A Constitutional Conundrum: Assessing The Legality Of Electoral Bonds As Money Bills


In Association of Democratic Reforms v. Union of India, the Supreme Court dealt a significant blow to the Electoral Bond Scheme, declaring it unconstitutional on the grounds of violating the fundamental right to information enshrined in Article 19(1)(a) of the Constitution. However, it notably refrained from delving into the procedural challenge to its enactment- namely, its introduction in the Finance Act, 2017 as a Money Bill. The court deferred the procedural challenge to a seven-judge bench for adjudication. This approach seems counterproductive given that if the Speaker’s certification of the Finance Act as a money bill was held invalid, the amendment would ipso facto be rendered null and void without the court delving into its substantive constitutionality.

This aspect had previously been examined by a coordinate bench in Roger Matthew v. South Bank of India (“Roger Matthew”). The bench observed that the ratio in the Aadhaar case failed to sufficiently consider the effect of ‘only’ in Article 110(1) of the constitution. It therefore directed the matter to be placed before a seven-judge bench to authoritatively determine the scope and ambit of Article 110 of the Constitution.

Against this backdrop, this article attempts to spotlight the procedural aspects of bringing the Electoral Bond Scheme under the garb of the Money Bill. The authors contend that the procedure route taken to bring this scheme under the Money Bill was illegal and therefore unconstitutional. This article proceeds in two sequential steps. The first part of the article delineates the scope of the Money Bill by considering the language of Article 110, constituent assembly debates, and judicial precedents. The second part analyses the amendments in the Companies Act, Income Tax Act, and the RPA through the Finance Act 2017 that incorporates the Electoral Bond Scheme vis-a-vis the interpretative scope of the Money Bill under Article 110.

Framework on Money Bill

Article 110 of the Constitution delineates the scope of Money Bills. If in the opinion of the Speaker, a bill exclusively falls within the subjects listed in sub-clauses (a) to (f) of Article 110(1) or any matter incidental to the subjects listed, it can be categorised as a money bill. Consequently, such bills only require the assent of the Lok Sabha. The Rajya Sabha’s role is merely consultative. It has fourteen days to consider and can merely provide recommendations. The excerpt of Article 110 is provided herein under:

(1) For the purposes of this Chapter, a Bill shall be deemed to be a Money Bill if it contains only provisions dealing with all or any of the following matters, namely:—

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

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

The Union of India relies on Article 110(3) to argue that the Speaker’s certification makes it fait accompli. Article 110(3) of the Constitution stipulates that the decision of the Speaker shall be final on the question of whether the bill is a money bill or not.

(3) If any question arises whether a Bill is a Money Bill or not, the decision of the Speaker of the House of the People thereon shall be final.

However, the finality of the decision does not exclude albeit restrict its judicial review on the principle of constitutional illegality. In the Aadhaar judgement, the majority opinion settled the position of law that judicial review of the decision of the speaker is admissible. If this is not the case, the decision of the Speaker would render the certification immune from scrutiny, even if it does not deal only with the subjects listed in sub-clause (a) to (f) [para 359]. If the judicial review is permissible, then the relevant issue for consideration is whether the amendments introduced through the Finance Act 2017 encompassing the Electoral bond scheme constituted a money bill or not. In determining it, the interpretation of the word ‘only’ in Article 110 of the Constitution is of the essence.

Judicial Scope of Money Bill

In the Aadhaar case, Justice Ashok Bhushan in his concurring opinion observed that the legislative intent behind the expression ‘only’ was that the ‘main and substantive’ provision must only be from sub-clauses (a) to (f) otherwise the bill cannot be deemed a money bill. It was further emphasised that the use of the word “only” in Article 110(1) serves a purpose, delineating a clear restriction for a bill to be certified as a “Money Bill” [para 362]. In a similar vein, in his dissenting opinion, J. Chandrachud emphasised the importance of the word ‘only’ in Article 110(1) and held that if a Bill contains even a single provision beyond the scope of the subjects enlisted in clauses (a) to (f) of Article 110(1), then it could not be introduced as a Money Bill [Para 107].

In Roger Matthew, while noting the importance of the word ‘only’ in the language of Article 110(1), the court interpreted the sub-clauses (a) to (g) as exclusive and not exhaustive. Though sub-clause (g) of Article 110(1) provides to cover “any matter incidental to what is specified in clauses (a) to (f), the court categorically denied it to be a “catch-all phrase” and held that only if a matter which is incidental to any of the matters specified in clause (a) to (f) then only it could be contemplated in clause (g) [Para 30]. If literal interpretation is adopted, the effect of the word ‘only’ is that if the bill contains provisions unrelated to or not incidental to clause (a) to (f) it would not be deemed a money bill. In the Constituent Assembly, an amendment to omit the word ‘only’ was moved. The amendment argued that the word only implies that if the bill has provisions dealing with subjects listed in Article 110(1) and also has other unrelated provisions then it should not be considered a money bill. If it is not the intention, then the word ‘only’ is dangerous. The amendment was rejected in a vote after discussion. Thus, the legislative intention in using ‘only’ in Article 110(1) is to restrict certification of a bill as a money bill to certain well-defined subjects.

