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Madras Bar Association vs. Union of India and another dated 2014-09-25

                                                                “REPORTABLE”

                        IN THE SUPREME COURT OF INDIA
                    CIVIL ORIGINAL/APPELLATE JURISDICTION
                    TRANSFERRED CASE (C) NO. 150 OF 2006

Madras Bar Association                             …Petitioner(s)
                                   versus
Union of India and another                         …Respondents
                                    WITH

                        CIVIL APPEAL NO. 3850 OF 2006

                        CIVIL APPEAL NO. 3862 OF 2006

                        CIVIL APPEAL NO. 3881 OF 2006

                        CIVIL APPEAL NO. 3882 OF 2006

                        CIVIL APPEAL NO. 4051 OF 2006

                        CIVIL APPEAL NO. 4052 OF 2006

                      WRIT PETITION (C)  NO.621 OF 2007

                    TRANSFERRED CASE (C)  NO.116 OF 2006

                    TRANSFERRED CASE (C)  NO.117 OF 2006

                    TRANSFERRED CASE (C)  NO.118 OF 2006

                      WRIT PETITION (C)  NO.697 OF 2007


                               J U D G M E N T

Jagdish Singh 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:

2(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.
3(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:
4(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:-
discovery and inspection;
enforcing the attendance of any person and examining him on oath;
compelling the production of books of account and other documents; and
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:
5(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:
10.   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.
15.   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
            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 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.


17.   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.
18.   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.
20.   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 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.
22.    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              xxx              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.
xxxx             xxxx             xxxx
      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.
xxxx             xxxx             xxxx
      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.
xxxx             xxxx             xxxx
      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 Criminal  Procedure  Code,
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
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              xxx        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              xxx              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  25.4.997,  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:-

1     “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
section  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
subsection (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  subsection  (1)  and   "Governor   General"
for "Governor" in each  of  the  four  references  originally  made  to  the
Governor in subsection (4). In 1975 subsection (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.

2           xxx              xxx             xxx


3 The Constitution


4           xxx              xxx             xxx


5 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.

6           xxx              xxx             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 Hindscase 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.

7           xxx              xxx             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
subsection (1) and "the court" for each reference to "the  Governor-General"
in subsection (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 apologise to the Third  Defendant,  the  form  of
the apology being annexed to the determination;
(2) that the Plaintiff do pay the sum of $2 500 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 apologise 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 $10 000 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-
15. 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 s.71 and constituted in accordance with s.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.

8           xxx              xxx             xxx

21. 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 ss.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              xxx              xxx
25.    Turning  to  the  case  before  the  Court,  whatever  might  be  the
enforceability of  a  declaration  that  the  plaintiff  "do  apologise",  a
declaration that the plaintiff "do pay the sum  of  $2  500"  to  the  third
defendant, once registered, attracts the operation of s.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 s.53(2)) .
      26.    But  s.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,
s.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 s. 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 ss. 96 to 100 in favour  of  the  federal  authority.  Under  s.  96  the
Governor General has the sole power to appoint the judges of  the  Superior,
District and County Courts in each Province. Under s. 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  s.  100  the
Parliament of Canada is obliged to  fix  and  provide  for  their  salaries.
Section 92(14) and ss. 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  s.  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  s.  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 s. 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 s. 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
inter-relationship between the judicial and administrative features  of  the
legislative scheme; the assumption was that any attempt to confer  a  s.  96
function  on   a   provincially-appointed   tribunal   was ultra   vires the
Legislature.
This sweeping interpretation of s. 96,  with  its  accompanying  restrictive
view of provincial legislative authority under s.  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 s. 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  s.  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, (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                   xxx              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
inter-relationship 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
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  (s.101).
The provincial reference statutes are also valid as laws in relation to  the
administration of justice in the province (s.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  ss.
96 to 100 of the constitution Act, 1867.
      If ss. 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 s. 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 s. 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 s. 96, (2) are drawn from the  bar  of  the  province  in
conformity with ss. 97 and 98, and (3) receive salaries that are  fixed  and
provided by the federal parliament in conformity with s. 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 “s. 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 s. 96 litigation: five  challenges  to  the
powers of inferior courts or tribunals based on s. 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,  (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, Section 7  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,  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 vs. State of U.P., 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                         xxx                    xxx
      18.   In the case of Shri Kumar Padma  Prasad  v.  Union  of  India  &
Ors., (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. vs. H.R. Deb, 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                         xxx                    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:
27.   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:-
"323B.      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.
28.   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:
30.   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  asseessee  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
asseessee 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:-
      “13.  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
ununderstandable.  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.
34.   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.
35.   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 fora, 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.
37.   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. (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                    xxx                   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.”

38.   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, (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.
41.   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,
(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:
“87. 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 CPC.  In  this
behalf reference was made to, Aundal Ammal v. Sadasivan Pilai, (1987) 1  SCC
183, wherein it was held as under:
“15. 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
(l)(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  indisputed
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 CPC. 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,  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 CPC, 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 CPC. 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 [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 subsection (5) of Section 18 of the Act.  Sub-section  (5)  of
Section18 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 CPC  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 CPC under Section 115 of  the  CPC  could  revise  again  an
order once again after revision under Section20 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 (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  Section115 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.”

43.   Most importantly, a nine-Judge constitution  bench  judgment  of  this
Court, in Mafatlal Industries v. Union of India  (1997)  5  SCC  536,  while
dealing with the validity of Section 11B(3)  of  the  Excise  Act,  held  as
follows:
“77.  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 11-B (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 11-B, 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 11-B,  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 11-B is questioned, no specific  reasons  have
been assigned why a provision of the nature of Sub-section (3) of Section11-
B (amended) is unconstitutional. Applying the propositions enunciated  by  a
seven-Judge Bench of this Court in Kamala Mills case, AIR 1965 SC  1942,  it
must be held that Section 11-B (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 11-B 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 11-B 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 11-B 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 11-B,  prior  to
its amendment in 1991, and Sub-section (3) of Section 11-B,  as  amended  in
1991. It is relevant to notice that the  Act  provides  for  more  than  one
appeal against the orders made under Section 11-B/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 11-B, 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 11-B. 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 11-B,  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 11-B,  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
“11A. Administration  of  justice;  constitution  and  organisation  of  all
courts, except the Supreme Court and the High Courts.
            xxx                   xxx              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.
47.   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 (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.
48.   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 Section 35G), 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  (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 pubic 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,
(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).”
81.   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  323-B  of  the
Constitution. It is to be remembered  that,  apart  from  the  authorisation
that flows from Articles 323-A and 323-B,  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.
82.   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
[pic]Courts has  exploded  in  an  unprecedented  manner.  The  decision  in
Sampath Kumar’s  case,  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,  (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 [pic]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.
87.   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.   In R.K. Jain’s case, (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 323-A  and  323-B  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  [pic]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.
8.64  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
8.65  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.
8.66  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.
89.   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.
90.   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 [pic]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 323-A or  Article  323-B  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 [pic]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, (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 [pic]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 [pic]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  323-A  and  323-B
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  [pic]the
sense that the same can be subjected to judicial review by  the  High  Court
under Articles 226 and 227 of the Constitution.
26.   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                    xxx                   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  and/or  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 & Ors., (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:-
“12.  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 [pic]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.
14.   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: (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.”
16.   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
hypertechnicalities.
19.   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
[pic]constituted in terms of Section 4 of the Act  to  promote  and  protect
the rights of the consumers as noticed hereinbefore.
xxx              xxx              xxx
24.   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 [pic]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.
27.   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.
28.   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 [pic]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.
29.   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, AIR 1955 SC 58, and Union of  India
v. Harbhajan Singh Dhillon, (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, (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
[pic]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 thereagainst 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                    xxx                   xxx
49.   The question as regards the applicability  or  otherwise  of  Articles
323-A and 323-B 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, (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 323-A and  323-B
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:
52(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, (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.:
“292.  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                    xxx                   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  [pic]rigid
amendatory process which authorizes amendment by means of 2/3  majority  and
the additional requirement of ratification.
xxx              xxx              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 31-C, in my  opinion,  strikes  at  the
basic structure of the Constitution. The second part of  Article  31-C  thus
goes beyond the  permissible  limit  of  what  constitutes  amendment  under
Article 368.
            xxx                   xxx                    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              xxx              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              xxx              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              xxx              xxx
(xiv)       The second part of Article 31-C contains the  seed  of  national
disintegration and is invalid on the following two grounds:
[pic](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  31-C  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  31-C.
The vice of second part of Article 31-C lies in the fact that  even  if  the
law  enacted  is  not  for  the  object  mentioned  in  Article  31-C,   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 31-C goes beyond the permissible  limit  of  what
constitutes amendment under Article 368.
            The second  part  of  Article  31-C  can  be  severed  from  the
remaining part of Article 31-C and  its  invalidity  would  not  affect  the
validity of  the  remaining  part.  I  would,  therefore,  strike  down  the
following words in Article 31-C  --
“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”.”

