THE CONTEXT: The Chief Justice of India (CJI) recently said that he will constitute a seven-judge Constitution Bench to hear a batch of petitions on challenging the Centre’s use of the money bill as a route to pass key legislations.
WHAT IS A MONEY BILL?
- A money bill has been defined under Article 110 of the Constitution as a draft law that must deal “only” with matters specified in Article 110 (1)(a) to (g) taxation, borrowing by the government, and appropriation of money from the Consolidated Fund of India, among others.
- As per Article 110(1)(g), “any matter incidental to any of the matters specified in Articles 110(1)(a)-(f)” can also be classified as a money bill.
- Generally, for a bill to be enacted into law it requires the approval of both the Lok Sabha and the Rajya Sabha.
- However, a money bill can be introduced only in the Lok Sabha, and the Rajya Sabha cannot amend or reject such bills. The Rajya Sabha can suggest amendments, but it is up to the Lok Sabha to accept or reject them.
- In the event that a dispute arises over whether a bill is a money bill or not, the Lok Sabha Speaker’s decision on the issue shall be considered final.
WAS THE PASSAGE OF THE AADHAAR ACT AS A MONEY BILL LAWFUL?
- The first major challenge about whether a bill qualified as a money bill under the Constitution was in the Aadhaar case.
- In K.S. Puttaswamy v. Union of India (2018), the Supreme Court upheld the constitutionality of the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016.
- It was done by a 4:1 majority and stated that no illegality was committed by passing the Aadhaar Bill as a money bill in the Parliament. However, Justice Chandrachud, had dissented.
The majority opinion:
- It reasoned that the main objective of the legislation is to extend benefits in the nature of aid, grant, or subsidy to the marginalised sections of society with the support of the Consolidated Fund of India.
- Therefore, the Act fell within the ambit of Article 110 (1)(e) of the Constitution (expenditure charged to the consolidated fund) and was validly passed as a money bill.
- It was highlighted that the other provisions are only “incidental” in nature for the proper working of the Act.
- Notably, the concurring opinion by Justice Bhushan affirmed that the matter is subject to future judicial review.
The Dissenting opinion:
- It criticised the government for passing the Act as a money bill and pointed out an important word in provision (i) of Article 110 “only,” followed by a list of matters connected to taxation and expenditure from the Consolidated Fund of India.
- In light of this, he dismissed the argument that since the Aadhar Act involved extending grants from the Consolidated Fund, it should qualify as a money bill.
- In his view, such a contention would allow just about anything to be passed as a money bill . The dissent also underscored that superseding the authority of the Rajya Sabha is in conflict with the constitutional scheme and the legitimacy of democratic institutions.
WHY WAS A REFERENCE TO A LARGER BENCH MADE?
- In Roger Mathew v. Union of India (2019), a five-judge Constitution Bench headed by then CJI Ranjan Gogoi struck down an amendment to the 2017 Finance Act, passed as a money bill, that altered the structure and functioning of various tribunals.
- The Bench noted that majority did not substantially discuss the effect of the word “only” in Article 110(1) in Puttaswamy case. Also, the Puttaswamy case did not examine the repercussions of a finding when some of the provisions of an enactment passed as a “money bill” do not conform to Article 110(1)(a) to (g). Therefore, the Bench asked for the question to be put before a larger bench of the Supreme Court
PMLA verdict
- In 2015, 2016, 2018, and 2019, amendments to Prevention of Money Laundering Act, 2002 related to bail and classification of offences were made through the Finance Act. Finance Bills passed during the budget are introduced as money bills.
- Petitions thereafter filed in the Supreme Court contended that the passage of such amendments as money bills was in violation of Article 110.
- In July 2022, a three-judge Bench upheld key provisions of the PMLA which conferred extensive powers upon the Enforcement Directorate (ED) but left it open for a seven-judge Bench to decide whether these amendments could have been passed through the money bill route.
POTENTIAL IMPACTS
- Could invalidate crucial laws: The final outcome of this seven-judge Bench reference could potentially invalidate crucial laws passed in the past and penalise the government for its legislative approach.
- Issue can be raised on the functioning of both houses: The Lok Sabha enjoys a more popular mandate than the Rajya Sabha. However, the framers of the Constitution ensured that a certain role was carved out for the Rajya Sabha as an institution in a constitutional democracy. This shall be the epicentre of the discussion surrounding this reference.
THE CONCLUSION: With formation of larger constitutional bench, the earlier judgment requires reconsideration of the previous laws and effective judgement needs to ensured for resolving the ambiguities.
PREVIOUS YEAR QUESTIONS
Q.1 Rajya Sabha has been transformed from a ‘useless stepney tyre’ to the most useful supporting organ in past few decades. Highlight the factors as well as the areas in which this transformation could be visible. (2020)
Q.2 “Parliament’s power to amend the constitution is limited power and it cannot be enlarged into absolute power”. In light of this statement, explain whether parliament under article 368 of the constitution can destroy the basic structure of the constitution by expanding its amending power? (2019)
MAINS PRACTICE QUESTIONS
Q.1 The Puttaswamy case was virtually a test case of a Bill that could not be categorized as a Money Bill.
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