Does Aadhaar count as a Money Bill? Supreme Court seeks government’s opinion

The status of a Money Bill had allowed the Lok Sabha to overrule amendments passed by the Rajya Sabha, where the ruling BJP does not command a majority.


The Supreme Court on Monday sought the government’s opinion on Congress leader Jairam Ramesh’s petition challenging the passage of the law on Aadhaar as a Money Bill.

Parliament had on March 16 passed the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Bill, 2016, which provides a legal framework to India’s unique identification project that assigns a biometric identity to all citizens. Amendments moved in the Rajya Sabha during the Budget Session had been overruled, because the status of a Money Bill allows the Lok Sabha to override the wishes of the Upper House of Parliament.

A bench comprising of Chief Justice TS Thakur, Justice UU Lalit and Justice R Banumathi on Monday asked the country’s top law officer, Attorney General Mukul Rohatgi, to express his views on the matter at the next hearing fixed on May 10.

The judges, however, declined to issue a notice on the plea to the government, which means the petition is still at a preliminary stage and the court has not yet decided to entertain the petition.

The Supreme Court has in the past refused to examine the validity of Money Bills, which are meant to be legislations focused on taxes or the way the government spends its funds. Such Bills can only be introduced and passed in the Lok Sabha. The Speaker of the Lok Sabha is the final and binding authority on the certification of a Money Bill.

However, Jairam Ramesh, a former Union minister and current Rajya Sabha member, has contended that the moving of the Aadhaar Act to regulate the collection, storing and use of biometric data of millions of citizens and residents in the form of a Money Bill is “wrongful and unconstitutional”.

The April 7 petition terms the Aadhaar Act a “clear case of Constitutional fraud” violating fundamental rights, and “a colourable exercise of power” open to judicial scrutiny.

‘Infringement on rights’

Since 2009, the Union government has been collecting and centralising demographic and biometric (fingerprints, iris scans) data of Indian residents under the Unique Identity or Aadhaar project, run under an executive order. The government database now contains data of more than one billion Indian residents.

While a National Identification Authority of India Bill, 2010, drafted by the previous United Progressive Alliance government was pending in Parliament, the Modi government introduced the Aadhaar (Targeted Delivery of Financial and other Subsidies Benefits and Services) Bill in the Lok Sabha on March 3.

The government’s decision to introduce the legislation as a Money Bill triggered a controversy. Opposition members in the Lok Sabha objected to this classification since the Bill covers more than spending. The ruling MPs in the Lok Sabha on March 16 rejected five amendments moved by the Rajya Sabha and passed the Bill in its original form. It became a law on March 25 after the President’s assent.

Congress leader Jairam Ramesh, who had moved the five amendments in the Rajya Sabha, filed a writ petition in the Supreme Court on April 7, challenging the treatment of Aadhaar Act as a Money Bill. The 213-page petition terms the Aadhaar Act “a brazen and malafide attempt to bypass the approval of the Rajya Sabha”.

The petition argues that the validity of a law introduced as Money Bill, passed only with the approval of the Lok Sabha even though it impacts the fundamental rights of the citizens and residents under Article 14 (right to equality) and Article 21 (personal liberty), is questionable, and has implications for imposing restrictions on the rights guaranteed by the Constitution.

The petition claims that the Aadhaar Act, wrongly introduced as a Money Bill in the Lok Sabha, cannot be considered to be a law since it was not approved by the Rajya Sabha.

It cites and compares the “statement of objects and reasons” of the 2010 and 2016 drafts of the law to show that the provisions of both the Acts are largely similar and seek to obtain the same purpose. Yet, the 2010 Bill was introduced as an ordinary Bill, while Aadhaar Act was tabled as a Money Bill, to bypass the Upper House of parliament where the Modi government lacks a majority.

For and against

Union Finance Minister Arun Jaitley had earlier stated in the Parliament that the Aadhaar Bill can be classified as a Money Bill as it pertains to the delivery of subsidies to the beneficiaries of welfare schemes. However, Ramesh’s petition contends that Aadhaar number may be used for several purposes, only one of which is identification of beneficiaries of targeted beneficiaries for delivery of various subsidies, benefits, services, grants, and wages.

It points out that only one chapter in the Aadhaar law, on “Grants, Accounts, and Audit and Annual Report” contains provisions on financial and budgetary matters laid down in section (a) to (f) of Article 110(1) of the Constitution that defines a Money Bill. “In pith and substance, the Aadhaar Act provides for a legislative framework for the establishment and maintenance of a central database of identity-related information of residents, and elaborates as to how such information may be collected, stored and used,” arguing that these issues are beyond the scope of a money Bill.

Since the Aadhaar Act was passed in March, legal researchers and political scientists have questioned the classification as a money Bill on similar grounds.

“If this bill with far-reaching implications for rights, accountability and the powers of the state is a money bill, then practically any legislation can be converted into a money bill,” noted Pratap Bhanu Mehta, president for Centre for Policy Research in a commentary in The Indian Express.

MR Madhavan, president of PRS Legislative Research, has also argued the same that Aadhaar Act is not a money Bill as it contain “matters other than those that are incidental to expenditure from the Consolidated Fund,” which is a clearly defined contour of a Money Bill.

Other critics of the law have argued that since it deals with privacy and confidentiality aspects of the personal data of millions of Indian residents and does not just pertain to subsidies but any government services, it should not have been passed as a money bill. Section 57 of the Aadhaar law allows private entities – telecom, real estate, insurance companies – to also use Aadhaar authentication services, and not just the government.

What next?

The question now is whether the Speaker’s decision will be challenged by Jairam Ramesh’s writ petition?

The petition has argued that the final decision of the Speaker in certifying a Bill to be a Money Bill is not immune to judicial scrutiny. It requests the Supreme Court to examine whether there is “merely an irregularity of procedure”, or “clear mischief” crossing into “a threshold of substantive illegality and unconstitutionality.”

MR Madhavan, President of PRS Legislative Research, in an article in The Indian Express cites that Parliament’s decisions have in the past beensubject to judicial review, and argues that in this case there is a need for debate as it sets a precedent.