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Lawless withdrawals from public funds: Cocking a snook at Parliament
by Professor P.K. Tripathi*
Cite as : (2001) 1 SCC (Jour) 1
The Ministry of Finance of the Government of India, for some years, has been acting on the view that an Act of Parliament passed under Article 267 of the Constitution is enough to authorise the appropriation and withdrawal of money from the Consolidated Fund of India for the purpose of being put in the Contingency Fund of India without satisfying the requirements of Article 114 or Article 115 or Article 116 of the Constitution.1
The object of the paper is to show that this view is wrong being contrary to the express provisions of the Constitution, and violative of the principle of democracy which is the bedrock on which the entire structure of the Constitution has been built.
It is also the object of this paper to show that making any advances from the Contingency Fund to a caretaker Government after the House of People to which that Government had been constitutionally responsible was dissolved and ceased to exist is violative of the provisions of Article 267 itself, and is an affront to democracy2.
Setting up of two Funds
The Consolidated Fund of India and the Contingency Fund of India are dealt with under Articles 266 and 267 respectively.
The two Articles occur in Part XII of the Constitution under Chapter I dealing with finance. The title of Article 266 is "Consolidated Fund and Public Accounts of India and of the States." This Article deals with the establishment of the Consolidated Fund of India, its funding and withdrawal of money out of it.
The title of Article 267 is "Contingency Fund." It deals with the establishment of the Contingency Fund of India and its funding, which may be considered as one part, and withdrawing money out of it, which may be considered as the second and separate part of its provisions.
As to the first part, Article 267 does not establish the Contingency Fund by its own provision, but leaves it to Parliament to decide whether or not it will establish the Fund. "Parliament may by law establish" says the text of the Article. This is different from the Consolidated Fund of India which is established by the Constitution itself by Article 266, without leaving it to the option of any other authority.
If Parliament decides to establish the Contingency Fund of India, Article 267 further provides that into the Fund so established by Parliament by law, "shall be paid from time to time such sums as may be determined by such law". This again is in contrast with the provision in Article 266 relating to the Consolidated Fund. The sum to be kept in the Contingency Fund has to be a specific amount, the quantum of which is determined, and therefore, limited by Parliament by law. In contrast the quantum of money for the Consolidated Fund is not limited and does not depend on the discretion of any authority.
Constitutionally prescribed way to make withdrawals from the Consolidated Fund
The Ministry of Finance takes the view that the words "shall be paid from time to time such sums as may be determined by such law" occurring in Article 267, not only require the payment of specified sums into the Contingency Fund but also authorise the appropriation and withdrawal of such sums out of the Consolidated Fund of India without regard to any of the provisions of the Constitution dealing specifically with the Consolidated Fund, and the appropriation and withdrawal of money from that Fund. Particularly, the Ministry of Finance claims that these words in Article 267 authorise appropriations and withdrawals from the Consolidated Fund without regard to the Article 114 of the Constitution, clause (3) of which is as follows:
"114. (3) Subject to the provisions of Articles 115 and 116, no money shall be withdrawn from the Consolidated Fund of India except under appropriation made by law passed in accordance with the provisions of this article."
The Ministry of Finance seeks support for this claim from clause (1) of Article 266 which opens with the words "subject to the provisions of Article 267". These words, according to the Ministry, make all the provisions in the Constitution regarding the Consolidated Fund of India subordinate and inapplicable to the provisions of Article 267, and, consequently money can be appropriated and withdrawn from the Consolidated Fund for being put in the Contingency Fund without regard to Articles 114, 115 or 116.
An examination of the text of Article 266 will clearly show that it does not support this claim. In fact it provides just the contrary.
