lal
Mukundlal Saraf's case MANU/SC/0129/1958 : 1959 SCR 1350, has been correctly
decided in so far as it said that where taxes are paid under a mistake of law, the
person paying is entitled to recover from the State such taxes on establishing the
mistake and that this consequence flows from Section 72 of the Contract Act. In
answering this question, this Court made an observation that so long as an appeal is
provided to the Supreme Court from the orders of the appellate tribunal, the Act
would be constitutionally valid. This Court while deciding whether Saraf's case was
correctly decided or not, was not faced with the present question at all. Further, at
the time that Mafatlal's case was decided, the scheme contained in the Central Excise
and Salt Act, 1944, required the High Court on a statement of case made to it to
decide a question of law arising out of the order of the appellate tribunal, after which
the High Court is to deliver its judgment and send it back to the appellate tribunal
which will then make such orders as are necessary to dispose of the case in
conformity with such judgment. The then statutory scheme of the Central Excise and
Salt Act, 1944 is contained in Sections 35G to 35L.
35G Statement of case to High Court.
(1) The Collector of Central Excise or the other party may, within sixty days
of the date upon which he is served with notice of an order Under Section
35C (not being an order relating, among other things, to the determination of
any question having a relation to the rate of duty of excise or to the value of
goods for purposes of assessment), by application in the prescribed form,
accompanied, where the application is made by the other party, by a fee of
two hundred rupees, require the Appellate Tribunal to refer to the High Court
any question of law arising out of such order and, subject to the other
provisions contained in this section, the Appellate Tribunal shall, within one
hundred and twenty days of the receipt of such application, draw up a
statement of the case and refer it to the High Court:
Provided that the Appellate Tribunal may, if it is satisfied that the
applicant was prevented by sufficient cause from presenting the
application within the period hereinbefore specified, allow it to be
presented within a further period not exceeding thirty days.
(2) On receipt of notice that an application has been made Under Sub-section
(1), the person against whom such application has been made, may,
notwithstanding that he may not have filed such an application, file, within
forty-five days of the receipt of the notice, a memorandum of cross-
objections verified in the prescribed manner against any part of the order in
relation to which an application for reference has been made and such
memorandum shall be disposed of by the Appellate Tribunal as if it were an
application presented within the time specified in Sub-section (1).
(3) If, on an application made Under Sub-section (1), the Appellate Tribunal
refuses to state the case on the ground that no question of law arises, the
Collector of Central Excise, or, as the case may be, the other party may,
within six months from the date on which he is served with notice of such
refusal, apply to the High Court and the High Court may, if it is not satisfied
with the correctness of the decision of the Appellate Tribunal, require the
Appellate Tribunal to state the case and to refer it, and on receipt of any such
requisition, the Appellate Tribunal shall state the case and refer it accordingly.
(4) Where in the exercise of its powers Under Sub-section (3), the Appellate
Tribunal refuses to state a case which it has been required by an applicant to
state, the applicant may, within thirty days from the date on which he
receives notice of such refusal, withdraw his application and, if he does so,
the fee, if any, paid by him shall be refunded.
35H. Statement of case to Supreme court in certain cases. If, on an
application made Under Section 35G, the Appellate Tribunal is of opinion that,
on account of conflict in the decisions of High Courts in respect of any
particular question of law, it is expedient that a reference should be made
direct to the Supreme Court, the Appellate Tribunal may draw up a statement
of the case and refer it through the President direct to the Supreme Court.
35I. Power of High Court or Supreme Court to require statement to be
amended. If the High Court or the Supreme Court is not satisfied that the
statements in a case referred to it are sufficient to enable it to determine the
questions raised thereby, the Court may refer the case back to the Appellate
Tribunal, for the purpose of making such additions thereto or alterations
therein as it may direct in that behalf.
35J. Case before High Court to be heard by not less than two Judges.
(1) When any case has been referred to the High Court Under Section
35G, it shall be heard by a Bench of not less than two Judges of the
High Court and shall be decided in accordance with the opinion of
such Judges or of the majority, if any, of such Judges.
(2) Where there is no such majority, the Judges shall state the point
of law upon which they differ and the case shall then be heard upon
that point only by one or more of the other Judges of the High Court,
and such point shall be decided according to the opinion of the
majority of the Judges who have heard the case including those who
first heard it.
35K. Decision of High Court or Supreme Court on the case stated.
(1) The High Court or the Supreme Court hearing any such case shall decide
the questions of law raised therein and shall deliver its judgment thereon
containing the grounds on which such decision is founded and a copy of the
judgment shall be sent under the seal of the Court and the signature of the
Registrar to the Appellate Tribunal which shall pass such orders as are
necessary to dispose of the case in conformity with such judgment.
(2) The costs of any reference to the High Court or the Supreme Court which
shall not include the fee for making the reference shall be in the discretion of
the Court.
