When we observe a concentration of power among a group of people, there is a high chance of other people to be suppressed by the person in authority. The Constitution of India obeys the principle of Separation of Powers, which means that the power cannot be concentrated with a single authority and cannot be interfered with by any other authority. We will also see the provisions of the Constitution and many precedents that establish this principle in the Indian Legal System. But when we indulge more into the provisions of the constitution, one can observe certain peculiarities which can raise certain incidents of an authority having absolute power. In the present article, a similar provision of the Constitution of India has been discussed, which deals with the Money Bills which the Union Legislature and the State Legislature can pass for the financial matters of the Government. The article discusses the provisions and procedure of such bills and further discusses the situation where such power is misused. Furthermore, two landmark cases have also been discussed, which answers as to how such misuse is done in such a comprehensive legal system.
“Liberty may be endangered by the abuse of liberty, but can also by the abuse of power.”– James Madison
The Indian Constitution has given many options to the legislature to introduce bills in the Parliament. It can be an ordinary bill, finance bill, money bill, and constitutional amendment bills. We have seen many examples of every bill in the history of Indian legal system but in this article, the aspects, procedure, the controversies, and the decisions regarding money bills will be dealt. Under Article 110 of the Indian Constitution, the basic conditions or elements for which a bill can be considered as a Money Bill is provided. This includes the management of taxes, regulation of loans or any other financial obligations of Government of India, the payments and withdrawal, the expenditure and appropriation of the Consolidated or Contingency funds of Government of India. Therefore, to conclude any bill which consists of any of the above can be said as a Money Bill.
Difference between Money bill & Financial bill
One can be confused about the difference between Money Bills and financial bills as they both deal with the finances and expenditures of the Government. Financial bills are nothing but Money Bill in which some other matters are also been included. Therefore, a bill that has any elements or of the Money Bill combined with any other matter is termed as financial bills. Article 117 addresses provisions for financial bills. It can be concluded that every money bill is a financial bill but it is not vice versa. Therefore, financial bills can be understood as a subset of Money Bills but at no instance are equivalent to each other.
Procedure for Money Bills and Financial Bills
The procedure for these two bills is different from other bills. The initiation of these bills is done only with the prior recommendation of the President.The further procedure can be divided onto four steps:
- Step 1
During the introduction of money bills or financial bills in the Lok Sabha, important features of the bills are discussed by the member in charge. It is to note that a Money Bill or a financial bill can only be introduced in the Lok Sabha. The speaker of the Lok Sabha has to endorse a certificate with his signature to give effect to the money bill.
- Step 2
The Money Bill is transmitted to the Rajya Sabha where the bill is discussed. The Rajya Sabha has two options to exercise i.e. it can fully pass the bill or it can recommend certain amendments in the bill. The power of Rajya Sabha is only limited to such recommendations. The Rajya Sabha has 14 days to return the bill with the recommendations if any. If it will not be returned to Lok Sabha in the stipulated time, the bill will be assumed to be passed by the Rajya Sabha.
- Step 3
The bill is again returned to Lok Sabha where it has two options, i.e. to accept the bill with the recommendations or to reject the recommendations. In both cases, the bills will be considered as passed by both the Houses of Parliament. The endorsement is again done by the Speaker of Lok Sabha before sending it to the President for assent.
- Step 4
The bill is sent for the Presidential Assent where the President again has two options, first, to simply give the assent and pass the bill, second to return the bill with amendments. The Lok Sabha can accept these amendments or can again pass the bill without amendments. When the bill is given for the second time to the President he cannot withhold his assent.
The Rift in Procedure
Through the above procedure, it can be concluded that the power of Rajya Sabha in the passing of Money Bills is ‘dispensed’. The Lok Sabha has an absolute say regarding the Money Bills, this is to protect the position of Lok Sabha in the matters of finance. If such a provision is not there, it is highly possible that the Rajya Sabha by adding certain provisions in the bill will be able to characterize the Money Bill as a financial bill or a mere original bill, resulting in hampering the objective of the bill introduced.
But the other side of the procedure actually hampers the power of Rajya Sabha. Having dispensed power in hand, there is no actual say of the Rajya Sabha in Money bills, therefore the Lok Sabha by adding certain provisions under Article 110 clauses (a)-(f) can make any ordinary bill to Money Bill and bypass the Rajya Sabha. The Lok Sabha can misuse this absolute power to make laws which they want to.
Therefore, it can be perceived that the procedure is not balanced between the two houses. The procedure has a good probability of concentration of power with any of the houses in the above two circumstances. There are many instances in the history of parliament when such misuse of power was done.
Following are two incidences where it can be seen that issues occur over a bill regarding its character, whether it is a Money Bill, financial bill or an ordinary bill.
- The Aadhaar Judgement
Justice K.S Puttaswamy and Anr. v. Union of India[i]
The history of this goes back to the year 2009 in which the Aadhaar scheme was introduced as the original bill. But this bill was not able to reach even at the stage of passing and was soon withdrawn. The government then introduced the Aadhaar (Targeted Delivery of Financial & Other Subsidies, Benefits & Services) Bill, 2016. But the major difference in this bill was that it was introduced as Money Bill in Lok Sabha bypassing the decision of Rajya Sabha. There were accusations on the Government that this bill was introduced as Money Bill as the Government in the power did not have the majority in Rajya Sabha.
The validity of the bill as Money Bill was challenged in this case and many other significant issues were also addressed regarding issues like the infringement of privacy of the individuals.