Clause (1) of Article 266 provides that "subject to the provisions of Article 267" all revenues received by the Government of India, all loans raised by that Government etc. "shall form one consolidated fund to be entitled 'the Consolidated Fund of India' ". It will be seen that since one more fund could be set up by Parliament under Article 267 the direction that all revenues etc. received by the Government of India shall form "one consolidated fund" has to be qualified by the possibility of the creation of the other fund. The opening words of clause (1) of Article 266, therefore, are meant only to qualify the "oneness" of the Consolidated Fund into which all the revenues etc. are directed to be held and which is institutionalised by this clause as "the Consolidated Fund of India". The opening words of clause (1) of the Article 266 do not lay down that every provision made in the Constitution about the Consolidated Fund of India is subject to every provision made in Article 267 regarding the Contingency Fund.
However, if any doubt remains about appropriation and withdrawal of money from the Consolidated Fund, clause (3) of Article 266 itself will dispel it. This clause provides:
"266. (3) No moneys out of the Consolidated Fund of India or the Consolidated Fund of a State shall be appropriated except in accordance with law and for the purposes and in the manner provided in this Constitution."
It will be noted, in the first place, that unlike clause (1) of the Article, clause (3) is not "subject to the provisions of Article 267", or to any other provision of the Constitution. It is an independent and categorical provision meant to secure against all unauthorised withdrawals of the tax payer's money kept in the Fund created by clause (1) of Article 266 itself.
It lays down three conditions without fulfilling which "No money out of the Consolidated Fund of India shall be appropriated" or withdrawn. These conditions are:
(i) the appropriation must be in accordance with a law authorising appropriation of money from the Consolidated Fund; and
(ii) the appropriation should be for a "purpose provided in this Constitution"; and
(iii) the appropriation must be made "in the manner provided in this Constitution" as the manner for appropriation of money from the Consolidated Fund of India.
That each one of these conditions is independent of the others is made clear by the clause by repeating the conjunction "and", placing it between each two of the three conditions. Ordinarily, it should be sufficient to use it once only between the last two conditions.
This clause completely demolishes the claim of the Ministry of Finance that money can be appropriated and withdrawn from the Consolidated Fund of India on the authority of a law made under Article 267 "determining" the sums to be put in the Contingency Fund.
As already noted, Article 267 deals with the Contingency Fund, and not with the Consolidated Fund. In fact, Article 267 does not even mention the name of the Consolidated Fund, nor does it mention even once, the word "appropriation".
Grant from House of the People and appropriation by Act of Parliament absolute requirements to authorise withdrawal
There can be no doubt that "in the manner provided in this Constitution" referred to in clause (3) of Article 266 as the third condition for appropriating money from the Consolidated Fund has reference to Article 114 of the Constitution which lays down that "no money shall be withdrawn from the Consolidated Fund of India except under appropriation made by law passed in accordance with the provisions of this Article".
What are these provisions of Article 114 and what is so special about them?
The provisions of Article 114 rest, as we shall see essentially on the assumption that in a democracy the Government must function both, in respect of determination of its policies and the administering of these policies, strictly under the control of the representatives of the people, freely and directly elected by them, and sitting as the Lower House of Parliament. And for this control to be real and effective the Government must depend for the money needed for giving effect to its policies entirely on the Lower House or the popular House.
In a democracy, no money collected from the tax payer is available to the Government for any purpose without a grant made by the popular House for that purpose, and no "grant" is made by the popular House unless the Government first places a "demand" before the House specifying the purposes for which it plans to spend and the amounts of money it plans to spend on each of those purposes.
Historical development of the method
This method of democratic control, now adored by the whole world, and followed in all the democratically-ruled commonwealth countries, was developed in England over centuries of struggle between autocratic kings and the people.
In the last stages of this struggle in the seventeenth century the Stuart Kings claimed that the power to govern the people according to the King's own wisdom and judgment was given to him by God, to whom alone he was answerable. This was, in essence, the theory of divine right of kingship. The people rejected this theory, and argued instead that centuries of practice on the part of the people's representatives and the monarchs - particularly the Tudors, who just preceded the Stuarts - had evolved and established the customary right of the people, acting through their representatives, to consider annually the demands of the King-in-Council for grants of money required by the King and his Council to carry out the various activities the King proposed to undertake during the year. Only on the basis of the grants made by the people through their representatives could the King levy taxes and collect from the people the required revenues to meet the expenditure of government. There was no agreement on the two sides and, ultimately, an armed conflict during which one King was executed for treason, and another fled the country, settled the issue in favour of the people.