35L. Appeal to Supreme Court. An appeal shall lie to the Supreme Court
from-
(a) any judgment of the High Court delivered on a reference made
Under Section 35G in any case which, on its own motion or on an
oral application made by or on behalf of the party aggrieved,
immediately after the passing of the judgment, the High Court
certifies to be a fit one for appeal to the Supreme Court; or
(b) any order passed by the Appellate Tribunal relating, among other
things, to the determination of any question having a relation to the
rate of duty of excise or to the value of goods for purposes of
assessment.
114. It is obvious that the decision of the nine Judge Bench was only referring to
decisions of the appellate tribunal falling Under Sub-clause (b) of Section 35L
relating to orders passed by the Appellate Tribunal on questions having a relation to
the rate of duty of excise or value of goods for the purpose of assessment and not to
appeals from judgments of the High Court delivered on a reference Under Section
35G after the High Court had decided on a question of law. It is clear, therefore, that
the context of Mafatlal's decision was completely different and the decision did not
advert to Sections 35G to 35L as they then stood.
115. Article 323B was part of the constitution 42nd Amendment Act which was, as is
well known, an amendment which was rushed through during the 1975 emergency.
Many of its features were undone by the constitution 44th Amendment Act passed a
couple of years later. One of the interesting features that was undone was the
amendment to Article 227.
The 42nd Amendment substituted the following clause for Clause (1) of Article 227:
(1) Every High Court shall have superintendence over all courts subject to its
appellate jurisdiction.
116. A cursory reading of the substituted clause shows that the old Section 107 of
the Government of India Act 1915 was brought back: Tribunals were no longer
subject to the High Courts' superintendence, and subordinate courts were only
subject to the High Courts' superintendence, if they were also subject to its appellate
jurisdiction. As stated above, the 44th Amendment undid this and restored Sub-
clause (1) to its original position.
117. However, Article 323B continues as part of the constitution. The real reason for
the insertion of the said article was the same as the amendment made to Article 227 -
the removal of the High Courts' supervisory jurisdiction over tribunals. L. Chandra
Kumar v. Union of India MANU/SC/0261/1997 : (1997) 3 SCC 261, undid the very
raison d'etre of Article 323B by restoring the supervisory jurisdiction of the High
Courts so that a reference to Article 323B would no longer be necessary as the
legislative competence to make a law relating to tribunals would in any case be
traceable to Entries 77 to 79, 95 of List I, Entry 65 of List II and Entry 11A and 46 of
List III of the 7th Schedule to the Constitution of India.
1 1 8 . In a significant statement of the law, Chandra Kumar's judgment, in
upholding the vesting of the High Court's original jurisdiction in a Central
Administrative Tribunal, stated thus:
The legitimacy of the power of Courts within constitutional democracies to
review legislative action has been questioned since the time it was first
conceived. The Constitution of India, being alive to such criticism, has, while
conferring such power upon the higher judiciary, incorporated important
safeguards. An analysis of the manner in which the Framers of our
Constitution incorporated provisions relating to the judiciary would indicate
that they were very greatly concerned with securing the independence of the
judiciary. These attempts were directed at ensuring that the judiciary would
be capable of effectively discharging its wide powers of judicial review. While
the Constitution confers the power to strike down laws upon the High Courts
and the Supreme Court, it also contains elaborate provisions dealing with the
tenure, salaries, allowances, retirement age of Judges as well as the
mechanism for selecting Judges to the superior courts. The inclusion of such
elaborate provisions appears to have been occasioned by the belief that,
armed by such provisions, the superior courts would be insulated from any
executive or legislative attempts to interfere with the making of their
decisions. The Judges of the superior courts have been entrusted with the
task of upholding the Constitution and to this end, have been conferred the
power to interpret it. It is they who have to ensure that the balance of power
envisaged by the Constitution is maintained and that the legislature and the
executive do not, in the discharge of their functions, transgress constitutional
limitations. It is equally their duty to oversee that the judicial decisions
rendered by those who man the subordinate courts and tribunals do not fall
foul of strict standards of legal correctness and judicial independence. The
constitutional safeguards which ensure the independence of the Judges of the
superior judiciary, are not available to the Judges of the subordinate judiciary
or to those who man Tribunals created by ordinary legislations. Consequently,
Judges of the latter category can never be considered full and effective
substitutes for the superior judiciary in discharging the function of
constitutional interpretation. We, therefore, hold that the power of judicial
review over legislative action vested in the High Courts Under Articles 226 and
in this Court Under Article 32 of the Constitution is an integral and essential
feature of the Constitution, constituting part of its basic structure. Ordinarily,
therefore, the power of High Courts and the Supreme Court to test the
constitutional validity of legislations can never be ousted or excluded.(See
Para 78)
We also hold that the power vested in the High Courts to exercise judicial
superintendence over the decisions of all Courts and Tribunals within their
respective jurisdictions is also part of the basic structure of the Constitution.
