Article 198
Article 198 of the Constitution of India establishes the special procedure for the introduction and passage of Money Bills in State Legislatures. This provision is analogous to Article 109, which governs the procedure for Money Bills at the Union level. It ensures that matters relating to state finances — including taxation, borrowing, and expenditure — remain under the exclusive control of the Legislative Assembly (Vidhan Sabha), the directly elected House representing the people.
Definition and Scope of Money Bills
The definition of a Money Bill is provided under Article 110 of the Constitution, which also applies mutatis mutandis to the states. A Bill is classified as a Money Bill if it exclusively contains provisions dealing with:
- The imposition, abolition, remission, alteration, or regulation of any tax by the State;
- The borrowing of money or the giving of any guarantee by the State;
- The custody of the Consolidated Fund of the State or the Contingency Fund;
- The appropriation of money out of the Consolidated Fund of the State;
- The receipt or custody of public money or the audit of state accounts; and
- Any incidental matter connected with the above subjects.
This narrow definition ensures that the special procedure under Article 198 applies only to Bills dealing solely with financial matters, thereby preventing misuse of the provision to bypass legislative scrutiny.
Introduction of Money Bills
Under Article 198(1), a Money Bill cannot be introduced in the Legislative Council. It can be introduced only in the Legislative Assembly on the recommendation of the Governor. This reflects the constitutional principle that control over public finances should rest with the representatives directly elected by the people.
The procedure thus maintains a clear distinction between the two Houses in a bicameral state legislature, with the Legislative Assembly exercising financial primacy.
Procedure After Passage by the Legislative Assembly
Once the Legislative Assembly passes a Money Bill, it is transmitted to the Legislative Council for its recommendations. Under Article 198(2), the Council must return the Bill within 14 days from the date of receipt, along with any recommendations it wishes to make.
The Legislative Council does not possess the power to amend or reject a Money Bill. Its role is advisory rather than determinative. If the Council fails to return the Bill within the specified period, the Bill is deemed to have been passed by both Houses in the form approved by the Assembly.
Consideration of the Council’s Recommendations
According to Article 198(3), the Legislative Assembly may accept or reject any or all recommendations made by the Legislative Council. If the Assembly chooses to accept any of the suggested amendments, the Bill is considered to have been passed by both Houses with those amendments incorporated.
However, if the Assembly rejects all the recommendations or does not accept them within the 14-day period, the Bill is deemed to have been passed by both Houses in the form originally passed by the Legislative Assembly.
This mechanism ensures that while the Council can express its views, it cannot delay or obstruct financial legislation, thereby preserving the supremacy of the elected chamber.
Deemed Passage of Money Bills
Under Article 198(4), if the Legislative Council fails to return a Money Bill to the Assembly within 14 days, the Bill is automatically deemed to have been passed by both Houses in the form approved by the Assembly.
This deemed passage provision eliminates the possibility of financial deadlock between the two Houses and ensures that essential fiscal legislation is enacted within a reasonable timeframe. It reflects the constitutional doctrine of financial accountability to the electorate through their representatives in the lower House.
Role of the Governor and Certification of Money Bills
A crucial procedural requirement under Article 198 is that the Speaker of the Legislative Assembly must certify the Bill as a Money Bill before it is transmitted to the Legislative Council. This certification is final and conclusive, and its validity cannot be questioned in any court of law.
Additionally, under Article 200, once a Money Bill is passed by the Legislature, it is presented to the Governor for assent. The Governor may either give assent or reserve the Bill for the consideration of the President, especially if it conflicts with central laws or concerns of national interest.
Comparison with the Parliamentary Procedure under Article 109
Article 198 closely parallels Article 109, which governs Money Bills in the Parliament of India. The essential similarities include:
- Exclusive introduction in the Lower House (Lok Sabha or Legislative Assembly).
- The Upper House (Rajya Sabha or Legislative Council) can only make recommendations, not amendments.
- A 14-day period for the Upper House to return the Bill.
- Deemed passage if the Bill is not returned within that period.
The distinction reflects the constitutional intent that financial matters must remain under the control of the directly elected body, which is accountable to the public.
Judicial Interpretations and Key Case Laws
Several judicial pronouncements have elaborated on the nature, scope, and procedural requirements of Money Bills:
- Keshav Singh v. State of U.P. (1965): Clarified that the Speaker’s certification of a Bill as a Money Bill is an essential constitutional safeguard and cannot be challenged in court.
- Mohd. Sadiq v. State of U.P. (1979): Discussed the legislative competence and procedure concerning Money Bills at the state level, reaffirming the Assembly’s exclusive role.
- Raja Ram Jaiswal v. State of Bihar (1984): Reiterated that the Legislative Council has no power to amend or reject a Money Bill, underscoring its limited role.
- Union of India v. S. R. Bommai (1994): Examined the broader scope of legislative powers, reaffirming the supremacy of elected chambers in financial control.
These rulings collectively affirm that Article 198 safeguards the fiscal sovereignty of state governments while ensuring democratic accountability in financial legislation.
Legislative Significance and Purpose
The rationale behind Article 198 lies in maintaining the financial integrity and stability of state governments. The article:
- Ensures swift passage of budgetary and taxation measures necessary for governance;
- Prevents legislative obstruction by the upper chamber, which is indirectly elected;
- Reinforces popular control over public expenditure by vesting financial initiative in the Assembly;
- Provides a clear time-bound process for enacting Money Bills.
This structure reflects a vital democratic principle — that public expenditure and taxation must originate and be approved by those directly accountable to the people.
Practical Application and Administrative Relevance
In practice, most state budgets, taxation laws, and appropriation Bills are Money Bills governed by Article 198. The smooth functioning of state finances depends on the timely passage of such Bills. The Council’s limited role allows financial governance to proceed without prolonged debate or procedural delays.
For instance, annual Appropriation Bills authorising withdrawals from the Consolidated Fund of the State and Finance Bills containing taxation provisions are invariably treated as Money Bills and are governed entirely by this procedure.