Context:

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.​​

Definition and Classification of Money Bills

The Constitution of India outlines specific categories of bills related to financial matters, classified as Money Bills and Financial Bills. Article 110(1)(a) to (f) defines a Money Bill as one that contains ‘only’ provisions dealing with six particular matters:

1.      Taxation

2.      Government borrowing

3.      Custody and expenditure from the Consolidated Fund or Contingency Fund

4.      Appropriation from the Consolidated Fund

5.      Expenditure charged on the Consolidated Fund

6.      Receipt and audit of accounts of the Union or States

Clause (g) of Article 110(1) extends this definition to include matters incidental to these six categories. Classic examples of Money Bills include the Finance Act and the Appropriation Act, which primarily deal with taxation and expenditure from the Consolidated Fund. Article 117 further distinguishes Financial Bills into two categories:

●       Category I: Includes the six matters specified in Article 110(1)(a) to (f) along with any additional matters.

●       Category II: Does not include the six matters but involves expenditures from the Consolidated Fund.

Major Types of Money Bills in India

●       Appropriation Bill

This bill authorises the government to withdraw money from the Consolidated Fund of India for designated purposes. It includes expenditures such as salaries and allowances for government employees, pensions, grants to states, and funding for defence and infrastructure projects. The Appropriation Bill requires only a simple majority in the Lok Sabha for passage and does not require approval from the Rajya Sabha.

●       Finance Bill

The Finance Bill is central to the annual budget process, detailing the estimated revenue and expenditure for the upcoming fiscal year. It introduces new taxes or modifies existing tax rates. Like the Appropriation Bill, the Finance Bill only needs a simple majority in the Lok Sabha for passage and does not require the Rajya Sabha's consent.

●       Supplementary Demand for Grants

This bill seeks additional funds for expenditure heads that were not covered in the original budget. It may be introduced during the fiscal year to address unforeseen expenses or emergencies. Passage of a Supplementary Demand for Grants also requires only a simple majority in the Lok Sabha and does not need Rajya Sabha approval.

●       Vote on Account

The Vote on Account permits the government to withdraw money from the Consolidated Fund of India to cover essential expenditures for a limited period, usually until the regular budget is passed. It is typically introduced at the start of a new financial year if the regular budget has not yet been finalized. This bill also requires only a simple majority in the Lok Sabha and does not need approval from the Rajya Sabha.

Procedure for Money Bills

According to Article 109, a Money Bill can only be introduced in the Lok Sabha. Once passed by the Lok Sabha, the Rajya Sabha has 14 days to review and suggest recommendations, which the Lok Sabha may or may not accept. This special procedure underscores the significance of Money Bills in managing the country’s financial matters and is designed to streamline their approval, reflecting the majority view in the Lok Sabha where the ruling government has significant control.

This procedure is inspired by the U.K.'s approach in 1911, which restricted the House of Lords' power over the Budget, reserving budget approval to the elected House of Commons. The Speaker of the Lok Sabha is responsible for certifying a Bill as a Money Bill.

Key Characteristics of Money Bills in India

●       Introduction in Lok Sabha: Only the Lok Sabha, the Lower House of Parliament, can introduce a Money Bill. This grants the Lok Sabha financial authority over the Rajya Sabha, ensuring prompt action on financial matters.

●       Simple Majority Requirement: A Money Bill needs only a simple majority in the Lok Sabha to pass. This facilitates the quick implementation of financial policies without delays from the Rajya Sabha.

●       Rajya Sabha's Role: The Rajya Sabha can suggest amendments to a Money Bill, but the Lok Sabha is not obligated to accept these recommendations. This underscores the Lok Sabha's dominant role in financial matters and prevents significant delays.

●       Speaker's Certification: The Speaker of the Lok Sabha has the exclusive authority to certify whether a bill is a Money Bill. This decision is final and cannot be contested in court, giving the Speaker considerable control over financial legislation.

●       Presidential Assent: After passing the Lok Sabha, a Money Bill is sent to the President for assent. The President cannot refuse assent to a Money Bill, ensuring that the government's financial policies are implemented without presidential veto.

Why Special Treatment for Money Bills?

●       Financial Implications: Money Bills directly affect the government's spending and revenue generation. They can introduce new taxes, authorize government borrowing, or allocate funds for specific purposes. This power to control finances needs careful scrutiny.

●       Preventing Fiscal Mismanagement: A special procedure ensures responsible spending and reduces the risk of hasty financial decisions that could burden the economy.

●       Maintaining Parliamentary Control: The special procedure strengthens the power of the Lok Sabha (lower house) in financial matters by giving the final say on money bills and ensuring accountability of the government to the people's representatives.

Issues with Certification and Judicial Review

The certification of a Bill as a ‘Money Bill’ by the Speaker has faced judicial scrutiny. Notably, the Aadhaar Act of 2016, which included provisions related to enrolment, authentication, and penalties, was classified as a Money Bill despite containing extensive non-financial provisions. The Supreme Court upheld this classification with a majority of 4:1, although the current Chief Justice of India (CJI) dissented, arguing that the Act did not meet the criteria for a Money Bill.

The Finance Act, 2017, further fueled controversy by amending various Acts related to the reorganisation of tribunals, including the National Green Tribunal, as a Money Bill. This classification was contested in the case of Rojer Mathew vs. South Indian Bank (2019), where a five-judge Bench noted that the Aadhaar case did not adequately address the implications of the term ‘only’ in the Money Bill definition. Consequently, the matter was referred to a larger Bench for comprehensive evaluation. The establishment of a seven-judge Bench is anticipated for a definitive ruling on the Money Bill definition, and it is essential for Speakers to adhere to the spirit of this definition when certifying a Bill as a Money Bill.

 Conclusion

The classification and procedural handling of Money Bills play a crucial role in India's legislative process. As debates continue on the scope and application of this classification, a clear and authoritative judgment from a larger Bench is necessary to uphold the integrity of the legislative framework and ensure that the spirit of the Constitution is maintained.

Source: The Hindu