This is because a situation where the High Courts are divested of all other
judicial functions apart from that of constitutional interpretation, is equally to
be avoided. (See Para 79)
Before moving on to other aspects, we may summarise our conclusions on
the jurisdictional powers of these Tribunals. The Tribunals are competent to
hear matters where the vires of statutory provisions are questioned. However,
in discharging this duty, they cannot act as substitutes for the High Courts
and the Supreme Court which have, under our constitutional set-up, been
specifically entrusted with such an obligation. Their function in this respect is
only supplementary and all such decisions of the Tribunals will be subject to
scrutiny before a Division Bench of the respective High Courts.(see Para 93)
119. The stage is now set for the Attorney General's reliance on Union of India v.
R. Gandhi MANU/SC/0378/2010 : (2010) 11 SCC 1.
Various provisions of the Companies Act, 1956 were under challenge before the
Constitution Bench. The effect of these provisions was to replace the Company Law
Board by a Tribunal vested with original jurisdiction, and to replace the High Court in
First Appeal with an appellate tribunal. After noticing the difference between courts
and tribunals in paras 38 and 45, the court referred to the independence of the
judiciary and to the separation of powers doctrine, as understood in the Indian
Constitutional Context in paras 46 to 57. In a significant statement of the law, the
Constitution Bench said:
The Constitution contemplates judicial power being exercised by both courts
and tribunals. Except the powers and jurisdiction vested in superior courts by
the Constitution, powers and jurisdiction of courts are controlled and
regulated by legislative enactments. The High Courts are vested with the
jurisdiction to entertain and hear appeals, revisions and references in
pursuance of provisions contained in several specific legislative enactments. If
jurisdiction of High Courts can be created by providing for appeals, revisions
and references to be heard by the High Courts, jurisdiction can also be taken
away by deleting the provisions for appeals, revisions or references. It also
follows that the legislature has the power to create Tribunals with reference to
specific enactments and confer jurisdiction on them to decide disputes in
regard to matters arising from such special enactments. Therefore it cannot
be said that legislature has no power to transfer judicial functions traditionally
performed by courts to Tribunals. (para 87)
In another significant paragraph, the Constitution bench stated:
But when we say that the legislature has the competence to make laws,
providing which disputes will be decided by courts, and which disputes will be
decided by tribunals, it is subject to constitutional limitations, without
encroaching upon the independence of the judiciary and keeping in view the
principles of the rule of law and separation of powers. If tribunals are to be
vested with judicial power hitherto vested in or exercised by courts, such
tribunals should possess the independence, security and capacity associated
with courts. If the tribunals are intended to serve an area which requires
specialized knowledge or expertise, no doubt there can be technical members
in addition to judicial members. Where however jurisdiction to try certain
category of cases are transferred from courts to tribunals only to expedite the
hearing and disposal or relieve from the rigours of the Evidence Act and
procedural laws, there is obviously no need to have any non-judicial technical
member. In respect of such tribunals, only members of the judiciary should
be the Presiding Officers/Members. Typical examples of such special tribunals
are Rent Tribunals, Motor Accidents Claims Tribunals and Special Courts under
several enactments. Therefore, when transferring the jurisdiction exercised by
courts to tribunals, which does not involve any specialized knowledge or
expertise in any field and expediting the disposal and relaxing the procedure
is the only object, a provision for technical members in addition to or in
substitution of judicial members would clearly be a case of dilution of and
encroachment upon the independence of the judiciary and the rule of law and
would be unconstitutional. (at para 90)
The Bench then went on to hold that only certain areas of litigation can be transferred
from courts to tribunals. (see para 92)
In paragraphs 101 and 102 the law is stated thus:
Independent judicial tribunals for determination of the rights of citizens, and
for adjudication of the disputes and complaints of the citizens, is a necessary
concomitant of the rule of law. The rule of law has several facets, one of
which is that disputes of citizens will be decided by Judges who are
independent and impartial; and that disputes as to legality of acts of the
Government will be decided by Judges who are independent of the executive.
Another facet of the rule of law is equality before law. The essence of the
equality is that it must be capable of being enforced and adjudicated by an
independent judicial forum. Judicial independence and separation of judicial
power from the executive are part of the common law traditions implicit in a
Constitution like ours which is based on the Westminster model.
The fundamental right to equality before law and equal protection of laws
guaranteed by Article 14 of the Constitution, clearly includes a right to have
the person's rights, adjudicated by a forum which exercises judicial power in
an impartial and independent manner, consistent with the recognized
principles of adjudication. Therefore wherever access to courts to enforce
such rights is sought to be abridged, altered, modified or substituted by
directing him to approach an alternative forum, such legislative act is open to
challenge if it violates the right to adjudication by an independent forum.
