[Madras Bar Association
v. Union of India and Another, (2010) 324 ITR 166 (SC)]
In the petitions before the
Supreme Court, the constitutional validity of the National Tax Tribunal Act,
2005 (‘the Act’ for short) was challenged. In T.C. No. 150 of 2006, additionally
there was challenge to S. 46 of the Constitution (Forty-second Amendment) Act,
1976 and Article 323B of the Constitution of India. It was contended that S. 46
of the Constitution (Forty-second Amendment) Act, is ultra vires the
basic structure of the Constitution as it enables proliferation of Tribunal
system and makes serious inroads into the independence of the judiciary by
providing a parallel system of administration of justice, in which the executive
has retained extensive control over matters such as appointment, jurisdiction,
procedure, etc. It is contended that Article 323B violates the basic structure
of the Constitution as it completely takes away the jurisdiction of the High
Courts and vests it in the National Tax Tribunal, including trial of offences
and adjudication of pure questions of law, which have always been in the
exclusive domain of the judiciary.
On January 21, 2009, when
arguments in C.A. No. 3067 of 2004 and C.A. No. 3717 of 2005, which related to
the challenge to Parts IB and IC of the Companies Act, 1956 were in progress
before the Constitution Bench, it was submitted that these matters involved a
similar issue and they could be tagged and disposed of in terms of the decision
in those appeals. Therefore the Constitution Bench directed these cases to be
listed with those appeals, even though there was no order of reference in these
matters.
C.A. No. 3067 of 2004 and
C.A. No. 3717 of 2005 were subsequently heard at length and were reserved for
judgment. The matters which were tagged were also reserved for judgment.
While disposing of C.A. No.
3067 of 2004 and C.A. No. 3717 of 2005, the Supreme Court observed that insofar
as the cases relating to the National Tax Tribunal were concerned, the T.C.
(Civil) No. 150 of 2006 involved the challenge to Article 323B of the
Constitution. The said Article enables appropriate Legislatures to provide by
law, for adjudication of trial by Tribunals of any disputes, complaints or
offences with respect to all or any of the matters specified in clause (2)
thereof. Sub-clause (i) of the clause (2) of Article 323B enables such Tribunals
to try offences against laws with respect to any of the matters specified in
clauses (a) to (h) of clause (2) of the said Article.
One of the contentions urged
in support of the challenge to Article 323B related to the fact that the
Tribunals do not follow the normal rules of evidence contained in the Evidence
Act. In criminal trials, an accused is presumed to be innocent till proved
guilty beyond reasonable doubt, and the Evidence Act plays an important role, as
appreciation of evidence and consequential finds of facts are crucial. The trial
would require experience and expertise in criminal law, which means that the
judge or the adjudicator to be legally trained. The Tribunals which follow their
own summary procedure, are not bound by the strict rules of evidence and the
members will not be legally trained. Therefore it may lead to convictions of
persons on evidence which is not sufficient in probative value or on the basis
of inadmissible evidence. It was submitted that it would thus be a retrograde
step for separation of executive from the judiciary.
The Supreme Court observed
that the appeals on issues on law are traditionally heard by the Courts. Article
323B enables the Constitution of Tribunals which will be hearing appeals on pure
questions of law which is the function of the Courts. In L. Chandra Kumar v.
Union of India (1997) 3 SCC 261 it had considered the validity of only clause
(3)(d) of Article 323B, but did not consider the validity of other provisions of
Article 323B.
The Supreme Court noted that
the appeals relating to constitutional validity of the National Company Law
Tribunal under the Companies Act, 1956 did not involve the consideration of
Article 323B. The constitutional issues raised in T.C. (Civil) No. 150 of 2006
were not touched as the power to establish company Tribunals was not traceable
to Article 323B but to several entries of Lists I and III of the Seventh
Schedule and consequently there was a challenge to this article.
The Supreme Court observed
that the basis of attack in regard to Parts IB and IC of the Companies Act and
the provisions of the NTT Act were completely different. The challenge to Parts
IB and IC of the Companies Act, 1956 sought to derive support from Article 323B
by contending that Article 323B was a bar for constitution of any Tribunal in
respect of matters not enumerated therein. On the other hand the challenge to
the NTT Act was based on the challenge to Article 323B itself.
The Supreme Court therefore
was of the view that these petitions relating to the validity of the NTT Act and
the challenge to Article 323B raised issues which did not arise in the two civil
appeals. Therefore these cases could not be disposed of in terms of the decision
in the civil appeals, but were required to be heard separately. The Supreme
Court accordingly directed that these matters be delinked and listed separately
for hearing.