The following passage from May's Parliamentary Practice will explain:
"It was a central factor in the historical development of parliamentary influence and power that the Sovereign was obliged to obtain the consent of Parliament (and particularly of the House of Commons as representatives of the people) to levying of taxes to meet the expenditure of the State ... it was for the Sovereign to demand money and for the Commons to respond to that demand.
In more modern terms, the Government presents to the House of Commons its detailed requirements for the financing of the public services; it is for the Commons, acting on the initiative of the Ministers of the Crown, first to authorise the relevant expenditure (or, 'supply') and, second, to provide through taxes and other sources of public revenue the "ways and means" deemed necessary to meet the supply so granted."3
It is important not to miss the point that the demands were presented to, and grants were made by the representatives of the people. These representatives, in earlier times, gathered outside the King's Council Hall; and the King and his Councillors communicated with them through their spokesman - the Speaker. In "more modern times" these representatives sit as the House of Commons, and the Prime Minister as well as most of the other Ministers are also chosen from among the Members of the House of Commons on the basis of their ability to command the majority in the House of Commons. The King's Council now is therefore, not outside and separate from the House of Commons. But the House of Commons remains the only player in the demand-and-grant process, and the other House of Parliament, has a subsequent, and merely perfunctory role to perform:
"The role of the House of Lords is confined to assenting to such financial provisions of the House of Commons as require statutory authorisation."4
The leaders of our own struggle for independence against British rule were well conversant with this method of democratic control over the Government and they had been demanding from the British rulers a freely elected and truly representative legislature with complete financial control over the Government. After achieving independence when they got the opportunity to frame their own Constitution they adopted the same system of effective financial control of the elected representatives of the people over the Government or the Council of Ministers. The pivotal point of this system is the demand-and-grant transaction between the Government and the directly elected House of Parliament precisely as developed in England.
The "demand-and-grant" method adopted by the Constitution of India
The process begins with the presentation of the Annual Financial Statement by the Government before both the Houses of Parliament as laid down in Article 112. This is a statement of estimated receipts and expenditure for the year. The estimate of expenditure must show separately the expenditure charged by the Constitution itself on the Consolidated Fund of India, such expenditure requiring no grant from the House of People. It consists mainly of the salaries and allowances of constitutional functionaries like the President, Vice-President, Speaker, Judges of the Supreme Court and High Courts and so on. These are officers who function independently of the Government, and their salaries and emoluments etc. are protected by the Constitution. The expenditure on these is not dependent on a grant by the House though a discussion in the House on it is not prohibited. All other expenditure shown in the estimates presented to Parliament, and actually referred to in Article 112 as the "other expenditure" is subject to the grant of the House. Article 113 provides that the estimates relating to the "other expenditure shall be submitted in the form of demands for grants to the House of the People, and the House of the People shall have power to assent, or to refuse to assent to any demand, or to assent to any demand subject to a reduction of the amount specified therein".
Since the "grant" is the essential instrument for making democratic control effective over the Government some significant features of the "grant" process may be carefully noted.
The grants are considered and assented to only by the House of the People, acting alone and independently, and not by Parliament which consists of both the Houses. The House of People functions here as the tax payers' representative to concede or not to concede the Government's request for his money required for rendering the proposed services for him; he can only be taxed to the extent he agrees through his representatives to be taxed. The House does not function in the grant-making process as a part of the law-making body that is Parliament. That role it will perform, separately, only after the grants have been made.
One significant fall out of this double role performed by the House of the People is that its role as the tax payer's representative in conceding the request for grant is not a legislative function. It is pre-legislative, and therefore, beyond the reach of the ordinance-making power of the Government.
Even the Parliament functioning as a bicameral legislative body cannot perform this function. The function of scrutinising the demands of the Government and granting such of them, and to such extent as is considered acceptable to the taxpayer, is a function that is to be performed only by the House of People.