56(i) The next judgment having a bearing  on  the  subject  is  Smt.  Indira
Nehru Gandhi v.  Shri  Raj  Narain,  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:-
“16.  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,  (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  329-A  is  said  to  be
exercise  of  a  purely  judicial  power  which  is  not  included  in   the
constituent power conferred by Article 368.
            xxx                   xxx                    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                   xxx                    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                   xxx                    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 31-B 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,  (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.
176.  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                   xxx                    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  [pic]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. [pic]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                    xxx                   xxx
343.  I think clause (4) is  bad  for  the  reasons  which  I  have  already
summarised. Clauses (1) to (3) of Article 329-A are severable but I  express
no opinion on their validity as it is not necessary for deciding this case.
xxx                    xxx                   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. & Ors.  v.  Union  of
India & Ors., (1980) 2 SCC 591, as also, Minerva Mills Ltd. & Ors. v.  Union
of India & Ors., (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
31-C 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 31-C 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 31-C, 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 31-C must follow. Indeed,  if
there is one topic on which  all  the  13  Judges  in  Kesavananda  Bharati,
(1973) 4 SCC 225, were agreed, it is this: that the only  question  open  to
judicial review under the unamended Article 31-C  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 31-
C into a democratic outfit under which an extensive  judicial  review  would
be permissible must fail.
xxx                    xxx                   xxx
[pic]73.    It was finally urged by the learned Attorney General that if  we
uphold the challenge to the  validity  of  Article  31-C,  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 31-C 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                    xxx                   xxx
75.   These then are our reasons for the Order (See Minerva Mills  Ltd.  vs.
Union of India, (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, 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 [pic]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
[pic]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
329-A(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,  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  pro-active  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   politicial   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[pic]  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  vs.  Sankalchand
Himmatlal Sheth, (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  [pic]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                    xxx                   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                    xxx                   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                    xxx                   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:-

“624.       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 [pic]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, (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,  (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, 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[pic]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, (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 [pic]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, (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.
697.   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 [pic]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, (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                    xxx                   xxx
771.  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 [pic]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
seniormost 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  juniormost  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
[pic]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                    xxx                   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                    xxx                   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 [pic]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, (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,  (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
[pic]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 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  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 [pic]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  323-
A 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 323-A 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 323-A  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 323-A 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 [pic]the test of constitutionality  as  being  within  the
ambit and coverage of clause (2)(d) of Article 323-A,  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:-
“10.  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;
[pic](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.
11.   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, (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 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…”
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  323-A(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 [pic]Constitution bringing in  Article  323-A  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 323-A. A Constitution Bench of this  Court  in  K.K.
Dutta v. Union of India, (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, (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, (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, (1987) 1 SCC 422, M.B. Majumdar v. Union of India, (1990) 4 SCC  501,
Amulya Chandra Kalita v. Union of India, (1991) 1  SCC  181,  R.K.  Jain  v.
Union of India, (1993) 4 SCC 119, and Dr. Mahabal Ram v. Indian  Council  of
Agricultural Research, (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,(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, 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, (1980) 3 SCC 625, (at pp. 671-672) and is not  regarded  as  the
definitive test in this field of Constitutional Law.
77.   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, AIR 1965 SC  745,  Beg,  J.  and
Khanna, J. in Kesavananda Bharati [pic]case (supra), Chandrachud,  C.J.  and
Bhagwati, J. in Minerva  Mills  (supra),  Chandrachud,  C.J.  in  Fertilizer
Kamgar, (1981) 1 SCC 568, K.N. Singh, J. in Delhi  Judicial  Service  Assn.,
(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.
79.   We also hold that the power vested in  the  High  Courts  to  exercise
judicial superintendence over the decisions  of  all  courts  and  tribunals
within [pic]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                    xxx                   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.
97.   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, (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 323-A and clause 3(d) of Article 323-B, 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 323-A  and  323-B  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 323-A  and  Article  323-B  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.”

61.   Reference was then made to Union of India v. Madras  Bar  Association,
(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  10-FB,  10-FD,
10-FE, 10-FF, 10-FL(2), 10-FO, 10-FR(3), 10-FT, 10-FX 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 10-FD(3)(f): Appointment of Technical Member to NCLT
16.   The High Court has  held  that  appointment  of  a  member  under  the
category specified in Section 10-FD(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 [pic]appropriate benches.  It  is  also  pointed  out  that  a
technical member would always sit in a Bench with a judicial member.
Section 10-FD(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.
20.   The High Court has also observed  that  as  persons  who  satisfy  the
qualifications prescribed in Section 10-FD(3)(g) would be persons  who  fall
under Section 10-FD(2)(a), it would be  more  appropriate  to  include  this
qualification in Section 10-FD(2)(a). It has also observed in Section  10-FL
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 10-FL(2) for cases relating to  rehabilitation,
restructuring or winding up of companies.
21.   The Union Government has not  accepted  these  findings  and  contends
that  the  observations  of  the  High  Court  would  amount   to   judicial
legislation.
Section 10-FD(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.
23.   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                    xxx                   xxx
Section 10-FX: Selection process for President/Chairperson
31.   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.
[pic] 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 10-FD(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
10-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.
10-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.
10-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).
[pic] (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 10-FD 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 10-FD.
10-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,—
[pic]       (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.
10-FF.         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).
                                *     *     *
10-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.
10-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 10-FD:
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
10-FD, and a Member appointed under clause (g) or clause (h) of  sub-section
(3) of Section 10-FD:
[pic]       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.
                                *     *     *
10-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
                                *     *     *
10-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.
                             *     *     *[pic]
10-FT.      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.
                                *     *     *
10-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—
(a)   Chief Justice of India or his nominee        Chairperson;
(b)   Secretary in the Ministry of Finance and Company Affairs
      Member;
(c)   Secretary in the Ministry of Labour       Member;
(d)   Secretary in the Ministry of Law  and  Justice  (Department  of  Legal
Affairs or Legislative Department)        Member;
(e)   Secretary in the Ministry of Finance and Company  Affairs  (Department
of Company Affairs)                   Member.
(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.
                                *     *     *
10-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.
                                *     *     *
10-GB.      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.
                                *     *     *
10-GF.      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.”

