On Money Bills And Judicial Review

On Money Bills And Judicial Review

Over the course of the last five years, several laws of substantial and wide-reaching importance have been enacted without securing the Rajya Sabha's assent. These have included, among others, legislation such as the Aadhaar Act, the Specified Bank Notes (Cessation of Liabilities) Act, 2017, which provided imprimatur to the government's demonetisation programme, and the Finance Act of 2017, through which a raft of statutes was amended, and various different judicial tribunals were either newly created or merged and integrated together. The government achieved this circumvention of the Rajya Sabha's checks by having the Lok Sabha's speaker certify the draft of these legislation as money bills.

As I pointed out previously here, generally under India's constitutional structure, for a bill to be enacted as law, it requires approval by both Houses of Parliament. The 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).

Article 110(3) further states 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. But, in its judgment in the Aadhaar case, despite clause 3, the Supreme Court did, in fact, review whether the Speaker was correct in branding the Aadhaar Bill as a money bill, albeit concluding that the certification in the case was correct. Now, however, arguments are once again afoot on whether such decisions by the Speaker can at all be subject to judicial scrutiny.

Last week, in challenging the provisions of the Finance Act of 2017, insofar as they affected the functioning of tribunals, Mr. Arvind Datar, for the petitioners, contended that the Speaker's certification, in this case, amounted to a fraud on the Constitution. The provisions of the law, through which tribunals were either merged together or newly created, he argued, related to matters entirely beyond the scope of the enlisted items in Article 110(1).

In response, the Union government, represented by the Attorney General, argued that the speaker's decision in certifying the Finance Bill of 2017 as a money bill was final and binding. In the government's belief, the majority's judgment in the Aadhaar case does not represent an authority for the proposition that the speaker's endorsement is amenable to judicial review.

Admittedly, as I pointed out in my previous post, the leading opinion in the Aadhaar case, authored by Justice AK Sikri, is riddled with inconsistencies on this question. Had the court approached its decision-making process logically, it would have first rendered a conclusive opinion on whether the Speaker's decision was capable of being judicially examined, before proceeding to consider the question of whether her decision was, in fact, correct on a consideration of the Aadhaar Bill. But not only did the court fail to do this, it adopted an altogether bizarre approach by first reflecting on whether the Aadhaar Act infringed any fundamental right or not. In doing so, it concluded that section 57 of the Act alone was unconstitutional. As a result, when considering arguments on the bill's certification under Article 110, the majority considered a version of the law that was deemed to exclude section 57. This is inexplicable because the Speaker, when attesting the draft legislation, one would have thought, would have considered its provisions as a collective whole.

But the contradictions do not end here. In analysing the Aadhaar Bill—an imagined version of the law sans section 57—and whether it could have been classified as a money bill under Article 110, the majority's judgment is decidedly vague. Consider paragraphs 396 and 397, where the court recorded the petitioners' submissions on the point:

396) It was further submitted that though clause (3) of Article 110 stipulates that decision of the Speaker on whether a Bill is a Money Bill or not is final, that did not mean that it was not subject to the judicial scrutiny and, therefore, in a given case, the Court was empowered to decide as to whether decision of the Speaker was constitutionally correct. In respect of Bill in question, it was argued that though Section 7 states that subsidies, benefits and services shall be provided from Consolidated Fund of India which was an attempt to give it a colour of Money Bill, some of the other provisions, namely, clauses 23(2)(h), 54(2)(m) and 57 of the Bill (which corresponds to Sections 23(2)(h), 54(2)(m) and 57 of the Aadhaar Act) do not fall under any of the clauses of Article 110 of the Constitution. Therefore, some provisions which were other than those covered by Money Bill and, therefore, introduction of the Bill as Money Bill was clearly inappropriate. It was also argued that, in this scenario, entire Act was bound to fail as there is no provision for severing clauses in Indian Constitution, unlike Section 55 of the Australian Constitution. Insofar as justiciability of the Speaker's decision is concerned, following judgments were referred to:

(i) Sub-Committee on Judicial Accountability v. Union of India & Ors.

(ii) S.R. Bommai & Ors. v. Union of India & Ors.

