MADRAS BAR ASSOCIATIONversusUNION OF INDIA

                          (2010) 6 S.C.R. 957


                   MADRAS BAR ASSOCIATION                         A
                                     v.
                        UNION OF INDIA
         (Transferred Case (Civil) No. 150 of 2006 etc.)

                             MAY 11, 2010
                                                                  B
       [K.G. BALAKRISHNAN, CJI., R.V. RAVEENDRAN,
     D.K. JAIN, P. SATHASIVAM AND J.M. PANCHAL, JJ.]

       Constitution of India, 1950:
                                                                  c
      Article 323-B - Enabling appropriate Legislature to
provide for adjudication or trial by Tribunals - Enactment of
National Tax Tribunal Act, 2005 - Validity of - HELD: The
petitions relating to validity of the NTT Act and the challenge
to Article 323-B raises issues which did not arise in CA No.      D
306712004 and CA No. 371712005 1 - Therefore, the instant
cases cannot be disposed of in terms of the decision in the
two civil appeals, but require to be heard separately - These
matters are, therefore, directed to be de-linked and listed
separately for hearing - National Tax Tribunal Act, 2005 -
~~of                                                              E
    CIVIL ORIGINAL JURISDICTION : Transfered Case (C)
No. 150 of 2006.

       Under Article 139 of the Constitution of India.
                                                                  F
                                      WITH

T.C. (C) No. 116, 117 & 118 of 2006,

W.P. (C) No. 697 of 2007.
                                                                  G
   Parag P. Tripathy, ASG, Arvind P. Datar, Ananth
Padmanabhan, Nikhil Nayyar, TVS Raghavendra Sreyas,
Ambuj Agrawal, Suchindran B.N., E.C. Vidya Sagar, Amey
1.    Union of India vs. R. Gandhi (2010) 6 SCR 857.
                                                                  H
                                    957
    958      SUPREME COURT REPORTS                  [2010) 6 S.C.R.


A   Nargolkar, Arti Gupta, Vismai Rao, Gaurav Agarwal, Kunal
    Bahri, Varun Sarin, Anubha Agarwal, Sushma Suri, Navin
    Prakash (for P. Parmeswaran), Sanjeev Sachdeva, Saurabh
    Sharma, Preet Pal Singh, Parmanand Gaur, Gagan Gupta,
    Achin Gupta for the appearing parties.
B
          The following order of the Court was delivered

                              ORDER

        In all these petitions, the constitutional validity of the
c National Tax Tribunal Act, 2005 ('Act' for short) is challenged.
  In TC No.150/2006, additionally there is a challenge to section
  46 of the Constitution (Forty-second Amendment) Act, 1976
  and Article 3238 of Constitution of India. It is contended that
  section 46 of the Constitution (Forty-second Amendment) Act,
0 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,
E procedure etc. It is contended that Article 3238 violates the
  basic structure of the Constitution as it completely takes away
  the jurisdiction of the High Courts and vests them in the National
  Tax Tribunal, including trial of offences and adjudication of pure
  questions of law, which have always been in the exclusive
F domain of the judiciary.

          2. When these matters came up on 9.1.2007 before a
    thn~e Judge Bench, the challenge to various sections of the Act
    was noticed.

G      (2.1) The first challenge was to section 13 which permitted
  "any person" duly authorized to appear before the National Tax
  Tribunal. Union of India submitted that the appropriate
  amendment will be made in the Act to ensure that only lawyers,
  Chartered Accountants and parties in person will be permitted
H to appear before the National Tax Tribunal.
   MADRAS BAR ASSOCIATION v. UNION OF INDIA                   959


       (2.2) The second challenge was to section 5(5) of the Act     A
  which provided that the Central Government may, in
. consultation with the Chairperson, transfers a Member from
  headquarters of one Bench in one State to the headquarters
  of anothar Bench in another State or to the headquarters of any
  other Bench within a State. Union of India submitted that having   B
  regard to the nature of the functions to be performed by the
  Tribunal and the constitutional scheme of separation of powers
  and independence of judiciary, the expression "consultation with
  the Chairperson" occurring in section 5(5) of the Act should be
  read and construed as "concurrence of the Chairperson".            C