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:-
“70.  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  as  were
implemented in United Kingdom and as were suggested by L. Chandra Kumar  vs.
Union of India, (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 323-A  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 [pic]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                    xxx                   xxx
80.   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., (2002) 4 SCC  75,  and
State of Karnataka v. Vishwabharathi House Building Coop. Society, (2003)  2
SCC 412, held that Articles 323-A and 323-B 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                    xxx                   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.
91    In R.K. Jain  v.  Union  of  India,  (1993)  4  SCC  119,  this  Court
observed: (SCC pp. 169-70, para 67)
“67.   The  tribunals  set  up  under  Articles  323-A  and  323-B  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
[pic]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                    xxx                   xxx
101.  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 [pic]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                    xxx                   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  [pic]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                    xxx                   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                   xxx              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 10-FD. 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  10-FD  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
[pic]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 10-FD 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 10-FX, 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 10-FE 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 10-FJ and Section  10-FV  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, (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  323-B  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  323-B  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 vs. Madras Bar Association, (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  323-B  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 323-B 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 323-
B 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
323-B 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,  (1997)  3  SCC  261,  this  Court  considered  the
validity of only clause (3)(d) of Article 323-B but  did  not  consider  the
validity of other provisions of Article 323-B.
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 323-B.  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 323-B 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  323-B  by  contending  that  Article  323-B  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 323-B itself.
15. We therefore find that these petitions relating to the validity  of  the
NTT Act and the challenge to Article 323-B 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.”

63(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,  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  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,
(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,  (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.
64.   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?

III.   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.
69.   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?
70.   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.
73.   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.

IV.   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,
(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                    xxx              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
[pic]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,  (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                    xxx              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.”

76.   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.
77.   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:-
I: Hindu Law:
|Sl.|Name and citation|Allied subject/law adjudicated upon                    |
|No |of case          |                                                       |
|1  |Sri Sri Sridhar  |A Hindu idol is a juristic entity that is given the    |
|   |Jiew v. I.T.O.   |status of a human being capable of having property and |
|   |(1967) 63 ITR 192|it can be called an ‘individual’.                      |
|   |(Cal)            |                                                       |
|2  |C.E.D. v. Alladi |Though a widow cannot be a coparcener, she has         |
|   |Kuppuswamy       |copercenary interests and she is also a member of the  |
|   |(1977) 108 ITR   |coparcenary by virtue of the rights conferred by the   |
|   |439 (SC)         |Hindu Women’s Rights to Property Act, 1937.            |
|3  |Narendranath v.  |There is no distinction between property obtained by a |
|   |C.W.T.           |member of HUF on a partition and the property that     |
|   |(1969) 74 ITR 190|belongs to a member as a sole surviving coparcener by  |
|   |(SC)             |right of survivorship.                                 |
|4  |Goli Eswariah v. |A unilateral declaration of a Hindu coparcener, whereby|
|   |C.G.T.           |he throws his self-acquired property into the common   |
|   |(1970) 76 ITR 675|stock of the joint family property, does not amount to |
|   |(SC)             |a transfer and, therefore, such an act does not        |
|   |                 |constitute a gift.                                     |
|5  |C.I.T. v. Sandhya|The Supreme Court held that the wife and daughters     |
|   |Rani Dutta       |inheriting the property of a male Hindu do not form a  |
|   |(2001) 248 ITR   |HUF and that they could not also form such family by   |
|   |201 (SC)         |agreement among themselves by throwing their respective|
|   |                 |inherited shares in the hotchpot.                      |
|6  |C.I.T. v. Bharat |The gift of property of a HUF to the members of the    |
|   |Prasad Anshu     |family is not void but voidable.                       |
|   |Kumar            |                                                       |
|   |(2001) 249 ITR   |                                                       |
|   |755 (Delhi)      |                                                       |
|7  |C.W.T. v. M.A.R. |Even the fact that the wife had given up her right to  |
|   |Rajkumar         |maintenance does not mean that she is no longer a      |
|   |(1997) 226 ITR   |member of the family of her husband.                   |
|   |804 (AP)         |                                                       |
|8  |C.G.T. v. B.S.   |The amount spent by a Hindu father on his daughter’s   |
|   |Apparao          |marriage is treated as maintenance (and not a gift)    |
|   |(2001) 248 ITR   |under the Hindu Adoptions and Maintenance Act, 1956.   |
|   |103 (AP)         |                                                       |
|9  |Gowli Buddanna v.|A sole surviving coparcener can constitute a Hindu     |
|   |C.I.T.           |undivided family.                                      |
|   |60 ITR 293 (SC)  |                                                       |
|10 |C.W.T. v. Chander|The separate property of the father inherited upon     |
|   |Sen              |intestacy by the son is to be treated as the son’s     |
|   |161 ITR 370(SC)  |separate property and not as the property of his joint |
|   |                 |family.                                                |
|11 |C.I.T. v. Radhe  |If on partition of the family, separate shares are     |
|   |Shyam Agrawal    |allotted to the karta, his wife and children, the      |
|   |230 ITR 21       |existence of the Hindu undivided family comes to an    |
|   |(Patna)          |end, and the share of the erstwhile karta becomes his  |
|   |                 |separate property.                                     |
|12 |Kaniram          |A joint Hindu family, as such, cannot be a partner in a|
|   |Hazarimull v.    |firm.  However, it may enter into a partnership through|
|   |C.I.T.           |its karta.                                             |
|   |27 ITR 294 (Cal) |                                                       |
|13 |C.I.T. v. Bainik |A female member, as a member of a joint family, can    |
|   |Industries       |become a partner in a firm as the representative of her|
|   |119 ITR 282 Pat) |family.                                                |
|14 |C.G.T. v. Getti  |Unequal partition amongst coparceners in a HUF does not|
|   |Chettiar         |amount to a gift.                                      |
|   |82 ITR 599 (SC)  |                                                       |
|15 |Paramanand Bajaj |In the reunion of a HUF, all assets originally         |
|   |v. C.I.T.        |partitioned need not be pooled back.                   |
|   |135 ITR 673(Kar) |                                                       |
|16 |Pushpa Devi v.   |The scope of the theory of blending in Hindu law was   |
|   |C.I.T.           |discussed in detail.                                   |
|   |109 ITR 730(SC)  |                                                       |
|17 |C.I.T. v. B.     |Gift deed executed by the assessee in favour of her    |
|   |Indira Devi      |daughter to secure her future after marriage was not   |
|   |238 ITR 846 (Ker)|due to any legal obligation enjoined upon the assessee |
|   |                 |by virtue of Section 20 of the Hindu Adoptions and     |
|   |                 |Maintenance Act, but for other considerations.         |
|   |                 |Therefore, the gift being voluntary within the meaning |
|   |                 |of Section 2(xii) of the Gift Tax Act, 1964, was liable|
|   |                 |to tax.                                                |
|18 |Sathyaprana      |Meaning of “coparcenary”, “HUF” and “survivorship”     |
|   |Manjunatha Gowda |discussed.                                             |
|   |v. C.E.D.        |                                                       |
|   |227 ITR 130 (SC) |                                                       |
|19 |C.I.T. v.        |Income from shares held by the members of HUF cannot be|
|   |Shakuntala       |termed as the income of HUF.                           |
|   |(1961) 43 ITR 352|                                                       |
|   |(SC)             |                                                       |
|20 |C.W.T. v. Late R.|Divided member marrying a Christian under Special      |
|   |Sridharan        |Marriage Act, 1956.  HUF way of living practiced by    |
|   |104 ITR 436 (SC) |divided member and son – continue to be HUF – meaning  |
|   |                 |of word “Hindu” discussed.                             |

