As Justice Chandrachud Calls Aadhaar Law ‘Unconstitutional’, Government Increases Use Of Controversial Short Cut

Mumbai: "The passing of Aadhaar Act as a money bill is a fraud on the Constitution,” said Justice DY Chandrachud in his dissenting judgement on the 2016 Aadhaar Act on September 26, 2018. “If a Constitution has to survive political aggrandisement, notions of power and authority must give compliance to rule of law.”

With two sessions still to go (the 2018 winter session and the 2019-20 budget session), the 16th Lok Sabha (2014-19) has already passed 9% more “money bills” than the 15th (2009-14). Money bills are meant to clear government expenses and taxation and are easily passed by ruling-party majority in the lower house, the Lok Sabha, instead of greater debate in and scrutiny by both houses of Parliament.

Over the years, it appears that the Lok Sabha has favoured the use of money bills; 21% more money bills were passed than ordinary bills between May 2004 and September 2018--indicating that bills have been introduced and passed solely by the Lok Sabha (Rajya Sabha can only discuss money bills, but does not need to pass them), according to our analysis of parliamentary data.

The 14th Lok Sabha (2004-09) passed 173 bills, of which 51% were money bills (89 of 173 bills).

Since the current session of the Lok Sabha was convened, it has passed 208 bills, a 20% increase since the 14th Lok Sabha. Money bills were 35% (72 of 208) of the bills passed.

Laws that took the short cut

Here are some other laws, besides Aadhaar, that took the controversial “money bill” short cut:

1) The government amended the Foreign Contributions Regulation Act (FCRA), 1976--which earlier barred political parties from receiving foreign funding--through an amendment in the Finance Bill, 2016, to permit funding of non-government organisations by foreign companies and changed the definition of “foreign companies”.

Subsequently, the government amended the FCRA again to push back the date of commencement to 1976, rendering all donations received after 1976 legitimate, The Hindu reported on February 3, 2018. This move benefits the two major political parties of India, the Indian National Congress and Bharatiya Janata Party. The parties were pulled up by the Delhi High Court in 2014 for violating the FCRA by accepting donations from the UK based Vedanta group. With this amendment, the parties have managed to evade legal issues.

2) The Finance Act, 2017,  amended the Representation of Peoples Act, 1951, and the Reserve Bank of India Act, 1934, to allow the issuance of electoral bonds from any scheduled bank to donate funds to political parties listed under Representation of Peoples Act, 1951.

Electoral bonds were introduced to encourage transparency in the way political parties are funded by ensuring a cap in payment by cash of Rs 2,000. Anything above that requires donation through electoral bonds and cheques.

The electoral bonds, similar to promissory notes, do not bear the name of the donor or any other detail by which the donor can be identified. Details of the political party encashing it can not be accessed, according to this press release by the Ministry of Finance.

Electoral bonds, along with an amendment that allows loss-making companies to donate funds to the parties, could lead to the creation of shell companies (see here and here).

3) In a move to reform existing tribunals (parallel to the traditional court systems but related to disputes on specific issues; for example, the National Green Tribunal adjudicates environmental disputes), eight tribunals were to be merged with existing tribunals.

The newly framed rules under the Finance Act, 2017, shifted the authority to appoint the heads of the tribunals to the central government. This move has evoked six separate notices from the High Courts of Gujarat, Madras, Punjab, Haryana and Bombay and the Supreme Court, as provisions in the amendment are unrelated to tax-based issues.

At least 25 out of 40 amendments introduced in the Finance Act, 2017, were unrelated to government revenue and taxation, Bloomberg-Quint reported on March 23,2017.

What is a money bill?

Such a bill “only” deals with all or any of the following matters under Article 110(1) of the Indian constitution:

  1. Imposition, abolition, remission, alteration or regulation of any tax;

  2. Regulation of the borrowing of money or guarantee given by the Government of India, or the amendment of the law with respect to any financial obligations undertaken by the Government of India;

  3. Access to the Consolidated Fund or the Contingency Fund of India for payment or withdrawal;

  4. Appropriation of money out of the Consolidated Fund of India;

  5. Declaration of any expense charged on the Consolidated Fund of India and the increase, if any.

  6. 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;

  7.    
  8. Any matter incidental to any of the matters specified in sub-clauses (a) to (f).

