The Aadhaar Judgment and the Constitution – III: On the Money Bill (Guest Post)

(In this, the concluding essay in our series analysing the legal foundations of the Aadhaar judgment, Suhrith Parthasarathy examines the issue of the money bill.)

The Supreme Court’s judgment in the Aadhaar case is troubling at many different levels. As Gautam Bhatia’s post highlights, the majority’s opinion, authored by Justice AK Sikri, on behalf of himself, Chief Justice Dipak Misra and Justice AM Khanwilkar, is riddled with doctrinal inconsistencies and fails to so much as a maintain a sense of internal logic. This makes criticism of the judgment an especially demanding task. Not only are the court’s chosen standards of review questionable, its application of those flawed choices is often equally unsatisfactory. These fallacies are, perhaps, best exemplified by the majority’s approach to the questions concerning the enactment of the Aadhaar Act as a money bill. The court’s decision in this regard is productive of consequences that are likely to have a deep bearing on India’s democracy.

The Background

When the Aadhaar scheme was originally introduced in 2009, the government thought it unnecessary to enact a suitable legislation. In what represented a blatantly illegal move, it thought an executive notification would suffice for the purpose. Eventually, when the draft of a statute was presented in December 2010, to purportedly validate the scheme, it was introduced in the Rajya Sabha as an ordinary bill. This meant that the bill, like most other laws in India, required the assent of both houses of Parliament to turn into law. As it happened, the draft bill was sent to a Parliamentary Standing Committee even before it could secure the Upper House’s clearance. After substantial concerns were raised by the committee, the government, now under a different dispensation, withdrew the bill from consideration in March 2016, and introduced, in its place, a new draft legislation, titled the Aadhaar (Targeted Delivery of Financial & Other Subsidies, Benefits & Services) Bill, 2016. But this time the draft statute was introduced in the Lok Sabha with an added certificate from the speaker of the House classifying the proposed legislation as a money bill. This meant that all that the bill needed to turn into law was the Lok Sabha’s affirmation, which the bill secured within days of its introduction. And with that, the Aadhaar Act came to be enacted.

A number of the petitions challenging the Aadhaar programme in the Supreme Court explicitly questioned the introduction and enactment of the law as a money bill. The petitioners in these cases argued that the court possessed the power to judicially review the speaker’s decision, and, what’s more, his decision to certify the law as a money bill was patently unconstitutional.

Money Bills and the Constitutional Framework

Now, generally, under India’s Constitution, for a bill to be enacted into law it requires approval by both the Lok Sabha and the Rajya Sabha. The only exception to this rule is contained in Article 110(1), which defines a “money bill” in the following terms:

(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, the payment of moneys into or the withdrawal of moneys from any such Fund;

(d) the appropriation of moneys 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 money 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 sub clause (a) to (f). (Emphasis Supplied)

Critically, Article 110(3) adds that in cases where a dispute arises over whether a bill is a money bill or not, the Lok Sabha Speaker’s decision on the issue shall be considered final. It was this provision that the government placed particular emphasis on in its defence. The Union of India argued that the speaker’s decision was altogether immune from judicial review. In any event, according to it, the categorisation made in this case was in conformity with clause 1 of Article 110.

The Majority Approach: Judicial Review 

In deciding the case, common logic ought to have dictated that the court considered the question of whether the Aadhaar Act was a validly enacted legislation first. After all, if the court were to find that it had the power to review the speaker’s decision and if it found that the decision made in this case was unconstitutional, the entire legislation would have been rendered null and void, effectively making every other argument advanced in the case moot. Yet, the court chose a different path. For reasons best known to the majority, it chose to frame the question concerning the validity of the Aadhaar Bill’s categorisation as the sixth issue for consideration. Bizarrely, issues that preceded this included questions over whether the Aadhaar Act created a surveillance state, whether the Act violated the right to privacy, and whether children could be brought within the sweep of the programme. Thus, the majority chose to decide what ought to have been a preliminary question only once it gave its imprimatur to the general architecture of the Aadhaar programme. This approach, it must be said, runs counter to the most fundamental principles of judicial decision-making.