II: Company Law:
|Sl.|Name and citation|Allied subject/law adjudicated upon                    |
|No |of case          |                                                       |
|1  |C.I.T. v. Light  |A private company becoming a public company by virtue  |
|   |Publications Ltd.|of the provisions of Section 43A of the Companies Act, |
|   |(2001) 251 ITR   |1956 may still not become a “company in which the      |
|   |0120 (Guj.)      |public are substantially interested” due to the        |
|   |                 |restriction imposed on its shareholders upon           |
|   |                 |transferability of its shares to the other members of  |
|   |                 |the public.                                            |
|2  |C.I.T. v. Sunaero|Presumption that a registered shareholder holds the    |
|   |Ltd.             |share in his own right and any claim that shares were  |
|   |(2012) 345 ITR   |being held as a nominee has to be proved by the person |
|   |0163 (Del)       |claiming so.                                           |
|3  |Rajasthan        |Shares of a single type issued by a State Financial    |
|   |Financial        |Corporation providing for minimum and maximum dividend |
|   |Corporation v.   |cannot be termed as ‘preference shares’.               |
|   |C.I.T.           |                                                       |
|   |163 ITR 278(Raj) |                                                       |
|4  |Bacha F. Guzdar  |(i)  Partnership is merely an association of persons   |
|   |v. C.I.T.        |for carrying on the business of partnership and, in    |
|   |AIR 1955 SC 74   |law, the firm name is a compendious method of          |
|   |                 |describing the partners.  Such is, however, not the    |
|   |                 |case of a company which stands as a separate juristic  |
|   |                 |entity distinct from the shareholders.                 |
|   |                 |(ii)  Shareholders have no right in the property of the|
|   |                 |company.  They are only entitled to dividends and a    |
|   |                 |share in the surplus, if any, after the dissolution of |
|   |                 |the company.                                           |
|5  |Juggilal Kamlapat|Although company is a separate legal entity, in certain|
|   |v. C.I.T.        |exceptional cases, the Court can lift the veil of the  |
|   |AIR 1969 SC 932; |corporate entity and have regard to the economic       |
|   |C.I.T. v. Poulose|realities behind the legal façade.                     |
|   |and Mathen (Pvt.)|                                                       |
|   |Ltd.             |                                                       |
|   |(1999) 236 ITR   |                                                       |
|   |416 (Ker)        |                                                       |
|6  |C.G.T. v. Indo   |Valuation of shares-reasonable valuation has to be     |
|   |Traders &        |accepted unless the valuation shocks conscience of the |
|   |Agencies (Madras)|court.                                                 |
|   |Ltd.             |                                                       |
|   |131 ITR 313 (Mad)|                                                       |
|7  |Vodafone         |In company law, there is no transfer of a share when   |
|   |International    |there is a transfer of underlying assets.  Various     |
|   |Holdings BV v.   |issues of lifting of the corporate veil discussed.     |
|   |UoI              |Also discussed, briefly, the enforceability of         |
|   |341 ITR 1 (SC)   |shareholders’ agreements.                              |
|8  |C.I.T. v. Suleman|A firm of 20 major partners and 3 minor partners does  |
|   |Khan and Mahaboob|not contravene Section 11(2) of the Companies Act, 1956|
|   |Khan and Co.     |since minors are not to be reckoned as partners for the|
|   |(2002) 257 ITR   |purposes of the calculation.                           |
|   |0170 (AP)        |                                                       |
|9  |Marshall Sons and|Amalgamation – date of transfer/ date of amalgamation /|
|   |Co. (India) Ltd. |transfer is the date specified in the scheme as the    |
|   |v. I.T.O.        |transfer date.                                         |
|   |(1997) 223 ITR   |                                                       |
|   |809 (SC)         |                                                       |
|10 |C.I.T. v. Mrs.   |a)  On amalgamation there is an extinguishment of      |
|   |Grace Collis and |rights and, therefore, there is a transfer.            |
|   |others           |b)  The amalgamation scheme sanctioned by the court    |
|   |248 ITR 323(SC)  |would be an instrument within the meaning of Section   |
|   |                 |2(1) of the Bombay Stamp Act, 1958, and liable for     |
|   |                 |stamp duty.  A document creating or transferring a     |
|   |                 |right is an instrument.                                |
|11 |Anarkali Sarabhai|Redemption of preference shares amounts to transfer and|
|   |v. C.I.T.        |is liable to capital gains.                            |
|   |227 ITR 260(SC)  |                                                       |
|12 |C.I.T. v. Artex  |Gains arising out of slump sale of business as a going |
|   |Manufacturing Co.|concern is liable to tax under Section 41(2) on        |
|   |227 ITR 260(SC)  |itemized basis if slump sale is determined on valuation|
|   |                 |of each asset/ liability.                              |
|13 |C.I.T. v. Gold   |Valuation of bonus shares – The correct method to apply|
|   |Mohore Investment|in cases where bonus shares rank pari passu is to take |
|   |Company Ltd.     |the cost of the original shares and to spread it over  |
|   |(1970) 78 ITR 16 |all the original as well as the bonus shares and to    |
|   |(SC)             |find out the average price of all the shares.          |
|14 |Hansur Plywood   |When a shareholder gets a bonus share the value of the |
|   |Works Ltd. v.    |original share held by him goes down.  In effect, the  |
|   |C.I.T.           |shareholder gets two shares instead of the one share   |
|   |(1998) 229 ITR   |held by him and the market value as well as the        |
|   |112 (SC)         |intrinsic value of the two shares put together will be |
|   |                 |the same or nearly the same as the value of the        |
|   |                 |original share before the bonus issue.                 |
|15 |Shree Gopal Paper|Issuance of share takes place when entry of name of    |
|   |Mills Ltd. v.    |subscriber or successful offerer is made in the        |
|   |C.I.T.           |Register of Members.                                   |
|   |(1967) 64 ITR 233|                                                       |
|   |(Cal)            |                                                       |
|16 |Dalmia Investment|Though no cash is paid by the shareholders for         |
|   |Co. Ltd. v.      |allotment of the bonus shares, the set-off for dividend|
|   |C.I.T.           |which was due to be paid to the shareholder out of     |
|   |(1961) 41 ITR 705|undistributed profits of company can be regarded as    |
|   |(Pat)            |consideration for the bonus shares.  Therefore, real   |
|   |                 |cost of bonus shares to shareholder/assessee is the    |
|   |                 |value of shares as shown in books of account of the    |
|   |                 |company.                                               |
|17 |Anarkali Sarabhai|Redemption of preference shares is “transfer” and      |
|   |v. C.I.T.        |liable to capital gains.                               |
|   |227 ITR 260 (SC) |                                                       |
|18 |C.I.T. v. Artex  |Gains arising out of “slump sale” of a business as a   |
|   |Manufacturing Co.|going concern is liable to tax under Section 41(2) on  |
|   |227 ITR 260 (SC) |itemized basis if the slump sale is determined on      |
|   |                 |valuation of each asset/liability.                     |