(iii) Raja Ram Pal v. Hon'ble Speaker, Lok Sabha & Ors.

(iv) Ramdas Athawale v. Union of India & Ors.

(v) Kihoto Hollohan v. Zachillhu & Ors.

397) It was emphasised that the creation and composition of the Rajya Sabha (Upper House) is an indicator of, and is essential to, constitutional federalism. It is a part of basic structure of the Constitution as held in Kuldip Nayar & Ors. v. Union of India & Ors.147. Therefore, Rajya Sabha could not have been by-passed while passing the legislation in question and doing away with this process and also right of the President to return the Bill has rendered the statute unconstitutional.

Having documented this, the court proceeded to cite the Attorney General's arguments, including the government's reliance on the judgment of a 3-judge bench in Mohd. Saeed Siddiqui v. State of UP (2014), where the Supreme Court had held that the Speaker's decision under Article 110 is altogether beyond judicial review. The court then cited the government's reliance on Article 122, which states that "The validity of any proceedings in Parliament shall not be called in question on the ground of any alleged irregularity of procedure."

Having done so, the court held thus, in paragraphs 404 and 405:

404) The Rajya Sabha, therefore, becomes an important institution signifying constitutional fedaralism. It is precisely for this reason that to enact any statute, the Bill has to be passed by both the Houses, namely, Lok Sabha as well as Rajya Sabha. It is the constitutional mandate. The only exception to the aforesaid Parliamentary norm is Article 110 of the Constitution of India. Having regard to this overall scheme of bicameralism enshrined in our Constitution, strict interpretation has to be accorded to Article 110. Keeping in view these principles, we have considered the arguments advanced by both the sides.

405) We would also like to observe at this stage that insofar as submission of the respondents about the justiciability of the decision of the Speaker of the Lok Sabha is concerned, we are unable to subscribe to such a contention. Judicial review would be admissible under certain circumstances having regard to the law laid down by this Court in various judgments which have been cited by Mr. P. Chidambaram, learned senior counsel appearing for the petitioners, and taken note of in paragraph 396.

Although the court didn't expressly hold Siddiqui to be wrongly decided, it would be reasonable for us to assume, especially from paragraph 405, that the majority in the Aadhaar case rejected the government's argument that the Speaker's decision under Article 110 is beyond judicial review. Indeed, the court having agreed with Mr. Chidambaram proceeded to then examine whether the Aadhaar Bill (sans section 57) could be classified properly as a money bill. On this, the court concluded that the Speaker's certification was correct, and the law was, in fact, validly enacted.

But, curiously, in paragraph 412, Justice Sikri observed as follows:

For all the aforesaid reasons, we are of the opinion that Bill was rightly introduced as Money Bill. Accordingly, it is not necessary for us to deal with other contentions of the petitioners, namely, whether certification by the Speaker about the Bill being Money Bill is subject to judicial review or not, whether a provision which does not relate to Money Bill is severable or not. We reiterate that main provision is a part of Money Bill and other are only incidental and, therefore, covered by clause (g) of Article 110 of the Constitution.

Now, had the court thought the speaker's certification final and incapable of being scrutinised, it's unfathomable why it would even consider whether the Aadhaar Bill's introduction as a money bill was correct in law or not. Yet, paragraph 412 has left open an avenue for the government to continue to insist that the Speaker's endorsement under Article 110 is beyond judicial review. But as I have argued
previously
, Article 110, if abused, is capable of producing great public mischief. What is more, as Justice DY Chandrachud's opinion in the Aadhaar case shows us (here Justice Bhushan too concurs), the decision in
Siddiqui
proceeded on a grossly mistaken belief that a certificate issued under Article 110 is merely a matter of procedure. The ongoing case over the validity of the Finance Act, 2017, insofar as it relates to tribunals, represents a great opportunity for the court to irrefutably settle the issue. It's time the court explicitly overruled
Siddiqui
, for to hold otherwise is to undermine the fundamental democratic role that the Rajya Sabha performs.

The article was first published Here.

Suhrith Parthasarathy is an advocate practising at the Madras High Court.

Views are personal.