How and when can a bill be defined as a money Bill? | Explained

CJI agrees to hear petitions challenging money Bill route for passing laws, amendments; Constitution defines money Bills.

The story so far: The Chief Justice of India (CJI) has agreed to list before Constitution Benches, the petitions challenging the money Bill route taken by the Centre to pass contentious laws/amendments.

The Constitution defines certain categories of bills that deal with financial matters as money Bills and financial Bills. Article 110(1)(a) to (f) defines a money Bill as a bill that contains ‘only’ provisions dealing with one or more of six specific matters. They relate to taxation; borrowing by government; custody of consolidated fund or contingency fund and payment/withdrawal of money from such fund; appropriation out of consolidated fund; expenditure charged on consolidated fund; receipt on account of consolidated fund or public account or the audit of accounts of Union or States. Clause (g) of Article 110 (1) provides that any matter incidental to these six matters can also be classified as a money Bill. Classic examples of money Bills include the Finance Act and the Appropriation Act that deal primarily ‘only’ with taxation and spending out of the consolidated fund respectively. Article 117 provides for two different categories of financial Bills. Category I contains any of the six matters mentioned in Article 110(1)(a) to (f) along with any other matter. Category II Bills do not contain any of those six matters but would involve expenditures from the consolidated fund.

As per Article 109, a money Bill shall be introduced only in the Lok Sabha. After it is passed in the Lok Sabha, the Rajya Sabha has only 14 days to provide its recommendations on such a Bill which may or may not be accepted by the Lok Sabha. Money Bills deal ‘only’ with financial matters that are crucial for the administration of the country. Hence, the Constitution provides for this special procedure that effectively requires only the approval of Lok Sabha where the ruling government enjoys a majority. It has its origin in the U.K., where in 1911 the powers of the unelected House of Lords over the Budget were curtailed. The Budget was required to be passed only by the House of Commons that reflected the will of the people. However, it must be noted that the operative word of the definition of a money Bill is the word ‘only.’ It is the Speaker of Lok Sabha who certifies a Bill to be a money Bill.

Financial Bills of Category I and II do not enjoy this special procedure.

Certification of a Bill as a ‘money Bill’ by the Speaker came under judicial review during the scrutiny of the Aadhaar Act passed in 2016. This law contains provisions with respect to process for enrolment and authentication, establishment of authority for Aadhaar, mechanism for safeguards, and penalties for offences under the Act. Section 7 of the Act provides that the Central or State government may require Aadhaar authentication of an individual as a condition for providing subsidy, benefit or service, for which expenditure is incurred from the consolidated fund. Stating the withdrawal of funds from the consolidated fund as the primary purpose of the Act, with all other provisions being incidental to it, this law was passed as a ‘money Bill’. While this was a debatable classification, the Supreme Court upheld this with a majority of 4:1. The current CJI was the lone dissenting judge who held that the Aadhaar Act did not fulfil the definition of a ‘money Bill’.

The Finance Act, 2017 was even more controversial, in passing amendments to various Acts for reorganisation of tribunals such as the National Green Tribunal, as a money Bill. These amendments were struck down in Rojer Mathew versus South Indian Bank (2019) wherein a five-judge Bench opined that the Aadhaar case judgment did not substantially discuss the effect of the word ‘only’ in the definition of money Bill. It referred the matter to a larger Bench for consideration. A seven-judge Bench should be constituted for an authoritative judgment on the definition of money Bills. The Speakers should also uphold the spirit of the definition while certifying a ‘money Bill.’

Rangarajan. R is a former IAS officer and author of ‘Polity Simplified’. Views expressed are personal.