Making matters worse, the court’s ultimate approach in deciding the issue was just as illogical. Quite opposed to addressing, at the outset, the government’s objection that the speaker’s certification was beyond judicial review, the court first chose to consider whether the bill, in fact, met the requirements of Article 110(1). Once it did this, and once it found that the bill fell within the categories prescribed in Article 110(1), the court altogether brushed aside the question of whether a speaker’s decision is judicially reviewable or not. Now, it’s difficult to understand whether we can presume from the fact that the court conducted an examination on the provisions of the bill to conclude that it was a money bill that the majority did believe the speaker’s decision to be reviewable. The majority offers no clear and precise answer for this.

But, given that the government’s argument wasn’t entirely meritless, in that it was backed by at least one decision of a 3-judge bench of the Supreme Court, in Mohd. Saeed Siddiqui v. State of UP (2014), in the present post we shall endeavour to consider the issue by first answering the question of whether a speaker’s decision under Article 110 is judicially reviewable or not.

In Siddiqui, the question before the court concerned a categorisation made under Article 199 of the Constitution, which defines a money bill for the purposes of state legislatures. The provision is in pari materia with Article 110, and, as such, any decision made interpreting Article 199 ought to apply directly to Article 110 too. There, the Supreme Court had ruled that a Speaker’s decision to classify a draft statute as a money bill was not judicially reviewable, even if the classification was incorrect, since the speaker’s mistake constituted nothing more than a mere procedural irregularity. The court arrived at its decision, as Justice DY Chandrachud’s dissenting opinion in the Aadhaar case correctly points out, on a misunderstanding of a constitution bench judgment in Mangalore Ganesh Beedi Works vs. State of Mysore (1963).

In Mangalore Ganesh Beedi Works, the court had found that the Indian Coinage (Amendment) Act, which introduced a new system of coinage, was not a taxing measure. The petitioners had argued that through the substitution of 2 naya paisas in place of 3 pies as tax, there was a change in the tax imposed by the Mysore Sales Tax Act, which could only have been done by passing a Money Bill under Articles 198, 199 and 207 of the Constitution. Since no money bill had been introduced, the Act itself, the petitioners argued was illegal and invalid. It was in those circumstances, having found that a substitution of coinage did not result in an enhancement of tax, that the court ruled that Article 199 was simply not attracted. The further observation made by the court that the “the validity of an Act cannot be challenged on the ground that it offends Articles 197 to 199 and the procedure laid down in Article 202” ought to therefore be viewed in light of the ratio decidendi of the judgment.

Yet, in Siddiqui the court proceeded on the grossly mistaken premise that the decision in Mangalore Ganesh Beedi Works was somehow an authority for the proposition that a speaker’s decision to categorise a draft law as a money bill was beyond judicial review. Once again, as Justice Chandrachud’s dissenting opinion in the Aadhaar case points out, there is a consistent thread that emerges from the court’s judgments in (a) In re Special Reference No. of 1964, (b) Ramdas Athawale v. Union of India, and (c) Raja Ram Pal v. Hon’ble Speaker, Lok Sabha, which makes it clear that the validity of proceedings in Parliament or a State Legislature can be subject to the rigours of judicial review on the ground that there is a constitutional violation. Considering the trend of these judgments, and considering the grave consequences that emanate out of a certification of a draft law as a money bill the majority in the Aadhaar case ought to have at the least tested the continuing applicability of the court’s verdict in Siddiqui. For, as Justice Chandrachud writes:

Barring judicial review of the Lok Sabha Speaker’s decision would render a certification of a Bill as a Money Bill immune from scrutiny, even where the Bill does not, objectively speaking, deal only with the provisions set out in Article 110(1).[Paragraph 83]

What’s more, as Justice Chandrachud adds:

