Supreme Court to hear challenge: When can a bill be designated as a ‘money bill’

 A seven-judge SC bench will hear a challenge to the Centre’s use of money bills for passing important laws

A Money Bill, in the context of India's parliamentary system, is a specific type of legislation outlined in Article 110 of the Indian Constitution. Money Bills deal primarily with matters related to taxation, government expenditure, borrowing of money, or the custody of the Consolidated Fund of India. The essential characteristic of a Money Bill is that it exclusively contains provisions related to these financial matters. Moreover, only the Lok Sabha (the lower house of India's Parliament) has the authority to introduce and pass Money Bills.

The distinction between a Money Bill and an ordinary Bill lies in the procedure of passage. A Money Bill can be introduced only in the Lok Sabha, and once it is passed there, it is sent to the Rajya Sabha (the upper house) for its consideration. However, the Rajya Sabha does not have the power to amend or reject a Money Bill. It can only suggest amendments, but it is ultimately up to the Lok Sabha to accept or reject these suggestions. This process is designed to ensure that financial matters, which are crucial for the functioning of the government, do not face unnecessary delays or blockades.

However, there have been instances where certain legislations were categorized as Money Bills, and this categorization has been challenged. The issue arises when the classification as a Money Bill is viewed as an attempt to bypass the scrutiny of the Rajya Sabha, which has the power to amend or reject ordinary Bills. If a law is improperly categorized as a Money Bill when it does not primarily pertain to financial matters, it can lead to concerns about the abuse of power and the circumvention of the Rajya Sabha's role in the legislative process.

In the context of the statement made by Chief Justice of India DY Chandrachud, a seven-judge bench will be set up to examine whether certain key legislations were validly categorized as Money Bills or if they were improperly labeled as such to avoid scrutiny by the Rajya Sabha. The specific legislations that are under challenge for being passed as Money Bills may not be mentioned in your provided information, but this legal challenge is crucial in ensuring the proper functioning of India's parliamentary democracy and the separation of powers between the two houses of Parliament. The outcome of such cases can have significant implications for the legislative process and the balance of power between the Lok Sabha and the Rajya Sabha in India.

Article 110(1) of the Indian Constitution outlines the criteria for categorizing a Bill as a Money Bill. It specifies that a Bill is considered a Money Bill if it exclusively deals with specific financial matters listed in Article 110(1)(a) to (g). These matters include taxation, government borrowing, and the appropriation of funds from the Consolidated Fund of India, among others. Importantly, Article 110(1)(g) extends the scope of Money Bills to encompass "any matter incidental to any of the matters specified in Articles 110(1)(a)-(f)." This means that if a legislative provision is directly related to any of these financial matters, it can also be included within the ambit of a Money Bill.

In practice, this provision has led to debates and controversies, as some governments have sought to classify important legislations as Money Bills to avoid the scrutiny of the Rajya Sabha. The Rajya Sabha plays a crucial role in India's legislative process, and it can amend or reject regular Bills. However, it has limited powers when it comes to Money Bills, which can only be suggested amendments. This has led to allegations from the opposition that the classification of certain laws as Money Bills was primarily a strategic move by the government to bypass the Rajya Sabha, particularly in cases where they lacked the necessary numbers for approval in the upper house. Such debates underscore the importance of clear and principled categorization of legislation to maintain the integrity of India's parliamentary democracy and the separation of powers between the two houses of Parliament.

The larger bench's primary task will be to revisit and reevaluate the constitutionality of three significant legislations in light of whether they correctly qualified as Money Bills. These legislations include the Prevention of Money Laundering Act (PMLA), the Aadhaar Act, and the 2017 amendments that altered the service conditions of Tribunals.

