Supreme Court agrees to hear challenges to government’s passage of several laws through the money bill route

India's Supreme Court is soon expected to begin hearings on the challenges to the government's decision to pass several laws through the money bill route in the Parliament.

On Monday, Chief Justice of India, D.Y. Chandrachud accepted senior lawyers and Congress leaders Kapil Sibal and Abhishek Manu Singhvi's petition to hear the matter urgently after they urged the court to address the matter soon in light of the upcoming budget.

A seven-judge constitutional bench has already been formed to hear the matter, but it has not yet commenced hearings in the case.

The Supreme Court had formed the constitutional bench in October 2023 to hear all the challenges made to the government's passage of several laws by way of money bills. 

The challenges had started following the precedent set in the case of Roger Matthew vs. Union of India in November 2019, in which the Supreme Court had addressed changes in the service conditions of tribunal members that were introduced as a part of Finance Act, 2017, which was passed as a money bill. 

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While a five-judge bench had found the law unconstitutional for infringing upon the independence of judicial bodies, it had also referred the money bill aspect of the case to a larger constitution bench. 

This move had also cast doubt on the validity of a five-judge constitution bench’s 2018 ruling that had upheld the validity of the passage of the Aadhaar Act as a money bill.

The money bill paradox

A money bill, as defined under Article 110 of the Indian Constitution, concerns financial matters related to taxation and public expenditure.

A prominent feature of a money bill is that the Rajya Sabha cannot amend or reject it, due to which, governments rely on it to pass laws through the Rajya Sabha even if they lack a majority in the upper house.

The present case pertains to the NDA government's usage of the money bill route to enact crucial laws like the Aadhaar Act, 2016, amendments to The Prevention of Money Laundering Act, 2002, (PMLA), and the Foreign Contributions Regulations Act, 2010.

At the time when these bills were passed, the opposition had higher numbers in the Rajya Sabha. Hence, it would not have been possible for the government to pass some of these legislations, had it not been for their classification as a money bill.

With regard to challenges to such moves by the government, the most notable resistance has been against the Aadhaar Act. Petitioners have argued that parts of the Act, passed through the two houses as a money bill, contained provisions unrelated to the subjects listed under Article 110.

Also read: SC notice to Centre on plea against PMLA amendments via Money Bill

In September 2018, a five-judge constitutional bench had upheld the Aadhar Act's constitutionality. Justice Ashok Bhushan, in his concurring judgment in the case, had stated that since the Act's main aim was to provide subsidies and benefits involving expenditure from the Consolidated Fund of India, it was validly passed as a money bill.

However, he had also noted that even though the Speaker's decision on whether a bill is a money bill, is ‘final’ according to the Constitution, it can still be subject to judicial review. Meanwhile, Chief Justice D.Y. Chandrachud had dissented on the ruling and had called the passage of the Aadhaar Act as a money bill, an abuse of the constitutional process.

Several amendments to the Prevention of Money Laundering Act (PMLA) were also introduced as money bills, and later challenged in the Supreme Court. While the court had upheld the constitutional validity of the PMLA, it had refrained from deciding on whether passing these amendments as money bills was valid. 

These are the issues that are to be considered by the seven-judge bench now.

Challenged from all sides

The present case also raises questions about the passage of the Finance Act, 2017, as a money bill. The act had altered the appointments to 19 key judicial tribunals, including the National Green Tribunal and Central Administrative Tribunal. 

Senior lawyer Jairam Ramesh, who is also a Member of Parliament for Congress and a petitioner in this case, had argued that the 2017 act was deliberately categorised as a money bill to “extend executive control over these institutions (tribunals) by altering the composition of the selection committees and vastly downgrading the qualifications and experience required to staff these bodies”.

Other petitioners, including the Madras Bar Association, the All India Lawyers Union (AILU), and Ramesh, had argued that various provisions in the Finance Act, 2017, were unrelated to fiscal subjects listed under Article 110, and hence it should be struck down. 

Also read: It would be better if Rajya Sabha can also scrutinize money bills: P.J. Kurien

Although the Supreme Court had quashed some amendments introduced by the law, it did not strike down the entire Finance Act, 2017. The question of whether it was validly passed as a money bill was referred to a larger seven-judge bench.

Even in the electoral bond scheme case, the court had struck down the scheme and amendments introduced through the Finance Act, 2017. 

Challenges to other amendments passed through the money bill route have also been put on hold until the seven-judge bench decides on the definition and scope of money bills.

The decision of the seven-judge bench on the money bill issue could open the door to renewed challenges against the PMLA and the Aadhaar Act.