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Supreme Court to Consider Challenge Regarding Classification of Bills as Money Bills


A seven-judge Bench of the Supreme Court of India, led by the Chief Justice of India, addresses a request for priority to a reference concerning the manner in which the Centre got crucial amendments passed in the Parliament as Money Bills.


GS II: Polity and Governance

Dimensions of the Article:

  1. Money Bill: Definition and Constitutional Basis
  2. Contested Amendments Passed as Money Bills
  3. Implications of the Larger Bench

Money Bill: Definition and Constitutional Basis

  • Definition: A Money Bill is a type of financial legislation that exclusively deals with matters related to revenue, taxation, government expenditures, and borrowing.
  • Constitutional Basis:
    • Article 110(1) specifies that a Bill is considered a Money Bill if it pertains to matters outlined in Article 110(1)(a) to (g), including taxation, government borrowing, and appropriation of funds from the Consolidated Fund of India.
    • Article 110(1)(g) extends this definition to include “any matter incidental to any of the matters specified in Articles 110(1)(a)-(f).”
  • Speaker’s Decision: According to Article 110(3) of the Constitution, if there is a question about whether a Bill qualifies as a Money Bill or not, the Speaker of the House of the People (Lok Sabha) has the final say on the matter.
  • Money Bills must be introduced in the Lok Sabha and cannot be introduced in the Rajya Sabha (the upper house of Parliament).
  • While the Rajya Sabha can make recommendations on a Money Bill, it does not possess the authority to amend or reject it.
  • The President can either accept or reject a Money Bill but cannot return it for reconsideration.
  • There is no provision for a Joint sitting of both houses to resolve disagreements on Money Bills.

Contested Amendments Passed as Money Bills

Prevention of Money Laundering Act (PMLA) Amendments:
  • Amendments to the Prevention of Money Laundering Act (PMLA) from 2015 onwards granted the Enforcement Directorate extensive powers, such as arrest and search authority.
  • The controversy surrounds the passage of these amendments as Money Bills, raising concerns about their legality and constitutionality.
  • Legal experts and petitioners question whether these substantial changes should have followed the regular legislative process involving both houses of Parliament.
Finance Act of 2017:
  • The Finance Act of 2017 was designated and passed as a Money Bill, sparking concerns about the proper utilization of this legislative procedure.
  • Allegations emerged that the Act aimed to modify appointments to 19 significant judicial tribunals, including the National Green Tribunal and Central Administrative Tribunal.
  • Accusations were made that categorizing the 2017 Act as a Money Bill was a deliberate effort to expand executive control over these tribunals.
  • The Act’s passage coincided with changes that significantly reduced the qualifications and experience required for staffing these crucial judicial bodies.
Aadhaar Act, 2016:
  • In 2018, the Supreme Court ruled in favor of the government, validating the Aadhaar Act as a legitimate Money Bill under Article 110 of the Constitution.
  • The government’s argument was based on subsidies distributed through Aadhaar flowing from the Consolidated Fund of India, justifying the Act’s categorization as a Money Bill.
  • This decision raised legal and procedural questions as Money Bills are the exclusive domain of the Lok Sabha and limit the influence of the Rajya Sabha.
  • Recently, the Chief Justice of India called for a more comprehensive review of these issues.

Implications of the Larger Bench:

  • Clarity on Constitutionality: The larger bench’s decision will provide clarity on the constitutionality of the Prevention of Money Laundering Act (PMLA), the Aadhaar Act, and the Tribunal reforms.
  • Categorization as Money Bills: It will determine whether these laws were accurately categorized as money bills or if they were used to bypass scrutiny in the Rajya Sabha.
  • Legal Soundness: The resolution will clarify whether these classifications were legally valid or strategic maneuvers to evade oversight.
  • Judicial Scrutiny: The discussions within the larger bench may also shed light on the extent of judicial scrutiny that can be applied to the Speaker’s determinations when classifying bills as money bills.

-Source: The Hindu

April 2024