Legislative Procedure ~ UPSC Polity Notes

Legislative procedure means the procedure which is followed for making It is initiated by the introduction of the proposals for legislation in the "Bill" and involves the following stages

Introduction of the Bill in one of the Houses.
When it is passed by that House, the Bill is transmitted to the other House.
When the Bill is passed or deemed to have been passed by both the Houses, it is sent to the President for his assent thereto.
On his assent, the Bill becomes law and the legislative procedure is completed.

The legislative procedure is discussed in respect to the following Bills

Ordinary Bill (Article 107)

An Ordinary Bill may be defined as that Bill which is neither a Money Bill, nor a Financial Bill nor a Bill involving expenditure from Consolidated Fund of India.

An Ordinary Bill may be introduced in either House of Parliament when passed by the House in which it is introduced; the Bill is to be transmitted to the other House. When the other House has also agreed to the Bill, it is said to be passed by both Houses. It is then presented to President for his assent.

The passing of a Bill in a House is done through three stages commonly known as readings:

First reading, second reading and third reading first stage.
In the First stage, the Bill is introduced in the House. No discussions take place this stage.
Then starts the consideration stage where the Bill is discussed clause by clause. At this stage, amendments are moved and accepted or rejected. It is known as the second reading of the Bill.
At the third reading stage, a brief general discussion takes place and the bill is passed. All the three reading stages are repeated in each House of Parliament. If there is any disagreement between the two Houses over the Bill cannot be deemed to have been passed by both Houses.

Money Bill (Article 110)

The expression Money Bill is defined by Clause (1) of Article 110 is that Bill which contains only provisions dealing with all or any of following matters, namely

(a). the imposition, abolition, remission, alteration, or regulation of tax

(b). 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

(c). the custody of the Consolidated Fund or the Contingency Fund India, the payment of moneys into or the withdrawal of moneys from any such Fund

(d). the appropriation of moneys out of the Consolidated Fund of India

(e). the declaring of any expenditure to be expenditure charged on Consolidated Fund of India or the increasing of the amount of any such expenditure.

(f).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

(g).any matter incidental to any of the matters specified in sub-clauses (a) to (f).

Thus, a Money Bill is that Bill which contains all or any of the matters contained in Sub-clauses (a) to (g) of Clause (1) of Article 110. However, Bill shall not be deemed to be a Money Bill by reasons only that it provides payment of fees for licences or fees for services rendered, or by reasons provides for the imposition, abolition, remission, alteration or regulation of any tax by any local authority or body for local purposes.

If any question arises as to whether a Bill is a Money Bill or not, the decision of the Speaker of the Lok Sabha shall be final.

Aadhaar Controversy

An important question that required consideration in the Aadhar judgment was whether the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 was rightly passed as a “Money Bill”. By a majority, it was held that it was indeed a Money Bill while the dissenting judgement of Chandrachud J. held to the contrary.

Aadhaar was a money Bill:

The Aadhaar Bill was a Money Bill as it had a substantial nexus with the appropriation of funds from the Consolidated Fund of India and was directly connected with Article 110 of the Constitution. (Justice Sikri).
Section 7 of Aadhar act states that the expenditure of subsidies and other schemes which are for the welfare of the people would be met from the Consolidated Fund of India, thus, the Aadhar Bill was held eligible to be categorized as a Money, Bill.
The majority introduces a test of “substantial nexus with the appropriation of funds and direct connection”. However, this will enable any future Parliament to introduce any Bill with just one provision that has a substantial nexus with the “appropriation of funds and direct connection” and it would pass muster as a “Money Bill”.

Aadhar was not a Money Bill:

Expenditure on the Aadhaar scheme is “incurred” from the Consolidated Fund of India not Charged on Consolidated Fund of India and will not be covered by Articles 110(c) or 110(e). Consequently, Article 110(g) will also have no application.
The scholarly book on ‘Parliamentary Practice’ by Erskine May specifically points out that if a Money Bill contains other matters, which are not subordinate or incidental to the enumerated matters, it would not be a Money Bill. Accordingly, the Speaker of the House of Commons has rejected 1/3rd of such Bills. The Aadhaar Bill contained several provisions which were neither subordinate nor incidental to any of the enumerated matters in Article 110(1).
When a money bill is sent to Rajya Sabha, it cannot be amended or rejected by the Rajya Sabha. The Rajya Sabha should return the bill with or without recommendations, which may be accepted or rejected by the Lok Sabha.

