Context: The debate surrounding the classification of the Digital Personal Data Protection (DPDP) Bill as a Money Bill and its implications has sparked discussions on the nuances of Money Bills and Financial Bills in India’s parliamentary process.

About Financial Bills & Money Bills

• In a Parliament, a bill that has provisions related to financial matters is termed as a Financial Bill. There are 3 kinds of Financial Bills in the Parliament, viz. Money Bills, Financial Bills category-I and Financial Bill category-II.

• A Bill that contains some provisions related to taxation and expenditure, and additionally contains provisions related to any other matter is called a Financial Bill. Therefore, if a Bill merely involves expenditure by the government, and addresses other issues, it will be a financial bill.

• A Financial Bill (I) contains not only any or all the matters mentioned in the Money Bill, but also other matters of general legislation. It is dealt under Article 117 (1) of the Constitution.

• A Financial Bill (II) contains provisions involving expenditure from the Consolidated Fund of India but does not include any of the matters mentioned in Article 110. It is dealt under Article 117 (3) of the Constitution.

• A Money Bill is also a specific type of Finance Bill, that must deal only with matters specified in Article 110 (1) (a) to (g).  A Bill is said to be a Money Bill if it only contains provisions related to taxation, borrowing of money by the government, expenditure from or receipt to the Consolidated Fund of India.

• Thus, the basic difference is that all money bills are financial bills, but not all financial bills are money bills.

Supreme Court’s Perspective

• Striking Down Amendments: In Nov 2019, a five-judge Constitution Bench, headed by the then CJI Ranjan Gogoi, struck down amendments to the 2017 Finance Act, passed as a Money Bill. The court found the amendments altering the structure and functioning of various tribunals contrary to constitutional principles.

• Referring the Matter: The court referred the issue of whether these amendments could have been passed as a Money Bill to a seven-judge bench for consideration, indicating the complexity of the matter.

• Doubts Over Aadhaar Act: The same Constitution Bench expressed doubts about the correctness of the 2018 verdict upholding the 2016 Aadhaar Act, which was also passed as a Money Bill. This matter is yet to be conclusively settled, as petitions seeking a review of the Aadhaar Act ruling remain pending in the Supreme Court.

Conclusion

• The distinction between Money Bills and Financial Bills is crucial in India’s parliamentary process, as it determines the extent of Rajya Sabha’s role and the passage procedure.

• While Money Bills have limited Rajya Sabha involvement and cannot be amended or rejected by it, other Financial Bills and ordinary Bills require the agreement of both houses for passage.

• The Supreme Court’s perspective on the correct classification of certain Bills as Money Bills adds further complexity to the debate, underscoring the need for a comprehensive understanding of these constitutional provisions.