Therefore, though the challenge by MBA is on the ground of violation of
principles forming part of the basic structure, they are relatable to one of
more of the express provisions of the Constitution which gave rise to such
principles. Though the validity of the provisions of a legislative act cannot be
challenged on the ground it violates the basic structure of the Constitution, it
can be challenged as violative of constitutional provisions which enshrine the
principles of the rule of law, separation of powers and independence of the
judiciary.
120. Gandhi's case dealt with one specialized tribunal replacing another specialized
tribunal (The Company Law Board) at the original stage. It is significant to note that
the first appeal provided to the appellate tribunal is not restricted only to questions
of law. It is a full first appeal as understood in the Section 96 Code of Civil Procedure
sense-(See Section 10FQ of the Companies Act). A further appeal is provided to the
Supreme Court Under Section 10GF only on questions of law. When Gandhi's case
states in paragraph 87 that the jurisdiction of the High Courts can be taken away by
deleting provisions for appeals, revisions or references, and that these functions
traditionally performed by courts can be transferred to tribunals, the court was only
dealing with the situation of the High Court being supplanted at the original and first
appellate stage so far as the company 'jurisdiction' is concerned in a situation where
questions of fact have to be determined afresh at the first appellate stage as well.
These observations obviously cannot be logically extended to cover a situation like
the present where the High Court is being supplanted by a tribunal which would be
deciding only substantial questions of law.
121. The present case differs from Gandhi's case in a very fundamental manner. The
National Tax Tribunal which replaces the High Courts in the country replaces them
only to decide substantial questions of law which relate to taxation. In fact, a Direct
Tax Laws Committee delivered a report in 1978 called the Choksi Committee after its
Chairman. This report had in fact recommended that a Central Tax Court should be
set up. The report stated:
II-6.10. In paragraph 11.30 of our Interim Report, we had expressed the
view that the Government should consider the establishment of a Central Tax
Court to deal with all matters arising under the Income-tax Act and other
Central Tax Laws, and had left the matter for consideration in greater detail in
our Final Report. We have since examined the matter from all aspects.
II-6.11. The problem of tax litigation in India has assumed staggering
proportions in recent years. From the statistics supplied to us, it is seen that,
as on 30th June, 1977, there were as many as 10,500 references under the
direct tax laws pending with the various High Courts, the largest pendency
being in Bombay, Calcutta, Madras, Karnataka and Madhya Pradesh. The
number of references made to the High Courts in India under all the tax laws
is of the order of about 3,300 in a year, whereas the annual disposals of such
references by all the High Courts put together amount to about 600 in a year.
In addition to these references, about 750 writ petitions on tax matters are
also filed before the High Courts every year. Under the existing practice of
each High Court having only a single bench for dealing with the tax matters
and that too not all round the year, there is obviously no likelihood of the
problem being brought down to manageable proportions at any time in, the
future, but, on the other hand, it is likely to become worse. Even writ
petitions seeking urgent remedy against executive action take several years
for disposal. The Wanchoo Committee, which had considered this problem,
recommended the creation of permanent Tax Benches in High Courts and
appointment of retired Judges to such Benches Under Article 224A of the
Constitution to clear the backlog. Although more than 6 years have passed
since that recommendation was made, the position of arrears in tax matters
has shown no improvement but, on the other hand, it has worsened. In this
connection, it would be worth noting that the Wanchoo Committee considered
an alternative course for dealing with this problem through the establishment
of a Tax Court but they desisted from making any recommendation to that
effect us, in their opinion, that would involve extensive amendments to law
and procedures. We have directed our attention to this matter in the context
of the mounting arrears of tax cases before the courts.
II-6.12. The pendency of cases before the courts in tax matters has also a
snow-balling effect all along the line of appellate hierarchies inasmuch as
proceedings in hundreds of cases are initiated and kept pending, awaiting the
law to be finally settled by the Supreme Court after prolonged litigation in
some other cases. This obviously adds considerably to the load of infructuous
word in the Department and clutters up the files of appellate authorities at all
levels, with adverse consequences on their efficiency. According to the figures
supplied to us, out of tax arrears amounting to Rs. 986.53 crores as on 31st
December, 1977, Rs. 293.26 crores (30 per cent) were disputed in
proceedings before various appellate authorities and courts.
II-6.13. Apart from the delays which are inherent in the existing system, the
jurisdiction pattern of the High Courts also seems to contribute to the
generation of avoidable work. At present, High Courts are obliged to hear
references on matters falling within their jurisdiction notwithstanding that
references on identical points have been decided by other High Courts. The
decision of one High Court is not binding on another High Court even on
identical issues. Finality is reached only when the Supreme Court decides the
issue which may take 10 to 15 years.
II-6.14. Tax litigation is currently handled by different Benches of the High
Courts constituted on an ad hoc basis. The absence of permanent benches
also accounts for the delay in the disposal of the tax cases by High Courts.