What is the difference between a finance bill and a money bill?

Finance bills are similar to money bills in the sense that it has provisions related to tax, expenditure and that may contain matters specified in Article 110 (1). A money bill specifically centres its identity around the provisions (a) to (g) and is certified by the Speaker as such.

A financial bill becomes a money bill only when it carries the Speaker’s certification as a money bill. Bills that are not certified by the Speaker are:

  1. Bills that contain any of the matters specified in Article 110, but do not contain only those matters Article 117 (1);

  2. Ordinary bills that contain provisions involving expenditure from the Consolidated Fund, according to Article 117 (3).

Why a money bills is easy to pass

An ordinary bill usually goes through three hurdles before becoming a law. In the Lok Sabha (if introduced first in the Lok Sabha), the bill is debated and amendments are suggested. After the bill is passed, it is moved to the Rajya Sabha for another round of debate and voting. The bill finally goes to the President for approval, after which it becomes an Act, or law, and is published in the official gazette.

A money bill, however, does not have to go through these processes. The Lok Sabha has the sole authority to introduce a money bill, which must be certified by the speaker as a “money bill”. Article 110 (3) of the constitution states that “if any question arises whether a bill is a money bill or not, the decision of the Speaker of the House of the People thereon shall be final”.

Once passed, the bill is handed over to the Rajya Sabha. The upper house has the bill for 14 days, and its contribution is restricted to recommending amendments, which may or may not be accepted by the Lok Sabha. In case the bill is not sent back to the Lok Sabha in 14 days, the bill is deemed passed by both houses.

In the cases of the Finance Act 2017 and the Aadhaar Act 2016, recommendations that were suggested by the Rajya Sabha on March 29, 2017 and March 16, 2016, respectively were rejected by the Lok Sabha both times.

“Bicameralism is a founding value of our democracy,” said Justice Chandrachud in his judgment.

Invoking the Constitution, his judgement--which dissented with the majority opinion by Chief Justice Dipak Misra, Justices AM Khanwilkar, AS Sikri and Ashok Bhushan--criticised the introduction and passing of the Aadhaar Bill as a money bill, as it did not qualify as a money bill under Article 110 (1) of the constitution, making it “plainly unconstitutional”.

“The Lok Sabha is not entrusted with the entire authority of Parliament. The Lok Sabha, the Rajya Sabha and the President together constitute the Parliament of India,” his judgement further said.

In the 2018 budget session, the Lok Sabha passed two bills and 218 amendments without debate in thirty minutes on March 13, 2018, after the Speaker exercised the ‘guillotine’, which refers to voting on tabled bills and amendments by a voice vote without debate, IndiaSpend reported on March 14, 2018. Both bills were money bills--the Finance Bill, 2018, and the Appropriation Bill, 2018--and less than a second was spent on each matter tabled to be discussed.

The final stage in the passing of a money bill is the assent of the President. While the Constitution does not allow the money bill to be sent back to the lower house by the President, the assent to a money bill can be withheld by the President. Even as 72 money bills have been passed by the current Lok Sabha, only 62 have been accepted by the President.

The Aadhaar judgement noted previous instances where a money bill was considered exempt from judicial review.

The certification of a bill as a money bill is not just a matter of procedure in Parliament, the Court observed. If any illegality was detected and if the decision had breached constitutional provisions, then the decision (of the Speaker) is subject to judicial review, the court declared.

(Chhetri, a graduate of Lady Shri Ram College for Women, is an intern with IndiaSpend.)

We welcome feedback. Please write to respond@indiaspend.org. We reserve the right to edit responses for language and grammar.