Three-prong standard

An analysis of both these landmark judgements along with the minority opinion of Justice Chandrachud seems to suggest that in cases of deciding whether a Bill falls within the ambit of a Money Bill under Article 110 or not, the three-prong standard could be employed. The first step is to identify the main and substantive provision of the concerned Bill. If the bill has more than one substantive provision, each of them must be individually considered. The next step is to check if the substantive provisions of the Bill directly fall within any or all of the sub-clauses (a) to (f) of Article 110(1). If the second prong is satisfied, the last prong is to examine the related and ancillary provisions of the relevant Bill and examine if they are incidental to the matter specified in clauses (a) to (f) of Article 110 or necessary for the proper working of the bill. If the answer to the third query is negative, the court must consider whether the said provisions can be severed from the bill and declared unconstitutional. If not, the whole bill would be deemed not to be a money bill and thus, unconstitutional. The standard may be employed to determine the constitutionality of introducing the electoral bond scheme through the Finance Act 2017 as a money bill.

Applying the Three-prong standard to the electoral bond scheme

The Finance Act 2017

Finance Acts are usually dealt with as money bills to give effect to the tax change in the Union budget. However, the Finance Act 2017 introduces certain amendments that are unrelated to the subjects listed in Article 110. The Finance Act, 2017 amended certain provisions of the Representation of People Act (“the RP Act”), the Companies Act, and the Income Tax Act (“the IT Act”) in order to incorporate the electoral bond scheme. Section 29C of the RP Act was amended such that the political party were exempted from disclosing the details of contributions received through the electoral bonds. Section 13A of the IT Act was amended such that the political party was exempted from maintaining a record of contributions received through electoral bonds. Additionally, Section 182 of the Companies Act was amended such that the companies were required to disclose only the total amount contributed in a financial year. It further removed the cap on corporate funding. In simpler words, it provided for undisclosed contributions by corporate entities to the political parties on the fulfilment of certain requirements.

The amendment in the Finance Act 2017 can be classified in two broad heads- amendment providing non-disclosure of information on corporate bonds and amendment permitting unlimited funding by corporate entities. The electoral nature of these amendments was acknowledged by the Supreme Court in the Electoral Bond judgement. Article 110 provides the essential constitutional condition to deem a bill as a money bill. Provided that the money bill is an exception to the bicameral law-making procedure, its content must be given strict interpretation.

To illustrate the application of the three-pronged standard on the electoral bonds scheme, the first step would be to ascertain the main and substantive purpose of the amendments. The ‘main and substantive’ provisions on electoral bonds introduced through the Finance Act 2017 relate to the non-disclosure of corporate funding to political parties and corporate identity. In the next step, it is to be ascertained whether the main purpose falls within the subjects listed in Article 110(1) of the constitution. The funding neither affects the taxation nor the financial obligation of the government through a charge on the consolidated fund of India. It does not constitute provisions falling within the listed subjects under Article 110. Thus, the second prong is not satisfied. The third prong is immaterial to the results.


The decision of the Speaker to certify the bill as a money bill directly limits the role of the Rajya Sabha in the lawmaking. Money bill is an exception to federal bicameralism. The scope and ambit of it must be strictly limited to the subjects listed in sub-clauses (a) to (f) of Article 110 of the Constitution. The liberal interpretation of Article 110(1)(g) risks blurring the distinction between the ordinary bill and the money bill, thereby limiting the role of the Rajya Sabha based only on the decision of the Speaker. The literal interpretation of the text, the legislative intent, and the judicial decision hint towards the three-prong standard to ascertain whether the bill is a money bill. The electoral bond scheme introduced through the Finance Act, 2017 fails to satisfy the above-stated standard and ought to be deemed unconstitutional. The Supreme Court should have examined this procedural challenge before delving into the substantive unconstitutionality of the act itself. The substantive constitutionality should not be justification for the procedural unconstitutionality.

(This post has been co-authored by Piyush Gupta and Harshit Gupta, students at National Law School of India University, Bengaluru.)

CITE AS: Piyush Gupta and Harshit Gupta, ‘A Constitutional Conundrum: Assessing The Legality Of Electoral Bonds As Money Bills’ (The Contemporary Law Forum, 14 April 2024) <tclf.in/2024/04/14/a-constitutional-conundrum-assessing-the-legality-of-electoral-bonds-as-money-bills>date of access.

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