Article 266 of the Costitution of India with Case law
🔹 Article 266 of the Constitution of India
Title: Consolidated Funds and Public Accounts of India and of the States
🔸 Text of Article 266
(1) Subject to the provisions of Article 267 and to the provisions of this Chapter with respect to the assignment of the whole or part of the net proceeds of certain taxes and duties to States, all revenues received by the Government of India, all loans raised by that Government by the issue of treasury bills, loans or ways and means advances, and all moneys received by that Government in repayment of loans shall form one Consolidated Fund to be entitled the “Consolidated Fund of India”.
(2) Similarly, for each State, there shall be a “Consolidated Fund of the State” comprising revenues, loans, and repayments.
(3) No moneys out of the Consolidated Fund of India or of a State shall be appropriated except in accordance with law and in accordance with the provisions of this Constitution.
🔸 Explanation of Article 266
Article 266 provides the constitutional basis for the financial framework of the Union and State governments. It defines how revenues and expenditures are structured.
📌 Key Funds Defined:
Consolidated Fund of India
Includes:
Revenue from taxes, duties
Loans taken by the government
Loan repayments
All Union government spending must be from this fund and authorized by law (Article 114).
Consolidated Fund of State
Similar structure for State Governments.
Public Account
Includes moneys not belonging to the government, e.g.:
Provident funds, small savings, etc.
Government acts as a trustee.
Money in this account can be spent without parliamentary approval but must be accounted for.
🔸 Key Points
| Fund | Controlled by | Spending Allowed by |
|---|---|---|
| Consolidated Fund | Union or State | Vote of Legislature (Appropriation Act) |
| Public Account | Union or State | Executive authority (no vote needed) |
🔸 Relevant Articles Linked with Article 266
| Article | Description |
|---|---|
| Article 112 | Union Budget / Annual Financial Statement |
| Article 114 | Appropriation Bill |
| Article 202 | State Budget |
| Article 204 | State Appropriation |
| Article 267 | Contingency Fund |
| Article 266(3) | No money shall be spent without legislative approval |
🔸 Important Case Laws on Article 266
🧑⚖️ State of Kerala v. Gwalior Rayon Silk Manufacturing Co. Ltd., AIR 1973 SC 2734
Issue: Whether certain amounts collected by the State were part of Consolidated Fund.
Held: Amounts that do not belong to the government do not form part of Consolidated Fund, but go to Public Account.
Significance: Clarified scope and structure of Article 266.
🧑⚖️ Union of India v. Association of Unified Telecom Service Providers of India, (2011) 10 SCC 543
Context: Government revenue from telecom licensing and spectrum.
Held: All such revenues must be credited to Consolidated Fund, and appropriated only via Parliament, reinforcing Clause (3) of Article 266.
🧑⚖️ Comptroller and Auditor General v. K.S. Jagannathan, AIR 1987 SC 537
Held: Expenditure without budgetary approval is unconstitutional.
Related to Article 266(3): No appropriation from Consolidated Fund without law.
🔸 Summary Table
| Clause | Description |
|---|---|
| 266(1) | Consolidated Fund of India – All Union revenue, loans, repayments |
| 266(2) | Consolidated Fund of State – State level revenues |
| 266(3) | No withdrawal without legislative approval |
🔸 Conclusion
Article 266 is vital to:
Uphold financial discipline and accountability
Prevent unauthorized expenditure
Ensure Parliamentary control over public finances
It is one of the cornerstones of India's fiscal federalism.
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