III: Mohammedan Law:
|Sl.|Name and citation|Allied subject/law adjudicated upon                    |
|No |of case          |                                                       |
|1  |Trustees of      |A gift was made to the assessee by his father granting |
|   |Sahebzadi Oalia  |him life estate and the remainder to his children.     |
|   |Kuslsum Trust v. |Deed was held to be void under Mohammedan law.  It was |
|   |C.E.D.           |held to be an absolute gift.                           |
|   |[1998] 233 ITR   |                                                       |
|   |434 (SC)         |                                                       |
|2  |S.C.M. Mohammed  |Principles of Mohammedan law regarding gift analyzed   |
|   |v. C.I.T.        |and applied – gift with limited estate not valid in    |
|   |[1999] 235 ITR 75|Muslim law – gift to be that of an entire property     |
|   |(Mad)            |though the document only gave him a limited right.     |
|3  |Ghiasuddin Babu  |Deferred dower on the dissolution of marriage by death |
|   |Khan v. C.I.T.   |or divorce is not a contingent debt because one of the |
|   |[1985] 153 ITR   |two events is bound to happen.  Wife cannot demand the |
|   |707 (AP)         |payment of deferred dower before the event, but husband|
|   |                 |can pay even earlier.                                  |
|4  |Ziauddin Ahmed v.|A family arrangement is valid amongst Muslims.         |
|   |C.G.T.           |                                                       |
|   |(1976) 102 ITR   |                                                       |
|   |253 (Gau)        |                                                       |
|5  |C.I.T. v. Puthiya|A wakf cannot be a partner, but the mutawalli of a wakf|
|   |Ponmanichintakam |can be.                                                |
|   |Wakf,            |                                                       |
|   |44 ITR 172 (SC)  |                                                       |
|6  |Ahmed G H Ariff  |Held, the moment a wakf is created all rights of       |
|   |v. C.W.T.        |property pass out of wakf and vest in the Almighty –   |
|   |76 ITR 471 (SC)  |Property is a term of the widest import and subject to |
|   |                 |any limitation which the context may require; it       |
|   |                 |signifies every possible interest which a person can   |
|   |                 |clearly hold or enjoy.                                 |

IV: Family Arrangement:
|Sl.|Name and citation|Allied subject/law adjudicated upon                    |
|No |of case          |                                                       |
|1  |C.I.T. v. R.     |Even if a party to the settlement had no title but,    |
|   |Ponnammal        |under the family arrangement, the other party          |
|   |(1987) 164 ITR   |relinquishes all its claims or titles in favour of such|
|   |706 (Mad)        |a person and acknowledges him to be the sole owner,    |
|   |                 |then the antecedent title must be assumed and the      |
|   |                 |family arrangement will be upheld.                     |
|2  |C.I.T. v. Shanti |An asset acquired by way of a family arrangement to be |
|   |Chandran         |considered as an asset acquired on partition or other  |
|   |(2000) 241 ITR   |succession.                                            |
|   |371 (Mad)        |                                                       |

V: Law of Partnership:
|Sl.|Name and citation|Allied subject/law adjudicated upon                    |
|No |of case          |                                                       |
|1  |C.I.T. v.        |Asset of partnership firm – transfer to partner by     |
|   |Palaniappa       |agreement – not valid – registered deed necessary.     |
|   |Enterprises      |                                                       |
|   |(1998) 234 ITR   |                                                       |
|   |635 (Mad)        |                                                       |
|2  |Saraladevi       |Contribution of capital by a partner to a firm         |
|   |Sarabhai v.      |constitutes “transfer”.                                |
|   |C.I.T.           |                                                       |
|   |(2001) 250 ITR   |                                                       |
|   |745 (Guj)        |                                                       |
|3  |Sunil            |Conversion of an exclusive interest into a shared      |
|   |Siddharthabhai v.|interest would amount to a “transfer” and does not     |
|   |C.I.T.           |amount to a conveyance by way of sale.                 |
|   |(1985) 156 ITR   |                                                       |
|   |509 (SC)         |                                                       |
|4  |C.I.T. v. S.     |Transaction of a partner with the firm, during the     |
|   |Rajamani and     |subsistence of the firm requires a registered          |
|   |Thangarajan      |instrument, where the transaction involves immovable   |
|   |Industries       |property.                                              |
|   |(2000) 241 ITR   |                                                       |
|   |668 (Mad)        |                                                       |
|5  |Malabar Fisheries|Distribution of assets on dissolution is not transfer  |
|   |v. C.I.T.        |by the firm.                                           |
|   |(1979) 120 ITR 49|                                                       |
|   |(SC)             |                                                       |
|6  |C.I.T. v. Gupta  |Validity of partnership – contribution of partner need |
|   |Brothers         |not be cash or property.  Skill and labor would        |
|   |(1981) 131 ITR   |constitute contribution.                               |
|   |492 (All)        |                                                       |
|7  |C.G.T. v. Pranay |Minors who were admitted to the benefits of the        |
|   |Kr. Saharia      |partnership could not claim their share of goodwill on |
|   |(1993) 204 ITR 78|the reconstruction of the firm by excluding the minors |
|   |(Gau)            |and consequently they were not liable to gift-tax.     |
|8  |Beniram Moolchand|The mere fact that two persons take a commission agency|
|   |v. C.I.T.        |business jointly would not necessarily constitute a    |
|   |25 ITR 287 (All) |partnership between them.                              |
|9  |C.I.T. v. Chandra|If a partnership has been entered between two persons  |
|   |Shekhar Pawan    |of whom one is a benamidar of the other, there is no   |
|   |Kumar            |relation of partnership between the two persons and one|
|   |203 ITR 435      |person cannot constitute a firm.                       |
|   |(Raj.)           |                                                       |
|10 |Addl. C.I.T. v.  |On retirement of a partner from the firm, there is no  |
|   |Mohanbhai        |transfer of interest of the partner I the assets       |
|   |Pamabhai         |thereof including the goodwill.  The amount received is|
|   |165 ITR 166 (SC) |no assessable as capital gains.  This case law is valid|
|   |                 |even after amendment in Section 45(4) which talks of   |
|   |                 |dissolution or otherwise transferred.                  |
|11 |Manohardas       |It is open to the partners to agree not to take the    |
|   |Kedarnath v.     |whole of the firm’s profits for their personal use and |
|   |C.I.T.           |to reserve a part of the firm’s profits for charity.   |
|   |25 ITR 287 (All) |                                                       |
|12 |C.I.T. v. Bharani|A partner has no interest in the property of the firm. |
|   |Pictures (Mad)   |In a case where there are two partners and one signs a |
|   |(1981) 129 ITR   |release deed to a property in favour of the other, it  |
|   |244              |is in fact a transfer from the partnership to that     |
|   |                 |partner.                                               |

