With 7-Judge Bench Hearing, Supreme Court To Decide Fate of Key Laws Passed as Money Bills

Introduction

  • Why this topic is in news now:
    • CJI’s recent announcement of constituting a 7-judge bench to examine pleas challenging passage of key legislations as money bills

The issue of certain key legislations being passed as Money Bills has come under judicial scrutiny recently. Chief Justice of India announced that a 7-judge Constitution Bench will be set up to examine a series of pleas challenging the passage of certain laws as Money Bills. This decision comes in the wake of growing apprehensions regarding the constitutionality and propriety of using the Money Bill route to enact important legislation.

The petitioners have argued that critical laws were passed as Money Bills to avoid proper legislative scrutiny and debate in the Rajya Sabha. The larger bench will assess whether bypassing the Rajya Sabha to pass non-financial legislation as Money Bills undermines the system of checks and balances envisaged in the Constitution. The outcome of this judicial review will have far-reaching implications on the balance of power between the Lok Sabha and the Rajya Sabha when it comes to the democratic process of enacting laws.

7-judge Bench to take a call on giving priority to Money Bill case

Money Bill Overview
SectionsDetails
What is a Money Bill?
  • Defined under Article 110
  • Concerns taxation, govt borrowing, Consolidated Fund of India
  • Introduced in Lok Sabha
  • Rajya Sabha can suggest changes
  • No need for Rajya Sabha approval
  • Lok Sabha Speaker certifies as Money Bill
Examples of Money Bills
  • Finance Bills, Appropriation Bills
  • Aadhaar Act, FCRA Amendment, RBI Amendment
Concerns Over Money Bill Route
  • Bypassing Rajya Sabha review
  • Diminishes legislative checks
  • Potential misuse for non-financial laws
Challenged Legislations
  • Aadhaar Act upheld, but minority labeled it ‘fraud’
  • PMLA Amendments via Finance Bills: 2015-2019
  • Finance Act 2017 alters tribunal conditions
Significance of 7-Judge Bench
  • Review of Speaker’s certification
  • Reevaluate unclear past decisions
  • Affects Lok Sabha-Rajya Sabha balance
  • Vital for legislative methods
Conclusion Addresses intricate constitutional topics. Verdict to clarify Money Bills. Impact on parliamentary democracy.

What is a Money Bill?

  • Constitutional provisions under Article 110
  • Key features: introduced only in Lok Sabha, Rajya Sabha can recommend amendments but not reject
  • Differ from other bills in not requiring Rajya Sabha approval
  • Speaker certifies bill as Money Bill

A Money Bill is a special category of bill defined under Article 110 of the Constitution. As per Article 110, a bill can be classified as a Money Bill if it deals exclusively with matters related to the imposition, regulation or abolition of taxes, government borrowing, custody of the Consolidated Fund or Contingency Fund of India, and expenditure from or receipts into these funds.

The key features of a Money Bill are that it can only be introduced in the Lok Sabha and the Rajya Sabha does not have the power to reject or amend such bills. The Rajya Sabha can only make recommendations on a Money Bill, which may or may not be accepted by the Lok Sabha. Importantly, a Money Bill does not require the approval of the Rajya Sabha for passage, unlike other bills. The final authority to certify a bill as a Money Bill lies with the Speaker of the Lok Sabha.

Money Bills differ from other bills in the sense that they do not require to be passed by both Houses of Parliament. The Rajya Sabha has no power over their passage and can only play an advisory role. This provides Money Bills a special status and gives dominance to the directly elected Lok Sabha in matters concerning taxation and public expenditure.

Examples of Money Bills

  • Finance Bills, Appropriation Bills
  • Aadhaar Act, Amendment to FCRA, RBI Act

Some examples of Money Bills include the Annual Financial Statement (Union Budget), Finance Bills containing tax proposals, Appropriation Bills that authorize government expenditure, amendments to the RBI Act, Aadhaar Act, amendments to the FCRA among others. These bills were certified as Money Bills by the Lok Sabha Speaker and passed without requiring the Rajya Sabha’s approval.

Concerns over passing bills as Money Bills

  • Avoiding Rajya Sabha scrutiny and oversight
  • Undermining system of legislative checks and balances
  • Misuse/abuse of Money Bill provision for non-financial legislation

There have been growing concerns regarding the passage of key legislations as Money Bills to bypass the Rajya Sabha. Critics argue that certifying non-financial bills as Money Bills undermines the spirit of legislative scrutiny enshrined in the Constitution.

