REPORTABLE IN 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 JUDGMENT Jagdish Singh Khehar, J. Controversy: 1. All above cases are being disposed of by this common judgment. issue which arises for consideration before us, in present bunch of cases, 1 Page 1 pertains to constitutional validity of National Tax Tribunal Act, 2005 (hereinafter referred to as, NTT Act). Simultaneously, constitutional validity of Constitution (Forty-second Amendment) Act, 1976 has been assailed, by asserting, that same violates basic structure of Constitution of India (hereinafter referred to as, Constitution), by impinging on power of judicial review vested in High Court. In event of this Court not acceding to aforementioned prayers, challenge in alternative, has been raised to various provisions of NTT Act, which has led to constitution of National Tax Tribunal (hereinafter referred to as, NTT). NTT, according to learned counsel for petitioners, is styled as quasi-judicial appellate tribunal. It has been vested with power of adjudicating appeals arising from orders passed by Appellate Tribunals (constituted under Income Tax Act, Customs Act, 1962, and Central Excise Act, 1944). Hitherto before, instant jurisdiction was vested with High Courts. pointed issue canvassed in this behalf is, that High Courts which discharge judicial functions, cannot be substituted by extra-judicial body. Additionally, it is maintained that NTT in manner of its constitution undermines process of independence and fairness, which are sine qua non of adjudicatory authority. Historical Perspective: 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 first time. original 2 Page 2 enactment was replaced by subsequent legislations, enacted in 1865, 1886, 1918 and 1922. Indian Income Tax Act, 1922 (hereinafter referred to as, 1922 Act) was brought about, as result of recommendations of All India Tax Committee. 1922 Act can be described as milestone in evolution of direct tax laws in India. Detailed reference needs to be made to provisions of 1922 Act. (ii) After procedure provided for assessment of tax had run its course, and tax had been assessed, executive-appellate remedy was provided for, before Appellate Assistant Commissioner of Income Tax (under Section 30 of 1922 Act). further quasi-judicial appellate remedy, from decisions rendered by first appellate authority, lay before appellate tribunal (hereinafter referred to as Appellate Tribunal). Section 33A was inserted by Indian Income Tax (Amendment) Act, 1941. It provided for remedy by way of revision before Commissioner of Income Tax. (iii) remedy before Appellate Tribunal (provided under Section 5A of 1922 Act, by Section 85 of Indian Income Tax (Amendment) Act, 1939), was required to be exercised by bench comprising of one Judicial Member and one Accountant Member. It was permissible for President of Appellate Tribunal or any other Member thereof, to dispose of appeals, sitting singly (subject to condition, that total income of assessee, as computed by assessing officer, did not exceed Rs.15,000/-). It was also open to President of Appellate Tribunal to constitute larger benches of three 3 Page 3 Members (subject to condition, that larger bench would comprise of at least one Judicial Member and one Accountant Member). (iv) Section 5A of 1922 Act, laid down conditions of eligibility for appointment as Judicial Member - person who had served on civil judicial post for 10 years was eligible, additionally Advocate who had been practicing before High Court for period of 10 years, was also eligible. Under 1922 Act, person who had practiced in accountancy as Chartered Accountant (under Chartered Accountants Act, 1949) for period of 10 years, or was Registered Accountant (or partly Registered Accountant, and partly Chartered Accountant) for period of 10 years (under any law formerly enforced), was eligible for appointment as Accountant Member. Only Judicial Member could be appointed as President of Appellate Tribunal. (v) Section 67 of 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 officer of Government, for act or omission, in furtherance of anything done in good faith or intended to be done under 1922 Act. (vi) 1922 Act, did not provide for appellate remedy, before jurisdictional High Court. only involvement of jurisdictional High Court, was under Section 66 of 1922 Act. Under Section 66, either assessee or Commissioner of Income Tax, could move application to Appellate Tribunal, requiring it to refer question of law (arising out of assessment order) to jurisdictional High Court. In case of refusal to make such 4 Page 4 reference, aggrieved assessee or Commissioner of Income Tax, could assail refusal by Appellate Tribunal, before jurisdictional High Court. case referred to High Court under Section 66, was to be heard by bench of not less than two judges of High Court (Section 66A of 1922 Act inserted by Indian Income Tax (Amendment) Act, 1926). Section 66 of 1922 Act, was amended by Indian Income Tax (Amendment) Act, 1939, whereby power to make reference became determinable by Commissioner of Income Tax (in place of Appellate Tribunal). (vii) In exercise of reference jurisdiction, question of law, which had arisen in appeal pending before Appellate Tribunal, had to be determined by High Court. After jurisdictional High Court had answered reference, Appellate Tribunal would dispose of pending appeal in consonance with legal position declared by High Court. 3(i) 1922 Act was repealed by Income Tax Act, 1961 (hereinafter referred to as, Income Tax Act). As in repealed enactment, so also under Income Tax Act, order passed by assessing officer, was assailable through executive-appellate remedy. instant appellate remedy, was vested with Deputy Commissioner (Appeals)/Commissioner (Appeals). orders appealable before Deputy Commissioner (Appeals) were distinctly mentioned (in Section 246 of Income Tax Act). Likewise, orders appealable before Commissioner (Appeals) were expressly enumerated (in Section 246A of Income Tax Act). 5 Page 5 (ii) As against order passed by executive-appellate authority, further appellate remedy was provided before quasi-judicial appellate tribunal (hereinafter referred to as, Appellate Tribunal, under Section 252 of Income Tax Act). Section 255(6) of Income Tax Act provides as under:- 6. Appellate Tribunal shall, for purpose of discharging its functions, have all powers which are vested in income-tax authorities referred to in section 131, and any proceeding before Appellate Tribunal shall be deemed to be judicial proceeding within meaning of sections 193 and 228 and for purpose of section 196 of Indian Penal Code (45 of 1860), and Appellate Tribunal shall be deemed to be civil court for all purposes of section 195 and Chapter XXXV of Code of Criminal Procedure, 1898 (5 of 1898). By deeming fiction of law, therefore, Appellate Tribunal was considered as civil court , dealing with judicial proceedings . (iii) To be eligible for appointment as President of ITAT, incumbent had to be sitting or retired judge of High Court, with not less than 7 years of service as judge. Alternatively, Central Government could appoint Senior Vice President or Vice President of Appellate Tribunal, as its President. It is, therefore apparent, that Appellate Tribunal was to be comprised of President, Senior Vice President(s), Vice President(s) and Members. (iv) benches of Appellate Tribunal, under Income Tax Act (was similar to one under 1922 Act), were to be comprised of at least one Judicial Member and one Accountant Member. authority to constitute benches of Appellate Tribunal was vested with President. composition of benches under Income Tax Act, was similar to that postulated under 1922 Act. When authorized by Central Government, it 6 Page 6 was open to Appellate Tribunal, to dispose of appeals sitting singly (subject to condition, that appeal pertained to dispute, wherein concerned assessee s total income was assessed as not exceeding Rs.5 lakhs). President of Appellate Tribunal, had authority to constitute special benches, comprising of three or more Members (one of whom had to be Judicial Member, and one, Accountant Member). In case of difference of opinion, matter was deemed to have been decided in terms of opinion expressed by majority. (v) assessee or Commissioner, could move application before Appellate Tribunal, under Section 256 of Income Tax Act, requiring it to make reference to High Court on question of law (arising in appeal pending before Appellate Tribunal). In case prayer made in application was declined by Appellate Tribunal, order (declining prayer) was assailable before High Court. (vi) Section 257 of Income Tax Act provided for reference directly to Supreme Court. instant reference could be made by Appellate Tribunal, if it was of opinion, that 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 Income Tax Act by Finance (No. 2) Act, 1998, with effect from 1.10.1998. Under Section 260A, appellate remedy was provided for, to raise challenge to orders passed by Appellate Tribunal. instant appellate remedy, would lie before jurisdictional High Court. In terms of mandate contained in Section 260B of Income Tax Act, 7 Page 7 appeal before High Court was to be heard by bench of not less than two judges. opinion of majority, would constitute decision of High Court. Where there was no majority, on point(s) of difference, opinion of one or more judges of High Court, was to be sought. Thereupon, majority opinion of judges (including judges who had originally heard case) would constitute decision of High Court. (viii) further appellate remedy was available as against decision rendered by jurisdictional High Court. instant appellate remedy was vested with Supreme Court under Section 261 of Income Tax Act. Customs Legislation, in India: 4(i). Customs Act, 1962 (hereinafter referred to as, Customs Act) was enacted to consolidate and amend law relating to customs. Customs Act vested power of assessment of customs duty, with Deputy Collector of Customs or Collector of Customs. executive-appellate remedy was provided under Section 128 of Customs Act, before Collector of Customs (where impugned order had been passed by officer, lower in rank to Collector of Customs), and before Central Board of Excise and Customs (constituted under Central Boards of Revenue Act, 1963), where impugned order had been passed by Collector of Customs. Board had also been conferred with executive revisional powers (under Section 130 of Customs Act), to suo moto, or on application of aggrieved person, examine record of any proceeding, pertaining to decision or order under provisions of Customs Act. Revisional powers, besides those expressly 8 Page 8 vested in Board (under Section 130 of Customs Act), were also vested with Central Government (under Section 131 of Customs Act). (ii) By Finance (No. 2) Act, 1980, Sections 128 to 131 of original Act were substituted. power to entertain first executive-appellate remedy, was now vested with Collector (Appeals), under Sections 128 and 128A of Customs Act. On exhaustion of above remedy, further quasi-judicial appellate remedy was provided for, under Sections 129 and 129A before Customs, Excise and Gold (Control) Appellate Tribunal (hereinafter referred to as, CEGAT/Appellate Tribunal). CEGAT was also appellate authority, against orders passed by Board. With introduction of Service Tax, under Chapter V of Finance Act, 1994, CEGAT was conferred jurisdiction to hear appeals in cases pertaining to service tax disputes as well. Appellate Tribunal is now known as Customs, Excise and Service Tax Appellate Tribunal CESTAT. By Act 22 of 2003, expression Gold (Control) was substituted with Service Tax in definition of Appellate Tribunal (w.e.f. 14.5.2003). (iii) Section 129 of Customs Act delineated constitution of CEGAT. It was to comprise of as many Judicial and Technical Members, as Central Government thought fit. instant provision, also laid down conditions of eligibility for appointment of Judicial/Technical Members. Judicial Member could be chosen out of persons, who had held civil judicial post for at least 10 years, or out of persons who had been in practice as Advocate for at least 10 years, as also, from out of Members of Central Legal Service (not below 9 Page 9 Grade-I), who had held such post for at least 3 years. Technical Member could be appointed out of persons, who had been members of Indian Customs and Central Excise Service (Group A), subject to condition, that such persons had held post of Collector of Customs or Central Excise (Level I), or equivalent or higher post, for at least 3 years. Finance (No.2) Act, 1996 amended Section 129(3) of Customs Act, whereby it enabled Central Government to appoint person to be President of Appellate Tribunal. Central Government could make such appointment, subject to condition, that person concerned had been judge of High Court, or was one of Members of Appellate Tribunal. Likewise, it was open to Central Government to appoint one or more Members of Appellate Tribunal to be its Vice President(s). (iv) Powers and functions of Appellate Tribunal were to be exercised through benches constituted by its President, from amongst Members of Appellate Tribunal (in terms of Section 129C of Customs Act). Each bench was required to be comprised of at least one Judicial Member and one Technical Member. It was open to President to constitute special bench of not less than three Members (comprising of at least one Judicial and one Technical Member). composition of bench, was modified by amendment which provided, that special bench of Appellate Tribunal was to consist of not less than two Members (instead of three). It was also open to President and/or Members (as authorized by President of Appellate Tribunal) to dispose of appeals, sitting singly, subject to condition, that value of goods 10 Page 10 confiscated, or difference in duty involved, or duty involved, or amount of fine or penalty involved, did not exceed Rs.10,000/- -- limit was first revised to Rs.50,000/-, then to Rs.1 lakh, later to Rs.10 lakhs, and at present, same is Rs.50 lakhs. case involving dispute where determination of any question having relation to rate of duty of customs or to value of goods for purposes of assessment is sole or one of points in issue, must however be heard by bench comprising of Judicial and Technical Member [Section 129C(4)(b)]. In case of difference of opinion on any point(s), opinion of majority was to constitute decision of Appellate Tribunal. If Members were equally divided, appeal was to be referred by President, for hearing on such point(s), by one or more other Members of Appellate Tribunal. Whereupon, majority opinion was to be considered as decision of Appellate Tribunal. Sub-sections (7) and (8) of Section 129C provided as under:- (7) Appellate Tribunal shall, for purposes of discharging its functions, have same powers as are vested in court under Code of Civil Procedure, 1908 (5 of 1908), when trying suit in respect of following matters, namely:- (a) discovery and inspection; (b) enforcing attendance of any person and examining him on oath; (c) compelling production of books of account and other documents; and (d) issuing commissions. (8) Any proceeding before Appellate Tribunal shall be deemed to be judicial proceeding within meaning of Sections 193 and 228 and for purpose of Section 196 of Indian Penal Code 945 of 1860) and Appellate Tribunal shall be deemed to be Civil Court for all purposes of Section 195 and Chapter XXVI of Code of Criminal Procedure, 1973 (2 of 1974). 11 Page 11 It is apparent from above provision, that by fiction of law, proceedings before Appellate Tribunal are treated as judicial proceedings. (v) Customs and Excise Revenues Appellate Tribunal Act, 1986 came into force with effect from 23.12.1986. Section 26 of instant enactment, excluded jurisdiction of courts except Supreme Court. Section 28 thereof provided as under:- 28. Proceedings before Appellate Tribunal to be judicial proceedings All proceedings before Appellate Tribunal shall be deemed to be judicial proceedings within meaning of Sections 193, 219 and 228 of Indian Penal Code (45 of 1860). perusal of above amendment reveals, that by fiction of law, Appellate Tribunal was deemed to be discharging judicial proceedings . Therefore, position prevailing prior to amendment, was maintained, so far as instant aspect was concerned. (vi) Just as in case of 1922 Act, which did not provide for appellate remedy, but allowed reference to be made to jurisdictional High Court, under Section 66, likewise, Section 130 of Customs Act provided for reference on question of law, to High Court. reference could be made, on application by Collector of Customs or person on whom customs duty has been levied, to Appellate Tribunal. If Appellate Tribunal refused to make reference, aggrieved party could assail determination of Appellate Tribunal, before jurisdictional High Court. Where reference on question of law was entertained, it had to be heard by bench of not less than two judges of High Court. In case of difference of opinion on any point(s), opinion 12 Page 12 expressed by majority, was to be treated as decision of High Court. Where opinion was equally divided, on point(s) of difference, matter was to be heard by one or more other judges of High Court. Thereupon, majority opinion of judges (including judges who had originally heard case) would constitute decision of High Court. decision of High Court, would then be applied by Appellate Tribunal, for disposal of appeal wherefrom reference had arisen. (vii) Appellate Tribunal was also authorized to make reference directly to Supreme Court (under Section 130A of Customs Act). This could be done, in case Appellate Tribunal was of view, that there was conflict of decisions of High Courts in respect of question of law pending before it for decision. decision of Supreme Court, would then be applied by Appellate Tribunal, for disposal of appeal out of which reference had arisen. (viii) Finance (No. 32) Act, 2003 introduced new Section 130. remedy of reference to jurisdictional High Court, was substituted by remedy of appeal to High Court. amended Section 130 of Customs Act provided, that appeal would lie to High Court from every order passed by Appellate Tribunal (on or after 1.7.2003), subject to condition, that High Court was satisfied, that case involved substantial question of law. In such eventuality, High Court would formulate substantial question(s) of law. It was open to High Court in exercise of its instant appellate jurisdiction, also to determine any issue which had not been 13 Page 13 decided by Appellate Tribunal, or had been wrongly decided by Appellate Tribunal. appeal preferred before High Court, could be heard by bench of not less than two judges. (ix) After amendment to Section 130, Section 130E was also amended. latter amended provision, provided for appeal to Supreme Court, from judgment of High Court, delivered on appeal filed under Section 130, or on reference made under Section 130 by Appellate Tribunal (before 1.7.2003), or on reference made under Section 130A. (x) NTT Act omitted Sections 130, 130A, 130B, 130C and 130D of Customs Act. instant enactment provided for appeal from every order passed by Appellate Tribunal to NTT, subject to condition, that NTT arrived at satisfaction, that case involved substantial question of law. On admission of appeal, NTT would formulate substantial question of law for hearing appeal. Section 23 of NTT Act provided, that on and from date, to be notified by Central Government, all matters and proceedings including appeals and references, pertaining to direct/indirect taxes, pending before High Court, would stand transferred to NTT. Section 24 of NTT Act provides for appeal from order passed by NTT, directly to Supreme Court. Central Excise Legislation, in India: 5(i). Central Excise and Salt Act, 1944 (hereinafter referred to as, Excise Act) was enacted to consolidate and amend, law related to central duties on excise, and goods manufactured and produced in India, and to salt. 14 Page 14 Under said enactment, power to assess duty, was vested with Assistant Collectors of Central Excise, and Collectors of Central Excise. executive-appellate remedy was provided for under Section 35 before Commissioner (Appeals). (ii) Board was vested with revisional jurisdiction. Revisional jurisdiction was additionally vested with Central Government. In 1972, Board was empowered under Section 35A of Excise Act, to exercise power of revision, from decision/order/rule made/passed, under Excise Act, subject to condition, that no revision would lie under instant provision, as against appellate order passed under Section 35 of Excise Act, by Commissioner (Appeals). Central Government was vested with revisional jurisdiction against appellate orders passed by Commissioner (Appeals) under Section 35. In 1978, revisional jurisdiction which hitherto before lay with Board, was vested with Collector of Central Excise. (iii) On exhaustion of first executive-appellate remedy, further quasi- judicial appellate remedy was provided for, under Section 35B of Excise Act, to Appellate Tribunal. remedy of appeal before Appellate Tribunal, could be availed of (a) against decision or order passed by Collector of Central Excise as adjudicating authority, (b) against order passed by Collector (Appeals) under Section 35A of Excise Act (as substituted by Finance (No. 2) Act, 1980), (c) against order passed by Board or Appellate Collector of Central Excise under Section 35 (as it stood before 15 Page 15 21.8.1980), and (d) against order passed by Board or Collector of Central Excise under Section 35A (as it stood before 21.8.1980). (iv) Appellate Tribunal was to be comprised of such number of Judicial/Technical Members as Central Government would think fit. Appointment of Judicial Members could only be made from amongst persons who had held judicial office in India for at least 10 years, or who had been practicing as Advocate for at least 10 years, or who had been member of Indian Legal Service (having held post in Grade I of 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 Indian Customs and Central Excise Service, Group A, and had held post of Collector of Customs or Central Excise (or any equivalent or higher post) for at least 3 years. Central Government had power to appoint person, who was or had been judge of High Court, or who was one of Members of Appellate Tribunal, as President of Appellate Tribunal. functions of Appellate Tribunal were to be discharged through benches constituted by its President. Central Government also had authority to appoint one or more Members of 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), opinion of majority would constitute decision of Appellate Tribunal. If Members of bench were equally divided, President was required to refer disputed opinion for hearing, on point(s) of difference, by one or more other Members of Appellate 16 Page 16 Tribunal. majority opinion after such reference, would be decision of Appellate Tribunal. It was also permissible for President, and Members (authorized by President) of Appellate Tribunal, to hear and dispose of appeals, sitting singly (subject to condition, that difference in duty or duty involved, or amount of fine or penalty involved, did not exceed Rs.10,000/- -- limit was first revised to Rs.50,000/-, then to Rs.1 lakh, later to Rs.10 lakhs, and at present, same is Rs.50 lakhs). Similar provision (as in respect of appeals to Appellate Tribunal under Customs Act) with regard to matters to be heard by division bench, is enjoined in Section 35D(3)(a) of Excise Act. (v) Customs and Excise Revenues Appellate Tribunals Act, 1986, came into force on 23.12.1986. Section 26 of instant enactment excluded jurisdiction of courts except Supreme Court. Section 14, provided for jurisdiction, powers and authority of Appellate Tribunal. Section 28 provided as under:- 28. Proceedings before Appellate Tribunal to be judicial proceedings All proceedings before Appellate Tribunal shall be deemed to be judicial proceedings within meaning of Sections 193, 219 and 228 of Indian Penal Code (45 of 1860). perusal of above amendment reveals, that by fiction of law, Appellate Tribunal was deemed to be discharging judicial proceedings . (vi) Section 35G provided for reference on any question of law, by Appellate Tribunal, to High Court. aforesaid remedy could be availed of by filing application before Appellate Tribunal. Such application could be filed by either Collector of Central Excise, or person on whom 17 Page 17 excise duty was levied. reference, on question of law, made by Appellate Tribunal, to High Court, would be heard by bench of not less than two judges. On Appellate Tribunal s refusal to refer question of law, aggrieved party could assail decision of Appellate Tribunal (declining to make reference), before High Court. jurisdictional High Court, on acceptance of reference, would render its decision, on question of law. In case of difference of opinion, opinion expressed by majority would constitute decision of High Court. If opinion by bench was equally divided, point(s) of difference were to be heard by one or more other judges of High Court, whereafter, opinion expressed by majority would be treated as decision of High Court. Appellate Tribunal would thereupon, decide pending appeal, in consonance with decision rendered by High Court. (vii) Section 35H of Excise Act provided for reference, by Appellate Tribunal, directly to Supreme Court. instant reference by Appellate Tribunal, could be made after Appellate Tribunal had arrived at conclusion, that question of law arising for adjudication in appeal pending before it, was differently interpreted by two or more jurisdictional High Courts. decision of Supreme Court, would then be applied by Appellate Tribunal, to decide pending appeal. Section 35L provided for appeal to Supreme Court against judgment rendered by High Court (upon reference made to High Court by Appellate Tribunal). decision of 18 Page 18 Supreme Court would then be applied by Appellate Tribunal, in disposal of appeal pending before it. (viii) Finance (No. 32) Act, 2003 substituted Section 35G of Excise Act and in place of remedy of reference, amended provision provided for direct appeal to jurisdictional High Court (after cut-off date, i.e., 1.7.2003). jurisdictional High Court was to entertain appeal from order passed by Appellate Tribunal, on its being satisfied, that appeal raised substantial question of law. In such eventuality, High Court would formulate substantial question(s) of law. It was open to High Court in exercise of its instant appellate jurisdiction, also to determine any issue which had not been decided by Appellate Tribunal, or had wrongly been decided by Appellate Tribunal. appeal preferred before High Court, would be heard by bench of not less than two judges. Section 35L of Excise Act was also amended. amended provision provided for appeal from any judgment of High Court (in exercise of its appellate jurisdiction under Section 35G of Excise Act, or on reference made under Section 35G by Appellate Tribunal before 1.7.2003, or on reference made under Section 35H), to Supreme Court. (ix) NTT Act omitted Sections 35G, 35H, 35I and 35J of Excise Act. instant enactment provided for appeal from every order passed by Appellate Tribunal to NTT, subject to condition, that NTT was satisfied, that case involved substantial question of law. On admission of appeal, NTT would formulate substantial question of law, for hearing 19 Page 19 appeal. Section 23 of NTT Act provided, that on and from date to be notified by Central Government, all matters and proceedings including appeals and references, pertaining to direct/indirect taxes, pending before jurisdictional High Courts, would stand transferred to NTT. Section 24 of NTT Act provided for appeal from order passed by NTT, to Supreme Court. Facts leading to promulgation of NTT Act: 6. first Law Commission of independent India was established in 1955 for three year term under chairmanship of Mr. M.C. Setalvad, who was also first Attorney General for India. idea of constituting National Tax Court was mooted by first Law Commission in its 12 th Report, suggesting abolition of existing appellate tribunal, under framework of Income Tax Act. It recommended direct appeal to High Courts, from orders passed by appellate Commissioners. This recommendation was not accepted. 7. Direct Taxes Enquiry Committee was set up by Government of India in 1970, with Mr. K.N. Wanchoo retired Chief Justice of Supreme Court of India, as its Chairman. Enquiry Committee was assigned following objectives: (1) to recommend ways to check avoidance of tax, through various legal lacunae; (2) to examine 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. Wanchoo Committee recommended creation of National Court , which would be comprised of 20 Page 20 judges with special knowledge of tax laws. recommendation made by Wanchoo Committee, was for creation of permanent Tax Benches in High Courts, and appointment of retired judges to such benches, under Article 224A of Constitution. suggestion was aimed at clearing backlog of tax cases. Wanchoo Committee did not suggest establishment of any separate tax courts as that, according to Committee, would involve amendment to provisions of Constitution, besides other statutory and procedural changes. 8. Another Direct Tax Laws Committee was constituted in 1977, under chairmanship of Mr. N.K. Palkhivala, eminent jurist. Committee was later headed by Mr. G.C. Choksi. Committee was constituted, to examine and suggest legal and administrative measures, for simplification and rationalization of direct tax laws. Choksi Committee recommended establishment of Central Tax Court with all-India jurisdiction. It was suggested, that such court be constituted under separate statute. Just like recommendations of Wanchoo Committee, recommendations of Choksi Committee also necessitated amendments in provisions of Constitution. As interim measure to above recommendation, Choksi Committee suggested, desirability of constituting Special Tax Benches in High Courts, to deal with large number of pending tax cases, by continuous sitting throughout year. It was also suggested, that judges who sit on Special Tax Benches , should be selected from those who had special knowledge, to deal with matters relating to direct tax laws. Choksi Committee recommended, that judges selected for Special Tax Benches would be transferred to Central Tax Court , as 21 Page 21 and when same was constituted. It is, therefore apparent, that according to recommendations of Choksi Committee, Central Tax Court was to comprise of judges of High Courts, or persons qualified to be appointed as High Court Judges. recommendations of Choksi Committee reveal, that suggested Central Tax Court would be 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 Choksi Committee s Report. 9. None of recommendations referred to hereinabove were implemented, till similar recommendation was again mooted in early 1990s. After deliberating on issue for few years, Union of India promulgated National Tax Tribunal Ordinance, 2003. Ordinance inter alia provided, for transfer of appellate jurisdiction (under direct tax laws) vested in High Courts, to NTT. After Ordinance lapsed, National Tax Tribunal Bill, 2004 was introduced. said Bill was referred to Select Committee of Parliament. Select Committee granted personal hearing to variety of stakeholders, including representatives of Madras Bar Association (i.e., petitioner before this Court in Transferred Case (C) no. 150 of 2006). Committee presented its report on 2.8.2005. In its report, it suggested serious reservations on setting up of NTT. above Bill was presented before Lok Sabha in 2005. Bill expressed four main reasons for setting up NTT: (1) to reduce pendency of huge arrears, that had mounted in High Courts all over country, (2) huge tax recovery was statedly held up, in tax litigation before various High Courts, which directly impacted implementation of national 22 Page 22 projects/welfare schemes of Government of India, (3) to have uniformity in 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 litigation process being tied up in higher Courts, and (4) existing judges dealing with tax cases, were from civil courts, and therefore, were not well-versed to decide complicated tax issues. issues canvassed on behalf of petitioners: 10. submissions advanced on behalf of petitioners, for purposes of convenience, deserve to be examined from series of distinct and separate perspectives. Each perspective is truly independent submission. It is, therefore necessary, in first instance, to clearly describe different submissions, advanced at hands of learned counsel for petitioners. same are accordingly being delineated hereunder:- first contention: That reasons for setting up NTT, were fallacious and non-existent. Since foundational basis is untrue, structure erected thereupon, cannot be accepted as valid and justified. And therefore, same is liable to be struck down. second contention: It is impermissible for legislature to abrogate/divest core judicial appellate functions, specially functions traditionally vested with High Court. Furthermore, transfer of such functions to quasi- judicial authority, devoid of essential ingredients of superior court, sought to be replaced was constitutionally impermissible, and was liable to be set aside. Besides appellate jurisdiction, power of judicial review vested in High 23 Page 23 Courts under Articles 226 and 227 of Constitution, has also been negated by NTT Act. And therefore, same be set aside. third contention: Separation of powers, rule of law, and judicial review, constitute amongst others, basic structure of Constitution. Article 323B inserted by Constitution (Forty-second Amendment) Act, 1976, to extent it is violative of above mentioned components of basic structure of Constitution, is liable to be declared ultra vires Constitution. fourth contention: number of provisions including Sections 5, 6, 7, 8 and 13 of NTT Act, undermine independence of adjudicatory process vested in NTT, and as such, are liable to be set aside in their present format. 11. We shall now narrate each of above contentions advanced by learned counsel for petitioners, in manner submissions were advanced before us. first contention: 12. As regards arrears of tax related cases before High Courts is concerned, it was submitted, that figures indicated by Department were incorrect. In this behalf it was asserted, that stance adopted at behest of Revenue, that there were about 80,000 cases pending in different courts, was untrue. It was emphatic contention of learned counsel for petitioners, that as of October, 2003 (when National Tax Tribunal Ordinance, was promulgated), arrears were approximately 29,000. Of total pendency, substantial number was only before few High Courts, including High Court of Bombay and High Court of Delhi. In petition filed by Madras Bar Association, it 24 Page 24 was asserted, that in Madras High Court, pending appeals under Section 260A of Income Tax Act, were less than 2,000. It was also sought to be asserted, that pendency of similar appeals in most southern States was even lesser. It was pointed out, that pendency of such appeals in High Court of Karnataka and High Court of Kerala, was even lesser than 2,000. 13. In respect of Revenue s assertion, that huge tax recovery was held up, in tax litigation, before High Courts, it was submitted, that figures projected at behest of Department were incorrect. It was pointed out, that according to Revenue, pending cases in High Courts involved amount of approximately Rs.80,000 crores (relatable to direct tax cases). It was submitted, that figures projected by Department, included not only 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 main appeals were set aside by High Court, there would hardly be any dues payable to Government at all. Additionally, it was sought to be asserted, that many tax appeals pending before High Courts, were filed by assessees, and accordingly, in event of assessees succeeding, amount could not be considered as having been held up, but may have to be refunded. It was further asserted, that in most cases, Revenue was able to recover substantial amount from assessees, by time matter reached High Court (on account of pre-deposits). It was, therefore sought to be submitted, that 25 Page 25 figures indicated by Revenue, with reference to amount of tax held up in pending cases, before High Courts was wholly flawed and deceptive. 14. It was also contention of learned counsel for petitioners, that mere establishment and creation of 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 manner two High Courts could differ with one another, so also, could two tax benches, of NTT. On factual front, it was pointed out, that divergence of opinion in High Courts was very rare. It was, as matter of approximation, suggested, that in most cases (approximately 99%), one High Court would follow view taken by another High Court. Learned counsel, however pointed out, that in High Courts age-old mechanism, to resolve conflicts of views, by either placing such matters before larger benches, or before higher court, was in place. Pointing out illustratively to ITAT and 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 instant basis for constituting NTT, was also not based on prudent or sensible rationale. 15. On subject of High Court Judges being not well-versed to determine complicated interpretation of tax-law related issues, it was submitted, that very mention of above as basis, for creating NTT, was extremely unfortunate. It was submitted, that well before independence of this country, and even thereafter, High Courts have been interpreting and construing tax related disputes, in legitimate, tenable and lawful manner. fairness and 26 Page 26 rationale of tax related issues, according to learned counsel, was apparent from faith reposed in High Courts both by Revenue, as well as, by assessees. Furthermore, veracity and truthfulness, of instant assertion, according to learned counsel, could be gauged from fact, that interference by Supreme Court, in orders passed by High Courts on tax matters, has been minimal. 16. During course of hearing, our attention was also invited to fact, that legislations of instant nature would have lopsided effect. In this behalf it was sought to be pointed out, that while jurisdiction vested in High Courts was being excluded, burden was being transferred to Supreme Court of India. This assertion was sought to be substantiated by learned counsel for petitioners, by inviting our attention to legislations, wherein power of judicial review traditionally vested in High Courts, has been excluded, and remedy of appeal has been provided from tribunals constituted directly to Supreme Court. In this behalf, reference may illustratively be made to following provisions:- (i) Electricity Act, 2003 125. Appeal to Supreme Court - Any person aggrieved by any decision or order of Appellate Tribunal, may, file appeal to Supreme Court within sixty days from date of communication of decision or order of Appellate Tribunal to him, on any one or more of grounds specified in Section 100 of Code of Civil Procedure, 1908 (5 of 1908): Provided that Supreme Court may, if it is satisfied that appellant was prevented by sufficient cause from filing appeal within said period, allow it to be filed within further period not exceeding sixty days. (ii) National Green Tribunal Act, 2010 27 Page 27 Section 22. Appeal to Supreme Court Any person aggrieved by any award, decision or order of tribunal, may, file appeal to Supreme Court, within ninety days from date of communication of award, decision or order of Tribunal, to him, on any one or more of grounds specified in Section 100 of Code of Civil Procedure, 1908 (5 of 1908) Provided that Supreme Court may, entertain any appeal after expiry of ninety days, if it is satisfied that appellant was prevented by sufficient cause from preferring appeal. (iii) Telecom Regulatory Authority of India Act, 1997 Section 18. Appeal to Supreme Court (1) Notwithstanding anything contained in Code of Civil Procedure, 1908 (5 of 1908) or in any other law, appeal shall lie against any order, not being interlocutory order, of Appellate Tribunal to Supreme Court on one or more of grounds specified in section 100 of that code. (2) No appeal shall lie against any decision or order made by Appellate Tribunal with consent of parties. (3) Every appeal under this section shall be preferred within period of ninety days from date of decision or order appealed against: Provided that Supreme Court may entertain appeal after expiry of said period of ninety days, if it is satisfied that appellant was prevented by sufficient cause from preferring appeal in time. (iv) Securities and Exchange Board of India Act, 1992 Section 15Z. Appeal to Supreme Court. Any person aggrieved by any decision or order of Securities Appellate Tribunal may file appeal to Supreme Court within sixty days from date of communication of decision or order of Securities Appellate Tribunal to him on any question of law arising out to such order: Provided that Supreme Court may, if it is satisfied that applicant was prevented by sufficient cause from filing appeal within said period, allow it to be filed within 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 Appellate Tribunal may file appeal to Supreme Court within sixty days from date of communication of decision or order of Appellate Tribunal to him on any question of law arising out of such decision or order: Provided that Supreme Court may, if it is satisfied that appellant was prevented by sufficient cause from filing appeal within said period, allow it to be filed within further period not exceeding sixty days. 28 Page 28 17. It was also pointed out, that enactment of NTT Act per se lacks bonafides. In this behalf contention of learned counsel for petitioner was, that there is Parliamentary convention that if Select Committee rejects Bill, it is normally not passed by Parliament. At very least, reservations expressed by Select Committee are taken into account, and Bill in question is appropriately modified. It was submitted, that bill under reference was presented before Lok Sabha on 29.11.2005, and same was passed without making single amendment. 18. It was, therefore, vehement contention of learned counsel for petitioners, that foundational facts being incorrect, and manner in which bill was passed, being devoid of bonafides, legislation itself i.e., NTT Act, deserved to be set aside. second contention: 19. It was emphatic contention of learned counsel for petitioners, that it was impermissible for legislature to abrogate/divest core judicial appellate functions traditionally vested with High Court, and to confer/vest same, with independent quasi-judicial authority, which did not even have basic ingredients of superior Court, like High Court (whose jurisdiction is sought to be transferred). In conjunction with instant contention, it was also submission of learned counsel, that jurisdiction vested in High Courts under Articles 226 and 227 of Constitution, is not only in respect of rightful implementation of statutory provisions, but also of supervisory jurisdiction, over courts and tribunals, cannot be curtailed under any circumstances. 29 Page 29 20. In order to supplement instant contention, learned counsel also placed reliance on Article 225 of Constitution which is being extracted hereunder:- 225. Jurisdiction of existing High Courts - Subject to provisions of this Constitution and to provisions of any law of appropriate Legislature made by virtue of powers conferred on that Legislature by this Constitution, jurisdiction of, and law administered in, any existing High Court, and respective powers of Judges thereof in relation to administration of justice in Court, including any power to make rules of Court and to regulate sittings of court and of members thereof sitting alone or in Division Courts, shall be same as immediately before commencement of this Constitution: Provided that any restriction to which exercise of original jurisdiction by any of High Courts with respect to any matter concerning revenue or concerning any act ordered or done in collection thereof was subject immediately before commencement of this Constitution shall no longer apply to exercise of such jurisdiction. Inviting Court s attention to proviso to Article 225 of Constitution it was submitted, that original jurisdiction of High Courts on matters pertaining to revenue or collection thereof, even if considered as barred, said bar was ordered to be expressly done away with, by proviso to Article 225 of Constitution. In present context, learned counsel for petitioners invited our attention to Section 226(1) of Government of India Act, 1935. said Section is reproduced hereunder:- 226(1) Until otherwise provided by Act of appropriate Legislature, no High Court shall have any original Jurisdiction in any matter concerning revenue, or concerning any act ordered or done in collection thereof according to usage and practice of country or law for time being in force. It was submitted, that under above statutory provision, High Court could not issue writ in nature of mandamus, to call upon Revenue authority to discharge its statutory obligations, in respect of assessment of tax. Likewise, 30 Page 30 it was not open to High Court, to issue writ in nature of certiorari or certiorarified mandamus, in order to set aside or modify order of assessment, passed in violation of or in contravention of any statutory provision(s). It was submitted, that proviso to Article 225 of Constitution, as has been extracted hereinabove, was omitted by Constitution (Forty-second Amendment) Act, 1976 (with effect from 1.2.1977). It was, however pointed out, that Parliament having realized its mistake, restored proviso to Article 225 of Constitution, as was originally enacted by Constitution (Forty-fourth Amendment) Act, 1978 (with effect from 20.6.1979). Thus viewed, according to learned counsel for petitioners, under provisions of Constitution, prevailing at present juncture, original jurisdiction of High Court (i.e., jurisdiction under Articles 226 and 227 of Constitution), as also, law administered by High Court at time of enactment of Constitution, cannot be restricted. Accordingly, it was asserted, that on matters pertaining to revenue or collection thereof, adjudication authority of High Courts, could not be curtailed. 21. Articles 226 and 227 of Constitution, on which emphatic reliance has been placed by 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 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 nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari, or any of them, for enforcement of any of rights conferred by Part III and for any other purpose. 31 Page 31 (2) 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 territories within which cause of action, wholly or in part, arises for exercise of such power, notwithstanding that seat of such Government or authority or residence of such person is not within those territories. (3) Where any party against whom interim order, whether by way of injunction or stay or in any other manner, is made on, or in any proceedings relating to, petition under clause (1), without (a) furnishing to such party copies of such petition and all documents in support of plea for such interim order; and (b) giving such party opportunity of being heard, makes application to High Court for vacation of such order and furnishes copy of such application to party in whose favour such order has been made or counsel of such party, High Court shall dispose of application within period of two weeks from date on which it is received or from date on which copy of such application is so furnished, whichever is later, or where High Court is closed on last day of that period, before expiry of next day afterwards on which High Court is open; and if application is not so disposed of, interim order shall, on expiry of that period, or, as case may be, expiry of aid next day, stand vacated. (4) power conferred on High Court by this article shall not be in derogation of power conferred on Supreme Court by clause (2) of Article 32. 227. Power of superintendence over all courts by High Court (1) Every High Court shall have superintendence over all courts and tribunals throughout territories in relation to which it exercises jurisdiction. (2) Without prejudice to generality of foregoing provisions, High Court may - (a) call for returns from such courts; (b) make and issue general rules and prescribe forms for regulating practice and proceedings of such courts; and (c) prescribe forms in which books, entries and accounts shall be kept by officers of any such courts. (3) High Court may also settle tables of fees to be allowed to 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 provision of any law for time being in force, and shall require previous approval of Governor. 32 Page 32 (4) Nothing in this article shall be deemed to confer on High Court powers of superintendence over any court or tribunal constituted by or under any law relating to Armed Forces. It was submitted, that above original jurisdiction vested in 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 enactment of NTT Act has clear and explicit effect, of excluding jurisdiction of High Courts. This was sought to be explained by indicating, that jurisdiction to adjudicate appeals, traditionally determined by jurisdictional High Courts, from orders passed by Appellate Tribunals under Income Tax Act, Customs Act and Excise Act (all taxing legislations) have been taken out of purview of High Courts, and have been vested with NTT, by NTT Act. It was further submitted, that even jurisdiction vested in High Courts under Articles 226 and 227 of Constitution, has been practically done away with. In this behalf explanation was, that by providing for appellate remedy against order passed by NTT, directly to Supreme Court, above original jurisdiction of High Courts, had practically been frustrated and effectively neutralized. It is pointed out, that curtailment of jurisdiction of High Courts under Articles 226 and 227 of Constitution, must be viewed as submission, distinct and separate from one emerging out of substitution of, jurisdiction of High Courts under Section 260A of Income Tax Act, 1961, Section 130 of Customs Act, and Section 35G of Excise Act. Whilst former contention is based on clear constitutional right, submission based on provisions of taxing statutes, 33 Page 33 emerges from well accepted constitutional convention, coupled with clear intent expressed in proviso to Article 225 of Constitution. 22. In order to support second contention advanced by petitioners, following decisions were relied upon: (i) Reliance was first of all, placed on decision of Privy Council in Hinds v. Queen Director of Public Prosecutions v. Jackson Attorney General of Jamaica (Intervener), 1976 All ER Vol. (1) 353. factual/legal position which arose for determination in cited case pertained to Gun Court Act, 1974, enacted by Parliament of Jamaica. aforesaid enactment was made, without following special procedure prescribed by Section 49 of Constitution of Jamaica (to alter provisions of Constitution of Jamaica). Gun Court Act, 1974, had effect of creating new Court Gun Court , to sit in three different kinds of divisions: Resident Magistrate s Division, Full Court Division and Circuit Court Division. One or other of these divisions, was conferred with jurisdiction to try, different categories of offenders of criminal offences. Prior to passing of Act, and at date of coming into force of Constitution, these offences were cognizable only before Resident Magistrate s Court, or before Circuit Court of Supreme Court of Jamaica. Gun Court Act, 1974, also laid down procedure to be followed (in each of divisions). For certain specified offences relating to unauthorized possession, acquisition or disposal of firearms and ammunition, Gun Court was required to mandatorily impose sentence of detention on hard labour. detenue could only be discharged, at direction of 34 Page 34 Governor-General, acting in accordance with advice of Review Board. Review Board was non-judicial body under Gun Court Act, 1974. Lord Diplock while recording majority view in Hinds case (supra), observed as under:- ..In seeking to apply to interpretation of 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 express words used in particular constitution under consideration and reasoning which depended on what, though not expressed, is nonetheless necessary implication from subject-matter and structure of constitution and circumstances in which it had been made. Such caution is particularly necessary in cases dealing with federal constitution in which question immediately in issue may have depended in part on separation of judicial power from legislative or executive power of federation or of one of its component states and in part upon division of judicial power between federation and component state. Nevertheless all these constitutions have two things in common which have important bearing on their interpretation. They differ fundamentally in their nature from ordinary legislation passed by parliament of sovereign state. They embody what is in substance agreement reached between representatives of various shades of political opinion in state as to structure of organs of government through which plenitude of sovereign power of state is to be exercised in future. All of them were negotiated as well as drafted by persons nurtured in tradition of that branch of common law of England that is concerned with public law and familiar in particular with basic concept of separation of legislative, executive and judicial power as it had been developed in unwritten constitution of United Kingdom. As to their subject-matter, peoples for whom new constitutions were being provided were already living under system of public law in which local institutions through which government was carried on, legislature, executive and courts, reflected same basic concept. new constitutions, particularly in case of unitary states, were evolutionary not revolutionary. They provided for continuity of government through successor institutions, legislative, executive and judicial, of which members were to be selected in different way, but each institution was to exercise powers which, although enlarged, remained of similar character to those that had been exercised by corresponding institution that it had replaced. 35 Page 35 Because of this great deal can be, and in drafting practice often is, left to necessary implication from adoption in new constitution of governmental structure which makes provision for legislature, executive and judicature. It is taken for granted that basic principle of separation of powers will apply to exercise of their respective functions by these three organs of government. Thus constitution does not normally contain any express prohibition on exercise of legislative powers by executive or of judicial powers by either executive or legislature. As respects judicature, particularly if it is intended that previously existing courts shall continue to function, constitution itself may even omit any express provision conferring judicial power upon judicature. Nevertheless it is well established as rule of construction applicable to constitutional instruments under which this governmental structure is adopted that absence of express words to that effect does not prevent legislative, executive and judicial powers of new state being exercisable exclusively by legislature, by executive and by judicature respectively. To seek to apply to constitutional instruments canons of construction applicable to ordinary legislation in 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 well-established principle that express words are needed to impose charge on subject. In result there can be discerned in all those constitutions which have their origin in Act of Imperial Parliament at Westminster or in Order in Council, common pattern and style of draftsmanship which may conveniently be described as Westminster model. Before turning to those express provisions of Constitution of Jamaica upon which appellants rely in these appeals, their Lordships will make some general observations about interpretation of constitutions which follow Westminster model. All Constitutions on Westminster model deal under separate Chapter headings with legislature, executive and judicature. Chapter dealing with judicature invariably contains provisions dealing with method of appointment and security of tenure of members of judiciary which are designed to assure to them degree of independence from other two branches of government. It may, as in case of Constitution of Ceylon, contain nothing more. To extent to which Constitution itself is silent as to distribution of plenitude of judicial power between various courts it is implicit that it shall continue to be distributed between and exercised by courts that were already in existence when new Constitution came into force; but legislature, in exercise of its power to make laws for peace, order and good government of state, may provide for establishment of new courts and for transfer to them of whole or part of jurisdiction previously exercisable by existing court. What, however, is implicit in 36 Page 36 very structure of Constitution on 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 manner and on terms laid down in Chapter dealing with judicature, even though this is not expressly stated in Constitution (Liyanage v. R. [1966] 1 All ER 650 at 658, [1967] A.C. 259 at 287, 288). more recent constitutions on Westminster model, unlike their earlier prototypes, include Chapter dealing with fundamental rights and freedoms. provisions of this Chapter form part of substantive law of state and until amended by whatever special procedure is laid down in Constitution for this purpose, impose fetter upon exercise by legislature, executive and judiciary of plenitude of their respective powers. remaining Chapters of Constitutions are primarily concerned not with legislature, executive and judicature as abstractions, but with persons who shall be entitled collectively or individually to exercise plenitude of legislative, executive or judicial powers - their qualifications for legislative, executive or judicial office, methods of selecting them, their tenure of office, procedure to be followed where powers are conferred on class of persons acting collectively and majorities required for exercise of those powers. Thus, where constitution on Westminster model speaks of particular court already in existence when Constitution comes into force it uses this expression as collective description of all those individual judges who, whether sitting alone or with other judges or with jury, are entitled to exercise jurisdiction exercised by that court before Constitution came into force. Any express provision in constitution for appointment or security of tenure of judges of that court will apply to all individual judges subsequently appointed to exercise analogous jurisdiction, whatever other name may be given to court in which they sit (Attorney-General for Ontario v. Attorney-General for Canada) [1925] A.C. 750. Where, under constitution on Westminster model, law is made by Parliament which purports to confer jurisdiction on court described by new name, question whether law conflicts with provisions of constitution dealing with exercise of judicial power does not depend upon label (in instant case Gun Court ) which Parliament attaches to judges when exercising jurisdiction conferred on them by law whose constitutionality is impugned. It is substance of law that must be regarded, not form. What is nature of jurisdiction to be exercised by judges who are to compose court to which new label is attached? Does method of their appointment and security of their tenure conform to requirements of constitution applicable to judges who, at time constitution came into force, exercised jurisdiction of that nature? (Attorney-General for 37 Page 37 Australia v. R. and Boilermakers Society of Australia, [1957] A.C. 288, 309-310). xxx xxx xxx ..So in deciding whether any provisions of law passed by Parliament of Jamaica as ordinary law are inconsistent with Constitution of Jamaica, neither courts of Jamaica nor their Lordships' Board are concerned with propriety or expediency of law impugned. They are concerned solely with whether those provisions, however reasonable and expedient, are of such character that they conflict with entrenched provision of Constitution and so can be validly passed only after Constitution has been amended by method laid down by it for altering that entrenched provision. question examined by Privy Council in background of factual/legal position expressed above, was recorded in following words:- attack on constitutionality of Full Court Division of Gun Court may be based on two grounds. first is that Gun Court Act 1974 purports to confer on court consisting of persons qualified and appointed as resident magistrates jurisdiction which under provisions of Chapter VII of Constitution is exercisable only by person qualified and appointed as judge of Supreme Court. second ground is much less fundamental. It need only be mentioned briefly, for it arises only if first ground fails. It is that even if conferment of jurisdiction on Full Court Division consisting of three resident magistrates is valid, section 112 of Constitution requires that any assignment of resident magistrate to sit in that division should be made by Governor-General acting on recommendation of Judicial Service Commission and not by Chief Justice as 1974 Act provides. question was dealt with, by opining as under:- Chapter VII of Constitution, Judicature, was in their Lordships' view intended to deal with 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) higher judiciary, consisting of judges of Supreme Court and judges of Court of Appeal, and (ii) lower judiciary, consisting of those described in section 112 (2) , viz.: ... Resident magistrate, judge of Traffic Court, Registrar of Supreme Court, Registrar of Court of Appeal and such other offices connected with courts of Jamaica as, subject to provisions of this Constitution, may be prescribed by Parliament. Apart from offices of judge and registrar of Court of Appeal which were new, these two categories embraced all salaried members of 38 Page 38 judiciary who exercised civil or criminal jurisdiction in Jamaica at date when Constitution came into force. minor jurisdiction, particularly in relation to juveniles, was exercised by justices of 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 exception of Chief Justice of Supreme Court and President of Court of Appeal, is requirement under Constitution that they should be appointed by Governor-General on recommendation of Judicial Service Commission - body established under section 111 whose composition is different from that of Public Service Commission and consists of persons likely to be qualified to assess fitness of candidate for judicial office. distinction between higher judiciary and lower judiciary is that former are given greater degree of security of tenure than latter. There is nothing in Constitution to protect 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 short fixed term of years. Their independence of good-will of political party which commands bare majority in Parliament is thus not fully assured. only protection that is assured to them by section 112 is that they cannot be removed or disciplined except on recommendation of Judicial Service Commission with right of appeal to Privy Council. This last is local body established under section 82 of Constitution whose members are appointed by Governor-General after consultation with Prime Minister and hold office for period not exceeding three years. In contrast to this, judges of Supreme Court and of Court of Appeal are given more firmly rooted security of tenure. They are protected by entrenched provisions of 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 age of 65 years. They are not subject to any disciplinary control while in office. They can only be removed from office on advice of Judicial Committee of Her Majesty's Privy Council in United Kingdom given on reference made on recommendation of tribunal of inquiry consisting of persons who hold or have held high judicial office in some part of Commonwealth. manifest intention of these provisions is that all those who hold any salaried judicial office in Jamaica shall be appointed on recommendation of Judicial Service Commission and that their independence from political pressure by Parliament or by Executive in 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 importance of jurisdiction that they exercise. clear distinction is 39 Page 39 drawn between security of tenure appropriate to those judges who exercise jurisdiction of higher judiciary and that appropriate to those judges who exercise jurisdiction of lower judiciary. Their Lordships accept that there is nothing in Constitution to prohibit Parliament from establishing by ordinary law court under new name, such as "Revenue Court," to exercise part of jurisdiction that was being exercised by members of higher judiciary or by members of lower judiciary at time when Constitution came into force. To do so is merely to change label to be attached to capacity in which persons appointed to be members of new court exercise jurisdiction previously exercised by holders of one or other of judicial offices named in Chapter VII of Constitution. In their Lordships' view, however, it is manifest intention of Constitution that any person appointed to be member of such court should be appointed in same manner and entitled to same security of tenure as holder of judicial office named in Chapter VII of Constitution which entitled him to exercise corresponding jurisdiction at time