Another, and more obvious point to be noted is that the House of the People does not entertain the demand for just one lump sum to be granted to the Government for their requirements. The Government has to make "demands", i.e., a separate demand for each specific service, and receives a separate grant for each such service. The sum granted for one service cannot be transferred to another service even if there is a surplus left in one and a deficit in another; the surplus will remain unspent with the Consolidated Fund of India, and will lapse at the end of the financial year for which it was granted; and to obtain funds for meeting the deficit in the other service, supplementary demand will have to be made and a supplementary grant obtained from the House of the People. As observed in May's Parliamentary Practice:
"The appropriation by the House of Commons of the individual sums granted as supply to the specific services for which they were voted in the estimates is secured annually by legislation in the form of the appropriation Act.
Three important precepts of financial practice are implied in the appropriation of expenditure:
(1) A sum appropriated to a particular service cannot be spent on another service.
(2) The sum appropriated is a maximum sum.
(3) It is a sum available only to defray costs which have arisen during the year in respect of which it has been appropriated by the relevant Act."5
The point is that the grants process is an instrument of tight financial control over government spending. It is the bedrock on which the democratic functioning of Government rests.
Finally, it goes without saying that the Government cannot ask for, and will not be granted any loose money to be kept at its disposal for meeting the expenses of any unspecified service, or of any service over and above the grant already made for it. Granting such loose or floating money will defeat the entire purpose of the grant-making process, namely, of keeping the Government under a tight leash in the hands of the people, by requiring it to approach them with a specific demand for every specific need for money. Every time it needs money in any amount large or small, for any activity already approved or yet to be approved the Government must go through the grant-making process.
It is here that Article 267 comes in. It authorises Parliament to pass a law creating the Contingency Fund, and determining the sum to be kept in it. The Article provides that the sum so "determined" by such law "shall be paid" into the Contingency Fund created by such law. The Government can now make a demand for a grant not of loose money, but of a specific sum determined by law, and not for an unspecified purpose but for a specific purpose for which an express provision of the Constitution requires it to obtain a grant. The House of the People will have no difficulty in making a grant for such purpose.
Integrated process culminating in passage of appropriation Act
Proceeding, now, from the estimates of receipts and expenditure for the year presented in the form of the "annual financial statement" to both the House of Parliament as stated in Article 112, and the presentation of demands before the House of People and the making of grants by the House as stated in Article 113, we come to the final stage of the appropriations in Article 114.
Clause (1) of Article 114 provides that:
"114. (1) As soon as may be after the grants under Article 113 have been made by the House of the People, there shall be introduced a Bill to provide for the appropriation out of the Consolidated Fund of India of all moneys required to meet-
(a) the grants so made by the House of the People; and
(b) the expenditure charged on the Consolidated Fund of India but not exceeding in any case the amount shown in the statement previously laid before Parliament."
Clause (2) of Article 114 prohibits any amendment being proposed to the Bill which will have the effect of "varying the amount or altering the destination of any grant" made under Article 113 or "varying the amount of any expenditure charged on the Consolidated Fund of India".
Clause (2) of Article 114 thus makes it clear that the "grants" as made by the House of the People under Article 113 are the final and the inviolable word on appropriation and withdrawals of money from the Consolidated Fund of India. The legislative act of introducing the Bill for enacting a law for appropriations out of the Consolidated Fund of India is a mere matter of completing the formality of giving the grants made by the House of the People a statutory status.
It will be noted that even the House of the People, sitting as one of the legislative chambers of Parliament under Article 114 has no power to tinker with the grants made by the same House in its role as the guardian and trustee of the tax payers' money under Article 113.
It will also be noted that the laying of the estimated receipts and expenditure for the year before both the Houses of Parliament under Article 112, the making of grants by the House of the People under Article 113, the presenting of the Bill and enacting the law for the appropriation out of the Consolidated Fund of India of all moneys required to meet "the grants so made" as well as the "expenditure charged" on the Fund, all constitute an integrated process culminating in the passage of an Act of Parliament authorising the appropriation of money out of the Consolidated Fund. The Bill for enacting this law cannot be introduced in Parliament unless the grants have been made, and the grants cannot be made unless the estimates of receipts and expenditure have been laid before both the Houses of Parliament and unless the estimates relating to "other expenditure" have been "submitted in the form of demands for grants to the House of the People".
