The Aadhaar bill was passed by Parliament as a money bill. The Lok Sabha rejected the amendments made by the Rajya Sabha. A writ petition has been filed in the Supreme Court challenging its classification as a money bill. In this context, it would be instructive to see why some bills are labelled as money bills and require only the Lower House to pass them.
India has a bicameral Parliament. The purpose of the second House is to be a revising chamber. Any legislation must be passed by each House by a simple majority. This provides a check on hasty decisions.
Following the procedure in the British parliament, our Constitution makes an exception for money bills. The British parliament, over the centuries, built up checks against the monarch’s power. It required all government expenditure to be sanctioned by parliament. It also forbade new taxes unless parliament provided for them by law. Parliament could stop any expenditure plans of the government and bring it to a standstill. In such a case, the government cannot function and would be expected to resign. Given that the government requires the confidence of the Lower House, the corollary is that only the Lower House should have decision-making powers on such bills.
In other words, money bills are an exception to the rule that bills need to be passed by each House. Therefore, there is a need to provide limits on the usage of this procedure. Our Constitution specifies six conditions for any bill to be a money bill, and states that the bill should have only these features, or any item incidental to it. The six conditions pertain to taxes, government borrowings and expenditure.
Erskine May’s Parliamentary Practice says the following. “A bill which contains any of the enumerated matters and nothing besides is indisputably a ‘money bill’. If it contains any other matters, then, unless these are ‘subordinate matters incidental to’ any of the matters so contained in the bill, the bill is not a money bill. Further, if the main object of a bill is to create a new charge on the Consolidated Fund or on money provided by Parliament, the bill will not be certified if it is apparent that the primary purpose of the new charge is not purely financial.”
In this context, does the Aadhaar bill fit the money bill criteria? The bill provides for a mechanism to identify a person using biometrics, and states that this could be used for providing subsidies or government services. However, it also allows the Aadhaar system to be used for other purposes. Therefore, it seems to contain matters other than those that are incidental to expenditure from the Consolidated Fund. That is, it does not seem to fit the requirement of “only” the matters listed.
Our Constitution also follows the British procedure that provides the speaker with the authority to certify a bill as a money bill. However, there is a key difference. The House of Commons appoints two senior members who must be consulted before the speaker gives the certificate. In India, the speaker makes the decision on her own.
Can the speaker’s decision be challenged? The Constitution says the decision of the speaker shall be final. However, there are several instances in which Parliament’s decisions have been subjected to judicial review. These include decisions made by speakers under the anti-defection law. Also, in a recent judgment, a Constitution bench of the Supreme Court decided that the privilege of legislatures was subject to judicial review, and repealed a resolution of the Punjab legislative assembly to expel Amarinder Singh for the rest of its term. It remains to be seen whether the court will consider the writ petition.
Though the bill has been passed, this issue needs debate as it sets a precedent. An immediate case is the Finance Bill, 2016, which includes structural changes to the RBI Act to enable statutory backing for a monetary policy committee. The question is whether such a bill can be certified as a money bill, which will enable these amendments to be made without the concurrence of the Rajya Sabha. Perhaps it may help if the Lok Sabha creates a consultative mechanism before the speaker certifies a bill as a money bill.