when Constitution came into force. Their Lordships understand Attorney-General to concede that salaried judges of any new court that Parliament may establish by ordinary law must be appointed in manner and entitled to security of tenure provided for members of lower judiciary by section 112 of Constitution. In their Lordships' view this concession was rightly made. To adopt 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 mockery of Constitution if Parliament could transfer jurisdiction previously exercisable by holders of judicial offices named in Chapter VII of Constitution to holders of new judicial offices to which some different name was attached and to provide that persons holding new judicial offices should not be appointed in manner and on terms prescribed in Chapter VII for appointment of members of judicature. If this were case there would be nothing to prevent Parliament from transferring whole of judicial power of Jamaica (with two minor exceptions referred to below) to bodies composed of persons who, not being members of Judicature, would not be entitled to protection of Chapter VII at all. What Attorney-General does not concede is that Parliament is prohibited by Chapter VII from transferring to court composed of duly appointed members of lower judiciary jurisdiction which, at time Constitution came into force, was exercisable only by court composed of duly appointed members of higher judiciary. In their Lordships' view section 110 of Constitution makes it apparent that in providing in section 103 (1) that: There shall be Court of Appeal for Jamaica draftsman treated this form of words as carrying with it by necessary implication that judges of court required to be 40 Page 40 established under section 103 should exercise appellate jurisdiction in all substantial civil cases and in all serious criminal cases; and that 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 ordinary law to deprive Court of Appeal of significant part of such appellate jurisdiction or to confer it on judges who do not enjoy security of tenure which Constitution guarantees to judges of Court of Appeal. Section 110 (1) of Constitution which grants to litigants wide rights of appeal to Her Majesty in Council but only from decisions of Court of Appeal, clearly proceeds on this assumption as to effect of section 103, Section 110 would be rendered nugatory if its wide appellate jurisdiction could be removed from Court of Appeal by ordinary law without amendment of Constitution. Their Lordships see no reason why similar implication should not be drawn from corresponding words of section 97. Court of Appeal of Jamaica was new court established under Judicature (Appellate Jurisdiction) Law 1962 , which came into force one day before Constitution, viz. on 5 August, 1962. Supreme Court of Jamaica had existed under that title since 1880. In judges of that court there had been vested all that jurisdiction in Jamaica which in their Lordships' view was characteristic of court to which in 1962 description Supreme Court was appropriate in hierarchy of courts which was to include separate Court of Appeal. three kinds of jurisdiction that are characteristic of Supreme Court where appellate jurisdiction is vested in 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 proceedings of inferior courts (viz. of kind which owes its origin to prerogative writs of certiorari, mandamus and prohibition). That section 97 (1) of Constitution was intended to preserve in Jamaica Supreme Court exercising this characteristic jurisdiction is, in their Lordships' view, supported by provision in section 13 (1) of Jamaica (Constitution) Order in Council 1962, that Supreme Court in existence immediately before commencement of this Order shall be Supreme Court for purposes of Constitution. This is made entrenched provision of Constitution itself by section 21 (1) of Order in Council, and confirms that kind of court referred to in words There shall be Supreme Court for Jamaica was court which would exercise in Jamaica three kinds of jurisdiction characteristic of Supreme Court that have been indicated above. If, as contended by Attorney-General, words italicised above in section 97 (1) entitled Parliament by ordinary law to strip 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 court of such limited jurisdiction that label Supreme 41 Page 41 Court would be false description; so too if all its jurisdiction (with those two exceptions) were exercisable concurrently by other courts composed of members of lower judiciary. But more important, for this is substance of matter, individual citizen could be deprived of safeguard, which makers of Constitution regarded as necessary, of having important questions affecting his civil or criminal responsibilities determined by court, however named, composed of judges whose independence from all local pressure by Parliament or by executive was guaranteed by security of tenure more absolute than that provided by Constitution for judges of inferior courts. Their Lordships therefore are unable to accept that words in section 97 (1), upon which Attorney-General relies, entitle Parliament by ordinary law to vest in new court composed of members of lower judiciary jurisdiction that forms significant part of unlimited civil, criminal or supervisory jurisdiction that is characteristic of Supreme Court and was exercised by Supreme Court of Jamaica at time when Constitution came into force, at any rate where such vesting is accompanied by ancillary provisions, such as those contained in section 6 (1) of Gun Court Act 1974 , which would have consequence that all cases falling within jurisdiction of new court would in practice be heard and determined by it instead of by court composed of judges of Supreme Court. xxxx xxxx xxxx In their Lordships' view provisions of 1974 Act, in so far as they provide for establishment of Full Court Division of Gun Court consisting of three resident magistrates, conflict with Chapter VII of Constitution and are accordingly void by virtue of section 2. xxxx xxxx xxxx Thus Parliament, in exercise of its legislative power, may make law imposing limits upon discretion of judges who preside over courts by whom offences against that law are tried to inflict on individual offender custodial sentence length of which reflects judge's own assessment of gravity of offender's conduct in particular circumstance of his case. What Parliament cannot do, consistently with separation of powers, is to transfer from judiciary to any executive body whose members are not appointed under Chapter VII of Constitution, discretion to determine severity of punishment to be inflicted upon individual member of class of offenders. Whilst none would suggest that Review Board composed as is provided in section 22 of Gun Court Act 1974 would not perform its duties responsibly and impartially, fact remains that majority of its members are not persons qualified by Constitution to exercise judicial powers. breach of constitutional restriction is not excused by good intentions with which legislative power has been exceeded by particular law. If, consistently with Constitution, it is permissible for Parliament to confer discretion to 42 Page 42 determine length of custodial sentences for criminal offences on body composed as Review Board is, it would be equally permissible to less well-intentioned Parliament to confer same discretion on any other person or body of persons not qualified to exercise judicial powers, and in this way, without any amendment of Constitution, to open door to exercise of arbitrary power by executive in whole field of criminal law. xxxx xxxx xxxx Their Lordships would hold that provisions of section 8 of Act relating to mandatory sentence of detention during Governor- General's pleasure and provisions of section 22 relating to Review Board are law made after coming into force of Constitution which is inconsistent with provisions of Constitution relating to separation of powers. They are accordingly void by virtue of section 2 of Constitution. (ii) In same sequence, learned counsel for petitioners invited our attention to Liyanage v. Reginam, (1966) 1 All ER 650. It is first necessary to record factual/legal matrix, in cited judgment. All 11 appellants in matter before Privy Council, were charged with offences arising out of abortive coup d e tat on 27.1.1962. factum of said coup d e tat, was set out in White Paper issued by Government of Ceylon on 13.2.1962. White Paper gave names of 13 alleged conspirators including appellants. White Paper concluded by observing, that deterrent punishment of severe character ought to be imposed, on all those who were guilty. On 16.3.1962, 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 State, on or around 27.1.1962. above Act legalized imprisonment of appellants, while they were awaiting trial. It modified section of Penal Code, so as to enact ex post facto, new offence, to meet circumstance of abortive coup. It altered ex post facto, 43 Page 43 law of evidence, regarding settlements made by accused, while in custody. It enacted minimum punishment, accompanied by forfeiture of property, for offences for which appellants were tried. Under Section 440A of Criminal Procedure Code, trial in case of sedition, could be directed to be before three judges without jury. instant provision was amended by above Act, so as to extend same, to offences for which appellants were charged. Under Section 9 of above Act, Minister of Justice was empowered to nominate three judges. In exercise of his powers under Section 9, Minister of Justice had nominated three judges, to try appellants without jury. Supreme Court upheld objection raised by appellants, that Section 9 was ultra vires Constitution of Ceylon, and that, nomination was invalid. Thereafter, Criminal Law Act, No. 31 of 1962 was passed. It repealed Section 9 of earlier Act. It amended power of nomination, in that, power was conferred on Chief Justice. On appeal by appellants, against conviction and sentence from their trial before Court of three judges nominated under Act, it was held, that Criminal Law (Special Provisions) Act, No. 1 of 1962, as well as, Criminal Law Act, No. 31 of 1962, were invalid for two reasons. Firstly, under Constitution of Ceylon, there was separation of powers. power of judicature, while Constitution stood, could not be usurped or infringed by executive or legislature. Secondly, Criminal Law (Special Provisions) Act, No. 1 of 1962, as well as, Criminal Law Act, No. 31 of 1962 were aimed at individuals concerned in abortive coup, and were not legislation effecting criminal law of 44 Page 44 general application. Although not every enactment ad hominem, and ex post facto, necessarily infringed judicial power, yet there was such infringement in present case, by above two Acts. In addition to above conclusions, it was also held, that joint effect of Ceylon Constitution Order in Council 1946, and Ceylon Independence Act, 1947, was intended to, and resulted in, giving Ceylon Parliament, full legislative powers of independent sovereign State. Consequently, legislative power of Ceylon Parliament, was not limited by inability to pass laws, which offended fundamental principles of justice. Privy Council while examining above controversy, rendered following opinion:- In Ceylon, however, position was different. change of sovereignty did not in itself produce any apparent change in constituents or functioning of Judicature. So far as courts were concerned their work continued unaffected by new Constitution, and Ordinances under which they functioned remained in force. judicial system had been established in Ceylon by Charter of Justice in 1833. Clause 4 of Charter read: "And to provide for administration of justice hereafter in Our said Island Our will and pleasure is, and We do hereby direct that entire administration of justice, civil and criminal therein, shall be vested exclusively in 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 Governor of Our said Island by any Law or Ordinance to be by him made, with advice of Legislative Council thereof or otherwise howsoever, to constitute or establish any court for administration of justice in any case civil or criminal, save as hereinafter is expressly saved and provided." Clause 5 established Supreme Court and clause 6 Chief Justice and two puisne judges. Clause 7 gave Governor powers of appointing their successors. There follow many clauses with regard to administrative, procedural and jurisdictional matters. Some half century later Ordinances (in particular Courts Ordinance) continued jurisdiction and procedure of courts. Thereunder courts have functioned continuously up to present day. xxx xxx xxx 45 Page 45 Constitution is significantly divided into parts - "Part 2 Governor-General," "Part 3 Legislature," "Part 4 Delimitation of Electoral Districts," "Part 5 Executive," "Part 6 Judicature," "Part 7 Public Service," "Part 8 Finance." And although no express mention is made of vesting in judicature judicial power which it already had and was wielding in its daily process under Courts Ordinance, there is provision under Part 6 for appointment of judges by Judicial Service Commission which shall not contain member of either House, but shall be composed of Chief Justice and judge and another person who is or shall have been judge. Any attempt to influence any decision of Commission is made criminal offence. There is also provision that judges shall not be removable except by Governor-General on address of both Houses. These provisions manifest intention to secure in judiciary freedom from political, legislative and executive control. They are wholly appropriate in Constitution which intends that judicial power shall be vested only in judicature. They would be inappropriate in Constitution by which it was intended that judicial power should be shared by executive or legislature. Constitution's silence as to vesting of judicial power is consistent with its remaining, where it had lain for more than century, in hands of judicature. It is not consistent with any intention that henceforth it should pass to or be shared by, executive or legislature. Counsel for appellants succinctly summarises his attack on Acts in question as follows. first Act was wholly bad in that it was special direction to judiciary as to trial of particular prisoners who were identifiable (in view of White Paper) and charged with particular offences on particular occasion. pith and substance of both Acts was legislative plan ex post facto to secure conviction and enhance 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 fundamental law of evidence so as to facilitate their conviction. and finally it altered ex post facto punishment to be imposed on them. In their Lordships' view that cogent summary fairly describes effect of Acts. As has been indicated already, legislation ad hominem which is thus directed to course of particular proceedings may not always amount to interference with functions of judiciary. But in present case their Lordships have no doubt that there was such interference; that it was not only likely but intended effect of impugned enactments; and that it is fatal to their validity. true nature and purpose of these enactments are revealed by their conjoint impact on specific proceedings in respect of which they were designed, and they take their colour, in particular, from alterations they purported to make as to their ultimate objective, punishment of those convicted. These 46 Page 46 alterations constituted grave and deliberate incursion into judicial sphere. Quite bluntly, their aim was to ensure that 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 conspiracy might have been trivial. trial court concluded its long and careful judgment with these words ((1965), 67 CNLR at p. 424): "But we must draw attention to fact that Act of 1962 radically altered ex post facto punishment to which defendants are rendered liable. Act removed discretion of court as to period of sentence to be imposed, and compels court to impose term of 10 years' imprisonment, although we would have wished to differentiate in matter of sentence between those who organised conspiracy and those who were induced to join it. It also imposes compulsory forfeiture of property. These amendments were not merely retroactive: they were also ad hoc, applicable only to conspiracy which was subject of charges we have tried. We are unable to understand this discrimination. To courts, which must be free of political bias, treasonable offences are equally heinous, whatever be complexion of Government in power or whoever be offenders." Their Lordships sympathise with that protest and wholly agree with it. One might fairly apply to these Acts words of Chase J., in Supreme Court of United States in Calder v. Bull: "These acts were legislative judgments; and exercise of judicial power." Blackstone in his Commentaries, Vol. I (4th Edition), p. 44, wrote: "Therefore particular act of legislature to confiscate goods of Titius, or to attaint him of high treason does not enter into idea of municipal law: for operation of this act is spent upon Titius only and has no relation to community in General: it is rather sentence than law." If such Acts as these were valid judicial power could be wholly absorbed by legislature and taken out of hands of judges. It is appreciated that legislature had no such general intention. It was beset by 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 Constitution. What is done once, if it be allowed, may be done again and in lesser crisis and less serious circumstances; and thus judicial power may be eroded. Such erosion is contrary to clear intention of 47 Page 47 Constitution. In their Lordships' view Acts were ultra vires and invalid. xxx xxx xxx It was agreed between parties that if Acts were ultra vires and invalid, convictions cannot stand. Their Lordships have therefore humbly advised Her Majesty that this appeal should be allowed and that convictions should be quashed. (iii) Reference was then made to Director of Public Prosecutions of Jamaica v. Mollison, (2003) 2 AC 411. factual controversy which led to above cited decision of Privy Council may be noticed. On 16.3.1994, when Kurt Mollison was merely 16 years old, he committed murder in furtherance of robbery. His offence was described as capital murder , under 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 Juveniles Act, 1951, to be detained during Governor-General s pleasure. On 16.2.2000, although Court of Appeal refused his prayer for leave to appeal against his conviction, it agreed to examine his contention, whether sentence imposed on him was compatible with provisions of Constitution of Jamaica. Court of Appeal accepted his contention. sentence of detention, during Governor-General s pleasure, was set aside. In its place, he was sentenced to life imprisonment, with recommendation that, he be not considered for parole till he had served term of 20 years imprisonment. In controversy which came up for consideration before Privy Council, there were two main issues. Firstly, whether sentence of detention during Governor-General s pleasure authorized by Section 29(1), was power exercised by him in his executive capacity. And secondly, whether power to determine measure for 48 Page 48 punishment to be inflicted on offender, is compatible with Constitution. Privy Council, while examining controversy, opined as under:- Section 29 of Juveniles Act 1951 [3] Section 3 of Offences against 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 number of amendments made pursuant to section 4 of Jamaica (Constitution) Order in Council 1962 (SI 1962/1500), section 29 of Juveniles Act 1951 now provides, so far as material to main issue in this appeal, as follows: "(1) Sentence of death shall not be pronounced on or recorded against person convicted of offence if it appears to court that at time when offence was committed he was under age of 18 years, but in place thereof court shall sentence him to be detained during Her Majesty's pleasure, and, if so sentenced, he shall, notwithstanding anything in other provisions of this Law, be liable to be detained in such place (including, save in case of child, adult correctional centre) and under such conditions as Minister may direct, and while so detained shall be deemed to be in legal custody. (4) 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 Governor- General may direct, and may at any time be revoked or varied by Governor-General. Where such licence is revoked person to whom it relates shall return forthwith to such place as 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 four references originally made to Governor in subsection (4). In 1975 subsection (1) was further amended to make plain, reversing effect of Baker v Queen, [1975] AC 774, [1975] 3 All ER 55, that statutory prohibition on pronouncement of death sentence applied to those appearing to be aged under 18 at time when they had committed offence, not at time of sentence. In 1985, reference to "an adult correctional centre" was substituted for previous reference to "a prison". enacted reference to "Her Majesty's pleasure" has not, however, been amended, no doubt because section 68(2) of Constitution of Jamaica provides that executive authority of Jamaica may be exercised on behalf of Her Majesty by Governor- General. In recognition of this constitutional reality, it appears to be practice where section 29(1) applies, as was done in this case, to call 49 Page 49 sentence one of detention during Governor-General's pleasure, and in this opinion that usage will be adopted. xxx xxx xxx Constitution xxx xxx xxx first question: is section 29 compatible with Constitution of Jamaica? [11] Both Director and Solicitor-General, who appeared with him, accepted at hearing that, subject to their argument based on section 26(8) of Constitution, section 29 of Juveniles Act 1951 infringes rights guaranteed by, and so is inconsistent with, sections 15(1)(b) and 20(1) of Constitution. Given this concession, rightly made, it is unnecessary to do more than note reason for it. person detained during Governor-General's pleasure is deprived of his personal liberty not in execution of sentence or order of court but at discretion of executive. Such person is not afforded fair hearing by independent and impartial court, because sentencing of criminal defendant is part of hearing and in cases such as present sentence is effectively passed by executive and not by court independent of executive. xxx xxx xxx [13] ..It does indeed appear that sentencing provisions under challenge in Hinds case were held to be unconstitutional not because of their repugnancy to any of rights guaranteed by sections in Chapter III of Constitution but because of their incompatibility with principle on which Constitution itself was held to be founded. There appears to be no reason why (subject to other arguments considered below) reasoning in Hindscase does not apply to present case. It would no doubt be open to Board to reject that reasoning, but it would be reluctant to depart from decision which has stood unchallenged for 25 years, more so since decision gives effect to very important and salutary principle. Whatever overlap there may be under constitutions on Westminster model between exercise of executive and legislative powers, separation between exercise of judicial powers on one hand and legislative and executive powers on other is total or effectively so. Such separation, based on rule of law, was recently described by Lord Steyn as "a characteristic feature of democracies": R (Anderson) v Secretary of State for Home Department, [2002] 4 All ER 1089, [2002] 3 WLR 1800, at pp. 1821-1822, para 5 of latter report. In opinion of Board, Mr Fitzgerald has made good his challenge to section 29 based on its incompatibility with constitutional principle that judicial functions (such as sentencing) must be exercised by judiciary and not by executive. xxx xxx xxx 50 Page 50 ..The nature and purpose of sentence of detention during Governor-General's pleasure are clear, as explained above. only question is who should decide on measure of punishment detainee should suffer. Since vice of section 29 is to entrust this decision to executive instead of judiciary, necessary modification to ensure conformity with Constitution is (as in Browne v 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. instant judgment was rendered by High Court of Australia. factual controversy which led to above determination is being narrated first. plaintiff Harry Brandy was engaged as officer of Aboriginal and Torres Strait Islander Commission. third defendant John Bell was also officer of said Commission. plaintiff and third defendant continued to serve Commission until Commission itself ceased to exist. On 13.3.1990, John Bell lodged complaint with Human Rights and Equal Opportunity Commission, wherein he alleged, verbal abuse and threatening behaviour on part of Harry Brandy, while both were in employment of Commission. Thereafter, John Bell issued notice under Section 24 of Racial Discrimination Act, 1975. And accordingly, Commissioner referred complaint to Commission. power of Commission, to hold enquiry under Racial Discrimination Act, 1975 against Harry Brandy, was exercised by second defendant. second defendant had been appointed under Section 24 of Racial Discrimination Act, 1975, which empowered Minister, to appoint person to perform and discharge functions of Commissioner. second defendant returned 51 Page 51 his findings under Section 25Z of Racial Discrimination Act, 1975 on 22.12.1993. defendant s complaint was found to be substantiated. In disposing of controversy, second defendant required Harry Brandy, plaintiff, to do following acts/course of conduct:- "(1) that Plaintiff do apologise to Third Defendant, form of apology being annexed to determination; (2) that Plaintiff do pay sum of $2 500 to Third Defendant by way of damages for pain, humiliation, distress and loss of personal dignity suffered by Third Defendant; (3) that ATSIC do take disciplinary action against Plaintiff, in relation to conduct which he perpetrated against Third Defendant; (4) that ATSIC do apologise to Third Defendant in relation to handling of his complaint, form of apology being annexed to determination; (5) that ATSIC do pay sum of $10 000 to Third Defendant by way of damages for pain, humiliation, distress and loss of personal dignity suffered by Third Defendant." In order to contest determination rendered by second defendant, Harry Brandy raised challenge to provisions of Racial Discrimination Act, 1975. challenge raised by him came to be formulated in following words:- "In consequence of amendments embodied in Sex Discrimination and other Legislation Amendment Act 1992 and/or Law and Justice Legislation Amendment Act 1993 as they affect Racial Discrimination Act 1975 are any, and if so which, of provisions of Part III of Racial Discrimination Act invalid?" While adjudicating upon matter, High Court of Australia held as under:- plaintiff's challenge to Act- 15. plaintiff's challenge to particular provisions of Act is based upon proposition that they provide for exercise of judicial power otherwise than in conformity with Ch.III of Commonwealth Constitution in that power is exercised by Commission which is not court established pursuant to s.71 and constituted in accordance with s.72 of Constitution. plaintiff further argues that correctness of this 52 Page 52 proposition is not affected by provisions for review by Federal Court. xxx xxx xxx 21. Although many decision-making functions may take their character as exercise of judicial, executive or legislative power from their legislative setting, character of decision-maker and nature of 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 ascertainment of existing rights by judicial determination of issues of fact or law falls exclusively within judicial power so that Parliament cannot confide function to any person or body but court constituted under ss.71 and 72 of Constitution". In that statement, expression "judicial determination" means authoritative determination by means of judicial method, that is, enforceable decision reached by applying relevant principles of law to facts as found. xxx xxx xxx 25. Turning to case before Court, whatever might be enforceability of declaration that plaintiff "do apologise", declaration that plaintiff "do pay sum of $2 500" to third defendant, once registered, attracts operation of s.53 of Federal Court of Australia Act 1976 (Cth). By that section, person in whose favour judgment is given is entitled to same remedies for enforcement, by execution or otherwise, as are allowed by laws of State or Territory applicable. In present case, this means New South Wales. Section 53 does not affect operation of any provision made by or under any other Act or Rules of Court for execution and enforcement of judgments of Court (40 s.53(2)) . 26. But s.25ZAB goes beyond providing machinery for enforcement of determination. It purports to give registered determination effect "as if it were order made by Federal Court". judicial order made by Federal Court takes effect as exercise of Commonwealth judicial power, but determination by Commission is neither made nor registered in exercise of judicial power. exercise of executive power by Commission and performance of administrative function by Registrar of Federal Court simply cannot create order which takes effect as exercise of judicial power; conversely, order which takes effect as exercise of judicial power cannot be made except after making of judicial determination. Thus, s.25ZAB purports to prescribe what Constitution does not permit. 53 Page 53 (v) Our attention was then invited to Reference Re Residential Tenancies Act, 123 DLR (3d) 554. factual matrix, in furtherance of which above judgment was rendered by Supreme Court of Canada, is as follows. provisions of Residential Tenancies Act, 1979 (Ontario), by which Residential Tenancy Commission was empowered to order eviction of tenants, as also, could require landlords and tenants to comply with obligations imposed under said Act, were assailed, as offending against limitation contained in Section 96 of British North America Act, 1867, and therefore, ultra vires. In recording its conclusions on similar analogy, as in judgments noticed above, Supreme Court of Canada observed as under:- Under s. 92(14) of British North America Act, 1867, provincial Legislatures have legislative power in relation to administration of justice in Province. This is wide power but subject to subtraction of ss. 96 to 100 in favour of federal authority. Under s. 96 Governor General has sole power to appoint judges of Superior, District and County Courts in each Province. Under s. 97 Judges who are to be appointed to Superior, District and County Courts are to be selected from respective bars of each Province. Under s. 100 Parliament of Canada is obliged to fix and provide for their salaries. Section 92(14) and ss. 96 to 100 represent one of important compromises of Fathers of Confederation. It is plain that what was sought to be achieved through this compromise, and intended effect of s. 96, would be destroyed if Province could pass legislation creating tribunal, appoint members thereto, and then confer on tribunal jurisdiction of Superior Courts. What was conceived as strong constitutional base for national unity, through unitary judicial system, would be gravely undermined. Section 96 has thus come to be regarded as limiting provincial competence to make appointments to tribunal exercising s. 96 judicial powers and therefore as implicitly limiting provincial competence to endow provincial tribunal with such powers. IV belief that any function which in 1867 had been vested in s. 96 Court must forever remain in that Court reached its apogee in 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 54 Page 54 three principal pillars in temple of justice not to be undermined , Lord Atkin held that Ontario Municipal Board could not validly receive judicial authority . At same time, he held that Municipal Board was in pith and substance administrative body, and impugned judicial functions were severable from administrative powers given to Board under its enabling legislation. There was no analysis of inter- relationship between judicial and administrative features of legislative scheme; assumption was that any attempt to confer s. 96 function on provincially-appointed tribunal was ultra vires Legislature. This sweeping interpretation of s. 96, with its accompanying restrictive view of provincial legislative authority under s. 92, was limited almost immediately by judgment of this Court in Reference re Adoption Act and Other Act, etc., (1938) 3 DLR 497, 71 CCC 110, (1938) SCR 398. Chief Justice Duff held that jurisdiction of inferior Courts was not fixed forever as it stood at date of Confederation . On his view, it was quite possible to remove jurisdiction from Superior Court and vest it in Court of summary jurisdiction. question which must be asked was whether jurisdiction conferred upon Magistrates under these statutes broadly conforms to type of jurisdiction generally exercisable by Courts of summary jurisdiction rather than jurisdiction of Courts within purview of s. 96 (p. 514). In Adoption Reference, Duff C.J. looked to historical practice in England and concluded that jurisdiction conferred on Magistrates under legislation before Court in Reference was analogous to jurisdiction under English Poor Laws, jurisdiction which had belonged to courts of summary nature rather than to Superior Courts. On this basis, legislation was upheld. Adoption Reference represented liberalization of view of s. 96 adopted by Privy Council in Toronto v. York, at least in context of transfer of jurisdiction from Superior Court to inferior Court. same process of liberalization, this time in context of transfer of jurisdiction from Superior Court to administrative tribunal, was initiated by 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 two-fold test. first limb of test is to ask whether board or tribunal exercises judicial power . Lord Simonds did not propose final answer to definition of judicial power , but he suggested at p. 680 DLR, p. 149 AC, that: conception of judicial function is inseparably bound up with idea of suit between parties, whether between Crown and subject or between subject and subject, and that it is duty of Court to decide issue between those parties, with whom alone it rests to initiate or defend or compromise proceedings. If answer to initial question as to judicial power is in negative, then that concludes matter in favour of provincial board. 55 Page 55 If, however, power is in fact judicial power, then it becomes necessary to ask second question: in exercise of that power, is tribunal analogous to Superior, District or County Court? xxx xxx xxx Step two involves consideration of function within its institutional setting to determine whether function itself is different when viewed in that setting. In particular, can function still be considered to be judicial function? In addressing issue, it is important to keep in mind further statement by Rand J. in Dupont v. Inglis (at p. 424 DLR, p. 543 SCR) that it is subject-matter rather than apparatus of adjudication that is determinative . Thus question of whether any particular function is judicial is not to be determined simply on basis of procedural trappings. primary issue is nature of question which tribunal is called upon to decide. Where tribunal is faced with private dispute between parties, and is called upon to adjudicate through application of recognized body of rules in manner consistent with fairness and impartiality, then, normally, it is acting in judicial capacity . To borrow terminology of Professor Ronald Dworkin, judicial task involves questions of principle , that is, consideration of competing rights of individuals or groups. This can be contrasted with questions of policy involving competing views of collective good of community as whole. (See Dworkin, Taking Rights Seriously (1977) at pp. 82-90 (Duckworth). perusal of conclusions recorded by Supreme Court of Canada reveals, that court evolved three step test to determine constitutional validity of provision which vested adjudicatory functions in administrative tribunal. first step was determined in light of historical conditions existing in 1867, i.e. before British North America Act, 1867 was enacted. first step required determination whether at time of Confederation, power or jurisdiction now vested in administrative tribunal, was exercised through judicial court process. If answer to first step was in negative, constitution of administrative tribunal would be valid. If historical evidence indicated, that power, now vested with administrative tribunal, was identical or analogous to power exercised under Section 96 Courts at 56 Page 56 Confederation, then matter needed to be examined further. second step was to determine, whether power to be exercised by administrative tribunal, should be considered as judicial function. Insofar as instant aspect of matter is concerned, it was illustratively concluded, that where power vested in administrative tribunal was in respect of adjudication of disputes between parties, which required to be settled through application of recognized body of rules, in manner consistent with fairness and impartiality, then said power could be classified as judicial power/function. If, however, while applying second step, answer was in negative, it was not necessary to proceed with matter further, and vesting of power with administrative tribunal should be considered as valid. If power or jurisdiction is exercised in judicial manner, then it is imperative to proceed to third and final step. third step contemplates analysis and review of administrative tribunal s functions as whole, and to examine same in its entire institutional context. It contemplated examination of inter- relationship between administrative tribunal s judicial powers, and other powers and jurisdiction conferred by legislative enactment. If judicial hearing is must, whereafter judgment was required to be rendered, administrative tribunal would be deemed to be exercising jurisdiction which is ordinarily vested in Court . It is after recording finding in affirmative on all three steps, that it will be possible to conclude, whether judicial functions have been required to be exercised by concerned administrative tribunal. Having examined controversy in Reference Re Residential Tenancies Act 57 Page 57 (supra), Supreme Court of Canada arrived at conclusion, that Residential Tenancy Commission could have been authorized to grant orders for possession to landlord or to grant orders for specific performance of tenancy. 23. Finally, learned counsel for 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 separation of power rule has not been explicitly provided for, there would be limitations in delegation of Court functions to tribunals. Relevant text on subject, from above treatise is being reproduced hereunder:- 7.3 Implications of Constitution s judicature sections (a) Separation of powers There is no general separation of powers in Constitution Act, 1867. Act does not separate legislative, executive and judicial functions and insist that each branch of government exercise only its own function. As between legislative and executive branches, any separation of powers would make little sense in system of responsible government; and it is clearly established that Act does not call for any such separation. As between judicial and two political branches, there is likewise no general separation of powers. Either Parliament or Legislatures may by appropriate legislation confer non-judicial functions on 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 statute which enables government to refer question of law to courts for advisory opinion. rendering of advisory opinions to government is traditionally executive function, performed by law officers of government. For that reason, supreme Court of United States and High Court of Australia have refused to render advisory opinions, reasoning that separation of powers doctrine in their Constitutions confines courts to traditional judicial function of adjudicating upon genuine controversies. But in Reference Appeal (1912), A-G Ont. V.A.-G. Can. (Reference Appeal) (1912) AC 571, Privy Council refused to read any such limitation into Canada s Constitution. Their lordships upheld federal reference statute, 58 Page 58 apparently as law in relation to supreme court of Canada (s.101). provincial reference statutes are also valid as laws in relation to administration of justice in province (s.92(14)). conferral of judicial functions on bodies which are not courts is likewise subject to no general prohibition. However, here there is important qualification to be made. courts have held that provincial Legislatures may not confer on body other than superior, district or county court judicial functions analogous to those performed by superior, district or county court. This little separation of powers doctrine has been developed to preclude evasion of stipulations of ss. 96 to 100 of constitution Act, 1867. If ss. 96 to 100 of constitution Act, 1867 were read literally, they could easily be evaded by province which wanted to assume control of its judicial appointments. province could increase jurisdiction of its inferior courts so that they assumed much of jurisdiction of higher courts; or province could best higher-court jurisdiction in newly- established tribunal, and call that tribunal inferior court or administrative tribunal. It is therefore not surprising that courts have added gloss to s. 96 and associated constitutional provisions. What they have said is this: if province invests tribunal with jurisdiction of kind that ought property to belong to superior, district or county court, then that tribunal, whatever its official name, is for constitutional purposes superior, district or county court and must satisfy requirements of s. 96 and associated provisions of constitution Act, 1867. This means that such tribunal will be invalidly constituted, unless its members (1) are appointed by federal government in conformity with s. 96, (2) are drawn from bar of province in conformity with ss. 97 and 98, and (3) receive salaries that are fixed and provided by federal parliament in conformity with s. 100. So far law is clear, and policy underlying it is comprehensible. But difficulty lies in definition of those functions that ought properly to belong to superior, district or county court. courts have attempted to fashion judicially enforceable rule which would separate s. 96 functions from other adjudicatory functions. attempt has not been successful, and it is difficult to predict with confidence how courts will characterize particular adjudicatory functions. uncertainty of law, with its risk of nullification, could be serious deterrent to conferral of new adjudicatory functions on inferior courts or administrative tribunals, and consequent impediment to much new regulatory or social policy. For most part, courts have exercised restraint in reviewing provincial statutes which create new adjudicatory jurisdictions, so that difficulty has not been as serious as it could have been. However, in last two decades, there has been regrettable resurgence of s. 96 litigation: five challenges to powers of inferior courts or tribunals based on s. 96 have succeeded in Supreme Court 59 Page 59 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 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 text that follows. 24. It was also submission of learned counsel for petitioners, that proposition of law highlighted hereinabove on basis of provisions of constitutions of different countries (Jamaica, Ceylon, Australia and Canada) decided either by Privy Council or highest courts of 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. controversy in cited case originated with filing of writ petition by respondent Association challenging appointment of Assistant Commissioners of Labour (i.e., Officers discharging executive functions under Labour Department). above appointments had been made, consequent upon amendments to provisions of Bombay Industrial Relations Act, and Industrial Disputes (Maharashtra Amendment) Act. submission advanced at hands of respondent Association was, that Labour Courts had been constituted in State of Maharashtra, under Industrial Disputes Act, Bombay Industrial Relations Act, as also, Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices, Act. Qualifications of persons to be appointed as judge of Labour Court under Industrial Disputes Act, was stipulated in Section 7, which provided as under:- 60 Page 60 (a) that he was or had been Judge of High Court; or (b) that he had for period of not less than three years been District Judge or Additional District Judge; or (c) that he had held office of Chairman or any other Member of Labour Appellate Tribunal or of any Tribunal for 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 Presiding Officer of Labour Court constituted under any provincial Act for not less than five years. By Industrial Disputes (Maharashtra Amendment) Act, 1974, Section 7 was amended, and three more sources of recruitment for post of judge of Labour Court were added. These were:- (d-1) he has practiced as advocate or attorney for not less than seven years in High Court, or any court, subordinate thereto, or any Industrial Court or Tribunal or Labour Court, constituted under any law for time being in force; or (d-2) he holds degree in law of University established by law in any part of India and is holding or has held office not lower in rank than that of Deputy Registrar of any such Industrial Court or Tribunal for not less than five years; or (d-3) he holds degree in law of University established by law in any part of India and is holding or has held office not lower in rank than that of Assistant Commissioner of Labour under State Government for not less than five years. Under Bombay Industrial Relations Act, as it originally stood, Section 9 provided, that only such persons would be eligible for appointment as judge of Labour Court, who possessed qualifications laid down under Article 234 of Constitution, for being eligible to enter judicial service in State of Maharashtra. By Maharashtra Act 47 of 1977, Section 9 of Bombay Industrial Relations Act was amended by substituting new sub-section (2), which replaced original sub-section (2) of Section 9. amended sub- section (2) was as follows:- 61 Page 61 9. (2) person shall not be qualified for appointment as presiding officer of Labour Court, unless: (a) he has held any judicial office in India for not less than five years; or (b) he has practiced as Advocate or Attorney for not less than seven years in High Court or any court subordinate thereto, or in any Industrial Court, Tribunal or Labour Court constituted under any law for time being in force; or (c) he holds degree in law of University established by law in any part of India and is holding or has held office not lower in rank than that of Deputy Registrar of any such Industrial Court or Tribunal, or of Assistant Commissioner of Labour under State Government, in both cases for not less than five years. In first instance, this Court for first time declared salient components of functions exercised by civil court , as under:- 6. In case of Bharat Bank Ltd. v. Employees, AIR 1950 SC 188, this Court considered whether Industrial Tribunal was court. It said that one cannot go by mere nomenclature. One has to examine functions of Tribunal and how it proceeds to discharge those functions. It held that Industrial Tribunal had all trappings of court and performed functions which cannot but be regarded as judicial. Court referred to Rules by which proceedings before Tribunal were regulated. Court dwelt on fact that powers vested in it are similar to those exercised by civil courts under Code of Civil Procedure when trying suit. It had power of ordering discovery, inspection etc. and forcing attendance of witnesses, compelling production of documents and so on. It gave its decision on basis of evidence and in accordance with law. Applying test laid down in case of Cooper v. Wilson, (1937) 2 K.B. 309 at p.340, this Court said that "a true judicial decision presupposes existence of dispute between two or more parties and then involves four requisites - (1) presentation of their case by parties; (2) ascertainment of facts by means of evidence adduced by parties often with assistance of argument; (3) if dispute relates to question of law, submission of legal arguments by parties; and (4) by decision which disposes of whole matter by findings on fact and application of law to facts so found. Judged by same tests, Labour Court would undoubtedly be court in true sense of term. question, however, is whether such court and presiding officer of such court can be said to hold post in judicial service of State as defined in Article 236 of Constitution. 62 Page 62 other relevant observations recorded in 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 hierarchy of civil courts headed by District Judge. This Court, however, was not considering position of other civil courts, in context of extensive definition given to term "district judge". This Court was concerned with preserving independence of judiciary from executive and making sure that persons from non-judicial services, such as, police, excise or revenue were not considered as eligible for appointment as District Judges. That is why emphasis is on fact that 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 judge who can be considered as District Judge bearing in mind extensive definition of that term in Article 236. 14. High Court has, therefore, correctly interpreted observations of this Court in Chandra Mohan vs. State of U.P., AIR 1966 SC 1987, as giving paramount importance to enforcement of constitutional scheme providing for independence of judiciary. concern of court was to see that this independence was not destroyed by indirect method. xxx xxx xxx 18. In case of Shri Kumar Padma Prasad v. Union of India & Ors., (1992) 2 SCC 428, this Court had to consider qualifications for purpose of appointment as Judge of High Court under Article 217 of Constitution. While interpreting expression "judicial office" under Article 217(2)(a), this Court held that expression "judicial office" must be interpreted in consonance with scheme of Chapters V and VI of Part VI of Constitution. So construed it means judicial office which belongs to judicial service as defined under Article 236(b). Therefore, in order to qualify for appointment as judge of High Court, person must hold judicial office which must be part of judicial service of State. After referring to cases of Chandra Mohan (supra) and Statesman (Private) Ltd. vs. H.R. Deb, AIR 1968 SC 1495, this Court said that term "judicial office" in its generic sense may include wide variety of offices which are connected with administration of justice in one way or other. Officers holding various posts under executive are often vested with magisterial power to meet particular situation. Court said, "Did framers of Constitution have this type of offices in mind when they provided source of appointment to high office, of judge of High Court from amongst holders of judicial office ? answer, has to be in negative. We are of view 63 Page 63 that holder of judicial office under Article 217(2)(a) means person who exercises only judicial functions, determines causes inter- parties and renders decisions in judicial capacity. He must belong to judicial service which as class is free from executive control and is disciplined to uphold dignity, integrity and independence of judiciary." Going by these tests laid down as to what constitutes judicial service under Article 236 of Constitution, Labour Court judges and judges of Industrial Court can be held to belong to judicial service. hierarchy contemplated in case of Labour Court judges is hierarchy of Labour Court judges and Industrial Court judges with Industrial Court judges holding superior position of District Judges. Labour Courts have also been held as subject to High Court's power of superintendence under Article 227. xxx xxx xxx 20. constitutional scheme under Chapter V of Part VI dealing with High Courts and Chapter VI of Part VI dealing with subordinate courts shows clear anxiety on part of framers of Constitution to preserve and promote independence of judiciary from executive. Thus Article 233 which deals with appointment of District Judges requires that such appointments shall be made by Governor of State in consultation with High Court. Article 233(2) has been interpreted as prescribing that "a person in service of Union or State" can refer only to person in judicial service of Union or State. Article 234 which deals with recruitment of persons other than District Judges to judicial service requires that their appointments can be made only in accordance with Rules framed by Governor of State after consultation with State Public Service Commission and with High Court. Article 235 provides that control over district courts and courts subordinate thereto shall be vested in High Court; and Article 236 defines expression "District Judge" extensively as covering judges of City Civil Court etc. as earlier set out, and expression "judicial service" as meaning service consisting exclusively of persons intended to fill post of District Judge and other civil judicial posts inferior to post of District Judge. Therefore, bearing in mind principle of separation of powers and independence of judiciary, judicial service contemplates service exclusively of judicial posts in which there will be hierarchy headed by District Judge. High Court has rightly come to conclusion that persons presiding over Industrial and Labour Courts would constitute judicial service so defined. Therefore, recruitment of Labour Court judges is required to be made in accordance with Article 234 of Constitution. 25. According to learned counsel for petitioners, judgments and text cited hereinabove, are fully applicable on subject of administration of 64 Page 64 justice through courts in India. Insofar as instant aspect of matter is concerned, learned counsel placed reliance on Article 50 of Constitution, which is reproduced hereunder:- 50. Separation of judiciary from executive - State shall take steps to separate judiciary from executive in public services of State. Based on Article 50 aforementioned, it was contention of learned counsel for petitioners, that Constitution itself mandates separate judicial hierarchy of courts distinct from executive. 26. Coupled with above mandate, it was contention of learned counsel for petitioners, that provisions of Income Tax Act, Customs Act, and Excise Act prior to independence of this country, and even thereafter, vested High Courts with exclusive jurisdiction to settle questions of law emerging out of tax disputes. It was further contended, that even after enforcement of Constitution, with effect from 26.11.1949, adjudicatory power to decide substantial questions of law, continued to be vested in High Courts, inasmuch as, jurisdictional High Courts continued to exercise appellate jurisdiction. position has remained unaltered till date. It is, therefore, contention of learned counsel for petitioners, that historically, constitutionally and legally, appellate jurisdiction in direct/indirect tax matters, has remained with High Courts, and it is not permissible either by way of amendment to Constitution itself, or by enacting legislation, to transfer said appellate jurisdiction exercised by High Courts to quasi- judicial tribunal. 65 Page 65 third contention: 27. In course of submissions advanced by learned counsel for petitioners on third contention, wherein it was sought to be submitted, that separation of powers , rule of law and judicial review constitute amongst others, basic structure of Constitution, it was submitted, that Article 323B inserted by Constitution (Forty-second Amendment) Act, 1976 was violative of above mentioned components of basic structure of Constitution. Article 323B is being extracted hereunder:- "323B. Tribunals for other matters - (1) appropriate Legislature may, by law, provide for adjudication or trial by tribunals of any disputes, complaints, or offences with respect to all or any of matters specified in clause (2) with respect to which such Legislature has power to make laws. (2) matters referred to in clause (1) are 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 State of any estate as defined in article 31A or of any rights therein or 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 House or either House of Legislature of State, but excluding 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 President may, by public notification, declare to be essential goods for purpose of this article and control of prices of such goods; (h) rent, its regulation and control and tenancy issues including rights, title and interest of landlords and tenants; (i) offences against laws with respect to any of matters specified in sub-clauses (a) to (h) and fees in respect of any of those matters; (j) any matter incidental to any of matters specified in sub- clauses (a) to (i). (3) law made under clause (1) may- (a) provide for establishment of hierarchy of tribunals; 66 Page 66 (b) specify jurisdiction, powers (including power to punish for contempt) and authority which may be exercised by each of said tribunals; (c) provide for procedure (including provisions as to limitation and rules of evidence) to be followed by said tribunals; (d) exclude jurisdiction of all courts except jurisdiction of Supreme Court under article 136, with respect to all or any of matters falling within jurisdiction of said tribunals; (e) provide for transfer to each such tribunal of any cases pending before any court or any other authority immediately before establishment of such tribunal as would have been within jurisdiction of such tribunal if 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 appropriate Legislature may deem necessary for effective functioning of, and for speedy disposal of cases by, and enforcement of orders of, such tribunals. (4) provisions of this article shall have effect notwithstanding anything in any other provision of this Constitution or in any other law for time being in force. Explanation. In this article, appropriate Legislature , in relation to any matter, means Parliament or, as case may be, State Legislature competent to make laws with respect to such matter in accordance with provisions of Part XI. Insofar as aforesaid provision is concerned it was submitted, that Clause (3) of Article 323B clearly violated all above mentioned ingredients of basic structure theory. In this behalf it was sought to be asserted, that establishment of hierarchy of tribunals implicitly led to inference, that existing judicial process, where adjudication was before court of law, was to be substituted in its entirety. Thereby, even existing appellate process which was vested in High Courts was sought to be substituted by tribunals. It was submitted, that creation of parallel judicial system, was alien to provisions of Constitution, which recognized judiciary as independent component, separate from executive and legislature. It was accordingly vehemently 67 Page 67 asserted, that process of justice was being substituted, by tribunalization of justice, which was clearly unacceptable under Constitution. Sub-clause (d) of Article 323B(3), according to learned counsel for petitioners, divested jurisdiction vested in all civil courts for adjudication of matters on subjects referred to in Article 323B(2), including not only appellate jurisdiction of High Courts, but also, power of judicial review vested in High Courts under Articles 226 and 227, of Constitution. It was also contention of learned counsel for petitioners, that despite decisions rendered by this Court, legislature has repeated and reiterated what had been found to be unsustainable in law. 28. While canvassing aforesaid contention learned counsel for petitioners pointed out, that above mentioned Article 323B was introduced by Constitution (Forty-second Amendment) Act, 1976, which was part of overall scheme, to drastically curtail power of judicial review vested with 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 of Constitution, inserting Articles 323A and 323B was allowed to remain. It was submitted that Articles 323A and 323B, enabled creation of parallel judiciary under executive control. In order to support his aforestated contention, learned counsel invited Court s attention to expressions adjudication or trial , disputes, complaints or offences , transfer of suits or proceedings , etc. which could be fashioned in manner different from that which presently prevailed. It was pointed out, that aforestated mandate contained 68 Page 68 in Article 323B of Constitution, was incompatible with basic structure of Constitution, which mandates separation of powers . 