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Arvind P. Datar & Rahul Unnikrishnan
An important question that required consideration in the Aadhaar judgment – KS Puttaswamy v Union of India – was whether the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 was rightly passed as a “Money Bill”. By a majority, it was held that it was indeed a Money Bill while the dissenting judgment of Chandrachud J. held to the contrary.
It is submitted that the view taken by the majority requires early reconsideration as it virtually reduces the Rajya Sabha to a nullity and will enable any Government, which has a majority in the Lok Sabha, to simply by-pass the Rajya Sabha where it may be in a minority. All that is now required is for any bill to merely contain a provision involving expenditure to be paid out of the Consolidated Fund of India.
Types of Bills
The examination of Articles 107 to 117 of the Constitution indicates the following kinds of Bills:
(i) General Bills (Art 107)
(ii) Money Bills (Art 110)
(iii) Appropriation Bills (Art 114)
(iv) Financial Bills (Art 117)
As per the Rajya Sabha website, Financial Bills can be further sub-divided in two categories i.e. Category-I and Category II. As explained later, Aadhaar is an ordinary bill and, at best, it would be a Financial Bill-Category-II. This would have required the approval of the Rajya Sabha as well. (This Article does not deal with the Bills to amend the Constitution, which are covered by Article 368. These Bills are passed in exercise of the constituent power of Parliament and have to follow the special procedure prescribed therein).
Article 199 is the equivalent provision relating to Money Bills that is applicable to State Legislatures.
Introduction of the Aadhaar Bill
The Aadhaar Bill was first introduced as a Money Bill in 2016. This Bill contained 59 sections of which only section 7 referred to the Consolidated Fund of India and the relevant portion of that section reads as follows:-
“7. Proof of Aadhaar number necessary for receipt of certain subsidies, benefits and services, etc.− The Central Government or, as the case may be, the State Government may, for the purpose of establishing identity of an individual as a condition for receipt of a subsidy, benefit or service for which the expenditure is incurred from, or the receipt therefrom forms part of, the Consolidated Fund of India, require that such individual undergo authentication, or furnish proof of possession of Aadhaar number or in the case of an individual to whom no Aadhaar number has been assigned, such individual makes an application for enrolment.”
Article 110(1) of the Constitution specifically states that a Money Bill must contain only provisions that deal with the matters enumerated therein. The article reads as follows:-
“Article 110. Definition of ‘Money Bills’.-(1) For the purposes of this Chapter, a Bill shall be deemed to be a Money Bill if it contains only provisions dealing with all or any of the following matters, namely:-
(a) The imposition, abolition, remission, alteration or regulation of any tax;
(b) The regulation of the borrowing of money or the giving of any guarantee by the Government of India or the amendment of the law with respect to any financial obligations undertaken or to be undertaken by the Government of India;
(c) The custody of the Consolidated Fund or the Contingency Fund of India, payments of moneys into or the withdrawal from any such Fund;
(d) The appropriation of money out of the Consolidated Fund of India;
(e) The declaring of any expenditure to be expenditure charged on the Consolidated Fund of India or the increasing of the amount of any such expenditure;
(f) The receipt of money on account of the Consolidated Fund of India or the public account of India or the custody or issue of such monies or the audit of the accounts of the Union or of a State; or
(g) Any matter incidental to any of the matters specified in (a) to (f) above.”
