Type: Prelims Only

What’s the news?

• In recent years, some major legislations have been passed via the money bill route. Now a seven-judge SC bench will hear a challenge to the Centre’s use of money bills for passing important laws.

Central idea

• In a significant development, the Chief Justice of India announced that a seven-judge bench will be constituted to address a series of pleas challenging the government’s use of the money bill route to enact certain key legislations. This move comes in response to mounting concerns about the validity and constitutional propriety of this legislative procedure.

What is a money bill?

• A money bill is a type of legislative proposal that is defined and governed by Article 110 of the Indian Constitution.

What constitutes a money bill?

• Subject: A bill is considered a money bill if it exclusively deals with specific financial matters outlined in Article 110(1)(a) to (g) of the Indian Constitution. These matters include taxation, government borrowing, and the appropriation of money from the Consolidated Fund of India, among others.
• Introduction in Lok Sabha: Money bills can only be introduced in the Lok Sabha, which is the lower house of India’s Parliament. They cannot originate in the Rajya Sabha, which is the upper house.
• Exclusion of Rajya Sabha Consent: Unlike ordinary bills, money bills do not require the consent or approval of the Rajya Sabha (Council of States). The Lok Sabha has the exclusive authority to pass or reject money bills.
• Final Decision of the Speaker: Article 110(3) of the Constitution states that if any question arises whether a bill is a money bill or not, the decision of the Speaker of the Lok Sabha on this matter shall be final.
• Judicial Scrutiny: While the Constitution grants the Speaker the final authority in deciding whether a bill is a money bill, the Indian judiciary has the power to review and examine the Speaker’s decision for compliance with constitutional provisions.

Challenged Legislations

• Prevention of Money Laundering Act (PMLA) Amendments:
• In July 2022, a three-judge bench composed of Justices A. M. Khanwilkar, Dinesh Maheshwari, and CT Ravikumar upheld the PMLA and the extensive powers of the Enforcement Directorate (ED).
• However, they left the validity of amendments to the PMLA via the Money Bill route open for review by a larger Constitution bench.
• The Finance Acts passed in 2015, 2016, 2018, and 2019 introduced significant changes to the PMLA, raising questions about the constitutionality of their passage.
• Aadhaar Act:
• The Aadhaar case marked a significant challenge to the categorization of a bill as a money bill.
• In 2018, the Supreme Court, in a 4:1 majority, ruled in favor of the government, declaring the Aadhaar Act a valid money bill under Article 110 of the Constitution.
• Notably, Justice Chandrachud dissented, condemning the government’s action as a fraud on the Constitution and subterfuge.
• Tribunal Reform:
• In the case of Roger Matthew vs. Union of India in November 2019, the Supreme Court confronted the issue of changes in the service conditions of tribunal members introduced as a money bill in the Finance Act, 2017.
• While a five-judge bench deemed the law unconstitutional for impinging on judicial independence, it referred the money bill aspect to a larger constitution bench.
• This move also cast doubt on the correctness of the five-judge Constitution Bench’s 2018 verdict upholding the Aadhaar Act as a money bill.

The Larger Bench and Implications

• Constitutional Significance: The cases involve the interpretation of Article 110 and the determination of whether specific bills genuinely qualify as money bills. The decisions reached by the larger bench will establish crucial precedents in constitutional law.
• Clarifying Legislative Boundaries: The larger bench’s decisions will play a pivotal role in clarifying the boundaries of legislative power in India. It will provide guidance on when a bill can be categorized as a money bill and, consequently, whether it requires the consent of the Rajya Sabha.
• Impact on Challenged Legislations: The decisions of the larger bench will directly impact the validity of specific legislations challenged for being passed as money bills. For instance, in the case of amendments to the PMLA, the outcome will determine the fate of these amendments and whether they must undergo further scrutiny in both houses of Parliament.
• Judicial Review of Speaker’s Decision: The larger bench’s deliberations may provide further clarity on the extent of judicial review over the Speaker’s decision regarding the classification of bills as money bills.

Conclusion

• The announcement of a seven-judge bench by CJI Chandrachud signals a substantial step toward addressing these concerns and providing clarity on the boundaries of this legislative process, which has far-reaching implications for India’s legal and political framework.

Also read:

Money Bills vs Finance Bills: What are the differences, what the court has ruled