1. Prevention of Money Laundering Act (PMLA): The bench will likely assess whether the PMLA, which deals with financial matters related to money laundering and asset forfeiture, was rightfully categorized as a Money Bill. If the larger bench determines that it was incorrectly classified, it could potentially impact the legislative process through which this law was enacted and open the door for further scrutiny and potential modifications.
2. Aadhaar Act: The Aadhaar Act, which governs the use of Aadhaar cards for various purposes, including identification and government benefits, will also undergo a fresh examination. If the larger bench concludes that it should not have been categorized as a Money Bill, it might raise questions about the legitimacy of the legislative process used to pass this critical legislation.
3. 2017 Amendments to Tribunals: The bench will revisit the 2017 amendments that altered the service conditions of Tribunals. The Supreme Court had previously struck down these amendments as unconstitutional. However, the larger bench will assess whether the categorization of these amendments as Money Bills was correct, which could have implications for the way such changes are made to the functioning of Tribunals in the future.

In summary, the larger bench will determine whether these laws should have been classified as Money Bills, which could have significant consequences for their constitutional validity and the legislative process surrounding them. The decision will provide clarity on the separation of powers between the Lok Sabha and the Rajya Sabha and the extent to which certain legislations can bypass the upper house.

How SC's decision on Money Bill will impact LIC IPO, Aadhaar & ED's powers

The issue of money bills in India has indeed sparked numerous controversies, particularly since the passage of the Aadhaar Act in 2016 by the Modi government. Under the Indian Constitution, a money bill is a type of legislation in which the Rajya Sabha, the upper house of Parliament, does not possess the authority to amend or reject. Instead, it can only offer suggestions, while the Lok Sabha's decision is deemed final in this regard.

Article 110 of the Indian Constitution provides a clear definition of a money bill. According to this article, a money bill is one that includes provisions related to the imposition, abolition, remission, alteration, or regulation of any tax. It also encompasses measures pertaining to the regulation of government borrowings and financial obligations, as well as the custody and flow of funds from the Consolidated Fund of India (CFI).

This constitutional provision is significant because it ensures that matters related to taxation, government finances, and the allocation of funds from the CFI are decided by the directly elected representatives in the Lok Sabha, where the ruling party typically holds a majority. This provision is intended to prevent the Rajya Sabha, which may have a different political composition, from obstructing or altering crucial financial decisions made by the elected government.

However, the application of the money bill classification has been contentious in some cases, as it can lead to concerns about bypassing the checks and balances provided by the Rajya Sabha. Controversies have arisen when bills that may have substantial financial implications are classified as money bills to circumvent the Rajya Sabha's scrutiny, leading to debates over the interpretation of Article 110 and its implications for India's democratic processes. These controversies highlight the importance of maintaining a careful balance between expediency and democratic oversight in the legislative process.

Allegations of Bypassing Rajya Sabha:

Allegations from the opposition that the government employed a strategy of categorizing bills as money bills to bypass the Rajya Sabha, due to a lack of majority, have stirred significant controversy in India's political landscape. This raises crucial questions about the proper functioning of the legislative process and the potential for abuse of parliamentary procedures. The ongoing debate underscores the need to maintain the integrity of democratic governance by accurately classifying bills and ensuring that they undergo appropriate scrutiny in both houses of Parliament.

PMLA Amendments and ED Powers:

Similarly, controversies emerged when the government enacted amendments to the Prevention of Money Laundering Act (PMLA), which led to significant alterations in the powers of the Enforcement Directorate (ED). These amendments provoked substantial debate, particularly concerning their implications for law enforcement and financial regulation in the country. These discussions emphasize the intricate nature of legislative decision-making and the impact it can have on institutions and policies.

Finance Act 2021 and LIC Amendments:

Furthermore, legal challenges arose when the government passed the Finance Act 2021, making amendments to the LIC Act. Petitions were filed against these amendments on various grounds, including the contention that they should not have been passed as money bills. The decisions made by the bench on the constitutionality of these amendments could potentially reshape the status quo and establish important precedents for future legislative processes in India. Moreover, the bench's consideration of Article 110 and the Aadhaar judgment from the KS Puttaswamy case will add a layer of complexity to these deliberations, setting the stage for critical legal interpretations in the future.