II-6.15. The answer to these problems, in our view, is the establishment of a
Central Tax Court with all-India jurisdiction to deal with such litigation to the
exclusion of High Courts. Such a step will have several advantages. In the
first place, it would lead to uniformity in decisions and bring a measure of
certainty in tax matters. References involving common issues can be
conveniently consolidated and disposed of together, thereby accelerating the
pace of disposal. Better co-ordination among the benches would make for
speedy disposal of cases and reduce the scope for proliferation of appeals on
the same issues before the lower appellate authorities, which in its turn will
reduce the volume of litigation going up before the Tax Court as well. Once a
Central Tax Court is established, the judges appointed to the Benches thereof
will develop the requisite expertise by continuous working in this field. This
would facilitate quicker disposal of tax matters and would also help in
reducing litigation by ensuring uniformity in decisions.
II-6.16. In the light of the foregoing discussions, we recommend that the
Government should take steps for this early establishment of a Central Tax
Court with all-India jurisdiction to deal exclusively with litigation under the
direct Tax laws in the first instance, with provisions for extending its
jurisdiction to cover all other Central Tax laws, if considered necessary in the
future. We suggest that such a court should be constituted under a separate
statute. As the implementation of this recommendation may necessitate
amendment of the constitution, which is likely to take time, we further
recommend that Government may in the meanwhile, consider the desirability
of constituting special Tax benches in the High Courts to deal with the large
number of Tax cases by continuously sitting throughout the year. The Judges
to be appointed to these special benches may be selected from among those,
who have special knowledge and experience in dealing with matters relating
to direct Tax laws so that, when the Central Tax Court is established at a later
date, these judges could be transferred to that Court.
II-6.17. The Central Tax Court should have Benches located at important
centres. To start with it may have Benches at the following seven places, viz.,
Ahmedabad, Bombay, Calcutta, Delhi, Kanpur, Madras and Nagpur. Each
Bench should consist of two judges. Highly qualified persons should be
appointed as judges of the Central Tax Court, from among persons who are
High Court judges or who are eligible to be appointed as High Court judges.
In the matter of conditions of service, scales or pay and other privileges,
judges of the Central Tax Court should be on par with the High Court judges.
II-6.18. The Supreme Court and, following it, the High Courts have held that
the Tribunal and the tax authorities, being creatures of the Act cannot
pronounce on the constitutional validity or vires of any provision of the Act;
that; therefore, such a question cannot arise out of the order of the Tribunal
and cannot be made the subject matter of a reference to the High Court and a
subsequent appeal to the Supreme court; and that such a question of validity
or vires can be raised only in a suit or a writ petition. While an income-tax
authority or the Tribunal cannot decide upon the validity or vires of the other
provisions of the law. We recommend that the powers of the Central Tax
Court in this regard should be clarified in the law itself by specifically giving it
the right to go into questions of validity of the provisions of the Tax Laws or
of the rules framed thereunder.
II-6.19. Another important matter, in which we consider that the present
position needs improvement, is the nature of the Court's jurisdiction in tax
matters. Under the present law, the High Court's jurisdiction in such matters
is merely advisory on questions of law. For this purpose, the Appellate
Tribunal has to draw up a statement of the case and refer the same to the
High Court for its opinion. After the High Court delivers its judgment on the
reference, the matter goes back to the Tribunal, which has then to pass such
orders as are necessary to dispose of the case conformably to such
judgment. Under this procedure, the aggrieved party before the Tribunal has
to file an application seeking a reference to the High Court on specified
questions of law arising out of the Tribunal's order. The hearing of such
application by the Tribunal, followed by the drawing up of the statement of
the case to the High Court, delays the consideration of the issue by the High
Court for a considerable time. Where the Tribunal refuses to state the case as
sought by the applicant, then again, the law provides for a direct approach to
the High Court for issue of directions to the Appellate Tribunal to state the
case to the High Court on the relevant question of law. This process also
delays the consideration of the matter by the High court for quite some time.
In addition to these types of delay, there will be further delays after the High
Court decides the matter, as the Tribunal has to pass consequential orders
disposing of the case, before the relief, if any due, can be granted to the
Assessee.
II-6.20. In our view, the disposal of tax litigation can be speeded up
considerably by vesting jurisdiction in the proposed Central Tax Court to hear
appeals against the orders of the Tribunal on questions of law arising out of
such orders. We, accordingly, recommend that the jurisdiction of the Central
Tax Court should be Appellate and not advisory. We also recommend that
appeals before the Central Tax Court should be heard by a Bench of two
judges. The judgment of a division Bench should be binding on other division
Benches of the Tax Court unless it is contrary to a decision of the Supreme
Court or of a full Bench of the Tax Court.
II-6.21. In the matter of appeals before the Central Tax Court, it would be
necessary to make a special provision for enabling Chartered Accountants to
appear on behalf of Appellants or Respondents to argue the appeals before it.
