Key issue will be back in SC: What constitutes a Money Bill?

• The Supreme Court has agreed to “take the call” on hearing petitions challenging the “Money Bill route” taken by the government to push through contentious legislation in Parliament.

Money Bill in Constitution

• In the usual process of lawmaking, a Bill must be passed by majorities in both Lok Sabha and Rajya Sabha. The exception are a category of Bills known as Money Bills.
• Under Article 109, a Money Bill shall be introduced only in Lok Sabha and, upon passage, transmitted to Rajya Sabha for its “recommendations”. Rajya Sabha must revert within 14 days, but it is up to Lok Sabha to accept or reject any or all of its recommendations. If the Bill is not returned by Rajya Sabha within the stipulated period, it is considered passed anyway.
• To ensure this process is not abused, Article 110 provides a strict definition of a Money Bill. In order for a Bill to be designated as a Money Bill, it must contain “only provisions dealing with all or any” of a specific list of subjects. These subjects include taxation, financial obligations of the Government of India, the Consolidated Fund (revenue received by the government through taxes and expenses incurred in the form of borrowings and loans) or Contingency Fund (money to meet unforeseen expenditure) of India, or “any matter incidental” to the matters listed in the Article.
• Under Article 110(3), “If any question arises whether a Bill is a Money Bill or not, the decision of the Speaker of the House of the People thereon shall be final.”

The important cases in SC

• CHALLENGE TO AADHAAR ACT: In September 2018, the court ruled in favour of the government, upholding the constitutionality of the Aadhaar law by a 4-1 majority.
• The petitioners argued that the Act was passed as a Money Bill, even though it contained provisions that were unrelated to the subjects listed under Article 110.
• Justice Ashok Bhushan, who concurred with the majority, wrote that the main aim of the Act was to provide subsidies and benefits, which involves expenditure from the Consolidated Fund, and qualified the Act to be passed as a Money Bill.
• Justice D Y Chandrachud (he was not CJI at the time), was the sole dissenting voice. He observed that the use of the Money Bill route in this case was an “abuse of the constitutional process”, and that passing an ordinary Bill as a money Bill limits the role of Rajya Sabha in lawmaking.
• FINANCE ACT, 2017: The Finance Act, 2017 included amendments to a number of Acts which, among other things, empowered the government to notify rules regarding the service conditions of members of Tribunals. Shortly afterward, the Centre notified the Appellate Tribunal and Other Authorities (Qualifications, Experience and Other Conditions of Service of Members) Rules of 2017 (Tribunal Rules).
• In November 2019, a five-judge Bench struck down the Tribunal Rules as unconstitutional for interfering with judicial independence, but referred the Money Bill aspect to a larger seven-judge Bench. The court observed that the five-judge Bench in the Aadhaar case did not elaborate upon what makes a valid Money Bill.
• SINCE 2019: In the years since the 2019 judgment, the court has stopped short of addressing the Money Bill question in several cases, given the pending seven-judge Bench case.
• These include the challenge to the wide powers of the Enforcement Directorate under the PMLA, where the restrictive bail conditions under Section 45 were introduced through a Money Bill (the Finance Act, 2018), and the challenge to the Centre’s Electoral Bond scheme which was facilitated through amendments to key laws through the Money Bill route.