This case is one of the most important cases regarding the Finance Act which was passed in the year 2017. The main issue of these cases was to seek the validity or the Constitutionality of Part XIV of the Finance Act, 2017, and also the rules that we're framed in consonance had been concerned in the case.
The summary of the prayers that were made in these matters that aid the formulation of the core issues arising for adjudication was that the Madras Bar Association preferred a Civil writ petition; a writ of mandamus directing the Union of India to implement the directions of the honourable Supreme Court in the Union of India v R. Gandhi case. The prayer on being heard by a three-judge bench observed that this case presented substantial questions of Constitutional interpretation which is required to be heard by a Constitution bench. The Court also stated that the Union of India v R Gandhi also holds an important point regarding this case.
During the pendency of the above-stated writ petition, Rojer Mathew who is held to be the leading petitioner, in this case, filed a petition before the honourable High Court challenging the Constitutional validity of Section 13(5A) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest also known as SARFAESI Act 2002. Section 13(5A) of the Securitisation and Reconstruction of Financial Assets and enforcement of Securities Interest Act permitted secured creditors to participate in the auction of immovable property if it renewed unsold for want of reserve bid in an earlier bid. According to Rojer Mathew, this provision violated rights guaranteed under Article 300A and Article 14 of the Constitution of India. He also stated that it was in contravention of the Code Of Civil Procedure.
During the argument, the Court was brought into the notice that the appointment to the Debt Recovery Tribunals did not align with the Constitutional spirit of judicial independence. However, the Rojer Mathew case was kept pending as the honourable High Court had to consider some broad issues immediately.
Another, Public Interest Litigation was filed by Kudrat Sadhu by challenging the vires of Part XIV of the Finance Act, 2017 by which the provisions of twenty-five different enactments were amended to effect sweeping changes to the requisite qualification, method of appointment, learns of office, salaries and allowances and various other terms and conditions of agencies of the members and presiding officers of different statutory Tribunals.
These cases reached the Honourable Supreme Court of India. These three main issues along with some other issues when was observed closely, it was stated that most of the individual cases were similar and overlapping. Hence for the sake of brevity, it is not necessary to refer to each submission separately. Broadly, it was observed that the petitioners had questioned the validity of Part XIV read with the 8th and the 9th Schedule of the Finance Act 2017, as being ex-facie unconstitutional, arbitrary, and offensive to the basic structure of the Constitution. The word only of Article 110 of the Constitution of India was emphasised which falls within the metes and bounds of Clause (a) to (g) and treated as a money bill because the foremost contention on behalf of petitioner In Part XIV could not be part to be money bill of the Finance Act 2017. The petitioner counsel also stated that the Tribunals are governed by Article 323A and Article 323B and laws enacted in this regard can't be claimed as a money bill.
The learned Attorney General passionately drew attention to the existence over forty tribunals, statutory commissions, and authority under the Government of India. They also stated that such inconsistency may happen due to the drafting error, and further stressed the need to normalize and harmonize the applicable rules which were attempted through the Finance Act 2017.
Now the Court started analyzing the case. The questions that arose in the first instance that whether the Finance Act 2017 can be termed as a money bill under Article 110. The Court in this regard opined that the Indian Parliament is a bicameral legislature, and had to be both passed by Rajya Sabha and Lok Sabha and must also receive Presidential ratification. However, the Court after much scrutiny thought it appropriate to refer it to a seven-judge bench.
In the next instance, the question which arose was whether Section 184 of the Finance Act, 2017 is unconstitutional on account of exercise delegation. The Court on examining of the Constitutional scheme, the statute which had created Tribunal and precedents stated that they do not think the power to prescribe qualifications, selection procedure and service conditions of member and other officeholders of Tribunals is to be a vest solely on. legislature. However, a mere possibility of abuse of delegated powers in absence of the evidence cannot be a ground to strike down the provision of Finance Act 2017.
Another important issue was if Section 184 is valid, then whether the Tribunal, Appellate Tribunal and other Authorities( Qualification, Experience Condition And Service of Members Rule 2017 align with the Parent Act. In this regard, the bench observed that there lies some inconsistency within the Rules.
Finally, the Court gave the verdict. They struck down the Rules 2017 and also stated for framing a fresh set of Rules. They also referred it to a larger bench in this regard whether this can be passed as a money bill.