Speaker decision & Judicial Review:

In the cases of Mohd. Saeed Siddiqui v. State of Uttar Pradesh, and Yogendra Kumar Jaiswal v. State of Bihar, the Supreme Court had held that the certificate issued by the Speaker was final and not subject to judicial review.

However In Raja Rampal case, the Supreme Court held that the while the Court may not review procedural irregularities in parliamentary proceedings as per Article 122, the Article doesn’t exempt review on other grounds. Thus, judicial review is possible on other grounds, in particular, substantive illegality and unconstitutionality. This includes reviewing even the decision of the Speaker.

Special Procedure in respect of Money Bill (Article 109):

Article 109 provides for a special procedure for the passing of Money Bill.
A Money Bill can originate only in the Lok Sabha. Thus, it cannot be introduced in the Rajya Sabha.
A Money Bill cannot be introduced in the Lok Sabha without the prior recommendations of the President.
When the Money Bill is passed by the Lok Sabha, the Speaker shall make an endorsement on that Bill that the Bill is a Money Bill, before it is transmitted to the Rajya Sabha.
If the Rajya Sabha passes the Money Bill without making any amendments, the Bill is said to be passed by both.
If the Rajya Sabha recommends some amendments to the Money Bill, and it is then returned to the Lok Sabha. If all the amendments recommended by Rajya Sabha are accepted by the Lok Sabha, the Money Bill is deemed to have been passed by both the houses.
If all or any of the amendments recommended by Rajya Sabha to the Money Bill are not accepted by the Lok Sabha, even then the Money Bill shall be deemed to have been passed by both Houses.
If Rajya Sabha does not return the Money Bill within a period of 14 days from the date of its receipt in the House, without it being passed by it, the Money Bill shall be deemed to have been passed by both Houses after the expiration of such period of 14 days.
It is thus clear that Rajya Sabha has no power with respect to the passing Money Bill except delaying its passing for a period of 14 days.
It follows that a deadlock in the two Houses does not result on a Money bill.

Financial Bill:

Financial Bills are also called as, "Act for Appropriation of Funds for Appropriations". It is different than money bills which has been mentioned under article 110 of the constitution of India.
Financial bills are responsible for the fiscal matters such as government spending or revenue. It specifies the amount of money to be spent by the government and the way it is to be spent.
Financial bills are a component of the constitution and the union budget. It proposes all the necessary legal changes required for the proposed tax adjustments. When a question arises that a bill is a money bill or not, the speaker of the house decides on the matter and his decision shall be final in the regard.
According to Rule 219 of the Lok Sabha's Rules of Procedure, a "Finance Bill" is defined as the Bill that is typically introduced each year to give effect to the Government of India's financial proposals for the upcoming fiscal year, as well as a Bill to give effect to supplementary financial proposals for any period.

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 the 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) OR Bill involving expenditure from Consolidated Fund of India:

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.

Need of a Financial Bill:

The Union Budget suggests a number of tax changes for the upcoming fiscal year, even if the Finance Minister's Budget address does not mention all of the suggested changes.
These suggested changes will have an impact on a variety of current tax-related laws in the nation.
The Finance Bill intends to alter all pertinent laws without necessitating the passage of individual amendment bills for each one.
This law addresses a number of concerns, including tax relief, inflation, and interest rates.
For instance, a Union Budget's anticipated tax modifications may require amending various sections of the Income Tax Act, Stamp Act, Money Laundering Act, and other legislation. The Finance Bill amends and repeals existing legislation as appropriate.

