Rojer Mathew vs. South Indian Bank Ltd. and Ors.

Facts

In 2017, the Union Government enacted the Finance Act, which took effect on March 31, 2017. This Act introduced amendments related to the structure, organization, and service conditions of tribunals in India. Notably, Section 184 of Finance Act authorized the Central Government to establish rules regarding the qualifications, appointments, terms of office, salaries, allowances, resignations, removals, and other service conditions for tribunal members. Then, the Union Government issued the Appellate Tribunal and Other Authorities (Qualifications, Experience and Other Conditions of Service of Members) Rules 2017 under this section.After the said Act was passed and the Rules were notified numerous petitions were filed before theSupreme Court challenging the constitutional validity of the Act.

Key Takeaways for Students

Legal Issue

• Whether the Finance Act, 2017 constitutionally validand satisfies the test of a 'money bill' under Article 110 of the Constitution?
• If it is held that the impugned legislation has been validly enacted, then does it through Section 184 excessively delegate legislative power to the Executive?
• Whether the Rules thus framed as delegated legislation are ultra vires their parent enactments and are liable to be struck down?

Holding

The Supreme Court, ruled that while the Lok Sabha Speaker’s certification of a Money Bill is generally respected, however it remains subject to judicial review if it blatantly violates the Constitution. The issue relating of whether Part XIV of the Finance Act is a Money Bill should be referred to a larger bench. On the constitutionality of Section 184, the court found it valid as it aligns with prior decisions on tribunal systems. The Court held that while guidelines exist for prescribing qualifications and service conditions for tribunal members, these powers should not be solely vested on the Legislature. It also ruled that the mere chances of executive misuse of Section 184 cannot justify striking down the provision, but courts can review delegated legislation to check if it aligns with the parent law.The Court unanimously struck down the Appellate Tribunal and Other Authorities Rules 2017 for violating judicial independence due to unwarranted government influence and lack of necessary qualifications for technical members. Lastly, the Court called for measures to rationalize tribunal functioning, including judicial impact assessments and the creation of a National Tribunal Commission.

Final Decision Appeal allowed

Ratio

The Search-cum-Selection Committees under the Rules enable excessive executive interference in tribunal appointments, threatening judicial independence and violating the separation of powers.