OPINION | As another budget approaches, judicial finality on the Money Bill’s remit is pending

Money Bill

In September 2018, the Supreme Court delivered its judgment in the Aadhaar case, which addressed the constitutional validity of the Aadhaar Act. One of the key issues before the Court was whether the passage of the Aadhaar Act as a Money Bill was constitutionally valid.

Two contrasting views on Aadhaar Act falling within purview of a Money Bill

Justice Ashok Bhushan, writing for the majority, held that Parliament was competent to pass the Aadhaar Act as a Money Bill under Article 110 of the Constitution. He reasoned that the primary objective of the Act is to facilitate the delivery of State subsidies and benefits, the expenditure for which is drawn from the Consolidated Fund of India. Article 110(1)(c) provides that a Bill qualifies as a Money Bill if it contains provisions relating to the custody of the Consolidated Fund of India. Relying on Article 110(3), Justice Ashok Bhushan concluded that the Aadhaar Act satisfied the constitutional requirements of a Money Bill.

In contrast, Justice DY Chandrachud dissented, holding that the passage of the Aadhaar Act as a Money Bill was unconstitutional. He emphasised that for a Bill to qualify as a Money Bill, it must contain only those provisions that fall within clauses (a) to (g) of Article 110(1). According to Justice Chandrachud, a close reading of the Aadhaar Act reveals that it regulates several aspects of the Aadhaar scheme that extend beyond the scope of Article 110(1). Moreover, he held that Section 7 of the Act does not itself authorise expenditure from the Consolidated Fund of India; it merely makes Aadhaar mandatory in cases where such expenditure is incurred.

While the constitutional validity of the Aadhaar Act was upheld and the majority accepted its passage as a Money Bill, Justice Bhushan affirmed that the matter is subject to future judicial review.

In July 2024, the then Chief Justice of India, DY Chandrachud, said that the Supreme Court would soon take a decision on listing the “Money Bill” issue for hearing. Earlier, in October 2023, the Supreme Court had stated that it would constitute a seven-judge Constitution Bench to adjudicate the matter. The question of which Bills can validly be classified as Money Bills was originally referred to a seven-judge Bench in November 2019 by a five-judge Bench led by then Chief Justice of India Ranjan Gogoi in the Roger Mathew v. South Indian Bank Ltd case.

Unique place of the Money Bill

The Money Bill is one of the most important legislative provisions entrusted to the legislature within the Indian parliamentary system. What makes a Money Bill unique is its subject matter and special procedural safeguards. As defined under Article 110 of the Indian Constitution, a Money Bill deals exclusively with financial matters such as taxation, public expenditure, and issues relating to the Consolidated Fund of India.

A Money Bill can be introduced only in the Lok Sabha and requires the prior recommendation of the President, making presidential consent an inherent requirement in its introduction. Unlike ordinary legislation, the Rajya Sabha does not have the power to amend or reject a Money Bill; it may only make recommendations, which the Lok Sabha is free to accept or reject.

Furthermore, the authority to decide whether a Bill qualifies as a Money Bill rests with the Speaker of the Lok Sabha. Under Article 110(3), the Speaker’s decision is final.

Evolution of Money Bill

The framers of the Indian Constitution borrowed the principle of bicameralism from the British parliamentary system. The origin of conferring a limited role on the Upper House in the passage of Money Bills can be traced to the British Parliament Act, 1911.

Section 3 of the Act accords finality to the Speaker’s certification of a Money Bill and places it beyond judicial scrutiny. It expressly provides that any certificate issued by the Speaker of the House of Commons under the Act shall be conclusive for all purposes and shall not be questioned in any court of law.

Long backstory of the Money Bill

An understanding of India’s constitutional history is essential to fully appreciate the scope and implications of the finality accorded to the Speaker’s decision on whether a Bill qualifies as a Money Bill.

* In India, the categorisation of Money Bills can be said to have begun from the Commonwealth of India Bill 1925, which was drafted by a National Convention comprised of 250 members, with Tej Bahadur Sapru as its Chairman.

* Article 17 of the Nehru Report also defined a Money Bill.

* The draft prepared by the Constitutional Advisor, BN Rau, defined a Money Bill. Article 75 of this Draft Constitution provided that “if any question arises whether a Bill is a ‘money bill’ or not, the decision of the Speaker of the House of the People thereon shall be final.”

* Section 37 of the Government of India Act 1935 made special provisions for financial bills.

* The statutory concept of a “Money Bill” and the Speaker’s power to certify a Bill as such, originally introduced by the British Parliament Act, 1911, was incorporated into the Indian constitutional framework with significant modifications. While the 1911 Act accorded absolute finality to the Speaker’s certification by expressly providing that it “shall not be questioned in any court of law,” the framers of the Indian Constitution consciously departed from this language and instead adopted the phrase “shall be final.”

* This distinction is significant, as the British constitutional system is founded on parliamentary sovereignty, whereas the Indian constitutional order is premised on the supremacy of the Constitution. Judicial review is an essential feature of the Indian constitutional scheme as it ensures that all constitutional authorities act within the bounds of the Constitution. Consequently, no constitutional institution in India, including the Speaker of the Lok Sabha, exercises unfettered or absolute power. The Speaker’s decision to certify a Bill as a Money Bill is therefore not immune from judicial scrutiny and may be examined on the touchstone of compliance with constitutional principles.

Speaker’s decision doesn’t have immunity from judicial scrutiny

As highlighted by the apex court in the Aadhar judgment, the claim that the Speaker’s decision is immune from judicial review and cannot be challenged runs counter to the fundamental framework of the Constitution, which is founded on principles of “transparency, fairness, and non-arbitrariness”.

In the Aadhar case, the apex court made a significant point. It stated that the constitutional function is entrusted to the Speaker to certify a Bill as a Money Bill under Article 110(3), to which the attributes of a judicial power do not apply. Indeed, the power which is entrusted to the Speaker under Article 110(3) is integral to the legislative process. But the fact that the authority which a constitutional functionary exercises is not of a judicial character is not sufficient to lead to the conclusion that a finality clause governing the exercise of that power makes it immune from judicial review.

The apex Court in the Aadhar case also dealt with the question whether the Speaker’s decision under Article 110(3) is protected by Article 122. It opined that Article 122 will not save the action of the Speaker if it is contrary to constitutional norms provided under Article 110. The Court, in the exercise of its power of judicial review, can adjudicate upon the validity of the action of the Speaker if it causes constitutional infirmities. Article 122 does not envisage exemption from judicial review if there has been a constitutional infirmity. Justice A. K. Sikri, writing for the majority, observed that Article 212 only limited challenges on the ground of ‘irregularity of procedure’ and not ‘substantive illegality’.

(Views are personal, and do not represent the stance of this publication.)