Last week’s proceedings in the Lok Sabha were unprecedented and the Lower House saw the normal process of Parliamentary scrutiny being disrupted when the Finance Bill was taken up for hearing on March 22.
The Finance Bill, a legislative instrument that gives effect to the key legal provisions of the Union Budget, had been tabled in Parliament on February 1. However Finance Minister Arun Jaitley introduced 30 pages of amendments to the government’s own bill text less than 48 hours before the legislation was taken up for scrutiny.
These amendments were brought without much discussion and with a request to the Speaker by the treasury benches to suspend several normal rules of Lok Sabha functioning in order to consider and pass these amendments despite late notice.
Concerns were raised on both the substance of the Bill as well as the process in rushing through the debate, prompting Opposition MPs from the Congress and the Biju Janata Dal to stage a walkout. However, the Finance Bill was eventually cleared in totality by the Lok Sabha. Though it was presented before the Rajya Sabha on Monday, the legislation is a money bill and the government therefore does not need the assent of the Upper House, where it is in a minority, for its enactment.
Monstrous scope
When Revolutionary Socialist Party MP NK Premchandran told the Speaker that such a finance Bill has “never been heard in the history of Indian legislative mechanism,” this was not hyperbole. With a total of 40 amendments, the Finance Bill proposes several sweeping changes.
For one, the government has expanded the scope of the biometric-based Aadhaar number, making it mandatory for tax payers to provide their unique identity number while filing returns. This comes even as the Supreme Court has repeatedly held that the government cannot make Aadhaar mandatory while the project is subject to judicial review.
The amendments also include a new chapter that alters 27 laws previously passed by Parliament. These amendments bring about unprecedented changes to the various tribunals established by Parliament through different Acts over the years. Through these changes, eight tribunals will cease to exist, their functions merged into some of the remaining ones. Also, the Centre can now set the rules regarding the qualifications, appointment and removal of the judges and members of these tribunals.
The tribunals, each adjudicating specific matters, are under the government and function separately from the judiciary. Most of these tribunals were set up under subject-specific laws that were debated and passed by both houses of Parliament with the objective of ensuring the proper and just functioning of regulators and government agencies in a host of sectors key to our economy and society.
By adding these amendments to the Finance Bill, the government implies that changing the nature of tribunals and overseeing the people who staff and run them is directly linked to government’s treasury through the Consolidated Fund of India, which is why the legislation qualifies as a money bill.
However, the changes that the Finance Bill makes to the functioning of tribunals goes well beyond fiscal matters. The legislation covers bodies that oversee and judge government actions in a host of subjects, including industrial disputes, copyright matters, competition law, airport economic affairs, telecommunications, information technology, highways, armed forces personnel and the environment concerns.
These amendments were introduced with an alarming speed. The government did not hold any public consultation or discussions and neither did it brief any of Parliament’s standing committees about this. The finance minister’s Budget speech just made a brief mention that the government was considering consolidating some tribunals.
This haste also reflects in the typos and errors in the wording of the amendments. For instance, the text passed by the Lok Sabha includes a reference to a non-existent “Information Technology Qualifications Act 2000” in its provision amending the Telecom Regulatory Authority of India Act.
Weakening our tribunals
This brings us to a situation where the government is implying that a subject such as film censorship (covered under the Cinematograph Act, 1952, which the Bill amends) is a critical financial issue, or that the judicial and technical experts of the Telecom Dispute Settlement Appellate Tribunal need to deal with complaints involving telecom law, information technology, and airport economic regulator affairs simultaneously, as it will now absorb the Airports Economic Regulatory Authority Appellate Tribunal and the Cyber Appellate Tribunal.
By transferring subject areas and responsibilities from one tribunal to another, the Bill substantially increases the workload of the remaining tribunals, which could degrade their functioning and ability to ensure strong substantive rulings.
This mass transfer will also lead to a loss of critical subject knowledge and in the expert capacity of our tribunals. Bodies such as the Competition Appellate Tribunal had finally begun to function smoothly, enabling the growth of specialised bar associations, economic analysis and expert knowledge.
The haste in pushing this massive set of amendments through last-minute additions to the Finance Bill has undermined Parliamentary scrutiny and re-opened issues that had been settled just recently. For example, the Copyright Act was amended in 2012 to include changes to the composition and functioning of the Copyright Board, after two years of debate and discussions in Parliament, including an extensive set of standing committee hearings. But the amended Finance Bill junks the Copyright Board and transfers its matters to the Intellectual Property Appellate Board in Chennai.
The biggest concern, however, lies around the omnibus clauses regarding the appointment and service conditions of the members of these tribunals. Earlier, almost every law under which the tribunal was set up specified how the chairpersons and members of each tribunal were be appointed. These specified that chairpersons of tribunals had to be judges of certain rank or seniority and required tribunal members to be subject matter experts.
Substantive changes to these requirements should have been carried out by introducing an amendment Bill for each specific law to be cleared by both houses of Parliament. Instead, the finance bill gives catch-all powers to the Union government to regulate the qualifications, appointment, term of office, salaries, resignation, and other conditions of service of the members of all the affected tribunals “by notification”.
That means that by issuing a gazette notification written by civil servants, the Union Government can remake or alter the functioning of tribunals. This means proactive approval of our elected legislators will no longer be required.
Way ahead
When the Rajya Sabha took up the Finance Bill for discussion on Monday, Opposition MPs criticised the government over the contents of the legislation and the manner of its passage. However, though the Upper House can vote on changes to specific clauses of the Bill, the government can have the Lok Sabha overturn those recommendations, as it did last March with the Aadhaar Bill, also introduced as a money Bill.
However, the certification of the Finance Bill can also be challenged in court. For instance, the Supreme Court is hearing a petition filed by the Congress’ Jairam Ramesh on the Aadhaar Act being certified as a money Bill.
In its current state, the Finance Bill 2017 can also be questioned for violating previous rulings by the High Court and Supreme Court on the independence required of tribunals. In particular, the wide powers granted to the government to decide and alter the appointment process and conditions of service of tribunals may be in conflict with the Supreme Court’s 2014 judgment in the National Tax Tribunal case. In that year, the apex court had quashed the National Tax Tribunal Act, 2005, holding that tax-related litigation should be under the purview of the independent judiciary.
The intent shown by the Centre in formulating such wide-ranging amendments is also a matter of concern. Earlier in March, a report in the Business Standard quoted an unnamed government official saying that the Centre did “not plan to touch the financial sector regulators but sectoral regulators need some restructuring.”
This statement does undermine the government’s case that this was purely a financial reform related package that was justified as being pushed via the Money Bill route of the Finance Bill.
We will have to wait and see the outcome of the Parliament session and whether the Finance Bill will be challenged in court. However, this constitutional conflict could have been avoided if the amendments had not been rushed into the Finance Bill at the 11th hour.
Ultimately, there is no excuse for passing bad law or short-circuiting the Constitution’s focus on Parliamentary review and deliberation, no matter which political bloc is in majority.
Raman Jit Singh Chima is a lawyer and a policy director at Access Now. Views are personal.
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