29. In view of aforementioned submissions, it was vehement contention of learned counsel for petitioners, that Article 323B(4) should be struck down. It was submitted, that if instant prayer of petitioners does not find favour with this Court, alternative prayer of petitioners was, that Article 323B must be purposefully interpreted, so as to bestow equivalence commensurate to Court sought to be substituted by tribunal. It was submitted, that it was imperative to provide for measures to ensure independence in functioning of tribunals substituting functions carried out by courts. This could be done, according to learned counsel for petitioners, by extending conditions of service applicable to judges of court sought to be substituted. In order to support his aforestated contention, learned counsel for petitioners placed reliance on judgments rendered by this Court, laying down limits and parameters within which such tribunals could be created. Despite declaration of law by this Court it was submitted, that NTT Act, has been enacted, which suffers from same vices, which had already been found to be unconstitutional. For reasons of brevity, it is considered inappropriate, to refer to all judgments relied upon by rival parties on instant issue. Suffice it to state, that same will be examined, only while recording conclusions. fourth contention: 30. While advancing fourth contention, learned counsel for petitioners referred to various provisions of NTT Act, which would have effect of 69 Page 69 compromising independence of NTT. We may briefly refer to provisions of said Act, highlighted by learned counsel for petitioners, during course of hearing, as under:- (i) First and foremost, reference was made to Section 5 of NTT Act. same is being extracted hereunder:- 5. Constitution and jurisdiction of Benches- (1) jurisdiction of National Tax Tribunal may be exercised by Benches thereof to be constituted by Chairperson. (2) Benches of National Tax Tribunal shall ordinarily sit at any place in National Capital Territory of Delhi or such other places as Central Government may, in consultation with Chairperson, notify: Provided that Chairperson may for adequate reasons permit Bench to hold its temporary sitting for period not exceeding fifteen days at place other than its ordinary place of seat. (3) Central Government shall notify areas in relation to which each bench of National Tax Tribunal may exercise its jurisdiction. (4) Central Government shall determine number of Benches and each Bench shall consist of two members. (5) Central Government may transfer Member from headquarters of one Bench in one State to headquarters of another Bench in another State or to headquarters of any other Bench within State: Provided that no member shall be transferred without concurrence of Chairperson. Referring to sub-section (2) of Section 5 it was sought to be asserted, that benches of NTT are ordinarily to function in National Capital Territory of Delhi. This, according to learned counsel for petitioners, would deprive litigating assessee, convenience of approaching High Court of State to which he belongs. In this behalf it was sought to be asserted, that in every tax related dispute, there is asseessee on one side, and Revenue on other. Accordingly, if NTT is mandated to sit ordinarily in National Capital Territory of Delhi, assessees from far flung States would have to suffer extreme hardship for redressal of their grievance, especially at appellate 70 Page 70 stage. Besides hardships, it was pointed out, that each asseessee would be subjected to unfathomable financial expense. Referring to sub-section (5) of Section 5 of NTT Act, it was submission of learned counsel for petitioners, that Central Government was vested with power to transfer Member from headquarters of one bench in one State, to headquarters of another bench in another State. It was also open to Central Government to transfer Member from one bench to another bench in same State. It was submitted, that in case of High Courts, such power is exercised exclusively by Chief Justice, in best interest of administration of justice. It was submitted, that Central Government, which is stakeholder, could exercise above power of transfer for harassment and exploitation of sitting Members of NTT. In other words, inconvenient Member could be moved away, and replaced by one who would tow desired line. (ii) Likewise, learned counsel for petitioners referred to Section 6 of NTT Act to demonstrate, that same would also have undermining effect on adjudicatory process. Section 6 of NTT Act is reproduced hereunder:- 6. Qualifications for appointment of Chairperson and other Members (1) Chairperson of National Tax Tribunal shall be person who has been Judge of Supreme Court or Chief Justice of High Court. (2) person shall not be qualified for appointment as Member unless he- (a) is, or has been, or is eligible to be, Judge of High Court; or (b) is, or has been, Member of Income-tax Appellate Tribunal or of Customs, Excise and Service Tax Appellate Tribunal for at least five years. Learned counsel for petitioners pointed out, that sub-section (2), aforementioned, laid down qualifications for appointment as Member of 71 Page 71 NTT. Referring to clause (a) of sub-section (2) of Section 6 of NTT Act it was submitted, that person who is eligible to be judge of High Court, is to be treated as eligible as member of NTT. Inviting our attention to Article 217 of Constitution it was submitted, that person who is citizen of India and has, for at least 10 years, practiced as Advocate before one or other High Court, has been treated as eligible for being appointed as Member of NTT. Referring to Section 8 of NTT Act it was pointed out, that Member of NTT is provided with tenure of five years, from date of his appointment as Member of NTT. It was pointed out, that in terms of Article 217 of Constitution, person would easily become eligible for appointment as judge at or around age of 35-40 years, and as such, if he is assured 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 larking uncertainty in his mind about his future, after expiry of prescribed term of five years, in event of not being granted extension. Relying on clause (b) of Section 6(2) of NTT Act, it was also submission of learned counsel for petitioners, that Members of Appellate Tribunals constituted under Income Tax Act, Customs Act, and Excise Act, are also eligible for being appointed as Members of NTT. In this behalf it was sought to be asserted, that there are Accountant Members of Income Tax Appellate Tribunal, who too would become eligible for appointment as Members of NTT. It was submitted, that judicial experience on niceties of law, specially on different aspects, which need to be dealt with while adjudicating tax matters, would be alien to 72 Page 72 them, inasmuch as they can only be experts on subject of accountancy. It was pointed out, that jurisdiction vested in NTT, is alternative jurisdiction to that of High Court, and as such, it is difficult to appreciate how Accountant Member of Income Tax Appellate Tribunal can be expected to discharge duties relating to settling substantial questions of law in manner judges of High Court dispense with aforesaid responsibilities. (iii) Learned counsel for petitioners then invited our attention to Section 7 of NTT Act. said section is reproduced hereunder:- 7. Appointment of Chairperson and other Members - (1) Subject to provisions of sub-section (2), Chairperson and every other Member shall be appointed by Central Government. (2) Chairperson and other Members shall be appointed by Central Government on recommendations of Selection Committee consisting of- (a) Chief Justice of India or Judge of Supreme Court nominated by him; (b) Secretary in Ministry of Law and Justice (Department of Legal Affairs); (c) Secretary in Ministry of Finance (Department of Revenue). (3) No appointment of Chairperson or of any other Member shall be invalidated merely by reason of any vacancy or any defect in constitution of Selection Committee. perusal of sub-section (2) of Section 7 reveals composition of selection committee for selection of Chairperson and Members of NTT. It was sought to be pointed out, that there were two representatives of executive, out of three member selection committee, and only one member in selection committee was from judiciary. Accordingly it was asserted, that two representatives belonging to executive would control outcome of every selection process. Since NTT was, alternative to jurisdiction earlier 73 Page 73 vested with High Court, it was submitted, that same process of selection, as was prevalent for appointment of judges of High Court, should be adopted for selection of Chairperson and Members of NTT. All that is imperative and essential is, that selection process should be same, as is in place, for court sought to be substituted. It was also contention of learned counsel for petitioners, that provision similar to Section 7(2) of NTT Act, had been struck down by this Court, in State of Maharashtra v. Labour Law Practitioners Association (supra). (iv) Learned counsel for petitioners then invited our attention to Section 8 of NTT Act. Section 8 is being reproduced hereunder:- 8. Terms of office of Chairperson and other Members - Chairperson and every other Member shall hold office as such for term of five years from 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 case of Chairperson, age of sixty-eight years; and (b) in case of any other Member, age of sixty-five years. According to learned counsel, perusal of Section 8 reveals, that Chairperson and Member of NTT would hold office for term of five years, from date of his/her appointment to NTT. It was, however sought to be pointed out, that person appointed as such, is clearly eligible for reappointment. It was sought to be asserted, that provision for reappointment, would itself have effect of undermining independence of Members of NTT. It was sought to be asserted, that each one of appointees to NTT would be prompted to appease Revenue, so as to solicit reappointment contemplated under Section 8 of NTT Act. In this behalf it was submitted, that tenure of 74 Page 74 appointment to tribunal, which is to substitute High Court, should be akin to that of judge of High Court. (v) Our attention was then invited to Section 13 of NTT Act, which is reproduced hereunder:- 13. Appearance before National Tax Tribunal - (1) party to 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 National Tax Tribunal. (2) Government may authorize one or more legal practitioners or any of its officers to present its case before National Tax Tribunal. Explanation For purposes of this Section,- (a) chartered accountant means chartered accountant as defined in clause (b) of sub-section (1) of section 2 of Chartered Accountants Act, 1949 (38 of 1949) and who has obtained certificate of practice under sub-section (1) of section 6 of that Act; (b) legal practitioner means advocate, vakil or any attorney of any High Court, and includes pleader in practice. It was submitted, that besides allowing assessee to represent himself before NTT, Section 13 allows him to be represented through one or more Chartered Accountants or legal practitioners. Thus far, according to learned counsel for petitioners, there seemed to be no difficulty in Section 13(1) of NTT Act. However, allowing any person duly authorized by assessee to represent him before NTT, is clearly ununderstandable. It was submitted, that main function of NTT would be to settle substantial questions of law on tax issues, and as such, under Section 13(1), it would be open to assessee to engage individual to represent him, even though he is totally unqualified in fields on which adjudicatory process is to be conducted. Likewise, it is contention of learned counsel for petitioners, besides legal practitioners, Revenue is allowed to be represented through any of its 75 Page 75 officers. It was sought to be asserted, that understanding of text of provision is one thing, whereas interpreting it in contemplated context, quite another. As such, it was submitted, that officers of Revenue, who lack in interpretative skills, would be wholly unsuited for representing Revenue before NTT. Submissions in opposition, by respondents/interveners: first contention: 31. In response to first contention, namely, that reasons for setting up NTT were fallacious and non-existent, and as such, legislative enactment under reference creating NTT as independent appellate forum to decide appeals on substantial questions of law, from orders passed by Appellate Tribunals constituted under Income Tax Act, Customs Act, and Excise Act deserves to be set aside; it was contention of learned counsel for respondents, that submissions advanced at hands of petitioners, were premised on improper understanding of factual background. In this behalf, it is sought to be asserted, that tax receipts are primary source of revenue in India. Government of India meets its budgetary requirements from revenue receipts. It is sought to be explained, that tax is collected by established administrative and legal structure. On one hand, while fastening of tax liability would reduce profits of assessee, it would enhance revenue receipts of Government. On other hand, exemption from tax 76 Page 76 liability would increase profits of assessee, but would reduce revenue receipts of Government. In view of above profit and loss scenario, administration of tax loss, has inherent tendency to result in disputes and litigation. process of litigation is primarily based on adoption of innovative means of interpretation of law, both by revenue and by tax payers. As result, significant amount of time is spent, on long drawn litigation, wherein tax payers and 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 Centre for Monitoring Indian Economy Database, Indian companies have vast amount locked in disputed taxes. As per above report, during Financial Year 2011-2012; 30 companies that make up Bombay Stock Exchange sensex, had money locked in disputed taxes estimated at Rs.42,388 crores. above disputed tax liability, according to learned counsel for respondents, was 27% increase from amount of preceding year, which was estimated at Rs.33,339 crores. 32. In respect of disputes on direct taxes, it was submitted, that in written reply submitted by Minster of State for Finance, Lok Sabha was informed in April, 2012, that 5,943 tax cases were pending with Supreme Court, and 30,213 direct tax cases were pending with High Courts. It was submitted that Lok Sabha was additionally informed, that 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 preceding year, estimate in respect of 77 Page 77 disputed amount at various levels, was to tune of Rs.2,43,603 crores. Accordingly it was sought to be pointed out, that with each succeeding year, not only tax related litigation was being progressively enhanced, there was also significant increase in finance blocked in such matters. 33. It was likewise pointed out, that number of cases involving levy of indirect taxes, projected similar unfortunate reflection. In this behalf, it was sought to be pointed out, that as on 31.12.2012, number of pending customs disputes were approximately 17,800, wherein amount of approximately Rs.7,400 crores was involved. Insofar as number of pending central excise cases as on 31.10.2012 is concerned, figure was approximately 19,800 and amount involved was approximately Rs.21,450 crores. By adding figures reflected hereinabove, in respect of disputes pertaining to indirect taxes, it was suggested that total of about 37,600 cases were pending, involving amount of approximately Rs.28,850 crores. Additionally it was submitted, that out of 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 19,800 central excise cases, 1,600 cases were pending for decision for period between one to three years; and 240 cases had been pending for decision for over three years. 34. It was pointed out at behest of respondents, that several reasons contributed to prolonged continuation of tax disputes. main reason however was, that there was lack of clarity in law in tax litigation. It was 78 Page 78 submitted, that above lack of clarity resulted in multiple interpretations. Added to that, according to learned counsel for respondents, existence of multiple appellate levels, and independent jurisdictional High Courts, resulted in existence of conflicting opinions at various appellate forums across country, contributing in unfathomable delay and multiplicity of proceedings. 35. Based on factors narrated above, it was submission of learned counsel for respondents, that burden of high volume of disputes had had effect of straining adjudicatory, as well as, judicial system. It was pointed out, that judicial system was already heavily burdened by weight of significant number of unresolved cases. It was submitted, that addition of cases each year, added not only to inconvenience of taxpayer, but also to revenue earned by government. It was pointed out, that instant state of affairs created uncertain and destabilized business environment, with taxpayers not being able to budget, for tax costs. Importantly such uncertainty, according to learned counsel, emerged out of two factors. Firstly, law itself was complex, and therefore, uncertain. And secondly, for interpretation of law to achieve degree of certainty at Supreme Court level, required several rounds of litigation. It was submitted, that in view of above, current scenario called for reforms in dispute resolution mechanism, and introduction of, conscious practices and procedures, aimed at limiting initiation, as well as, prolongation of tax disputes. It is, therefore, submission of learned counsel for respondents, that assertions made 79 Page 79 at hands of petitioners, while projecting first contention, were wholly misconceived, and as such, are liable to be rejected. second contention: 36. In response to second contention, namely, that it is impermissible for legislature to abrogate core judicial appellate functions, traditionally vested with High Court, or that it is impermissible to vest same with independent, parallel quasi-judicial hierarchy of tribunals, it was submitted, that petitioners had not been able to appreciate matter in its correct perspective. It was pointed out, that NTT Act is legislation which creates appellate forum, in hierarchy of fora, as remedy for ventilation of grievances emerging out of taxing statutes. To fully appreciate purport of special remedy created by statute, nature of right and/or liability created by taxing statutes, and enforcement for which these remedies have been provided, needed to be understood in correct perspective. Accordingly, in order to debate rightful cause, learned counsel drew our attention to proposition, in manner, as was understood by respondents. submissions advanced in this behalf are being summarized hereinafter. 37. It was contention of learned counsel for respondents, that Income Tax Act, Customs Act, and Excise Act, as also, other taxing statutes create statutory liability. said statutory liability has no existence, de hors statute itself. said statutory liability, has no existence in common law. It was further submitted, that it had been long well settled, that where right to plead liability had no existence in common law, but was creation of 80 Page 80 statute, which simultaneously provided for special and particular remedy for enforcing it, remedy provided by statute was bound to be followed. In respect of such statutory liability, it was not competent for party to proceed, by action at common law. In this behalf, our attention was invited to observations recorded by this Court in Dhulabhai v. State of M.P. (1968) 3 SCR 662 wherein Court observed as under: 9. 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 Divisional Bench of this Court but in view of difficulty presented by earlier rulings of this Court, they were referred to Constitution Bench and that is how they are before us. At very start we may observe that jurisdiction of Civil Courts is all embracing except to extent it is excluded by express provision of law or by clear intendment arising from such law. This is purport of Section 9 of Code of Civil Procedure. How Section 9 operates is perhaps best illustrated by referring to 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 liability existing at common law, and that liability is affirmed by statute which gives special and peculiar form of remedy different from remedy which existed at common law: there, unless statute contains words which expressly or by necessary implication exclude common law remedy party suing has his election to pursue either that or statutory remedy. second class of cases is, where statue gives right to sue merely, but provides, no particular form of remedy: there, party can only proceed by action at common law. But there is third class, viz., where liability not existing at common law is created by statute which at same time gives special and particular remedy for enforcing it.........The remedy provided by statute must be followed and it is not competent to party to pursue course applicable to cases of second class." This view of Willes, J. was accepted by House of Lords in Neville v. London 'Express' Newspaper Ltd., [1919] A.C. 368. xxx xxx xxx 35. Neither of two cases of Firm of Illuri Subayya or Kamla Mills can be said to run counter to series of cases earlier noticed. result of this inquiry into diverse views expressed in this Court may be stated as follows :- 81 Page 81 (1) Where statute gives finality to orders of special tribunals Civil Courts jurisdiction must be held to be excluded if there is adequate remedy to do what Civil Courts would normally do in suit. Such provision, however, does not exclude those cases where provisions of particular Act have not been complied with or statutory tribunal has not acted in conformity with fundamental principles of judicial procedure. (2) Where there is express bar of jurisdiction of court, examination of scheme of particular Act to find adequacy or sufficiency of remedies provided may be relevant but is not decisive to sustain jurisdiction of civil court. Where there is no express exclusion examination of remedies and scheme of particular Act to find out intendment becomes necessary and result of inquiry may be decisive. In latter case it is necessary to see if statute creates special right or liability and provides for determination of right or liability and further lays down that all questions about said right and liability shall be determined by tribunals so constituted, and whether remedies normally associated with actions in Civil Courts are prescribed by said statue or not. (3) Challenge to provisions of particular Act as ultra vires cannot be brought before Tribunals constituted under that Act. Even High Court cannot go into that question on revision or reference from decision of Tribunals. (4) When provision is already declared unconstitutional or constitutionality of any provision is to be challenged, suit is open. writ of certiorari may include direction for refund if claim is clearly within time prescribed by Limitation Act but it is not compulsory remedy to replace suit. (5) Where particular Act contains no machinery for refund of tax collected in excess of constitutional limits or illegally collected suit lies. (6) Questions of correctness of assessment apart from its constitutionality are for decision of authorities and civil suit does not lie if orders of authorities are declared to be final or there is express prohibition in particular Act. In either case scheme of particular Act must be examined because it is relevant enquiry. (7) exclusion of jurisdiction of Civil Court is not readily to be inferred unless conditions above set down apply. 38. In addition to above submissions, it was sought to be asserted that Income Tax Act expressly barred jurisdiction of civil courts. Reference in this 82 Page 82 behalf was made to Section 293 of 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 Government or any officer of 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 dictum at Barraclough v. Brown (1897) AC 615, that if statute confers right and in same breath provides for enforcement of such right remedy provided by such statute is 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, principles applicable to jurisdiction of Civil Court in relation to industrial dispute may be stated thus: (1) If dispute is not industrial dispute, nor does it relate to enforcement of any other right under Act remedy lies only in civil Court. (2) If dispute is industrial dispute arising out of right or liability under general or common law and not under Act, jurisdiction of civil Court is alternative, leaving it to election of suitor concerned to choose his remedy for relief which is competent to be granted in particular remedy. (3) If industrial dispute relates to enforcement of right or obligation created under Act, then only remedy available to suitor is to get adjudication under Act. (4) If right which is sought to be enforced is right created under Act such as Chapter VA then remedy for its enforcement is either Section 33C or raising of industrial dispute, as case may be. In paragraph 12 of Premier Automobiles case (supra), this Court quoted words of Lord Watson in Barraclough v. Brown (supra) to following effect: right and remedy are given uno flatu and one cannot be disassociated from other 83 Page 83 40. It is for this reason, according to learned counsel for respondents, that civil courts, even 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]. principle underlying those passages seem to me to be applicable to present case Section 341 of Income Tax Act, 1952, confers right, right to adjustment tax liability by reference to loss; that right does not exist independently of section; section uno flatu in breath gives specific remedy and appoints specific tribunal for its enforcement, namely General Commission or Special Commissioners. In those circumstances in my judgment, taxpayer must resort to that remedy and that tribunal. In due course if dissatisfied with decision of commissioners concerned he can appeal to high court by way Case Stated, but any original jurisdiction of high court by declaration or otherwise, is, in my judgment, excluded. contentions of petitioners, that substituting Section 260A of Income Tax Act and divesting High Court of appellate remedy and vesting it in NTT, is unconstitutional as it constitutes inroad into principles of rule of law and independence of judiciary, according to learned counsel, are fallacious. 41. According to learned counsel for respondents, fallacy in petitioners argument is, that they are overlooking fact that as far as NTT Act is concerned, there is no common law remedy which has now been divested. Section 260A of Income Tax Act and Section 35(g), (h), (i) of Excise Act were all statutorily vested appeals, in High Court, and as such, as has been held in above mentioned cases can be completely divested. According to learned counsel, NTT Act, was on surer and sounder footing, than provisions of Companies Act, which came up for consideration in Union of 84 Page 84 India v. Madras Bar Association, (2010) 11 SCC 87. Accordingly, as no common law remedy has been substituted under present Act, it was submitted, that contentions advanced on behalf of petitioners had no legs to stand. Even when Companies Act set up, Company Law Tribunal and Company Law Appellate Tribunal, substituting jurisdiction of High Courts, this Court in Union of India v. Madras Bar Association (supra), held that said provisions were valid and were not unconstitutional. This Court held as under: 87. Constitution contemplates judicial power being exercised by both courts and tribunals. Except powers and jurisdictions vested in superior courts by Constitution, powers and jurisdiction of courts are controlled and regulated by Legislative enactments. High Courts are vested with 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 High Courts, jurisdiction can also be taken away by deleting provisions for appeals, revisions or references. It also follows that legislature has 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. argument that there cannot be whole-sale transfer of powers is misconceived. It is nobody's case that entire functioning of courts in country is transferred to tribunals. competence of Parliament to make law creating tribunals to deal with disputes arising under or relating to particular statute or statutes cannot be disputed. When Tribunal is constituted under Companies Act, empowered to deal with disputes arising under said Act and statute substitutes word tribunal in place of High Court necessarily there will be whole-sale transfer of company law matters to tribunals. It is inevitable consequence of creation of tribunal, for such disputes, and will no way affect validity of law creating tribunal. 42. Similarly, statutory provisions providing for revision to District Judge, with finality clauses, have been interpreted to exclude revisionary powers 85 Page 85 of 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 scheme of Act it appears that landlord who wants eviction of his tenant has to move for eviction and case has to be disposed of by Rent Control Court. That is provided by Sub-section(2) of Section 11 of Act. From Rent Control Court, appeal lies to Appellate Authority under conditions laid down under Sub-section (l)(b) of Section 18 of Act. From Appellate Authority revision in certain circumstances lies in case where appellate authority is Subordinate Judge to District Court and in other cases to High Court. In this case as mentioned hereinbefore appeal lay from Rent Control Court to appellate authority who was Subordinate Judge and therefore revision lay to District Judge. Indeed it is indisputed that respondent has in this case taken resort to all these provisions. After dismissal of revision by District Judge from appellate decision of Subordinate Judge who confirmed order of Rent Controller, respondent-landlord chose again to go before High Court under Section 115 of CPC. question, is, can he have second revision to High Court? Shri Poti submitted that he cannot. We are of opinion that he is right. This position is clear if Sub-section (5) of Section 18 of Act is read in conjunction with Section 20 of Act. Sub- section (5) of Section 18, as we have noted hereinbefore, clearly stipulates that decision of appellate authority and subject to such decision, order of 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, revision is provided where appellate authority is Subordinate Judge to District Judge and in other cases, that is to say, where appellate authority is District Judge, to High Court. ambits of revisional powers are well-settled and need not be re-stated. It is inconceivable to have two revisions. scheme of Act does not warrant such conclusion. In our opinion, expression 'shall be final' in Act means what it says. 20. learned judge referred to decision of Judicial Committee in case of Maung Ba Thaw and Anr. Insolvents v. Ma Pin, AIR 1934 PC 81. learned judge also referred to decision of this Court in South Asia Industries (P) Ltd. v. S.B. Sarup Singh and Ors. (supra). learned judge concluded that so long as there was no specific provision in statute making determination by District Court final and excluding supervisory power of High Court under Section 115 of CPC, it had to be held that decision rendered by District Court under Section 20(1) of Act being decision of court subordinate to High 86 Page 86 Court to which appeal lay to High Court was liable to be revised by High Court under Section 115 of CPC. In that view of matter, Full Bench rejected view of division bench of Kerala High Court in Kurien v. Chacko [1960] KLT 1248. With respect, we are unable to sustain view of Full Bench of High Court on this aspect of matter. In our opinion, Full Bench misconstrued provisions of subsection (5) of Section 18 of Act. Sub-section (5) of Section18 clearly states that such decision of appellate authority as mentioned in Section 18 of Act shall not be liable to be questioned except in manner under Section 20 of Act. There was thereby implied prohibition or exclusion of second revision under Section 115 of CPC to High Court when revision has been provided under Section 20 of Act in question. When Section 18(5) of Act specifically states that "shall not be liable to be called in question in any Court of law" except in manner provided under Section 20, it cannot be said that High Court which is court of law and which is civil court under CPC under Section 115 of CPC could revise again order once again after revision under Section20 of Act. That would mean there would be trial by four courts, that would be repugnant to scheme manifest in different sections of Act in question. Public policy or public interest demands curtailment of law's delay and justice demands finality within quick disposal of case. language of provisions of Section 18(5) read with Section 20 inhibits further revision. 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 following: 15. Even without any discussion it may be seen from narrative given above that there is really no conflict between two decisions because provisions in two Acts are materially different. However, to clarify matters further we may point put differences between two Acts in greater detail and clarity. Under Kerala Act, against order passed by Rent Control Court presided over by District Munsif, aggrieved party is conferred right of appeal under Section 18. Appellate Authority has to be judicial officer not below rank of subordinate Judge. appellate Authority has been conferred powers co-extensive with those of Rent Control Court but having over-riding effect. Having these factors in mind, Legislature has declared that in so far as order of Rent Control Court is concerned it shall be final subject only to any modification or revision by Appellate Authority; and in so far as 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, division of powers of revision 87 Page 87 exercisable thereunder has been made between High Court and District Court. In all those cases where revision is preferred against decision of Appellate Authority of rank of Subordinate Judge under Section 18, District Judge has been constituted revisional authority. It is only in other cases i.e. where decision sought to be revised is that of judicial officer of higher rank than Subordinate Judge, High Court has been constituted Revisional authority. revisional powers conferred under Section 20, whether it be on District Judge or High Court as case may be are of greater amplitude than powers of revision exercisable by High Court under Section 115 Code of Civil Procedure Under Section 20 Revisional Authority is entitled to satisfy itself about legality regularity, or propriety of orders sought to be revised. Not only that, Appellate Authority and Revisional Authority have been expressly conferred powers of remand under Section 20A of Act. Therefore, party is afforded opportunity to put forth his case before Rent Control Court and then before Appellate Authority and there after if need be before Court of Revision viz. District Court if Appellate Authority is of rank of Subordinate Judge. Legislature in its wisdom has thought that on account of ample opportunity given to party to put forth his case before three courts, viz. Trial Court, Appellate Court and Revisional Court, there was no need to make revisional order of District Court subject to further scrutiny by High Court by means of second revision either under Act or under Code of Civil Procedure. It has been pointed out in Aundal Ammal's case (supra) that full Bench of Kerala High Court had failed to construe terms of Section 20 read with Section 18(5) in their proper perspective and this failing had effected its conclusion According to Full Bench, revisional order of District, Court under Section 20 laid itself open for further challenge to High Court under Section115 Code of Civil Procedure because of two factors viz. (1) there was no mention in Act that order would be final and (2) there was no provision in Act for appeal being filed against revisional order under Section 20. full Bench failed to notice certain crucial factors. In first place, Section 20 is composite section and refers to powers of revision exercisable under that Section by District Judge as well as by High Court. Such being case if it is to be taken that order passed by District Court under Section 20 will not have finality because Section does not specifically say so, then it will follow that revisional order passed by High Court under Section 20 (1) also will not have finality Surely it cannot be contended by anyone that order passed by 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 order passed under that Section. Secondly, terms of Section 20 (1) have to be read in conjunction with Section 18(5). Section 18(5) as 88 Page 88 already seen, declares that order of Rent Control Court shall be final subject to decision of Appellate Authority and order of 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 Legislature has declared that even order of Rent Control Court and decision of Appellate Authority shall be final at their respective stages unless order is modified by Appellate Authority or Revisional Authority as case may be, there is no necessity for legislature to declare once ever again that order passed in revision under Section 20(1) by District Judge or High Court as case may be will also have seal of finality. third aspect is that Legislature has not merely conferred finality to decision of Appellate Authority but has further laid down that 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 prohibition or exclusion of second revision under Section 115 Code of Civil Procedure to High Court against revisional order passed by District Court under Section 20 of Act. This position has been succinctly set out in para 20 of judgment in Aundal Ammal's case (supra). As was noticed in Vishesh Kumar's case, intent behind bifurcation of jurisdiction is to reduce number of revision petitions filed in High Court and for determining legislative intent, Court must as far as possible construe statute in such manner as would advance object of legislation and suppress mischief sought to be cured by it. 43. Most importantly, nine-Judge constitution bench judgment of this Court, in Mafatlal Industries v. Union of India (1997) 5 SCC 536, while dealing with validity of Section 11B(3) of Excise Act, held as follows: 77. Hereinbefore, we have referred to provisions relating to refund obtaining from time to time under 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 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 claimant makes application for such refund under his signature and lodges it to proper officers within three months from date of such payment or adjustment, as 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 89 Page 89 excise shall be entertained". Sub-section (5) was more specific and emphatic. It said: "Notwithstanding anything contained in any other law, provisions of this Section shall also apply to claim for refund of any amount collected as duty of excise made on ground that 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 non-obstante clause; it took in every kind of refund and every claim for refund and it expressly barred jurisdiction of courts in respect of such claim. Sub-section (3) of Section 11-B, as it now stands, it s to same effect - indeed, more comprehensive and all- encompassing. It says: "(3) Notwithstanding anything to contrary contained in any judgment, decree, order or direction of Appellate Tribunal or any court or in any other provision of this Act or rules made thereunder or in any law for time being in force, no refund shall be made except as provided in sub-section". language could not have been more specific and emphatic. exclusivity of provision relating to refund is not only express and unambiguous but is in addition to general bar arising from fact that 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 bar upon bar - aspect emphasised in Para 23 (supra), and has to be respected so long as it stands. validity of these provisions has never been seriously doubted. Even though in certain writ petitions now before us, validity of 1991 (Amendment) Act including amended Section 11-B is questioned, no specific reasons have been assigned why provision of nature of Sub-section (3) of Section11- B (amended) is unconstitutional. Applying propositions enunciated by 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 constitutional validity of Section 20 of Bombay Sales Tax Act (set out hereinbefore) on ground that Bombay Act contained adequate provisions for refund, for appeal, revision, rectification of mistake and for condonation of delay in filing appeal/revision. Court pointed out that had Bombay Act not provided these remedies and yet barred resort to civil court, 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 constitutionality of said provision - or similar provision - can be doubted. It must also be remembered that 90 Page 90 Central Excises and Salt Act is special enactment creating new and special obligations and rights, which at same time prescribes procedure for levy, assessment, collection, refund and all other incidental and ancillary provisions. As pointed out in Statement of Objects and Reasons appended to Bill which became Act, Act along with Rules was intended to "form complete central excise code". idea was "to consolidate in single enactment all laws relating to central duties of excise". Act is self-contained enactment. It contains provisions for collecting taxes which are due according to law but have not been collected and also for refunding taxes which have been collected contrary to law, viz., Sections 11-A and 11-B and its allied provisions. Both provisions contain uniform rule of limitation, viz., six months, with exception in each case. Sections 11-A and 11-B are complimentary to each other. To such situation, Proposition No. 3 enunciated in Kamala Mills becomes applicable, viz., where statute creates special right or liability and also provides procedure for determination of right or liability by Tribunals constituted in that behalf and provides further that all questions about said right and liability shall be determined by Tribunals so constituted, resort to civil court is not available -except to 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. jurisdiction of 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 Act provides for more than one appeal against orders made under Section 11-B/Rule 11. Since 1981, appeal is provided to this Court also from orders of Tribunal. While Tribunal is not departmental organ, this Court is civil court. In this view of matter and 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 violation of principles of natural justice and infraction of fundamental principles of judicial procedure can be urged in these appeals, obviating necessity of suit or writ petition in matters relating to refund. Once constitutionality of provisions of Act including provisions relating to refund is beyond question, they constitute "law" within meaning of Article 265 of Constitution. It follows that any action taken under and in accordance with said provisions would be action taken under "authority of law", within meaning of Article 265. In face of express provision which expressly declares that no claim for refund of any duty shall be entertained except in accordance with said provisions, it is not permissible to resort to Section 72 of Contract Act to do precisely that which is expressly prohibited by said provisions. In other words, it is not permissible to claim refund by invoking Section 72 as separate and independent 91 Page 91 remedy when such course is expressly barred by provisions in Act, viz., Rule 11 and Section 11-B. For this reason, suit for refund would also not lie. Taking any other view would amount to nullifying 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 case may be, in forums provided by Act. No suit can be filed for refund of duty invoking Section 72 of Contract Act. So far as jurisdiction of High Court under Article 226 - or for that matter, jurisdiction of this Court under Article 32 - is concerned, it is obvious that provisions of Act cannot bar and curtail these remedies. It is, however, equally obvious that while exercising power under Article 226/Article 32, Court would certainly take note of legislative intent manifested in provisions of Act and would exercise their jurisdiction consistent with provisions of enactment. It was submitted, that perusal of above paragraph shows, that this Court noticed, that against order of tribunal appeal was provided for to this Court. Court declared, that tribunal was not departmental organ and Supreme Court was civil court as it was hearing statutory appeal. More importantly it held, that every ground including violation and infraction of judicial procedure could be urged in these appeals, obviating necessity of suit or writ petition in matters relating to refund. This Court took care to hold, that so far as 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 power under Article 226/32 Court would certainly take note of legislative intent manifested in provisions of Act and would exercise their jurisdiction consistent with provisions of enactment. It was accordingly submitted, that in view of conclusions drawn, in above judgment, all contentions urged by petitioners, needed to be rejected. 92 Page 92 third contention: 44. Learned counsel for respondents, vehemently controverted submissions advanced at hands of petitioners, that NTT Act was ultra vires provisions of Constitution. Insofar as instant aspect of matter is concerned, learned counsel for respondents, first placed reliance on Article 246 of Constitution. Article 246 is being extracted hereunder: 246. Subject-matter of laws made by Parliament and by Legislatures of States (1) Notwithstanding anything in clauses (2) and (3), Parliament has exclusive power to make laws with respect to any of matters enumerated in List I in Seventh Schedule (in this Constitution referred to as Union List ). (2) Notwithstanding anything in clause (3), Parliament and, subject to clause (1), Legislature of any State also, have power to make laws with respect to any of matters enumerated in List III in Seventh Schedule (in this Constitution referred to as Concurrent List ). (3) Subject to clauses (1) and (2), Legislature of any State has exclusive power to make laws for such State or any part thereof with respect to any of matters enumerated in List II in Seventh Schedule (in this Constitution referred to as State List ). (4) Parliament has power to make laws with respect to any matter for any part of territory of India not included (in State) notwithstanding that such matter is matter enumerated in State List. Based on aforesaid provision, it was sought to be asserted that Parliament had unqualified and absolute jurisdiction, power and authority to enact laws in respect of matters enumerated in Lists I and III of Constitution. Additionally, placing reliance on Article 246(4), it was asserted, that even on subjects not expressly provided for in three Lists of Seventh Schedule to Constitution, Parliament still had absolute and untrammeled right to enact legislation. Insofar as instant aspect of matter is concerned, 93 Page 93 learned counsel for respondents placed reliance on entries 77 to 79, 82 to 84, 95 and 97 of List I. above entries are being extracted hereunder: List I Union List 77. Constitution, organisation, jurisdiction and powers of Supreme Court (including contempt of such Court), and fees taken therein; persons entitled to practise before Supreme Court. 78. Constitution and organisation (including vacations) of High Courts except provisions as to officers and servants of High Courts; persons entitled to practise before High Courts. 79. Extension of jurisdiction of High Court to, and exclusion of jurisdiction of 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 Supreme Court, with respect to any of 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 entries reproduced hereinabove, especially entries 77 to 79, it was submitted, that Parliament had jurisdiction to enact legislation even in respect of Supreme Court and High Courts. Additionally, it had power to legislate, and thereby, to extend or exclude jurisdiction of High Court. Relying on entries 82 to 84, it was submission of learned counsel for respondents, that on matters of income-tax, customs duty and excise duty, power to legislate was unequivocally vested with Parliament. Reliance was placed on entry 95, to contend, that extent of jurisdiction of all courts including High Court, in respect of matters expressed in List I could also be laid down by Parliament. Referring again to entries 82 to 84 it was submitted, 94 Page 94 that extension or exclusion of jurisdiction on tax matters, was also within domain of Parliament. So as to assert, that in case this Court was of view, that subject of legislation contained in NTT Act did not find mention, in any of three Lists of Seventh Schedule of Constitution, submission on behalf of respondents was, that Parliament would still have authority to legislate thereon, under entry 97 contained in List I of Seventh Schedule. 45. Learned counsel for respondents, also placed reliance on entries 11A and 46 contained in List III of Seventh Schedule. above entries are being extracted hereunder: List III Concurrent List 11A. Administration of justice; constitution and organisation of all courts, except Supreme Court and High Courts. xxx xxx xxx 46. Jurisdiction and powers of all courts, except Supreme Court, with respect to any of matters in this List. Referring to above entries, it was contention of learned counsel for respondents that Parliament had authority to enact legislation, in respect of extent of jurisdiction and powers of courts, including High Court. It was, however pointed out, that this power extended only to such matters and subjects, that found mention in List III of 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 Supreme Court and High Courts) would lead to inevitable conclusion that NTT Act was promulgated, well within power vested with Parliament, under Article 246(2) of Constitution. 95 Page 95 46. Additionally, reliance was placed by learned counsel for respondents, on Article 247 of Constitution, which is reproduced hereunder: 247. Power of Parliament to provide for establishment of certain additional courts. - Notwithstanding anything in this Chapter, Parliament may by law provide for establishment of any additional courts for better administration of laws made by Parliament or of any existing laws with respect to matter enumerated in Union List. Referring to above provision, it was assertion of learned counsel for respondents, that power was expressly vested with Parliament, to establish additional courts, for better administration of laws. It was submitted, that this was exactly what Parliament had chosen to do, while enacting NTT Act. Referring to objects and reasons, indicating basis of enactment of NTT Act, it was categoric assertion at hands of learned counsel, that impugned enactment was promulgated with clear understanding, that NTT would provide better adjudication of legal issues, arising out of direct/indirect tax laws. 47. Besides Articles 246 and 247 of Constitution, learned counsel for respondents asserted, that Articles 323A and 323B were inserted into Constitution, by Constitution (Forty-second Amendment) Act, 1976. above provisions were included in newly enacted Part XIV of Constitution. It was asserted, that instant amendment of Constitution was made for achieving two objectives. Firstly, to exclude power of judicial review of High Courts and 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 burden of High Courts and 96 Page 96 Supreme Court. It was however acknowledged by learned counsel representing respondents, that first of 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 extent amended provisions introduced by Forty-second Amendment to Constitution, excluded jurisdiction of High Courts and Supreme Court under Articles 226/227 and 32/136 respectively. Insofar as second objective is concerned, placing reliance in L. Chandra Kumar case (supra), it was contention of learned counsel for respondents, that this Court had clearly concluded, that as long as power of judicial review continue with High Courts and Supreme Court, under provisions referred to hereinabove, enactment under reference would be constitutionally valid. Therefore, in response to submissions advanced at hands of learned counsel for petitioners (as have been noticed hereinabove), it was contention of learned counsel for respondents, that power to enact NTT Act, was clearly vested with Parliament even under Article 323B of Constitution. Furthermore, since impugned enactment did not exclude jurisdiction of High Courts under Articles 226 and 227 of Constitution, and also, did not exclude jurisdiction of Supreme Court under Articles 32 and 136 of Constitution, challenge to constitutional validity of NTT Act was wholly unjustified. 48. Learned counsel for respondents was at pains to emphasise, that jurisdictional road of Courts, as final interpreter of law, was clearly preserved. 97 Page 97 Firstly, because statutory appeal was provided for under NTT Act to Supreme Court. And secondly because, judicial review vested in High Courts under Articles 226 and 227 of Constitution, and in Supreme Court under Articles 32 and 136 of Constitution, had been kept intact. It is, therefore, submission of learned counsel for respondents, that no fault can be found in vesting of appellate jurisdiction from orders passed by Appellate Tribunals (constituted under Income Tax Act, Customs Act and Excise Act) with NTT. 49. While acknowledging fact, that jurisdiction vested in High Courts to hear appeals from Appellate Tribunals, under Income Tax Act (vide Section 260A), Customs Act (vide Section 130), and Excise Act (vide Section 35G), has been transferred from jurisdictional High Court to NTT, it was submitted that appellate jurisdiction vested in High Court under statute, could be taken away by amendment of statute. Stated simply, submission at behest of respondents was, whatever is vested by statutory enactment, can likewise be divested in same manner. It was therefore sought to be asserted, that grounds of challenge to NTT Act raised, at behest of petitioners, were misconceived and unacceptable. 50. Besides submissions noticed hereinabove, it was also contended on behalf of respondents, that assertion made by petitioners, that appellate jurisdiction on substantial questions of law could not be vested with NTT, was fallacious. In this behalf, it was sought to be reiterated, that jurisdiction of civil courts (including original side of High Court) was 98 Page 98 barred in respect of tax related issues. It was sought to be explained, that case could involve questions of fact, as well as, questions of law right from stage of initial adjudicatory authority. But, it was pointed out, that only cases involving substantial questions of law would qualify for adjudication at hands of NTT. As such, placing reliance on decision in Mafatlal Industries Ltd. v. Union of India (1997) 5 SCC 536, it was submitted, that above contention raised by petitioners had no legs to stand. Furthermore, it was sought to be pointed out, that 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 rights of parties to litigation. It was also asserted, that question of law would also include, legal issue not previously settled, subject to condition, that it had material bearing on determination of controversy to be settled, between parties. It is accordingly contended, that no limited interpretation could be placed on term substantial questions of law . Accordingly, it was submitted, that challenge to constitution of NTT on premise that NTT was vested with jurisdiction to settle substantial questions of law was unsustainable. 51. In order to support his above submission, learned counsel for respondents placed emphatic reliance on few judgments rendered by this Court. 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 respondents, while relying on instant judgment, made reference to various observations recorded therein. We wish 99 Page 99 to incorporate hereunder all paragraphs on which reliance was placed by learned counsel:- 80. However, it is important to emphasise that though subordinate judiciary or Tribunals created under ordinary legislations cannot exercise power of judicial review of legislative action to exclusion of High Courts and Supreme Court, there is no constitutional prohibition against their performing supplemental as opposed to substitutional role in this respect. That such situation is contemplated within constitutional scheme becomes evident when one analyses clause (3) of Article 32 of Constitution which reads as under: 32. Remedies for enforcement of rights conferred by this Part. (1) (2) (3) Without prejudice to powers conferred on Supreme Court by clauses (1) and (2), Parliament may by law empower any other court to exercise within local limits of its jurisdiction all or any of powers exercisable by Supreme Court under clause (2). 81. If power under Article 32 of Constitution, which has been described as heart and soul of Constitution, can be additionally conferred upon any other court , there is no reason why same situation cannot subsist in respect of jurisdiction conferred upon High Courts under Article 226 of Constitution. So long as jurisdiction of High Courts under Articles 226/227 and that of this Court under Article 32 is retained, there is no reason why power to test validity of legislations against provisions of Constitution cannot be conferred upon Administrative Tribunals created under Act or upon Tribunals created under Article 323-B of Constitution. It is to be remembered that, apart from authorisation that flows from Articles 323- and 323-B, both Parliament and State Legislatures possess legislative competence to effect changes in original jurisdiction of Supreme Court and High Courts. This power is available to Parliament under Entries 77, 78, 79 and 95 of List I and to State Legislatures under Entry 65 of List II; Entry 46 of List III can also be availed of both by Parliament and State Legislatures for this purpose. 82. There are pressing reasons why we are anxious to preserve conferment of such power on these Tribunals. When Framers of our Constitution bestowed powers of judicial review of legislative action upon High Courts and Supreme Court, they ensured that other constitutional safeguards were created to assist them in effectively discharging this onerous burden. expectation was that this power would be required to be used only occasionally. However, in five decades that have ensued since Independence, quantity of litigation 100 Page 100 before High Courts has exploded in unprecedented manner. decision in Sampath Kumar s case, AIR 1987 SC 386, was rendered against such backdrop. We are conscious of fact that when Constitution Bench of this Court in Sampath Kumar s case (supra) adopted theory of alternative institutional mechanisms, it was attempting to remedy alarming practical situation and approach selected by it appeared to be most appropriate to meet exigencies of time. Nearly decade later, we are now in position to review theoretical and practical results that have arisen as consequence of adoption of such approach. 83. We must, at this stage, focus upon factual position which occasioned adoption of theory of alternative institutional mechanisms in Sampath Kumar s case (supra). In his leading judgment, R. Misra, J. refers to fact that since Independence, population explosion and increase in litigation had greatly increased burden of pendency in High Courts. Reference was made to studies conducted towards relieving High Courts of their increased load. In this regard, recommendations of Shah Committee for setting up independent Tribunals as also suggestion of Administrative Reforms Commission that Civil Service Tribunals be set up, were noted. Reference was also made to decision in K.K. Dutta v. Union of India, (1980) 4 SCC 38, where this Court had, while emphasising need for speedy resolution of service disputes, proposed establishment of Service Tribunals. 84. problem of clearing backlogs of High Courts, which has reached colossal proportions in our times is, nevertheless, one that has been focus of study for close to half century. Over time, several Expert Committees and Commissions have analysed intricacies involved and have made suggestions, not all of which have been consistent. Of several studies that have been conducted in this regard, as many as twelve have been undertaken by Law Commission of India (hereinafter referred to as LCI ) or similar high-level committees appointed by Central Government, and are particularly noteworthy. (Report of High Court Arrears Committee, 1949; LCI, 14 th 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 Higher Judiciary (1974); Report of High Court Arrears Committee, 1972; LCI, 79 th Report on Delay and Arrears in High Courts and other Appellate Courts (1979); LCI, 99 th Report on Oral Arguments and Written Arguments in Higher Courts (1984); Satish Chandra s Committee Report 1986; LCI, 124th Report on High Court Arrears Fresh Look (1988); Report of Arrears Committee (1989-90). 101 Page 101 85. appraisal of daunting task which confronts High Courts can be made by referring to assessment undertaken by LCI in its 124th Report which was released sometime after judgment in Sampath Kumar s case (supra). Report was delivered in 1988, nine years ago, and some changes have occurred since, but broad perspective which emerges is still, by and large, true: High Courts enjoy civil as well as criminal, ordinary as well as extraordinary, and general as well as special jurisdiction. source of jurisdiction is Constitution and various statutes as well as letters patent and other instruments constituting High Courts. High Courts in country enjoy original jurisdiction in respect of testamentary, matrimonial and guardianship matters. Original jurisdiction is conferred on High Courts under Representation of People Act, 1951, Companies Act, 1956, and several other special statutes. High Courts, being courts of record, have power to punish for its contempt as well as contempt of its subordinate courts. High Courts enjoy extraordinary jurisdiction under Articles 226 and 227 of Constitution enabling it to issue prerogative writs, such as, one in nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari. Over and above this, High Courts of Bombay, Calcutta, Delhi, Himachal Pradesh, Jammu and Kashmir and Madras also exercise ordinary original civil jurisdiction. High Courts also enjoy advisory jurisdiction, as evidenced by Section 256 of Indian Companies Act, 1956, Section 27 of Wealth Tax Act, 1957, Section 26 of Gift Tax Act, 1958, and Section 18 of Companies (Profits) Surtax Act, 1964. Similarly, there are parallel provisions conferring advisory jurisdiction on High Courts, such as, Section 130 of Customs Act, 1962, and Section 354 of Central Excises and Salt Act, 1944. High Courts have also enjoyed jurisdiction under Indian Divorce Act, 1869, and Parsi Marriage and Divorce Act, 1936. Different types of litigation coming before High Court in exercise of its wide jurisdiction bear different names. vast area of jurisdiction can be appreciated by reference to those names, viz., (a) first appeals; (b) appeals under 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 Sales Tax Act; (l) election petitions under Representation of People Act; (m) petitions under Companies Act, Banking Companies Act and other special Acts and (n) wherever High Court has original jurisdiction, suits and other proceedings in exercise of that jurisdiction. This varied jurisdiction has to some extent been 102 Page 102 responsible for very heavy institution of matters in High Courts. 86. After analysing situation existing in High Courts at length, LCI made specific recommendations towards establishment of specialist Tribunals thereby lending force to approach adopted in Sampath Kumar s case (supra). LCI noted erstwhile international judicial trend which pointed towards generalist courts yielding their place to specialist Tribunals. Describing pendency in High Courts as catastrophic, crisis-ridden, almost unmanageable, imposing immeasurable burden on system , LCI stated that prevailing view in Indian Jurisprudence that jurisdiction enjoyed by High Court is holy cow required review. It, therefore, recommended trimming of jurisdiction of High Courts by setting up specialist courts/Tribunals while simultaneously eliminating jurisdiction of High Courts. 87. It is important to realise that though theory of alternative institutional mechanisms was propounded in Sampath Kumar s case (supra) in respect of Administrative Tribunals, 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, issue of having specialised tax court has been discussed for several decades; though Report of High Court Arrears Committee (1972) dismissed it as ill-conceived , LCI, in its 115th Report (1986) revived recommendation of setting up separate Central Tax Courts. Similarly, other Reports of LCI have suggested 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 theory of alternative institutional mechanisms had functioned in practice, recommended that LCI or similar expert body should conduct survey of functioning of these Tribunals. It was hoped that such study, conducted after gauging working of Tribunals over sizeable period of more than five years would provide answer to questions posed by critics of theory. Unfortunately, we do not have benefit of such study. We may, however, advert to Report of Arrears Committee (1989-90), popularly known as Malimath Committee Report, which has elaborately dealt with aspect. observations contained in Report, to this extent they contain review of functioning of Tribunals over period of three years or so after their institution, will be useful for our purpose. Chapter VIII of second volume of Report, Alternative Modes and Forums for Dispute Resolution , deals with issue at length. After forwarding its specific recommendations on feasibility of setting up Gram Nyayalayas , Industrial Tribunals and Educational Tribunals, Committee has dealt with issue of Tribunals set up under Articles 323-A and 323-B of 103 Page 103 Constitution. 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 country. Not all of them, however, have inspired confidence in public mind. reasons are not far to seek. foremost is lack of competence, objectivity and judicial approach. next is their constitution, power and method of appointment of personnel thereto, inferior status and casual method of working. last is their actual composition; men of calibre are not willing to be appointed as presiding officers in view of uncertainty of tenure, unsatisfactory conditions of service, executive subordination in matters of administration and political interference in judicial functioning. For these and other reasons, quality of justice is stated to have suffered and cause of expedition is not found to have been served by establishment of such tribunals. 8.64 Even experiment of setting up of Administrative Tribunals under Administrative Tribunals Act, 1985, has not been widely welcomed. Its members have been selected from all kinds of services including Indian Police Service. decision of State Administrative Tribunals are not appealable except under Article 136 of Constitution. On account of heavy cost and remoteness of forum, there is virtual negation of right of appeal. This has led to denial of justice in many cases and consequential dissatisfaction. There appears to be move in some of States where they have been established for their abolition. Tribunals Tests for Including High Court s Jurisdiction 8.65 Tribunal which substitutes High Court as alternative institutional mechanism for judicial review must be no less efficacious than High Court. Such tribunal must inspire confidence and public esteem that it is highly competent and expert mechanism with judicial approach and objectivity. What is needed in tribunal, which is intended to supplant High Court, is legal training and experience, and judicial acumen, equipment and approach. When such tribunal is composed of personnel drawn from judiciary as well as from services or from amongst experts in field, any weightage in favour of service members or expert members and value-discounting judicial members would render tribunal less effective and efficacious than High Court. Act setting up such tribunal would itself have to be declared as void under such circumstances. 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 Government is litigant in most of cases coming before such tribunal. (See S.P. Sampath Kumar s case (supra)). 104 Page 104 protagonists of specialist tribunals, who simultaneously with their establishment want exclusion of writ jurisdiction of 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 High Courts and not judicial review itself. Tribunals are not end in themselves but means to end; even if laudable objectives of speedy justice, uniformity of approach, predictability of decisions and specialist justice are to be achieved, framework of 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 alternative institutional mechanism in substitution of High Courts must pass aforesaid test in order to be constitutionally valid. 8.66 overall picture regarding tribunalisation of justice in our country is not satisfactory and encouraging. There is need for fresh look and review and serious consideration before experiment is extended to new areas of fields, especially if constitutional jurisdiction of High Courts is to be simultaneously ousted. Not many tribunals satisfying aforesaid tests can possibly be established. Having expressed itself in this manner, Malimath Committee specifically recommended that theory of alternative institutional mechanisms be abandoned. Instead, it recommended that institutional changes be carried out within 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 separate divisions while using existing infrastructure would be better way of remedying problem of pendency in High Courts. 