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Chief Justice of India DY Chandrachud said on Friday (October 6) that a seven-judge bench will soon be set up to hear a batch of pleas challenging the Centre’s use of the Money Bill route to pass certain key legislations. The CJI’s observation was made when he was hearing a plea specifically challenging certain amendments to the Prevention of Money Laundering Act (PMLA).
The 7- judge bench will essentially examine whether a law was validly categorised as a Money Bill or only to circumvent scrutiny of the Rajya Sabha. What is a money bill, and which legislations are under challenge for being passed as a money bill?
Article 110 of the Constitution deals with Money Bills. A money bill is a bill that, in the opinion of the Speaker of the Lok Sabha, deals with taxation or the appropriation of public funds — the Consolidated Fund of India or the Contingency Fund of India. A money bill can only be introduced in the Lok Sabha, and the Speaker categorising a bill as a “money bill” means that it need not be passed by the Rajya Sabha. The union budget, for example, is a money bill.
According to Article 110 (3) of the Constitution, “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.” This raises the question of the extent of judicial review possible on the Speaker’s decision. However, the court in the 2018 Aadhaar case had said that the Speaker’s decision will be subject to judicial scrutiny.
Under Article 110(1), a Bill is deemed to be a money Bill if it deals 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. Article 110(1)(g) adds that “any matter incidental to any of the matters specified in Articles 110(1)(a)-(f)” can also be a Money Bill.
Citing this additional clause, the Modi government has introduced several key legislation as a Money Bill, bypassing the Rajya Sabha. The Opposition has argued that this was done only because the government did not have the numbers to get these legislations cleared in the Rajya Sabha.
The constitutionality of three key legislations, including the PMLA, will be examined afresh by the larger bench in the light of whether these laws qualified as a money bill. The other two are the Aadhaar Act and the 2017 amendments altering service conditions of Tribunals. While the PMLA, Aadhaar Act have been substantially upheld by the Court, the SC had struck down the tribunal amendments as unconstitutional.
In July 2022, a three-judge bench comprising Justices AM Khanwilkar, Dinesh Maheshwari and CT Ravikumar had upheld the PMLA and the vast powers of the ED. However, the bench had left the validity of amendments to the PMLA through the Money Bill route open for a larger Constitution bench to hear.
The Finance Acts passed in 2015, 2016, 2018 and 2019, brought in crucial amendments to the PMLA. Finance Bills passed during the budget are introduced as money bills under Article 110 of the Constitution.
The first major challenge on whether a bill qualified to be a money bill under the Constitution was in the Aadhaar case. In a 4:1 majority, the Supreme Court in 2018, had ruled in favour of the government and had cleared the Aadhaar Act as a valid money bill under Article 110 of the Constitution.
Incidentally, Justice Chandrachud had been the lone dissenter in the Aadhaar ruling of 2018, criticising the government for passing the Aadhaar Act as a money Bill. He had called it a “fraud on the Constitution” and “subterfuge”. The government had argued that since the subsides distributed through Aadhaar flows from the Consolidated Fund of India, the law is validly categorised as a Money Bill.
In November 2019, in Roger Matthew, versus union of India, the Supreme Court heard the challenge against tweaks in the service conditions of tribunal members which was also introduced as a money bill in the Finance Act, 2017. On the issue of tribunals, the government had argued that since salaries of members of Tribunals flow from the Consolidated Fund of India, the amendments were introduced as a Money Bill.
While a five judge bench of the court struck down the law as unconstitutional for interfering with judicial independence, it referred the money bill aspect to a larger constitution bench.
In doing so, the court also expressed doubts over the correctness of a five-judge Constitution Bench’s 2018 verdict upholding the Aadhaar Act which had been passed as a money Bill.
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