There is no constitutional illegality in Parliament having amended the Life Insurance Corporation (LIC) Act of 1956 by way of a ‘Money Bill’ for floating an Initial Public Offering (IPO) and parting with its shareholding in the corporation to raise ₹65,000 crore to ₹70,000 crore initially to the Consolidated Fund of India, the Madras High Court has ruled.
The First Division Bench of Chief Justice Munishwar Nath Bhandari and Justice D. Bharatha Chakravarthy held that a challenge to the Finance Act of 2021, through which the LIC Act was amended, could not be accepted in the absence of a challenge to a certificate issued by the Lok Sabha Speaker classifying the Finance Bill 2021 as a Money Bill.
The judges said, the Speaker’s decision should be treated as final as per Article 110(3) of the Constitution, unless a judicial review of it had been prayed for. They dismissed a writ petition filed by an insurance policyholder L. Ponnammal who had contended that the subject matter would not fall within the definition of Money Bill.
Special procedures
The Bench pointed out that Article 109 lays down special procedures in respect of Money Bills. Such Bills could be introduced only in the Lok Sabha and not in the Rajya Sabha. After the Lok Sabha passes them, they should be transmitted to the Rajya Sabha for the latter to make its recommendations within 14 days.
If the recommendations were not made within 14 days, the Bill should be deemed to have been passed by both the Houses and if any recommendations were made, the Lok Sabha could take a call on accepting or rejecting the recommendations. After such decision, the Bill would be deemed to have been passed by both the Houses.
Issues related to payment or withdrawal of money either from the Consolidated Fund or Contingency Fund of India would fall under the definition of Money Bill and if any question arises as to whether a Bill was a Money Bill or not, the decision of the Lok Sabha Speaker would be final as per Article 110(3) of the Constitution.
The present case is not one where an allegation of constitutional fraud has been made. “Even otherwise, we do not find constitutional bar or illegality in the Act of 2021. It is more so when the Parliament, endowed with plenary powers, had passed the Bill and the Standing Committee on budget had approved it after scrutiny and due diligence,” the Bench said.
It concurred with the submissions of Additional Solicitor General N. Venkataraman that the prime purpose of the law was to receive money in the Consolidated Fund and use it for the development of the country and therefore the Act of 2021 would squarely fall within the realm of Money Bill.
Authoring the verdict for the Bench, the Chief Justice wrote: “In any case, the petitioner, who is a policyholder having a policy worth ₹50,000 is questioning the receipt of money approximately in the range of ₹65,000 crore to 70,000 crore into the Consolidated Fund of India on account of the IPO.”
He went on to state: “The intrusion or inference to the implementation of a public interest policy by way of legislation should be eschewed as it directly impacts the economic growth of the country and interference therein may have far reaching consequences because the money is to be used for the development of the country.”
