Issue with Money Bills

Source: The post issue with Money Bills has been created, based on the article “A verdict on the Money Bill that India awaits” published in “The Hindu” on 2nd August 2024

UPSC Syllabus Topic: GS Paper 2- Polity-Parliament and State Legislatures – structure, functioning, conduct of business, powers & privileges and issues arising out of these.

Context: The article discusses the Supreme Court of India’s upcoming review of what constitutes a Money Bill. The decision will affect many laws passed without the Rajya Sabha’s approval and impact India’s federal structure and balance of power.

For detailed information on Money bill and Finance bill read this article here

What is the Issue with Money Bills?

1. What is a Money Bill?: A Money Bill involves matters like taxation, government borrowing, and spending, as outlined in Article 110 of the Indian Constitution. It requires only the Lok Sabha’s approval, with the Rajya Sabha having limited influence.
2. Issue with Money Bills: The problem arises when legislation with broader implications, beyond financial matters, is passed as a Money Bill. This strategy bypasses the need for approval from the Rajya Sabha, raising concerns about the balance of power in Parliament.
3. Specific Example – Finance Act 2017: This act, certified as a Money Bill, made extensive changes to tribunal structures, affecting the judiciary’s independence. This is argued to stretch beyond the intended scope of a Money Bill.

What Did Previous Court Rulings Say?

1. K.S. Puttaswamy vs Union of India (2018):
2. The Aadhaar Act was upheld as a Money Bill because it involved government expenditure from the Consolidated Fund of India. The Act’s Section 7 related to subsidies and benefits funded by the government.
3. Issue: The ruling did not consider other extensive provisions like biometric data collection and administrative authority.
4. Rojer Mathew vs South Indian Bank Ltd. (2019):
5. The Finance Act, 2017, was challenged for being passed as a Money Bill. The Act made broad changes to tribunal structures, which went beyond typical financial matters.
6. Finding: The court noted the need for clear rules on Money Bills and highlighted the misuse of the Money Bill certification.
7. Vijay Madanlal Choudhary vs Union of India (2022):
8. The Supreme Court upheld amendments to the Prevention of Money Laundering Act made through a Money Bill.
9. Pending Issue: The validity of using the Money Bill route for such amendments remains unresolved.

What are the Implications of the Upcoming Ruling?

1. Definition of Money Bills: The upcoming Supreme Court ruling will clarify what qualifies as a Money Bill, crucial for determining how laws can bypass the Rajya Sabha.
2. Impact on Past Legislation: A stricter definition could challenge the validity of past laws like the Finance Act of 2017, which made sweeping changes to tribunal structures but was passed as a Money Bill.
3. Federal Balance: The ruling will influence the balance of power between the Lok Sabha and the Rajya Sabha, crucial for maintaining India’s federal structure. This is evident from cases like the Aadhaar Act and Finance Act amendments, where extensive non-financial measures were included under Money Bills.
4. Judicial Precedents: The decision could redefine or affirm previous court interpretations, impacting how similar cases are handled in the future.

Question for practice:

Examine the issues raised by the Supreme Court of India regarding the definition and use of Money Bills in light of past court rulings and their impact on federal balance and legislation.