Section 7 refers to expenditure which is “incurred” from the Consolidated Fund of India but Article 110(d) covers only expenditure “charged” to Consolidated Fund of India. Significantly, the expenditure on the Aadhaar scheme is not “charged” to the Consolidated Fund of India. Article 112(3) enumerates expenditure which is charged to the Consolidated Fund of India. It reads as follows:
“(3) The following expenditure shall be expenditure charged on the Consolidated Fund of India-
(a) the emoluments and allowances of the President and other expenditure relating to his office;
(b) the salaries and allowances of the Chairman and the Deputy Chairman of the Council of States and the Speaker and the Deputy Speaker of the House of the People;
(c) debt charges for which the Government of India is liable including interest, sinking fund charges and redemption charges, and other expenditure relating to the raising of loans and the service and redemption of debt;
(d) (i) the salaries, allowances and pensions payable to or in respect of Judges of the Supreme Court,
(ii) the pensions payable to or in respect of Judges of the Federal Court,
(iii) the pensions payable to or in respect of Judges of any High Court which exercises jurisdiction in relation to any area included in the territory of India or which at any time before the commencement of this Constitution exercises jurisdiction in relation to any area included in a Governors Province of the Dominion of India;
(e) the salary, allowances and pension payable to or in respect of the Comptroller and Auditor General of India;
(f) any sums required to satisfy any judgment, decree or award of any court or arbitral tribunal;
(g) any other expenditure declared by this Constitution or by Parliament by law to be so charged.”
The other provisions which create such charge are Articles 146(3), 148(6), 273(1), 275(1), 290, 291(1)(a), 293(2) and 322 of the Constitution.
The majority has upheld the Bill as a Money Bill on the following grounds:-
(a) The Aadhaar Bill was a Money Bill as it had a substantial nexus with the appropriation of funds from the Consolidated Fund of India and was directly connected with Article 110 of the Constitution (Paragraph 411 of Justice Sikri’s opinion for himself, and Misra & Khanwilkar JJ). Thus, the majority view has introduced a new concept of “substantial nexus with the appropriation of funds and direct connection” ; and
(b) Bhushan J., in a concurring view, held that section 7 would be covered by clauses (c) and (e) of Article 110 (1). It is further submitted that the paragraph 411 of the decision of Justice Sikri wrongly states that expenditure for the Aadhaar scheme is “chargeable” to the Consolidated Fund of India.
It is submitted that the view of the majority requires reconsideration for the following reasons
(i) The majority introduces a test of “substantial nexus with the appropriation of funds and direct connection” . This will enable any future Parliament to introduce any Bill with just one provision that has a substantial nexus with the “appropriation of funds and direct connection” and it would pass muster as a “Money Bill”.
(ii) The majority has wrongly presumed that expenditure under section 7 is “charged” to the Consolidated Fund of India. Article 112(3) of the Constitution specifically enumerates expenditure that will be charged to the Consolidated Fund of India. Expenditure on the Aadhaar scheme is “incurred” from the Consolidated Fund of India and will not be covered by Articles 110(c) or 110(e). Consequently, Article 110(g) will also have no application.
(iii) It completely destroys the meaning of the word “only”, which is a deliberate restriction on the powers of the Lok Sabha. A Bill need not be sent to the Rajya Sabha if it is a “Money Bill”. All other Bills have to go to the Rajya Sabha for approval. Therefore, any Bill, which has various substantive provisions, in addition to Clause (a) to (g), cannot passed as a Money Bill.
(iv)The majority view does not consider the legislative history of Article 110 and how it was expressly based on the provisions of section 1(2) of the Parliament Act, 1911 passed by the United Kingdom.
(v) In the Constituent Assembly Debates, the proposal to delete the word “only” in Article 110 was made by Ghanshyam Singh Gupta. This was specifically rejected.
(vi) The scholarly book on ‘Parliamentary Practice’ by Erskine May specifically points out that if a Money Bill contains other matters, which are not subordinate or incidental to the enumerated matters, it would not be a Money Bill. Accordingly, the Speaker of the House of Commons has rejected 1/3rd of such Bills. The Aadhaar Bill contained several provisions which were neither subordinate nor incidental to any of the enumerated matters in Article 110(1).
(vii) Indeed, the Aadhaar did not have the remotest claim to be a Money Bill as not a single clause of Article 110 applied to any of its provisions, including section 7.
The Minority View
Chandrachud J. held that the Aadhaar Bill was not a Money Bill. After tracing in detail the historical reasons of Article 110, the learned Judge emphasized the significance of bicameral legislation and the importance of the Rajya Sabha as a check against the abuse of power by Lok Sabha.