VI: Territoriality :
|Sl.|Name and citation|Allied subject/law adjudicated upon                    |
|No |of case          |                                                       |
|1  |C.I.T. v. H.E.H. |The case involved international law, municipal law and |
|   |Mir Osman Ali    |a convenant between the Government of India and the    |
|   |Bahadur          |Nizam of Hyderabad.  Held, that Hyderabad State never  |
|   |(1966) 59 ITR 666|acquired an international personality under            |
|   |(SC)             |international law and its ruler was not entitled to    |
|   |                 |claim immunity from taxation of his income.            |
|2  |Electronics      |Legislative powers of Parliament to enact laws which   |
|   |Corporation of   |have provisions of having extra-territorial operation, |
|   |India Ltd. v.    |is within the competence of Parliament.  But nexus with|
|   |C.I.T.           |something in India or object relating to India         |
|   |183 ITR 43 (SC)  |necessary.                                             |
|3  |G.V.K. Industries|Parliament is constitutionally restricted from enacting|
|   |Ltd. v. I.T.O.   |legislation with respect to extra-territorial aspects  |
|   |332 ITR 130 (SC) |or causes that do not have, nor are expected to have,  |
|   |                 |any direct or indirect, tangible or intangible, impact |
|   |                 |on or effect in or consequences for (a) the territory  |
|   |                 |of India, or any part of India; or (b) the interests   |
|   |                 |of, welfare of, well-being of, or security of          |
|   |                 |inhabitants of India and Indians.                      |
|4  |C.I.T. v. R.D.   |Business connection – there must be continuity as well |
|   |Agarwal & Co.    |as real and intimate relation between trading activity |
|   |56 ITR 20        |carried on outside the taxable territories and trading |
|   |                 |activity within the territories, the relation between  |
|   |                 |the two contributing to the earning of income by the   |
|   |                 |nonresident in his trading activity.                   |

VII: Trusts/ Societies:
|Sl.|Name and citation|Allied subject/law adjudicated upon                    |
|No |of case          |                                                       |
|1  |L.R. Patel Family|Trustees of a fixed (specific) trust cannot be         |
|   |Trust v. I.T.O.  |considered as an association of persons or body of     |
|   |262 ITR 520 (Bom)|individuals.                                           |
|2  |C.I.T. v. Thanthi|Discussion on the Doctrine of Cypres as applicable to  |
|   |Trust            |public charities.                                      |
|   |(1982) 137 ITR   |                                                       |
|   |735 (Mad)        |                                                       |
|3  |C.I.T. v.        |Power of trustees to contract on behalf of trust.      |
|   |Swashraya        |Consent of beneficiaries, if necessary.                |
|   |286 ITR 265 (Guj)|                                                       |
|4  |Pandit v. C.I.T. |The number of ultimate beneficiaries of a trust may    |
|   |(1972) 83 ITR 136|increase or decrease by reason of death and other      |
|   |(Bom)            |circumstances and the interests of beneficiaries may,  |
|   |                 |at a relevant date, be only contingent and may become  |
|   |                 |vested at much a later date.  If at that date, the     |
|   |                 |beneficiaries can be ascertained, the Court must hold  |
|   |                 |that the beneficiaries are determinate and known and   |
|   |                 |that assets are held by the trustees for their benefit.|
|5  |C.I.T. v. All    |A society registered under the Societies Registration  |
|   |India Hindu      |Act may be treated as an association of persons.       |
|   |Mahasabha        |                                                       |
|   |140 ITR 748 (Del)|                                                       |
|6  |Tulsidas         |India Trust Act, 1882 – trustee can also be a          |
|   |Kilachand v.     |beneficiary.                                           |
|   |C.I.T.           |                                                       |
|   |42 ITR 1 (SC)    |                                                       |
|7  |C.I.T. v. P.     |Trust may be created in favour of an unborn person if  |
|   |Bhandari         |it satisfies conditions laid down in Section 13 of the |
|   |(1984) 147 ITR   |Transfer of Property Act, 1882, even though coming into|
|   |500 (Mad)        |existence of such a beneficiary is uncertain.  A trust |
|   |                 |deed cannot be bad for uncertainty or vagueness.       |

VIII: Contract Law :
|Sl.|Name and citation|Allied subject/law adjudicated upon                    |
|No |of case          |                                                       |
|1  |C.I.T. v.        |Nature of breach – whether payment of damage results in|
|   |Shantilal Pvt.   |settlement of the original contract.                   |
|   |Ltd.             |                                                       |
|   |(1983) 144 ITR 57|                                                       |
|   |(SC)             |                                                       |
|2  |C.I.T. v. Best & |Compensation received on termination of agency and     |
|   |Co. P. Ltd.      |restrictive convenant – nature of receipt – revenue or |
|   |60 ITR 11 (SC)   |capital – restrictive convenant – whether an           |
|   |                 |independent obligation – whether compensation          |
|   |                 |severable.                                             |
|3  |N. Sundareswaran |Breach of contract – arbitration clause – scope of     |
|   |v. C.I.T.        |Section 73 – liquidated and unliquidated damages – no  |
|   |(1997) 226 ITR   |deduction can be claimed on potential liability for    |
|   |142 (Ker)        |damages.                                               |

IX: Transfer of Property Act :
|Sl.|Name and citation|Allied subject/law adjudicated upon                    |
|No |of case          |                                                       |
|1  |Bansidhar        |Difference between a sale with a condition to          |
|   |Sewabhogowan &   |re-purchase and a mortgage by conditional sale.        |
|   |Co. v. C.I.T.    |                                                       |
|   |(1996) 222 ITR 16|                                                       |
|   |(Gau)            |                                                       |
|2  |Jagadishchandran |Whether self-created mortgage or mortgage by previous  |
|   |v. C.I.T.        |owner affects the cost of acquisition.                 |
|   |227 ITR 240 (SC) |                                                       |
|   |Arunachalam v.   |                                                       |
|   |C.I.T.           |                                                       |
|   |227 ITR 222(SC)  |                                                       |
|3  |C.I.T. v. Brig.  |Though a transfer cannot be made directly to an unborn |
|   |Kapil Mohan      |person, since under the definition of “transfer” in    |
|   |252 ITR 830 (Del)|Section 5 of the Transfer of Property Act, 1882, a     |
|   |                 |transfer is limited to living persons, transfer to an  |
|   |                 |unborn person can only be made by the machinery of     |
|   |                 |trusts.                                                |
|4  |C.G.T. v. Aloka  |If two registered documents re-executed by the same    |
|   |Lata Sett        |person in respect of the same property to two different|
|   |(1991) 190 ITR   |persons at different times, the one which was executed |
|   |556 (Cal)        |first has priority over the other, although the former |
|   |                 |was registered subsequent to the latter.  In other     |
|   |                 |words, registration of a document relates to the date  |
|   |                 |of its execution.                                      |
|5  |C.I.T. v. N.R.   |Whether a sale along with deed for re-conveyance of    |
|   |Bhusanraj        |property amounts to transfer under both common law and |
|   |(2002) 256 ITR   |income-tax law?                                        |
|   |0340 (Mad)       |                                                       |


