by Pratik Datta, Shivangi Tyagi, and Shefali Malhotra.
In India, a bill usually becomes a law once it has been passed by both Houses - Lok Sabha and Rajya Sabha – and the President assents to it. `Money bills' are an exception. A money bill is deemed to have been passed by both the Houses even if it is passed only in the Lok Sabha. Rajya Sabha's approval is not necessary although it can recommend amendments to a money bill. This provision of the Constitution of India is grounded in the history of the UK.
Even before the Magna Carta (1215), English Kings had bound themselves not to impose certain taxes without the consent of the common council of their realm. The King would summon the Parliament whenever a new tax was to be imposed. Over time, the Parliament became a permanent institution. The House of Lords (Upper House) and House of Commons (Lower House) developed into separate and distinct organs. With time, as trade and commerce flourished, the Commons' contributions became the major source of revenue. So did their say in the Parliament. Consequently, the privileges of the Commons and the restrictions on the Lords in respect of imposition of charges upon people evolved organically over several centuries. Till 1911, no statute explicitly codified these privileges or restrictions.
In 1909, the Lords rejected the annual Finance Bill passed by the Commons. A government whose Finance Bill is rejected can only resign or dissolve Parliament, because without money it is impossible to govern. This prompted the enactment of the Parliament Act, 1911. The preamble of this 1911 Act explicitly states its purpose of `restricting the existing powers of the House of Lords'. Section 1(2) of this Act, for the first time, defined a money bill, one which could become a law even without the consent of the Lords. But it could contain `only' provisions dealing with all or any of the subjects specified in that section. Additionally, section 3 gave conclusive status to the certificate of the Speaker of the House of Commons as to whether a bill is a money bill. It explicitly stated that such certificate `shall not be questioned in any court of law'.
These provisions of the English Parliament Act, 1911 informed the drafting of Articles 109 and 110 of the Indian constitution, and Article 73 of Pakistan's constitution. But there is one crucial difference. Article 110(3) of our Constitution says 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. Unlike the 1911 Act, Article 110(3) does not state that such certificate shall not be questioned in any court of law. Instead, Articles 122 and 212 of Constitution states that the validity of any proceedings in Parliament or a State legislature shall not be called in question on the ground of any alleged irregularity of procedure.
However, in the context of Article 212 in Special Reference No. 1 of 1964, the Supreme Court kept open the possibility of questioning the validity of proceedings inside the legislative chamber, on the ground that the proceedings suffer from an illegality or unconstitutionality and not merely procedural irregularity. Non-compliance with the constitutional provisions on money bill is certainly unconstitutional and not merely a procedural irregularity. Although this should theoretically give the Indian courts the power to question the Speaker's certificate on money bill, till date the Apex Court has refused to do so. In contrast, Pakistan's Supreme Court has on certain occasions struck down statutory provisions passed through money bills for non-compliance with Article 73, their constitutional provision on money bills.
Recently, the certification of the Aadhaar Bill by the speaker as a money bill caused much furore. A careful analysis of Article 110 and of the Bill reveals that the Bill was tightly drafted in order to try to make it a money bill. Section 7 does not make it mandatory for everyone to get an Aadhar – it is only for those who want to avail a subsidy, benefit or service. To put it simply, if you want a (prescribed) subsidy, benefit or service, go get an Aadhar. Further, the draft clarifies that this subsidy, benefit or service will be withdrawn only from the Consolidated Fund of India (CFI). This brings it within the purview of Article 110(1)(c) [withdrawal of money from CFI] or Article 110(1)(d) [appropriation of money out of the CFI]. Even if it was not clarified so explicitly, unilateral transfers (like subsidies and benefits) are covered within the Government's non-plan expenditure.
Since the Bill does not prescribe any subsidy, it may not fall squarely within clauses (c) or (d). But it definitely prescribes 'matter incidental to' withdrawal or appropriation of money from the CFI'. Under Article 110(1)(g), a money bill could comprise of provisions dealing `only' with matters incidental to clauses (a) to (f). Since most of Aadhar Bill provides for a mechanism to transfer subsidy, benefit or service from the CFI, it can be argued that this is `incidental' to withdrawal (clause c) or appropriation (clause d) of money from the CFI, which justifies a money bill.
An area where the Bill may have ventured beyond the scope of a money bill is disclosure of information in the interest of national security, in section 33(2). Can such a provision be inserted into a money bill? Article 110(1) states that a Bill shall be deemed to be a money bill if it contains `only' provisions dealing with subject matters within clauses (a) to (f) or any matter incidental to any of the matters specified in clauses (a) to (f). It could reasonably be argued that disclosure of information for national security is neither covered specifically, nor is it `incidental' to the objective of targeted delivery of subsidies, benefits or services from CFI. Avoiding this provision would have largely reduced the legal risk and criticism that the Government has been subjected to.
The authors are researchers at the National Institute of Public Finance and Policy.