89. In years that have passed since Report of Malimath Committee was delivered, pendency in High Courts has substantially increased and we are of view that its recommendation is not suited to our present context. That various Tribunals have not performed up to expectations is self-evident and widely acknowledged truth. However, to draw inference that their unsatisfactory performance points to their being founded on fundamentally unsound principle would not be correct. reasons for which 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 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 discharge of power of judicial review conferred upon them. 105 Page 105 90. We may first address issue of exclusion of power of judicial review of High Courts. We have already held that in respect of power of judicial review, jurisdiction of High Courts under Articles 226/227 cannot be excluded. It has been contended before us that Tribunals should not be allowed to adjudicate upon matters where 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 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 High Courts and thus subvert jurisdiction of Tribunals. Moreover, even in these special branches of law, some areas do involve consideration of constitutional questions on regular basis; for instance, in service law matters, large majority of cases involve interpretation of Articles 14, 15 and 16 of Constitution. To hold that Tribunals have no power to handle matters involving constitutional issues would not serve purpose for which they were constituted. On other hand, to hold that all such decisions will be subject to jurisdiction of High Courts under Articles 226/227 of Constitution before Division Bench of High Court within whose territorial jurisdiction Tribunal concerned falls will serve two purposes. While saving power of judicial review of legislative action vested in High Courts under Articles 226/227 of Constitution, it will ensure that frivolous claims are filtered out through process of adjudication in Tribunal. High Court will also have benefit of reasoned decision on merits which will be of use to it in finally deciding matter. 91. It has also been contended before us that even in dealing with cases which are properly before Tribunals, manner in which justice is dispensed by them leaves much to be desired. Moreover, remedy provided in parent statutes, by way of appeal by special leave under Article 136 of Constitution, is too costly and inaccessible for it to be real and effective. Furthermore, result of providing such remedy is that docket of Supreme Court is crowded with decisions of Tribunals that are challenged on relatively trivial grounds and it is forced to perform role of first appellate court. We have already emphasised necessity for ensuring that High Courts are able to exercise judicial superintendence over decisions of Tribunals under Article 227 of Constitution. In R.K. Jain s case (supra), after taking note of these facts, it was suggested that possibility of appeal from Tribunal on questions of law to Division Bench of High Court within whose territorial jurisdiction Tribunal falls, be pursued. It appears that no follow-up action has been taken pursuant to suggestion. Such measure would have improved matters considerably. Having regard to both aforestated contentions, we hold that all decisions of Tribunals, 106 Page 106 whether created pursuant to Article 323-A or Article 323-B of Constitution, will be subject to High Court s writ jurisdiction under Articles 226/227 of Constitution, before Division Bench of High Court within whose territorial jurisdiction particular Tribunal falls. 92. We may add here that under existing system, direct appeals have been provided from decisions of all Tribunals to Supreme Court under Article 136 of Constitution. In view of our above-mentioned observations, this situation will also stand modified. In view that we have taken, no appeal from decision of Tribunal will directly lie before Supreme Court under Article 136 of Constitution; but instead, aggrieved party will be entitled to move High Court under Articles 226/227 of Constitution and from decision of Division Bench of High Court aggrieved party could move this Court under Article 136 of Constitution. 93. Before moving on to other aspects, we may summarise our conclusions on jurisdictional powers of these Tribunals. Tribunals are competent to hear matters where vires of statutory provisions are questioned. However, in discharging this duty, they cannot act as substitutes for High Courts and Supreme Court which have, under our constitutional set-up, been specifically entrusted with such obligation. Their function in this respect is only supplementary and all such decisions of Tribunals will be subject to scrutiny before Division Bench of respective High Courts. Tribunals will consequently also have power to test vires of subordinate legislations and rules. However, this power of Tribunals will be subject to one important exception. Tribunals shall not entertain any question regarding vires of their parent statutes following settled principle that Tribunal which is creature of Act cannot declare that very Act to be unconstitutional. In such cases alone, 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 Division Bench of their respective High Courts. We may add that Tribunals will, however, continue to act as only courts of first instance in respect of areas of law for which they have been constituted. By this, we mean that it will not be open for litigants to directly approach High Courts even in cases where they question vires of statutory legislations (except, as mentioned, where legislation which creates particular Tribunal is challenged) by overlooking jurisdiction of concerned Tribunal. 94. directions issued by us in respect of making decisions of Tribunals amenable to scrutiny before Division Bench of respective High Courts will, however, come into effect prospectively i.e. will apply to decisions rendered hereafter. To maintain sanctity of judicial 107 Page 107 proceedings, we have invoked doctrine of prospective overruling so as not to disturb procedure in relation to decisions already rendered. Based on decisions of this Court referred to above, it was contention of learned counsel for respondents, that submissions advanced on behalf of 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 controversy raised in 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. procedure for recovery of debts due to banks and financial institutions, which was being followed, had resulted in funds being blocked. To remedy above situation, Parliament enacted Recovery of Debts Due to Banks and Financial Institutions Act, 1993. Act, inter alia, provided for establishment of tribunals and Appellate Tribunals. 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. Appellate Tribunal, was vested with jurisdiction and authority, to entertain appeals. procedure to be followed by tribunals, as also, Appellate Tribunals, was provided for under above enactment. legislation also provided for modes of recovery of debts through Recovery Officers (appointed under Act). constitutional validity of Recovery of Debts Due to Banks and Financial Institutions Act, 1993 was raised on ground, that legislation was unreasonable and violative of Article 14 of Constitution. It was also claim of those who raised said challenge, 108 Page 108 that enactment was beyond legislative competence of Parliament. controversy came to be examined, in first instance, by Delhi High Court (in Delhi High Court Bar Association v. Union of India, AIR 1975 Delhi 323). Delhi High Court held, that even though tribunal could be constituted by Parliament, and even though constitution of tribunal was within purview of Articles 323A and 323B of Constitution, and despite fact that, expression administration of justice appearing in entry 11A of List III of Seventh Schedule to Constitution, would also include tribunals administering justice, yet impugned Act was unconstitutional, as it had effect of eroding independence of judiciary, besides being irrational, discriminatory, unreasonable and arbitrary. As such it was held, that provisions of enactment were violative of mandate contained in Article 14 of Constitution. High Court, in its judgment, also quashed appointment of Presiding Officers of tribunal. While adjudicating upon above controversy in reference to some of issues that have been raised before us, our pointed attention was invited to following observations: 21. .. Sub-section (20) of Section 19 provides that after giving applicant and defendant opportunity of being heard, Tribunal may pass such interim or final order as it thinks fit to meet ends of justice. It is after this order that certificate is issued by Presiding Officer to Recovery Officer for recovery of money. Section 22 of Act has not been amended. Therefore, reading Sections 19 and 22 of Act together, it appears that Tribunal and Appellate Tribunal are to be guided by principles of natural justice while trying matter before them. Section 22(1) of Act stipulates that Tribunal and Appellate Tribunal, while being guided by principles of natural justice, are to be subjected to other provisions of Act and Rules. Rule 12(7) provides that if defendant denies his liability to pay claim made by applicant, Tribunal may act upon affidavit of applicant 109 Page 109 who is acquainted with facts of case. In this Rule, which deals with consideration of applicant s bank application, there is no reference to examination of witnesses. This sub-rule refers only to affidavit of applicant. Rule 12(6), on other hand, provides that Tribunal may, at any time, for sufficient reason order fact to be proved by affidavit or may pass order that affidavit of any witness may be read at hearing. It is in proviso to this sub-rule that reference is made to cross-examination of witnesses. 22. At outset, we find that Rule 12 is not happily worded. reason for establishing Banking Tribunals being to expedite disposal of claims by banks, Parliament thought it proper only to require principles of natural justice to be guiding factor for Tribunals in deciding applications, as is evident from Section 22 of Act. While Tribunal has, no doubt, been given power of summoning and enforcing attendance of any witness and examining him on oath, but Act does not contain any provision which makes it mandatory for witness to be examined, if such witness could be produced. Rule 12(6) has to be read harmoniously with other provisions of Act and Rules. As we have already noticed, Rule 12(7) gives Tribunal power to act upon affidavit of applicant where defendant denies his liability to pay claims. Rule 12(6), if paraphrased, would read as follows: 1. Tribunal may, at any time for sufficient reason, order that any particular fact or facts may be proved by affidavit on such conditions as Tribunal thinks reasonable; 2. Tribunal may, at any time for sufficient reason, order that affidavit of any witness may be read at hearing, on such conditions as Tribunal thinks reasonable. 23. In other words, Tribunal has power to require any particular fact to be proved by affidavit, or it may order that affidavit of any witness may be read at hearing. While passing such order, it must record sufficient reasons for same. proviso to Rule 12(6) would certainly apply only where Tribunal chooses to issue direction on its own, for any particular fact to be proved by affidavit or affidavit of witness being read at hearing. said proviso refers to desire of applicant or defendant for production of witness for cross- examination. In setting in which said proviso occurs, it would appear to us that once parties have filed affidavits in support of their respective cases, it is only thereafter that desire for witness to be cross-examined can legitimately arise. It is at that time, if it appears to Tribunal, that such witness can be produced and it is necessary to do so and there is no desire to prolong case that it shall require witness to be present for cross-examination and in event of his not appearing, then affidavit shall not be taken into evidence. When High Courts and Supreme Court in exercise of their jurisdiction under Article 226 110 Page 110 and Article 32 can decide questions of fact as well as law merely on basis of documents and affidavits filed before them ordinarily, there should be no reason as to why Tribunal, likewise, should not be able to decide case merely on basis of documents and affidavits before it. It is common knowledge that hardly any transaction with bank would be oral and without proper documentation, whether in form of letters or formal agreements. In such event bona fide need for oral examination of witness should rarely arise. There has to be very good reason to hold that affidavits, in such case, would not be sufficient. 24. manner in which dispute is to be adjudicated upon is decided by procedural laws which are enacted from time to time. It is because of enactment of Code of Civil Procedure that normally all disputes between parties of civil nature would be adjudicated upon by civil courts. There is no absolute right in anyone to demand that his dispute is to be adjudicated upon only by civil court. decision of Delhi High Court proceeds on assumption that there is such right. As we have already observed, it is by reason of provisions of Code of Civil Procedure that civil courts had right, prior to enactment of Debts Recovery Act, to decide suits for recovery filed by banks and financial institutions. This forum, namely, that of civil court, now stands replaced by Banking Tribunal in respect of debts due to bank. When in Constitution Articles 323-A and 323-B contemplate establishment of Tribunal and that does not erode independence of judiciary, there is no reason to presume that Banking Tribunals and Appellate Tribunals so constituted would not be independent, or that justice would be denied to defendants or that independence of 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 essential part of judicial system in this country. Such specialised institutions may not strictly come within concept of judiciary, as envisaged by Article 50, but it cannot be presumed that such Tribunals are not effective part of justice delivery system, like courts of law. It will be seen that for person to be appointed as Presiding Officer of Tribunal, he should be one who is qualified to be District Judge and, in case of appointment of Presiding Officer of Appellate Tribunal he is, or has been, qualified to be Judge of High Court or has been member of Indian Legal Service who has held post in Grade I for at least three years or has held office as Presiding Officer of Tribunal for at least three years. Persons who are so appointed as Presiding Officers of Tribunal or of 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 decision of Appellate Tribunal is not final, in sense that same can be subjected to judicial review by High Court under Articles 226 and 227 of Constitution. 111 Page 111 26. With establishment of Tribunals, Section 31 provides for transfer of pending cases from civil courts to Tribunal. We do not find such provision being in any way bad in law. Once Debts Recovery Tribunal has been established, and jurisdiction of courts barred by Section 18 of Act, it would be only logical that any matter pending in civil court should stand transferred to Tribunal. This is what happened when Central Administrative Tribunal was established. All cases pending in High Courts stood transferred. Now that exclusive jurisdiction is vested in Banking Tribunal, it is only in that forum that bank cases can be tried and, therefore, provision like Section 31 was enacted. 27. With regard to observations of Delhi High Court in relation to pecuniary jurisdiction of Tribunals and of Delhi High Court, Act has been enacted for whole of India. In most of States, High Courts do not have original jurisdiction. In order to see that Tribunal is not flooded with cases where amounts involved are not very large, Act provides that it is only where recovery of money is more than Rs 10 lakhs that Tribunal will have jurisdiction to entertain application under Section 19. With respect to suits for recovery of money less than Rs 10 lakhs, it is subordinate courts which would continue to try them. In other words, for claim of Rs 10 lakhs or more, exclusive jurisdiction has been conferred on Tribunal but for any amount less than Rs 10 lakhs, it is ordinary civil courts which will have jurisdiction. bifurcation of original jurisdiction between Delhi High Court and subordinate courts is matter which cannot have any bearing on validity of establishment of Tribunal. It is only in those High Courts which have original jurisdiction that anomalous situation arises where suits for recovery of money less than Rs 10 lakhs have to be decided by High Courts while Tribunals have jurisdiction to decide suits for recovery of more than Rs 10 lakhs. This incongruous situation, which can be remedied by High Court divesting itself of original jurisdiction in regard to such claims and vesting said jurisdiction with subordinate courts or vice versa, cannot be ground for holding that Act is invalid. xxx xxx xxx 30. By virtue of Section 29 of Act, provisions of Second and Third Schedules to Income Tax Act, 1961 and Income Tax (Certificate Proceedings) Rules, 1962, have become applicable for realisation of dues by Recovery Officer. Detailed procedure for recovery is contained in these Schedules to Income Tax Act, including provisions relating to arrest and detention of defaulter. It cannot, therefore, be said that Recovery Officer would act in arbitrary manner. Furthermore, Section 30, after amendment by Amendment Act, 2000, gives right to any person aggrieved by order of Recovery Officer, to prefer appeal to Tribunal. Thus now 112 Page 112 appellate forum has been provided against any orders of Recovery Officer which may not be in accordance with law. There is, therefore, sufficient safeguard which has been provided in event of Recovery Officer acting in arbitrary or unreasonable manner. provisions of Sections 25 and 28 are, therefore, not bad in law. 31. For aforesaid reasons, while allowing appeals of Union of India and Banks, we hold that Recovery of Debts Due to Banks and Financial Institutions Act, 1993 is valid piece of legislation. As result thereof, writ petitions or appeals filed by various parties challenging validity of said Act or some of provisions thereof, are dismissed. It would be open to parties to raise other contentions on merits of their cases before authority constituted under Act and, only thereafter, should High Court entertain petition under Articles 226 and/or 227 of 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. primary question which arose for consideration was constitutional validity of Consumer Protection Act, 1986. challenge was raised on ground, that Parliament was not empowered to establish hierarchy of courts like District Fora, State Commission and National Commission, as this would constitute parallel hierarchy of courts, in addition to courts established under Constitution, namely, District Courts, High Courts and Supreme Court. In this behalf pointed submission was, that Parliament could only establish courts, with power to deal with specific subjects, but not such court which would run parallel to civil courts. It was sought to be asserted, that even under Articles 323A and 323B of Constitution, Parliament could not enact legislation, by which it could establish tribunals, in substitution of civil courts including High Court. This, according to those who raised challenge, would strike at independence of judiciary. As against above assertions, legislative 113 Page 113 competence of Parliament and State Legislatures, to provide for creation of courts and tribunals, reliance was placed on entries 77, 78 and 79 in List I of Seventh Schedule, as also, entries 11A and 46 contained in List III of Seventh Schedule to Constitution. While examining challenge raised to Consumer Protection Act, 1986, on grounds referred to above, this Court held as under:- 12. bare perusal of aforementioned provisions does not leave any manner of doubt as regard legislative competence of Parliament to provide for creation of Special Courts and Tribunals. Administration of justice; constitution and organization of all courts, except Supreme Court and High Courts is squarely covered by Entry 11-A of List III of Constitution of India. said entry was originally part of Entry 3 of List II. By reason of 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 Constitution, Parliament has requisite power to make laws with respect of constitution of organization of all courts except Supreme Court and High Court. 14. learned counsel appearing on behalf of petitioners could not seriously dispute plenary power of Parliament to make law as regard constitution of courts but as noticed supra, merely urged that it did not have competence to create parallel civil courts. 15. said submission has been made purported to be relying on or on basis of following observations made by Shinghal, J. while delivering partially dissenting judgment in Special Courts Bill, 1978, In re: (1979) 1 SCC 380 (SCC at p. 455, para 152) 152. Constitution has thus made ample and effective provision for establishment of strong, independent and impartial judicial administration in country, with necessary complement of civil and criminal courts. It is not permissible for Parliament or State Legislature to ignore or bypass that scheme of Constitution by providing for establishment of civil or criminal court parallel to High Court in State, or by way of additional or extra or second High Court, or court other than court subordinate to High Court. Any such attempt would be unconstitutional and will strike at independence of judiciary which has so nobly been enshrined in Constitution and so carefully nursed over years. 16. argument of learned counsel is fallacious inasmuch as provisions of said Act are in addition to provisions of any other law 114 Page 114 for time being in force and not in derogation thereof as is evident from Section 3 thereof. 17. provisions of said Act clearly demonstrate that it was enacted keeping in view long-felt necessity of protecting common man from wrongs wherefor ordinary law for all intent and purport had become illusory. In terms of said Act, consumer is entitled to participate in proceedings directly as result whereof his helplessness against powerful business house may be taken care of. 18. This Court in large number of decisions considered purport and object of said Act. By reason of said statute, quasi-judicial authorities have been created at district, State and Central levels so as to enable consumer to ventilate his grievances before forum where justice can be done without any procedural wrangles and hypertechnicalities. 19. One of objects of said Act is to provide momentum to consumer movement. Central Consumer Protection Council is also to be constituted in terms of Section 4 of Act to promote and protect rights of consumers as noticed hereinbefore. xxx xxx xxx 24. In terms of Section 10, President of District Forum shall be person who is, or has been, or is qualified to be District Judge and 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 woman. tenure of members of District Forum is fixed. 25. Section 13 of said Act lays down detailed procedure as regards mode and manner in which complaints received by District Forum are required to be dealt with. Section 14 provides for directions which can be issued by District Forum on arriving at satisfaction that goods complained against suffer from any of defects specified in complaint or that any of allegations contained in complaint about deficiencies in services have been proved. 26. Section 15 provides for appeal from order made by District Forum to State Commission. 27. Section 16 provides for composition of State Commission which reads thus: 16. (1) Each State Commission shall consist of, (a) person who is or has been Judge of High Court, appointed by State Government, who shall be its President: Provided that no appointment under this clause shall be made except after consultation with Chief Justice of High Court; (b) two other members, who shall be persons of ability, integrity and standing and have adequate knowledge or experience of, or 115 Page 115 have shown capacity in dealing with, problems relating to economics, law, commerce, accountancy, industry, public affairs or administration, one of whom shall be woman: Provided that every appointment under this clause shall be made by State Government on recommendation of Selection Committee consisting of following, namely: (i) President of State Commission: Chairman (ii) Secretary of Law Department of State: Member (iii) Secretary in charge of Department dealing with consumer affairs in State: Member (2) salary or honorarium and other allowances payable to, and other terms and conditions of service of members of State Commission shall be such as may be prescribed by State Government. (3) Every member of State Commission shall hold office for term of five years or up to age of sixty-seven years, whichever is earlier and shall not be eligible for reappointment. (4) Notwithstanding anything contained in sub-section (3), person appointed as President or as member before commencement of Consumer Protection (Amendment) Act, 1993, shall continue to hold such office as President or member, as case may be, till completion of his term. members of State Commission are to be selected by Selection Committee, Chairman whereof would be President of State Commission. 28. Section 19 provides for appeal from decision of State Commission to National Commission. Section 20 deals with composition of National Commission, President whereof would be person who is or has been Judge of Supreme Court and such appointment shall be made only upon consultation with Chief Justice of India. So far as members of National Commission are concerned, same are also to be made on recommendation of Selection Committee, Chairman whereof would be person who is Judge of Supreme Court to be nominated by Chief Justice of India. tenure of office of National Commission is also fixed by reason of sub-section (3) of Section 20. 29. By reason of provisions of said Act, therefore, independent authorities have been created. 30. Sections 15, 19 and 23 provide for hierarchy of appeals. By reason of sub-sections (4), (5) and (6) of Section 13, District Forum shall have same powers as are vested in civil courts for purposes mentioned therein. Sub-sections (2) and (2-A) of Section 14 mandate that proceedings shall be conducted by President of District Forum and at least one member thereof sitting together. Only in event of any difference between them on any point or points, same is 116 Page 116 to be referred to other member for hearing thereon and opinion of majority shall be order of District Forum. By reason of Section 18, provisions of Sections 12, 13 and 14 and rules made thereunder would mutatis mutandis be applicable to disposal of disputes by State Commission. 31. Section 23 provides for limited appeal to Supreme Court from order made by National Commission i.e. when 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. 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 legislative competence to enact said Act, submissions of learned counsel that relevant provisions of Constitution required amendments must be neglected. 38. scope and object of said legislation came up for consideration before this Court in Common Cause, Registered Society v. Union of India, (1997) 10 SCC 729. It was held: (SCC p. 730, para 2) 2. object of legislation, as preamble of Act proclaims, is for better protection of interests of consumers . During last few years preceding enactment there was in this country marked awareness among consumers of goods that they were not getting their money s worth and were being exploited by both traders and manufacturers of consumer goods. need for consumer redressal fora was, therefore, increasingly felt. Understandably, therefore, legislation was introduced and enacted with considerable enthusiasm and fanfare as path-breaking benevolent legislation intended to protect consumer from exploitation by unscrupulous manufacturers and traders of consumer goods. three-tier fora comprising District Forum, State Commission and National Commission came to be envisaged under Act for redressal of grievances of consumers. 39. rights of parties have adequately been safeguarded by reason of provisions of said Act inasmuch as although it provides for alternative system of consumer jurisdiction on summary trial, they are required to arrive at conclusion based on reasons. Even when quantifying damages, they are required to make attempt to serve ends of justice aiming not only at recompensing individual but also to 117 Page 117 bring about qualitative change in attitude of service provider. Assignment of reasons excludes or at any rate minimizes chances of arbitrariness and higher forums created under Act can test correctness thereof. 40. District Forum, State Commission and National Commission are not manned by lay persons. President would be person having judicial background and other members are required to have expertise in 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 Act, in case of difference of opinion between two members, matter has to be referred to third member and, in rare cases, majority opinion of members may prevail over President. But, such eventuality alone is insufficient for striking down Act as unconstitutional, particularly, when provisions have been made therein for appeal thereagainst to higher forum. 41. By reason of provisions of said Act, power of judicial review of High Court, which is basic feature of Constitution, has not been nor could be taken away. xxx xxx xxx 49. question as regards applicability or otherwise of Articles 323-A and 323-B of Constitution in 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 constitutional provisions vest Parliament and State Legislatures, as case may be, with powers to divest traditional courts of considerable portion of their judicial work. It was observed that Parliament and State Legislatures possess legislative competence to effect changes in original jurisdiction of Supreme Court and High Court apart from 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 Parliament is concerned, and in terms of Entry 65 of List II and Entry 46 of List III so far as State Legislatures are concerned. It was further held that power of judicial review being basic structure of Constitution cannot be taken away. 50. We, therefore, are clearly of opinion that said Act cannot be said to be unconstitutional. fourth contention: 52(i) In response to fourth contention, namely, challenge raised by learned counsel for petitioners, to various provisions of NTT Act, it was submission of learned counsel for respondents, that in view of 118 Page 118 submissions advanced in respect of third contention, it is apparent that Parliament had legislative competence to enact NTT Act. It was submitted, that NTT Act was enacted keeping in mind parameters laid down by this Court, by preserving power of judicial review vested in High Courts under Articles 226 and 227 of Constitution, as also, by preserving power of judicial review vested in this Court under Articles 32 and 136 of Constitution. It is, therefore, submitted that final word in respect of instant adjudicatory process, stands preserved with courts of law. And therefore, submissions advanced at hands of learned counsel for petitioners on individual provisions of NTT Act, pertaining to independence of adjudicatory process, were being exaggerated out of proportion. (ii) Despite having made above submissions, Attorney General for India, was fair and candid in stating, that if this Court felt that there was need to make certain changes in provisions referred to by petitioners, he had instructions to state, that any suggestion made by this Court will be viewed positively, and necessary amendments in NTT Act would be carried out. debate, and consideration: I. Constitutional validity of NTT Act Does NTT Act violate basic structure of Constitution? 53. principal contention advanced at hands of learned counsel for petitioners was premised on submission, that Article 323B, inserted by Constitution (Forty-second Amendment) Act 1976, to extent that it violated principles of, separation of powers , rule of law , and judicial 119 Page 119 review , was liable to be struck down. This striking down was founded on alleged violation of basic structure doctrine. Similarly, various provisions of NTT Act, were sought to be assailed. provisions of NTT Act were challenged, on premise, that they had trappings of executive control, over adjudicatory process vested with NTT, and therefore, were liable to be set aside as unconstitutional. 54. In context of foregoing submissions advanced at hands of learned counsel for petitioners, it is essential for us to examine exact contours of judicial review , in framework and scheme, of concepts of rule of law and separation of powers , which have been held to constitute basic structure of Constitution. And also, essential ingredients, of independent adjudicatory process. It is, therefore, that we would travel ladder of history and law, to determine exact scope of judicial review , which constitutes basic structure of Constitution. This would lead us to unravel salient ingredients of independent adjudicatory process. Based thereon, we will record our conclusions. analysis: 55. Reference must first of all be made to decision rendered by this Court in Kesavananda Bharati v. State of Kerala, (1973) 4 SCC 225. In above cited case, this Court was engaged with validity of Constitution (Twenty- fourth Amendment) Act, 1971, as also, Constitution (Twenty-fifth Amendment) Act, 1971. former Act related to amendments of Articles 13 and 368 of Constitution, whereas latter, pertained to amendment of Article 31 of Constitution. instant judgment was rendered by 120 Page 120 constitution bench of 13 Judges. Seven of Judges expressed majority view. observations recorded by this Court recognising judicial review as component of basic structure of Constitution, were made by four Judges. Reference is first of all being made, to view expressed by S.M. Sikri, CJ.: 292. learned Attorney-General said that every provision of Constitution is essential; otherwise it would not have been put in Constitution. This is true. But this does not place every provision of Constitution in same position. true position is that every provision of Constitution can be amended provided in result basic foundation and structure of constitution remains same. basic structure may be said to consist of following features: (1) Supremacy of Constitution; (2) Republican and Democratic form of Government; (3) Secular character of Constitution; (4) Separation of powers between legislature, executive and judiciary; (5) Federal character of Constitution. 293. above structure is built on basic foundation i.e. dignity and freedom of individual. This is of supreme importance. This cannot by any form of amendment be destroyed. It is also imperative to refer to view expressed by J.M. Shelat and A.N. Grover, JJ., who delivered common judgment: 487. .....The Rule of Law has been ensured by providing for judicial review. . xxx xxx xxx 577. .. Judicial review is undertaken by courts not out of any desire to tilt at legislative authority in crusader s spirit, but in discharge of duty plainly laid down upon them by Constitution . respondents have also contended that to let court have judicial review over constitutional amendments would mean involving court in political questions. To this answer may be given in words of Lord Porter in Commonwealth of Australia v. Bank of New South Wales, 1950 AC 235 at 310,: problem to be solved will often be not so much legal as political, social or economic, yet it must be solved by Court of law. For where dispute is, as here, not only between Commonwealth and citizen but between Commonwealth and intervening States on one hand 121 Page 121 and citizens and States on other, it is only Court that can decide issue, it is vain to invoke voice of Parliament. There is ample evidence in Constitution itself to indicate that it creates system of checks and balances by reason of which powers are so distributed that none of three organs it sets up can become so pre-dominant as to disable others from exercising and discharging powers and functions entrusted to them. Though Constitution does not lay down principle of separation of powers in all its rigidity as is case in United States Constitution but it envisages such separation to degree as was found in Ranasinghe s case, 1965 AC 172. judicial review provided expressly in our Constitution by means of Articles 226 and 32 is one of features upon which hinges system of checks and balances. Apart from that, as already stated, necessity for judicial decision on competence or otherwise of Act arises from very federal nature of Constitution (per Haldane, L.C. in Attorney-General for 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. function of interpretation of Constitution being thus assigned to judicial power of State, question whether subject of law is within ambit of one or more powers of Legislature conferred by Constitution would always be question of interpretation of Constitution. It may be added that at no stage respondents have contested proposition that validity of constitutional amendment can be subject of review by this Court. Advocate-General of Maharashtra has characterized judicial review as undemocratic. That cannot, however, be so in our Constitution because of provisions relating to appointment of Judges, specific restriction to which fundamental rights are made subject, deliberate exclusion of due process clause in Article 21 and affirmation in Article 141 that Judges declare but not make law. To this may be added none too rigid amendatory process which authorizes amendment by means of 2/3 majority and additional requirement of ratification. xxx xxx xxx 582. basic structure of Constitution is not vague concept and apprehensions expressed on behalf of respondents that neither citizen nor Parliament would be able to understand it are unfounded. If historical background, preamble, entire scheme of Constitution, relevant provisions thereof including Article 368 are kept in mind there can be no difficulty in discerning that following can be regarded as basic elements of constitutional structure. (These cannot be catalogued but can only be illustrated): (1) supremacy of Constitution. (2) Republican and Democratic form of government and sovereignty of country. (3) Secular and federal character of Constitution. 122 Page 122 (4) Demarcation of power between Legislature, executive and judiciary. (5) dignity of individual secured by various freedoms and basic rights in Part III and mandate to build welfare State contained in Part IV. (6) unity and integrity of Nation. In this behalf it is also imperative for us to record observations of P. Jaganmohan Reddy, J., who observed as under:- 1104. ..There is no constitutional matter which is not in some way or other involved with political, social or economic questions, and if Constitution-makers have vested in this Court power of Judicial review, and while so vesting, have given it prominent place describing it as heart and soul of Constitution, we will not be deterred from discharging that duty, merely because validity or otherwise of legislation will affect political or social policy underlying it. basic approach of this Court has been, and must always be, that Legislature has exclusive power to determine policy and to translate it into law, constitutionality of which is to be presumed, unless there are strong and cogent reasons for holding that it conflicts with constitutional mandate. In this regard both Legislature, executive, as well as judiciary are bound by paramount instrument, and, therefore, no court and no Judge will exercise judicial power dehors that instrument, nor will it function as supreme legislature above Constitution. bona fides of all three of them has been basic assumption, and though all of them may be liable to error, it can be corrected in manner and by method prescribed under Constitution and subject to such limitations as may be inherent in instrument. Some of observations of H.R. Khanna, J., are also relevant to issue in hand. same are placed hereunder: 1529. ..The power of judicial review is, however, confined not merely to deciding whether in making impugned laws Central or State Legislatures have acted within four corners of legislative lists earmarked for them; courts also deal with question as to whether laws are made in conformity with and not in violation of other provisions of 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 part of Constitution, power of judicial review has also to be exercised with view to see that guarantees afforded by those rights are not contravened. Dealing with draft Article 25 (corresponding to present Article 32 of Constitution) by which right is given to move 123 Page 123 Supreme Court for enforcement of fundamental rights, Dr Ambedkar speaking in Constituent Assembly on December 9, 1948 observed: If I was asked to name any particular article in this Constitution as most important article without which this Constitution would be nullity I could not refer to any other article except this one It is very soul of Constitution and very heart of it and I am glad that House has realised its importance (Constituent Assembly Debates, Vol VII, p. 953). Judicial review has thus become integral part of our constitutional system and power has been vested in High Courts and Supreme Court to decide about constitutional validity of provisions of statutes. Our Constitution postulates rule of law in sense of supremacy of Constitution and laws as opposed to arbitrariness. vesting of power of exclusion of judicial review in legislature, including State Legislature, contemplated by Article 31-C, in my opinion, strikes at basic structure of Constitution. second part of Article 31-C thus goes beyond permissible limit of what constitutes amendment under Article 368. xxx xxx xxx 1533. position as it emerges is that it is open to authority amending Constitution to exclude judicial review regarding validity of existing statute. It is likewise open to said authority to exclude judicial review regarding validity of statute which might be enacted by legislature in future in respect of specified subject. In such event, judicial review is not excluded for finding whether statute has been enacted in respect of specified subject. Both above types of constitutional amendments are permissible under Article 368. What is not permissible, however, is third type of constitutional amendment, according to which amending authority not merely excludes judicial review regarding validity of statute which might be enacted by legislature in future in respect of specified subject but also excludes judicial review for finding whether statute enacted by legislature is in respect of 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 Constitution as it existed before amendment made by Constitution (Twenty-fourth Amendment) Act as well as about validity of Constitution (Twenty-fourth Amendment) Act, Constitution (Twenty-fifth Amendment) Act and Constitution (Twenty-ninth Amendment) Act: (i) Article 368 contains not only procedure for amendment of Constitution but also confers power of amending Constitution. (ii) Entry 97 in List I of Seventh Schedule of Constitution does not cover subject of amendment of Constitution. (iii) word law in Article 13(2) does not include amendment of Constitution. It has reference to ordinary piece of legislation. It would also 124 Page 124 in view of definition contained in clause (a) of Article 13(3) include ordinance, order, bye-law, rule, regulation, notification, custom or usage having in territory of India force of law. xxx xxx xxx (vii) power of amendment under Article 368 does not include power to abrogate Constitution nor does it include power to alter basic structure or framework of Constitution. Subject to retention of basic structure or framework of Constitution, power of amendment is plenary and includes within itself power to amend various articles of Constitution, including those relating to fundamental rights as well as those which may be said to relate to essential features. No part of fundamental right can claim immunity from amendatory process by being described as essence, or core of that right. power of amendment would also include within itself power to add, alter or repeal various articles. xxx xxx xxx (xiv) second part of Article 31-C contains seed of national disintegration and is invalid on following two grounds: (1) It gives carte blanche to legislature to make any law violative of Articles 14, 19 and 31 and make it immune from attack by inserting requisite declaration. Article 31-C taken along with its second part gives in effect power to legislature including State Legislature, to amend Constitution in important respects. (2) legislature has been made final authority to decide as to whether law made by it is for objects mentioned in Article 31-C. vice of second part of Article 31-C lies in fact that even if law enacted is not for object mentioned in Article 31-C, declaration made by legislature precludes party from showing that law is not for that object and prevents court from going into question as to whether law enacted is really for that object. exclusion by legislature, including State Legislature, of even that limited judicial review strikes at basic structure of Constitution. second part of Article 31-C goes beyond permissible limit of what constitutes amendment under Article 368. second part of Article 31-C can be severed from remaining part of Article 31-C and its invalidity would not affect validity of remaining part. I would, therefore, strike down following words in Article 31-C -- and no law containing declaration that it is for giving effect to such policy shall be called in question in any court on ground that it does not give effect to such policy . 56(i) next judgment having bearing on subject is Smt. Indira Nehru Gandhi v. Shri Raj Narain, 1975 Supp. SCC 1. In instant judgment, this 125 Page 125 Court examined constitutional validity of Constitution (Thirty-ninth Amendment) Act, 1975. issue under reference included insertion of Article 329A (and more particularly, second clause thereof), which had effect of taking out from purview of judicial review , validity of election of person who was holding, either office of Prime Minister or of Speaker, or had come to be appointed/chosen as Prime Minister or Speaker, after such election. Insofar as instant aspect of matter is concerned, it would be relevant to mention, that election of appellant from Rae Bareli constituency in General Parliamentary Elections of 1971, was set aside by High Court of Judicature at Allahabad (hereinafter referred to as, High Court), on 12.6.1975. appellant had assailed order passed by High Court before this Court. During pendency of above appeal, on 10.8.1975, Constitution (Thirty-ninth Amendment) Act was passed, which introduced two new Articles, namely, Articles 71 and 329A of Constitution. controversy arising out of above referred appeal, therefore, virtually came to be rendered infructuous. It was, by way of cross-appeal, that constitutional validity of amended provisions was assailed. (ii) In above cross-appeal, it was asserted at hands of respondent, that judicial review was essential feature of basic structure of Constitution. This assertion was under doctrine of separation of powers . pointed submission at hands of learned counsel for respondent was, that judicial review , in matters of election was imperative. issue canvassed was, that judicial review would ensure free, fair and pure elections. 126 Page 126 It was sought to be asserted, that power of judicial review in context referred to hereinabove, was available both under American Constitution, as also, Australian Constitution. And therefore, even though there was no express/clear provision on subject under Indian Constitution, since executive, legislature and judiciary were earmarked respective spheres of activity (by compartmentalising them into separate parts and chapters), charge and onus of judicial review fell within sphere of activity of judiciary. It was sought to be asserted, that under Article 136 of Constitution, all tribunals and courts are amenable to jurisdiction of this Court. corollary sought to be drawn was, that if under clause 4 of Article 329A of Constitution, power of judicial review was taken away, it would amount to destruction of basic structure of Constitution. relevant observations made in instant judgment rendered by constitution bench of 5 Judges of this Court are being extracted hereunder. First and foremost reference may be made to following observations of A.N. Ray, CJ:- 16. It should be stated here that hearing has proceeded on assumption that it is not necessary to challenge majority view in Kesavananda Bharati s case, (1973) 4 SCC 225. contentions of respondent are these: First, under Article 368 only general principles governing organs of State and basic principles can be laid down. amendment of Constitution does not contemplate any decision in respect of individual cases. Clause (4) of Article 329-A is said to be exercise of purely judicial power which is not included in constituent power conferred by Article 368. xxx xxx xxx 20. Fifth, clause (4) destroys not only judicial review but also separation of power. order of High Court declaring election to be void is declared valid (lie void). cancellation of judgment is denial of political justice which is basic structure of Constitution. xxx xxx xxx 127 Page 127 52. Judicial review in election disputes is not compulsion. Judicial review of decisions in election disputes may be entrusted by law to judicial tribunal. If it is to tribunal or to High Court judicial review will be attracted either under relevant law providing for appeal to this Court or Article 136 may be attracted. Under Article 329(b) contemplated law may vest power to entertain election petitions in House itself which may determine dispute by resolution after receiving report from special committee. In such cases judicial review may be eliminated without involving amendment of Constitution. .. If judicial review is excluded court is not in position to conclude that principles of equality have been violated. xxx xxx xxx 153. contentions of respondent that 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 theory of basic features or basic structure or basic framework. Second, majority view in Kesavananda Bharati s case (supra) is that Twenty-ninth Amendment which put two statutes in Ninth Schedule and Article 31-B is not open to challenge on ground of either damage to or destruction of basic features, basic structure or basic framework or on ground of violation of fundamental rights. views expressed by H.R. Khanna, J. are now being reproduced below:- 175. proposition that power of amendment under Article 368 does not enable Parliament to alter basic structure of framework of Constitution was laid down by this Court by majority of 7 to 6 in case of His Holiness Kesavananda Bharati v. State of Kerala, (1973) 4 SCC 225. Apart from other reasons which were given in some of judgments of learned Judges who constituted majority, majority dealt with connotation of word amendment . It was held that words amendment of Constitution in Article 368 could not have effect of destroying or abrogating basic structure of Constitution. Some of us who were parties to that case took different view and came to conclusion that words amendment of Constitution in Article 368 did not admit of any limitation. Those of us who were in minority in Kesavananda Bharati s case (supra) may still hold same view as was given expression to in that case. For purpose of present case, we shall have to proceed in accordance with law as laid down by majority in that case. 176. Before dealing with question as to whether impugned amendment affects basic structure of Constitution, I may make it clear that this Court is not concerned with wisdom behind or propriety of impugned constitutional amendment. These are matters essentially for those who are vested with authority to make constitutional amendment. All that this Court is concerned with is constitutional validity of impugned amendment. 128 Page 128 xxx xxx xxx 210. It has been argued in support of constitutional validity of clause (4) that as result of this amendment, validity of one election has been preserved. Since basic structure of Constitution, according to submission, continues to be same, clause (4) cannot be said to be impermissible piece of constitutional amendment. argument has seeming plausibility about it, but deeper reflection would show that it is vitiated by basic fallacy. Law normally connotes rule or norm which is of general application. It may apply to all persons or class of persons or even individuals of particular description. Law prescribes abstract principles by application of which individual cases are decided. Law, however, is not what Blackstone called sentence . According to Roscoe Pound, law, as distinguished from laws, is system of authoritative materials for grounding or guiding judicial and administrative action recognised or established in politically organized society (see p. 106, Jurisprudence, Vol. III). Law is not same as judgment. Law lays down norm in abstract terms with coercive power and sanction against those guilty of violating norm, while judgment represents decision arrived at by application of law to concrete facts of case. Constitutional law relates to various organs of State; it deals with structure of Government, extent of distribution of its powers and modes and principles of its operation. Constitution of India is so detailed that some of matters which in brief Constitution like that of United States of America are dealt with by statutes form subject-matter of various articles of our Constitution. There is, however, in constitutional law, as there is in very idea of law, some element of generality or general application. It also carries with it concept of its applicability in future to situations which may arise in that context. If there is amendment of some provision of Constitution and amendment deals with matters which constitute constitutional law, in normally accepted sense, court while deciding question of validity of amendment would have to find out, in view of majority opinion in Kesavananda Bharati s case (supra), as to whether amendment affects basic structure of Constitution. constitutional amendment contained in clause (4) with which we are concerned in present case is, however, of altogether different nature. Its avowed object is to confer validity on election of appellant to Lok Sabha in 1971 after that election had been declared to be void by High Court and appeal against judgment of High Court was pending in this Court. In spite of our query, we were not referred to any precedent of similar amendment of any Constitution of world. uniqueness of impugned constitutional amendment would not, however, affect its validity. If constituent authority in its wisdom has chosen validity of disputed election as subject-matter of constitutional amendment, this Court cannot go behind that wisdom. All that this Court is concerned with is validity of amendment. I need not go into question as to whether such matter, in view of normal concept of 129 Page 129 constitutional law, can strictly be subject of constitutional amendment. I shall for purpose of this case assume that such matter can validly be subject-matter of constitutional amendment. question to be decided is that if impugned amendment of Constitution violates principle which is part of basic structure of Constitution, can it enjoy immunity from attack on its validity because of fact that for future, basic structure of Constitution remains unaffected. answer to above question, in my opinion, should be in negative. What has to be seen in such matter is whether amendment contravenes or runs counter to imperative rule or postulate which is integral part of basic structure of Constitution. If so, it would be impermissible amendment and it would make no difference whether it relates to one case or large number of cases. If amendment striking at basic structure of Constitution is not permissible, it would not acquire validity by being related only to one case. To accede to argument advanced in support of validity of amendment would be tantamount to holding that even though it is not permissible to change basic structure of Constitution, whenever authority concerned deems it proper to make such amendment, it can do so and circumvent bar to making of such amendment by confining it to one case. What is prohibited cannot become permissible because of its being confined to one matter. On issue in hand, K.K. Mathew, J. s views were as under:- 318. 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, difficulty has been to discover practical means of achieving this grand objective and to find opportunity for applying these means in ever-shifting tangle of human affairs. large part of effort of man over centuries has been expended in seeking solution of this great problem. region of law, in contrast to tyranny of power, can be achieved only through separating appropriately several powers of Government. If lawmakers should also be constant administrators and dispensers of law and justice, then, people would be left without remedy in case of injustice since no appeal can lie under fiat against such supremacy. And, in this age-old search of political philosophers for secret of sound Government, combined with individual liberty, it was Montesquieu who first saw light. He was first among political philosophers who saw necessity of separating judicial power from executive and legislative branches of Government. Montesquieu was first to conceive of three functions of Government as exercised by three organs, each juxtaposed against others. He realised that efficient operation of Government involved certain degree of overlapping and that theory of checks and balances required each organ to impede too great aggrandizement of authority by other two powers. As Holdsworth says, Montesquieu convinced world that he had discovered new constitutional 130 Page 130 principle which was universally valid. doctrine of separation of governmental powers is not mere theoretical, philosophical concept. It is practical, work-a-day principle. 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: Doctrine of Separation of Powers and its present day significance by T. Vanderbilt.) xxx xxx xxx 343. I think clause (4) is bad for 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 grounds argued by Counsel. 57. Insofar as third judgment in 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 former of above two judgments is concerned, same delineates pointed controversy dealt with by constitution bench of 5 Judges of this Court. issue adjudicated upon, pertained to constitutional validity of Constitution (Forty-second Amendment) Act, 1976, and more particularly, Sections 4 and 55 thereof, whereby Articles 31C and 368 of Constitution, came to be amended. majority view was expressed in ratio of 4:1, P.N. Bhagwati, J. (as he then was) having rendered dissent. majority arrived at conclusion, that Section 4 of Constitution (Forty-second Amendment) Act, 1976 was beyond amending power of Parliament and was void, as it had effect of violating basic or essential features of Constitution and destroying 131 Page 131 basic structure of Constitution, by total exclusion of challenge to any law, even on ground that it was inconsistent with, or had taken away, or had abridged any of rights, conferred by Articles 14 or 19 of Constitution. Likewise, Section 55 of Constitution (Forty-second Amendment) Act was struck down as unconstitutional, as same was beyond amending power of Parliament. Relevant observations recorded in instant judgment pertaining to issue in hand, are being extracted hereunder. opinion expressed by Y.V. Chandrachud, CJ, A.C. Gupta, N.L. Untawalia and P.S. Kailasam, JJ. on subject in hand, was to following effect:- 68. We must mention, what is perhaps not fully realised, that Article 31- C speaks of laws giving effect to policy of State , towards securing all or any of principles laid down in Part IV . In very nature of things it is difficult for court to determine whether particular law gives effect to particular policy. Whether law is adequate enough to give effect to policy of State towards securing directive principle is always debatable question and courts cannot set aside law as invalid merely because, in their opinion, law is not adequate enough to give effect to certain policy. In fact, though clear intendment of Article 31-C is to shut out all judicial review, argument of learned Additional Solicitor-General calls for doubly or trebly extensive judicial review than is even normally permissible to courts. Be it remembered that power to enquire into question whether there is direct and reasonable nexus between provisions of law and directive principle cannot confer upon courts power to sit in judgment over policy itself of State. At highest, courts can, under Article 31-C, satisfy themselves as to identity of law in sense whether it bears direct and reasonable nexus with directive principle. If court is satisfied as to existence of such nexus, inevitable consequence provided for by Article 31-C must follow. Indeed, if there is one topic on which all 13 Judges in Kesavananda Bharati, (1973) 4 SCC 225, were agreed, it is this: that only question open to judicial review under unamended Article 31-C was whether there is direct and reasonable nexus between impugned law and provisions of Article 39(b) and (c) Reasonableness is evidently regarding nexus and not regarding law. It is therefore impossible to accept contention that it is open to courts to undertake kind of enquiry suggested by Additional Solicitor General. 132 Page 132 attempt therefore to drape Article 31-C into democratic outfit under which extensive judicial review would be permissible must fail. xxx xxx xxx 73. It was finally urged by learned Attorney General that if we uphold challenge to validity of Article 31-C, 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 rights conferred by Article 19(1) which are essential feature of 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 interest of stated class of subjects only. It is for courts to decide whether restrictions are reasonable and whether they are in interest of particular subject. Apart from other basic dissimilarities, Article 31-C takes away power of judicial review to extent which destroys even semblance of 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 system by which liberty of people can be protected except through intervention of courts of law. xxx xxx xxx 75. These then are our reasons for Order (See Minerva Mills Ltd. vs. Union of India, (1980) 2 SCC 591) which we passed on May 9, 1980 to following effect: (SCC pp. 592-593, paras 1 & 2) Section 4 of Constitution (Forty-second Amendment) Act is beyond amending power of Parliament and is void since it damages basic or essential features of Constitution and destroys its basic structure by total exclusion of challenge to any law on ground that it is inconsistent with, or takes away or abridges any of rights conferred by Article 14 or Article 19 of Constitution, if law is for giving effect to policy of State towards securing all or any of principles laid down in Part IV of Constitution. Section 55 of Constitution (Forty-second Amendment) Act is beyond amending power of Parliament and is void since it removes all limitations on power of Parliament to amend Constitution and confers power upon it to amend Constitution so as to damage or destroy its basic or essential features or its basic structure. In order to appreciate minority view on issue, reference may be made to following observations of P.N. Bhagwati, J.:- 87. It is fundamental principle of our constitutional scheme, and I have pointed this out in preceding paragraph, that every organ of State, every authority under Constitution, derives its power from Constitution and has to act within limits of such power. But then question arises as 133 Page 133 to which authority must decide what are limits on power conferred upon each organ or instrumentality of State and whether such limits are transgressed or exceeded. Now there are three main departments of State amongst which powers of government are divided; executive, legislature and judiciary. Under our Constitution we have no rigid separation of powers as in United States of America, but there is broad demarcation, though, having regard to complex nature of governmental functions, certain degree of overlapping is inevitable. reason for this broad separation of powers is that concentration of powers in any one organ may to quote words of Chandrachud, J., (as he then was) in Indira Gandhi case, 1975 Supp SCC 1, by upsetting that fine balance between three organs, destroy fundamental premises of democratic government to which we are pledged . Take for example, case where executive which is in charge of administration acts to prejudice of citizen and question arises as to what are powers of executive and whether executive has acted within scope of its powers. Such question obviously cannot be left to executive to decide and for two very good reasons. First, decision of question would depend upon interpretation of Constitution and laws and this would pre-eminently be matter fit to be decided by judiciary, because it is judiciary which alone would be possessed of expertise in this field and secondly, constitutional and legal protection afforded to citizen would become illusory, if it were left to executive to determine legality of its own action. So also if legislature makes law and dispute arises whether in making law legislature has acted outside area of its legislative competence or law is violative of fundamental rights or of any other provisions of Constitution, its resolution cannot, for same reasons, be left to determination of legislature. Constitution has, therefore, created independent machinery for resolving these disputes and this independent machinery is judiciary which is vested with power of judicial review to determine legality of executive action and validity of legislation passed by legislature. It is solemn duty of judiciary under Constitution to keep different organs of State such as executive and legislature within limits of power conferred upon them by Constitution. This power of judicial review is conferred on judiciary by Articles 32 and 226 of Constitution. Speaking about draft Article 25, corresponding to present Article 32 of Constitution, Dr Ambedkar, principal architect of our Constitution, said in Constituent Assembly on December 9, 1948: If I was asked to name any particular Article in this Constitution as most important Article without which this Constitution would be nullity I could not refer to any other Article except this one. It is very soul of Constitution and very heart of it and I am glad that House has realised its importance. (CAD, Vol. 7, p.953) It is cardinal principle of our Constitution that no one howsoever highly placed and no authority however lofty can claim to be sole judge of its 134 Page 134 power under Constitution or whether its action is within confines of such power laid down by Constitution. judiciary is interpreter of Constitution and to judiciary is assigned delicate task to determine what is power conferred on each branch of government, whether it is limited, and if so, what are limits and whether any action of that branch transgresses such limits. It is for judiciary to uphold constitutional values and to enforce constitutional limitations. That is essence of rule of law, which inter alia requires that exercise of powers by government whether it be legislature or executive or any other authority, be conditioned by Constitution and law . power of judicial review is integral part of our constitutional system and without it, there will be no government of laws and rule of law would become teasing illusion and promise of unreality. I am of view that if there is one feature of our Constitution which, more than any other, is basic and fundamental to maintenance of democracy and rule of law, it is power of judicial review and it is unquestionably, to my mind, part of basic structure of 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 vital principle of our Constitution and it cannot be abrogated without affecting basic structure of Constitution. If by constitutional amendment, power of judicial review is taken away and it is provided that validity of any law made by legislature shall not be liable to be called in question on any ground, even if it is outside legislative competence of legislature or is violative of any fundamental rights, it would be nothing short of subversion of Constitution, for it would make mockery of distribution of legislative powers between Union and States and render fundamental rights meaningless and futile. So also if constitutional amendment is made which has effect of taking away power of judicial review and providing that no amendment made in Constitution shall be liable to be questioned on any ground, even if such amendment is violative of basic structure and, therefore, outside amendatory power of Parliament, it would be making Parliament sole judge of constitutional validity of what it has done and that would, in effect and substance, nullify limitation on amending power of Parliament and affect basic structure of Constitution. conclusion must therefore inevitably follow that clause (4) of Article 368 is unconstitutional and void as damaging basic structure of Constitution. 