X: Intellectual Property :
|Sl.|Name and citation|Allied subject/law adjudicated upon                    |
|No |of case          |                                                       |
|1  |Anantram v.      |The assignment of a patent is a transaction on capital |
|   |C.I.T.           |account, but where a person carries on a trade in the  |
|   |5 ITR 511 (Lah)  |buying and selling of patents or habitually sells his  |
|   |                 |own patents, or carries on the vocation of an inventor,|
|   |                 |the sale proceeds would be business income.            |
|2  |Mysore Elect. V. |If the owner gets a lump sum or periodic payment for   |
|   |C.I.T.           |imparting the know-how to others, without substantially|
|   |114 ITR 865 (Kar)|reducing its value to himself, the payment would       |
|   |                 |ordinarily be taxable as business income and the ground|
|   |                 |that the exploitation of the know-how is in the course |
|   |                 |of business and the imparting is no more than a        |
|   |                 |business service of however special kind.              |
|3  |Janki v. C.I.T.  |Royalties paid by a licensee for the right to take away|
|   |5 ITC 42         |earth to be used for brick making or extracting        |
|   |                 |saltpeter are income.  The fact that removal of the    |
|   |                 |soil itself is involved does not make the case any     |
|   |                 |different from cases of royalties on underground coal  |
|   |                 |and quarries                                           |

XI : Interpretation :
|Sl.|Name and citation|Allied subject/law adjudicated upon                    |
|No |of case          |                                                       |
|1  |Prakash Nath     |The SC ruled that interpretation should avoid “the     |
|   |Khanna v. C.I.T. |danger of a prior determination of the meaning with    |
|   |(2004) 266 ITR 1 |one’s own preconceived notions” and that the court     |
|   |(SC)             |interprets the law and cannot legislate.  It referred  |
|   |                 |to two other principles of construction, one relating  |
|   |                 |to casus omissus and the other requiring a statute to  |
|   |                 |be read as a whole.                                    |
|2  |I.T.A.T. vs. V.K.|Contempt of court – law applicable to ITAT.            |
|   |Agarwal          |                                                       |
|   |235 ITR 175(SC)  |                                                       |
|3  |C.I.T. v.        |Spes Successionis – Transfer of Property Act dealt     |
|   |Bhogilal Mangilal|with.                                                  |
|   |69 ITR 288 (Guj) |                                                       |
|4  |Ellerman Lines   |Discusses the binding nature of CBDT’s instructions on |
|   |Ltd. v. C.I.T.   |the revenue department.                                |
|   |(1971) 82 ITR 913|                                                       |
|   |(SC)             |                                                       |
|   |C.I.T. v. K.P.   |                                                       |
|   |Varghese         |                                                       |
|   |(1981) 131 ITR   |                                                       |
|   |597 (SC)         |                                                       |

XII :Miscellaneous:
|Sl.|Name and citation|Allied subject/law adjudicated upon                    |
|No |of case          |                                                       |
|1  |Sree Meenakshi   |Benami – meaning and effect of taxation in benamidars  |
|   |Mills v. C.I.T.  |hands discussed.                                       |
|   |31 ITR 25 (SC)   |                                                       |
|2  |Leo Machado v.   |Boat belonging to the assessee met with an accident and|
|   |C.I.T.           |sank in high seas; the compensation received from      |
|   |172 ITR 744 (Mad)|insurance company was due to destruction of property,  |
|   |                 |thus no “transfer” as contemplated by Section 45 read  |
|   |                 |with Section 48.  The insurance amount received cannot |
|   |                 |be considered as consideration and amount received not |
|   |                 |liable to capital gains tax.                           |
|3  |Gangadhar Bera v.|A clarificatory notice is a mere addendum to the       |
|   |Asst. C.I.T.     |original notice and the effect of clarification is     |
|   |(2004) 190 ITR   |always retrospective so it must relate to the original |
|   |467 (Cal)        |notice.  A mere non-mention of specific clause does not|
|   |                 |render notice bad in law.                              |
|4  |C.I.T. v. Andhra |The expression “charitable purpose” is very wide in its|
|   |Chamber of       |amplitude.  The object need not benefit the whole      |
|   |Commerce         |mankind or even all persons living in a particular     |
|   |55 ITR 722 (SC)  |country or province.  It is sufficient if the intention|
|   |                 |is to benefit a section of the public as distinguished |
|   |                 |from the specified individuals.                        |
|5  |Deccan Wine &    |Explained the difference between ‘association of       |
|   |General Stores v.|persons’ and ‘body of individuals’.                    |
|   |C.I.T.           |                                                       |
|   |(1977) 106 ITR   |                                                       |
|   |111 (AP)         |                                                       |
|6  |C.I.T. v.        |What constitutes an agricultural activity?             |
|   |Maharashtra Sugar|There must be cultivation of land in the strict sense  |
|   |Mills Ltd.       |of the term meaning thereby tilling the land.          |
|   |(1971) 82 ITR 452|                                                       |
|   |(Bom)            |                                                       |
|7  |I.T.O. v. M.K.   |Income Tax Appellate Tribunal has inherent power to    |
|   |Mohammed Kunhi   |grant stay of collection taxes and proceedings.        |
|   |(1968) 71 ITR 815|                                                       |
|   |(SC)             |                                                       |
|8  |C.I.T. v. Indira |Association of persons – when persons do not combine   |
|   |Balakrishna      |together to produce income, they cannot be assessed as |
|   |(1960) 39 ITR 546|an AOP.                                                |
|   |(SC)             |Note – The law has been amended after 1.4.2002         |
|9  |C.I.T. v. H.H.   |Personal effects of a ruler (heirloom jewellery) is not|
|   |Maharani Usha    |taxable upon its sale for a profit.                    |
|   |Devi             |                                                       |
|   |231 ITR 793 (MP) |                                                       |
|10 |C.I.T. v. Bai    |When an person re-values his capital asset and credits |
|   |Shrinbhai Kooka  |his capital account there is no gain for the purpose of|
|   |46 ITR 86 (SC)   |taxation.  One cannot make loss or profit out of       |
|   |                 |transactions with himself.                             |
|11 |Dhakeswari Cotton|Principles of Natural Justice set out almost for the   |
|   |Mills v. C.I.T.  |first time – locus classicus.                          |
|   |(1954) 26 ITR 775|                                                       |
|12 |Chemsford Club v.|Principle of mutuality applies to income from property.|
|   |C.I.T.           |                                                       |
|   |243 ITR 89 (SC)  |                                                       |
|   |C.I.T. v.        |                                                       |
|   |Bankipur Club    |                                                       |
|   |Ltd.             |                                                       |
|   |226 ITR 97 (SC)  |                                                       |


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:

79.   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.
82.   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, Mohemmedan 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:

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 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.
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.
89.   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:

91 (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.

 

      ………………………………...CJI.
                                                  (R.M. LODHA)

 

                                                  ……………………………….......J.
                                                  (JAGDISH SINGH KHEHAR)

 

                                                  ……………………………….......J.
                                                  (J. CHELAMESWAR)

 

                                                  ……………………………….......J.
                                                  (A.K. SIKRI)


Note: The emphases supplied in all the quotations in the  instant  judgment,
are ours.

