Madras HC upholds amendment of LIC Act of 1956 for floating IPO

The Madras High Court on Tuesday upheld the amendment of the LIC Act of 1956 for floating an IPO by way of a Money Bill in the Parliament saying there was no constitutional illegality in it.

The amendment paved the way for parting with the shareholding in the corporation to raise Rs. 65,000 crore to Rs. 70,000 crore initially to the Consolidated Fund of India.

Holding that the Lok Sabha Speaker’s decision should be treated as final as per Article 110(3) of the Constitution, “unless a judicial review of it had been prayed for”, the first Division Bench ruled a challenge to the Finance Act of 2021, through which the LIC Act was amended, could not be accepted in the absence of a challenge to a certificate issued by the Speaker classifying the Finance Bill, 2021 as a Money Bill.

The bench comprising Chief Justice Munishwar Nath Bhandari and Justice D. Bharatha Chakravarthy dismissed a petition filed by LIC policyholder Ponnammal challenging the amendment by way of Money Bill.

“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 crore to Rs. 70,000 crore into the Consolidated Fund of India on account of the IPO…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 money is to be used for the development of the country,” the court held.

The judges noted that issues related to payment or withdrawal of money from the Consolidated Fund or Contingency Fund of India would fall under the definition of the Money Bill. Hence if any question arises on whether a Bill was a Money Bill or not, the decision of the Speaker would be final. The case on hand is not where an allegation of constitutional fraud has been made.

“Even otherwise, we do not find constitutional bar or illegality in the Act of 2021. It is more so when the Parliament, endowed with plenary powers, had passed the Bill and the Standing Committee on the budget had approved it after scrutiny and due diligence,” the judges said.