Finance Bill, 2017: How Tribunal Mergers Took Cover Under Money Bill 

The Finance Bill amendments will make eight tribunals cease to exist. 

The Indian Parliament building in New Delhi (Photographer: Dilip Banerjee/Bloomberg News)
The Indian Parliament building in New Delhi (Photographer: Dilip Banerjee/Bloomberg News)

An annual legislative exercise took a curious turn on Tuesday, March 22, when the government introduced as many as 40 amendments to the Finance Bill, 2017. The amendments were not only unusually high in number but many either pertained to issues not presented in the Union Budget or were provisions in laws rarely amended by a Finance Bill.

For instance, the government's decision to make the biometric-based unique identification number, Aadhaar, mandatory for filing income tax returns was not announced in the Budget. Another amendment to merge eight tribunals was not only unanticipated but amended laws unconnected to tax or government finance.

Finance Bill, 2017: How Tribunal Mergers Took Cover Under Money Bill 

The current Finance Bill is a money bill and hence, as per the Constitution of India, requires only Lok Sabha approval (in which the Bharatiya Janata Party has a majority). The Rajya Sabha may recommend changes but the lower house is not bound to accept them, as per constitutional procedure. Only matters pertaining to taxation, the financial obligations of the government and the operation of the Consolidated Fund of India can be covered by a money bill.

And though the Finance Bill, along with all the amendments, was approved by the Lok Sabha, Tuesday's amendments caused consternation among some members of parliament.

“Forty existing Acts are proposed to be amended by means of this Finance Bill. This has never been heard in the history of Indian legislative mechanism,” said NK Premchandran, a Revolutionary Socialist Party Member of Parliament (MP) during the debate that preceded the passage of the Bill.

Premchandran said that while 40 amendments were proposed, at least 25 were on matters unrelated to taxation or revenue of the government. These amendments include those on merger of tribunals and adjudication of judges and officials working in these tribunals.

Laws Amended Via Finance Bill, 2017

  • Competition Act, 2002
  • Companies Act, 2013
  • Airports Economic Regulatory Authority of India Act, 2008
  • TRAI Act, 1997
  • Control of National Highways Act, 2002
  • Airport Authority of India Act, 1994
  • Employees Provident Fund and Miscellaneous Provisions Act, 1952
  • Industrial Disputes Act, 1947
  • Copyright Act, 1957
  • Trade Marks Act, 1999
  • Railways Act, 1989
  • Railways Claims Tribunal Act, 1987
  • FEMA, 1999
  • Smugglers and Foreign Exchange Manipulators Act, 1976
  • Cinematograph Act, 1952
  • Electricity Act, 2013
  • Armed Forces Act, 2007
  • National Green Tribunal Act, 2010
  • Income Tax Act, 1961
  • Customs Act, 1962
  • Securities and Exchange Board of India Act, 1992
  • Administrative Tribunals Act 1985
  • Securities Contract Act, 1956
  • Depositories Act, 1996
  • Information Technology Act, 2000
  • Recovery of Debts due to Banks and Financial Institutions Act, 1993
  • Armed Forces Tribunal Act, 2007

Trinamool Congress Party MP Saugata Roy argued that the finance minister should keep non-tax related bills outside the ambit of the Finance Bill and pass them at a later stage.

“Let the Finance Bill consist of only the taxation proposals. Let us pass it without much ado, and let us keep the other Bills in limbo. There is a long session ahead, and let the finance minister bring those Bills later,” Roy said in the lower house on Tuesday.

However, Finance Minister Arun Jaitley sought permission from the speaker to present these amendments as he claimed that these provisions were “incidental” to the budget document which lays down the government's expenditure plan for the coming financial year.

Tribunal Mergers

As a result of Tuesday's legislative action, eight tribunals in India have been merged with existing ones.

Finance Bill, 2017: How Tribunal Mergers Took Cover Under Money Bill 

While some combinations, such as that of the Copyright Board with the Intellectual Property Appellate Board, and that of The Railway Rates Tribunal with The Railway Claims Tribunal, can be justified, others have raised eyebrows, such as the merger of the National Company Law Appellate Tribunal with the Competition Law Appellate Tribunal.

In a phone conversation with BloombergQuint, Dhanendra Kumar, the first chairman of the Competition Commission of India criticised the COMPAT-NCLT merger on the grounds that the two entities were governed by different laws, with different objectives.

My little problem with the merger is that while they would like to economise and prevent proliferation of the tribunals, the focus of the two tribunals are different. COMPAT has to hear appeals and decide on compensation cases from the people who had grievances. NCLAT is under Company Law, it’s a financial regulator, not an economic regulator.
Dhanendra Kumar, Former Chairman, Competition Commission of India

Kumar worries that the development of specific jurisprudence on competition will be diluted by such a move.

Aman Lekhi, senior advocate at the Supreme Court, said that more thought and time should be given before deciding to merge tribunals with a single amendment even though there may not be a problem constitutionally with such action.

It is important to examine whether entities merged are relevant and whether the merged entity will be competent to adjudicate the issue. It cannot be passed in a hurry.
Aman Lekhi, Senior Advocate, Supreme Court

While the amendment states that the tribunal mergers may be executed at a later stage as determined by the central government, the suddenness of this and other changes effected on Wednesday, and the use of the Finance Bill to do so has prompted questions regarding the government's use of the money bill route.

Delhi-based lawyer Raman Jit Singh Chima, a policy director at Access Now, an international non-political advocacy group said the degree of amendments is definitely unprecedented. Chima has worked on multiple freedom of speech cases including the landmark Shreya Singhal v. Union of India case on free speech on the internet.

Except on tax tribunal matters, tribunal issues are generally not added to the Finance bill. To my knowledge, the number of subjects covered in the amendments is certainly unprecedented. They have directly sought to amend about 20 statutes ranging from the railways, airports to the cinematography and film censorship. They may not want to go through the other house of the parliament.
Raman Jit Chima, Advocate

Last year the government was criticised for passing the Aadhaar Bill as a money bill, a move challenged by Congress Party member Jairam Ramesh in the Supreme Court. That case is pending decision.