The Madras High Court on Monday dismissed a writ petition challenging the amendments brought in by the Finance Act 2021 and the subsequent amendments made in the LIC Act 1956 which provided for the disinvestment of the Life Insurance Corporation.
The Court rejected the argument of the petitioner, one L. Ponnammal and held that the amendments could not have been passed as a Money Bill and held that the decison to disinvest LIC through an Initial Public Offer was approved by the Parliament.
“In any case, the petitioner, who is a policyholder having a policy worth Rs.50,000/-, is questioning the receipt of money approximately in the range of Rs.65,000 to Rs.70,000 crores into the Consolidated Fund of India on account of the IPO, which is to be used for the development of the country. 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 receipt of money into the Consolidated Fund of India is to be used for the development of the country. The challenge to the Finance Bill, 2021 otherwise is in the hands of a policyholder having policy worth Rs.50,000/-. The Union is otherwise empowered to carry on any trade or business as per Article 298 of the Constitution of India and the decision to pass the Act of 2021 as Money Bill for that purpose was approved by the Parliament of India to trade 5% of its shareholding in LIC through an IPO,” the bench of Chief Justice Munishwar Nath Bhandari and Justice D. Bharatha Chakravarthy said.
The petitioner also made an alternative prayer to declare Section 5(9) of the Life Insurance Corporation Act, 1956 and Sections 128 to 130 and Sections 132 to 146 of the Act of 2021 as ultra vires Article 110 of the Constitution of India. An alternative prayer was also made to declare Section 140 of the Act of 2021 as ultra vires Article 110 of the Constitution of India.
Petitioner is a policy holder of Life Insurance Corporation (LIC). It is submitted that every participating policyholder was entitled to a minimum of 90% of the surplus arising from non-participating policies, but the amendment under challenge has reduced their entitlement to nil and, therefore, being a policyholder, she has challenged Sections 128 to 146 of the Act of 2021, apart from Section 5(9) of the Act of 1956.
The Court noted that the amendments were brought in after the Finance Bill was classified as a money bill under Article 110 of the constitution. The court held that the challenge was made to the amendments by way of Article 110 of the constitution without challenging the certificate issued by the Speaker of the House. Further, the procedure for certifying the Finance Bill as a money bill have been duly complied with and therefore there is no constitutional illegality.
The court also highlighted that the word “only” used in the definition of Money Bill has to be read along with Article 110(1) (g) of the constitution which provides for any matter incidental to any of the matters specified in (a) to (f) of Article 110(1) and therefore should not be given a narrow meaning.
L.Ponnammal vs Union of India, rep. by its Secretary, Department of Investment and Public Asset Management, Ministry of Finance
CITATION: 2022 TAXSCAN (HC) 218
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