• The Supreme Court agreed to consider a suggestion for setting up a constitution bench to hear pleas challenging the validity of passage of laws by the Modi government as Money Bills.

• The passage of Bills like the Aadhaar Act and even amendments to the Prevention of Money Laundering Act (PMLA) as Money Bills, apparently to circumvent the Rajya Sabha when the NDA did not have a majority there, has been at the centre of a major political and legal row.

• Congress general secretary in-charge of communications Jairam Ramesh is one of the petitioners who have challenged the passage of the Aadhaar Act of 2016 as Money Bill under Article 110 of the Constitution.

Passage of contentious legislation in Parliament as Money Bills

1) Prevention of Money Laundering Act (PMLA) amendments: Since 2015, amendments to the Prevention of Money Laundering Act (PMLA) have significantly expanded the powers of the Enforcement Directorate, enabling them to make arrests and conduct raids. 

• However, the passage of these amendments as Money Bills has raised concerns about their legality and constitutionality. 

• Legal experts and petitioners argue that such substantial changes should have undergone the standard legislative process, involving scrutiny and approval by both houses of Parliament.

• Earlier, another bench of the top court, while upholding the constitutional validity of PMLA, had kept the issue of passage of the amendments to it as a Money Bill open for adjudication by a larger bench.

2) Finance Act of 2017: The Finance Act of 2017 was categorised and passed as a Money Bill, which has sparked concerns regarding the proper use of this legislative procedure.

• Many critics allege that the Act aimed to alter appointments to 19 key judicial tribunals, including the National Green Tribunal and the Central Administrative Tribunal. 

• There are accusations that categorising the Act as a Money Bill was a deliberate attempt to extend executive control over these tribunals. 

• Additionally, the Act’s passage was accompanied by changes that significantly downgraded the qualifications and experience required to staff these important judicial bodies.

• The five-judge bench had then struck down in entirety the rules governing the appointment and service conditions of the members of various tribunals that formed part of the Finance Act.

3) Aadhaar Act, 2016: In 2018, the Supreme Court ruled in favor of the government, upholding the Aadhaar Act as a valid Money Bill under Article 110 of the Constitution. 

• The government argued that since the subsidies distributed through Aadhaar come from the Consolidated Fund of India, the law was correctly categorised as a Money Bill. 

• This decision raised legal and procedural questions, as Money Bills are exclusive to the Lok Sabha, limiting the influence of the Rajya Sabha. 

• In the Aadhaar judgment, the top court had upheld the validity of passage of the law as a Money Bill.

• However, Justice Chandrachud, the present CJI, had penned a dissenting judgment and called designating the Aadhaar legislation as a Money Bill a “fraud on the Constitution”.

What is a Money Bill?

Definition: Under article 110(1) of the Constitution, a Bill is deemed to be a Money Bill if it contains only provisions dealing with all or any of the following matters, namely:

a) The imposition, abolition, remission, alteration or regulation of any tax.

b) 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.

c) 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.

d) 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.

e) 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

f) Any matter incidental to any of the matters specified in sub-clauses (a) to (f).

A Bill is not deemed to be Money Bill by reason only that it provides for:

• The imposition of fines or other pecuniary penalties.

• The demand or payment of fees for licenses or fees for services rendered.

• The imposition, abolition, remission, alteration or regulation of any tax by any local authority or body for local purposes.

Procedure:

• A Money Bill can be introduced in the Lok Sabha only.

• It can only be introduced on the prior recommendation of the President.

• The Rajya Sabha cannot make any amendments to it or reject it, but can give its recommendations.

• Rajya Sabha has to return the Bill to the Lok Sabha in 14 days with or without recommendation.

• The Lok Sabha may or may not accept recommendations. 

• If after 14 days, the bill is not returned to the Lok Sabha, it is deemed to have been passed by both the houses at the expiration of 14 days. 

• Hence, the power of the Rajya Sabha with respect to Money Bills is not co-equal with the Lok Sabha as is the case with ordinary Bills. 

• It is merely consultative. There is no chance of any disagreement between the two houses in regard to Money Bills. The President cannot return a Money Bill for reconsideration. Furthermore, the defeat of its motion to pass a Money Bill in the Lok Sabha leads to the resignation of the government.

• Furthermore, Constitution Amendment Bills cannot be treated as Money Bill, even if all its provisions attract article 110(1). 

• This is because such amendments are governed by article 368 which overrides the provisions regarding Money Bills.

Certification of Money Bills

• The Constitution of India under Article 110(4) requires that every Money Bill has to be certified so by the Speaker of the Lok Sabha before its transmission to the Rajya Sabha. Hence, if any question arises whether a Bill is a Money Bill or not, the decision of the Speaker is final. 

• The Speaker is under no obligation to consult any one in coming to a decision or in giving his certificate that a Bill is a Money Bill.

• The Speaker’s certificate on a Money Bill once given is final and cannot be challenged.

• A Money Bill cannot be referred to a Joint Committee of the Houses.

(The author is a trainer for Civil Services aspirants.)