Legal practitioners would, in any event, be entitled to appear before the
Central Tax Court. In addition, any other person, who may be permitted by
the Court to appear before it, may also represent the Appellant or the
Respondent in tax matters.
II-6.22. Our recommendation for setting up of a Central Tax Court may not
be interpreted to be only a modified version of the concept of administrative
and other tribunals authorized to be set up for various purposes under the
amendments effected by the 42nd Amendment of the Constitution. The
Central Tax Court, which we have in view, will be a special kind of High court
with functional jurisdiction over tax matters and enjoying judicial
independence in the same manner as the High Courts. The controversy
generated by the 42nd Amendment to the Constitution should not, therefore,
be held to militate against the proposal for the establishment of a Central Tax
Court to exercise the functions of a High Court in tax matters.
This recommendation was not acceded to by Parliament.
122. It is obvious, that substantial questions of law which relate to taxation would
also involve many areas of civil and criminal law, for example Hindu Joint Family
Law, partnership, sale of goods, contracts, Mohammedan Law, Company Law, Law
relating to Trusts and Societies, Transfer of Property, Law relating to Intellectual
Property, Interpretation of Statutes and sections dealing with prosecution for
offences. It is therefore not correct to say that taxation, being a specialized subject,
can be dealt with by a tribunal. All substantial questions of law have under our
constitutional scheme to be decided by the superior courts and the superior courts
alone. Indeed, one of the objects for enacting the National Tax Tribunals Act, as
stated by the Minister on the floor of the House, is that the National Tax Tribunal can
lay down the law for the whole of India which then would bind all other authorities
and tribunals. This is a direct encroachment on the High Courts' power Under Article
227 to decide substantial questions of law which would bind all tribunals vide East
India Commercial Company case, supra.
123. In fact, it is a little surprising that the National Tax Tribunal is interposed
between the appellate Tribunal and the Supreme Court for the very good reason that
ultimately it will only be the Supreme Court that will declare the law to be followed in
future. As the appellate tribunal is already a second appellate court, it would be
wholly unnecessary to have a National Tax Tribunal decide substantial questions of
law in case of conflicting decisions of High Courts and Appellate Tribunals as these
would ultimately be decided by the Supreme Court itself, which decision would Under
Article 141 be binding on all tax authorities and tribunals. Secondly, in all tax
matters, the State is invariably a party and the High Court is ideally situated to decide
substantial questions of law which arise between the State and private persons, being
constitutionally completely independent of executive control. The same cannot be
said of tribunals which, as L. Chandra Kumar states, will have to be under a nodal
ministry as tribunals are not under the supervisory jurisdiction of the High Courts.
124. Indeed, other constitutions which are based on the Westminster model, like the
British North America Act which governs Canada have held likewise. In Attorney
General for Quebec v. Farrah (1978), Vol. 86 DLR [3d] 161 a transport tribunal
was given appellate jurisdiction over the Quebec Transport Commission. The tribunal
performed no function other than deciding questions of law. Since this function was
ultimately performed only by superior courts, the impugned section was held to be
unconstitutional. This judgment was followed in Re. Residential Tenancies Act
123 DLR (3d) 554. This judgment went further, and struck down the Residential
Tenancy Act which established a tribunal to require landlords and tenants to comply
with the obligations imposed under the Act. The court held:
The Court of Appeal delivered a careful and scholarly unanimous judgment in
which each of these questions was answered in the negative. The Court
concluded it was not within the legislative authority of Ontario to empower
the Residential Tenancy Commission to make eviction orders and compliance
orders as provided in the Residential Tenancies Act, 1979. The importance of
the issue is reflected in the fact that five Judges of the Court, including the
Chief Justice and Associate Chief Justice, sat on the appeal.
It then went on to enunciate a three steps test with which we are not directly
concerned. The Court finally concluded:
Implicit throughout the argument advanced on behalf of the Attorney-General
of Qntario is the assumption that the Court system is too cumbersome, too
expensive and therefore unable to respond properly to the social needs which
the residential Tenancies Act, 1979 is intended to meet. All statutes respond
to social needs. The Courts are unfamiliar with equity and the concept of
fairness, justice, convenience, reasonableness. Since the enactment in 1976
of the legislation assuring "security of tenure" the Country Court Judges of
Ontario have been dealing with matters arising out of that legislation,
apparently with reasonable dispatch, as both landlords and tenants in the
present proceedings have spoken clearly against transfer of jurisdiction in
respect of eviction and compliance orders from the Courts to a special
commission. It is perhaps also of interest that there is no suggestion in the
material filed with us that the Law Reforms Commission favoured removal
from the Courts of the historic functions performed for over 100 years by the
Courts.
