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Supreme Court and Money Bill: Here’s What’s Next After PMLA Verdict


In a landmark judgment on the powers of the Enforcement Directorate, the Supreme Court earlier this week upheld the constitutional validity of the Anti-Money Laundering Act.

At the same time, the SC bench left open an issue — whether the amendments to the PMLA that expanded the jurisdiction of the ED by including scheduled crimes that the agency could investigate — could have been passed as a money bill?

The matter will now be considered by a 7-judge bench, which is already considering the constitutional question of the Supreme Court’s jurisdiction to define a money bill and to review the decision of the Speaker of the Lok Sabha to certify a bill as a money bill. .

Issues related to Money Bill

A Money Bill is deemed to contain only provisions dealing with all or any of the matters covered by Articles 110(1) (a) to (g) of the Constitution, which often include appropriation of money from the Consolidated Fund of India and taxation.

Therefore, a money bill is restricted to certain matters and cannot include any other matter within its ambit. The Speaker of the Lok Sabha must certify that the Bill introduced in the Lok Sabha is a “Money Bill”.

Money Bills can only be introduced in the Lok Sabha and the Rajya Sabha has limited power to object to the bill.

With the BJP holding a single majority in the Lok Sabha, the opposition said the government was passing important changes in the law, such as the “money bill”, to avoid scrutiny by the Rajya Sabha. Majority.

A similar argument has been made on Aadhaar, and opposition leaders have been saying that Aadhaar is being expanded and made mandatory without a discussion on safeguards.

July 27 judgment

The July 27 judgment clearly states, “We are cognizant of the fact that if the challenge is accepted, it may go to the root of the matter and render the amendments made by the Finance Act unconstitutional or ineffective.”

This means that the 7-judge bench judgment on the scope and definition of “money bill” is very important and will change the scope of the ED’s powers.

Read | Chidambaram’s 2012 parliamentary speech on PMLA haunts him, flagged by Supreme Court in verdict

These issues are pending before a 7-judge Constitution Bench since 2019 in a case challenging the validity of the Finance Act, 2017.

Referring the matter to a 7-judge bench in Roger Mathew’s case, a 5-judge bench of the Supreme Court said, “If we hold that the decision of the Speaker is final under clause (3) of Article 110 of the Constitution, it is subject to judicial review on the principle of unconstitutionality, 110(1 ) provisions should be given due meaning and interpretation to avoid and prevent over-content or under-content. Any interpretation will have long-lasting consequences. “

The bench also took note of the opinion of Attorney General of India KK Venugopal, who suggested that the court should consider its overriding provisions to consider whether a bill is a money bill or not. Section 110(1)(a) to (f) of the Act falls within the ambit. Other minor provisions, though not strictly incidental, may predominate and may be passed along with them as a money bill. According to such an interpretation, the provisions should not be read in a piecemeal fashion and judicial review should be exercised with respect.”

Cases already pending before a 7-judge SC bench

The PMLA amendment is the third set of petitions in which changes in laws through money bills are referred to the larger bench.

Roger Mathew vs South Indian Bank Ltd. and others

In 2017-18, 22 petitions were filed challenging the validity of the Finance Bill 2017, which brought major changes in the administration and structure of various statutory tribunals in the country. The petitions were filed by the existing tribunals, advocates and bar associations of Congress leader Jairam Ramesh.

The petitions said that changes in the administration and structure of the NGT, Armed Forces Tribunal (AFT), Debt Recovery Tribunal (DRT) and other statutory tribunals could not have been made through a money bill.

The Supreme Court also questioned why the government was changing the structure of the tribunals, which were created as independent quasi-judicial bodies, and bringing more control over them.

Read more | Explanation: Supreme Court’s big judgment on Anti-Money Laundering Act

While passing the order, a five-judge bench of the apex court referred to “the issue and question of money bill as defined under Article 110(1) of the Constitution and the certificate issued by the Speaker of the Lok Sabha. Part-XIV of the Finance Act, 2017 is referred to a larger bench.”

The bench noted that a different 5-judge bench had considered the issue of money bill in the Aadhaar case but failed to pass orders within the ambit of Article 110 of the Constitution.

In the Aadhaar case, the majority judgment “has not clarified and explained the scope and scope of the statutory status and aspect of sub-clauses (a) to (f) of Article 110 (1) of the Constitution. This arises for consideration in the present case and assumes considerable importance.”

Thomas Franco Rajendra Dev and others

In May 2021, one-time appeals were filed before the SC challenging the IPO offer of the life insurance company. Earlier, the case was heard in the Bombay High Court and the petitions were dismissed. The petitions challenged the amendments to the LIC Act made through the Finance Act, 2021, which was passed as a Money Bill.

The petitions said that the amendment of Section 28 of the LIC Act could not have been made as a Money Bill.

“As a result of the amendment to Section 28 of the Life Insurance Corporation Act, 1956, the nature of LIC in the nature of a society for mutual benefit is sought to be changed into a joint stock company. This, according to the submission, is to expropriate the surplus from the participating policyholders and distribute it to the shareholders,” the petitions argued.

Read more | ‘Argue on facts and law, avoid emotions’: SC judge tells lawyers

On 12 May 2022, the Supreme Court docketed the case with the already pending tribunal cases before a 7-judge bench.

What does this mean?

So far, the CJI is yet to constitute a 7-judge bench which will consider the definition of money bill and whether the Speaker’s certification that these bills can be classified as money bills is correct.

Since 2017, the tribunals have been functioning, although in 2019 the Supreme Court barred the government’s power to appoint tribunal members and change their terms of office in its original 5-judge bench ruling.

Once these petitions come up for hearing, the final judgment of the 7-judge bench will have far-reaching consequences.

If the court says that these bills cannot be certified as money bills, then all the amendments to PMLA, such as the expanded definition of money laundering, expanded definition of proceeds of crime, bail and stringent conditions, and the expanded list of offenses ED can prosecute, will be struck down. It could affect hundreds of ongoing investigations and trials.

The LIC IPO listed on the stock market on May 17 will also be in trouble and the government will have to consider the rights of LIC policyholders and IPO subscribers. This may also impact the future investment plans of the government.

The Aadhaar card and the UIDAI system may also see another round of opposition as the court will also consider the Puttasamy judgment in 2019, which said the Supreme Court had the power to review the Speaker’s decision, but finally classified the Aadhaar bill as a money bill.

Additionally, the opposition, which has repeatedly criticized the government for “carrying out” the Rajya Sabha and “pushing” controversial bills, will prove its stand even though the Lok Sabha enjoys a majority.

— Ends —



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