Therefore, when clause (3) of Article 114 declares that no money shall be withdrawn from the Consolidated Fund of India except under appropriation made by law passed in accordance with the provisions of this Article, the effect is that no money can be withdrawn from the Consolidated Fund of India unless a grant has been made by the House of the People, except, of course, in the case of money required to meet the expenditure "charged on the Consolidated Fund of India". And, in the case of the "charged" expenditure also, no money can be withdrawn from the Consolidated Fund of India in excess of the amount shown in the "statement of estimates" as provided in Article 112. The bulk of the expenditure incurred by the Government is, in fact, the "other expenditure" and therefore obtaining the grants from the House of the People remains the key to the passage of the appropriation law and compliance with such law in turn is made the inviolable condition for withdrawing any money from the Consolidated Fund of India.
Finally, it will also be seen that the words "subject to the provisions of Articles 115 and 116" at the beginning of clause (3) of Article 114 make no difference to the prohibition declared in that clause. These two Articles make provisions for passing appropriation laws in circumstances, and on occasions different from those in which the statement of estimates envisaged in Article 112 is laid before both the Houses of Parliament and the integrated process ending up with the passage of the appropriation law referred to in clauses (1) and (2) of Article 114 is set in motion. But each of these two Articles, namely Articles 115 and 116, expressly incorporates within itself all the provisions of Articles 112, 113 and 114 including the prohibition in clause (3) of Article 114.
The result is that no money can be withdrawn from the Consolidated Fund of India unless it is appropriated from the Consolidated Fund of India on the authority of an appropriation Act passed in accordance with the provisions of either Article 114 or 115 or 116; and no appropriation Act can be passed according to the provisions of any of these Articles unless (1) in the case of "other expenditure" each appropriation is based on a "grant" made by the House of the People and is precisely for the service mentioned in the grant, and precisely for the amount shown for that service in the grant; and unless (2) in the case of the expenditure charged on the Consolidated Fund of India, the appropriation is for an expenditure so shown in a financial statement presented before both the Houses of Parliament, and does not exceed the amount so shown in a statement "previously laid before Parliament".
The text of Articles 114, 115 and 116 is clear, and categorical, and leaves no room for any other method or way of appropriating or withdrawing money out of the Consolidated Fund of India.
The object of the provisions of Articles 114, 115 and 116 is to secure effective control of the peoples' elected representatives, i.e., the House of the People, over the Government both in regard to the policies it undertakes and the manner of execution of those policies, thereby giving the people of India a truly "responsible Government" and a real, functioning democratic system.
This is how May's Parliamentary Practice puts it:
"The financial control of the House of Commons is exercised at two different levels. So far as policy is concerned, it authorises the various objects of expenditure and the sums to be spent on each; it also authorises the levying of taxes. On the level of administration, it satisfies itself that the expenditure decisions have been duly carried out - in other words, that the sums it has granted, and no more have been spent for the purposes for which they were granted, and for no other purposes. For both sets of functions the House of Commons has, partly through its own procedure and partly through legislation and administrative practice, devised adequate machinery."6
Article 266, which creates and institutionalises the "Consolidated Fund of India" and provides that all the tax payer's money shall go to this Fund only reiterates the sanctity of withdrawals from the Fund when it directs that "no moneys out of the Consolidated Fund of India ... shall be appropriated except ... in the manner provided in this Constitution". As already seen, there is only one "manner provided in the Constitution" for an appropriation of money authorising withdrawals out of the Consolidated Fund of India, namely the manner laid down in Articles 112 to 114 of the Constitution. The text of clause (3) of Article 114 leaves no doubt that there is no other manner, when it says "no money shall be withdrawn from the Consolidated Fund of India except under appropriation made by law passed in accordance with the provisions of this Article".