The Government contended that the substantial part of the Aadhaar Act was to provide subsidies and benefits, the expenditure to be withdrawn from the consolidated fund of India, coming into the parlance of Article 110.
The court with only one dissenting opinion held in a majority that the Aadhaar bill can be a Money Bill as it consists of one of the provisions i.e. Section 7 of the Act under Article 110 which the Government contended as the heart and soul of the Act. The dissenting opinion of Justice Chandrachud held the act unconstitutional.
Justice Chandrachud critically examined the Aadhaar act with respect to Article 110 where he mentioned that under Article 110 a bill is said to be a Money Bill if it contains ‘only provisions’ dealing with clauses (a) to (f).
Therefore, it can be analyzed that the approach of the court in deciding that the Aadhaar bill is a Money Bill was exceedingly broad. The application of ‘only provisions’ cannot be seen in this particular judgment. If we apply the logic which the court has observed here, it can be said that any bill which consists of one of the provisions of Article 110 will be a Money Bill, but according to the constitution, the opposite has to happen. If such broad interpretation is applied, any bill which does not have actual scope to be a Money Bill can be said as a Money Bill.
- The Tribunals Case
(Roger Mathew v. South Indian Bank Ltd)[ii]
In this case, the validity of the Finance Act, 2017 as a Money Bill was challenged. The bill was introduced and approved by Lok Sabha in March 2017. The bill was transmitted to Rajya Sabha which gave 5 amendments in return. The Lok Sabha rejected these amendments and passed the bill.
It was contended by the respondent that the bill laid down provisions which implied that the money spent on the Tribunals is from the Consolidated Fund of India. He referred to the Aadhaar Act Judgement as well.
The court actually referred this issue to a larger bench of seven, but Justice Chandrachud aimed to enhance his interpretations from the Aadhaar Act Judgement. He interprets that any non-financial matters can be included in the Money Bill only when it is ‘incidental’to the other provision of Article 110 Clauses (a) to (f). The provisions regarding the structuring, composition, and organization of tribunals cannot be included in a Money Bill.
After analyzing as above, we can say that Money Bills are significant part of the Legislature and the Constitution of India. It holds an important position to make laws related to financial matters of the Government. But Money bills does not include every financial matter. The constitution has restricted the scope of Money Bills as in the procedure of Money Bills the Lok Sabha has absolute power.
But from the above cases, it can be seen that the Government in power has negatively used this special procedure. They have bypassed the Rajya Sabha using Article 110 as an excuse to pass the bill. The government is successful in manipulating the provision by ignoring ‘only’ in Article 110, thus the government can successfully pass the bill using the provisions of Money Bill.
The other significant point is the failure of the court to observe this manipulation and rectify it. The court with a vague and illogical approach considered this as constitutional even though it exceeds the function mentioned in the Constitutional provisions. Furthermore, if we see the substantial part of a bill, the relation with provisions under Article 110 (a) to (g) is not sufficient but the bill has to come with in the provisions. The fact that there is a single provision in the introduced bill that comes under (a) to (f) and the other provisions are just concerning that does not satisfy a bill to be a Money Bill.
Therefore, stretching a provision to an extent that breaks the essence or main objective of the provision can lead to situations that can be harmful and infringe the basic principles of the Constitution. Therefore, the court has to be vigilant in exercising its power and see that there is no infringement. If the court fails to do so, we may have a government that has the power to manipulate the Constitution as well as the Judiciary.
Q.1 What bills cannot be Money Bills or Financial Bills?
A. Article 110 excludes the cases where a bill cannot be a Money Bill or Financial Bill.
There are three grounds which are mentioned below:
- The imposition of fines or other pecuniary penalties.
- Demand or payment of fees for licenses or fees for services rendered.
- Imposition, abolition, remission, alteration or regulation of any tax by any local authority or body for local purposes.
Q.2 What are Financial Bills?
A. Financial bills are the sub-category of money bills mentioned under Article 117. The financial bills can be divided into two kinds, first, bills which includes other financial matters than the matters in the Money bill. Second, includes the expenditure of Consolidates Fund of India and no other money bill matters. (Art 110 (a) to (g))
Q.3 Which authority decides whether a bill is a Money Bill or not?
A. The decision of the Speaker of Lok Sabha is final with respect to any issues which may arise for the characteristic of Money Bill.
Q. 4 Is the decision of Speaker of Lok Sabha subjected to Judicial Review?
A. This question was subjected to confusion prior to the Tribunals Case. The court in the Aadhaar Act judgment also failed to give an absolute decision for this issue. But in the Tribunal Case, the Chief Justice of India expressly concluded that the decision of the Speaker of Lok Sabha is subjected to Judicial Review.
- M.P Jain, Indian Constitutional Law
- SCC Online, (www.scconline.com)
- The Aadhaar (Targeted Delivery of Financial & Other Subsidies, Benefits and Services) Act, 2016, (uidai.gov.in)
- Finance Act, 2017, (www.civilaviation.gov.in)
- Aadhaar bill tabled in LS amid protest
 M.P Jain, Indian Constitutional Law, Chapter II, 72, Lexis Nexis,8th Edition, 2018
 Constitution of India
 Constitution of India, Article 117(1)
 Constitution of India, Article 109(1)
 Constitution of India, Article 109(2)
 Constitution of India, Article 110(g)
[i] (2019) 1 SCC 1
[ii] (2018) SC 500