Difference between Financial Bill and money bill:

While all Money Bills are Financial Bills, all Financial Bills are not Money Bills. For example, the Finance Bill which only contains provisions related to tax proposals would be a Money Bill.
However, a Bill that contains some provisions related to taxation or expenditure, but also covers other matters would be considered as a Financial Bill. The Compensatory Afforestation Fund Bill, 2015, which establishes funds under the Public Account of India and states, was introduced as a Financial Bill.
Secondly, the procedure for the passage of the two bills varies significantly. The Rajya Sabha has no power to reject or amend a Money Bill. However, a Financial Bill must be passed by both Houses of Parliament.

Deadlock in the Houses of Parliament on a Bill (Article 108)

It may be noticed that a deadlock in the two Houses of the Parliament can result only on a non-Money Bill, i.e., an Ordinary Bill, Financial Bill or a Bill Involving Expenditure from the Consolidated Fund.

There would be a deadlock in the two Houses on a Bill in the following cases:

When a Bill passed by the House in which it originated and transmitted to the other House, is rejected by the other House.
When a Bill, having been passed by the House in which it is originated, is transmitted to the other House, the other House recommends some amendments to that Bill and all or any of those amendments having been rejected by the first House.
When a Bill having been passed by the House in which originated, is transmitted to the other House, the other House does not return the Bill for six months from the date of its receipt in the House without it being passed by it.

Procedure to resolve deadlock (Article 108):

Article 108 provides that when deadlock has resulted on a bill, the President may notify to the houses of Parliament, his intention to summon a joint sitting of the houses for resolving the deadlock on that bill.
The President shall notify his intention by a message to the Houses if they are in session and sitting. If the Houses are not sitting, the President shall notify intention by a public notification. After the President has notified his intention to hold a joint sitting of Hours, neither House shall proceed further with that Bill. The President then, summon the Houses to meet in a joint sitting and the Houses meet accordingly. The Speaker of the Lok Sabha shall preside over that at the joint sitting of the two Houses.
If at the joint sitting of the two houses, the Bill is passed by the majority of the total number of members of both Houses, present and voting, it shall be deemed to have been passed by both Houses, The Bill shall be deemed to been passed with such amendments, if any, as are agreed to at the sitting. No new amendments except those on which the disagreement resulted in the two Houses, shall be proposed at the joint sitting.
A joint sitting of the two Houses shall be held even if the Lok Sabha has been dissolved, provided, the President had notified his intention to hold point sitting before the dissolution of the House takes place. Thus, the dissolution of the Lok Sabha shall have no effect on the joint sitting of the and the Bill passed at the joint sitting shall be deemed to have been by both Houses.
It is the only case in which the members of a dissolved House take part

Assent to Bills (Article 111):

When a Bill has been passed by both Houses of the Parliament, it shall be presented to the President for his assent. The President may declare either that he assents to the Bill, or that he withholds his assent therefrom. When President assents to the Bill, it becomes an Act, if he withholds his assent, the Bill lapses.
With respect to a non-Money Bill, the President has one more option, he may return a non-Money Bill to the Houses with a message requesting to reconsider the Bill and may recommend some amendments to that bill. The Houses when so required, shall reconsider the Bill along with the amendments, recommended by the President. If the Bill is again passed by Houses with or without amendments, it is to be presented to the President for his assent again. Article 111 provides that the President, then shall not withhold his assent to the Bill.

Private Member Bill

A member of parliament (MP) who is not a minister is a private member. The Bills introduced by private members are referred to as Private Member’s Bills. The Bills introduced by ministers are called government Bills. The government bills have the backing of the government and reflect its legislative agenda. Whether the Private Bill has to be admitted or not is decided by the Speaker of the Lok Sabha or Chairperson of the Rajya Sabha.

Procedure:

The Private Member’s Bills are either drafted by the Member of Parliament (MP) or his staff.
The MP who wants to move a Private Member’s Bill has to give at least a month’s notice, for the House Secretariat to examine it for compliance with constitutional provisions and rules on legislation.
While a government Bill can be introduced and discussed on any day, a private member’s bill is only introduced and discussed on Fridays.
In case of multiple Bills, a ballot system is used to decide the sequence of bills for introduction.
The Parliamentary Committee on Private Member's Bills and Resolutions goes through all such Bills and classifies them based on their urgency and importance.