      (2.3) The third challenge was to Section 7 which provided
 for a Selection Committee comprising of the Chief Justice of
 India or a Judge of the Supreme Court nominated by him, (b)
 Secretary in the Ministry of Law & Justice, and (c) Secretary in
                                                                     0
 the Ministry of Finance. It was contended by the petitioners that
 two of the Members who are Secretaries to the Government
 forming the majority may override the opinion of the Chief
 Justice or his nominee which was improper. It was stated on
 behalf of the Union of India that there was no question of two
 Secretaries overriding the opinion of the Chief Justice of India    E
 or his nominee since primacy of the Chairperson was inbuilt in
 the system and this aspect will be duly clarified.

      (2.4) In regard to certain other defects in the Act, pointed
 out by the petitioners, it was submitted that the Union             F
 Government will examine them and wherever necessary
 suitable amendments will be made.

     In view of these submissions, on 9.1.2007, this Court
 made an order reserving liberty to the Union Government to
 mention .the matter for listing after the appropriate amendments    G
 were made in the Act.

     3. On 21.1.2009, when arguments in CA No. 3067 of 2004 .
 and CA No. 3717/2005, which related to the challenge to Parts
 1B and 1C of Companies Act, 1956 were in progress before H
   960      SUPREME COURT REPORTS                  [2010] 6 S.C.R.


A 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
  app1~als, even though there is no order of reference in these
B matters.

      4. 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
C judgment.

       5. We have disposed of CA No.3067/2004 and CA No.
  3717/2005 today by a separate order. In so far as these cases
  are concerned, we find that TC (Civil) No. 150/2006 involves
  the challenge to Article 323B of the Constitution. The said
D 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 the matters specified in
  clause (2) thereof. Sub-clause (i) of Clause 2 of Article 323B
  enables such tribunals to try offences against laws with respect
E to any of the matters specified in clauses (a) to (h) of clause
  (2) of the said Article.

        6. One of the contentions urged in support of the challenge
  to Article 323B relate to the fact that Tribunals do not follow the
  normal rules of evidence contained in Evidence Act. In criminal
F trials, an accused is presumed to be innocent till proved guilty
  beyond reasonable doubt, and Evidence Act plays an important
  role, as appreciation of evidence and consequential findings
  of facts are crucial. The trial would require experience and
  expertise in criminal law, which means that the Judge or the
G adjudicator to be legally trained. 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
H evidence. It is submitted that it would thus be a retrograde step
  MADRAS BAR ASSOCIATION v. UNION OF INDIA                     961


for separation of executive from the judiciary.                        A

     7. Appeals on issues on law are traditionally heard by
courts. Article 3238 enable constitution of Tribunals which will
be hearing appeals on pure questions of law which is the
function of courts. In L. Chandra Kumarv. Union of India (1997)        8
4 sec 261, this court considered the validity of only Clause
3(d) of Article 3238 but did not consider the validity of other
provisions of Article 3238.

     8. The appeals relating to constitutional validity of National
Company Law Tribunals under the Companies Act, 1956 did                C
not involve the consideration of Article 3238. The constitutional
issues raised in TC (Civil) No. 150/2006 were not touched as
the power to establish Company Tribunals was not traceable
to Article 3238 but to several entries of Lists I and Ill of Seventh
Schedule and consequently there was no challenge to this               D
Article.

        9. The basis of attack in regard to Part 1B and 1C of
  Companies Act and the provisions of NTT Act are completely
  different. The challenge to Part 18 & IC of Companies Apt, 1956 E
  seeks to derive support from Article 3238 by contending that .
  Article 3238 is a bar for constitution of any Tribunal in respect
· of matters not enumerated therein. On the other hand the
  challenge to NTT Act is based on the challenge to Article 3238
  itself.
                                                                    F
        10. We therefore find that these petitions relating to the
  validity of the NTI Act and the challenge to Article 3238 raises
  issues which did not arise in the two civil appeals. Therefore
  these cases can not be disposed of in terms of the decision in
  the civil appeals but requires to be heard separately. We G
  accordingly direct that these matters be delinked and listed
  separately for hearing.

 R.P.                           Transferred cases delinked and
                                to be listed.separately for hearing    H