Article 267 does not override Articles 114 and 266
Returning now to Article 267 there is nothing in this Article to suggest even remotely that it is intended to brush aside the elaborate method of democratic control of policy and administration secured through the demand-and-grant process elaborated in the various Articles of the Constitution, and replace it by an independent procedure for appropriating and withdrawing money from the Consolidated Fund of India overriding the express prohibitions entrenched in the provisions of Articles 114(3) and 266(3). And all that too without even once mentioning the words "Consolidated Fund of India" or the words "appropriation" or "withdrawal". At best such independent authority for appropriating and withdrawing money can be read in Article 267 only by implication. It will indeed be a disastrously bold implication to suggest.
All that Article 267 does is to authorise Parliament to establish if it wishes, a contingency fund to be entitled the Contingency Fund of India, and, to determine the sum of money to be paid into this Fund. It further provides that the sum so "determined" by Parliament by law "shall be paid" into this Fund. As already mentioned the purpose of this provision of Article 267 is to convert the demand for money to be available for unforeseeable expenditure, which could be treated as a demand for loose or floating money, into a demand for a specific amount of money for a specific purpose approved by law made by Parliament and by the Constitution. In terms of clause (3) of Article 266, this satisfies one of the three conditions essential for making any "appropriation" of money "out of the Consolidated Fund of India", namely the condition that such appropriation can be made only for "purposes provided in the Constitution". The other essential condition required under Article 266, namely that the appropriation can be made only "in the manner provided in this Constitution" can only be satisfied by complying with provisions of Articles 112 to 114, Article 115 or Article 116 of the Constitution.
The expression "shall be paid" does not create the authorisation to make appropriation and withdrawal of money out of the Consolidated Fund of India. It is a familiar expression used also in other places in the text of the Constitution in the same sense as in Article 267. Thus, for instance, in the Second Schedule of the Constitution, para 1 of Part A provides:
"1. There shall be paid to the President and to the Governors of the States the following emoluments per mensem, that is to say—
The President  10,000 rupees.
The Governor of a State 5500 rupees."
But this provision has never been treated as sufficient to authorise appropriation and withdrawal of the money required to pay these emoluments to the President and to the Governor of a State. This provision only "determines" the sums of money to be so paid, and further, it creates an obligation on the Government concerned to take the proper budgetary steps to get the required sums appropriated for the purpose in accordance with the provisions of Articles 112 to 114.
As used in Article 267 also the expression "shall be paid" has precisely the same import. It creates on the Government of the Union of India the obligation to take necessary steps under Articles 112 to 114 to secure a "grant" and an "appropriation" for the sum determined by Parliament by a law passed under Article 267 for being withdrawn from the Consolidated Fund of India and put in the Contigency Fund of India.
Withdrawals from Contigency Fund by a caretaker Government
The other object of this paper is to show that a caretaker Government has no authority under Article 267 to spend any money out of the Contingency Fund.
The borrowing of money by Government from the Contingency Fund of India is dealt with in what we have termed as the second part of Article 267.
The Contingency Fund is, as stated in the article, "in the nature of an imprest". The dictionary meaning of the word "imprest" is "a loan or advance of money; esp: an advance from government funds to enable a person to discharge his duties"7 . The Fund is "placed at the disposal of the President to enable advances to be made by him out of such Fund for the purposes of meeting unforeseen expenditure pending authorisation of such expenditure by Parliament by law under Article 115 or Article 116".
In short, since the President is required constitutionally to act on the advice of the Council of Ministers, money withdrawn by the Government from the Contingency Fund is to be treated by the Government as an "advance" or loan taken by it from the Fund to meet the immediate need for meeting "unforeseen expenditure". But this advance or borrowing from the Contingency Fund is subject to the condition that "authorisation" for the expenditure shall be obtained from Parliament by a law under Article 115 or Article 116, enabling "appropriation" and withdrawal of the required sum from the Consolidated Fund of India for reimbursement of the same to the Contingency Fund to repay the loan.