New Delhi,
September 25, 2014.
                                                                  REPORTABLE
                        IN THE SUPREME COURT OF INDIA
                         CIVIL ORIGINAL JURISDICTION
                  TRANSFERRED CASE (CIVIL) No. 150 of 2006

Madras Bar Association                                   ……Petitioner

                                   Versus
Union of India & Anr.                                    …..Respondents
                             WITH
                        CIVIL APPEAL NO. 3850 OF 2006
                        CIVIL APPEAL NO. 3862 OF 2006
                        CIVIL APPEAL NO. 3881 OF 2006
                        CIVIL APPEAL NO. 3882 OF 2006
                        CIVIL APPEAL No. 4051 OF 2006
                        CIVIL APPEAL NO. 4052 OF 2006
                      WRIT PETITION (C) NO.621 OF 2007
                     TRANSFERRED CASE(C) NO.116 OF 2006
                    TRANSFERRED CASE (C) NO. 117 OF 2006
                     TRANSFERRED CASE (C) NO.118 OF 2006
                      WRIT PETITION (C) NO. 697 OF 2007


                       J U D G M E N T
R.F.NARIMAN, J. (concurring in the result)

1.    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 323-B 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.
2.          “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)

3.     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,
(2010) 11 SCC 1, these  matters  were  delinked  and  ordered  to  be  heard
separately vide judgment and order dated 11th May 2010  reported  in  (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.
4.    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 aggrived 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 assesee 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;

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.”

5.    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.
6.    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.
7.    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.”

8.    Art.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.   Art.131  vests  the  Supreme  Court  with   original
jurisdiction in disputes arising between the Government  of  India  and  the
States. Art. 132 to  134A  vest  an  appellate  jurisdiction  in  civil  and
criminal cases from the High Courts. Art. 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 Art. 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 Art. 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.
9.    Similarly, under Art. 214 High Courts for each State  are  established
and under Art. 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 Art. 225,  the  jurisdiction  of,  and  the  law
administered in any existing High Courts, is preserved. Art. 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 Art. 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 Art. 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.
10.   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.
11.   Art. 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.-
Call for returns;
Direct the transfer of any suit or appeal from any such court to  any  other
court of equal or superior jurisdiction;
Make and  issue  general  rules  and  prescribe  forms  for  regulating  the
practice and proceedings of such courts;
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.”

12.   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,-
call for returns;
make and  issue  general  rules  and  prescribe  forms  for  regulating  the
practice and proceedings of such courts;
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 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.”

13.   It will be noticed that Art. 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.
14.   In Waryam Singh v. Amarnath, 1954 SCR  565,  Das,J.  stated  the  High
Courts power under Art. 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)

15.   It is axiomatic that the  superintending  power  of  the  High  Courts
under Art. 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  Art.  141  so  far  as  High  Courts  are
concerned, in East India Commercial Co. Ltd. Calcutta v.  The  Collector  of
Customs, (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 Art. 215,  every  High  Court
shall be a court of record including the power to  punish  for  contempt  of
itself. Under Art. 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 Art. 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 superintendant 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)

16.   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.
17.   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., (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.”

18.   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:
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.”

19.   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:
the decision being contrary to law or to some  usage  having  the  force  of
law;
the decision having failed to determine some material issue of law or  usage
having the force of law;
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
exparte.
(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.”

20.   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.
21.   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,
(1997) 5 SCC 536 at para 77.
22.   This Court in Mafatlal’s case was  faced  with  whether  Kanhaiya  Lal
Mukundlal Saraf’s case,  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.”

23.   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.
24.   Art. 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    Art.    227.
The 42nd Amendment substituted the following clause for clause (1)  of  Art.
227:
      “(1) Every High Court  shall  have  superintendence  over  all  courts
subject to its appellate jurisdiction.”

25.   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.
26.   However, Art. 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 Art. 227 – the removal of the High Courts’ supervisory  jurisdiction
over tribunals.  L. Chandra Kumar v.Union of India (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 to79, 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.
27.   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)

28.   The stage is now set for the Attorney General’s reliance on  Union  of
India v. R. Gandhi (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 Art.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.”

29.   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 CPC 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.
30.   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.
31.   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  Art.  227  to  decide
substantial questions of law which would bind all tribunals vide East  India
Commercial Co. case, supra.
32.   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.
33.   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 in1976 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 s.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  s.96  it  must  be  struck
down.”

34.   In 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).”

35.   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.
36.   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.
37.   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.
38.   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.”

39.   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, 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 [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 [(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 [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 [(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.”

40.   In 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.

41.   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.

                                        ………………………………..J.
                                        (R.F. Nariman)
New Delhi,
September 25, 2014
ITEM NO.1A               COURT NO.1               SECTION XVIA
(For Judgment)
               S U P R E M E  C O U R T  O F  I N D I A
                       RECORD OF PROCEEDINGS

Transfer Case (Civil)  No(s).  150/2006

MADRAS BAR ASSOCIATION                             Petitioner(s)

                                VERSUS

UNION OF INDIA & ANR.                              Respondent(s)

WITH

C.A. No. 3850/2006

C.A. No. 3862/2006

C.A. No. 3881/2006

C.A. No. 3882/2006

C.A. No. 4051/2006

C.A. No. 4052/2006

T.C.(C) No. 116/2006

T.C.(C) No. 117/2006

T.C.(C) No. 118/2006

W.P.(C) No. 621/2007

W.P.(C) No. 697/2007

Date : 25/09/2014 These matters were called on for Judgment today.


For Petitioner(s)       Mr. Mukul Rohatgi, Attorney General’s
       Mr. Arijit Prasad, Adv.
                        Mr. B. V. Balaram Das,Adv.

                     Mr. Nikhil Nayyar,Adv.

                     Mr. P. Parmeswaran,Adv.


                                  :1:
                     Mr. D. S. Mahra,Adv.

                     Mr. K. C. Dua,Adv.

                     Mr. Shibashish Misra,Adv.

                     Mr. Rustom B. Hathikhanawala,Adv.

                     Mr. E. C. Vidya Sagar,Adv.

                        Mr. Pramod Dayal, Adv.

For Respondent(s)       Mr. P. Parmeswaran,Adv.

                     Mr. Ardhendumauli Kumar Prasad,Adv
                        Mr. Aviral Shukla, Adv.
                        Mr. Amit A. Pai, Adv.
                        Ms. Pankhuri Bhardwaj, Adv.
                        Mr. Nitesh Ranjan, Adv.

                     M/s. Parekh & Co.

                     Mr. Pramod Dayal,Adv.

                        Mr. K.C. Dua, Adv.

                        Mr. Nikhil Nayyar, Adv.

                        Mr. Satya Mitra Garg, Adv.

                        Mr. Rustom B. Hathikhanawala,Adv.

                        Mr. B. Krishna Prasad, Adv.

                        Mr. Ajay Pal, Adv.

                        Mr. Parmanand Gaur, Adv.

 


              Hon'ble  Mr.  Justice  Jagdish  Singh  Khehar  pronounced  the
Judgment on behalf of Hon'ble the Chief Justice, His Lordship,  Hon'ble  Mr.
Justice J. Chelameswar and  Hon'ble Mr. Justice A.K. Sikri.
                                  :2:

            Hon'ble Mr. Justice Rohinton Fali Nariman pronounced a  separate
Judgment concurring in the result.
            All matters are disposed of in terms  of  reportable  Judgments.


      (RAJESH DHAM)                                      (RENU DIWAN)
      COURT MASTER                                       COURT MASTER

   (two signed reportable Judgments are placed on the file)

 

                                  :3:


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