I am neither unaware of, nor unsympathetic to, the arguments advanced in
support of a view that Section 96 should not be interpreted so as to thwart or
unduly restrict the future growth of provincial administrative tribunals. Yet,
however worthy the policy objectives, must be recognized that we, as a
Court, are not given the freedom to choose whether the problem is such that
provincial, rather than federal, authority should deal with it. We must seek to
give effect to the Constitution as we understand it and with due regard for the
manner in which it has been judicially interpreted in the past. If the impugned
power is violative of Section 96 it must be struck down.
1 2 5 . I n Hins v. The Queen Director of Public Prosecutions V. Jackson
Attorney General of Jamaica (intervener) 1976 (1) All ER 353, the Privy Council
had to decide a matter under the Jamaican Constitution. A Gun Courts Act, 1974 was
passed by the Jamaican Parliament in which it set up various courts. A question
similar to the question posed in the instant case was decided thus:
All constitutions on the Westminister model deal under separate chapter
heading with the legislature, the executive and the judicature. The chapter
dealing with the judicature invariably contains provisions dealing with the
method of appointment and security of tenure of the members of the judiciary
which are designed to assure to them a degree of independence from the
other two branches of government. It may, as in the case of Constitution of
Ceylon, contain nothing more. To the extent to which the constitution itself is
silent as to the distribution of the plenitude of judicial power between various
courts it is implicit that it shall continue to be distributed between and
exercised by the courts that were already in existence when the new
constitution came into force; but the legislature, in exercise of its power to
make laws for the 'peace, order and good government of the state, may
provide for the establishment of new courts and for the transfer to them of
the whole or part of the jurisdiction previously exercisable by an existing
court. What, however, is implicit in the very structure of a constitution on the
Westminister model is that judicial power, however it be distributed from time
to time between various courts, is to continue to be vested in persons
appointed to hold judicial office in the manner and on the terms laid down in
the chapter dealing with the judicature, even though this not expressly stated
in the constitution (Liyanage v. R [1966] All ER 650 at 658 : [1976] AC 259
at 287, 288]
The more recent constitutions on the Westminister model, unlike their earlier
prototypes, include a chapter dealing with fundamental rights and freedoms.
The provisions of this chapter form part of the substantive law of the state
and until amended by whatever special procedure is laid down in the
constitution for this purpose, impose a fetter on the exercise by the
legislature, the executive and the judiciary of the plenitude of their respective
powers. The remaining chapters of the constitutions are primarily concerned
not with the legislature, the executive and the judicatures as abstractions, but
with the persons who shall be entitled collectively or individually to exercise
the plenitude of legislative, executive or judicial powers-their qualifications for
legislative, executive or judicial office, the method of selecting them, their
tenure of office, the procedure to be followed where powers are conferred on
a class of persons acting collectively and the majorities required for the
exercise of these powers. Thus, where a constitution on the Westminister
model speaks of a particular 'court' already in existence when the constitution
comes into force, it uses this expression as a collective description of all those
individual judges who, whether sitting alone or with other judges or with a
jury, are entitled to exercise the jurisdiction exercised by that court before the
constitution came into force. Any express provision in the constitution for the
appointment or security of tenure of judges of that court will apply to all
individual judges subsequently appointed to exercise an analogous
jurisdiction, whatever other name may be given to the 'court' in which they sit
(Attorney General for Ontario v. attorney General for Canada.)
Where, under a constitution on the Westminister model, a law is made by the
parliament which purports to confer jurisdiction on a court described by a
new name, the question whether the law conflicts with the provisions of the
constitution dealing with the exercise of the judicial power does not depend
on the label (in the instant case 'The Gun Court') which the parliament
attaches to the judges when exercising the jurisdiction conferred on them by
the law whose constitutionality is impugned. It is the substance of the law
that must be regarded, not the form. What is the nature of the jurisdiction to
be exercised by the judges who are to compose the court to which the new
label is attached? Does the method of their appointment and the security of
their tenure conform to the requirements of the constitution applicable to
judges who, at the time the constitution came into force, exercised
jurisdiction of that nature? (Attorney General for Australia v. R and
Boilermakers' Society of Australia).
126. Ultimately, a majority of the court found that the provisions of the 1974 Act, in
so far as they provide for the establishment of a full court division of the Gun Court
consisting of three resident Magistrates were unconstitutional.
1 2 7 . It was also argued by the learned Attorney General that the High Courts'
jurisdiction Under Section 260A of the Income Tax Act and other similar tax laws
could be taken away by ordinary law and such sections could be deleted. If that is so
surely the jurisdiction vested in the High Court by the said section can be transferred
to another body.
128. It is well settled that an appeal is a creature of statute and can be done away
by statute. The question posed here is completely different and the answer to that
question is fundamental to our jurisprudence: that a jurisdiction to decide substantial
questions of law vests under our constitution, only with the High Courts and the
Supreme Court, and cannot be vested in any other body as a core constitutional value
would be impaired thereby.
