Amendment To Clause (d) Of S. 25 CVC Act & Sub-Section 1 Of S. 4B DSPE Act Not Unconstitutional: SC While Declaring Extension Of ED Director's 2 Yrs Tenure Illegal

The Supreme Court yesterday held that the amendment to clause (d) of Section 25 of the Central Vigilance Commission Act (CVC Act) and to sub-section (1) of Section 4B of the Delhi Special Police Establishment Act (DSPE Act) is not unconstitutional.

The Court further said that there is no reason to hold that the amendment to Fundamental Rules, 1922 is impermissible in law and hence declared the extension of the Enforcement Directorate Director's 2 years tenure as illegal.

The three-Judge Bench comprising Justice B.R. Gavai, Justice Vikram Nath, and Justice Sanjay Karol observed, “Since we have already held that the amendment to clause (d) of Section 25 of the CVC Act and to sub-section (1) of Section 4B of the DSPE Act is not unconstitutional, we see no reason to hold that the amendment to Fundamental Rules, 1922 is impermissible in law. Consequently, we are of the considered view that the challenge to validity of Central Vigilance Commission (Amendment) Act, 2021, the Delhi Special Police Establishment (Amendment) Act, 2021, and the Fundamental (Amendment) Rules, 2021 fails and the writ petitions at the behest of the petitioners to that extent are liable to be rejected.”

The Bench also observed that the retrospective amendment should be reasonable and not arbitrary and must not be violative of the fundamental rights guaranteed under the Constitution.

Amicus Curiae K.V. Viswanathan assisted the Court. Senior Advocates Anoop G. Choudhary, Gopal Sankarnarayanan, Dr. Abhishek Manu Singhvi, Advocates Prashant Bhushan, J.S. Sinha, and Sharangowda appeared on behalf of the petitioners while Solicitor General Tushar Mehta and Additional Solicitor General S.V. Raju appeared on behalf of the Centre.

Facts of the Case -

A batch of writ petitions was filed seeking a writ, order, or directions in the nature of certiorari for quashing the order passed by the Centre for further extension of the tenure of the respondent. All the petitions challenged the validity of the Central Vigilance Commission (Amendment) Act, 2021, the Delhi Special Police Establishment (Amendment) Act, 2021, and the Fundamental (Amendment) Rules, 2021. The said respondent who was working as Principal Special Director in the Directorate of Enforcement (ED) was appointed as Director of Enforcement for a period of two years from the date of his assumption of charge of the post or until further orders, whichever was earlier, vide order dated November 19, 2018.

A writ petition [Common Cause (A Registered Society) v. Union of India & Ors. 2021 SCC OnLine SC 687] was filed in 2020 by Common Cause, a registered society before the Apex Court praying for quashing of the order and for a consequential direction to the respondent to appoint Director of Enforcement in accordance with the procedure prescribed under Section 25 of the CVC Act. The same was dismissed and in 2021, the amendments were brought into the CVC Act, DSPE Act, and Fundamental Rules.

The following two questions arose before the Supreme Court:

1. As to whether the amendment to Section 25 of the CVC Act by the Central Vigilance Commission (Amendment) Act, 2021 and to sub-section (1) of Section 4B of the DSPE Act by the Delhi Special Police Establishment (Amendment) Act, 2021 and the amendment in clause (d) of Rule 56 of the Fundamental Rules, 1922 by the Fundamental (Amendment) Rules, 2021 are liable to be held ultra vires and set aside?

2. As to whether the extensions granted to the tenure of the respondent No.2 as Director of Enforcement for a period of one year each vide orders dated 17th November 2021 and 17th November 2022 are legal and valid, and if not, whether liable to be set aside?

The Court while considering the first question noted, “It can thus be seen that by virtue of the Amendment the power which was available with the Central Government to grant extension, if it considers necessary in public interest so to do, in case of certain officers, has now been also extended to the Director of CBI appointed under the DSPE Act and Director of Enforcement in the ED appointed under the CVC Act. The second change that has been brought is that such extension in service does not exceed two years or the period provided in the respective Act or rules made thereunder, under which their appointments are made.”

While considering the second question, the Court said that the Constitution Bench of the Seven Judges of the Apex Court clearly held that by a subsequent enactment, the writ of mandamus issued by the Calcutta High Court crystalizing the rights and liabilities between the parties cannot be annulled.

“It could, thus, clearly be seen that this Court has held that the effect of the judgments of this court can be nullified by a legislative act removing the basis of the judgment. It has further been held that such law can be retrospective. … It has been held that the defect pointed out should have been cured such that the basis of the judgment pointing out the defect is removed. This Court has, however, clearly held that nullification of mandamus by an enactment would be impermissible legislative exercise”, further said the Court.

It noted that the transgression of constitutional limitations and intrusion into the judicial power by the legislature is violative of the principle of separation of powers, the rule of law, and Article 14 of the Constitution.

“… there was no proscription on the Government to appoint a Director of Enforcement beyond a period of two years. … the contention that the very foundation on which judgment of this Court in the case of Common Cause (2021) was based is taken away is without substance”, held the Court.

The Court observed that the Centre could have not issued orders in breach of the mandamus issued by it vide its judgment in Common Cause (2021).

“Though we have held that orders dated 17th November 2021 and 17th November 2022 granting extensions to respondent No.2 are not valid in law, we are inclined to take into consideration the concern expressed by the Union of India with regard to FATF review. We are further inclined to take into consideration that the process of appointing the Director of Enforcement is likely to take some time. In that view of the matter, we find that in order to ensure the transition to be smooth in the larger public interest, it will be appropriate to permit respondent No.2 to continue to be in office till 31st of July 2023”, held the Court.

Accordingly, the Apex Court partly allowed the pleas and permitted the respondent to continue to hold office till July 31, 2023.

Cause Title- Jaya Thakur v. Union of India & Ors. (Neutral Citation: 2023 INSC 616)

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