88. That takes us to clause (5) of Article 368. This clause opens with words for removal of doubts and proceeds to declare that there shall be no limitation whatever on amending power of Parliament under Article 368. It is difficult to appreciate meaning of opening words for removal of doubts because majority decision in Kesavananda Bharati case (supra) clearly laid down and left no doubt that basic structure of Constitution was outside competence of amendatory power of 135 Page 135 Parliament and in Indira Gandhi case (supra), all judges unanimously accepted theory of basic structure as theory by which validity of amendment impugned before them, namely, Article 329-A(4) was to be judged. Therefore, after decisions in Kesavananda Bharati case (supra) and Indira Gandhi case (supra), there was no doubt at all that amendatory power of Parliament was limited and it was not competent to Parliament to alter basic structure of Constitution and clause (5) could not remove doubt which did not exist. What clause (5) really sought to do was to remove limitation on amending power of Parliament and convert it from limited power into unlimited one. This was clearly and indubitably futile exercise on part of Parliament. I fail to see how Parliament which has only limited power of amendment and which cannot alter basic structure of Constitution can expand its power of amendment so as to confer upon itself power of repeal or abrogate Constitution or to damage or destroy its basic structure. That would clearly be in excess of limited amending power possessed by Parliament. Constitution has conferred only limited amending power on Parliament so that it cannot damage or destroy basic structure of Constitution and Parliament cannot by exercise of that limited amending power convert that very power into absolute and unlimited power. If it were permissible to Parliament to enlarge limited amending power conferred upon it into absolute power of amendment, then it was meaningless to place limitation on original power of amendment. It is difficult to appreciate how Parliament having limited power of amendment can get rid of limitation by exercising that very power and convert it into absolute power. Clause (5) of Article 368 which sought to remove limitation on amending power of Parliament by making it absolute must therefore be held to be outside amending power of Parliament. There is also another ground on which validity of this clause can be successfully assailed. This clause seeks to convert controlled Constitution into uncontrolled one by removing limitation on amending power of Parliament which, as pointed out above, is itself essential feature of Constitution and it is therefore violative of basic structure. I would in 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 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 Judiciary 27. Having disposed of preliminary objection in regard to locus standi of petitioners, we may now proceed to consider questions which arise 136 Page 136 for determination in these writ petitions. questions are of great constitutional significance affecting principle of independence of judiciary which is basic feature of Constitution and we would therefore prefer to begin discussion by making few prefatory remarks highlighting what true function of judiciary should be in country like India which is marching along road to social justice with banner of democracy and rule of law, for principle of independence of judiciary is not abstract conception but it is living faith which must derive its inspiration from constitutional charter and its nourishment and sustenance from constitutional values. It is necessary for every Judge to remember constantly and continually that our Constitution is not non-aligned national charter. It is document of social revolution which casts obligation on every instrumentality including judiciary, which is separate but equal branch of State, to transform status quo ante into 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 judicial function may be alright for stable and static society but not for society pulsating with urges of gender justice, worker justice, minorities justice, dalit justice and equal justice, between chronic unequals. Where contest is between those who are socially or economically unequal, judicial process may prove disastrous from point of view of social justice, if Judge adopts merely passive or negative role and does not adopt positive and creative approach. judiciary cannot remain mere bystander or spectator but it must become active participant in judicial process ready to use law in service of social justice through pro- active goal-oriented approach. But this cannot be achieved unless we have judicial cadres who share fighting faith of Constitution and who are imbued with constitutional values. necessity of judiciary which is in tune with social philosophy of Constitution has nowhere been better emphasised than in words of Justice Krishna Iyer which we quote: Appointment of Judges is 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 socialistic articles of 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 social philosophy of Judges, which shakes and shapes course of nation and, therefore, choice of Judges for higher Courts which makes and declares law of land, must be in tune with social philosophy of Constitution. Not mastery of law alone, but social vision and creative craftsmanship are 137 Page 137 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 new jurisprudence, who are judicial statesmen with social vision and creative faculty and who have, above all, deep sense of commitment to Constitution with activist approach and obligation for accountability, not to any party in power nor to opposition nor to classes which are vociferous but to half- hungry millions of India who are continually denied their basic human rights. We need Judges who are alive to socio-economic realities of Indian life, who are anxious to wipe every tear from every eye, who have faith in constitutional values and who are ready to use law as instrument for achieving constitutional objectives. This has to be broad blueprint of appointment project for higher echelons of judicial service. It is only if appointments of Judges are made with these considerations weighing predominantly with appointing authority that we can have truly independent judiciary committed only to Constitution and to people of India. concept of independence of judiciary is noble concept which inspires constitutional scheme and constitutes foundation on which rests edifice of our democratic polity. If there is one principle which runs through entire fabric of Constitution, it is principle of rule of law and under Constitution, it is judiciary which is entrusted with task of keeping every organ of State within limits of law and thereby making rule of law meaningful and effective. It is to aid judiciary in this task that power of judicial review has been conferred upon judiciary and it is by exercising this power which constitutes one of most potent weapons in armory of law, that judiciary seeks to protect citizen against violation of his constitutional or legal rights or misuse or abuse of power by State or its officers. judiciary stands between citizen and State as bulwark against executive excesses and misuse or abuse of power by executive and therefore it is absolutely essential that judiciary must be free from executive pressure or influence and this has been secured by Constitution-makers by making elaborate provisions in Constitution to which detailed reference has been made in judgments in Union of India vs. Sankalchand Himmatlal Sheth, (1977) 4 SCC 193. But it is necessary to remind ourselves that concept of independence of judiciary is not limited only to independence from executive pressure or influence but it is 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 class to which Judges belong. If we may again quote eloquent words of Justice Krishna Iyer: Independence of Judiciary is not genuflexion; nor is it opposition to every proposition of Government. It is neither Judiciary made to 138 Page 138 Opposition measure nor Government s pleasure. (Mainstream, November 22, 1980) tycoon, communalist, parochialist, faddist, extremist and radical reactionary lying coiled up and subconsciously shaping judicial mentations are menaces to judicial independence when they are at variance with Parts III and IV of Paramount Parchment. Judges should be of stern stuff and tough fibre, unbending before power, economic or political, and they must uphold core principle of rule of law which says, Be you ever so high, law is above you. This is principle of independence of judiciary which is vital for establishment of real participatory democracy, maintenance of rule of law as dynamic concept and delivery of social justice to vulnerable sections of community. It is this principle of independence of judiciary which we must keep in mind while interpreting relevant provisions of Constitution. S. Murtaza Fazal Ali, J., on issue of judicial review and basic structure , opined as under:- 332. It would appear that our Constitution has devised wholesome and effective mechanism for appointment of Judges which strikes just balance between judicial and executive powers so that while final appointment vests in highest authority of executive, power is subject to mandatory consultative process which by convention is entitled to great weight by President. Apart from these safety valves, checks and balances at every stage, where power of President is abused or misused or violates any of constitutional safeguards it is always subject to judicial review. power of judicial review, which has been conceded by Constitution to judiciary, is in our opinion safest possible safeguard not only to ensure independence of judiciary but also to prevent it from vagaries of executive. Another advantage of method adopted by our Constitution is that by vesting entire power in President, following important elements are introduced: (1) popular element in matter of administration of justice, (2) linking with judicial system dynamic goals of progressive society by subjecting principles of governance to be guided by Directive Principles of State Policy, (3) in order to make judiciary effective and powerful machinery, Constitution contains most onerous and complicated system by which Judges can be removed under Article 124(4), which in practice is almost impossibility, (4) in order to create and subserve democratic processes power of appointment of judiciary in executive has been so vested that 139 Page 139 head of executive which functions through Council of Ministers, which is purely elected body, is made accountable to people. xxx xxx xxx 336. This Court has in several cases held that condition of consultation which Governor has to exercise implies that he would have to respect recommendations of 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 ground of mala fide or exceeding his jurisdiction. xxx xxx xxx 345. This, therefore, disposes of all contentions of counsel for parties so far as various aspects of interpretation of Article 222 are concerned. On consideration, therefore, of facts, circumstances and authorities position is as follows: (1) that Article 222 expressly excludes consent and it is not possible to read word consent into Article 222 and thereby whittle down power conferred on President under this Article, (2) that transfer of Judge or C.J. of 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 face of it, order of transfer made by President would be subject to judicial review, (5) that transfer of Judge from one High Court to another does not amount to first or fresh appointment in any sense of term, (6) that transfer made under Article 222 after complying with conditions and circumstances mentioned above does not mar or erode 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 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 people than local Judges. position of C.J. is indeed very high constitutional position and our Constitution contains sufficient safeguards to protect both his decision-making process and his tenure. It is well-known saying that power corrupts and absolute power corrupts absolutely. As man is not infallible, so is Chief Justice, though person holding high judicial post is likely to be incorruptible because of quality of sobriety and restraint that judicial method contains. Even so, if C.J. is from outside State, chances of his misusing his powers are reduced to absolute minimum. We have pointed out that power to formulate or evolve this policy clearly lies within four-corners of Article 222 itself which contains very wide power conditioned only by consultation with 140 Page 140 C.J.I. who is highest judicial authority in country. It is always open to President, which in practice means Central Government, to lay down policy, norms and guidelines according to which presidential powers are to be exercised and once these norms are followed, powers of President would be beyond judicial review. On issue in hand, V.D. Tulzapurkar, J. expressed following view:- 624. As regards constitutional convention or practice and 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 expiry of their initial term, learned Attorney-General appearing for Union of India raised two fold contention. Regarding former he urged that constitutional convention or practice, howsoever wholesome, cannot affect, alter or control plain meaning of Article 224(1) which according to him gives absolute power and complete discretion to President in matter of continuance of sitting Additional Judges on expiry of their initial term, pendency of arrears being relevant only for deciding whether or not Additional Judges should be appointed and not relevant with regard to particular person to be appointed. As regards undertaking he pointed out that usual undertaking obtained from Member of Bar in all High Courts and for that matter even additional undertaking that is being obtained in Bombay High Court if properly read will show that it merely creates binding obligation on concerned Member of Bar but does not create any obligation or commitment on part of appointing authority to make offer of permanent Judgeship to him. It is difficult to accept either of these contentions of learned Attorney General. It was not disputed before us that constitutional conventions and practices have importance under unwritten as well as written Constitutions and position that conventions have role to play in interpreting articles of 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 conventions that prevail in United Kingdom. If words of Article are clear, notwithstanding any relevant convention, effect will no doubt be given to words. But it must be remembered that we are interpreting Constitution and not Act of Parliament, Constitution which establishes Parliamentary system of Government with Cabinet. In trying to understand one may well keep in mind conventions prevalent at time Constitution was framed. In State of Rajasthan v. Union of India, (1977) 3 SCC 592, also importance of constitutional convention or practice by way of crystallising otherwise vague and loose content of power to be found in certain article has been emphasised. In State of W.B. v. Nripendra Nath Bagchi, 141 Page 141 AIR 1966 SC 447, entire interpretation of concept of vesting of control over District Courts and Courts subordinate thereto in High Court was animated by conventions and practices having regard to history, object and purpose that lay behind group of relevant articles, principal purpose being, securing of independence of subordinate judiciary. It is true that no constitutional convention or practice can affect, alter or control 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 High Court and at highest reading article with Section 14 of General Clauses Act it can be said that power conferred by that article may be exercised from time to time as occasion requires but on question as to whether when occasion arises to make appointment on expiry of term of sitting Additional Judge whether he should be continued or fresher or outsider could be appointed by ignoring erstwhile incumbent even when arrears continue to obtain in that High Court article is silent and not at all clear and hence principle invoked by learned Attorney-General will not apply. On other hand, it will be proper to invoke in such situation other well- settled principle that in construing constitutional provision implications which arise from structure of Constitution itself or from its scheme may legitimately be made and looking at Article 224(1) from this angle wholesome constitutional convention or practice that has grown because of such implications will have to be borne in mind especially when it serves to safeguard one of basic features which is cardinal faith underlying our Constitution, namely, independence of judiciary. In other words limitation on otherwise absolute power and discretion contained in Article 224(1) is required to be read into it because of clear implication arising from said cardinal faith which forms fundamental pillar supporting basic structure of Constitution, as otherwise exercise of power in absolute manner as suggested will be destructive of same. That it is not sound approach to embark upon strict literal reach of any constitutional provision in order to determine its true ambit and effect is strikingly illustrated in 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 basic or essential features of Constitution do act as fetters or limitations on otherwise wide amending power contained in that article. In Australia limitations on law-making powers of Parliament of Federal Commonwealth over States were read into concerned provisions of Constitution because of implications arising from very federal nature of Constitution: (vide Lord Mayor Councillors and Citizens of City of Melbourne v. Commonwealth, 74 Commonwealth LR 31, and State of Victoria v. Commonwealth of Australia, 122 Commonwealth LR 353). As regards undertakings of types mentioned above, it is true that strictly and legally speaking these undertakings only create binding obligation on concerned Member of Bar and not on appointing authority but it 142 Page 142 cannot be forgotten that when such undertakings were thought of, postulate underlying same was that there was no question of appointing authority not making offer of permanent Judgeship to concerned Member of Bar but that such offer would be made and upon same being made sitting Additional Judge recruited from Bar should not decline to accept it and revert to Bar. I am therefore clearly of view that aforesaid convention or practice and undertaking serve 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 Bar legitimate expectancy and enforceable right not to be dropped illegally or at whim or caprice of 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 appointing authority absolute power and complete discretion in matter of appointment of Additional Judges to High Court as suggested and suggested construction has to be rejected. In view of above discussion it is clear that there is valid classification between proposed appointees for initial recruitment and sitting Additional Judges whose cases for their continuance after expiry of their initial term are to be decided and two are not in same position. 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 present batch of cases with view to avoiding repetition of arguments on points common to both sets of cases. In first group of cases question of construction of Articles 217, 224 and other connected articles prominently figured in context of circular of Law Minister dated March 18, 1981, seeking consent of Additional Judges for being appointed as permanent Judges in other High Courts and 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 final non-appointment of Shri O.N. Vohra and Shri S.N. Kumar. submission was that circular of Law Minister manifests covert attempt to transfer Additional Judges from one High Court to other High Court without consulting Chief Justice of India as required by Article 222(1) and thereby circumventing majority decision in Union of India v. Sankalchand Himatlal Sheth, (1977) 4 SCC 193. central theme was scope, ambit and content of consultation which President must have with three constitutional functionaries set out in Article 217(1). In second group of cases, question arose in context of transfer of Shri K.B.N. Singh, Chief Justice of Patna High Court as Chief Justice of Madras High Court consequent upon 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 143 Page 143 power conferred upon him by Article 222. controversy centred down scope, ambit and content of consultation that President must have with Chief Justice of India before exercising power to transfer under Article 222. Thus, scope, ambit and content of consultation under Article 217 as also one of Article 222 which, as Mr Seervai stated, was more or less same though different facets on which consultation must be focussed may differ in case of transfer and in case of appointment, figured prominently in both groups of cases. parameters of scope, ambit and content of consultation both under Articles 217(1), 222 and 224, were drawn on wide canvas to be tested on touchstone of independence of judiciary being fighting faith and fundamental and basic feature of Constitution. It was stated that if consultation itself is to provide reliable safeguard against arbitrary and naked exercise of power against judiciary, procedure of consultation must be so extensive as to cover all aspects of 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 decision can be corrected by judicial review. Therefore, at outset it is necessary to be properly informed as to concept of independence of judiciary as set out in Constitution. 697. entire gamut of arguments revolved principally round construction of Articles 217 and 224 in one batch of petitions and Article 222 in another batch but canvas was spread wide covering various other articles of 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 pivotal assumption that independence of judiciary is basic and fundamental feature of Constitution which has its genesis in power of judicial review which enables court to declare executive and legislative actions ultra vires Constitution. In this connection we are not starting on clean slate as contention in this very form and for 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 parties vied with each other as in 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 marked divergence. xxx xxx xxx 771. Now, power is conferred on President to make appointment of Judge of Supreme Court after consultation with such of Judges of Supreme Court and of High Courts in States as President may deem necessary. submission is that expression may deem necessary qualifies expression consultation and that if he deems otherwise President can proceed to make appointment of Chief Justice of India without consultation with any of Judges of Supreme 144 Page 144 Court and of High Courts. In other words, it was submitted on behalf of respondents, President has discretion to consult or not to consult Judges of 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 proviso extracted hereinabove wherein it is stated that it would be obligatory upon President to consult Chief Justice of India before making appointment of Judge of Supreme Court other than Chief Justice of India. Undoubtedly, proviso leaves no option to President but to consult Chief Justice of India while making appointment of Judge of Supreme Court other than Chief Justice of India, but it is rather difficult to accept construction as suggested on behalf of respondents that in making appointment of Chief Justice of India President is at large and may not consult any functionary in judicial branch of State before making appointment of Chief Justice of India. expression may deem necessary qualifies number of Judges of Supreme Court and High Courts to be consulted. What is optional is selection of number of Judges to be consulted and not consultation because expression shall be appointed after consultation would mandate consultation. extreme submission that President may consult High Court Judges for appointment of Chief Justice of India omitting altogether Supreme Court Judges does not commend to us, because consultation with such of Judges of Supreme Court and of High Courts would clearly indicate that consultation has to be with some Judges of Supreme Court and some Judges of High Courts. conjunction and is clearly indicative of intendment of framers of 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 submission that President may appoint Chief Justice of India ignoring Supreme Court and after consulting some High Court Judges. Undoubtedly, sub-article (2) does not cast obligation to consult all Judges of Supreme Court and all Judges of High Courts but in practical working President in order to discharge his function of selecting best suitable person to be 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 President to appoint Chief Justice of India without consultation with any judicial functionaries. That is certainly correct. But then he proceeded to suggest construction where, by constitutional convention, any necessity of consultation would be obviated and yet executive power to be choosy and selective in appointment of Chief Justice of India can be controlled or thwarted. He said that constitutional convention must be read that seniormost amongst puisne Judges of Supreme Court should as rule be appointed as Chief Justice of India except when he is physically unfit to shoulder responsibilities. This constitutional 145 Page 145 convention, it was said, when read in Article 124(2) would obviate any necessity of consultation with any functionary in judicial branch before making appointment of Chief Justice of India and yet would so circumscribe power of President as not to enable executive to choose person of its bend and thinking. In this very context it was pointed out that Article 126 permits President to appoint even juniormost Judge of Supreme Court to be acting Chief Justice of India and it was said that such approach or such construction of Article 126 would be subversive of independence of judiciary. It was said that if 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 convention of seniority is not read in Article 124(2), every Judge of Supreme Court would be possible candidate for office of Chief Justice of India and on account of personal bias would be disqualified from being consulted. There is no warrant for such extreme position and reflection on Judges of Supreme Court is equally unwarranted. On construction as indicated above there will be positive limitation on power of President while making appointment of Chief Justice of India and it is not necessary to read any limitation on power of President under Article 126 while making appointment of Judge of Supreme Court as acting Chief Justice of India. But observation is incidental to submission and may be examined in appropriate case. And question of construction is kept open. xxx xxx xxx 775. It was also stated that expression obtain in circular has element of coercion and 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 eye of law. It was said that threat implicit in circular becomes evident because Chief Minister, strong arm of executive is being asked to obtain consent. If every little thing is looked upon with suspicion and as attack on independence of judiciary, it becomes absolutely misleading. Law Minister, if he writes directly to Chief Justice or Judge concerned, propriety of action may be open to question. Chandrachud, J., has warned in Sheth case (supra) that 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, Law Minister wrote to Chief Ministers. Chief Minister in turn was bound to approach Chief Justice. This is also known to be proper communication channel with Judges of High Court. In this context expression obtain would only mean request Judge to give consent if he so desires. If he gives consent, well and good, and if does not give, no evil consequences are likely to ensue. I am not impressed by submission of learned Attorney-General that one who gives consent may have some advantage over 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 Judge not 146 Page 146 giving consent, arm of judicial review is strong enough to rectify executive error. xxx xxx xxx 815. public interest like public policy is 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 arbitrary exercise of power in 1976. This approach overlooks fact that Lakshman Rekha drawn by safeguards when transgressed or crossed, judicial review will set at naught mischief. True it is that it is almost next to impossible for individual Judge of High Court to knock at doors of Courts because access to justice is via insurmountable mountain of costs and expenses. This need not detain us because we have seen that in time of crisis Bar has risen to occasion twice over in near past though it must be conceded that judicial review is increasingly becoming preserve of high, mighty and affluent. But three safeguards, namely, full and effective consultation with Chief Justice of India, and that power to transfer can be exercised in public interest, and judicial review, would certainly insulate independence of judiciary against attempt by executive to control it. Last of all, reference may be made to observations of E.S. Venkataramiah, J., (as he then was) who held as under:- 1245. question of policy is matter entirely for President to decide. Even though Chief Justice of India is consulted in that behalf by President since policy relates to High Courts, his opinion is not binding on President. It is open to President to adopt any policy which is subject only to judicial review by Court. Under Article 222 of Constitution Chief Justice of India has to be consulted on question whether particular Judge should be transferred and where he should be transferred while implementing said policy. If Government requests Chief Justice of India to give his opinion on transfer to implement said policy which is really in public interest he cannot decline to do so. Even though Chief Justice was opposed to wholesale transfers of Judges there is no bar for Government treating recommendation for transfers made by Chief Justice of India as part of implementation of its policy. That transfer of Shri K.B.N. Singh was on account of policy of Government can be gathered from following statements in affidavits filed before this Court: In para 8 of affidavit dated September 16, 1981 of Shri K.B.N. Singh it is stated: When deponent wanted to know why he might be transferred to Madras, Hon ble Chief Justice of India merely said that it was Government policy, but gave no clue as to what necessitated his transfer from Patna to Madras. In para 2(g) of affidavit of Chief Justice of India he has stated: I deny that when Shri K.B.N. Singh 147 Page 147 wanted to know over telephone on January 5, 1981, I stated merely that it was Government policy .... . In paragraph 8 of 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. sequence of judgments would now lead us to judgment of this Court in S.P. Sampath Kumar v. Union of India, (1987) 1 SCC 124. view expressed by bench of 5 Hon ble Judges of this Court in above case, was in respect of controversy quite similar to one in hand. In instant judgment, constitutional vires of Administrative Tribunals Act, 1985 was under challenge. above Act was framed under Article 323A of Constitution. Article 323A was introduced in Constitution by Constitution (Forty-second Amendment) Act, 1976. 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 concurring view rendered by P.N. Bhagwati, CJ is concerned, conclusion recorded in following paragraphs has bearing on present controversy. 3. It is now well settled as result of decision of this Court in Minerva Mills Ltd. v. Union of India, (1980) 3 SCC 625, that judicial review is basic and essential feature of Constitution and no law passed by Parliament in exercise of its constituent power can abrogate it or take it away. If power of judicial review is abrogated or taken away Constitution will cease to be what it is. It is fundamental principle of our constitutional scheme that every organ of State, every authority under Constitution, derives its power from Constitution and has to act within limits of such power. It is limited government which we have under Constitution and both executive and legislature have to act within limits of power conferred upon them under Constitution. Now question may arise as to what are powers of executive and whether executive has acted within scope of its power. Such question obviously cannot be left to executive to decide and for two very good reasons. First decision of question would depend upon interpretation of Constitution and 148 Page 148 laws and this would pre-eminently be matter fit to be decided by judiciary, because it is judiciary which alone would be possessed of expertise in this field and secondly, constitutional and legal protection afforded to citizen would become illusory, if it were left to executive to determine legality of its own action. So also if legislature makes law and dispute arises whether in making law, legislature has acted outside area of its legislative competence or law is violative of fundamental rights or of any other provisions of Constitution, its resolution cannot, for same reasons, be left to determination of legislature. Constitution has, therefore created independent machinery for resolving these disputes and this independent machinery is judiciary which is vested with power of judicial review to determine legality of executive action and validity of legislation passed by legislature. judiciary is constituted ultimate interpreter of Constitution and to it is assigned delicate task of determining what is extent and scope of power conferred on each branch of government, what are limits on exercise of such power under Constitution and whether any action of any branch transgresses such limits. It is also basic principle of rule of law which permeates every provision of Constitution and which forms its very core and essence that exercise of power by executive or any other authority must not only be conditioned by Constitution but also be in accordance with law and it is judiciary which has to ensure that law is observed and there is compliance with requirements of law on part of executive and other authorities. This function is discharged by judiciary by exercise of power of judicial review which is most potent weapon in hands of judiciary for maintenance of Rule of Law. power of judicial review is integral part of our constitutional system and without it, there will be no government of laws and Rule of Law would become teasing illusion and 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 view that if there is one feature of our Constitution which, more than any other, is basic and fundamental to maintenance of democracy and rule of law, it is power of judicial review and it is unquestionably, to my mind, part of basic structure of 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 vital principle of our Constitution and it cannot be abrogated without affecting basic structure of Constitution. If by constitutional amendment, power of judicial review is taken away and it is provided that validity of any law made by legislature shall not be liable to be called in question on any ground, even if it is outside legislative competence of legislature or is violative of any fundamental rights, it would be 149 Page 149 nothing short of subversion of Constitution, for it would make mockery of distribution of legislative powers between Union and States and render fundamental rights meaningless and futile. So also if constitutional amendment is made which has effect of taking away power of judicial review and providing that no amendment made in Constitution shall be liable to be questioned on any ground, even if such amendment is violative of basic structure and, therefore, outside amendatory power of Parliament, it would be making Parliament sole judge of constitutional validity of what it has done and that would, in effect and substance, nullify limitation on amending power of Parliament and affect basic structure of Constitution. conclusion must therefore inevitably follow that clause (4) of Article 368 is unconstitutional and void as damaging basic structure of Constitution. It is undoubtedly true that my judgment in Minerva Mills Ltd. case (supra) was minority judgment but so far as this aspect is concerned, majority Judges also took same view and held that judicial review is basic and essential feature of Constitution and it cannot be abrogated without affecting basic structure of Constitution and it is equally clear from same decision that though judicial review cannot be altogether abrogated by Parliament by amending Constitution in exercise of its constituent power, Parliament can certainly, without in any way violating basic structure doctrine, set up effective alternative institutional mechanisms or arrangements for judicial review. basic and essential feature of judicial review cannot be dispensed with but it would be within competence of Parliament to amend Constitution so as to substitute in place of High Court, another alternative institutional mechanism or arrangement for judicial review, provided it is no less efficacious than High Court. Then, instead of High Court, it would be another institutional mechanism or authority which would be exercising power of judicial review with view to enforcing constitutional limitations and maintaining rule of law. Therefore, if any constitutional amendment made by Parliament takes away from High Court power of judicial review in any particular area and vests it in any other institutional mechanism or authority, it would not be violative of basic structure doctrine, so long as essential condition is fulfilled, namely, that alternative institutional mechanism or authority set up by parliamentary amendment is no less effective than High Court. 4. Here, in present case, impugned Act has been enacted by Parliament in exercise of power conferred by clause (1) of Article 323-A which was introduced in Constitution by Constitution (42nd Amendment) Act, 1976. Clause (2)(d) of this article provides that law made by Parliament under clause (1) may exclude jurisdiction of courts, except jurisdiction of Supreme Court under Article 136, with respect to disputes or complaints referred to in clause (1). exclusion of jurisdiction of High Court under Articles 226 and 227 by any law made by Parliament under 150 Page 150 clause (1) of Article 323-A is, therefore, specifically authorised by constitutional amendment enacted in clause (2)(d) of that article. It is clear from discussion in preceding para that this constitutional amendment authorising exclusion of jurisdiction of High Court under Articles 226 and 227 postulates for its validity that law made under clause (1) of Article 323-A excluding jurisdiction of High Court under Articles 226 and 227 must provide for effective alternative institutional mechanism or authority for judicial review. If this constitutional amendment were to permit law made under clause (1) of Article 323-A to exclude jurisdiction of High Court under Articles 226 and 227 without setting up effective alternative institutional mechanism or arrangement for judicial review, it would be violative of basic structure doctrine and hence outside constituent power of Parliament. It must, therefore, be read as implicit in this constitutional amendment that law excluding jurisdiction of High Court under Articles 226 and 227 permissible under it must not leave void but it must set up another effective institutional mechanism or authority and vest power of judicial review in it. Consequently, impugned Act excluding jurisdiction of High Court under Articles 226 and 227 in respect of service matters and vesting such jurisdiction in Administrative Tribunal can pass test of constitutionality as being within ambit and coverage of clause (2)(d) of Article 323-A, only if it can be shown that Administrative Tribunal set up under impugned Act is equally efficacious as High Court, so far as power of judicial review over service matters is concerned. We must, therefore, address ourselves to question whether Administrative Tribunal established under impugned Act can be regarded as equally effective and efficacious in exercising power of judicial review as High Court acting under Articles 226 and 227 of Constitution. Extracts from judgment rendered by Ranganath Misra, J. (as he then was) are first of all being reproduced hereunder:- 10. In writ applications as presented, main challenge was to abolition of jurisdiction of this Court under Article 32 in respect of specified service disputes. Challenge was also raised against taking away of jurisdiction of High Court under Articles 226 and 227. It was further canvassed that establishment of Benches of Tribunal at Allahabad, Bangalore, Bombay, Calcutta, Gauhati, Madras and Nagpur with principal seat at Delhi would still prejudice parties whose cases were already pending before respective High Courts located at places other than these places and unless at seat of every High Court facilities for presentation of applications and for hearing thereof were provided parties and their lawyers would be adversely affected. interim order made on October 31, 1985, made provision to meet working difficulties. Learned Attorney- 151 Page 151 General on behalf of Central Government assured court that early steps would be taken to amend law so as to save jurisdiction under Article 32, remove other minor anomalies and set up Bench of Tribunal at seat of every High Court. By Administrative Tribunals (Amendment) Ordinance, 1986, these amendments were brought about and by now appropriate Act of Parliament has replaced Ordinance. Most of original grounds of attack thus do not survive and contentions that were canvassed at hearing by counsel appearing for different parties are these: (1) Judicial review is fundamental aspect of basic structure of our Constitution and bar of jurisdiction of High Court under Articles 226 and 227 as contained in Section 28 of Act cannot be sustained; (2) Even if bar of jurisdiction is upheld, Tribunal being substitute of High Court, its constitution and set up should be such that it would in fact function as such substitute and become institution in which parties could repose faith and trust; (3) Benches of Tribunal should not only be established at seat of every High Court but should be available at every place where High Courts have permanent Benches; (4) So far as Tribunals set up or to be set up by Central or State Governments are concerned, they should have no jurisdiction in respect of employees of Supreme Court or members of subordinate judiciary and employees working in such establishments inasmuch as exercise of jurisdiction of Tribunal would interfere with control absolutely vested in respective High Courts in regard to judicial and other subordinate officers under Article 235 of Constitution. 11. After oral arguments were over, learned Attorney-General, after obtaining instructions from Central Government filed memorandum to effect that Section 2(q) of Act would be suitably amended so as to exclude officers and servants in employment of Supreme Court and members and staff of subordinate judiciary from purview of Act. In same memorandum it has also been said that Government would arrange for sittings of Benches of Tribunal at seat or seats of each High Court on basis that sittings will include circuit sittings and details thereof would be worked out by Chairman or Vice-Chairman concerned. 12. With these concessions made by learned Attorney-General, only two aspects remain to be dealt with by us, namely, those covered by first and second contentions. 13. Strong reliance was placed on judgment of Bhagwati, J. (one of us presently learned Chief Justice) in Minerva Mills Ltd. v. Union of India, (1980) 3 SCC 625, where it was said: (SCC p. 678, para 87) power of judicial review is integral part of our constitutional system and without it, there will be no government of laws and rule of law would become teasing illusion and promise of unreality. I am 152 Page 152 of view that if there is one feature of our Constitution which, more than any other, is basic and fundamental to maintenance of democracy and rule of law, it is power of judicial review and it is unquestionably, to my mind, part of basic structure of 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 vital principle of our Constitution and it cannot be abrogated without affecting basic structure of Constitution. If by constitutional amendment, power of judicial review is taken away and it is provided that validity of any law made by legislature shall not be liable to be called in question on any ground, even if it is outside legislative competence of legislature or is violative of any fundamental rights, it would be nothing short of subversion of Constitution, for it would make mockery of distribution of legislative powers between Union and States and render fundamental rights meaningless and futile. So also if constitutional amendment is made which has effect of taking away power of judicial review 14. Article 32 was described by Dr Ambedkar in course of debate in Constituent Assembly as soul and heart of Constitution and it is in recognition of this position that though Article 323-A(2)(d) authorised exclusion of jurisdiction under Article 32 and original Act had in Section 28 provided for it, by amendment jurisdiction under Article 32 has been left untouched. 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 Tribunal on grant of special leave. Judicial review by Apex Court has thus been left intact. 15. question that arises, however, for consideration is whether bar of jurisdiction under Articles 226 and 227 affects provision for judicial review. right to move High Court in its writ jurisdiction unlike one under Article 32 is not fundamental right. Yet, High Courts, as working experience of three-and-a-half decades shows have in exercise of power of judicial review played definite and positive role in matter of preservation of fundamental and other rights and in keeping administrative action under reasonable control. In these thirty-six years following enforcement of Constitution, not only has India s population been more than doubled but also number of litigations before courts including High Courts has greatly increased. As pendency in High Courts increased and soon became pressing problem of backlog, nation s attention came to be bestowed on this aspect. Ways and means to relieve High Courts of load began to engage attention of government at Centre as also in various States. As early as 1969, Committee was set up by Central Government under chairmanship of Mr Justice Shah of this Court to make recommendations suggesting ways and means for 153 Page 153 effective, expeditious and satisfactory disposal of matters relating to service disputes of government servants as it was found that sizeable portion of pending litigations related to this category. Committee recommended setting up of independent Tribunal to handle pending cases before this Court and High Courts. While this report was still engaging attention of government, Administrative Reforms Commission also took note of situation and recommended 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 Central Government looked into matter further as it transpired that major chunk of service litigations related to matters other than disciplinary action. In May 1976, Conference of Chief Secretaries of States discussed this problem. Then came Forty-second Amendment of Constitution bringing in Article 323-A which authorized Parliament to provide by law for 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 affairs of Union or of any State or of any local or other authority within territory of India or under control of Government of India or of any Corporation owned or controlled by government . As already stated this article envisaged exclusion of jurisdiction of all courts, except jurisdiction of Supreme Court under Article 136, with respect to disputes or complaints referred to in clause (1). Though Constitution now contained enabling power, no immediate steps were taken to set up any Tribunal as contemplated by Article 323-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 principle that public policy requires that all litigation must have 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. constitution of Service Tribunals by State Governments with apex Tribunal at Centre, which, in generality of cases, should be final arbiter of controversies relating to conditions of service, including vexed question of seniority, may save courts from avalanche of writ petitions and appeals in service matters. proceedings of such Tribunals can have 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 meantime problem of backlog of cases in High Courts became more acute and pressing and came to be further discussed in Parliament and in conferences and seminars. Ultimately in January 1985, 154 Page 154 both Houses of Parliament passed Bill and with Presidential assent on February 27, 1985, law enabling long awaited Tribunal to be constituted came into existence. As already noticed, Central Government notified Act to come into force with effect from November 1, 1985. 16. Exclusion of jurisdiction of High Courts in service matters and its propriety as also validity have thus to be examined in background indicated above. We have already seen that judicial review by this Court is left wholly unaffected and thus there is forum where matters of importance and grave injustice can be brought for determination or rectification. Thus exclusion of jurisdiction of 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 alternative institution in place of High Court for providing judicial review. debates and deliberations spread over almost two decades for exploring ways and means for relieving High Courts of load of backlog of cases and for assuring quick settlement of service disputes in interest of public servants as also country cannot be lost sight of while considering this aspect. It has not been disputed before us - and perhaps could not have been - that Tribunal under scheme of Act would take over part of existing backlog and share of normal load of High Courts. Tribunal has been contemplated as substitute and not as supplemental to High Court in scheme of administration of justice. To provide Tribunal as additional forum from where parties could go to High Court would certainly have been retrograde step considering situation and circumstances to meet which innovation has been brought about. Thus barring of jurisdiction of High Court can indeed not be valid ground of attack. 17. What, however, has to be kept in view is that Tribunal should be real substitute of 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), alternative arrangement has to be effective and efficient as also capable of upholding constitutional limitations. Article 16 of 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. touch-stone of equality enshrined in Article 14 is greatest of guarantees for citizen. Centering around these articles in Constitution service jurisprudence has already grown in this country. Under Sections 14 and 15 of Act all powers of Courts except those of this Court in regard to matters specified therein vest in Tribunal - either Central or State. Thus Tribunal is substitute of High Court and is entitled to exercise powers thereof. 18. High Courts have been functioning over century and quarter and until Federal Court was established under Government of India Act, 1935, used to be highest courts within their respective 155 Page 155 jurisdictions subject to appeal to Privy Council in limited category of cases. In this long period of about six scores of years, High Courts have played their role effectively, efficiently as also satisfactorily. litigant in this country has seasoned himself to look upto High Court as unfailing protector of his person, property and honour. institution has served its purpose very well and 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 unattached and objective manner have ensured dispensation of justice over years. Aggrieved people approach Court - social mechanism to act as arbiter - not under legal obligation but under belief and faith that justice shall be done to them and State's authorities would implement decision of Court. It is, therefore, of paramount importance that substitute institution - Tribunal - must be worthy successor of High Court in all respects. That is exactly what this Court intended to convey when it spoke of alternative mechanism in Minerva Mills' case (supra). 60. Reference may also be made to decision rendered by this Court in L. Chandra Kumar v. Union of India, (1997) 3 SCC 261. instant decision was rendered by constitution bench of 7 Judges. question which arose for determination in instant judgment was, whether power conferred upon Parliament and State legislatures vide Articles 323A(2)(d) and 323B(3)(d) totally excluding jurisdiction of all courts except Supreme Court, under Article 136 of Constitution, violated basic structure of Constitution. In other words, question was, whether annulling/retracting power of judicial review conferred on High Courts (under Articles 226 and 227 of Constitution) and on Supreme Court (under Articles 32 of Constitution), was violative of basic structure of Constitution. Furthermore, whether tribunals constituted under Articles 323A and 323B of Constitution, possess competence to test constitutional validity of statutory provisions/rules? And also, whether Tribunals constituted under Articles 323A 156 Page 156 and 323B of Constitution could be said to be effective substitutes of jurisdiction vested in High Courts? And if not, what changes were required? above controversy came to be referred to constitution bench in furtherance of order passed in L. Chandra Kumar v. Union of India, (1995) 1 SCC 400, on account of 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 issues which are relevant to present controversy, this Court observed as under:- 76. To express our opinion on issue whether power of judicial review vested in High Courts and in Supreme Court under Articles 226/227 and 32 is part of basic structure of Constitution, we must first attempt to understand what constitutes basic structure of Constitution. 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 specific and particular features mentioned in that judgment alone would constitute basic structure of our Constitution. Indeed, in judgments of Shelat and Grover, JJ., Hegde and Mukherjea, JJ. and Jaganmohan Reddy, J., there are specific observations to effect that their list of essential features comprising basic structure of Constitution are illustrative and are not intended to be exhaustive. In Indira Gandhi case, 1975 Supp. SCC 1, Chandrachud, J. held that proper approach for Judge who is confronted with question whether particular facet of Constitution is part of basic structure, is to examine, in each individual case, place of particular feature in scheme of our Constitution, its object and purpose, and consequences of its denial on integrity of our Constitution as fundamental instrument for governance of 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 definitive test in this field of Constitutional Law. 157 Page 157 77. We find that various factors mentioned in test evolved by Chandrachud, J. have already been considered by decisions of various Benches of this Court that have been referred to in 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 power of judicial review vested in High Courts and in this Court under Articles 226 and 32 respectively, enabling legislative action to be subjected to 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 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] rest have made general observations highlighting significance of this feature. 78. legitimacy of power of courts within constitutional democracies to review legislative action has been questioned since time it was first conceived. Constitution of India, being alive to such criticism, has, while conferring such power upon higher judiciary, incorporated important safeguards. analysis of manner in which Framers of our Constitution incorporated provisions relating to judiciary would indicate that they were very greatly concerned with securing independence of judiciary. These attempts were directed at ensuring that judiciary would be capable of effectively discharging its wide powers of judicial review. While Constitution confers power to strike down laws upon High Courts and Supreme Court, it also contains elaborate provisions dealing with tenure, salaries, allowances, retirement age of Judges as well as mechanism for selecting Judges to superior courts. inclusion of such elaborate provisions appears to have been occasioned by belief that, armed by such provisions, superior courts would be insulated from any executive or legislative attempts to interfere with making of their decisions. Judges of superior courts have been entrusted with task of upholding Constitution and to this end, have been conferred power to interpret it. It is they who have to ensure that balance of power envisaged by Constitution is maintained and that legislature and executive do not, in discharge of their functions, transgress constitutional limitations. It is equally their duty to oversee that judicial decisions rendered by those who man subordinate courts and tribunals do not fall foul of strict standards of legal correctness and judicial independence. constitutional safeguards which ensure independence of Judges of superior judiciary, are not available to Judges of subordinate judiciary or to those who man tribunals created by ordinary legislations. Consequently, Judges of latter category can never be considered full and effective substitutes for superior judiciary in discharging 158 Page 158 function of constitutional interpretation. We, therefore, hold that power of judicial review over legislative action vested in High Courts under Article 226 and in this Court under Article 32 of Constitution is integral and essential feature of Constitution, constituting part of its basic structure. Ordinarily, therefore, power of High Courts and Supreme Court to test constitutional validity of legislations can never be ousted or excluded. 79. We also hold that power vested in High Courts to exercise judicial superintendence over decisions of all courts and tribunals within their respective jurisdictions is also part of basic structure of Constitution. This is because situation where 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 Tribunals be made subject to supervisory jurisdiction of High Courts within whose territorial jurisdiction they fall. We are, however, of view that this may not be best way of solving problem. We do not think that our constitutional scheme requires that all adjudicatory bodies which fall within territorial jurisdiction of High Courts should be subject to their supervisory jurisdiction. If idea is to divest High Courts of their onerous burdens, then adding to their supervisory functions cannot, in any manner, be of assistance to them. situation at present is that different Tribunals constituted under different enactments are administered by different administrative departments of Central and State Governments. problem is compounded by fact that some Tribunals have been created pursuant to Central Legislations and some others have been created by State Legislations. However, even in case of Tribunals created by parliamentary legislations, there is no uniformity in administration. We are of view that, until wholly independent agency for administration of all such Tribunals can be set up, it is desirable that all such Tribunals should be, as far as possible, under single nodal ministry which will be in position to oversee working of these Tribunals. For number of reasons that Ministry should appropriately be Ministry of Law. It would be open for Ministry, in its turn, to appoint independent supervisory body to oversee working of Tribunals. This will ensure that if President or Chairperson of Tribunal is for some reason unable to take sufficient interest in working of Tribunal, entire system will not languish and ultimate consumer of justice will not suffer. creation of single umbrella organisation will, in our view, remove many of ills of present system. If need arises, there can be separate umbrella organisations at Central and State 159 Page 159 levels. Such supervisory authority must try to ensure that independence of members of all such Tribunals is maintained. To that extent, procedure for selection of members of Tribunals, manner in which funds are allocated for functioning of Tribunals and all other consequential details will have to be clearly spelt out. 97. suggestions that we have made in respect of appointments to Tribunals and supervision of their administrative function need to be considered in detail by those entrusted with duty of formulating policy in this respect. That body will also have to take into consideration comments of expert bodies like LCI and Malimath Committee in this regard. We, therefore, recommend that Union of India initiate action in this behalf and after consulting all concerned, place all these Tribunals under one single nodal department, preferably Legal Department. 98. Since we have analysed issue of constitutional validity of Section 5(6) of Act at length, we may now pronounce our opinion on this aspect. Though vires of provision was not in question in Dr Mahabal Ram case, (1994) 2 SCC 401, we believe that approach adopted in that case, relevant portion of which has been extracted in first part of this judgment, is correct since it harmoniously resolves manner in which Sections 5(2) and 5(6) can operate together. We wish to make it clear that where question involving interpretation of statutory provision or rule in relation to Constitution arises for consideration of Single Member Bench of Administrative Tribunal, proviso to Section 5(6) will automatically apply and Chairman or Member concerned shall refer matter to Bench consisting of at least two Members, one of whom must be Judicial Member. This will ensure that questions involving vires of statutory provision or rule will never arise for adjudication before Single Member Bench or Bench which does not consist of Judicial Member. So construed, Section 5(6) will no longer be susceptible to charges of unconstitutionality. 