What are Money Bills and why are they the subject of a constitutional challenge?

What is the issue?

Money Bills provide a fast-tracked option for the enactment of laws by Parliament. Typically, both the Lok Sabha and the Rajya Sabha must pass a Bill before it can become law.

Under Article 109, however, a Bill introduced as a money Bill only requires assent from the Lok Sabha and the Rajya Sabha merely has 14 days to consider the Bill and return it with recommendations. The Lok Sabha may either accept or reject these recommendations and enact the money Bill into law.

The current issue emerged when the NDA government began to use the money Bill route to enact crucial laws such as the Aadhaar Act, 2016, amendments to the Prevention of Money Laundering Act, 2002 (PMLA), and the Foreign Contributions Regulations Act, 2010. As the Opposition had higher numbers in the Rajya Sabha at the time, some of these legislation, including the Aadhaar Bill, may not have passed had they not been introduced as money Bills.

When have money Bills been challenged in the Supreme Court?

One notable challenge in recent years came against the Aadhaar Act. The petitioners claimed that parts of the Act were passed as a money Bill, despite containing provisions that were unrelated to the subjects listed under Article 110.

The Supreme Court, however, upheld the Aadhaar Act as constitutional in September 2018. Justice Ashok Bhushan, in his concurring judgement, said the main aim of the Act was to provide subsidies and benefits. Since this involves expenditure from the Consolidated Fund, the Act was validly passed as a money Bill.

But he also added that the Speaker’s decision on whether a Bill is a money Bill or not, despite being “final” according to the Constitution, can still be subject to judicial review.

Then Justice D Y Chandrachud authored a dissenting opinion in the case. He said: “The passage of the Aadhaar Act as a Money Bill is an abuse of the constitutional process.” He also highlighted how passing an ordinary Bill as a money Bill would limit the role of the Rajya Sabha in lawmaking.

Another challenge came in the form of pleas questioning the constitutionality of the Finance Act, 2017 — it brought in a number of changes to different Acts, including the Appellate Tribunal and Other Authorities (Qualifications, Experience and Other Conditions of Service of Members) Rules of 2017. The Act which was also enacted through the money Bill route.

Petitioners, including the Madras Bar Association, the All India Lawyers Union (AILU), and Congress MP Jairam Ramesh, argued that the Finance Act, 2017, must be struck down as a whole as it was unrelated to the fiscal subjects listed in Article 110. They also argued that the court has the power to review the decision of the Speaker.

Although in its 2019 judgement, the apex court quashed some of the reforms introduced by the law, it didn’t strike down the entire Finance Act, 2017.

The Supreme Court observed that the five-judge bench in the Aadhaar case had not detailed the scope of what constitutes a money Bill. As they were a bench of the same size, the court referred the question of whether the 2017 Finance Act was validly passed as a money Bill to a larger seven-judge bench.

How has the court dealt with money Bills in the meantime?

Challenges to amendments passed through the money Bill route have been put on hold until the seven-judge bench decides on what constitutes a money Bill.

In the challenge to the PMLA, Congress MP Karti Chidambaram challenged various provisions under the Act, including the restrictive bail conditions under Section 45(1). This provision was introduced through a money Bill (the Finance Act, 2018) and reverses the burden of proof in money laundering cases. It requires the accused to prove that they did not commit the offence and are not likely to commit such an offence while on bail.

In his written submissions, Chidambaram argued that these bail conditions were unrelated to any of the subjects listed under Article 110 and so the Finance Act, 2018, could not have been passed as a money Bill.

After numerous hearings, the court upheld all the challenged provisions under the PMLA in November 2022, including the restrictive bail conditions. It chose not to address the money Bill issue on account of the pending case before the seven-judge bench.

In the electoral bond scheme case, the court struck down the scheme and amendments introduced through the Finance Act, 2017. It, however, noted that the challenge to the passing of the Finance Act, 2017, as a money Bill is pending before the bench and didn’t repeal the Act.

Depending on how the seven-judge bench decides the money Bill issue, it may open the door to renewed challenges against the PMLA and the Aadhaar Act.