The existence of and the role of the Rajya Sabha, as an institution of federal bicameralism in the Indian Parliament, constitutes a part of the basic structure of the Constitution. The decision of the Speaker of the Lok Sabha to certify a Bill as a Money Bill has a direct impact on the role of the Rajya Sabha, since the latter has a limited role in the passing of a Money Bill. A decision of the Speaker of the Lok Sabha to declare an ordinary Bill to be a Money Bill limits the role of the Rajya Sabha. The power of the Speaker cannot be exercised arbitrarily in violation of constitutional norms and values, as it damages the essence of federal bicameralism, which is a part of the basic structure of the Constitution. Judicial review of the Speaker’s decision, on whether a Bill is a Money Bill, is therefore necessary to protect the basic structure of the Constitution. [Paragraph 339(d)]

Interestingly, Justice Bhushan in his separate opinion agrees with Justice Chandrachud that Siddiqui requires explicit overruling. It is unfortunate that despite the length of its opinion the majority has singularly failed to engage with this central point of contention.

The Aadhaar Act as a Money Bill 

What the majority does do, though, (and here Justice Bhushan agrees with it) is to hold, erroneously, that the speaker’s certification of the Aadhaar Bill as a money bill was in conformity with Article 110(1).

The government had argued that since Section 7 of the Aadhaar Act, “which was the heart and soul” of the legislation concerned subsidies, benefits and services, for which the expenditure was to be incurred from the Consolidated Fund of India, the requirements of Article 110(1) were met. It was sufficient, according to the government, if a law, in pith and substance, met the tests laid down in Article 110(1). In other words, so long as a draft legislation broadly concerned itself with one of the elements contained in clauses (a) to (f) of Article 110(1), the speaker was well within his rights to categorise the law as a money bill.

To start with, it needs to be noted that the doctrine of “pith and substance” is applied to adjudicate legislative competence, and has no role to play in examining whether or not the requirements of Article 110 are satisfied. But in any event, without expressing any specific opinion on the argument predicated on the doctrine of pith and substance, the majority in the Aadhaar case agrees with the government to the extent that Section 7 conforms to Article 110(1)(e) (“expenditure charged to the consolidated fund”), that all other provisions of the Act are only incidental to Section 7, and, therefore, fall within the meaning of Article 110(1)(g) (“incidental matters”). As Justice Chandrachud points out in his dissenting judgment this is an extraordinarily fallacious ruling. The majority altogether overlooks the fact that for a bill to be certified as a money bill under Article 110 it must contain “only provisions” that deal with every or any one of the matters contained in Article 110(1). Therefore, a bill, which contains a single item beyond the scope of the subjects enlisted in clauses (a) to (g) of Article 110(1) cannot be introduced as a money bill. Here, as Justice Chandrachud’s meticulous reading of each and every provision of the Aadhaar Act shows us there are a host of clauses that deal with items well beyond the scope of clauses (a) to (g) of Article 110(1). He holds:

The substantive provisions of the Act are, however, not confined to the object specified in the Preamble. Indeed, they travel far beyond the boundaries of a money bill under Article 110(1). The enrolment on the basis of demographic and biometric information, generation of Aadhaar number, obtaining consent of individuals before collecting their individual information, creation of a statutory authority to implement and supervise the process, protection of information collected during the process, disclosure of information in certain circumstances, creation of offences and penalties for disclosure or loss of information, and the use of the Aadhaar number for any purpose lie outside the ambit of Article 110. These themes are also not incidental to any of the matters covered by sub-clauses (a) to (f) of Article 110(1). The provisions of Section 57 which allow the use of an Aadhaar number by bodies corporate or private parties for any purpose do not fall within the ambit of Article 110. The legal framework of the Aadhaar Act creates substantive obligations and liabilities which have the capability of impacting on the fundamental rights of residents. [Paragraph 107].

