Differences between Money Bills and Financial Bills: Court Rulings Explained

Differences between Money Bills and Financial Bills: Court Rulings Explained

Subject: Polity

Section: Parliament 

Context:

Minister Pralhad Joshi stated that the Digital Personal Data Protection (DPDP) Bill is a regular Bill, not a money bill. Initial reports suggested it could be introduced under Article 117, which deals with special provisions for financial Bills.

What is a Money Bill?

Article 110 Definition of Money Bill:

• Article 110 defines a “money Bill” as one containing provisions dealing with taxes, government borrowing, and expenditure from the Consolidated Fund of India, among others.
• Article 110(1) lists seven specific clauses that define money Bills:

1. the imposition, abolition, remission, alteration or regulation of any tax;
2. the regulation of the borrowing of money or the giving of any guarantee by the Government of India, or the amendment of the law with respect to any financial obligations undertaken or to be undertaken by the Government of India;
3. the custody of the consolidated Fund or the Contingency Fund of India, the payment of moneys into or the withdrawal of moneys from any such Fund;
4. the appropriation of moneys out of the consolidated Fund of India;
5. the declaring of any expenditure to be expenditure charged on the Consolidated Fund of India or the increasing of the amount of any such expenditure;
6. the receipt of money on account of the Consolidated Fund of India or the public account of India or the custody or issue of such money or the audit of the accounts of the Union or of a State; or
7. any matter incidental to any of the matters specified in sub clause (a) to (f)

• Under article 110 (2), a Bill shall not be deemed to be a Money Bill by reason only that
  • it provides for the imposition of fines or other pecuniary penalties,
  • or for the demand or payment of fees for licences or fees for services rendered,
  • or by reason that it provides for the imposition, abolition, remission, alteration or regulation of any tax by any local authority or body for local purposes
• Under article 110(3), the Speaker of the House of the People has the final decision on whether a Bill is a Money Bill or not.

What is a finance Bill?

Definition of Financial Bill:

• Any Bill related to revenue or expenditure is considered a financial Bill.
• A money Bill is a specific type of financial Bill that must deal only with matters specified in Article 110(1)(a) to (g) of the Constitution.

Article 117 of the Constitution:

• Article 117 contains special provisions relating to financial Bills.
  • Bills or amendments related to matters in Article 110(1)(a) to (f) require the President’s recommendation for introduction or movement, except for amendments reducing or abolishing taxes.
  • Imposition of fines, fees, or local taxes in a Bill or amendment doesn’t automatically categorize it under the specified matters.
  • Bills involving expenditure from the Consolidated Fund of India need the President’s recommendation for consideration by Parliament.

What are the types of Financial Bills?

• Financial bills (I): Article 117 (1)
  • It includes not only the subjects stated in Article 110 of the Constitution but also other legislative provisions.
  • Financial bill (I) is comparable to the money bill in two ways.
    • Firstly, both of these bills can only originate in the Lok Sabha and not Rajya Sabha.
    • Secondly, both bills can be introduced only on the President’s advice.
  • A financial bill (i) follows the same parliamentary procedures as any ordinary bill.
  • A finance bill (I) follows the same parliamentary process as an ordinary bill in all other respects.
  • It can therefore be rejected or changed by the Rajya Sabha, with the exception that no amendment other than one that lowers or abolishes taxes can be introduced in either House without the president’s approval.
  • The president may call a joint session of the two Houses if they cannot agree on such a measure. This will end the impasse.
  • When the measure is presented to the President, he has three options: to approve it, decline to do so, or send it back to the Houses for further consideration.
• Financial bills (II): Article 117 (3)
  • A financial bill (II) does not contain any of the items listed in Article 110, but it does contain measures impacting Consolidated Fund of India spending.
  • It is regarded as an ordinary bill and is handled in every way by the same parliamentary process as an ordinary bill.
  • This bill’s sole unique feature is that neither House of Parliament may pass it without the President first requesting that it be brought up for consideration.
  • Financial bill (II) can be filed in either house of the Parliament and the President’s approval is not required.
  • However, the President’s suggestion can be taken during the consideration stage of the bill.
  • It can be rejected or amended by either House of Parliament. The President may call a joint session of the two Houses if they cannot agree on such a measure. This will end the impasse.
  • When the measure is presented to the President, he has three options: to approve it, decline to do so, or send it back to the Houses for further consideration.

What is the difference Between Financial Bill And Money Bill?

• Money bills have been covered under Article 110 of the constitution whereas the Finance bill is covered under Article 117 (1) and (3) of the constitution of India.
• The Rajya Sabha cannot amend or reject the money bill but it has the power to amend or reject the finance bill.
• Whether a bill is a money bill has to be decided by the speaker whereas no such prior approval is required to classify a finance bill.
• Money bill and finance bill (1) can be introduced only in the Lok Sabha whereas a Finance Bill (2) can be introduced both in Rajya Sabha and the Lok Sabha.
• To resolve a deadlock, the President can summon a joint sitting of Lok Sabha and the Rajya Sabha in case if it is a finance bill, however, no such provision is made in case of a money bill.

How are money and financial Bills passed?

Role of Rajya Sabha in Passing Money Bills:

1. Money Bills can originate only in the Lok Sabha.
2. After being passed by the Lok Sabha, money Bills are sent to the Rajya Sabha for its recommendations, if any.
3. Within 14 days, the Rajya Sabha must submit the Bill back to the Lok Sabha with its non-binding recommendations.
4. If the Lok Sabha rejects the recommendations, the Bill is considered passed without them.

Passage of Ordinary and Financial Bills:

1. Ordinary Bills and other financial Bills require the agreement of both Houses (Lok Sabha and Rajya Sabha) to ensure their passage.
2. Rajya Sabha can reject or amend ordinary and other financial Bills, unlike money Bills.
3. All other financial Bills, separate from money Bills, must go through all stages in the Rajya Sabha as ordinary Bills.
4. The President can summon a joint sitting of both Houses to resolve differences over a deadlock in passing an ordinary Bill, but there is no provision for a joint sitting for differences over a money Bill.

Examples of Bills Introduced through Money Bill Route:

Over the last seven years, the government has introduced multiple legislations through the money Bill route, including the Aadhaar Act, 2016, and the Finance Act, 2017.

What is the top court’s view?

Constitution Bench Ruling:

• In November 2019, a five-judge Constitution Bench, headed by the Chief Justice of India (then Ranjan Gogoi), struck down amendments to the 2017 Finance Act, passed as a money Bill, regarding tribunal functioning.
• The court referred the issue of whether the amendments could be passed as a money Bill to a seven-judge bench.

Doubts over Aadhaar Act Ruling:

• The Constitution Bench expressed doubts about the correctness of the 2018 verdict upholding the Aadhaar Act, which was also passed as a money Bill.
• The court referred to potential conflicts between judgments of coordinate benches.
• Review petitions on the Aadhaar Act ruling are still pending in the Supreme Court.

CJI Chandrachud’s Dissent:

Chief Justice of India (CJI) Chandrachud, the lone dissenter in the 2018 Aadhaar ruling, criticized passing the Aadhaar Act as a money Bill, calling it a “fraud on the Constitution”.