No Private Member’s Bill has been passed by the Parliament since 1970, according to PRS Legislative Research. So far, the Parliament has passed 14 such Bills, six of them in 1956. The 16th Lok Sabha (2014-19) witnessed the highest number of Private Member Bills introduced (999) since 2000.

Budget in Parliament

As regards the procedure to be followed in the Houses of Parliament for the purpose of timely completion of the financial business, Article 119 confers power of the Parliament to make law for the purpose.

In financial matters, the legislative procedure is initiated with the presentation of the Annual Budget in the two Houses of the Parliament various estimates, the demands for grant and appropriation bill is discussed and passed by the house.

Annual Financial Statement (Article 112)

Article 112(1) provides: "The President shall in respect of every financial year shall cause to be laid before both the Houses of Parliament a Statement of the estimated Receipts and Expenditure of the Government of India for that year, referred to as the Annual Financial Statement". "Annual Financial Statement" is commonly known as the "Annual Budget"

The estimates of expenditure embodied in the Annual Financial Statement shall show separately-

The sums required to meet expenditure scribed by this Constitution as expenditure charged upon the Consolidated Red of India; and
The sums required to meet other expenditure proposed be made from the Consolidated Fund of India. It shall also distinguish expenditure on Revenue Account from other expenditure.

Expenditure Charged upon the Consolidated Fund of India [Article 112(3)]

The essential characteristic of this expenditure is that it is not subjected to vote of the Parliament. The Parliament can neither refuse this expenditure nor reduce it. However, the Members of Parliament are not prevented from discussing this expenditure." The following expenditure has been declared by the Constitution as expenditure charged upon the Consolidated Fund of India:

The emoluments and allowances of the President and other expenditure relating to his office
The salaries and allowances of the Chairman and the Deputy Chairman of the Council of States, and the Speaker and the Deputy Speaker of the House of People
The debt charges for which the Government of India is liable including interest, sinking fund charges and redemption charges, and other expenditure relating to the raising of loans and the service and redemption of debt.
The salaries, allowances and pensions payable to or in respect of the Judges of the Supreme Court, the pensions payable to or in respect of Judges of the Federal Court, the pension payable to or in respect of Judges of any High Court
The salary, allowances and pension payable to or in respect of the Comptroller and Auditor General of India.
Any sums required to satisfy any judgment, decree or award of any Court or arbitral tribunal.
Any other expenditure declared by Constitution or by Parliament, by law, to be so charged.

Types of Fund

Consolidated Fund of India (article 266)

It is the account of the revenue the Government of India receives — via income tax, Customs, central excise and the non-tax revenue — and the expenses it makes, excluding exceptional items.

Any money raised by the government, including loans through public notifications, treasury bills, and borrowings from foreign governments or international institutions, is always credited to this fund. Likewise, whatever money the Indian government spends — government expenditure — is incurred from this account.
The government cannot withdraw any fund from this account without the approval of Parliament. Essentially, a sum of Rs 500 crore from consolidated fund of India is transferred to the Contingency Fund of India for dealing with any emergency situation. However, if the contingency fund is not used by the government in a given financial year, there is no requirement to add more to it.
Disbursement charged on Consolidated Fund of India: Payment of interests, loans and advances to state governments, internal debt of the central government, and grants-in-aid to state governments account for the bulk of expenditure.

Contingency Fund of India

It is Constituted under Article 267(1) of the Indian Constitution.

It is used at a time when there is a crisis in the nation, a natural calamity, for instance and money is required to deal with it. The Union government has its own contingency fund with a corpus of Rs 500 crore.
States can also opt to have their own contingency funds. The contingency fund of the Union government is at the disposal of the President of India, who releases the funds on request of the Union Cabinet, which later gets an approval from Parliament. A Parliament approval is mandatory.
After the emergency has been dealt with, the fund is reimbursed to its full capacity of Rs 500 crore. This required money comes from the Consolidated Fund of India.