129. In fact, the Attorney General in his written argument at paras 16 and 21(a) has
stated before us:
16. It is submitted that the present Act does not take away the power of
judicial superintendence of the High Court Under Article 227. Direct appeal to
the Supreme Court from the decisions of a tribunal of first instance is an
acceptable form of judicial scrutiny. Provision for direct appeal to Supreme
Court from the decision of a tribunal can be purely on questions of law as
well. Since the High Court as a rule does not exercise its power of judicial
superintendence when an appeal is provided to the Supreme Court, the power
of judicial superintendence of the High Court over the tribunal stands curtailed
in such cases as well. But this curtailment does not violate the rule of law as a
court of law i.e. the Supreme Court continues to be the final interpreter of the
law. By the same analogy a decision of an appellate tribunal with unrestricted
right of appeal to the Supreme Court will not curtail the power of High Court
under 227 as recourse to the High Court Under Articles 226/227 would still be
available if the tribunal exceeds its jurisdiction or violates the principles of
natural justice or commits such other transgressions.
21. (a) The present Act provides ample scope for judicial scrutiny in the form
of an Appeal Under Section 24 of the Act and also Under Articles 226/227,
Article 32 and Article 136 of the Constitution.
1 3 0 . On reading the above argument, it is clear that even according to this
argument, the High Court's power of judicial review Under Articles 226/227 has in
fact been supplanted by the National Tax Tribunal, something which L. Chandrakumar
said cannot be done. See Para 93 of L. Chandra Kumar's case quoted above. In
State of West Bengal v. Committee for Protection of Democratic Rights
MANU/SC/0121/2010 : 2010 (3) SCC 571, a Constitution Bench of this Court held:
39. It is trite that in the constitutional scheme adopted in India, besides
supremacy of the Constitution, the separation of powers between the
legislature, the executive and the judiciary constitutes the basic features of
the Constitution. In fact, the importance of separation of powers in our
system of governance was recognised in Special Reference No. 1 of 1964
[MANU/SC/0048/1964 : AIR 1965 SC 745: (1965) 1 SCR 413], even before
the basic structure doctrine came to be propounded in the celebrated case of
Kesavananda Bharati v. State of Kerala [MANU/SC/0445/1973 : (1973) 4 SCC
225], wherein while finding certain basic features of the Constitution, it was
opined that separation of powers is part of the basic structure of the
Constitution. Later, similar view was echoed in Indira Nehru Gandhi v. Raj
Narain [MANU/SC/0304/1975 : 1975 Supp SCC 1] and in a series of other
cases on the point. Nevertheless, apart from the fact that our Constitution
does not envisage a rigid and strict separation of powers between the said
three organs of the State, the power of judicial review stands entirely on a
different pedestal. Being itself part of the basic structure of the Constitution, it
cannot be ousted or abridged by even a constitutional amendment. (See L.
Chandra Kumar v. Union of India [MANU/SC/0261/1997 : (1997) 3 SCC 261
: 1997 SCC (L&S) 577].) Besides, judicial review is otherwise essential for
resolving the disputes regarding the limits of constitutional power and
entering the constitutional limitations as an ultimate interpreter of the
Constitution.
68. Thus, having examined the rival contentions in the context of the
constitutional scheme, we conclude as follows:
(iii) In view of the constitutional scheme and the jurisdiction
conferred on this Court Under Article 32 and on the High Courts
Under Article 226 of the Constitution the power of judicial review
being an integral part of the basic structure of the Constitution, no
Act of Parliament can exclude or curtail the powers of the
constitutional courts with regard to the enforcement of fundamental
rights. As a matter of fact, such a power is essential to give
practicable content to the objectives of the Constitution embodied in
Part III and other parts of the Constitution. Moreover, in a federal
constitution, the distribution of legislative powers between Parliament
and the State Legislature involves limitation on legislative powers
and, therefore, this requires an authority other than Parliament to
ascertain whether such limitations are transgressed. Judicial review
acts as the final arbiter not only to give effect to the distribution of
legislative powers between Parliament and the State Legislatures, it is
also necessary to show any transgression by each entity. Therefore,
to borrow the words of Lord Steyn, judicial review is justified by
combination of "the principles of separation of powers, rule of law,
the principle of constitutionality and the reach of judicial review.
1 3 1 . I n Proprietary Articles Trades Association v. Attorney General for
Canada 1931 AC 311, Lord Atkin said:
Their Lordships entertain no doubt that time alone will not validate an Act
which when challenged is found to be ultra vires; nor will a history of a
gradual series of advances till this boundary is finally crossed avail to protect
the ultimate encroachment. At Pg 317.
132. Chandra Kumar and R. Gandhi have allowed tribunalization at the original stage
subject to certain safeguards. The boundary has finally been crossed in this case. I
would, therefore, hold that the National Tax Tribunals Act is unconstitutional, being
the ultimate encroachment on the exclusive domain of the superior Courts of Record
in India.
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MANU/SC/0875/2014

IN THE SUPREME COURT OF INDIA

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