SC to Set Up Seven-Judge Bench to Hear Money Bill Challenge

October 7, 2023

Chief Justice of India DY Chandrachud has announced that a seven-judge bench will be formed to hear a batch of pleas challenging the Indian government’s use of the money bill route to pass certain key legislations. This development raises questions about the classification of bills as money bills and their passage in India’s parliamentary system.

Background on Money Bill Challenge

The decision to form a seven-judge bench came during a hearing challenging amendments to the Prevention of Money Laundering Act (PMLA).
A three-judge bench had previously upheld the PMLA and the extensive powers of the Enforcement Directorate (ED) in July 2022.
However, the bench left the validity of amendments to the PMLA passed as money bills open for a larger Constitution bench to consider.

Amendments to the PMLA

The Finance Acts of 2015, 2016, 2018, and 2019 introduced significant amendments to the PMLA. These Finance Bills, which are typically introduced during the budget, are classified as money bills under Article 110 of the Indian Constitution.

Challenges on Money Bill Classification

The Aadhaar case in 2018 was one of the first major challenges to determine whether a bill qualified as a money bill under the Constitution.
In a 4:1 majority decision, the Supreme Court ruled in favor of the government, affirming the Aadhaar Act as a valid money bill under Article 110 of the Constitution.
Justice Chandrachud had been the lone dissenter in this ruling, criticizing the government for passing the Aadhaar Act as a money bill.
In the Roger Matthew vs. Union of India case in November 2019, the Supreme Court heard a challenge against changes in the service conditions of tribunal members introduced as a money bill in the Finance Act of 2017.
While a five-judge bench struck down the law as unconstitutional for interfering with judicial independence, it referred the money bill aspect to a larger constitution bench.
This move also raised doubts about the correctness of a previous five-judge Constitution Bench’s 2018 verdict upholding the Aadhaar Act passed as a money bill.

Definition of a Money Bill in India

Under Article 110(1) of the Indian Constitution, a bill is deemed a money bill if it deals exclusively with matters specified in Article 110(1)(a) to (g). These matters include taxation, government borrowing, and appropriation of money from the Consolidated Fund of India, among others. Money bills can only be introduced in the Lok Sabha (House of the People) and do not require the consent of the Rajya Sabha (Council of States).
Article 110(3) of the Constitution states 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.” However, the Supreme Court in the Aadhaar case held that the Speaker’s decision on money bill classification is subject to judicial scrutiny.

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