Mumbai: "The passing of Aadhaar Act as a money bill is a fraud on the Constitution,” said Justice DY Chandrachud in his dissenting judgement on the 2016 Aadhaar Act on September 26, 2018. “If a Constitution has to survive political aggrandisement, notions of power and authority must give compliance to rule of law.”

With two sessions still to go (the 2018 winter session and the 2019-20 budget session), the 16th Lok Sabha (2014-19) has already passed 9% more “money bills” than the 15th (2009-14). Money bills are meant to clear government expenses and taxation and are easily passed by ruling-party majority in the lower house, the Lok Sabha, instead of greater debate in and scrutiny by both houses of Parliament.

Over the years, it appears that the Lok Sabha has favoured the use of money bills; 21% more money bills were passed than ordinary bills between May 2004 and September 2018--indicating that bills have been introduced and passed solely by the Lok Sabha (Rajya Sabha can only discuss money bills, but does not need to pass them), according to our analysis of parliamentary data.

The 14th Lok Sabha (2004-09) passed 173 bills, of which 51% were money bills (89 of 173 bills).

Since the current session of the Lok Sabha was convened, it has passed 208 bills, a 20% increase since the 14th Lok Sabha. Money bills were 35% (72 of 208) of the bills passed.

Laws that took the short cut

Here are some other laws, besides Aadhaar, that took the controversial “money bill” short cut:

1) The government amended the Foreign Contributions Regulation Act (FCRA), 1976--which earlier barred political parties from receiving foreign funding--through an amendment in the Finance Bill, 2016, to permit funding of non-government organisations by foreign companies and changed the definition of “foreign companies”.

Subsequently, the government amended the FCRA again to push back the date of commencement to 1976, rendering all donations received after 1976 legitimate, The Hindu reported on February 3, 2018. This move benefits the two major political parties of India, the Indian National Congress and Bharatiya Janata Party. The parties were pulled up by the Delhi High Court in 2014 for violating the FCRA by accepting donations from the UK based Vedanta group. With this amendment, the parties have managed to evade legal issues.

2) The Finance Act, 2017,  amended the Representation of Peoples Act, 1951, and the Reserve Bank of India Act, 1934, to allow the issuance of electoral bonds from any scheduled bank to donate funds to political parties listed under Representation of Peoples Act, 1951.

Electoral bonds were introduced to encourage transparency in the way political parties are funded by ensuring a cap in payment by cash of Rs 2,000. Anything above that requires donation through electoral bonds and cheques.

The electoral bonds, similar to promissory notes, do not bear the name of the donor or any other detail by which the donor can be identified. Details of the political party encashing it can not be accessed, according to this press release by the Ministry of Finance.

Electoral bonds, along with an amendment that allows loss-making companies to donate funds to the parties, could lead to the creation of shell companies (see here and here).

3) In a move to reform existing tribunals (parallel to the traditional court systems but related to disputes on specific issues; for example, the National Green Tribunal adjudicates environmental disputes), eight tribunals were to be merged with existing tribunals.

The newly framed rules under the Finance Act, 2017, shifted the authority to appoint the heads of the tribunals to the central government. This move has evoked six separate notices from the High Courts of Gujarat, Madras, Punjab, Haryana and Bombay and the Supreme Court, as provisions in the amendment are unrelated to tax-based issues.

At least 25 out of 40 amendments introduced in the Finance Act, 2017, were unrelated to government revenue and taxation, Bloomberg-Quint reported on March 23,2017.

What is a money bill?

Such a bill “only” deals with all or any of the following matters under Article 110(1) of the Indian constitution:

  1. Imposition, abolition, remission, alteration or regulation of any tax;

  2. Regulation of the borrowing of money or guarantee given by the Government of India, or the amendment of the law with respect to any financial obligations undertaken by the Government of India;

  3. Access to the Consolidated Fund or the Contingency Fund of India for payment or withdrawal;

  4. Appropriation of money out of the Consolidated Fund of India;

  5. Declaration of any expense charged on the Consolidated Fund of India and the increase, if any.

  6. 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;

  7.    
  8. Any matter incidental to any of the matters specified in sub-clauses (a) to (f).