99. In view of reasoning adopted by us, we hold that clause 2( d) of Article 323-A and clause 3(d) of Article 323-B, to extent they exclude jurisdiction of High Courts and Supreme Court under Articles 226/227 and 32 of Constitution, are unconstitutional. Section 28 of Act and exclusion of jurisdiction clauses in all other legislations enacted under aegis of Articles 323-A and 323-B would, to same extent, be unconstitutional. jurisdiction conferred upon High Courts under Articles 226/227 and upon Supreme Court under Article 32 of Constitution is part of inviolable basic structure of our Constitution. While this jurisdiction cannot be ousted, other courts and Tribunals may perform supplemental role in discharging powers conferred by Articles 226/227 and 32 of Constitution. Tribunals created under Article 323-A and Article 323-B of Constitution are possessed of competence to test constitutional validity of statutory 160 Page 160 provisions and rules. All decisions of these Tribunals will, however, be subject to scrutiny before Division Bench of High Court within whose jurisdiction Tribunal concerned falls. Tribunals will, nevertheless, continue to act like courts of first instance in respect of areas of law for which they have been constituted. It will not, therefore, be open for litigants to directly approach High Courts even in cases where they question vires of statutory legislations (except where legislation which creates particular Tribunal is challenged) by overlooking jurisdiction of Tribunal concerned. Section 5(6) of Act is valid and constitutional and is to be interpreted in manner we have indicated. 61. Reference was then made to Union of India v. Madras Bar Association, (2010) 11 SCC 1. instant decision was rendered by constitution bench of 5 Judges. controversy adjudicated upon in this case related to challenge to constitutional validity of Parts 1B and 1C of Companies Act, 1956. These parts were inserted into Companies Act, by Companies (Second Amendment) Act, 2002. Thereby, provision was made for constitution of National Company Law Tribunal and National Company Law Appellate Tribunal. relevant questions raised in present controversy, are being noticed. Firstly, whether Parliament does not have jurisdiction/legislative competence, to vest intrinsic judicial functions, that have been traditionally performed by High Courts, in any tribunal outside judiciary? Secondly, whether transferring of entire company law jurisdiction, hitherto before vested in High Courts, to National Company Law Tribunal, which was not under control of judiciary, was violative of 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 Companies Act, by virtue of above amendment, were unconstitutional being in breach of principles of rule of law , separation 161 Page 161 of powers and independence of judiciary ? relevant narration and conclusions recorded by this Court are being reproduced hereunder:- Section 10-FD(3)(f): Appointment of Technical Member to NCLT 16. High Court has held that appointment of member under category specified in Section 10-FD(3)(f), can have role only in matters concerning revival and rehabilitation of sick industrial companies and not in relation to other matters. High Court has therefore virtually indicated that NCLT should have two divisions, that is Adjudication Division and Rehabilitation Division and persons selected under category specified in clause (f) should only be appointed as Members of Rehabilitation Division. 17. Union Government contends that similar provision exists in Section 4(3) of Sick Industrial Companies (Special Provisions) Act, 1985; that provision is only enabling one so that best talent can be selected by Selection Committee headed by Chief Justice of India or his nominee; and that it may not be advisable to have division or limit or place restrictions on power of President of Tribunal to constitute appropriate benches. It is also pointed out that technical member would always sit in Bench with judicial member. Section 10-FD(3)(g): Qualification for appointment of Technical Member 18. High Court has observed that in regard to Presiding Officers of Labour Courts and Industrial Tribunals or National Industrial Tribunal, 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. Union Government submits that it may be advisable to leave choice of selection of most appropriate candidate to Committee headed by Chief Justice of India or his nominee. 20. High Court has also observed that as persons who satisfy 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 Tribunal , provision should be made that judicial member with this qualification shall be member of Special Bench referred to in Section 10-FL(2) for cases relating to rehabilitation, restructuring or winding up of companies. 21. Union Government has not accepted these findings and contends that observations of High Court would amount to judicial legislation. Section 10-FD(3)(h): Qualification of Technical Member of NCLT 22. High Court has observed that clause (h) referring to category of persons having special knowledge of and experience in matters relating to labour, for not less than 15 years is vague and should 162 Page 162 be suitably amended so as to spell out with certainty qualification which person to be appointed under clause (h) should possess. 23. Union Government contends that in view of wide and varied experience possible in labour matters, it may not be advisable to set out nature of experience or impose any restrictions in regard to nature of experience. It is submitted that Selection Committee headed by Chief Justice of India or his nominee would consider each application on its own merits. 24. second observation of High Court is that member selected under category mentioned in clause (h) must confine his participation only to Benches dealing with revival and rehabilitation of sick companies and should also be excluded from functioning as single- Member Bench for any matter. 25. Union Government contends that it may not be advisable to fetter prerogative of President of Tribunal to constitute benches by making use of available members. It is also pointed out that it may not be proper to presume that person well versed in labour matters will be unsuitable to be associated with judicial member in regard to adjudication of winding-up matters. xxx xxx xxx Section 10-FX: Selection process for President/Chairperson 31. High Court has expressed view that selection of President/Chairperson should be by Committee headed by Chief Justice of India in consultation with two senior Judges of Supreme Court. 32. Union Government has submitted that it would not be advisable to make such provision in regard to appointment of President/Chairperson of statutory tribunals. It is pointed out that no other legislation constituting tribunals has such provision. In order to assail challenge to provisions extracted hereinabove, Union of India asserted, that Madras High Court (the judgment whereof was, also under challenge) having held that Parliament had competence and power to establish National Company Law Tribunal and National Company Law Appellate Tribunal, ought to have dismissed writ petition. assertion at hands of Union of India was, that some of directions contained in judgment rendered by Madras High Court, reframed and recast Parts 1B and 1C introduced by Amendment Act and amounted to 163 Page 163 converting judicial review into judicial legislation. It was, however noticed, that Union of India having agreed to rectify several of defects pointed out by High Court, appeal of Union of India was restricted to findings of High Court relating to Sections 10-FD(3)(f), (g), (h) and 10-FX. To understand tenor of issue which was subject matter before this Court, it is relevant to extract some of provisions of Companies Act, 1956 as amended by Companies (Second Amendment) Act, 2002, relating to constitution of National Company Law Tribunal and National Company Law Appellate Tribunal). same are reproduced hereunder:- PART I-B NATIONAL COMPANY LAW TRIBUNAL 10-FB. Constitution of National Company Law Tribunal. Central Government shall, by notification in Official Gazette, constitute Tribunal to be known as 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 time being in force. 10-FC. Composition of Tribunal. Tribunal shall consist of President and such number of judicial and technical members not exceeding sixty-two, as Central Government deems fit, to be appointed by that Government, by notification in Official Gazette. 10-FD. Qualifications for appointment of President and Members. (1) Central Government shall appoint person who has been, or is qualified to be, Judge of High Court as President of Tribunal. (2) person shall not be qualified for appointment as judicial member unless he (a) has, for at least fifteen years, held judicial office in territory of India; or (b) has, for at least ten years been advocate of High Court, or has partly held judicial office and has been partly in practice as advocate for total period of fifteen years; or (c) has held for at least fifteen years Group post or equivalent post under Central Government or State Government including at least three years of service as Member of Indian Company Law Service (Legal Branch) in Senior Administrative Grade in that service; or 164 Page 164 (d) has held for at least fifteen years Group post or equivalent post under Central Government (including at least three years of service as Member of Indian Legal Service in Grade I of that service). (3) person shall not be qualified for appointment as technical member unless he (a) has held for at least fifteen years Group post or equivalent post under Central Government or State Government [including at least three years of service as Member of Indian Company Law Service (Accounts Branch) in Senior Administrative Grade in that service]; or (b) is, or has been, Joint Secretary to Government of India under Central Staffing Scheme, or held any other post under Central Government or State Government carrying scale of pay which is not less than that of Joint Secretary to 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 chartered accountant under Chartered Accountants Act, 1949 (38 of 1949); or (d) is, or has been, for at least fifteen years in practice as cost accountant under Cost and Works Accountants Act, 1959 (23 of 1959); or (e) is, or has been, for at least fifteen years working experience as Secretary in wholetime practice as defined in clause (45-A) of Section 2 of this Act and is member of Institute of Company Secretaries of India constituted under Company Secretaries Act, 1980 (56 of 1980); or (f) is 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, special knowledge of, or professional experience in, which would be in opinion of Central Government useful to Tribunal; or (g) is, or has been, Presiding Officer of Labour Court, Tribunal or National Tribunal constituted under Industrial Disputes Act, 1947 (14 of 1947); or (h) is person having special knowledge of, and experience of not less than fifteen years in, matters relating to labour. Explanation. For purposes of this Part, (i) judicial member means Member of Tribunal appointed as such under sub-section (2) of Section 10-FD and includes President of Tribunal; (ii) technical member means Member of Tribunal appointed as such under sub-section (3) of Section 10-FD. 165 Page 165 10-FE. Term of office of President and Members. President and every other Member of Tribunal shall hold office as such for term of three years from 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, (a) in case of President, age of sixty-seven years; (b) in case of any other Member, age of sixty-five years: Provided further that President or other Member may retain his lien with his parent cadre or Ministry or Department, as case may be, while holding office as such. 10-FF. Financial and administrative powers of Member Administration. 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 rules which may be made by Central Government: Provided that Member (Administration) shall have authority to delegate such of his financial and administrative powers as he may think fit to any other officer of Tribunal subject to condition that such officer shall, while exercising such delegated powers continue to act under direction, superintendence and control of Member (Administration). * * * 10-FK. Officers and employees of Tribunal. (1) Central Government shall provide Tribunal with such officers and other employees as it may deem fit. (2) officers and other employees of Tribunal shall discharge their functions under general superintendence of Member Administration. (3) salaries and allowances and other terms and conditions of service of officers and other employees of Tribunal shall be such as may be prescribed. 10-FL. Benches of Tribunal. (1) Subject to provisions of this section, powers of Tribunal may be exercised by Benches, constituted by President of Tribunal, out of which one shall be judicial member and another shall be technical member referred to in clauses (a) to (f) of sub-section (3) of Section 10-FD: Provided that it shall be competent for Members authorised in this behalf to function as Bench consisting of single Member and exercise jurisdiction, powers and authority of Tribunal in respect of such class of cases or such matters pertaining to such class of cases, as President of Tribunal may, by general or special order, specify: Provided further that if at any stage of hearing of any such case or matter, it appears to Member of Tribunal that case or matter is of such nature that it ought to be heard by Bench consisting of two Members, case or matter may be transferred by President of 166 Page 166 Tribunal or, as case may be, referred to him for transfer to such Bench as President may deem fit. (2) President of Tribunal shall, for disposal of any case relating to rehabilitation, restructuring or winding up of companies, constitute one or more special Benches consisting of three or more Members, each of whom shall necessarily be judicial member, technical member appointed under any of clauses (a) to (f) of sub- section (3) of Section 10-FD, and Member appointed under clause (g) or clause (h) of sub-section (3) of Section 10-FD: Provided that in case Special Bench passes order in respect of company to be wound up, winding-up proceedings of such company may be conducted by Bench consisting of single Member. (3) If Members of Bench differ in opinion on any point or points, it shall be decided according to majority, if there is majority, but if Members are equally divided, they shall state point or points on which they differ, and case shall be referred by President of Tribunal for hearing on such point or points by one or more of other Members of Tribunal and such point or points shall be decided according to opinion of majority of Members of Tribunal who have heard case, including those who first heard it. (4) There shall be constituted such number of Benches as may be notified by Central Government. (5) In addition to other Benches, there shall be Principal Bench at New Delhi presided over by President of Tribunal. (6) Principal Bench of Tribunal shall have powers of transfer of proceedings from any Bench to another Bench of Tribunal in 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 reasons for so doing in writing. * * * 10-FO. Delegation of powers. Tribunal may, by general or special order, delegate, subject to such conditions and limitations, if any, as may be specified in order, to any Member or officer or other employee of Tribunal or other person authorized by 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) Central Government shall, by notification in Official Gazette, constitute with effect from such date as may be specified therein, Appellate Tribunal to be called National Company Law Appellate Tribunal consisting of 167 Page 167 Chairperson and not more than two Members, to be appointed by that Government, for hearing appeals against orders of Tribunal under this Act. (2) Chairperson of Appellate Tribunal shall be person who has been Judge of Supreme Court or Chief Justice of High Court. (3) Member of Appellate Tribunal shall be 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, special knowledge of, or professional experience in which, would be in opinion of Central Government useful to Appellate Tribunal. * * * 10-FT. Term of office of Chairperson and Members. Chairperson or Member of Appellate Tribunal shall hold office as such for term of three years from 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 case of Chairperson, age of seventy years; (b) in case of any other Member, age of sixty-seven years. * * * 10-FX. Selection Committee. (1) Chairperson and Members of Appellate Tribunal and President and Members of Tribunal shall be appointed by Central Government on recommendations of Selection Committee consisting of (a) Chief Justice of India or his nominee Chairperson; (b) Secretary in Ministry of Finance and Company Affairs Member; (c) Secretary in Ministry of Labour Member; (d) Secretary in Ministry of Law and Justice (Department of Legal Affairs or Legislative Department) Member; (e) Secretary in Ministry of Finance and Company Affairs (Department of Company Affairs) Member. (2) Joint Secretary in Ministry or Department of Central Government dealing with this Act shall be Convenor of Selection Committee. * * * (5) Before recommending any person for appointment as Chairperson and Members of Appellate Tribunal and President and Members of Tribunal, Selection Committee shall satisfy itself that such person does not have financial or other interest which is likely to affect prejudicially his 168 Page 168 functions as such Chairperson or Member of Appellate Tribunal or President or Member of Tribunal, as case may be. (6) No appointment of Chairperson and Members of Appellate Tribunal and President and Members of Tribunal shall be invalidated merely by reason of any vacancy or any defect in constitution of Selection Committee. * * * 10-G. Power to punish for contempt. Appellate Tribunal shall have same jurisdiction, powers and authority in respect of contempt of itself as High Court has and may exercise, for this purpose under provisions of Contempt of Courts Act, 1971 (70 of 1971), which shall have effect subject to modifications that (a) reference therein to High Court shall be construed as including reference to Appellate Tribunal; (b) reference to Advocate General in Section 15 of said Act shall be construed as reference to such law officers as 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 Tribunal or Appellate Tribunal is empowered to determine by or under this Act or any other law for 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 time being in force. * * * 10-GF. Appeal to Supreme Court. Any person aggrieved by any decision or order of Appellate Tribunal may file appeal to Supreme Court within sixty days from date of communication of decision or order of Appellate Tribunal to him on any question of law arising out of such decision or order: Provided that Supreme Court may, if it is satisfied that appellant was prevented by sufficient cause from filing appeal within said period, allow it to be filed within further period not exceeding sixty days. Having noticed relevant statutory provisions, this Court made detailed observations relating to difference between Courts and Tribunals , Re: independence of judiciary , separation of powers , and whether Government can transfer judicial functions traditionally performed by Courts, to Tribunals , as under:- 169 Page 169 70. But in India, unfortunately tribunals have not achieved full independence. Secretary of sponsoring department concerned sits in Selection Committee for appointment. When tribunals are formed, they are mostly dependent on their sponsoring department for funding, infrastructure and even space for functioning. statutes constituting tribunals routinely provide for members of civil services from sponsoring departments becoming members of 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 Government can transfer judicial functions traditionally performed by courts to tribunals? 71. It is well settled that courts perform all judicial functions of State except those that are excluded by law from their jurisdiction. Section 9 of Code of Civil Procedure, for example, provides that courts shall have jurisdiction to try all suits of civil nature excepting suits of which their cognizance is either expressly or impliedly barred. 72. Article 32 provides that without prejudice to powers conferred on Supreme Court by clauses (1) and (2) of said Article, Parliament may by law, empower any other court to exercise within local limits of its jurisdiction all or any of powers exercisable by Supreme Court under clause (2) of Article 32. 73. Article 247 provides that notwithstanding anything contained in Chapter I of Part XI of Constitution, Parliament may by law provide for establishment of any additional courts for better administration of laws made by Parliament or of any existing laws with respect to matter enumerated in Union List. Article 245 provides that subject to provisions of Constitution, Parliament may make laws for whole or any part of territory of India, and legislature of State may make laws for whole or any part of State. 74. Article 246 deals with subject-matter of laws made by Parliament and by legislatures of States. Union List (List I of Seventh Schedule) enumerates 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 Supreme Court. Entry 78 of List I refers to constitution and organisation of High Courts. Entry 79 of List I refers to extension or exclusion of jurisdiction of 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 Supreme Court, with respect to any of matters in Union List. 75. Concurrent List (List III of Seventh Schedule) enumerates matters with respect to which Parliament and Legislature of State 170 Page 170 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 Supreme Court and High Courts. Entry 46 of List III refers to jurisdiction and powers of all courts, except Supreme Court, with respect to any of matters in List III. 76. Part XIV-A was inserted in Constitution with effect from 3-1-1977 by Constitution (Forty-second Amendment) Act, 1976. said part contains two articles. Article 323-A relates to Administrative Tribunals and empowers Parliament to make law, providing for 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 affairs of Government or of any State or of any local or other authority within territory of India or under control of Government of India or of any corporation owned or controlled by Government. xxx xxx xxx 80. 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 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 setting up of tribunals contemplated therein; and that said articles, however, cannot be interpreted to mean that they prohibited legislature from establishing tribunals not covered by those articles, as long as there is legislative competence under appropriate entry in Seventh Schedule. xxx xxx xxx 90. But when we say that legislature has 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 independence of judiciary and keeping in view principles of 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 independence, security and capacity associated with courts. If tribunals are intended to serve 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 hearing and disposal or relieve from rigours of 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 judiciary should be Presiding Officers/Members. Typical examples of such special tribunals are Rent 171 Page 171 Tribunals, Motor Accidents Claims Tribunals and Special Courts under several enactments. Therefore, when transferring jurisdiction exercised by courts to tribunals, which does not involve any specialised knowledge or expertise in any field and expediting disposal and relaxing procedure is only object, provision for technical members in addition to or in substitution of judicial members would clearly be case of dilution of and encroachment upon independence of judiciary and 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. tribunals set up under Articles 323-A and 323-B of Constitution or under Act of legislature are creatures of statute and in no case claim status as Judges of High Court or parity or as substitutes. However, personnel appointed to hold those offices under 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. legal input would undeniably be more important and sacrificing legal input and not giving it sufficient weightage and teeth would definitely impair efficacy and effectiveness of 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 occasion different and complex questions of law which baffle minds of even trained Judges in 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 legislature can provide for technical members in addition to judicial members in such tribunals, let us turn our attention to question as to who can be members. 93. If Act provides for tribunal with judicial member and technical member, does it mean that there are no limitations upon power of legislature to prescribe qualifications for such technical member? question will also be whether any limitations can be read into competence of legislature to prescribe qualification for judicial member? answer, of course, depends upon nature of jurisdiction that is being transferred from courts to tribunals. Logically and necessarily, depending upon whether jurisdiction is being shifted from High Court, or District Court or Civil Judge, yardstick will differ. It is for court which considers challenge to qualification, to determine whether legislative power has been exercised in manner in consonance with constitutional principles and constitutional guarantees. xxx xxx xxx 172 Page 172 101. Independent judicial tribunals for determination of rights of citizens, and for adjudication of disputes and complaints of citizens, is necessary concomitant of rule of law. 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 Government will be decided by Judges who are independent of executive. Another facet of rule of law is equality before law. essence of equality is that it must be capable of being enforced and adjudicated by independent judicial forum. Judicial independence and separation of judicial power from executive are part of common law traditions implicit in Constitution like ours which is based on Westminster model. 102. fundamental right to equality before law and equal protection of laws guaranteed by Article 14 of Constitution, clearly includes right to have person s rights, adjudicated by forum which exercises judicial power in impartial and independent manner, consistent with 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 alternative forum, such legislative Act is open to challenge if it violates right to adjudication by independent forum. Therefore, though challenge by MBA is on ground of violation of principles forming part of basic structure, they are relatable to one or more of express provisions of Constitution which gave rise to such principles. Though validity of provisions of legislative Act cannot be challenged on ground it violates basic structure of Constitution, it can be challenged as violative of constitutional provisions which enshrine principles of rule of law, separation of powers and independence of judiciary. xxx xxx xxx 106. We may summarise position as follows: (a) legislature can enact law transferring jurisdiction exercised by courts in regard to any specified subject (other than those which are vested in courts by express provisions of Constitution) to any tribunal. (b) All courts are tribunals. Any tribunal to which any existing jurisdiction of courts is transferred should also be judicial tribunal. This means that such tribunal should have as members, persons of rank, capacity and status as nearly as possible equal to rank, status and capacity of court which was till then dealing with such matters and members of tribunal should have 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 tribunals. When any jurisdiction is shifted from courts to tribunals, on ground of pendency and delay in courts, and jurisdiction so transferred does 173 Page 173 not involve any technical aspects requiring assistance of experts, tribunals should normally have only judicial members. Only where exercise of jurisdiction involves inquiry and decisions into technical or special 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 independence of judiciary. (d) legislature can reorganise jurisdictions of judicial tribunals. For example, it can provide that specified category of cases tried by higher court can be tried by lower court or vice versa (a standard example is variation of pecuniary limits of courts). Similarly while constituting tribunals, legislature can prescribe qualifications/eligibility criteria. same is however subject to judicial review. If court in exercise of judicial review is of view that such tribunalisation would adversely affect independence of judiciary or standards of judiciary, court may interfere to preserve independence and standards of judiciary. Such exercise will be part of checks and balances measures to maintain separation of powers and to prevent any encroachment, intentional or unintentional, by either legislature or by executive. xxx xxx xxx 113. When Administrative Tribunals were constituted, presence of members of civil services as Technical (Administrative) Members was considered necessary, as they were well versed in functioning of government departments and rules and procedures applicable to government servants. But fact that senior officers of civil services could function as Administrative Members of Administrative Tribunals, does not necessarily make them suitable to function as technical members in Company Law Tribunals or other tribunals requiring technical expertise. 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 field to which tribunals relate, or worse, where purely judicial functions are involved. While one can understand presence of members of civil services being technical members in Administrative Tribunals, or Military Officers being members of Armed Forces Tribunals, or electrical engineers being members of Electricity Appellate Tribunal, or telecom engineers being members of TDSAT, we find no logic in members of general civil services being members of Company Law Tribunals. 114. Let us now refer to dilution of independence. If any member of tribunal is permitted to retain his lien over his post with parent cadre or ministry or department in civil service for his entire period of service as member of tribunal, he would continue to think, act and function as member of civil services. litigant may legitimately think that such member will not be independent and impartial. We reiterate 174 Page 174 that our observations are not intended to cast any doubt about honesty and integrity or capacity and capability of officers of civil services in particular those who are of rank of Joint Secretary or for that matter even junior officers. What we are referring to is perception of litigants and public about independence or conduct of members of tribunal. Independence, impartiality and fairness are qualities which have to be nurtured and developed and cannot be acquired overnight. independence of members discharging judicial functions in tribunal cannot be diluted. xxx xxx xxx 120. We may tabulate corrections required to set right defects in Parts I-B and I-C of Act: (i) Only Judges and advocates can be considered for appointment as judicial members of Tribunal. Only High Court Judges, or Judges who have served in rank of District Judge for at least five years or person who has practised as lawyer for ten years can be considered for appointment as judicial member. Persons who have held Group or equivalent post under Central or State Government with experience in Indian Company Law Service (Legal Branch) and 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. expertise in Company Law Service or Indian Legal Service will at best enable them to be considered for appointment as technical members. (ii) As NCLT takes over functions of High Court, members should as nearly as possible have same position and status as High Court Judges. This can be achieved, not by giving salary and perks of High Court Judge to 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 ranks of Secretaries or Additional Secretaries alone can be considered for appointment as technical members of 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 post or persons holding post of Joint Secretary or equivalent post in Central or State Government, being qualified for appointment as Members of Tribunal, are invalid. (iii) technical member presupposes experience in field to which Tribunal relates. member of 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. 175 Page 175 (iv) 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 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 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 latter part of clause (f) in sub-section (3) of Section 10-FD and officers of civil services of rank of Secretary or Additional Secretary in Indian Company Law Service and Indian Legal Service can be considered for purposes of appointment as technical members of Tribunal. (viii) Instead of five-member Selection Committee with Chief Justice of India (or his nominee) as Chairperson and two Secretaries from Ministry of Finance and Company Affairs and Secretary in Ministry of Labour and Secretary in Ministry of Law and Justice as members mentioned in Section 10-FX, Selection Committee should broadly be on following lines: (a) Chief Justice of India or his nominee Chairperson (with casting vote); (b) Senior Judge of Supreme Court or Chief Justice of High Court Member; (c) Secretary in Ministry of Finance and Company Affairs Member; and (d) Secretary in Ministry of Law and Justice Member. (ix) term of office of three years shall be changed to 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 field concerned. term of three years is very short and by time members achieve required knowledge, expertise and efficiency, one term will be over. Further said term of three years with 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 reasonable period of service. 176 Page 176 (x) second proviso to Section 10-FE enabling President and members to retain lien with their parent cadre/ministry/department while holding office as President or Members will not be conducive for independence of members. Any person appointed as member should be prepared to totally disassociate himself from executive. lien cannot therefore exceed 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 President/Chairman or member of Tribunal can be only with concurrence of Chief Justice of India. (xii) administrative support for all Tribunals should be from Ministry of Law and Justice. Neither Tribunals nor their members shall seek or be provided with facilities from respective sponsoring or parent Ministries or Department concerned. (xiii) Two-member Benches of Tribunal should always have judicial member. Whenever any larger or special Benches are constituted, number of technical members shall not exceed judicial members. 62. Before venturing to examine controversy in hand it needs to be noticed, that some of assertions raised at hands of petitioners in present controversy have since been resolved. These have been noticed in 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, constitutional validity of National Tax Tribunal Act, 2005 ( Act , for short) is challenged. In TC No. 150 of 2006, additionally there is challenge to Section 46 of Constitution (Forty-second Amendment) Act, 1976 and Article 323-B of Constitution of India. It is contended that Section 46 of Constitution (Forty-second Amendment) Act, is ultra vires basic structure of Constitution as it enables proliferation of tribunal system and makes serious inroads into independence of judiciary by providing parallel system of administration of justice, in which executive has retained extensive control over matters such as appointment, jurisdiction, procedure, etc. It is contended that Article 323-B violates basic structure of Constitution as it completely takes away jurisdiction of High Courts and vests them in National Tax Tribunal, including trial of offences and adjudication of pure questions of law, which have always been in exclusive domain of judiciary. 177 Page 177 2. When these matters came up on 9-1-2007 before three-Judge Bench, challenge to various sections of Act was noticed. 3. first challenge was to Section 13 which permitted any person duly authorised to appear before National Tax Tribunal. Union of India submitted that appropriate amendment will be made in Act to ensure that only lawyers, chartered accountants and parties in person will be permitted to appear before National Tax Tribunal. 4. second challenge was to Section 5(5) of Act which provided that: 5. (5) Central Government may in consultation with Chairperson transfer member from headquarters of one Bench in one State to headquarters of another Bench in another State or to headquarters of any other Bench within State: 5. Union of India submitted that having regard to nature of functions to be performed by Tribunal and constitutional scheme of separation of powers and independence of judiciary, expression consultation with Chairperson occurring in Section 5(5) of Act should be read and construed as concurrence of Chairperson . 6. third challenge was to Section 7 which provided for Selection Committee comprising of (a) Chief Justice of India or Judge of Supreme Court nominated by him, (b) Secretary in Ministry of Law and Justice, and (c) Secretary in Ministry of Finance. It was contended by petitioners that two of members who are Secretaries to Government forming majority may override opinion of Chief Justice or his nominee which was improper. It was stated on behalf of Union of India that there was no question of two Secretaries overriding opinion of Chief Justice of India or his nominee since primacy of Chairperson was inbuilt in system and this aspect will be duly clarified. 7. In regard to certain other defects in Act, pointed out by petitioners, it was submitted that 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 order reserving liberty to Union Government to mention matter for listing after appropriate amendments were made in Act. 9. On 21-1-2009, when arguments in CA No. 3067 of 2004 and CA No. 3717 of 2005, which related to challenge to Parts I-B and I-C of Companies Act, 1956 were in progress before Constitution Bench, it was submitted that these matters involved similar issue and they could be tagged and disposed of in terms of decision in those appeals. Therefore 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. 178 Page 178 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 separate order. Insofar as these cases are concerned, we find that TC (Civil) No. 150 of 2006 involves challenge to Article 323-B of Constitution. 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 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 matters specified in sub-clauses (a) to (h) of clause (2) of said article. 11. One of contentions urged in support of challenge to Article 323- B relate to fact that tribunals do not follow normal rules of evidence contained in Evidence Act, 1872. In criminal trials, accused is presumed to be innocent till proved guilty beyond reasonable doubt, and Evidence Act plays important role, as appreciation of evidence and consequential findings of facts are crucial. trial would require experience and expertise in criminal law, which means that Judge or adjudicator to be legally trained. Tribunals which follow their own summary procedure, are not bound by strict rules of evidence and 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 basis of inadmissible evidence. It is submitted that it would thus be retrograde step for separation of executive from judiciary. 12. Appeals on issues on law are traditionally heard by courts. Article 323-B enable constitution of tribunals which will be hearing appeals on pure questions of law which is function of courts. In L. Chandra Kumar v. Union of India, (1997) 3 SCC 261, this Court considered validity of only clause (3)(d) of Article 323-B but did not consider validity of other provisions of Article 323-B. 13. appeals relating to constitutional validity of National Company Law Tribunals under Companies Act, 1956 did not involve consideration of Article 323-B. constitutional issues raised in TC (Civil) No. 150 of 2006 were not touched on as power to establish Company Tribunals was not traceable to Article 323-B but to several entries of Lists I and III of Seventh Schedule and consequently there was no challenge to this article. 14. basis of attack in regard to Parts I-B and I-C of Companies Act and provisions of NTT Act are completely different. challenge to Parts I-B and I-C of Companies Act, 1956 seeks to derive support from Article 323-B by contending that Article 323-B is bar for constitution of any tribunal in respect of matters not enumerated therein. On other hand challenge to NTT Act is based on challenge to Article 323-B itself. 15. We therefore find that these petitions relating to validity of NTT Act and challenge to Article 323-B raise issues which did not arise in 179 Page 179 two civil appeals. Therefore these cases cannot be disposed of in terms of decision in civil appeals but require to be heard separately. We accordingly direct that these matters be delinked and listed separately for hearing. 63(i) perusal of judgment rendered in Kesavananda Bharati case (supra) reveals, that separation of powers creates system of checks and balances, by reasons of which, powers are so distributed, that none of three organs transgresses into domain of other. concept ensures dignity of individual. power of judicial review ensures, that executive functioning confines itself within framework of law enacted by legislature. Accordingly, demarcation of powers between legislature, executive and judiciary, is regarded as basic element of constitutional scheme. When judicial process is prevented by law, from determining whether action taken, was or was not, within framework of legislation enacted, it would amount to transgression of adjudicatory/determinatory process by legislature. Therefore, exclusion of power of judicial review , would strike at basic structure of Constitution. (ii) In Indira Nehru Gandhi case (supra), this Court arrived at conclusion, that clause (4) of Article 329A of Constitution, destroyed not only power of judicial review , but also rule of separation of powers . By above legislative provision, election declared void, on culmination of adjudicatory process, was treated as valid. Meaning thereby, that judicial process was substituted by legislative pronouncement. It was held, that issue to be focused on was, whether amendment which was sought to be 180 Page 180 assailed, violated principle which constituted basic structure of Constitution. argument raised in opposition was, that determination which had bearing on just one (or few) individual(s) would not raise such issue. query was answered by concluding, that it would make no difference whether it related to one case, or large number of cases. Encroachment on basic structure of Constitution would be invalid, irrespective of whether, it related to limited number of individuals or large number of people. view expressed was, that if lawmakers were to be assigned responsibility of administering those laws, and dispensing justice, then those governed by such laws would be left without remedy in case they were subjected to injustice. For 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 view expressed in Kesavananda Bharati case (supra) and Indira Nehru Gandhi case (supra), that amending power of Parliament, was not absolute. Parliament, it was maintained, did not have power to amend basic structure of Constitution. legislative assertion, that enacted law had been made, for giving effect to policy to secure provisions made in Part IV of Constitution, had effect of excluding adjudicatory process. In case on hand, this Court arrived at conclusion, that Section 4 of Constitution (Forty-second Amendment) Act was beyond amending power of Parliament, and same was void, because it had effect of damaging 181 Page 181 basic and essential features of Constitution and destroying its basic structure , by totally excluding any challenge to any law, even on ground, whether it was inconsistent with or it had abridged, any of rights conferred by Articles 14 and 19 of Constitution. Furthermore, Section 55 of Constitution (Forty-second Amendment), Act was held to be beyond amending power of Parliament. It was held to be void, as it had effect of removing all limitations on powers of Parliament, to amend Constitution including, power to alter its basic and essential features, i.e., its basic structure . According to this Court, reason for broad separation of powers under Constitution was, because concentration of powers in any one of organs of Government, would destroy foundational premise of democratic Government. illustrations narrated in judgment are of some relevance. We shall therefore, narrate them hereunder, in our own words: (a) Take for example case where executive, which is in-charge of administration, acts to prejudice of citizen. And question arises, as to what are powers of executive, and whether executive had acted within scope of its powers. Such question obviously, cannot be left to executive to decide, for two very good reasons. Firstly, because decision would depend upon interpretation of Constitution or laws, which are, pre-eminently fit to be decided by judiciary, as it is judiciary alone which would be possessed of expertise in decision making. And secondly, because legal protection afforded to citizens by Constitution 182 Page 182 or laws would become illusory, if it were left to executive to determine legality, of its own actions. (b) Take for example, case where legislature makes law, which is to prejudice of citizen. And dispute arises, whether in making law legislature had acted outside area of its legislative competence, or whether law was violative of fundamental rights of citizen, or of some other provision(s) of law. Its resolution cannot be left to legislature to decide, for two very good reasons. Firstly, because decision would depend upon interpretation of Constitution or laws, which are, pre- eminently fit to be decided by judiciary, as it is judiciary alone which would be possessed of expertise in decision making. And secondly, because legal protection afforded to citizens, by Constitution or laws would become illusory, if it were left to legislature to determine legality of its own actions. On basis of examples cited above, this Court concluded, that creation of independent machinery, for resolving disputes, was constitutionally vested with judiciary. judiciary was vested with power of judicial review , to determine legality of executive action, and validity of laws enacted by legislature. It was further held, that it was solemn duty of judiciary under Constitution, to keep different organs of State, such as executive and legislature, within limits of powers conferred upon them by Constitution. It was accordingly also held, that power of judicial review was integral part of India s constitutional system, and without it, rule of law 183 Page 183 would become teasing illusion, and promise of unreality. Premised on aforesaid inferences, this Court finally concluded, that if there was one feature of Indian Constitution, which more than any others, was its basic structure fundamental to maintenance of democracy and rule of law , it was power of judicial review . While recording aforementioned conclusion, this Court also recorded clarificatory note, namely, that it should not be taken, that effective alternative institutional mechanism or arrangement for judicial review could not be made by Parliament. It was, however, clearly emphasized, that judicial review was vital principle of Indian Constitution, and it could not be abrogated, without affecting basic structure of Constitution. It is therefore, that it came to be held, that constitutional amendment, which had effect of taking away power of judicial review , by providing, that it would not be liable to be questioned, on any ground, was held to be beyond amending power of Parliament. For, that would make Parliament sole judge, of constitutional validity, of what it had done, and thereby, allow it to determine legality of its own actions. In above judgment, critical reflection, in our considered view was expressed by words, Human ingenuity, limitless though it may be, has yet not devised system, by which liberty of people can be protected, except for intervention of courts of law . (iv) In S.P. Gupta case (supra), concept of independence of judiciary came up for consideration before this Court. This Court having examined 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 184 Page 184 transfer, deserved to be preserved, within framework of judicial fraternity. Likewise, foundation of appointment of outside Chief Justices, was made with similar objective. Based on same, parameters were also laid down, in respect of appointment of Judges to Supreme Court. consideration even extended to appointment of Chief Justice of Supreme Court. All this, for ensuring judicial autonomy. It was felt that independence of judiciary, could be preserved only if primacy in above causes rested with judiciary itself, with minimal involvement of executive and legislature. It needs to be highlighted, that independence of judges of High Courts and Supreme Court was considered as salient, to ensure due exercise of power of judicial review . It would be pertinent to mention, that 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, matter was reconsidered by constitution bench of nine Judges in, Supreme Court Advocates on Record Association v. Union of India, (1993) 4 SCC 441. On subject of preserving independence in respect of appointment of judges of High Courts, as also their transfer, position recorded earlier in S.P.Gupta case (supra) remained substantially unaltered. So also, of appointments of Chief Justices of High Courts and Supreme Court. It was reiterated, that to ensure judicial independence, primacy in all these matters should be with judiciary. (v) Having recorded determination rendered by this Court to effect that separation of powers , rule of law and judicial review at hands of independent judiciary, constitute basic structure of Constitution, we are 185 Page 185 in position now to determine, how aforesaid concepts came to be adopted by this Court, while adjudicating upon validity of provisions similar to ones, which are subject of consideration, in case on hand. first controversy arose with reference to Administrative Tribunals Act, 1985, which was enacted under Article 323A of Constitution. In S.P. Sampath Kumar case (supra), it was sought to be concluded, that power of judicial review had been negated by aforementioned enactment, inasmuch as, avenue of redress under Articles 226 and 227 of Constitution before High Court, was no longer available. It was also sought to be asserted, that tribunal constituted under enactment, being substitute of High Court, ought to have been constituted in manner, that it would be able to function in same manner as High Court itself. Since insulation of judiciary from all forms of interference, even from coordinate branches of Government, was by now being perceived as basic essential feature of Constitution, it was felt that same independence from possibility of executive pressure or influence, needed to be ensured for Chairman, Vice Chairman and Members of administrative tribunal. In recording its conclusions, even though it was maintained, that judicial review was integral part of basic structure of Constitution, yet it was held, that Parliament was competent to amend Constitution, and substitute in place of High Court, another alternative institutional mechanism or arrangement. This Court, however cautioned, that it was imperative to ensure, that alternative arrangement, was no less independent, and no less judicious, than High Court (which was sought to be 186 Page 186 replaced) itself. This was conveyed by observing, if any constitutional amendment made by Parliament takes away from High Court power of judicial review in any particular area, and vests it in any other institutional mechanism or authority, it would not be violative of basic structure doctrine so long as essential condition is fulfilled, namely, that alternative institutional mechanism or authority set up by Parliament by amendment is no less effective than High Court . exclusion of High Courts jurisdiction under Articles 226 and 227 of Constitution, it was held, would render Administrative Tribunals Act, 1985 unconstitutional, unless amendments to 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 executive in matters of appointment of Chairman, Vice Chairman and Members of 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 executive, only in consultation with Chief Justice of India, and that, such consultation had to be meaningful and effective, inasmuch as, ordinarily recommendation of Chief Justice of India ought to be accepted, unless there were cogent reasons not to. If there were any reasons, for not accepting recommendation, they needed to be disclosed to Chief Justice. Alternatively, it was commended, that high powered Selection Committee headed by Chief Justice or sitting Judge of Supreme Court, or of 187 Page 187 concerned High Court (nominated by 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 impugned Act would be saved from invalidation. It was mentioned, that Section 6(2) also needed to be amended, so as to make District Judge or Advocate, who fulfilled qualifications for appointment as judge of High Court, eligible for appointment as Vice Chairman. With reference to Section 8 it was felt, that term of five years of office, would be too short and ought to be suitably extended. It was so felt, because presently prescribed tenure would neither be convenient to persons selected for job, nor expedient to scheme of adjudication contemplated under Administrative Tribunals Act. It was also opined, that Government ought to set up permanent bench wherever there was seat of High Court. And if that was not feasible, at least circuit bench of administrative tribunal, wherever there is seat of High Court. That would alleviate hardship, which would have to be faced by persons, who were not residing close to places at which benches of tribunal were set up. In this behalf, it may only be stated that all suggestions made by this Court were adopted. (vi) Post S.P. Sampath Kumar case (supra), divergent views came to be expressed in number of judgments rendered by this Court. It is therefore, that judgment in S.P. Sampath Kumar case (supra), came up for reconsideration in L. Chandra Kumar case (supra). On reconsideration, this Court declared, that power of judicial review over legislative action was vested in High Courts under Article 226, and in Supreme Court under Article 32 of 188 Page 188 Constitution. Judicial review was again held to be integral and essential feature of Constitution, constituting its basic structure . It was further concluded, that ordinarily power of High Courts and Supreme Court, to test constitutional validity of legislations, could never be ousted or excluded. It was also held, that power vested in High Courts of judicial superintendence over all Courts and tribunals within their respective jurisdictions, was also part of basic structure of Constitution. And that, situation needed to be avoided where High Courts were divested from their judicial functions, besides power of constitutional interpretation. Referring to inappropriate and ineffective functioning of tribunals, this Court observed, that above malady was on account of lack of responsibility, of fulfilling administrative requirements of administrative tribunals. It was opined, that malady could be remedied by creating single umbrella organization, to ensure independence of members of such tribunals, and to provide funds for fulfillment of their administrative requirements. Although determination of governmental organization, to discharge such role was left open, it was recommended, that it should preferably be vested with Law Department. With reference to controversies which arose before tribunals, it was held, that matters wherein interpretation of statutory provisions or rules, or where provisions of Constitution were expected to be construed, same would have to be determined by bench consisting of at least two Members, one of whom must be Judicial Member. Having found that provisions of Administrative Tribunals Act, had impinged on power of judicial review 189 Page 189 vested in High Court, clause (2)(d) of Article 323A and clause (3)(d) of Article 323B, to extent they excluded jurisdiction of High Courts and Supreme Court under Articles 226/227 and 32 of Constitution, were held to be unconstitutional. Likewise, exclusion of jurisdiction clauses in all other legislations enacted under aegis of Articles 323A and 323B, were also held to be unconstitutional. In view of above, it was concluded, that jurisdiction conferred upon High Court under Articles 226/227, and upon Supreme Court under Article 32 of Constitution, was part of inviolable basic structure of Constitution. Since said jurisdiction could not be ousted, jurisdiction vested in tribunals would be deemed to be discharging supplemental role, in exercise of powers conferred by Articles 226/227 and 32 of Constitution. Although it was affirmed, that such tribunals would be deemed to be possessed of competence to test constitutional validity of statutory provisions and rules, it was provided, that all decisions of tribunals would be subject to scrutiny before division bench of High Court, within whose jurisdiction concerned tribunal had passed order. In above view of matter, it was held that tribunals would act like courts of first instance, in respect of areas of law, for which they had been constituted. After adjudication at hands of tribunals, it would be open for litigants to directly approach High Courts. Section 5(6) of Administrative Tribunals Act, interpreted in manner indicated above, was bestowed with validity. (vii) In Union of India v. Madras Bar Association case (supra), all conclusions/propositions narrated above, were reiterated and followed, 190 Page 190 whereupon 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 same independence, security and capacity, as courts which tribunals are mandated to substitute. Members of 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 adjudicatory process transferred to tribunals, did not involve any specialized skill, knowledge or expertise, provision for appointment of Technical Members (in addition to, or in substitution of Judicial Members) would constitute clear case of delusion and encroachment upon independence of judiciary, and rule of law . stature of members, who would constitute tribunal, would depend on jurisdiction which was being transferred to tribunal. In other words, if jurisdiction of High Court was transferred to tribunal, stature of members of newly constituted tribunal, should be possessed of qualifications akin to judges of High Court. Whereas in case, jurisdiction and functions sought to be transferred were being exercised/performed by District Judges, Members appointed to tribunal should be possessed of equivalent qualifications and commensurate stature of District Judges. conditions of service of members should be such, that they are in position 191 Page 191 to discharge their duties in independent and impartial manner. 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. functioning of tribunals, their infrastructure and responsibility of fulfilling their administrative requirements ought to be assigned to Ministry of Law and Justice. Neither tribunals nor their members, should be required to seek any facilities from parent ministries or department concerned. Even though legislature can reorganize jurisdiction of judicial tribunals, and can prescribe qualifications/eligibility of members thereof, same would be subject to judicial review wherein it would be open to court to hold, that tribunalization would adversely affect adjudicatory standards, whereupon it would be open to court to interfere therewith. Such exercise would naturally be, part of checks and balances measures, conferred by Constitution on judiciary, to maintain rule of separation of powers to prevent any encroachment by legislature or executive. 64. position of law summarized in foregoing paragraph constitutes declaration on concept of basic structure , with reference to concepts of separation of powers , rule of law , and judicial review . Based on conclusions summarized above, it will be possible for us to answer first issue projected before us, namely, whether judicial review is part of basic structure of Constitution. answer has inevitably to be in affirmative. From above determination, petitioners would like us to further conclude, 192 Page 192 that power of judicial review stands breached with promulgation of NTT Act. This Court in Minerva Mills Ltd. case (supra) held, that it should not be taken, that effective alternative institutional mechanism or arrangement for judicial review could not be made by Parliament. same position was reiterated in S.P. Sampath Kumar case (supra), namely, that judicial review was integral part of basic structure of Constitution. All same it was held, that Parliament was competent to amend Constitution, and substitute in place of High Court, another alternative institutional mechanism (court or tribunal). It would be pertinent to mention, that in so concluding, this Court added forewarning, that alternative institutional mechanism set up by Parliament through amendment, had to be no less effective than High Court itself. In L. Chandra Kumar case (supra), even though this Court held that power of judicial review over legislative action vested in High Courts, was part of basic structure , it went on to conclude that ordinarily power of High Courts to test constitutional validity of legislations could never be ousted. All same it was held, that powers vested in High Courts to exercise judicial superintendence over decisions of all courts and tribunals within their respective jurisdictions, was also part of basic structure of Constitution. position that Parliament had power to amend Constitution, and to create court/tribunal to discharge functions which High Court was discharging, was reiterated, in Union of India v. Madras Bar Association case (supra). It was concluded, that Parliament was competent to enact law, transferring jurisdiction exercised by High Courts, in regard to 193 Page 193 any specified subject, to any court/tribunal. But it was clarified, that Parliament could not transfer power vested in High Courts, by Constitution itself. We therefore have no hesitation in concluding, that appellate powers vested in High Court under different statutory provisions, can definitely be transferred from High Court to other courts/tribunals, subject to satisfaction of norms declared by this Court. Herein jurisdiction transferred by NTT Act was with regard to specified subjects under tax related statutes. That, in our opinion, would be permissible in terms of position expressed above. Has NTT Act transferred any power vested in courts by Constitution? answer is in negative. power of judicial review vested in High Court under Articles 226 and 227 of Constitution, has remained intact. This aspect of matter, has substantial bearing, to issue in hand. And will also lead to some important inferences. Therefore, it must never be overlooked, that since power of judicial review exercised by High Court under Articles 226 and 227 of Constitution has remained unaltered, power vested in High Courts to exercise judicial superintendence over benches of NTT within their respective jurisdiction, has been consciously preserved. This position was confirmed by learned Attorney General for India, during course of hearing. Since above jurisdiction of High Court has not been ousted, NTT will be deemed to be discharging supplemental role, rather than substitutional role. In above view of matter, submission that NTT Act violates basic structure of Constitution, cannot be acquiesced to. 194 Page 194 65. Even though we have declined to accept contention advanced on behalf of petitioners, premised on basic structure theory, we feel it is still essential for us, to deal with submission advanced on behalf of respondents in response. We may first record contention advanced on behalf of respondents. It was contended, that legislation (not being amendment to Constitution), enacted in consonance of provisions of Constitution, on subject within realm of concerned legislature, cannot be assailed on ground that it violates basic structure of Constitution. For present controversy, respondents had placed reliance on Articles 245 and 246 of Constitution, as also, on entries 77 to 79, 82 to 84, 95 and 97 of Union List of Seventh Schedule, and on entries 11A and 46 of Concurrent List of Seventh Schedule. Based thereon it was asserted, that Parliament was competent to enact NTT Act. For examining instant contention, let us presume it is so. Having accepted above, our consideration is as follows. Constitution regulates manner of governance in substantially minute detail. It is fountainhead distributing power, for such governance. Constitution vests power of legislation at Centre, with Lok Sabha and Rajya Sabha, and in States with State Legislative Assemblies (and in some States, State Legislative Councils, as well). instant legislative power is regulated by Part XI of Constitution. submission advanced at hands of learned counsel for respondents, insofar as instant aspect of matter is concerned, is premised on assertion that NTT Act has been enacted strictly in 195 Page 195 consonance with procedure depicted in Part XI of Constitution. It is also contention of learned counsel for respondents, that said power has been exercised strictly in consonance with subject on which Parliament is authorized to legislate. Whilst dealing with instant submission advanced at hands of learned counsel for respondents, all that needs to be stated is, that legislative power conferred under Part XI of Constitution has one overall exception, which undoubtedly is, that basic structure of Constitution, cannot be infringed, no matter what. On instant aspect, some relevant judgments, rendered by constitutional benches of this Court, have been cited hereinabove. It seems to us, that there is fine difference in what petitioners contend, and what respondents seek to project. submission advanced at hands of learned counsel for petitioners does not pertain to lack of jurisdiction or inappropriate exercise of jurisdiction. submission advanced at hands of learned counsel for petitioners pointedly is, that it is impermissible to legislate in manner as would violate basic structure of Constitution. This Court has repeatedly held, that amendment to provisions of Constitution, would not be sustainable if it violated basic structure of Constitution, even though amendment had been carried out, by following procedure contemplated under Part XI of Constitution. This leads to determination, that basic structure is inviolable. In our view, same would apply to all other legislations (other than amendments to Constitution) as well, even though legislation had been enacted by following prescribed procedure, and was 196 Page 196 within domain of enacting legislature, any infringement to basic structure would be unacceptable. Such submissions advanced at hands of learned counsel for respondents are, therefore, liable to be disallowed. And are accordingly declined. II. Whether transfer of adjudicatory functions vested in High Court to NTT violates recognized constitutional conventions? III. Whether while transferring jurisdiction to newly created court/tribunal, it is essential to maintain standards and stature of court replaced? 