The majority’s finding, such as it were, can be found in paragraphs 408 to 411 of its judgment, where it holds, inter alia, that since Aadhaar-based authentication is mandated by Section 7 of the Act for the receipt of a subsidy, benefit or service, and since such subsidies, benefits and services accrue out of the Consolidated Fund of India, Section 7 has to be seen as the “core provision of the Aadhaar Act and this provision satisfies the conditions of Article 110 of the Constitution.” Having held thus, in paragraph 411, the majority says:

To facilitate this, UIDAI is established as Authority under the Act which performs various functions including that of a regulator needing funds for staff salary and it’s own expenses. Respondents have rights remarked that the Authority is the performer in chief, the predominant dramatis personae. It appoints Registrars, enrollers, REs and ASAs; it lays down device and software specifications, and develops softwares too; it enrols; it de-duplicates; it establishes CIDR and manages it; it authenticates; it inspects; it prosecutes; it imposes disincentives; etc. And all this it does based on funds obtained by appropriations from Consolidated Fund of India (Section 24).

It’s difficult to understand the majority’s precise point here. But if its intent is to suggest that virtually any governmental activity would fulfil the condition laid down in Article 110(e), given that most government functions would be funded out of the Consolidated Fund of India it can only be a ruling that is predicated on a flagrant misunderstanding of the Constitution. The entire idea behind Article 110(e) is that the law must contain “only provisions” that involve “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.” In other words, under clause (e), a money bill must deal with the declaring of any expenditure to be expenditure charged on the Consolidated Fund of India.

As Justice Chandrachud, once again, correctly holds, not even Section 7 of the Aadhaar Act fulfils this requirement. As he writes in paragraph 110 of the dissent:

What Section 7 does is to enact a provision allowing for Aadhaar to be made mandatory, in the case of services, benefits or subsidies which are charged to the Consolidated Fund. Section 7 does not declare them to be a charge on the Consolidated Fund. It provides that in the case of services, benefits or subsidies which are already charged to the Consolidated Fund, Aadhaar can be made mandatory to avail of them. Section 7, in other words, is a provision for imposing a requirement of authentication and not declaring any expenditure to be a charge on the Consolidated Fund of India. Hence, even Section 7 is not within the ambit of Article 110(1)(e).

The majority’s troubling holding on the money bill issue doesn’t end here. It also holds that by virtue of it striking down Section 57 of the Act, it was unnecessary for it to consider whether the provision was merely incidental to the other provisions, specifically to Section 7. This finding is yet another instance of the judgment’s incoherence. The Aadhaar Act was enacted as a package. Section 57 was very much a part of the bill which was presented for the Lok Sabha’s consideration. So, if Section 57 wasn’t merely incidental to Section 7 (and it would have involved a huge stretch even of the majority’s logic to hold that it was), the draft legislation simply could not have been categorised as a money bill.

In other words, the majority effectively inverts basic judicial reasoning. Instead of considering the Aadhaar Act as a whole, and testing whether it qualifies as a money bill, the majority first examines provisions of the Act for substantive compliance with the Constitution, strikes down Section 57 as unconstitutional, and then turns around and says, “hey, now that Section 57 is gone, the remainder of the Act is a money bill after all.” As explained above, this is simply absurd.



Ultimately, the court’s ruling here creates a dangerous precedent. Now, virtually any legislation can be pushed through as a money bill, by ensuring that the law contains an “element” of one or the other of the clauses contained in Article 110. If the judgment is allowed to stand on this point its impact could be far-reaching. It will give government a carte blanche to enact all manners of laws by-passing the Rajya Sabha altogether.

The majority’s judgment in the Aadhaar case, therefore, requires immediate overruling. It will be interesting to see when the government next amends the Aadhaar Act (as it’s surely likely to do) if it will introduce the draft amendment as a money bill. Any such effort must serve as an opportunity for the court to reverse the majority’s findings here, and to restore, in Justice Chandrachud’s words, “the delicate balance of bicameralism” which lies at the heart of India’s parliamentary democracy.

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