money bill and supreme court

 The Supreme Court of India’s ruling will have bearing on legislation enacted without the Rajya Sabha’s approval and the state of India’s federal architecture

 Rojer Mathew vs South Indian Bank Ltd.

 in which the Finance Act, 2017, was under challenge. The Act, which was passed after its certification as a Money Bill, radically altered the authority and jurisdiction of 26 different tribunals

. It abolished some of these bodies, merged together others, prescribed qualifications for appointment of members, and imposed various other stipulations, including conditions of service.

Articles and definitions

 Article 109

allows Money Bills to be enacted as law with only the Lok Sabha’s approval. The Rajya Sabha may make recommendations on the Bill, but any suggestions from it would not bind the Lok Sabha in any way.

Article 110(1)

which defines a Money Bill,It details a list of subjects, including the

•  imposition or abolition of a tax; 
• 
  
• the regulation of the borrowing of money;
• 
  
•  the appropriation of cash out of the Consolidated Fund of India; 
• 
  
• and any matter “incidental” to the specified subjects. 

Speaker of the Lok Sabha shall have the final

 Article 110(3) further makes it clear that the Speaker of the Lok Sabha shall have the final say in determining whether a proposed legislation is a Money Bill or not.

Usually, a Finance Act is passed at the beginning of every year 

to outline the state’s fiscal plans. 

But here, the law made sweeping changes to the functioning of tribunals, invading, in the process, principles essential to the maintenance of the judiciary’s independence. 

The law, quite apart from rearranging panels and bodies, also granted to the Union Executive a carte blanche to make rules on how the subsisting tribunals were to be administered.

Finance Act had elements in it that touched on subjects contained in Article 110(1)

 For example, the law determined salaries payable to members of tribunals out of the Consolidated Fund of India. Those clauses could be attributable to items which would ordinarily be termed a Money Bill. 

But, for the most part, the legislation made amendments to substantive laws, and encroached into areas well beyond the subjects enlisted in Article 110(1).

A colourable exercise of power

 majority on the five-judge Bench saw itself constrained by prior precedent. It found that a coordinate Bench, in K.S. Puttaswamy vs Union of India (2018) (where the validity of the Aadhaar regime was challenged), 

had failed to provide sufficiently clear bright-line rules on the standards to be employed in reviewing a Speaker’s decision to certify a draft law as a Money Bill. In particular, the effect of the word “only” in Article 110(1), the Bench said, had been overlooked in K.S. Puttaswamy.

Adhar act as a money bill 

1 Justice A.K. Sikri, who wrote the majority opinion there, concluded that because Section 7 of the Aadhaar Act concerned subsidies, benefits and services, for which expenditure was to be incurred from the Consolidated Fund of India, the law met the conditions of a Money Bill. 

2 What he failed 

These ranged from enrolment to the scheme based on demographic and biometric information and the obtaining of consent from individuals before information was collected, to the creation of offences and penalties and the establishment of a statutory authority to administer the process.

PMLA act 

Notably, the Finance Act, 2019, made far-reaching amendments to the Prevention of Money Laundering Act, 2002 (PMLA) through a Money Bill. 

The changes made included alterations to the definition of what constitutes “proceeds of crime” , Enforcement Directorate of draconian powers of arrest, attachment, and search and seizure.

The role of the Upper House

“[The Rajya Sabha] is an indispensable constitutive unit of the federal backbone of the Constitution,” Justice Chandrachud wrote.

 “Potential differences between the two houses of the Parliament cannot be resolved by simply ignoring the Rajya Sabha.

Money Bills are a means of ensuring that the Rajya Sabha does not scuttle the efforts of the government of the day to access the treasury for basic administration. To use the measure as a tool to circumvent the Council’s role in serving as a check on the state’s legislative function amounts to playing a ruse on the Constitution. Should the Court allow this practice to go unchecked, it might well endanger the foundations on which our democracy stands.

source the hindu