66. In addition to determination on adjudication of present controversy on concept of basic structure, instant matter calls for determination on sustainability of NTT Act, from other perspectives also. We shall now advert to alternative contentions. First and foremost, it was submission of learned counsel for petitioners, that it is impermissible for legislature to abrogate/divest core judicial appellate functions, specially, functions traditionally vested in superior court, to quasi judicial authority devoid of essential ingredients of superior court. instant submission was premised on foundation, that such action is constitutionally impermissible. 67. In order to determine whether or not appellate functions which have now been vested with NTT, constituted core judicial appellate function traditionally vested with jurisdictional High Courts, we have recorded under heading Historical Perspective , legislative details, pertaining to Income Tax Act, Customs Act and Excise Act. We had to do so, for that was only manner to deal with instant aspect of controversy. perusal of historical perspective reveals, that as against initial assessment of 197 Page 197 tax/duty liability, first forum for challenge has traditionally been with executive appellate adjudicatory authority. Legislative details reveal, that for some time there was power of reference, exercisable on questions of law . adjudication thereof rested with jurisdictional High Courts. second appellate remedy has always been before quasi-judicial appellate authority, styled as Appellate Tribunal. Across board, under all enactments which are relevant for present controversy, proceedings before Appellate Tribunal have been legislatively described as judicial proceedings . It is, therefore apparent, that right from beginning, clear legislative understanding was, that from stage of proceedings before Appellate Tribunal, proceedings were of nature of judicial proceedings . Again across board, under all enactments, relevant for present controversy, questions of law were originally left to be adjudicated by jurisdictional High Courts. reference jurisdiction, was substituted in all enactments, and converted into appellate jurisdiction. instant appellate jurisdiction was vested with jurisdictional High Court. Under Income Tax Act, 1961, Section 260A, provided appellate remedy from order passed by Appellate Tribunal, to jurisdictional High Court. Similarly Section 129A of Customs Act, 1962, and Section 35G of Central Excise Act, 1944, provided for appellate remedy from concerned Appellate Tribunal to High Court. jurisdictional High Court would hear appeals on questions of law, against orders passed by Appellate Tribunals. It is, therefore apparent, that right from beginning, well before promulgation of Constitution, core 198 Page 198 judicial appellate functions, for adjudication of tax related disputes, were vested with jurisdictional High Courts. High Courts have traditionally, been exercising jurisdiction to determine questions of law, under all above tax legislations. In this view of matter, it is not possible for us to conclude, that it was not justified for learned counsel for petitioners to contend, that core judicial appellate function in tax matters, on questions of law, has uninterruptedly been vested with jurisdictional High Courts. 68. Before we proceed with matter further, it is necessary to keep in mind composition of adjudicatory authorities which have historically dealt with matters arising out of tax laws. First, we shall deal with composition of Appellate Tribunals. All Appellate Tribunals which are relevant for present controversy were essentially comprised of Judicial Members, besides Accountant or Technical Members. To qualify for appointment as Judicial Member, it was essential that incumbent had held judicial office in India for period of 10 years, or had practiced as Advocate for similar period. It is above qualification, which enabled enactments to provide, by fiction of law, that all said Appellate Tribunals were discharging judicial proceedings . next stage of appellate determination, has been traditionally vested with High Courts. income-tax legislation, customs legislation, as well as, central excise legislation uniformly provided, that in exercise of its appellate jurisdiction, jurisdictional High Court would adjudicate appeals arising out of orders passed by respective Appellate Tribunals. said appeals were by legislative determination, to be heard by benches comprising of at least two 199 Page 199 judges of High Court. Adjudication at hands of bench consisting of at least two judges, by itself is indicative of legal complications, insofar as appellate adjudicatory role, of jurisdictional High Court was concerned. It would, therefore, not be incorrect to conclude, by accepting submissions advanced at hands of learned counsel for petitioners, that before and after promulgation of Constitution, till enactment of NTT Act, all legislative provisions vested appellate power of adjudication, arising out of Income Tax Act, Customs Act and Excise Act, on questions of law, with jurisdictional High Courts. 69. Having recorded above conclusion, next issue to be determined is whether adjudication of disputes arising out of provisions under reference, must remain within realm of jurisdictional High Courts? instant proposition has two perspectives. Firstly, whether constitutional interpretation in manner accepted world over (details whereof have been narrated by us under heading Issues canvassed on behalf of petitioners , under sub-title second contention ), would be constitutional mandate, for appellate jurisdiction pertaining to tax matters, to remain with High Court? Secondly, whether express provisions of Constitution mandate, that tax issues should be decided by concerned jurisdictional High Court? 70. We shall first deal with first perspective, namely, whether constitutional interpretation in manner accepted world over, would be constitutional mandate for appellate jurisdiction on tax matters, to remain with jurisdictional 200 Page 200 High Court. Insofar as instant aspect of matter is concerned, reliance was placed on judgments emerging out of Constitutions of Jamaica, Ceylon, Australia and Canada, rendered either by Privy Council or highest Courts of concerned countries. contention of learned counsel for petitioners was, that constitutions of above countries were based on Westminster model. It was further pointed out, that Indian Constitution was also based on Westminster model, and that, instant position stands recognized in 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 above judgment hereinabove, wherein it is so recorded. It is accordingly contention of learned counsel for petitioners, that judgments relied upon by petitioners on instant aspect of matter, would be fully applicable to controversy in hand. Under constitutional convention, adverted to in judgments referred to on behalf of petitioners, it was submitted, that judicial power which rested with definite courts at time of enactment of constitutions based on Westminster model, had to remain with same courts, even after constitutions had become effective and operational. Furthermore, it was submitted, that judicial power had to be exercised in same manner as before, i.e., whether by judge sitting singly, or with other judges. And therefore it was asserted, that on constitutional conventions well recognized world over, appellate jurisdiction in respect of tax matters, would have to remain with jurisdictional High Courts, and would have to be determined by bench of at least two judges of High 201 Page 201 Court, as was position before enactment of Constitution, and, as has been position thereafter, till promulgation of NTT Act. 71. We have given our thoughtful consideration to submission advanced at hands of learned counsel for petitioners, insofar as first perspective is concerned. We find substance in submission advanced at hands of learned counsel for petitioners, but not exactly in format suggested by learned counsel. closer examination of judgments relied upon lead us to conclusion, that in every new constitution, which makes separate provisions for legislature, executive and judiciary, it is taken as acknowledged/conceded, that basic principle of separation of powers would apply. And that, three wings of governance would operate in their assigned domain/province. power of discharging judicial functions, which was exercised by members of higher judiciary, at time when constitution came into force, should ordinarily remain with court, which exercised said jurisdiction, at time of promulgation of new constitution. But judicial power could be allowed to be exercised by analogous/similar court/tribunal, with different name. However, by virtue of constitutional convention, while constituting analogous court/tribunal, it will have to be ensured, that appointment and security of tenure of judges of that court would be same, as of court sought to be substituted. This was express conclusion drawn in Hinds case (supra). In Hinds case it was acknowledged, that Parliament was not precluded from establishing court under new name, to exercise jurisdiction that was being exercised by members of higher 202 Page 202 judiciary, at time when constitution came into force. But when that was done, it was critical to ensure, that persons appointed to be members of such court/tribunal, should be appointed in same manner, and should be entitled to same security of tenure, as holder of judicial office, at time when constitution came into force. Even in treatise Constitutional Law of Canada by Peter W. Hogg, it was observed; if province invested tribunal with jurisdiction of kind, which ought to properly belong to 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 superior, district or county Court, satisfy requirements and standards of substituted court. This would mean, that newly constituted court/tribunal will be deemed to be invalidly constituted, till its members are appointed in same manner, and till its members are entitled to same conditions of service, as were available to judges of court sought to be substituted. In judgments under reference it has also been concluded, that breach of above constitutional convention could not be excused by good intention (by which legislative power had been exercised, to enact given law). We are satisfied, that aforesaid exposition of law, is in consonance with position expressed by this Court, while dealing with concepts of separation of powers , rule of law and judicial review . In this behalf, reference may be made to 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, court to which 203 Page 203 power of adjudication is transferred, must be endured with salient characteristics, which were possessed by court from which adjudicatory power has been transferred. In recording our conclusions on submission advanced as first perspective, we may only state, that our conclusion is exactly same as was drawn by us while examining 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. answer is, that such transfer is permissible. But whenever there is such transfer, all conventions/customs/practices of court sought to be replaced, have to be incorporated in court/tribunal created. newly created court/tribunal would have to be established, in consonance with salient characteristics and standards of court which is sought to be substituted. 72. Now we shall deal with second perspective, namely, whether provisions of Indian Constitution itself mandate, that tax issues at appellate level, must be heard by concerned jurisdictional High Court. Insofar as instant aspect of matter is concerned, learned counsel for petitioners placed reliance on Articles 50 and 225 of Constitution. Article 50 of Constitution was relied upon to demonstrate intent of framers of Constitution, namely, that they wished to ensure exclusivity and separation of judiciary, from executive. It is not necessary for us to deal with instant aspect of matter, for reason that, in judgments 204 Page 204 rendered by this Court which have been referred to by us hereinabove, issue has already been debated with reference to Article 50 of Constitution. 73. other provision relied upon by learned counsel for petitioners is Article 225 of Constitution. tenor of submission advanced by learned counsel for petitioners, has been recorded by us while dealing with second contention (advanced on behalf of petitioners). same may be adverted to. There can be no doubt whatsoever, that Article 225 of Constitution does expressly provide, that jurisdiction of existing High Courts and respective powers of judges thereof shall be same as immediately before commencement of Constitution . It is also apparent, that proviso thereto expressly mandates, that any restriction to which exercise of original jurisdiction by any of High Courts with respect to any matter concerning revenue or concerning any act ordered or done in collection thereof was subject immediately before commencement of Constitution shall no longer apply to exercise of such jurisdiction . Insofar as contention emerging out of proviso is concerned, it needs to be pointed out, that same pertains to exercise of original jurisdiction by any of High Courts . It is, therefore apparent, that issue in hand, namely, appellate jurisdiction vested with jurisdictional High Courts, under provisions of Income Tax Act, Customs Act and Excise Act, has no bearing to proviso under reference. We may therefore conclude by recording, that instant submission advanced on behalf of petitioners, is not made out from Article 225 of Constitution. 205 Page 205 IV. Whether Company Secretaries should be allowed to appear before NTT to represent party to appeal in same fashion, and on parity with, Accountants? V. Whether Section 13(1) of NTT Act insofar as it allows Accountants to represent party to appeal before NTT is valid? 74. We may first take up for consideration, Writ Petition (Civil) no. 621 of 2007. same has been filed by members of Institute of Company Secretaries of India, seeking right to appear before NTT, as representatives of party to appeal. Respondent no. 5 in said Writ Petition, is Institute of Chartered Accountants. It has entered appearance and canvassed that claim of Company Secretaries and Chartered Accountants is not comparable. While indicating permissibility of Chartered Accountants to represent party to appeal before NTT on account of their special acumen, their claim is, that this issue raised on behalf of Company Secretaries is matter of policy. And therefore, it would not be open to this Court to bestow, on account of parity, right to represent party to appeal, before NTT, on Company Secretaries. 75. While examining above contention, we will indeed be dealing with Section 13 of NTT Act, which has already been extracted while recording submissions advanced on behalf of petitioners, with reference to fourth contention. perusal of said provision reveals, that party to appeal (other than 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 NTT. pointed submission advanced on behalf of Institute of Chartered Accountants of India was, that under Section 13 of NTT Act, Chartered Accountants are entitled to appear 206 Page 206 before NTT, because of their recognized acumen. It was submitted, that it is prerogative of legislature and matter of policy, to determine persons who are entitled to appear before NTT. It was pointed out, that courts should not ordinarily interfere in such policy matters. It is therefore, that learned counsel for Institute of Chartered Accountants of India, has placed reliance on 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 following observations:- 2. propriety and validity of public notice issued by Director, Health Services, Delhi Administration indicating that Indian Medicine Central Council had recognized Ayurveda Ratna and Vaid Visharada degrees awarded by Hindi Sahitya Sammelan, Prayag, Allahabad only up to 1967 and certificate of Ayurveda Ratna and Vaid Visharada given by said organization after 1967 not being recognized under said Act, registration obtained by any person as medical practitioner on 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 said public notice that no Indian university or Board conducts one year s course for giving bachelor s degree in Ayurvedic Medicine or through correspondence course no M.D. Degree in Ayurveda was conferred by any university or Board. public at large was cautioned by said public notice published in 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 Indian Medicine Central Council Act, 1970, in our view, only envisages that where before enactment of said Indian Medicine Central Council Act, 1970 on basis of requisite qualification which was then recognized, person got himself registered as medical practitioner in disciplines contemplated under said Act or in 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, right of such person to practise in discipline concerned including privileges of registered medical practitioner stood protected even though such practitioner did not possess requisite qualification under said Act of 1970. It may be indicated that such view of ours is reflected from Objects and Reasons indicated for introducing 207 Page 207 sub-section (3) of Section 17 in Act. In Objects and Reasons, it was mentioned: [T]he Committee are of opinion that existing rights and privileges of practitioners of Indian Medicine should be given adequate safeguards. Committee, in order to achieve this object, have added three new paragraphs to sub-section (3) of clause protecting (i) rights to practise of those practitioners of Indian Medicine who may not, under proposed legislation, possess recognized qualification subject to condition that they are already enrolled on State Register of Indian Medicine on date of commencement of this Act, (ii) privileges conferred on practitioners of Indian Medicine enrolled on State Register, under any law in force in that State, and (iii) right to practise in State of those practitioners who have been practising Indian Medicine in that State for not less than five years where no register of Indian Medicine was maintained earlier. As it is not case of any of writ petitioners that they had acquired degree in between 1957 (sic 1967) and 1970 or on date of enforcement of provisions of Section 17(2) of said Act and got themselves registered or acquired right to be registered, there is no question of getting protection under sub-section (3) of Section 17 of said Act. It is to be stated here that there is also no challenge as to validity of said Central Act, 1970. decision of Delhi High Court therefore cannot be assailed by appellants. We may indicate here that it has been submitted by Mr. Mehta and also by Ms. Sona Khan appearing in appeal arising out of Special Leave Petition No. 6167 of 1993 that proper consideration had not been given to standard of education imparted by said Hindi Sahitya Sammelan, Prayag and expertise acquired by holders of aforesaid degrees awarded by said institution. In any event, when proper medical facilities have not been made available to large number of poorer sections of society, ban imposed on practitioners like writ petitioners rendering useful service to needy and poor people was wholly unjustified. It is not necessary for this Court to consider such submissions because same remains in realm of policy decision of other constitutional functionaries. We may also indicate here that what constitutes proper education and requisite expertise for practitioner in Indian Medicine, must be left to proper authority having requisite knowledge in subject. As decision of Delhi High Court is justified on face of legal position flowing from 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. 208 Page 208 Reliance was also placed on State of Rajasthan v. Lata Arun, (2002) 6 SCC 252, wherein it was held as under:- 4. question which arises for determination in this case is whether respondent had eligibility qualification for admission in General Nursing and Midwifery and Staff Nurse Course (hereinafter referred to as Nursing Course ) commencing in year 1990. Director, Medical and Health Services had invited applications by 15-12-1989 from eligible candidates for admission in Nursing Course to be started from January 1990. It was stated in notification that candidates should have passed first year of three years degree course (TDC) or 10+2; and that candidates with Science subjects (Biology, Chemistry, Physics) will be given preference. During period, Indian Nursing Council had issued set of Syllabi and Regulations for courses in General Nursing and Midwifery in which prescribed minimum educational qualification for all candidates was 12th class-pass or its equivalent preferably with Science subjects. xxx xxx xxx 10. points involved in case are twofold: one relating to prescription of minimum educational qualification for admission to course and other relating to recognition of Madhyama Certificate issued by Hindi Sahitya Sammelan, Allahabad as equivalent to or higher than +2 or 1st year of TDC for purpose of admission. Both these points relate to matters in realm of policy decision to be taken by State Government or authority vested with power under any statute. It is not for courts to determine whether particular educational qualification possessed by candidate should or should not be recognized as equivalent to prescribed qualification in case. That is not to say that such matters are not justiciable. In appropriate case court can examine whether policy decision or administrative order dealing with matter is based on fair, rational and reasonable ground; whether decision has been taken on consideration of relevant aspects of matter; whether exercise of power is obtained with mala fide intention; whether decision serves purpose of giving proper training to candidates admitted or it is based on irrelevant and irrational considerations or intended to benefit individual or group of candidates. 76. In addition to above submissions it was contended, that Chartered Accountants are permitted to appear before large number of tribunals/fora. Illustratively it was submitted, that under Section 288 of Income Tax Act, 1961, read with Rule 50 of Income Tax Rules, 1962, Chartered Accountants 209 Page 209 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 Central Excise Act, 1944. They are also permitted to appear in matters arising out of Customs Act, 1962 (wherefor reliance was placed on Section 146A of Customs Act, 1962, read with Rule 9(a), Customs (Appeals) Rules, 1982). Besides aforesaid provisions, it was contended, that Chartered Accountants were entitled to appear before various tribunals/fora under different statutory provisions, such as, under Securities and Exchange Board of India Act, 1992, Securities Contracts (Regulation) Act, 1956, Telecom Regulatory Authority of India Act, 1991, Companies Act, 2013, Company Law Board Regulations, 1991, Competition (Amendment) Act, 2007, and Special Economic Zone Rules, 2006. We were informed, that Chartered Accountants were also entitled to appear before 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 provisions referred to hereinabove, there should be no difficulty in allowing them to appear before NTT, as also, to consider them eligible for being appointed as Members of NTT. It was therefore asserted, that Section 13 of NTT Act rightly permitted Chartered Accountants to represent party to appeal before NTT. submission on behalf of Institute of Chartered Accountants was, that Company Secretaries were not comparable with them, and therefore, as matter of policy, they had no legitimate claim for being allowed to represent party before NTT. 210 Page 210 77. It is pertinent to record, that during course of hearing we had required learned counsel representing petitioners, to file 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 compilation on behalf of 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. compilation brought to our notice is summarized hereunder:- I: Hindu Law: Sl. Name and Allied subject/law adjudicated upon No citation of case 1 Sri Sri Sridhar Hindu idol is juristic entity that is given status of Jiew v. I.T.O. human being capable of having property and it can be called (1967) 63 ITR individual . 192 (Cal) 2 C.E.D. v. Alladi Though widow cannot be coparcener, she has Kuppuswamy copercenary interests and she is also member of (1977) 108 ITR coparcenary by virtue of rights conferred by Hindu 439 (SC) Women s Rights to Property Act, 1937. 3 Narendranath v. There is no distinction between property obtained by C.W.T. member of HUF on partition and property that belongs (1969) 74 ITR to member as sole surviving coparcener by right of 190 (SC) survivorship. 4 Goli Eswariah v. unilateral declaration of Hindu coparcener, whereby he C.G.T. throws his self-acquired property into common stock of (1970) 76 ITR joint family property, does not amount to transfer and, 675 (SC) therefore, such act does not constitute gift. 5 C.I.T. v. Sandhya Supreme Court held that wife and daughters Rani Dutta inheriting property of male Hindu do not form HUF (2001) 248 ITR and that they could not also form such family by agreement 201 (SC) among themselves by throwing their respective inherited shares in hotchpot. 6 C.I.T. v. Bharat gift of property of HUF to members of family is Prasad Anshu not void but voidable. 211 Page 211 Kumar (2001) 249 ITR 755 (Delhi) 7 C.W.T. v. M.A.R. Even fact that wife had given up her right to Rajkumar maintenance does not mean that she is no longer member (1997) 226 ITR of family of her husband. 804 (AP) 8 C.G.T. v. B.S. amount spent by Hindu father on his daughter s Apparao marriage is treated as maintenance (and not gift) under (2001) 248 ITR Hindu Adoptions and Maintenance Act, 1956. 103 (AP) 9 Gowli Buddanna sole surviving coparcener can constitute Hindu v. C.I.T. undivided family. 60 ITR 293 (SC) 10 C.W.T. v. separate property of father inherited upon intestacy Chander Sen by son is to be treated as son s separate property 161 ITR 370(SC) and not as property of his joint family. 11 C.I.T. v. Radhe If on partition of family, separate shares are allotted to Shyam Agrawal karta, his wife and children, existence of Hindu 230 ITR 21 undivided family comes to end, and share of (Patna) erstwhile karta becomes his separate property. 12 Kaniram joint Hindu family, as such, cannot be partner in firm. Hazarimull v. However, it may enter into partnership through its karta. C.I.T. 27 ITR 294 (Cal) 13 C.I.T. v. Bainik female member, as member of joint family, can Industries become partner in firm as representative of her 119 ITR 282 Pat) family. 14 C.G.T. v. Getti Unequal partition amongst coparceners in HUF does not Chettiar amount to gift. 82 ITR 599 (SC) 15 Paramanand In reunion of HUF, all assets originally partitioned need Bajaj v. C.I.T. not be pooled back. 135 ITR 673(Kar) 16 Pushpa Devi v. scope of theory of blending in Hindu law was C.I.T. discussed in detail. 109 ITR 730(SC) 17 C.I.T. v. B. Indira Gift deed executed by assessee in favour of her Devi daughter to secure her future after marriage was not due to 238 ITR 846 any legal obligation enjoined upon assessee by virtue of (Ker) Section 20 of Hindu Adoptions and Maintenance Act, but for other considerations. Therefore, gift being voluntary within meaning of Section 2(xii) of Gift Tax Act, 1964, was liable to tax. 212 Page 212 18 Sathyaprana Meaning of coparcenary , HUF and survivorship Manjunatha discussed. Gowda v. C.E.D. 227 ITR 130 (SC) 19 C.I.T. v. Income from shares held by members of HUF cannot be Shakuntala termed as income of HUF. (1961) 43 ITR 352 (SC) 20 C.W.T. v. Late R. Divided member marrying Christian under Special Sridharan Marriage Act, 1956. HUF way of living practiced by divided 104 ITR 436 member and son continue to be HUF meaning of word (SC) Hindu discussed. II: Company Law: Sl. Name and Allied subject/law adjudicated upon No citation of case 1 C.I.T. v. Light private company becoming public company by virtue of Publications Ltd. provisions of Section 43A of Companies Act, 1956 (2001) 251 ITR may still not become company in which public are 0120 (Guj.) substantially interested due to restriction imposed on its shareholders upon transferability of its shares to other members of public. 2 C.I.T. v. Sunaero Presumption that registered shareholder holds share in Ltd. his own right and any claim that shares were being held as (2012) 345 ITR nominee has to be proved by person claiming so. 0163 (Del) 3 Rajasthan Shares of single type issued by 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 association of persons for v. C.I.T. carrying on business of partnership and, in law, firm AIR 1955 SC 74 name is compendious method of describing partners. Such is, however, not case of company which stands as separate juristic entity distinct from shareholders. (ii) Shareholders have no right in property of company. They are only entitled to dividends and share in surplus, if any, after dissolution of company. 5 Juggilal Although company is separate legal entity, in certain Kamlapat v. exceptional cases, Court can lift veil of corporate C.I.T. entity and have regard to economic realities behind AIR 1969 SC legal fa ade. 932; C.I.T. v. Poulose and 213 Page 213 Mathen (Pvt.) Ltd. (1999) 236 ITR 416 (Ker) 6 C.G.T. v. Indo Valuation of shares-reasonable valuation has to be accepted Traders & unless valuation shocks conscience of court. Agencies (Madras) Ltd. 131 ITR 313 (Mad) 7 Vodafone In company law, there is no transfer of share when there is International transfer of underlying assets. Various issues of lifting of Holdings BV v. corporate veil discussed. Also discussed, briefly, UoI enforceability of shareholders agreements. 341 ITR 1 (SC) 8 C.I.T. v. Suleman firm of 20 major partners and 3 minor partners does not Khan and contravene Section 11(2) of Companies Act, 1956 since Mahaboob Khan minors are not to be reckoned as partners for purposes and Co. of calculation. (2002) 257 ITR 0170 (AP) 9 Marshall Sons Amalgamation date of transfer/ date of amalgamation / and Co. (India) transfer is date specified in scheme as transfer Ltd. v. I.T.O. date. (1997) 223 ITR 809 (SC) 10 C.I.T. v. Mrs. a) On amalgamation there is extinguishment of rights Grace Collis and and, therefore, there is transfer. others b) amalgamation scheme sanctioned by court 248 ITR 323(SC) would be instrument within meaning of Section 2(1) of Bombay Stamp Act, 1958, and liable for stamp duty. document creating or transferring right is instrument. 11 Anarkali Redemption of preference shares amounts to transfer and is Sarabhai v. C.I.T. liable to capital gains. 227 ITR 260(SC) 12 C.I.T. v. Artex Gains arising out of slump sale of business as going Manufacturing concern is liable to tax under Section 41(2) on itemized Co. basis if slump sale is determined on valuation of each asset/ 227 ITR 260(SC) liability. 13 C.I.T. v. Gold Valuation of bonus shares correct method to apply in Mohore cases where bonus shares rank pari passu is to take Investment cost of original shares and to spread it over all Company Ltd. original as well as bonus shares and to find out (1970) 78 ITR 16 average price of all shares. (SC) 214 Page 214 14 Hansur Plywood When shareholder gets bonus share value of Works Ltd. v. original share held by him goes down. In effect, C.I.T. shareholder gets two shares instead of one share held (1998) 229 ITR by him and market value as well as intrinsic value of 112 (SC) two shares put together will be same or nearly same as value of original share before bonus issue. 15 Shree Gopal Issuance of share takes place when entry of name of Paper Mills Ltd. v. subscriber or successful offerer is made in Register of C.I.T. Members. (1967) 64 ITR 233 (Cal) 16 Dalmia Though no cash is paid by shareholders for allotment of Investment Co. bonus shares, set-off for dividend which was due to Ltd. v. C.I.T. be paid to shareholder out of undistributed profits of (1961) 41 ITR company can be regarded as consideration for bonus 705 (Pat) shares. Therefore, real cost of bonus shares to shareholder/assessee is value of shares as shown in books of account of company. 17 Anarkali Redemption of preference shares is transfer and liable to Sarabhai v. C.I.T. capital gains. 227 ITR 260 (SC) 18 C.I.T. v. Artex Gains arising out of slump sale of business as going Manufacturing concern is liable to tax under Section 41(2) on itemized Co. basis if slump sale is determined on valuation of each 227 ITR 260 asset/liability. (SC) III: Mohammedan Law: Sl. Name and Allied subject/law adjudicated upon No citation of case 1 Trustees of gift was made to assessee by his father granting him Sahebzadi Oalia life estate and remainder to his children. Deed was held Kuslsum Trust v. to be void under Mohammedan law. It was held to be C.E.D. absolute gift. [1998] 233 ITR 434 (SC) 2 S.C.M. Principles of Mohammedan law regarding gift analyzed and Mohammed v. applied gift with limited estate not valid in Muslim law gift C.I.T. to be that of entire property though document only [1999] 235 ITR gave him limited right. 75 (Mad) 3 Ghiasuddin Babu Deferred dower on dissolution of marriage by death or Khan v. C.I.T. divorce is not contingent debt because one of two [1985] 153 ITR events is bound to happen. Wife cannot demand 215 Page 215 707 (AP) payment of deferred dower before event, but husband can pay even earlier. 4 Ziauddin Ahmed family arrangement is valid amongst Muslims. v. C.G.T. (1976) 102 ITR 253 (Gau) 5 C.I.T. v. Puthiya wakf cannot be partner, but mutawalli of wakf can Ponmanichintaka be. m Wakf, 44 ITR 172 (SC) 6 Ahmed G H Ariff Held, moment wakf is created all rights of property v. C.W.T. pass out of wakf and vest in Almighty Property is 76 ITR 471 (SC) term of widest import and subject to any limitation which context may require; it signifies every possible interest which person can clearly hold or enjoy. IV: Family Arrangement: Sl. Name and Allied subject/law adjudicated upon No citation of case 1 C.I.T. v. R. Even if party to settlement had no title but, under Ponnammal family arrangement, other party relinquishes all its claims (1987) 164 ITR or titles in favour of such person and acknowledges him to 706 (Mad) be sole owner, then antecedent title must be assumed and family arrangement will be upheld. 2 C.I.T. v. Shanti asset acquired by way of family arrangement to be Chandran considered as asset acquired on partition or other (2000) 241 ITR succession. 371 (Mad) V: Law of Partnership: Sl. Name and Allied subject/law adjudicated upon No citation of case 1 C.I.T. v. Asset of partnership firm transfer to partner by agreement Palaniappa not valid registered deed necessary. Enterprises (1998) 234 ITR 635 (Mad) 2 Saraladevi Contribution of capital by partner to firm constitutes Sarabhai v. C.I.T. transfer . (2001) 250 ITR 745 (Guj) 3 Sunil Conversion of exclusive interest into shared interest Siddharthabhai v. would amount to transfer and does not amount to C.I.T. conveyance by way of sale. 216 Page 216 (1985) 156 ITR 509 (SC) 4 C.I.T. v. S. Transaction of partner with firm, during subsistence Rajamani and of firm requires registered instrument, where Thangarajan transaction involves immovable property. Industries (2000) 241 ITR 668 (Mad) 5 Malabar Distribution of assets on dissolution is not transfer by Fisheries v. firm. C.I.T. (1979) 120 ITR 49 (SC) 6 C.I.T. v. Gupta Validity of partnership contribution of partner need not be Brothers cash or property. Skill and labor would constitute (1981) 131 ITR contribution. 492 (All) 7 C.G.T. v. Pranay Minors who were admitted to benefits of partnership Kr. Saharia could not claim their share of goodwill on reconstruction (1993) 204 ITR of firm by excluding minors and consequently they 78 (Gau) were not liable to gift-tax. 8 Beniram mere fact that two persons take commission agency Moolchand v. business jointly would not necessarily constitute C.I.T. partnership between them. 25 ITR 287 (All) 9 C.I.T. v. Chandra If partnership has been entered between two persons of Shekhar Pawan whom one is benamidar of other, there is no relation of Kumar partnership between two persons and one person 203 ITR 435 cannot constitute firm. (Raj.) 10 Addl. C.I.T. v. On retirement of partner from firm, there is no transfer Mohanbhai of interest of partner I assets thereof including Pamabhai goodwill. amount received is no assessable as capital 165 ITR 166 gains. This case law is valid even after amendment in (SC) Section 45(4) which talks of dissolution or otherwise transferred. 11 Manohardas It is open to partners to agree not to take whole of Kedarnath v. firm s profits for their personal use and to reserve part C.I.T. of firm s profits for charity. 25 ITR 287 (All) 12 C.I.T. v. Bharani partner has no interest in property of firm. In Pictures (Mad) case where there are two partners and one signs release (1981) 129 ITR deed to property in favour of other, it is in fact 244 transfer from partnership to that partner. 217 Page 217 VI: Territoriality : Sl. Name and Allied subject/law adjudicated upon No citation of case 1 C.I.T. v. H.E.H. case involved international law, municipal law and Mir Osman Ali convenant between Government of India and Nizam Bahadur of Hyderabad. Held, that Hyderabad State never acquired (1966) 59 ITR international personality under international law and its ruler 666 (SC) was not entitled to claim immunity from taxation of his income. 2 Electronics Legislative powers of Parliament to enact laws which have Corporation of provisions of having extra-territorial operation, is within India Ltd. v. competence of Parliament. But nexus with something in C.I.T. India or object relating to India necessary. 183 ITR 43 (SC) 3 G.V.K. Industries Parliament is constitutionally restricted from enacting Ltd. v. I.T.O. legislation with respect to extra-territorial aspects or causes 332 ITR 130 that do not have, nor are expected to have, any direct or (SC) indirect, tangible or intangible, impact on or effect in or consequences for (a) territory of India, or any part of India; or (b) 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 as Agarwal & Co. real and intimate relation between trading activity carried on 56 ITR 20 outside taxable territories and trading activity within territories, relation between two contributing to earning of income by nonresident in his trading activity. VII: Trusts/ Societies: Sl. Name and Allied subject/law adjudicated upon No citation of case 1 L.R. Patel Family Trustees of fixed (specific) trust cannot be considered as Trust v. I.T.O. association of persons or body of individuals. 262 ITR 520 (Bom) 2 C.I.T. v. Thanthi Discussion on Doctrine of Cypres as applicable to public Trust charities. (1982) 137 ITR 735 (Mad) 3 C.I.T. v. Power of trustees to contract on behalf of trust. Consent of Swashraya beneficiaries, if necessary. 286 ITR 265 (Guj) 4 Pandit v. C.I.T. number of ultimate beneficiaries of trust may increase 218 Page 218 (1972) 83 ITR or decrease by reason of death and other circumstances 136 (Bom) and interests of beneficiaries may, at relevant date, be only contingent and may become vested at much later date. If at that date, beneficiaries can be ascertained, Court must hold that beneficiaries are determinate and known and that assets are held by trustees for their benefit. 5 C.I.T. v. All India society registered under Societies Registration Act Hindu may be treated as association of persons. Mahasabha 140 ITR 748 (Del) 6 Tulsidas India Trust Act, 1882 trustee can also be beneficiary. Kilachand v. C.I.T. 42 ITR 1 (SC) 7 C.I.T. v. P. Trust may be created in favour of unborn person if it Bhandari satisfies conditions laid down in Section 13 of Transfer of (1984) 147 ITR Property Act, 1882, even though coming into existence of 500 (Mad) such beneficiary is uncertain. trust deed cannot be bad for uncertainty or vagueness. VIII: Contract Law : Sl. Name and Allied subject/law adjudicated upon No citation of case 1 C.I.T. v. Shantilal Nature of breach whether payment of damage results in Pvt. Ltd. settlement of original contract. (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 capital 60 ITR 11 (SC) restrictive convenant whether independent obligation whether compensation severable. 3 N. Breach of contract arbitration clause scope of Section 73 Sundareswaran liquidated and unliquidated damages no deduction can v. C.I.T. be claimed on potential liability for damages. (1997) 226 ITR 142 (Ker) IX: Transfer of Property Act : Sl. Name and Allied subject/law adjudicated upon No citation of case 1 Bansidhar Difference between sale with condition to re-purchase Sewabhogowan and mortgage by conditional sale. 219 Page 219 & Co. v. C.I.T. (1996) 222 ITR 16 (Gau) 2 Jagadishchandra Whether self-created mortgage or mortgage by previous n v. C.I.T. owner affects cost of acquisition. 227 ITR 240 (SC) Arunachalam v. C.I.T. 227 ITR 222(SC) 3 C.I.T. v. Brig. Though transfer cannot be made directly to unborn Kapil Mohan person, since under definition of transfer in Section 5 of 252 ITR 830 Transfer of Property Act, 1882, transfer is limited to (Del) living persons, transfer to unborn person can only be made by machinery of trusts. 4 C.G.T. v. Aloka If two registered documents re-executed by same Lata Sett person in respect of same property to two different (1991) 190 ITR persons at different times, one which was executed first 556 (Cal) has priority over other, although former was registered subsequent to latter. In other words, registration of document relates to date of its execution. 5 C.I.T. v. N.R. Whether 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 Allied subject/law adjudicated upon No citation of case 1 Anantram v. assignment of patent is transaction on capital C.I.T. account, but where person carries on trade in buying 5 ITR 511 (Lah) and selling of patents or habitually sells his own patents, or carries on vocation of inventor, sale proceeds would be business income. 2 Mysore Elect. V. If owner gets lump sum or periodic payment for C.I.T. imparting know-how to others, without substantially 114 ITR 865 reducing its value to himself, payment would ordinarily (Kar) be taxable as business income and ground that exploitation of know-how is in course of business and imparting is no more than business service of however special kind. 3 Janki v. C.I.T. Royalties paid by licensee for right to take away earth 220 Page 220 5 ITC 42 to be used for brick making or extracting saltpeter are income. fact that removal of soil itself is involved does not make case any different from cases of royalties on underground coal and quarries XI : Interpretation : Sl. Name and Allied subject/law adjudicated upon No citation of case 1 Prakash Nath SC ruled that interpretation should avoid danger of Khanna v. C.I.T. prior determination of meaning with one s own (2004) 266 ITR 1 preconceived notions and that court interprets law (SC) and cannot legislate. It referred to two other principles of construction, one relating to casus omissus and other requiring statute to be read as 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. Bhogilal Spes Successionis Transfer of Property Act dealt with. Mangilal 69 ITR 288 (Guj) 4 Ellerman Lines Discusses binding nature of CBDT s instructions on Ltd. v. C.I.T. revenue department. (1971) 82 ITR 913 (SC) C.I.T. v. K.P. Varghese (1981) 131 ITR 597 (SC) XII :Miscellaneous: Sl. Name and Allied subject/law adjudicated upon No citation 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 assessee met with accident and C.I.T. sank in high seas; compensation received from 172 ITR 744 insurance company was due to destruction of property, thus (Mad) no transfer as contemplated by Section 45 read with Section 48. insurance amount received cannot be considered as consideration and amount received not liable to capital gains tax. 3 Gangadhar Bera clarificatory notice is mere addendum to original v. Asst. C.I.T. notice and effect of clarification is always retrospective (2004) 190 ITR so it must relate to original notice. mere non-mention 221 Page 221 467 (Cal) of specific clause does not render notice bad in law. 4 C.I.T. v. Andhra expression charitable purpose is very wide in its Chamber of amplitude. object need not benefit whole mankind Commerce or even all persons living in particular country or province. 55 ITR 722 (SC) It is sufficient if intention is to benefit section of public as distinguished from specified individuals. 5 Deccan Wine & Explained difference between association of persons General Stores v. and body of individuals . C.I.T. (1977) 106 ITR 111 (AP) 6 C.I.T. v. What constitutes agricultural activity? Maharashtra There must be cultivation of land in strict sense of Sugar Mills Ltd. term meaning thereby tilling land. (1971) 82 ITR 452 (Bom) 7 I.T.O. v. M.K. Income Tax Appellate Tribunal has inherent power to grant Mohammed Kunhi 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 AOP. 546 (SC) Note law has been amended after 1.4.2002 9 C.I.T. v. H.H. Personal effects of ruler (heirloom jewellery) is not taxable Maharani Usha upon its sale for profit. Devi 231 ITR 793 (MP) 10 C.I.T. v. Bai When person re-values his capital asset and credits his Shrinbhai Kooka capital account there is no gain for purpose of taxation. 46 ITR 86 (SC) One cannot make loss or profit out of transactions with himself. 11 Dhakeswari Principles of Natural Justice set out almost for first time Cotton Mills v. locus classicus. C.I.T. (1954) 26 ITR 775 12 Chemsford Club Principle of mutuality applies to income from property. v. C.I.T. 243 ITR 89 (SC) C.I.T. v. Bankipur Club Ltd. 226 ITR 97 (SC) 222 Page 222 It is apparent from compilation extracted hereinabove, that Members of NTT would most definitely be confronted with 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. NTT besides aforesaid statutes, will not only have to interpret provisions of three statutes, out of which appeals will be heard by it, but will also have to examine challenge to vires of statutory amendments made in said provisions, from time to time. They will also have to determine in some cases, whether provisions relied upon had prospective or retrospective applicability. 78. Keeping in mind fact, that in terms of Section 15 of NTT Act, NTT would hear appeals from Income Tax Appellate Tribunal and Customs, Excise and Service Tax Appellate Tribunal (CESTAT) only on substantial questions of law , it is difficult for us to appreciate propriety of representation, on behalf of party to appeal, through either Chartered Accountants or Company Secretaries, before NTT. determination at hands of 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 realm of facts. We find it difficult to accept prayer made by Company Secretaries to 223 Page 223 allow them, to represent party to appeal before NTT. Even insofar as Chartered Accountants are concerned, we are constrained to hold that allowing them to appear on behalf of party before NTT, would be unacceptable in law. We accordingly reject claim of Company Secretaries, to represent party before NTT. Accordingly prayer made by Company Secretaries in Writ Petition (Civil) no. 621 of 2007 is hereby declined. While recording above conclusion, we simultaneously hold Section 13(1), insofar as it allows Chartered Accountants to represent party to appeal before NTT, as unconstitutional and unsustainable in law. VI. constitutional validity of Sections 5, 6, 7, 8 and 13 of NTT Act: 79. We shall now endeavour to deal with validity of some other individual provisions of NTT Act, based on parameters laid down by constitutional benches of this Court and on basis of recognized constitutional conventions referable to constitutions framed on Westminster model. While dealing with prayers made in Writ Petition (Civil) no. 621 of 2007, we have already dealt with Section 13 of NTT Act, and have held, same to be partly unconstitutional. We shall now proceed chronologically, and examine validity of Sections 5, 6, 7 and 8 of NTT Act. 80. We shall first examine validity of Section 5 of NTT Act. basis of challenge to above provision, has already been narrated by us while dealing with submissions advanced on behalf of petitioners, with reference to fourth contention. According to learned counsel for 224 Page 224 petitioners, Section 5(2) of NTT Act mandates, that NTT would ordinarily have its sittings in National Capital Territory of Delhi. According to petitioners, aforesaid mandate would deprive litigating assessee, convenience of approaching jurisdictional High Court in State, to which he belongs. assessee may belong to distant/remote State, in which eventuality, he would not merely have to suffer hardship of traveling long distance, but such travel would also entail uncalled for financial expense. Likewise, litigant assessee from far-flung State may find it extremely difficult and inconvenient to identify Advocate who would represent him before NTT, since same is mandated to be ordinarily located in National Capital Territory of Delhi. Even though we have expressed view, that it is open to Parliament to substitute appellate jurisdiction vested in jurisdictional High Courts and constitute courts/tribunals to exercise said jurisdiction, we are of view, that while vesting jurisdiction in alternative court/tribunal, it is imperative for legislature to ensure, that redress should be available, with same convenience and expediency, as it was prior to introduction of newly created court/tribunal. Thus viewed, mandate incorporated in Section 5(2) of NTT Act to effect that sittings of NTT would ordinarily be conducted in National Capital Territory of Delhi, would render remedy inefficacious, and thus unacceptable in law. instant aspect of matter was considered by this Court with reference to 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 225 Page 225 seat of every jurisdictional High Court. And if that was not possible, at least circuit bench required to be established at every place where aggrieved party could avail of his remedy. position on above issue, is no different in present controversy. For above reason, Section 5(2) of NTT Act is in clear breach of law declared by this Court. 81. One needs to also examine sub-sections (2), (3), (4) and (5) of Section 5 of NTT Act, with pointed reference to role of Central Government in determining sitting of benches of NTT. Central Government has been authorized to notify area in relation to which each bench would exercise jurisdiction, to determine constitution of benches, and finally, to exercise power of transfer of Members of one bench to another bench. One cannot lose sight of fact, that Central Government will be stakeholder in each and every appeal/case, which would be filed before NTT. It cannot, therefore, be appropriate to allow Central Government to play any role, with reference to places where benches would be set up, areas over which benches would exercise jurisdiction, composition and constitution of benches, as also, transfer of Members from one bench to another. It would be inappropriate for Central Government, to have any administrative dealings with NTT or its Members. In jurisdictional High Courts, such power is exercised exclusively by Chief Justice, in best interest of administration of justice. Allowing Central Government to participate in aforestated administrative functioning of NTT, in our view, would impinge upon independence and fairness of Members of NTT. For NTT 226 Page 226 Act to be valid, Chairperson and Members of NTT should be possessed of same independence and security, as judges of jurisdictional High Courts (which NTT is mandated to substitute). Vesting of power of determining jurisdiction, and postings of different Members, with Central Government, in our considered view, would undermine independence and fairness of Chairperson and Members of 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. unsuitable/disadvantageous Chairperson or Member could be easily moved to insignificant jurisdiction, or to inconvenient posting. This could be done to chastise him, to accept position he would not voluntarily accede to. We are, therefore of considered view, that Section 5 of NTT Act is not sustainable in law, as it does not ensure that 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 NTT Act are unconstitutional. 82. We shall now examine validity of Section 6 of NTT Act. above provision has already been extracted in earlier part of this judgment, while dealing with submissions advanced on behalf of petitioners, with reference to fourth contention. perusal of Section 6 reveals, that person would be qualified for appointment as Member, if he is or has been Member of Income Tax Appellate Tribunal or of Customs, Excise and Service Tax 227 Page 227 Appellate Tribunal for at least 5 years. While dealing with historical perspective, with reference to Income Tax legislation, Customs legislation, as also, Central Excise legislation, we have noticed eligibility of those who can be appointed as Members of Appellate Tribunals constituted under aforesaid legislations. Under Income Tax Act, person who has practiced in accountancy as Chartered Accountant (under Chartered Accountants Act, 1949) for period of 10 years, or has been Registered Accountant (or partly Registered Accountant, and partly Chartered Accountant) for period of 10 years, is eligible to be appointed as Accountant Member. Under Customs Act and Excise Act, person who has been member of Indian Customs and Central Excise Service (Group A), subject to condition, that such person has held 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 Technical Member. It is apparent from narration recorded hereinabove, that persons with above qualifications, who were appointed as Accountant Members or Technical Members in respective Appellate Tribunals, are also eligible for appointment as Members of NTT, subject to their having rendered specified years service as such. question to be determined is, whether persons with aforesaid qualifications, satisfy parameters of law declared by this Court, to be appointed as, Members of NTT? And do they satisfy recognized constitutional conventions? 83. This Court has declared position in this behalf in L. Chandra Kumar case (supra) and in Union of India v. Madras Bar Association case (supra), that 228 Page 228 Technical Members could be appointed to tribunals, where technical expertise is essential for disposal of matters, and not otherwise. It has also been held, that where adjudicatory process transferred to tribunal does not involve any specialized skill, knowledge or expertise, provision for appointment of non-Judicial Members (in addition to, or in substitution of Judicial Members), would constitute clear case of delusion and encroachment upon independence of judiciary , and 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 variety of subjects (unconnected to tax), in exercise of jurisdiction vested with NTT. That in our view would be tall order. arduous and intimidating asking. Since Chairperson/Members of NTT will be required to determine substantial questions of law , arising out of decisions of Appellate Tribunals, it is difficult to appreciate how 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 qualification of law, or may have no experience at all in practice of law, would be able to deal with substantial questions of law , for which alone, NTT has been constituted. 84. We have already noticed hereinabove, from data placed on record by learned counsel for petitioners, that 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 229 Page 229 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 above, Members of NTT will regularly have to interpret provisions of Income Tax Act, Customs Act and Excise Act. We are of considered opinion, that only person possessing professional qualification in law, with substantial experience in practice of law, will be in position to handle onerous responsibilities which Chairperson and Members of NTT will have to shoulder. 85. There seems to be no doubt, whatsoever, that Members of court/tribunal to which adjudicatory functions are transferred, must be manned by judges/members whose stature and qualifications are commensurate to court from which adjudicatory process has been transferred. This position is recognized world over. Constitutional conventions in respect of Jamaica, Ceylon, Australia and Canada, on this aspect of matter have been delineated above. opinion of Privy Council expressed by Lord Diplock in Hind case (supra), has been shown as being followed in countries which have constitutions on Westminster model. Indian Constitution is one such Constitution. position has been clearly recorded while interpreting constitutions framed on above model, namely, that even though legislature can transfer judicial power from traditional court, to analogous court/tribunal with different name, court/tribunal to which such power is transferred, should be possessed of same salient characteristics, standards and parameters, as court power whereof was being transferred. It is not possible for us to accept, that 230 Page 230 Accountant Members and Technical Members have stature and qualification possessed by judges of High Courts. 86. It was not disputed, that NTT has been created to handle matters which were earlier within appellate purview of jurisdictional High Courts. We are accordingly satisfied, that appointment of Accountant Members and Technical Members of Appellate Tribunals to NTT, would be in clear violation of constitutional conventions recognized by courts, world over. References on questions of law (under three legislative enactments in question), were by legislative mandate, required to be adjudicated by bench of at least two judges of jurisdictional High Court. When remedy of reference (before High Court) was converted into appellate remedy (under three legislative enactments in question), again by legislative mandate, appeal was to be heard by bench of at least two judges, of jurisdictional High Court. One cannot lose sight of fact, that hitherto before, issues which will vest in jurisdiction of NTT, were being decided by bench of at least two judges of High Court. onerous and complicated nature of adjudicatory process is clear. We may also simultaneously notice, that power of judicial review vested in High Courts under Articles 226 and 227 of Constitution has not been expressly taken away by NTT Act. During course of hearing, we had expressed our opinion in respect of power of judicial review vested in High Courts under Articles 226 and 227 of Constitution. In our view, power stood denuded, on account of fact that, Section 24 of NTT Act vested with aggrieved party, remedy of appeal 231 Page 231 against order passed by NTT, directly to Supreme Court. Section 24 aforementioned is being extracted hereunder: 24. Appeal to Supreme Court.- Any person including any department of Government aggrieved by any decision or order of National Tax Tribunal may file appeal to Supreme Court within sixty days from date of communication of decision or order of National Tax Tribunal to him: Provided that Supreme Court may, if it is satisfied that appellant was prevented by sufficient cause from filing appeal within said period, allow it to be filed within such time as it may deem fit. In view of aforestated appellate remedy, from order passed by NTT directly to Supreme Court, there would hardly be any occasion, to raise challenge on tax matter, arising out of provisions of Income Tax Act, Customs Act and Excise Act, before jurisdictional High Court. Even though learned Attorney General pointed out, that power of judicial review under Articles 226 and 227 of Constitution had not been taken away, yet he acknowledged, that there would be implicit limitations where such power would be exercisable. Therefore, all more, composition of NTT would have to be on same parameters as judges of High Courts. Since appointments of Chairperson/Members of NTT are not on parameters expressed hereinabove, same are unsustainable under declared law. perusal of Section 6 of NTT Act leaves no room for any doubt, that none of above parameters is satisfied insofar as appointment of Chairperson and other Members of NTT is concerned. In above view of matter, Section 6(2)(b) of NTT Act is liable to be declared unconstitutional. We declare it to be so. 232 Page 232 87. We would now deal with submissions advanced by learned counsel for petitioners in respect of Section 7 of NTT Act. It seems to us, that Section 7 has been styled in terms of decision rendered by this Court in L. Chandra Kumar case (supra). Following above judgment for determining manner of selection of Chairperson and Members of NTT, is obviously clear misunderstanding of legal position declared by this Court. It should not have been forgotten, that under provisions of Administrative Tribunals Act, 1985, which came up for consideration in L. Chandra Kumar case (supra), tribunals constituted under said Act, are to act like courts of first instance. All decisions of tribunal are amenable to challenge under Articles 226/227 of Constitution before, division bench of jurisdictional High Court. In such circumstances it is apparent, that tribunals under Administrative Tribunals Act, 1985, were subservient to jurisdictional High Courts. manner of selection, as suggested in L. Chandra Kumar case (supra) cannot therefore be adopted for tribunal of nature as NTT. Herein acknowledged position is, that NTT has been constituted as replacement of High Courts. NTT is, therefore, in real sense tribunal substituting High Courts. manner of appointment of Chairperson/Members to NTT will have to be, by same procedure (or by similar procedure), to that which is prevalent for appointment of judges of High Courts. Insofar as instant aspect of matter is concerned, above proposition was declared by this Court in Union of India v. Madras Bar Association case (supra), wherein it was held, that stature of Members who would constitute tribunal, would depend on jurisdiction 233 Page 233 which was being transferred to tribunal. Accordingly, if jurisdiction of High Courts is being transferred to NTT, stature of Members of tribunal had to be akin to that of judges of High Courts. So also conditions of service of its Chairperson/Members. And manner of their appointment and removal, including transfers. Including, tenure of their appointments. 88. Section 7 cannot even otherwise, be considered to be constitutionally valid, since it includes in process of selection and appointment of Chairperson and Members of NTT, Secretaries of Departments of Central Government. In this behalf, it would also be pertinent to mention, that interests of Central Government would be represented on one side, in every litigation before NTT. It is not possible to accept party to litigation, can participate in selection process, whereby Chairperson and Members of adjudicatory body are selected. This would also be violative of recognized constitutional convention recorded by Lord Diplock in Hinds case (supra), namely, that it would make mockery of constitution, if legislature could transfer jurisdiction previously exercisable by holders of judicial offices, to holders of new court/tribunal (to which some different name was attached) and to provide that persons holding new judicial offices, should not be appointed in manner and on terms prescribed for appointment of Members of judicature. For all reasons recorded hereinabove, we hereby declare Section 7 of NTT Act, as unconstitutional. 