In the coming weeks, a seven-judge Bench of the Supreme Court of India is slated to hear arguments over critical questions governing the contours of a Money Bill. The Court’s ultimate ruling will have ramifications on a slew of legislation that has been enacted in recent years without the Rajya Sabha’s approval.
At stake too in the case are the future of India’s federal architecture and the various delicate balances on which the Constitution’s divisions of power rest.
The reference to the seven-judge Bench emanates out of a verdict rendered in November 2019, in 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
In Rojer Mathew, the petitioners argued that these changes were far too extensive to meet the criteria required of a Money Bill. Under India’s constitutional structure, for a Bill to turn into law, it must obtain the sanction of both Houses of Parliament. The only exception, which is contained in 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, creates a deeming fiction. 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. So long as a draft law contains only provisions dealing with all or any of the matters enlisted in the clause it would be deemed a Money Bill. 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.
On a simple reading of the definition, it ought to be obvious that the use of the word “only” means that a Bill that has subjects in it which are more than merely attendant to those delineated in Article 110(1) can never qualify as a Money Bill. Yet, this is precisely what the Finance Act, 2017, sought to do.
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.
There is no doubt that the 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
In many ways, the Court’s job in Rojer Mathew ought to have been simple enough. After all, under no circumstances could changes through a Money Bill to terms of office, or the conferral on the executive of unbridled power to regulate tribunals through delegated legislation, or the incorporation of provisions on qualifications for appointment through a Money Bill be seen as anything but an act of subterfuge. It was, therefore, plainly evident that the Finance Act, 2017, was a colourable exercise of power. The Constitution’s plain language had been perverted with a view to defeating its basic thrust.
Still, the 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.
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. What he failed to account for was the veritable welter contained in the other provisions of the statute. 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.
Properly construed, these matters could scarcely be seen as incidental to the subjects in Article 110(1). It now falls within the remit of the seven-judge Bench to consider the implications of the word “only”. Any decision from it will have enormous consequences. This is because both before and since the reference in Rojer Mathew, there have been other instances where the Rajya Sabha has been bypassed.
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” and a bestowal on the Enforcement Directorate of draconian powers of arrest, attachment, and search and seizure. The Supreme Court upheld many of these amendments, in Vijay Madanlal Choudhary vs Union of India (2022), but kept open the question of whether the amendments could have been validly made through a Money Bill.
The role of the Upper House
Any ruling from the seven-judge Bench is, therefore, likely to carry considerable purport. But beyond the laws on which it will have an impact, there is, as Justice D.Y. Chandrachud pointed out in his concurring opinion in Rojer Mathew, something far deeper at peril: the role of the Upper House in acting as a mirror to the pluralism that our nation represents.
“[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. In a federal polity such as ours, the efficacy of a constitutional body created to subserve the purpose of a deliberate dialogue, cannot be defeated by immunising from judicial review the decision of the Speaker to certify a Bill as a Money Bill.”
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.
Suhrith Parthasarathy is an advocate practising in the Madras High Court