After discussing the provisions of the Aadhaar Act, the learned Judge also referred to the legislative history of the Aadhaar Act itself. The provision of a unique identity was first contemplated by the National Identification Authority of India Bill, 2010 which was introduced in the Rajya Sabha on December 3, 2010. Obviously, this Bill was not a Money Bill. It also faced several objections by the Standing Committee of the Finance and this Bill lapsed because of the change in government in 2014.
Although the earlier Bill did not contain a provision that was similar to section 7 of the present Aadhaar Act, it still would not make the present enactment as a Money Bill. It is submitted that the minority view of Justice Chandrachud is correct and is in consonance with the Constitutional scheme.
Pakistan Supreme Court
The Supreme Court of Pakistan dealt with a similar provision in their constitution and struck down three enactments on the ground that they were not a Money Bill:-
(i) In Sindh High Court Bar Association v. Federation of Pakistan, the amendment to the Supreme Court (Number of Judges) Act, 1997 through a Money Bill-the Finance Act, 2008 was held to be unconstitutional.
(ii) In Mir Muhammad Idris v. Federation of Pakistan, the amendment to the Bank Nationalisation Act, 1974, (which related to the appointment of Chairman, President and members of the Board of the National Bank of Pakistan) by the Finance Act, 2007 was also struck down even though introduced in the Finance Act, 2007.
(iii) In Federation of Pakistan v. Durrani Ceramics & Others, the Supreme Court held that the imposition of cess under the Gas Infrastructure Development Cess Act, 2011 was not a tax but a fee and, accordingly, it could not have been imposed as a Money Bill. Consequently, the statute was struck down.
Judicial Review of Speaker’s Certificate
Article 110(3) states that if any question arises as to whether the Bill is a Money Bill or not, the decision of the Speaker of the Lok Sabha shall be final. The question that arose was whether Article 110(3) excludes judicial review? In the cases of Mohd. Saeed Siddiqui v. State of Uttar Pradesh, and Yogendra Kumar Jaiswal v. State of Bihar, the Supreme Court had held that the certificate issued by the Speaker was final and not subject to judicial review.
These two decisions were plainly incorrect and have been rightly overruled in the Puttaswamy decision. However, there is an additional reason as to why the earlier decisions were wrong.
A Bill can be introduced either in the Rajya Sabha or in the Lok Sabha. If a Bill is first introduced in the Rajya Sabha, and a question arises as to whether it is a Money Bill, Article 110(3) makes it clear that this doubt of question cannot be resolved by the Chairman or Deputy Chairman of the Rajya Sabha but will have to be referred to the Speaker of the Lok Sabha and his/her decision on this issue will be final. This is the main reason for “finality”; there was never any intention to place the Speaker’s certificate beyond judicial review.
The Finance Act, 2016 and Tribunal Legislation
(i)In the Finance Act, 2017, Part XIV contains several provisions that have made large-scale amendments to numerous statutes that have constituted Tribunals.
(ii) These provisions have also been challenged on the ground that they could not have been introduced in the Finance Bill. Once a Finance Bill contains provisions for other matters, which are not subordinate or incidental to the enumerated matters, it would cease to be a Money Bill. This has been the ground on which two of the three cases of the Supreme Court of Pakistan have struck down Finance Acts. These provisions of the Finance Act, 2017 will also be open to challenge because they do not satisfy the “substantial nexus with the appropriation of funds and direct connection test” laid down in Puttaswamy.
It is indeed strange that the Bills which were patently unconnected with Article 110(1)/199(1) were earlier not struck down as Money Bills; Mohd. Saeed Siddiqui and Yogendra Kumar Jaiswal cases are examples of such cases. The Supreme Court did not examine these Bills from the perspective of Article 110 or the corresponding Article 199 that applies to Money Bills in the State Legislature. The Puttaswamy case was virtually a test case of a Bill that could not be categorized as a Money Bill.
It is humbly submitted that the view taken by the majority requires reconsideration as it now provides a gateway to Parliament and State Legislatures to circumvent the need for approval by the Rajya Sabha or the respective legislative Councils by clever drafting.