Money Bill

The concept of Money Bills in India is essential for the financial functioning of the government and is governed by specific provisions in the Constitution. Money Bills exclusively deal with matters related to taxation, public expenditure, borrowing, and other financial obligations specified in Article 110. These bills are introduced in the Lok Sabha and certified by the Speaker, with the Rajya Sabha having a limited role in making recommendations. Recent judicial scrutiny, exemplified by cases such as Roger Matthew v. Union of India and the Aadhaar Act controversy, underscores the need for clarity on what is a Money Bill. The establishment of a seven-judge bench, as proposed by Chief Justice DY Chandrachud, is crucial to address the complexities and ensure consistency in interpreting Money Bills.

Finance Bills deal with taxation, government revenue, and expenditures.They are of three kinds:

• Money bills - Article 110
• Financial bills (I) - Article 117 (1)
• Financial bills (II) - Article 117 (3)

Financial Bills (I) (Article 117(1)): Financial Bills (I) are outlined in Article 117(1) of the Indian Constitution.

• They are presented in the Lok Sabha and necessitate the President's endorsement for their introduction.
• Nevertheless, the Rajya Sabha has the authority to either reject or propose amendments to these bills.
• Financial Bills (I) address topics delineated in sub-clauses (a) to (f) of Article 110, along with any other matters related to general legislation.
• The President can summon a joint session in case of disagreement between the two Houses.

Financial Bills (II) (Article 117(3)):

• Financial Bills (II) are delineated in Article 117(3) of the Indian Constitution. These bills pertain to matters which includes expenditures from the Consolidated Fund of India but excludes those matters specified in Article 110.
• The only special feature of this bill is that it cannot be passed by either House of Parliament unless the President has recommended to that House the consideration of the bill. As such, these bills can be introduced in either House of Parliament without requiring the President's recommendation for their introduction. Furthermore, they can be either rejected or amended by either House of Parliament.
• The President can summon a joint session in case of disagreement between the two Houses.

What are Money Bills ?

• A money bill is a specific type of financial legislation that exclusively deals with matters mentioned in Article 110 of the Constitution.
• Money bills can be introduced only with the President's prior recommendation.
• Money Bills can only be introduced in the Lok Sabha, and the Speaker of the Lok Sabha is responsible for certifying whether a bill is a Money Bill or not. The decision of the Speaker in this regard is final and cannot be questioned.
• No provision for a joint session exists in case of disagreement between the two Houses

Money Bill Article 110 of the Indian Constitution outlines the criteria for classifying a bill as a Money Bill. According to this article, a bill is considered a Money Bill if it contains “only” provisions dealing with all or any of the following matters:

• the imposition, abolition, remission, alteration or regulation of any tax;
• 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;
• 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;
• the appropriation of moneys out of the Consolidated Fund of India;
• 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;
• 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
• any matter incidental to any of the matters specified above.

Chief Justice of India DY Chandrachud announced on October 6, 2023 that a seven-judge bench will be established shortly to address a series of petitions contesting the government's utilisation of the Money Bill procedure to enact specific significant laws. The Chief Justice made this remark while presiding over a petition specifically challenging certain amendments to the Prevention of Money Laundering Act (PMLA).

• Some matters are not eligible to be classified as money bills, as specified in the Indian Constitution. These exceptions encompass the imposition of fines, pecuniary penalties, fees for licenses or services, and local taxes levied by local authorities for local purposes.

• Exclusive Introduction in Lok Sabha:
  • Money Bills can only be introduced in the Lok Sabha, the lower house of Parliament. The Rajya Sabha, the upper house, does not have the authority to initiate Money Bills.
• Limited Role of Rajya Sabha:
  • The Rajya Sabha does not possess the power to amend or reject a Money Bill. Instead, it can only make recommendations on the bill, which must be returned to the Lok Sabha within a stipulated period of 14 days.
• Consideration of Recommendations by Lok Sabha:
  • Upon receiving recommendations from the Rajya Sabha, the Lok Sabha has the discretion to accept or reject all or any of the recommendations. Regardless of the Lok Sabha's decision, the Money Bill is deemed to have been passed by both houses of Parliament.
• Speaker's Authority:
  • The final authority to determine whether a particular bill qualifies as a Money Bill lies with the Speaker of the Lok Sabha. The Speaker's decision in this regard is final and cannot be contested.