Can a caretaker Government satisfy the condition? Obviously not. It cannot go to the House of the People to which it was responsible for obtaining approval for the expenditure it has made, or, to persuade the House to "authorise" the appropriation and withdrawal of the money required to repay the loan taken from the Contingency Fund of India. In the democratic system of Government the obligation of the Government to seek such approval from the popularly-elected House is vital to the system. It gives the House the opportunity to exercise its power of control over the Government by scrutinising its action as well as the policy behind such action, and if the House is so pleased, to criticise, or even disapprove of the action leading, in appropriate circumstances, to the dismissal of the Government. If the House itself has been dissolved, there is no question of the Government seeking from Parliament any approval of the expenditure, or authorisation for appropriation and withdrawal of money from the Consolidated Fund of India for the purpose of returning the loan taken from the Contingency Fund of India. A Government which is known to be incapable of fulfilling the condition attached by the Constitution itself to the exercise of the authority for borrowing provided by it, is not eligible to make the borrowing.
The Ministry of Finance seems to take a light view of the obligation of the borrower Government to fulfil the condition attached to the exercise of the authority to borrow. In its view, the borrower Government need not discharge the obligation itself, but may leave it outstanding for the succeeding Government to manage. In this view of the matter the succeeding Government has no option but to own up the borrowing made by the predecessor Government whether or not it approves of the object of the expenditure and the policy behind it. Further, according to this view the newly elected Parliament, to which the succeeding Government is responsible is also constitutionally-bound to approve of the borrowing and the expenditure incurred by a Government over which it has no democratic control. Add to this the exercise of the ordinance-making power by the caretaker Government to do away with the constitutional safeguard of Parliament "determining" the corpus of the Contingency Fund, thereby putting a ceiling on the amount available to the Government for borrowing from the Fund. The view taken by the Finance Ministry ends up giving you a caretaker Government which can withdraw and spend any amount of money without any limits whatsoever, and, for any purposes without any inhibitions whatsoever, and, free from any democratic control whatsoever. A Stuart King in seventeenth century England could'nt ask for more! This view can have no takers in a democracy.
Evidently, the Ministry of Finance of the Union of India has been frequently withdrawing money, sometimes to the tune of more than thirty thousand crores, from both the Consolidated Fund of India and the Contingency Fund of India, in defiance of the carefully orchestrated express provisions of the Constitution meant precisely to protect these Funds from such withdrawals. In the process, it has been damaging the basic feature of democratic government, namely, that the peoples' freely elected representatives sitting as the Lower House of Parliament should have effective control over the policies and administration of the Government through their prerogative of making or withholding grants for expenditure out of the tax payers' money.
Hopefully this paper succeeds in its object of exposing the cobwebs of wilful misinterpretations of the provisions of the Constitution created by the Ministry. The Ministry has, through these misinterpretations virtually made amendments to the Constitution of a nature which perhaps even a two-thirds majority of Parliament may find beyond its own competence.
How long will these amendments last?
- In reply to my letter addressed to the Finance Minister pointing out the unconstitutionality of withdrawing money from the Consolidated Fund of India by an ordinance, and without regard to the provisions of Article 114 of the Constitution, I received the DO Dy No. 6539/AS(B)/97 dated 18-12-1997, from Shri J.S. Mathur, Additional Secretary (Budget) saying, "I write to clarify that corpus of the Contingency Fund was increased through an ordinance on three occasions in the past, in 1972, 1979 and 1994 after consulting the Law Ministry."
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- A sum of Rs 14,700 crores was transferred to the Contingency Fund of India under Ordinance 30 of 1997 dated 26-12-1997 and a further sum was transferred by Ordinance 4 of 1998 dated 24-1-1998 taking the total of such transfers to Rs 32,490 crores. All this money was spent by the caretaker Government after the dissolution of Parliament to which it was responsible, and before the next Parliament was elected.
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- Erskine May: Parliamentary Practice, 22nd Edn., p. 732.
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- Ibid., p. 732.
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- Ibid., p. 735.
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- Ibid., pp. 732-33.
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- Webster's Seventh New Collegiate Dictionary, 1976, at p. 420.
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