Central Idea

CJI announced that a seven-judge bench will be established to address a series of petitions challenging the government’s use of the money bill route to pass significant legislations.
This move aims to provide clarity on the interpretation and application of money bills under Article 110 of the Constitution and their validity.

Understanding the Money Bill Issue

The PMLA Challenge: CJI Chandrachud’s statement came during the hearing of challenges against amendments made to the Prevention of Money Laundering Act (PMLA).
Previous Judgment: In July 2022, a three-judge bench upheld the PMLA and the extensive powers of the Enforcement Directorate (ED). However, the validity of amendments to the PMLA passed as money bills remained open for review by a larger Constitution bench.
Finance Acts’ Impact: Key amendments to the PMLA were introduced through Finance Acts passed in 2015, 2016, 2018, and 2019, which are presented as money bills during the budget sessions under Article 110 of the Constitution.

The issue of whether a bill qualifies as a money bill under Article 110 was first raised during the Aadhaar case.
In a 4:1 majority ruling in 2018, the Supreme Court upheld the Aadhaar Act as a valid money bill.
Notably, Justice Chandrachud dissented, criticizing the government’s passage of the Aadhaar Act as a money bill, labelling it a “fraud on the Constitution.”

In the case of Roger Matthew vs. Union of India (2019), the Supreme Court addressed challenges related to changes in the service conditions of tribunal members, introduced as a money bill in the Finance Act of 2017.
While declaring the law unconstitutional for interfering with judicial independence, the court referred the money bill aspect to a larger constitution bench, expressing doubts about the correctness of its 2018 verdict upholding the Aadhaar Act.

Article 110(1): A bill is considered a money bill if it exclusively pertains to matters specified in Article 110(1)(a) to (g), such as taxation, government borrowing, and appropriation of funds from the Consolidated Fund of India.
Lok Sabha Exclusive: Money bills can only be introduced in the Lok Sabha and do not require Rajya Sabha’s consent.
Role of Speaker: According to Article 110(3), the Speaker of the Lok Sabha has the final say in determining whether a bill is a money bill. However, the court in the Aadhaar case emphasized that the Speaker’s decision is subject to judicial scrutiny.

The formation of a seven-judge bench signifies a significant step towards resolving controversies surrounding money bills and their passage, ensuring a clearer understanding of their application under the Constitution.
This move underscores the importance of judicial review in upholding the constitutional principles of parliamentary proceedings and ensuring transparency and accountability in legislative processes involving money bills.