The Money Bill route is seen as a way of avoiding proper debate and oversight by the Rajya Sabha. This goes against the principle of bicameralism and the system of checks and balances between the two Houses. Passing laws without meaningful participation of the Upper House can be perceived as an attempt to undermine its role.

Further, the Money Bill provision is alleged to have been misused or abused to pass laws that are not directly related to taxation or government finances. For instance, the Aadhaar Act and amendments to the PMLA contained provisions not strictly related to the Consolidated Fund of India. Classifying such legislations as Money Bills is seen as an attempt to circumvent the spirit of the Constitution.

7 judges Bench Supreme Court

Challenged Legislations before 7-judge Bench

Aadhaar Act

  • Background of 2018 judgment upholding it as Money Bill
  • Minority view calling it ‘fraud on Constitution’

Aadhaar Act The Aadhaar Act was passed as a Money Bill in 2016. Subsequently, in 2018, a 5-judge Constitution Bench upheld the Act as a valid Money Bill by 4:1 majority. However, Justice Chandrachud gave a dissenting opinion calling it a ‘fraud on the Constitution’. Now, the 7-judge bench will re-examine this issue.

Amendments to PMLA

  • Introduced via Finance Acts passed as Money Bills in 2015-2019
  • Validity left open by 3-judge bench in 2022

Amendments to PMLA Several amendments to the Prevention of Money Laundering Act were introduced through Finance Acts passed as Money Bills between 2015-2019. In 2022, a 3-judge bench did not rule on their validity under Article 110. The 7-judge Bench will now scrutinize whether these amendments fulfill the criteria for Money Bills.

Finance Act, 2017 amendments

  • Service conditions of Tribunal members
  • Struck down in 2019, referred money bill issue to larger bench

Finance Act, 2017 amendments The Finance Act, 2017 made certain amendments relating to the service conditions of tribunal members. These amendments were introduced as part of a Money Bill.

In 2019, a 5-judge bench declared these amendments unconstitutional as they impinged on the independence of the judiciary. However, regarding the Money Bill aspect, the issue was referred to a larger 7-judge bench for detailed examination.

Significance of 7-judge bench

  • Examine extent of judicial review on Speaker’s certification
  • Address ambiguity in earlier verdicts on Money Bills
  • Impact on balance of power between Lok Sabha and Rajya Sabha
  • Strengthen legislative scrutiny or reinforce executive dominance

The 7-judge bench will assess the extent to which the Speaker’s decision to certify a bill as a Money Bill can be subject to judicial review. It will aim to address the ambiguity in earlier verdicts such as the Aadhaar case.

The judgment will have a major impact on the balance of power between the Lok Sabha and the Rajya Sabha when it comes to clearing legislative proposals. It will determine whether the Money Bill route reinforces executive dominance over the Parliament or strengthens legislative scrutiny.

Final Thoughts

  • Complex constitutional issues involved
  • Implications for democratic functioning and legislative processes
  • Judgment will bring clarity on Money Bill contours

The 7-judge bench faces complex questions regarding the interpretation of Article 110 of the Constitution pertaining to Money Bills. The outcome will have far-reaching implications for the democratic functioning and legislative processes of the Parliament. The verdict is expected to bring much-needed clarity on the contours of Money Bills and the Rajya Sabha’s role in passing laws.

Comparison between Money Bill, Finance Bill-I, and Finance Bill-II

ParametersMoney BillFinance Bill – IFinance Bill – II
Recommendation of PresidentRequiredRequiredNot Required
Rajya Sabha PowersCannot amend or rejectCan amend or rejectCan amend or reject
Decision by SpeakerDecides if it’s a Money BillNo approval needed for classificationNo approval needed for classification
IntroductionOnly in Lok SabhaOnly in Lok SabhaLok Sabha & Rajya Sabha
Deadlock ResolutionNo provision for joint sittingJoint sitting can be summoned by PresidentJoint sitting can be summoned by President
Constitution ArticleArticle 110Article 117(1)Article 117(3)
ScopeDeals with provisions in Article 110Provisions of Article 110 & other general legislation mattersProvisions on expenditure from Consolidated Fund of India, not in Article 110
Type of BillGovernment BillOrdinary BillOrdinary Bill
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