What is the difference between a finance bill and a money bill?

Finance bills are similar to money bills in the sense that it has provisions related to tax, expenditure and that may contain matters specified in Article 110 (1). A money bill specifically centres its identity around the provisions (a) to (g) and is certified by the Speaker as such.

A financial bill becomes a money bill only when it carries the Speaker’s certification as a money bill. Bills that are not certified by the Speaker are:

  1. Bills that contain any of the matters specified in Article 110, but do not contain only those matters Article 117 (1);

  2. Ordinary bills that contain provisions involving expenditure from the Consolidated Fund, according to Article 117 (3).

Why a money bills is easy to pass

An ordinary bill usually goes through three hurdles before becoming a law. In the Lok Sabha (if introduced first in the Lok Sabha), the bill is debated and amendments are suggested. After the bill is passed, it is moved to the Rajya Sabha for another round of debate and voting. The bill finally goes to the President for approval, after which it becomes an Act, or law, and is published in the official gazette.

A money bill, however, does not have to go through these processes. The Lok Sabha has the sole authority to introduce a money bill, which must be certified by the speaker as a “money bill”. Article 110 (3) of the constitution states that “if any question arises whether a bill is a money bill or not, the decision of the Speaker of the House of the People thereon shall be final”.

Once passed, the bill is handed over to the Rajya Sabha. The upper house has the bill for 14 days, and its contribution is restricted to recommending amendments, which may or may not be accepted by the Lok Sabha. In case the bill is not sent back to the Lok Sabha in 14 days, the bill is deemed passed by both houses.

In the cases of the Finance Act 2017 and the Aadhaar Act 2016, recommendations that were suggested by the Rajya Sabha on March 29, 2017 and March 16, 2016, respectively were rejected by the Lok Sabha both times.

“Bicameralism is a founding value of our democracy,” said Justice Chandrachud in his judgment.

Invoking the Constitution, his judgement--which dissented with the majority opinion by Chief Justice Dipak Misra, Justices AM Khanwilkar, AS Sikri and Ashok Bhushan--criticised the introduction and passing of the Aadhaar Bill as a money bill, as it did not qualify as a money bill under Article 110 (1) of the constitution, making it “plainly unconstitutional”.

“The Lok Sabha is not entrusted with the entire authority of Parliament. The Lok Sabha, the Rajya Sabha and the President together constitute the Parliament of India,” his judgement further said.

In the 2018 budget session, the Lok Sabha passed two bills and 218 amendments without debate in thirty minutes on March 13, 2018, after the Speaker exercised the ‘guillotine’, which refers to voting on tabled bills and amendments by a voice vote without debate, IndiaSpend reported on March 14, 2018. Both bills were money bills--the Finance Bill, 2018, and the Appropriation Bill, 2018--and less than a second was spent on each matter tabled to be discussed.

The final stage in the passing of a money bill is the assent of the President. While the Constitution does not allow the money bill to be sent back to the lower house by the President, the assent to a money bill can be withheld by the President. Even as 72 money bills have been passed by the current Lok Sabha, only 62 have been accepted by the President.

The Aadhaar judgement noted previous instances where a money bill was considered exempt from judicial review.

The certification of a bill as a money bill is not just a matter of procedure in Parliament, the Court observed. If any illegality was detected and if the decision had breached constitutional provisions, then the decision (of the Speaker) is subject to judicial review, the court declared.

(Chhetri, a graduate of Lady Shri Ram College for Women, is an intern with IndiaSpend.)

We welcome feedback. Please write to respond@indiaspend.org. We reserve the right to edit responses for language and grammar.


One response to “As Justice Chandrachud Calls Aadhaar Law ‘Unconstitutional’, Government Increases Use Of Controversial Short Cut”

  1. Will there be a judicial review? Who starts the process? Is there any chance of Aadhaar being declared unconstitutional?

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