08 Nov

Money Bill

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Content

• Introduction
• What is Money Bill
• Some recent examples include

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Introduction

In BR Ambedkar’s vision, the Constitution embodied not only a charter of rights but also a foundation for republican governance. But sometimes the constitutional provisions are misused which negatively hampers the legislative process and federal structure of the country. Provisions related to money bill are among such misused provisions.

What is Money Bill? 

• According to Article 110 of the Constitution of India a bill is deemed to be money bill if it contains ‘only’ provisions dealing with all or any of the following matters:

a. the imposition, abolition, remission, alteration or regulation of any tax;

b. the regulation of the borrowing of money or the giving of any guarantee by the Government of India, or the amendment of the law with respect to any financial obligations undertaken or to be undertaken by the Government of India;

c. the custody of the consolidated Fund or the Contingency Fund of India, the payment of moneys into or the withdrawal of moneys from any such Fund;

d. the appropriation of moneys out of the consolidated Fund of India;

e. the declaring of any expenditure to be expenditure charged on the Consolidated Fund of India or the increasing of the amount of any such expenditure;

f. the receipt of money on account of the Consolidated Fund of India or the public account of India or the custody or issue of such money or the audit of the accounts of the Union or of a State; or

g. any matter incidental to any of the matters specified in sub clause (a) to (f)

• Article 110(3)-> Speaker’s decision final.
• Article 122 -> prohibits courts from inquiring into proceedings of Parliament and examining their validity.

In order to ensure financial independence and continuity to government functioning, the Constitution gives primacy to Lok Sabha with respect to Money Bill. Such bills can only be introduced in Lok Sabha, can’t be amended by Rajya Sabha. The upper house can only make some recommendations to the money bill passed by the lower house within a period of fourteen days which the lower house may accept or reject.

Since Powers of Rajya Sabha are greatly reduced on Money bill, government (majority in Lok Sabha) sometimes by passes the Rajya Sabha by getting a bill which doesn’t satisfy the conditions for money bill declared as money bill.

 Some recent examples include:

• Adhaar Bill, 2016 contained provisions relating to providing of benefits, subsidies and services funded from Consolidated Fund of India, but it also contained several other provisions like allowing Adhaar to be used for opening bank accounts etc.
• Finance Bill, 2016 also had provisions other than those related to taxation. It amended the RBI Act to create Monetary Policy Committee. It also amended the Foreign Contribution Regulation Act (FCRA) (with retrospective effect) to change the definition of foreign company.
• Finance Bill, 2017 also had provisions related to structure and organization of the Tribunals.
• Finance Bill, 2019 was used to amend the provisions of the Prevention of Money Laundering Act (PMLA).

­ Supreme Court Verdict on Aadhaar Bill, 2016 in Sep 2018

• Accepts Adhaar as money bill.
  • The Supreme Court held that government was fine to use money bill route as long as the main focus on the bill fit the criteria – and even if other provisions were unconnected to taxation or government expenditure.
• Dissenting Judgment: Adhaar Act as Money Bill is a fraud on constitution.
  • Justice Chandrachud said that superseding the authority of the Rajya Sabha is in conflict with the Constitutional Scheme and the legitimacy of democratic institutions.
    • He pointed to an important word in provision (i) of Article 110: “only”.

­ Supreme Court Verdict on Finance Bill, 2017 (Nov 2019): Rojer Mathew vs South Indian Bank Ltd and Ors

• In Nov 2019, a five Judge Constitutional Bench of the Supreme Court judgement while examining the legality of a number of changes to the composition of tribunals passed through Finance Bill, 2017, which the court struck down, it also brought up the money bill question.
• The bench headed by CJI Ranjan Gogoi decided “It is clear to us that the majority dictum [in the Aadhaar judgment] did not substantially discuss the effect of the word ‘only’ in Article 110(1) and offers little guidance on 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).” The court was dissatisfied with the way the Aadhar judgement in the K Puttuswamy case had dealt with the issue of what could be certified as a money bill.
• The court has thus also raised question of whether the Finance Act 2017 could have been passed as money bill.
• The matter has been referred to a larger Seven Judge Bench.

­ In July 2022, while giving verdict on the Constitutionality of PMLA, the SC reiterated that the question if the amendment to PMLA could be passed as part of Finance Bill, will be determined by a larger bench.

Conclusion and Way Forward

• It appears that many of the bills discussed above don’t qualify to be money bill under Article 110 of the Constitution. Therefore, concerns have been raised about bypassing of the upper house. The upper house has special role in Indian federal structure and therefore there is an urgent need to arrest these developments.
• Steps that can be taken
  • The 7 judge Constitutional bench should examine the issue on priority.
  • The Supreme court should examine the issue under its power of judicial review under the principles laid down in the Kihoto Hollohan, 1992 and Raja Ram Pal, 2007 cases.
  • Reforming the officer of Speaker to make it more neutral as in the case of Britain.
    • Resignation from party
    • Guarantee of continuity of office
    • Election campaign on non-political issues
  • Further, Speaker removal procedure should be made more stringent. Instead of 50% of the total membership, allow speaker to be removed only by special majority (as in the case of a Supreme Court Judge)
  • A committee to decide whether a bill is money bill or not.
    • This committee can have representation from various political parties.
  • Opposition parties should also play a constructive role by reducing the disruption of upper house.

Example Questions

• The Constitution of India provides special provisions for the passage of a Money Bill to ensure the financial independence and continuity of government function. But these provisions are sometimes being misused to bypass the Rajya Sabha in the legislative process. Illustrate some of this misuse with examples. Suggest the way forward to deal with this trickery of the money bill. [15 marks, 250 words]