234 Page 234 89. Insofar as validity of Section 8 of NTT Act is concerned, it clearly emerges from perusal thereof, that Chairperson/Member is appointed to NTT, in first instance, for duration of 5 years. Such Chairperson/Member is eligible for reappointment, for further period of 5 years. We have no hesitation to accept submissions advanced at hands of learned counsel for petitioners, that provision for reappointment would itself have effect of undermining independence of Chairperson/Members of NTT. Every Chairperson/Member appointed to NTT, would be constrained to decide matters, in manner that would ensure his reappointment in terms of Section 8 of NTT Act. His decisions may or may not be based on his independent understanding. We are satisfied, that above provision would undermine independence and fairness of Chairperson and Members of NTT. Since NTT has been vested with jurisdiction which earlier lay with High Courts, in all matters of appointment, and extension of tenure, must be shielded from executive involvement. reasons for our instant conclusions are exactly same as have been expressed by us while dealing with Section 5 of NTT Act. We therefore hold, that Section 8 of NTT Act is unconstitutional. 90. Sections 5, 6, 7, 8 and 13 of NTT Act have been held by us (to extent indicated hereinabove) to be illegal and unconstitutional on basis of parameters laid down by decisions of constitutional benches of this Court and on basis of recognized constitutional conventions referable to constitutions framed on Westminster model. In absence of aforesaid provisions which have been held to be unconstitutional, remaining provisions have been 235 Page 235 rendered otiose and worthless, and as such, provisions of NTT Act, as whole, are hereby set aside. Conclusions: 91 (i) Parliament has power to enact legislation, and to vest adjudicatory functions, earlier vested in High Court, with alternative court/tribunal. Exercise of such power by Parliament would not per se violate basic structure of Constitution. (ii) Recognized constitutional conventions pertaining to Westminster model, do not debar legislating authority from enacting legislation to vest adjudicatory functions, earlier vested in superior court, with alternative court/tribunal. Exercise of such power by Parliament would per se not violate any constitutional convention. (iii) basic structure of Constitution will stand violated, if while enacting legislation pertaining to transfer of judicial power, Parliament does not ensure, that newly created court/tribunal, conforms with salient characteristics and standards, of court sought to be substituted. (iv) Constitutional conventions, pertaining to constitutions styled on Westminster model, will also stand breached, if while enacting legislation, pertaining to transfer of judicial power, conventions and salient characteristics of court sought to be replaced, are not incorporated in court/tribunal sought to be created. 236 Page 236 (v) prayer made in Writ Petition (C) No.621 of 2007 is declined. Company Secretaries are held ineligible, for representing party to appeal before NTT. (vi) Examined on touchstone of conclusions (iii) and (iv) above, Sections 5, 6, 7, 8 and 13 of NTT Act (to extent indicated hereinabove), are held to be unconstitutional. Since aforesaid provisions, constitute edifice of NTT Act, and without these provisions remaining provisions are rendered ineffective and inconsequential, entire enactment is declared unconstitutional. ...CJI. (R.M. LODHA) .......J. (JAGDISH SINGH KHEHAR) .......J. (J. CHELAMESWAR) .......J. (A.K. SIKRI) Note: emphases supplied in all quotations in instant judgment, are ours. New Delhi, September 25, 2014. 237 Page 237 REPORTABLE IN 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 JUDGMENT R.F.NARIMAN, J. (concurring in result) 1. In these cases, essentially four contentions have been urged on behalf of petitioners. first contention is that reason for setting up National Tax Tribunal is non-existent as uniformity of decisions pertaining to tax laws is hardly reason for interposing another tribunal between appellate Tribunal and Supreme Court, as High Court decisions are more or less uniform, since they follow law laid down by each other. Since this is so, Act must be struck down. second contention is that it is 238 Page 238 impermissible for legislature to divest superior courts of record from core judicial function of deciding substantial questions of law. third contention is as regards Constitutional validity of Article 323-B being violative of separation of powers doctrine, rule of law doctrine and judicial review. fourth contention concerns itself with nitty gritty of Act, namely, that various sections undermine independence of adjudicatory process and cannot stand judicial scrutiny in their present form. Since I am accepting second contention urged by petitioners, this judgment will not deal with any of other contentions. 2. It is emphatically province and duty of judicial department to say what law is. Those who apply 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 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 different departments of power must perceive, that, in government in which they are separated from each other, judiciary, from nature of its functions, will always be least dangerous to political rights of Constitution; because it will be least in capacity to annoy or injure them. Executive not only dispenses honors, but holds sword of community. legislature 239 Page 239 not only commands purse, but prescribes rules by which duties and rights of every citizen are to be regulated. judiciary, on contrary, has no influence over either sword or purse; no direction either of strength or of wealth of 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 aid of executive arm even for efficacy of its judgments. This simple view of matter suggests several important consequences. It proves incontestably, that judiciary is beyond comparison weakest of three departments of power, that it can never attack with success either of 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 courts of justice, general liberty of people can never be endangered from that quarter, I mean so long as judiciary remains truly distinct from both legislature and Executive. For I agree, that there is no liberty, if power of judging be not separated from legislative and executive powers. And it proves, in last place, that as liberty can have nothing to fear from judiciary alone, but would have everything to fear from its union with either of other departments; that as all effects of such union must ensue from dependence of former on latter, notwithstanding nominal and apparent separation; that as, from natural feebleness of 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 indispensable ingredient in its constitution, and, in great measure, as citadel of public justice and public security. (Emphasis supplied) 3. precise question arising in these appeals concerns constitutional validity of National Tax Tribunals Act, 2005. question raised on behalf of petitioners is one of great public importance and has, 240 Page 240 therefore, been placed before this Constitution Bench. Following upon heels of 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. precise question formulated on behalf of petitioners is whether tribunal can substitute 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) appeal shall lie to National Tax Tribunal from every order passed in appeal by Income-tax Appellate Tribunal and Customs, Excise and Service Tax appellate Tribunal, if National Tax Tribunal is satisfied that case involves substantial question of law. (2) Chief Commissioner or Commissioner of Income-tax or Chief Commissioner or Commissioner of Customs and Central Excise, as case may be, or assessee aggrived by any order passed by Income-tax Appellate Tribunal or any person aggrieved by any order passed by Customs, Excise and Service Tax Appellate Tribunal (hereinafter referred to as aggrieved person), may file appeal to National Tax Tribunal and such appeal under this sub-section shall- (a) be filed within one hundred and twenty days from date on which order appealed against is received by assesee or aggrieved person or Chief Commissioner or Commissioner, as case may be; (b) be in form of memorandum of appeal precisely stating therein 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 National Tax Tribunal may entertain appeal within sixty days after expiry of said period of 241 Page 241 one hundred and twenty days, if it is satisfied that appellant was prevented by sufficient cause from preferring appeal in time. (3) Where appeal is admitted under sub-section (1), National Tax Tribunal.- (a) shall formulate question of law for hearing appeal; and (b) may also determine any relevant issue in connection with question so formulated- (i) which has not been so determined by Income-tax Appellate Tribunal or by Customs, Excise and Service Tax Appellate Tribunal or (ii) which has been wrongly determined by income-tax Appellate Tribunal or by Customs, Excise and Service Tax Appellate Tribunal, and shall decide question of law so formulated and other relevant issue so determined and deliver such judgment thereon containing grounds on which such decision is founded and may award such cost as it deems fit. (4) Where in any appeal under this section, decision of income-tax Appellate Tribunal or Customs, Excise and Service Tax Appellate Tribunal involves payment of any tax or duties, assessee or aggrieved person, as 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 basis of order appealed against: Provided that where in particular case National Tax Tribunal is of opinion that 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 interest of revenue. 24. Appeal to Supreme Court.- Any person including any department of Government aggrieved by any decision or order of National tax Tribunal may file appeal to Supreme Court within sixty days from date of communication of decision or order of National Tax Tribunal to him; Provided that Supreme Court may, if it is satisfied that appellant was prevented by sufficient cause from filing 242 Page 242 appeal within said period, allow it to be filed within such time as it may deem fit. 5. According to petitioners, deciding substantial questions of law, even if they arise from specialized subject matters, would be core function of superior courts of India, and cannot be usurped by any other forum. To test validity of this argument, we need to go to some constitutional fundamentals. 6. It has been recognized that unlike U.S. Constitution, Constitution of India does not have rigid separation of powers. Despite that, Constitution contains several separate chapters devoted to each of three branches of Government. Chapter IV of part V deals exclusively with Union judiciary and Chapter V of part VI deals with High Courts in States. 7. Article 50 of Constitution states: 50. Separation of judiciary from executive: State shall take steps to separate judiciary from executive in public services of State. 8. Art.129 states that Supreme Court shall be court of record and shall have all powers of such court including power to punish for contempt of itself. Art.131 vests Supreme Court with original jurisdiction in disputes arising between Government of India and States. Art. 132 243 Page 243 to 134A vest appellate jurisdiction in civil and criminal cases from High Courts. Art. 136 vests Supreme Court with 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 territory of India. Under Art. 137, Supreme Court is given power to review any judgment or order made by it. By Article 141, law declared by Supreme Court shall be binding on all courts within territory of India. And by virtue of Art. 145(3) substantial questions as to interpretation of Constitution of India are vested exclusively in 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 Supreme Court, High Courts shall be courts of record and shall have all powers of such courts including power to punish for contempt. Under Art. 225, jurisdiction of, and law administered in any existing High Courts, is preserved. Art. 226 vests High Court with power to issue various writs for protection of fundamental rights and for any other purpose to any person or authority. Under Art. 228 questions involving interpretation of constitution are to be decided by High Court alone when court subordinate to it is seized of such question. Further, importance of these provisions is further 244 Page 244 highlighted by Art. 368 proviso which allows amendment of all aforesaid Articles only if such amendment is also ratified by legislatures of not less than one half of States. 10. Code of Civil Procedure also contains provisions which vest High Court with 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 Government of India Act 1915 which reads as follows: Each of High Courts has superintendence over all courts for time being subject to its appellate jurisdiction, and may do any of following things, that is to say.- (a) Call for returns; (b) Direct transfer of any suit or appeal from any such court to any other court of equal or superior jurisdiction; (c) Make and issue general rules and prescribe forms for regulating practice and proceedings of such courts; (d) Prescribe forms in which books, entries and accounts shall be kept by officers of any such courts; and settle tables of fees to be allowed to sheriff, attorneys and all clerks and officers of courts: Provided that such rules, forms and tables shall not be inconsistent with provisions of law for time being in force, and shall require previous approval, in case of high court at Calcutta, of Governor-General in Council, and in other cases of local government. 12. Section 224 of Government of India Act 1935 more or less adopted Section 107 of Act of 1915 with few changes. 245 Page 245 (1)Every High Court shall have superintendence over all courts in India for time being subject to its appellate jurisdiction, and may do any of following thing, that is to say,- (a) call for returns; (b) make and issue general rules and prescribe forms for regulating practice and proceedings of such courts; (c) prescribe forms in which books, entries and accounts shall be kept by officers of any such courts; and (d) settle tables of fees to be allowed to sheriff, attorneys, and all clerks and officers of courts: Provided that such rules, forms and tables shall not be inconsistent with provision of any law for time being in force, and shall require previous approval of Governor. (2) Nothing in this section shall be construed as giving to High Court any jurisdiction to question any judgment of any inferior Court which is not otherwise subject to appeal or revision. Article 227 of Constitution states: 227. Power of superintendence over all courts by High Court (1) Every High Court shall have superintendence over all courts and tribunals throughout territories in relation to which it exercises jurisdiction (2) Without prejudice to generality of foregoing provisions, High Court may (a) call for returns from such courts; (b) make and issue general rules and prescribe forms for regulating practice and proceedings of such courts; and (c) prescribe forms in which books, entries and accounts shall be kept by officers of any such courts (3) High Court may also settle tables of fees to be allowed to 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 provision of any law for time being in force, and shall require previous approval of Governor 246 Page 246 (4) Nothing in this article shall be deemed to confer on High Court powers of superintendence over any court or tribunal constituted by or under any law relating to Armed Forces. 13. It will be noticed that Art. 227 adds words and tribunals and contains no requirement that 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 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 Subordinate Courts within bounds of their authority and not for correcting mere errors. As rightly pointed out by Judicial Commissioner in case before us lower courts in refusing to make order for ejectment acted arbitrarily. lower courts realized 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, case which called for interference by court of Judicial Commissioner and it acted quite properly in doing so. (at 571) 15. It is axiomatic that superintending power of High Courts under Art. 227 is to keep courts and tribunals within bounds of law. Hence, errors of law that are apparent on face of record are liable to be corrected. In correcting such errors, High Court has necessarily to state what law is by deciding questions of law, which bind subordinate courts and tribunals in future cases. Despite fact that there is no equivalent of 247 Page 247 Art. 141 so far as High Courts are concerned, in East India Commercial Co. Ltd. Calcutta v. Collector of Customs, (1963) 3 SCR 338, Subba Rao, J. stated: This raises question whether administrative tribunal can ignore law declared by highest court in State and initiate proceedings in direct violation of law so declared. Under Art. 215, every High Court shall be court of record including power to punish for contempt of itself. Under Art. 226, it has plenary power to issue orders or writs for enforcement of 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 territories in relation to which it exercise jurisdiction. It would be anomalous to suggest that tribunal over which High Court has superintendant can ignore law declared by that court and start proceedings in direct violation of it. If tribunal can do so, all sub-ordinate courts can equally do so, for there is no specific provision, just like in case of Supreme Court, making law declared by High Court binding on subordinate courts. It is implicit in power of supervision conferred on superior tribunal that all tribunals subject to its supervision should conform to law laid down by it. Such obedience would also be conducive to their smooth working: otherwise there would be confusion in administration of law and respect for law would irretrievably suffer. We, therefore, hold that law declared by highest court in State is binding on authorities or tribunals under its superintendence, and that they cannot ignore it either in initiating proceeding or deciding on rights involved in such proceeding. (at 366) 16. aforesaid analysis shows that decision by superior courts of record of questions of law and binding effect of such decisions are implicit in constitutional scheme of things. It is obvious that it is 248 Page 248 emphatically province of superior judiciary to answer substantial questions of law not only for case at hand but also in order to guide subordinate courts and tribunals in future. That this is core of judicial function as outlined by constitutional provisions set out above. 17. As to what is substantial question of law has been decided way back in Sir Chunilal V. Mehta v. Century Spinning and Manufacturing Co. Ltd., (1962) Suppl. 3 SCR 549 at pages 557-558 thus: .The proper test for determining whether question of law raised in case is substantial would, in our opinion, be whether it is of general public importance or whether it directly and substantially affects rights of parties and if so whether it is either open question in sense that it is not finally settled by this Court or by Privy Council or by Federal Court or is not free from difficulty or calls for discussion of alternative views. If question is settled by highest Court or general principles to be applied in determining question are well settled and there is mere question of applying those principles or that plea raised is palpably absurd question would not be substantial question of law. 18. It is clear, therefore, that decision of substantial question of law is matter of great moment. It must be question of law which is of general public importance or is not free from difficulty and/or calls for discussion of alternative views. It is clear, therefore, that judicially trained mind with experience of deciding questions of law is sine qua non in order that such questions be decided correctly. Interestingly enough, our attention has 249 Page 249 been drawn to various Acts where appeals are on questions of law/substantial questions of law. i) Electricity Act, 2003 125. Appeal to Supreme Court - Any person aggrieved by any decision or order of Appellate Tribunal, may, file appeal to Supreme Court within sixty days from date of communication of decision or order of Appellate Tribunal to him, on any one or more of grounds specified in Section 100 of Code of Civil Procedure, 1908 (5 of 1908): Provided that Supreme Court may, if it is satisfied that appellant was prevented by sufficient cause from filing appeal within said period, allow it to be filed within further period not exceeding sixty days. (ii) National Green Tribunal Act, 2010 Section 22. Appeal to Supreme Court - Any person aggrieved by any award, decision or order of tribunal, may, file appeal to Supreme Court, within ninety days from date of communication of award, decision or order of Tribunal, to him, on any one or more of grounds specified in Section 100 of Code of Civil Procedure, 1908 (5 of 1908) . Provided that Supreme Court, entertain any appeal after expiry of ninety days, if it is satisfied that appellant was prevented by sufficient cause from preferring appeal. (iii) Telecom Regulatory Authority of India Act, 1997 Section 18. Appeal to Supreme Court - (1) Notwithstanding anything contained in Code of Civil Procedure, 1908 (5 of 1908) or in any other law, appeal shall lie against any order, not being interlocutory order, of Appellate Tribunal to Supreme Court on one or more of grounds specified in section 100 of that code. (2) No appeal shall lie against any decision or order made by Appellate Tribunal with consent of parties. (3) Every appeal under this section shall be preferred within period of ninety days from date of decision or order appealed against: Provided that Supreme Court may entertain appeal after expiry of said period of ninety days, if it is satisfied that 250 Page 250 appellant was prevented by sufficient cause from preferring appeal in time. (iv) Securities and Exchange Board of India Act, 1992 Section 15Z. Appeal to Supreme Court. - Any person aggrieved by any decision or order of Securities Appellate Tribunal may file appeal to Supreme Court within sixty days from date of communication of decision or order of Securities Appellate Tribunal to him on any question of law arising out to such order: Provided that Supreme Court may, if it is satisfied that applicant was prevented by sufficient cause from filing appeal within said period, allow it to be filed within 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 Appellate Tribunal may file appeal to Supreme Court within sixty days from date of communication of decision or order of Appellate Tribunal to him on any question of law arising out of such decision or order: Provided that Supreme Court may, if it is satisfied that appellant was prevented by sufficient cause from filing appeal within said period, allow it to be filed within further period not exceeding sixty days. 19. Whether one looks at old Section 100 of Code of Civil Procedure or Section 100 of Code of Civil Procedure as substituted in 1976, result is that superior courts alone are vested with power to decide questions of law. Section 100 (Before amendment) 100(1). Save where otherwise expressly provided in body of this Code or by any other law for time being in force, appeal shall lie to High Court from every decree passed in appeal by any court subordinate to High Court on any of following grounds, namely: 251 Page 251 (a) decision being contrary to law or to some usage having force of law; (b) decision having failed to determine some material issue of law or usage having force of law; (c) substantial error or defect in procedure provided by this Code or by any other law for time being in force, which may possibly have produced error or defect in decision of case upon merits. (2) appeal may lie under this section from appellate decree passed ex-parte. Section 100 (After amendment) 100. Second appeal (1) Save as otherwise expressly provided in body of this Code or by any other law for time being in force, appeal shall lie to High Court from every decree passed in appeal by any Court subordinate to High Court, if High Court is satisfied that case involves substantial question of law. (2) appeal may lie under this section from appellate decree passed exparte. (3) In appeal under this section, memorandum of appeal shall precisely state substantial question of law involved in appeal. (4) Where High Court is satisfied that substantial question of law is involved in any case, it shall formulate that question. (5) appeal shall be heard on question so formulated and respondent shall, at hearing of appeal, be allowed to argue that case does not involve such question : Provided that nothing in this sub-section shall be deemed to take away or abridge power of Court to hear, for reasons to be recorded, appeal on any other substantial question of law, not formulated by it, if it is satisfied that case involves such question. 20. It is obvious that hitherto Parliament has entrusted 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 252 Page 252 were always decided by High Courts in country. present Act is departure made for first time by Parliament. 21. In this regard, respondents argued that since taxation is specialised subject and there is complete code laid down for deciding this subject, present impugned Act being part of that code is constitutionally valid. For this purpose, respondents have relied on passage from 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 mistake of law, person paying is entitled to recover from State such taxes on establishing mistake and that this consequence flows from Section 72 of Contract Act. In answering this question, this Court made observation that so long as appeal is provided to Supreme Court from orders of appellate tribunal, Act would be constitutionally valid. This Court while deciding whether Saraf s case was correctly decided or not, was not faced with present question at all. Further, at time that Mafatlal s case was decided, scheme contained in Central Excise and Salt Act, 1944, required High Court on statement of case made to it to decide question of law 253 Page 253 arising out of order of appellate tribunal, after which High Court is to deliver its judgment and send it back to appellate tribunal which will then make such orders as are necessary to dispose of case in conformity with such judgment. then statutory scheme of Central Excise and Salt Act, 1944 is contained in Sections 35G to 35L. 35G Statement of case to High Court. (1) Collector of Central Excise or other party may, within sixty days of date upon which he is served with notice of order under section 35C (not being order relating, among other things, to determination of any question having relation to rate of duty of excise or to value of goods for purposes of assessment), by application in prescribed form, accompanied, where application is made by other party, by fee of two hundred rupees, require Appellate Tribunal to refer to High Court any question of law arising out of such order and, subject to other provisions contained in this section, Appellate Tribunal shall, within one hundred and twenty days of receipt of such application, draw up statement of case and refer it to High Court: Provided that Appellate Tribunal may, if it is satisfied that applicant was prevented by sufficient cause from presenting application within period hereinbefore specified, allow it to be presented within further period not exceeding thirty days. (2) On receipt of notice that application has been made under sub- section (1), person against whom such application has been made, may, notwithstanding that he may not have filed such application, file, within forty- five days of receipt of notice, memorandum of cross- objections verified in prescribed manner against any part of order in relation to which application for reference has been made and such memorandum shall be disposed of by Appellate Tribunal as if it were application presented within time specified in sub- section (1). 254 Page 254 (3) If, on application made under sub- section (1), Appellate Tribunal refuses to state case on ground that no question of law arises, Collector of Central Excise, or, as case may be, other party may, within six months from date on which he is served with notice of such refusal, apply to High Court and High Court may, if it is not satisfied with correctness of decision of Appellate Tribunal, require Appellate Tribunal to state case and to refer it, and on receipt of any such requisition, Appellate Tribunal shall state case and refer it accordingly. (4) Where in exercise of its powers under sub- section (3), Appellate Tribunal refuses to state case which it has been required by applicant to state, applicant may, within thirty days from date on which he receives notice of such refusal, withdraw his application and, if he does so, fee, if any, paid by him shall be refunded. 35H. Statement of case to Supreme court in certain cases. If, on application made under section 35G, Appellate Tribunal is of opinion that, on account of conflict in decisions of High Courts in respect of any particular question of law, it is expedient that reference should be made direct to Supreme Court, Appellate Tribunal may draw up statement of case and refer it through President direct to Supreme Court. 35I. Power of High Court or Supreme Court to require statement to be amended. If High Court or Supreme Court is not satisfied that statements in case referred to it are sufficient to enable it to determine questions raised thereby, Court may refer case back to Appellate Tribunal, for 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 High Court under section 35G, it shall be heard by Bench of not less than two Judges of High Court and shall be decided in accordance with opinion of such Judges or of majority, if any, of such Judges. (2) Where there is no such majority, Judges shall state point of law upon which they differ and case shall then be 255 Page 255 heard upon that point only by one or more of other Judges of High Court, and such point shall be decided according to opinion of majority of Judges who have heard case including those who first heard it. 35K. Decision of High Court or Supreme Court on case stated. (1) High Court or Supreme Court hearing any such case shall decide questions of law raised therein and shall deliver its judgment thereon containing grounds on which such decision is founded and copy of judgment shall be sent under seal of Court and signature of Registrar to Appellate Tribunal which shall pass such orders as are necessary to dispose of case in conformity with such judgment. (2) costs of any reference to High Court or Supreme Court which shall not include fee for making reference shall be in discretion of Court. 35L. Appeal to Supreme Court. appeal shall lie to Supreme Court from- (a) any judgment of High Court delivered on reference made under section 35G in any case which, on its own motion or on oral application made by or on behalf of party aggrieved, immediately after passing of judgment, High Court certifies to be fit one for appeal to Supreme Court; or (b) any order passed by Appellate Tribunal relating, among other things, to determination of any question having relation to rate of duty of excise or to value of goods for purposes of assessment. 23. It is obvious that decision of nine Judge Bench was only referring to decisions of appellate tribunal falling under sub-clause (b) of Section 35L relating to orders passed by Appellate Tribunal on questions having relation to rate of duty of excise or value of goods for purpose of assessment and not to appeals from judgments of High Court 256 Page 256 delivered on reference under Section 35G after High Court had decided on question of law. It is clear, therefore, that context of Mafatlal s decision was completely different and decision did not advert to Sections 35G to 35L as they then stood. 24. Art. 323B was part of constitution 42nd Amendment Act which was, as is well known, amendment which was rushed through during 1975 emergency. Many of its features were undone by constitution 44 th Amendment Act passed couple of years later. One of interesting features that was undone was amendment to Art. 227. 42nd Amendment substituted following clause for clause (1) of Art. 227: (1) Every High Court shall have superintendence over all courts subject to its appellate jurisdiction. 25. cursory reading of substituted clause shows that old section 107 of Government of India Act 1915 was brought back: Tribunals were no longer subject to High Courts superintendence, and subordinate courts were only subject to High Courts superintendence, if they were also subject to its appellate jurisdiction. As stated above, 44 th Amendment undid this and restored sub-clause (1) to its original position. 26. However, Art. 323B continues as part of constitution. real reason for insertion of said article was same as amendment 257 Page 257 made to Art. 227 removal of High Courts supervisory jurisdiction over tribunals. L. Chandra Kumar v.Union of India (1997) 3 SCC 261, undid very raison d etre of Article 323B by restoring supervisory jurisdiction of High Courts so that reference to Article 323B would no longer be necessary as legislative competence to make 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 7 th Schedule to Constitution of India. 27. In significant statement of law, Chandra Kumar s judgment, in upholding vesting of High Court s original jurisdiction in Central Administrative Tribunal, stated thus: legitimacy of power of Courts within constitutional democracies to review legislative action has been questioned since time it was first conceived. Constitution of India, being alive to such criticism, has, while conferring such power upon higher judiciary, incorporated important safeguards. analysis of manner in which Framers of our Constitution incorporated provisions relating to judiciary would indicate that they were very greatly concerned with securing independence of judiciary. These attempts were directed at ensuring that judiciary would be capable of effectively discharging its wide powers of judicial review. While Constitution confers power to strike down laws upon High Courts and Supreme Court, it also contains elaborate provisions dealing with tenure, salaries, allowances, retirement age of Judges as well as mechanism for selecting Judges to superior courts. inclusion of such elaborate provisions appears to have been occasioned by 258 Page 258 belief that, armed by such provisions, superior courts would be insulated from any executive or legislative attempts to interfere with making of their decisions. Judges of superior courts have been entrusted with task of upholding Constitution and to this end, have been conferred power to interpret it. It is they who have to ensure that balance of power envisaged by Constitution is maintained and that legislature and executive do not, in discharge of their functions, transgress constitutional limitations. It is equally their duty to oversee that judicial decisions rendered by those who man subordinate courts and tribunals do not fall foul of strict standards of legal correctness and judicial independence. constitutional safeguards which ensure independence of Judges of superior judiciary, are not available to Judges of subordinate judiciary or to those who man Tribunals created by ordinary legislations. Consequently, Judges of latter category can never be considered full and effective substitutes for superior judiciary in discharging function of constitutional interpretation. We, therefore, hold that power of judicial review over legislative action vested in High Courts under Articles 226 and in this Court under Article 32 of Constitution is integral and essential feature of Constitution, constituting part of its basic structure. Ordinarily, therefore, power of High Courts and Supreme Court to test constitutional validity of legislations can never be ousted or excluded.(See Para 78) We also hold that power vested in High Courts to exercise judicial superintendence over decisions of all Courts and Tribunals within their respective jurisdictions is also part of basic structure of Constitution. This is because situation where 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 jurisdictional powers of these Tribunals. Tribunals are competent to hear matters where vires of statutory provisions are questioned. However, in discharging 259 Page 259 this duty, they cannot act as substitutes for High Courts and Supreme Court which have, under our constitutional set-up, been specifically entrusted with such obligation. Their function in this respect is only supplementary and all such decisions of Tribunals will be subject to scrutiny before Division Bench of respective High Courts. (see Para 93) 28. stage is now set for Attorney General s reliance on Union of India v. R. Gandhi (2010) 11 SCC 1. Various provisions of Companies Act, 1956 were under challenge before Constitution Bench. effect of these provisions was to replace Company Law Board by Tribunal vested with original jurisdiction, and to replace High Court in First Appeal with appellate tribunal. After noticing difference between courts and tribunals in paras 38 and 45, court referred to independence of judiciary and to separation of powers doctrine, as understood in Indian Constitutional Context in paras 46 to 57. In significant statement of law, Constitution Bench said: Constitution contemplates judicial power being exercised by both courts and tribunals. Except powers and jurisdiction vested in superior courts by Constitution, powers and jurisdiction of courts are controlled and regulated by legislative enactments. High Courts are vested with 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 High Courts, jurisdiction can also be taken away by deleting provisions for appeals, revisions or references. It also follows that legislature has power to create Tribunals with reference to specific enactments and 260 Page 260 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, Constitution bench stated: But when we say that legislature has 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 independence of judiciary and keeping in view principles of 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 independence, security and capacity associated with courts. If tribunals are intended to serve 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 hearing and disposal or relieve from rigours of 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 judiciary should be 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 jurisdiction exercised by courts to tribunals, which does not involve any specialized knowledge or expertise in any field and expediting disposal and relaxing procedure is only object, provision for technical members in addition to or in substitution of judicial members would clearly be case of dilution of and encroachment upon independence of judiciary and rule of law and would be unconstitutional. (at para 90) Bench then went on to hold that only certain areas of litigation can be transferred from courts to tribunals. (see para 92) 261 Page 261 In paragraphs 101 and 102 law is stated thus: Independent judicial tribunals for determination of rights of citizens, and for adjudication of disputes and complaints of citizens, is necessary concomitant of rule of law. 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 Government will be decided by Judges who are independent of executive. Another facet of rule of law is equality before law. essence of equality is that it must be capable of being enforced and adjudicated by independent judicial forum. Judicial independence and separation of judicial power from executive are part of common law traditions implicit in Constitution like ours which is based on Westminster model. fundamental right to equality before law and equal protection of laws guaranteed by Art.14 of Constitution, clearly includes right to have person s rights, adjudicated by forum which exercises judicial power in impartial and independent manner, consistent with 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 alternative forum, such legislative act is open to challenge if it violates right to adjudication by independent forum. Therefore, though challenge by MBA is on ground of violation of principles forming part of basic structure, they are relatable to one of more of express provisions of Constitution which gave rise to such principles. Though validity of provisions of legislative act cannot be challenged on ground it violates basic structure of Constitution, it can be challenged as violative of constitutional provisions which enshrine principles of rule of law, separation of powers and independence of judiciary. 29. Gandhi s case dealt with one specialized tribunal replacing another specialized tribunal (The Company Law Board) at original stage. It is significant to note that first appeal provided to appellate tribunal is not 262 Page 262 restricted only to questions of law. It is full first appeal as understood in section 96 CPC sense (See section 10FQ of Companies Act). further appeal is provided to Supreme Court under Section 10GF only on questions of law. When Gandhi s case states in paragraph 87 that jurisdiction of 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, court was only dealing with situation of High Court being supplanted at original and first appellate stage so far as company `jurisdiction is concerned in situation where questions of fact have to be determined afresh at first appellate stage as well. These observations obviously cannot be logically extended to cover situation like present where High Court is being supplanted by tribunal which would be deciding only substantial questions of law. 30. present case differs from Gandhi s case in very fundamental manner. National Tax Tribunal which replaces High Courts in country replaces them only to decide substantial questions of law which relate to taxation. In fact, Direct Tax Laws Committee delivered report in 1978 called Choksi Committee after its Chairman. This report had in fact recommended that Central Tax Court should be set up. report stated: 263 Page 263 II-6.10. In paragraph 11.30 of our Interim Report, we had expressed view that Government should consider establishment of Central Tax Court to deal with all matters arising under Income-tax Act and other Central Tax Laws, and had left matter for consideration in greater detail in our Final Report. We have since examined matter from all aspects. II-6.11. problem of tax litigation in India has assumed staggering proportions in recent years. From statistics supplied to us, it is seen that, as on 30 th June, 1977, there were as many as 10,500 references under direct tax laws pending with various High Courts, largest pendency being in Bombay, Calcutta, Madras, Karnataka and Madhya Pradesh. number of references made to High Courts in India under all tax laws is of order of about 3,300 in year, whereas annual disposals of such references by all High Courts put together amount to about 600 in year. In addition to these references, about 750 writ petitions on tax matters are also filed before High Courts every year. Under existing practice of each High Court having only single bench for dealing with tax matters and that too not all round year, there is obviously no likelihood of problem being brought down to manageable proportions at any time in, future, but, on other hand, it is likely to become worse. Even writ petitions seeking urgent remedy against executive action take several years for disposal. Wanchoo Committee, which had considered this problem, recommended creation of permanent Tax Benches in High Courts and appointment of retired Judges to such Benches under Article 224A of Constitution to clear backlog. Although more than 6 years have passed since that recommendation was made, position of arrears in tax matters has shown no improvement but, on other hand, it has worsened. In this connection, it would be worth noting that Wanchoo Committee considered alternative course for dealing with this problem through establishment of 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 context of mounting arrears of tax cases before courts. 264 Page 264 II-6.12. pendency of cases before courts in tax matters has also snow-balling effect all along line of appellate hierarchies inasmuch as proceedings in hundreds of cases are initiated and kept pending, awaiting law to be finally settled by Supreme Court after prolonged litigation in some other cases. This obviously adds considerably to load of infructuous word in Department and clutters up files of appellate authorities at all levels, with adverse consequences on their efficiency. According to 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 delays which are inherent in existing system, jurisdiction pattern of High Courts also seems to contribute to 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. decision of one High Court is not binding on another High Court even on identical issues. Finality is reached only when Supreme Court decides issue which may take 10 to 15 years. II-6.14. Tax litigation is currently handled by different Benches of High Courts constituted on ad hoc basis. absence of permanent benches also accounts for delay in disposal of tax cases by High Courts. II-6.15. answer to these problems, in our view, is establishment of Central Tax Court with all-India jurisdiction to deal with such litigation to exclusion of High Courts. Such step will have several advantages. In first place, it would lead to uniformity in decisions and bring measure of certainty in tax matters. References involving common issues can be conveniently consolidated and disposed of together, thereby accelerating pace of disposal. Better co-ordination among benches would make for speedy disposal of cases and reduce scope for proliferation of appeals on same issues before lower appellate authorities, which in its turn will reduce volume of litigation going up before Tax Court as well. Once Central Tax Court is established, judges appointed to 265 Page 265 Benches thereof will develop 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 light of foregoing discussions, we recommend that Government should take steps for this early establishment of Central Tax Court with all-India jurisdiction to deal exclusively with litigation under direct Tax laws in first instance, with provisions for extending its jurisdiction to cover all other Central Tax laws, if considered necessary in future. We suggest that such court should be constituted under separate statute. As implementation of this recommendation may necessitate amendment of constitution, which is likely to take time, we further recommend that Government may in meanwhile, consider desirability of constituting special Tax benches in High Courts to deal with large number of Tax cases by continuously sitting throughout year. 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 Central Tax Court is established at later date, these judges could be transferred to that Court. II-6.17. Central Tax Court should have Benches located at important centres. To start with it may have Benches at 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 Central Tax Court, from among persons who are High Court judges or who are eligible to be appointed as High Court judges. In matter of conditions of service, scales or pay and other privileges, judges of Central Tax Court should be on par with High Court judges. II-6.18. Supreme Court and, following it, High Courts have held that Tribunal and tax authorities, being creatures of Act cannot pronounce on constitutional validity or vires of any provision of Act; that; therefore, such question cannot arise out of order of Tribunal and cannot be made subject matter of reference to 266 Page 266 High Court and subsequent appeal to Supreme court; and that such question of validity or vires can be raised only in suit or writ petition. While income-tax authority or Tribunal cannot decide upon validity or vires of other provisions of law. We recommend that powers of Central Tax Court in this regard should be clarified in law itself by specifically giving it right to go into questions of validity of provisions of Tax Laws or of rules framed thereunder. II-6.19. Another important matter, in which we consider that present position needs improvement, is nature of Court s jurisdiction in tax matters. Under present law, High Court s jurisdiction in such matters is merely advisory on questions of law. For this purpose, Appellate Tribunal has to draw up statement of case and refer same to High Court for its opinion. After High Court delivers its judgment on reference, matter goes back to Tribunal, which has then to pass such orders as are necessary to dispose of case conformably to such judgment. Under this procedure, aggrieved party before Tribunal has to file application seeking reference to High Court on specified questions of law arising out of Tribunal s order. hearing of such application by Tribunal, followed by drawing up of statement of case to High Court, delays consideration of issue by High Court for considerable time. Where Tribunal refuses to state case as sought by applicant, then again, law provides for direct approach to High Court for issue of directions to Appellate Tribunal to state case to High Court on relevant question of law. This process also delays consideration of matter by High court for quite some time. In addition to these types of delay, there will be further delays after High Court decides matter, as Tribunal has to pass consequential orders disposing of case, before relief, if any due, can be granted to assessee. II-6.20. In our view, disposal of tax litigation can be speeded up considerably by vesting jurisdiction in proposed Central Tax Court to hear appeals against orders of Tribunal on questions of law arising out of such orders. We, accordingly, recommend that jurisdiction of Central 267 Page 267 Tax Court should be Appellate and not advisory. We also recommend that appeals before Central Tax Court should be heard by Bench of two judges. judgment of division Bench should be binding on other division Benches of Tax Court unless it is contrary to decision of Supreme Court or of full Bench of Tax Court. II-6.21. In matter of appeals before Central Tax Court, it would be necessary to make special provision for enabling Chartered Accountants to appear on behalf of appellants or respondents to argue appeals before it. Legal practitioners would, in any event, be entitled to appear before Central Tax Court. In addition, any other person, who may be permitted by Court to appear before it, may also represent appellant or respondent in tax matters. II-6.22. Our recommendation for setting up of Central Tax Court may not be interpreted to be only modified version of concept of administrative and other tribunals authorized to be set up for various purposes under amendments effected by 42nd Amendment of Constitution. Central Tax Court, which we have in view, will be special kind of High court with functional jurisdiction over tax matters and enjoying judicial independence in same manner as High Courts. controversy generated by 42nd Amendment to Constitution should not, therefore, be held to militate against proposal for establishment of Central Tax Court to exercise functions of 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 268 Page 268 taxation, being specialized subject, can be dealt with by tribunal. All substantial questions of law have under our constitutional scheme to be decided by superior courts and superior courts alone. Indeed, one of objects for enacting National Tax Tribunals Act, as stated by Minister on floor of House, is that National Tax Tribunal can lay down law for whole of India which then would bind all other authorities and tribunals. This is direct encroachment on 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 little surprising that National Tax Tribunal is interposed between appellate Tribunal and Supreme Court for very good reason that ultimately it will only be Supreme Court that will declare law to be followed in future. As appellate tribunal is already second appellate court, it would be wholly unnecessary to have 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 Supreme Court itself, which decision would under Article 141 be binding on all tax authorities and tribunals. Secondly, in all tax matters, State is invariably party and High Court is ideally situated to decide substantial questions of law which arise between State and 269 Page 269 private persons, being constitutionally completely independent of executive control. same cannot be said of tribunals which, as L. Chandra Kumar states, will have to be under nodal ministry as tribunals are not under supervisory jurisdiction of High Courts. 33. Indeed, other constitutions which are based on Westminster model, like British North America Act which governs Canada have held likewise. In Attorney General for Quebec v. Farrah (1978), Vol.86 DLR [3d] 161 transport tribunal was given appellate jurisdiction over Quebec Transport Commission. tribunal performed no function other than deciding questions of law. Since this function was ultimately performed only by superior courts, 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 Residential Tenancy Act which established tribunal to require landlords and tenants to comply with obligations imposed under Act. court held: Court of Appeal delivered careful and scholarly unanimous judgment in which each of these questions was answered in negative. Court concluded it was not within legislative authority of Ontario to empower Residential Tenancy Commission to make eviction orders and compliance orders as provided in Residential Tenancies Act, 1979. importance of issue is reflected in fact that five Judges of Court, including Chief Justice and Associate Chief Justice, sat on appeal. 270 Page 270 It then went on to enunciate three steps test with which we are not directly concerned. Court finally concluded: Implicit throughout argument advanced on behalf of Attorney-General of Qntario is assumption that Court system is too cumbersome, too expensive and therefore unable to respond properly to social needs which residential Tenancies Act, 1979 is intended to meet. All statutes respond to social needs. Courts are unfamiliar with equity and concept of fairness, justice, convenience, reasonableness. Since enactment in1976 of legislation assuring security of tenure 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 present proceedings have spoken clearly against transfer of jurisdiction in respect of eviction and compliance orders from Courts to special commission. It is perhaps also of interest that there is no suggestion in material filed with us that Law Reforms Commission favoured removal from Courts of historic functions performed for over 100 years by Courts. I am neither unaware of, nor unsympathetic to, arguments advanced in support of view that s.96 should not be interpreted so as to thwart or unduly restrict future growth of provincial administrative tribunals. Yet, however worthy policy objectives, must be recognized that we, as Court, are not given freedom to choose whether problem is such that provincial, rather than federal, authority should deal with it. We must seek to give effect to Constitution as we understand it and with due regard for manner in which it has been judicially interpreted in past. If impugned power is violative of s.96 it must be struck down. 34. In Hins v. Queen Director of Public Prosecutions v Jackson Attorney General of Jamaica (intervener) 1976 (1) All ER 353, Privy Council had to decide matter under Jamaican Constitution. Gun 271 Page 271 Courts Act, 1974 was passed by Jamaican Parliament in which it set up various courts. question similar to question posed in instant case was decided thus: All constitutions on Westminister model deal under separate chapter heading with legislature, executive and judicature. chapter dealing with judicature invariably contains provisions dealing with method of appointment and security of tenure of members of judiciary which are designed to assure to them degree of independence from other two branches of government. It may, as in case of Constitution of Ceylon, contain nothing more. To extent to which constitution itself is silent as to distribution of plenitude of judicial power between various courts it is implicit that it shall continue to be distributed between and exercised by courts that were already in existence when new constitution came into force; but legislature, in exercise of its power to make laws for peace, order and good government of state, may provide for establishment of new courts and for transfer to them of whole or part of jurisdiction previously exercisable by existing court. What, however, is implicit in very structure of constitution on 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 manner and on terms laid down in chapter dealing with judicature, even though this not expressly stated in constitution (Liyanage v. R [1966] All ER 650 at 658 [1976] AC 259 at 287, 288] more recent constitutions on Westminister model, unlike their earlier prototypes, include chapter dealing with fundamental rights and freedoms. provisions of this chapter form part of substantive law of state and until amended by whatever special procedure is laid down in constitution for this purpose, impose fetter on exercise by legislature, executive and judiciary of plenitude of their respective powers. remaining chapters of constitutions are primarily concerned not with 272 Page 272 legislature, executive and judicatures as abstractions, but with persons who shall be entitled collectively or individually to exercise plenitude of legislative, executive or judicial powers their qualifications for legislative, executive or judicial office, method of selecting them, their tenure of office, procedure to be followed where powers are conferred on class of persons acting collectively and majorities required for exercise of these powers. Thus, where constitution on Westminister model speaks of particular court already in existence when constitution comes into force, it uses this expression as collective description of all those individual judges who, whether sitting alone or with other judges or with jury, are entitled to exercise jurisdiction exercised by that court before constitution came into force. Any express provision in constitution for appointment or security of tenure of judges of that court will apply to all individual judges subsequently appointed to exercise analogous jurisdiction, whatever other name may be given to court in which they sit (Attorney General for Ontario v. attorney General for Canada.) Where, under constitution on Westminister model, law is made by parliament which purports to confer jurisdiction on court described by new name, question whether law conflicts with provisions of constitution dealing with exercise of judicial power does not depend on label (in instant case Gun Court ) which parliament attaches to judges when exercising jurisdiction conferred on them by law whose constitutionality is impugned. It is substance of law that must be regarded, not form. What is nature of jurisdiction to be exercised by judges who are to compose court to which new label is attached? Does method of their appointment and security of their tenure conform to requirements of constitution applicable to judges who, at time constitution came into force, exercised jurisdiction of that nature? (Attorney General for Australia v. R and Boilermakers Society of Australia). 273 Page 273 35. Ultimately, majority of court found that provisions of 1974 Act, in so far as they provide for establishment of full court division of Gun Court consisting of three resident Magistrates were unconstitutional. 36. It was also argued by learned Attorney General that High Courts jurisdiction under Section 260A of 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 jurisdiction vested in High Court by said section can be transferred to another body. 37. It is well settled that appeal is creature of statute and can be done away by statute. question posed here is completely different and answer to that question is fundamental to our jurisprudence: that jurisdiction to decide substantial questions of law vests under our constitution, only with High Courts and Supreme Court, and cannot be vested in any other body as core constitutional value would be impaired thereby. 38. In fact, Attorney General in his written argument at paras 16 and 21(a) has stated before us: 16. It is submitted that present Act does not take away power of judicial superintendence of High Court under Article 227. Direct appeal to Supreme Court from decisions of tribunal of first instance is acceptable form of 274 Page 274 judicial scrutiny. Provision for direct appeal to Supreme Court from decision of tribunal can be purely on questions of law as well. Since High Court as rule does not exercise its power of judicial superintendence when appeal is provided to Supreme Court, power of judicial superintendence of High Court over tribunal stands curtailed in such cases as well. But this curtailment does not violate rule of law as court of law i.e. Supreme Court continues to be final interpreter of law. By same analogy decision of appellate tribunal with unrestricted right of appeal to Supreme Court will not curtail power of High Court under 227 as recourse to High Court under Articles 226/227 would still be available if tribunal exceeds its jurisdiction or violates principles of natural justice or commits such other transgressions. 21. (a) present Act provides ample scope for judicial scrutiny in form of Appeal under Section 24 of Act and also under Articles 226/227, Article 32 and Article 136 of Constitution. 39. On reading above argument, it is clear that even according to this argument, High Court s power of judicial review under Articles 226/227 has in fact been supplanted by 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, Constitution Bench of this Court held: 39. It is trite that in constitutional scheme adopted in India, besides supremacy of Constitution, separation of powers between legislature, executive and judiciary constitutes basic features of Constitution. In fact, importance of separation of powers in our system of governance was recognised in Special Reference No. 1 of 275 Page 275 1964 [AIR 1965 SC 745 : (1965) 1 SCR 413] , even before basic structure doctrine came to be propounded in celebrated case of Kesavananda Bharati v. State of Kerala [(1973) 4 SCC 225] , wherein while finding certain basic features of Constitution, it was opined that separation of powers is part of basic structure of Constitution. Later, similar view was echoed in Indira Nehru Gandhi v. Raj Narain [1975 Supp SCC 1] and in series of other cases on point. Nevertheless, apart from fact that our Constitution does not envisage rigid and strict separation of powers between said three organs of State, power of judicial review stands entirely on different pedestal. Being itself part of basic structure of Constitution, it cannot be ousted or abridged by even 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 disputes regarding limits of constitutional power and entering constitutional limitations as ultimate interpreter of Constitution. 68. Thus, having examined rival contentions in context of constitutional scheme, we conclude as follows: (iii) In view of constitutional scheme and jurisdiction conferred on this Court under Article 32 and on High Courts under Article 226 of Constitution power of judicial review being integral part of basic structure of Constitution, no Act of Parliament can exclude or curtail powers of constitutional courts with regard to enforcement of fundamental rights. As matter of fact, such power is essential to give practicable content to objectives of Constitution embodied in Part III and other parts of Constitution. Moreover, in federal constitution, distribution of legislative powers between Parliament and State Legislature involves limitation on legislative powers and, therefore, this requires authority other than Parliament to ascertain whether such limitations are transgressed. Judicial review acts as final arbiter not only to give effect to distribution of legislative powers between Parliament and State Legislatures, it is also necessary to show any transgression by each entity. Therefore, to borrow words of Lord Steyn, judicial review is justified by combination of 276 Page 276 principles of separation of powers, rule of law, principle of constitutionality and 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 Act which when challenged is found to be ultra vires; nor will history of gradual series of advances till this boundary is finally crossed avail to protect ultimate encroachment. At Pg 317. 41. Chandra Kumar and R. Gandhi have allowed tribunalization at original stage subject to certain safeguards. boundary has finally been crossed in this case. I would, therefore, hold that National Tax Tribunals Act is unconstitutional, being ultimate encroachment on exclusive domain of superior Courts of Record in India. ..J. (R.F. Nariman) New Delhi, September 25, 2014 277 Page 277 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 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: 278 Page 278 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 Judgment on behalf of Hon'ble Chief Justice, His Lordship, Hon'ble Mr. Justice J. Chelameswar and Hon'ble Mr. Justice A.K. Sikri. :2: 279 Page 279 Hon'ble Mr. Justice Rohinton Fali Nariman pronounced separate Judgment concurring in 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 file) :3: 280 Page 280 281 Page 281 Madras Bar Association v. Union of India and another