1997 (3) TMI 90 - SC - Income Tax

Clauses in arts.323A(2)(d) and 323B(3)(d) and exclusions under arts.226/227/32 struck down; tribunals must permit constitutional review

L. Chandra Kumar Versus Union Of India And Others

SC held that clauses in arts.323A(2)(d) and 323B(3)(d) and statutory provisions excluding High Court and Supreme Court jurisdiction under arts.226/227 and ... Constitutional validity of section 5(6) of the Administrative Tribunals Act, 1985 - Tribunals--Tests for including High Court's jurisdiction - Whether the power conferred upon Parliament or the State Legislatures, as the case may be, by sub-clause (d) of clause (2) of article 323A or by sub-clause (d) of clause (3) of article 323B of the Constitution, to totally exclude the jurisdiction of 'all courts', except that of the Supreme Court under article 136, in respect of disputes and complaints referred to in clause (1) of article 323A or with regard to all or any of the matters specified in clause (2) of article 323B, runs counter to the power of judicial review conferred on the High Courts under article 226/227 and on the Supreme Court under article 32 of the Constitution ? Held that:- 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. 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. Clause (2)(d) of article 323A and clause (3)(d) of article 323B, to the extent they exclude the jurisdiction of the High Courts and the Supreme Court under articles 226/227 and 32 of the Constitution, are unconstitutional. Section 28 of the Act and the 'exclusion of jurisdiction' clauses in all other legislations enacted under the aegis of articles 323A and 323B would, to the same extent, be unconstitutional. The jurisdiction conferred upon the High Courts under article 226/227 and upon the Supreme Court under article 32 of the Constitution is part of the inviolable basic structure of our Constitution. While this jurisdiction cannot be ousted, other courts and Tribunals may perform a supplemental role in discharging the powers conferred by articles 226/227 and 32 of the Constitution. The Tribunals created under article 323A and article 323B of the Constitution are possessed of the competence to test the constitutional validity of statutory provisions and rules. All decisions of these Tribunals will, however, be subject to scrutiny before a Division Bench of the High Court within whose jurisdiction the concerned Tribunal 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 concerned Tribunal. Section 5(6) of the Act is valid and constitutional and is to be interpreted in the manner we have indicated. 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. The Tribunals created under article 323A and article 323B of the Constitution are possessed of the competence to test the constitutional validity of statutory provisions and rules. All decisions of these Tribunals will, however, be subject to scrutiny before a Division Bench of the High Court within whose jurisdiction the concerned Tribunal 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 concerned Tribunal. Section 5(6) of the Act is valid and constitutional and is to be interpreted in the manner we have indicated. All these matters may now be listed before a Division Bench to enable them to be decided upon their individual facts in the light of the observations contained in this judgment. Issues Involved:1. Exclusion of High Courts' jurisdiction under Articles 226/227 and Supreme Court under Article 32 by Articles 323A(2)(d) and 323B(3)(d).2. Competence of Tribunals to test the constitutional validity of statutory provisions/rules.3. Effectiveness of Tribunals as substitutes for High Courts in judicial review.Detailed Analysis:Issue 1: Exclusion of High Courts' JurisdictionThe primary issue was whether the exclusion of the jurisdiction of High Courts under Articles 226/227 and the Supreme Court under Article 32 by Articles 323A(2)(d) and 323B(3)(d) of the Constitution is constitutional. The judgment held that the power of judicial review vested in the High Courts and the Supreme Court is an integral and essential feature of the Constitution, constituting part of its basic structure. It was concluded that the jurisdiction of the High Courts under Articles 226/227 and the Supreme Court under Article 32 cannot be wholly excluded. The judgment emphasized that while the Tribunals can perform a supplemental role in judicial review, they cannot act as substitutes for the High Courts and the Supreme Court. Consequently, Articles 323A(2)(d) and 323B(3)(d) were declared unconstitutional to the extent they exclude the jurisdiction of the High Courts and the Supreme Court.Issue 2: Competence of Tribunals to Test Constitutional ValidityThe judgment affirmed that Tribunals created under Articles 323A and 323B possess the competence to test the constitutional validity of statutory provisions and rules. However, their decisions are subject to scrutiny by a Division Bench of the High Court within whose jurisdiction the Tribunal falls. The judgment clarified that Tribunals cannot entertain questions regarding the vires of their parent statutes, which should be directly addressed by the High Courts. The Tribunals will continue to act as courts of first instance for the areas of law for which they have been constituted, but their decisions will be subject to High Court review.Issue 3: Effectiveness of Tribunals as Substitutes for High CourtsThe judgment acknowledged that the Tribunals, as they are functioning, have not been effective substitutes for the High Courts in discharging the power of judicial review. It was noted that the Tribunals have faced issues such as lack of competence, objectivity, judicial approach, and administrative supervision. The judgment recommended measures to improve the functioning of the Tribunals, including ensuring that they are manned by members with judicial experience and placing them under a single nodal Ministry, preferably the Ministry of Law, for better administrative supervision. The judgment also suggested that the decisions of the Tribunals be subject to review by a Division Bench of the High Court to ensure judicial oversight and maintain the sanctity of judicial proceedings.Conclusion:The judgment concluded that Articles 323A(2)(d) and 323B(3)(d) are unconstitutional to the extent they exclude the jurisdiction of the High Courts and the Supreme Court. The Tribunals have the competence to test the constitutional validity of statutory provisions and rules, but their decisions are subject to scrutiny by the High Courts. The Tribunals must function as effective supplemental bodies to the High Courts, and measures should be taken to improve their functioning and ensure judicial oversight. The judgment emphasized the importance of maintaining the power of judicial review as an integral part of the basic structure of the Constitution.