Public Account of India: (article 266)

All other public money (other than those which are credited to the Consolidated Fund of India) received by or on behalf of the Government of India shall be credited to Public account of India. Example: Deposits in provident funds, judicial deposits, savings bank deposits, departmental deposits, and remittances.
The approval of Parliament for such payments is not necessary.
This is not the money of the government, but of public, so must returned to them.

Demand for Grants: (article 113)

Article 113(1) provides that so much of the estimates in the Annual Budget as relate to expenditure charged upon the Consolidated Fund of India shall not be submitted to the vote of Parliament. However, this Clause shall not be considered as preventing the discussion in either House on any of these estimates,
The estimates as relate to other expenditure proposed to be made, sha be submitted to the Lok Sabha, in the form of "Demands for Grants" Thus, the "Demands for Grants" are the estimates of expenditure contained in the Annual Budget, which are submitted to the Lok Sabha for being passed by it. The Lok Sabha has full power to allow or to refuse or to reduce any of these "Demands for Grants". However, no "Demands for Grants" shall be made to the Lok Sabha except on the recommendation of the President.

Appropriation Bill (Article 114)

Article 114(1) provides that soon after the "Demands for Grants" made to the Lok Sabha are passed by the House, a Bill known as the Appropriation Bill shall be introduced in the Lok Sabha for the appropriation of money out of the Consolidated Fund of India. Appropriation Bill shall include:

The Demands for Grants so passed by the Lok Sabha under Article 113(2).
The expenditure charged upon the Consolidated Fund of India.

The Appropriation Bill shall not contain the expenditure exceeding the amount shown in the Annual Financial Statement previously laid before the Parliament.

Clause (2) of Article 114 provides that no amendment shall be proposed to the Appropriation Bill in either House of the Parliament which would have the effect of varying the amount or altering the destination of any grant so passed by the Lok Sabha. Whether any amendment is admissible or not shall be finally decided by the Presiding Officer of the Lok Sabha.
The Appropriation Bill, when passed by the Lok Sabha, shall be endorsed by the Speaker, that, it is a Money Bill. It shall then be transmitted to the Rajya Sabha. As, it is endorsed as a Money Bill, the Rajya Sabha would have no power to reject it. The endorsement would have the effect of restricting the power of Rajya Sabha on that Bill. After the Appropriation Bill is passed by both the Houses, and is assented to by the President, it becomes the Appropriation Act. It is only under this Appropriation Act that any money can be withdrawn by the Government from the Consolidate Fund of India.

Votes on Account [Article 116(1)(a)]:

"Votes on Account" are the grants which are made in advance in respect of the estimated expenditure for a part of financial year pending the completion of the procedure prescribed for the passing of the Annual Appropriation Bill contained in Articles 113 and 114. The Votes on Account shall mention separately the expenditure which is declared to be charge on Consolidated Fund of India.

Vote of Credit (Article 116(1)(b)]:

Vote of Credit" is a grant which is made for meeting an unexpected demand upon the resources of the Government when on account of the magnitude or indefinite character of the service, the demand cannot be stated with the details ordinarily given in the Annual Financial Statement. The provisions of Articles 113 and 114 are applicable to the making of any vote of credit.

Exceptional Grants [Article 116(1)(c)]:

An "Exceptional Grant" is a grant which forms no part of the current service of any financial year. The provisions of Articles 113 and 114 would have effect in relation to the making of such a grant.

Supplementary, additional or excess grants (Article 115) Supplementary grants are those-grants which are required to meet any supplementary or additional expenditure. The need arises for making of supplementary grants when:

The amount authorised under the annual Appropriation particular service for the current financial year is found to be insufficient for the purpose of that year, or
A need has arisen during the current financial year, for additional expenditure upon some new service not contemplated in the Annual Financial Statement for that year, or
Any money has been spent on any service during a financial year in excess of the amount granted for the purpose.

The statement showing the estimated amount of the supplementary or additional expenditure is caused to be presented to the Lok Sabha by the president. The provisions of Articles 112, 113 and 114 would be effective for making of the supplementary grants.