President : The President has two options:

• He can approve the bill, which results in it becoming law.
• He can choose not to approve the bill, which means it does not become law.
  • Therefore, the President cannot send a money bill back to Parliament for further review.

Governor He has three options:

• He can grant his approval to the bill, leading to its enactment as law.
• He can choose not to give his approval to the bill, resulting in it not becoming law.
• He can opt to reserve the bill for the President's consideration.
• When a Money Bill is reserved by the Governor for the President's consideration, the President has two options:
  • He can provide his assent to the bill, which results in it becoming an Act.
  • He can choose not to provide his assent to the bill, causing it to cease and not become an Act.
  • Hence, similar to the procedure with Parliament, the President cannot return a Money Bill for reconsideration by the state legislature.
• Therefore, the governor cannot send back a money bill for the state legislature's reconsideration.
• Once the governor reserves a money bill for the President's consideration, his involvement in the bill's enactment concludes. If the President approves the bill, it becomes law, rendering the governor's assent unnecessary.

As per Article 110, Speaker classifies Budget as a Money Bill. The Budget is presented by Finance Minister on the behalf of the President as the Annual Financial Statement. Budget is not a single "money bill" by itself but it comprises of Finance Bill and Appropriation Bill which both are passed as Money Bill. These bills deal with taxation, government spending, and other financial matters, and follow the special legislative procedure for money bills as outlined in Article 110 of the Indian Constitution. Hence, Rajya Sabha can also recommend changes which are non-binding and has no power to vote for these Bills.

• The concept of Money Bills in India gained significant attention during the enactment of the Aadhaar Act in 2016. Despite facing opposition, the Aadhaar Bill was classified as a "money bill" by the Speaker of the Lok Sabha, thereby bypassing the need for approval from the Rajya Sabha. However, this classification as a money bill was challenged.
• In 2018, in the landmark case of K.S. Puttaswamy v. Union of India, a five-judge bench led by then Chief Justice of India, Deepak Mishra, upheld the constitutional validity of the Aadhaar Bill. Notably, Justice DY Chandrachud, who currently serves as the Chief Justice of India, dissented from this decision.

• The Prevention of Money Laundering Act (PMLA) underwent several significant amendments in 2015, 2016, 2018, and 2019, which included changes related to bail provisions and the classification of predicate offences. These amendments were introduced through the Finance Act, as Finance Bills passed during the budget are presented as Money Bills.
• In July 2022, a three-judge Bench of the court upheld the PMLA and affirmed the extensive powers of the Enforcement Directorate (ED) under the Act.
• However, the bench refrained from making a definitive ruling on the validity of the amendments to the PMLA implemented through the Money Bill route. Instead, they left this aspect open for further consideration by a larger Constitution bench of the court.

• In November 2019, the Supreme Court addressed a challenge against modifications in the service conditions of tribunal members, which were introduced as part of a Money Bill in the Finance Act of 2017. This case, titled Roger Matthew v. Union of India, brought into question the constitutionality of these changes and their potential impact on judicial independence.
• A five-judge bench of the Supreme Court ruled that the law, which altered the service conditions of tribunal members, was unconstitutional as it encroached upon judicial independence. However, the aspect related to the classification of the law as a Money Bill was referred to a larger Constitution bench for further examination.
• In making this decision, the Supreme Court also expressed reservations regarding the correctness of a previous verdict by a five-judge Constitution Bench in 2018. This earlier ruling had upheld the validity of the Aadhaar Act, which had been passed as a Money Bill.

The recent judicial developments regarding the classification of bills as Money Bills, particularly in cases such as Roger Matthew v. Union of India and the Aadhaar Act, highlight the need for clarity and resolution on this matter. To address lingering doubts and ensure consistency in constitutional interpretation, the establishment of a seven-judge bench, as suggested by the Chief Justice of India, becomes imperative. This larger bench would play a crucial role in definitively addressing the complexities and ensuring a comprehensive resolution to the ongoing debate on the classification of bills as Money Bills.