It's a tug-of-war out there

The govt's approach in passing the Finance Bill, 2017, without Rajya Sabha scrutiny is legally wrong

It is by far the boldest move in executive governments pushing the envelope in breaking the law with the very process of law-making. The current government has piloted the Finance Act, 2017, through Parliament to get substantial legal provisions passed without the scrutiny of the Rajya Sabha.  

Many appellate tribunals that hear appeals against orders by regulatory authorities have been wound up for being merged with other tribunals —essentially, changes in institutions that were set up in the first place, with the approval of both the Lok Sabha and the Rajya Sabha. Constitutional courts may be visited with challenges to the abuse.  But not much may happen there. The Constitution has an inbuilt check and balance in the office of the Speaker of the Lok Sabha. She has the last word on whether or not a proposed law is a Money Bill, that is, a law that deals with matters of finance and tax, as set out in the Constitution.

The approach of the government is legally wrong. However, every wrong is not justiciable. If the Constitution set much store by the judgement of an occupant of high office, it was arguably intended that the occupant of that office must be trusted. If that trust is belied, it would only follow that we have a loophole in the Constitution that can only be corrected by a constitutional amendment.

It is equally true that courts have not always steered clear of every wrong that is not justiciable. Constitutional courts have happily legislated. Either entire legislation (for example, environmental charge for entry of vehicles into Delhi) including de facto contents of the Constitution (for example, the judges’ collegium for judicial appointments) have been created in the past by judge-made law. When facts are provocative enough, intervention may indeed follow.

In a challenge to the replacement of governors of states as political decisions, courts have ruled that no decision of the government, including a decision to replace a governor can be arbitrary, yet ruling that the decision cannot be interfered with. It is likely that the pending litigation over whether legislation that are nowhere near Money Bills can be passed by Parliament as if they were Money Bills.

Illustration: Binay Sinha

This contrivance aimed at simply circumventing the Rajya Sabha has been resorted to in the past. The Foreign Exchange Management Act, 1999, had been passed by both Houses of Parliament as a non-criminal law to replace the dreaded criminal law contained in the Foreign Exchange Regulation Act, 1974. That was not a Money Bill. That had been a major milestone in India’s legislative and economic policy history. Two years ago, provisions criminalising exchange controls were brought into FEMA through a Money Bill. No consent of the Rajya Sabha was needed.

These infractions of law were not challenged since they were not politically correct for challenge. Now that a bigger gauntlet has been thrown, it is possible that some may challenge it.  The history of constitutional challenges to the creation of tribunals has itself had a chequered history at the hands of courts. The National Tax Tribunal could not be set up while the National Company Law Tribunal being set up in conflict with earlier rulings of the Supreme Court when dealing with prior challenges, has survived. There are as many views on interpreting the Constitution as there can be benches of the Supreme Court and multiple high courts.

All of this is not to say that the changes sought to be brought in are bad. There are some laudatory amendments — one is the retirement age of the presiding officer has been extended to 70 years. Some changes are horrible. The Finance Act, 2017, is a quiet power-grab in the conflict between arms of the state.  If the judiciary wrested control back by striking down the National Judicial Appointments Commission, the executive has sought to strike back by giving itself powers over vast areas of quasi-judicial territory.

The tribunals listed in the Finance Act, 2017, are not the only ones whose constitution has been disturbed. A provision entitling government to similarly merge other tribunals not named for now, by a simple executive fiat has also been passed as a part of the Money Bill. This is the most vulnerable part of the Finance Act, 2017, since it could be struck down as being arbitrary as it is a matter of “excessive delegation” of powers by the legislature to the executive. A constitutional challenge to such delegation is not about whether it is a Money Bill. Even if it were to be regarded as a provision in a Money Bill, it would be liable to be attacked as an arbitrary delegation of power to the government.

The author is an independent legal counsel. He tweets at @SomasekharS