A State as defined in International law as an Independent political entity occupying a defined territory, the members of which are united together for the purpose of resisting the external force and presentation of internal order.

However, the said definition paid emphasis more on Police functions of a state to protect the territory from external aggression. But the modern state is much more than being merely a police or Law and Order State. Modern State is a Social Welfare State.

Legal System of country is largely divide into two categories:

1. Law governing the state, and
2. law by which state govern or regulate the conduct of its members.

The term Constitutional law is wider than the term Constitution as it comprises “ the constitution, relevant statutory law, judicial decisions and conventions.

The Constitution of any country may be a written or unwritten. By saying a written Constitution, it means one which is written down in from of a constitutional document whereas Unwritten Constitution is one which is not embodied in one comprehensive document and is governed by Constitutional principles, Court decisions , Common law principles, Conventions and usage. Constitution of India is a written constitution whereas British Constitution is an unwritten Constitution.

One of Central Doctrine of an Unwritten Constitution is Sovereignty of Parliament which means parliament can make and unmake any law and there is no difference between an ordinary law and the constitutional law.

Though Constitution of India is a written constitution but there has been instances where Conventions have been recognized and applied. E.g.- U.N.R. Rao v Indira Gandhi, AIR 1971 SC 1002, Samsher Singh v. State of Punjab, AIR 1974 SC212, Ram Jawaya Kapur v. State of Punjab, AIR 1955 SC549.

A Country may have the Constitution but not necessarily Constitutionalism. Constitutionalism ensures the check and balance and Putting the Power of Legislation and executive under Some restrictions.

Constitutionalism recognizes the need for government with power but at the same time it insist that limitation be placed on such powers.

Unlimited Power jeopardize Freedom of people and as its been said- Power corrupts and absolute power corrupt absolutely.

Article 110 In The Constitution Of India 1949:

110. Definition of Money Bill

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)
   
2. A Bill shall not be deemed to be a Money Bill by reason only that it provides for the imposition of fines or other pecuniary penalties, or for the demand or payment of fees for licences or fees for services rendered, or by reason that it provides for the imposition, abolition, remission, alteration or regulation of any tax by any local authority or body for local purposes
   
3. 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.
   
4. There shall be endorsed on every Money Bill when it is transmitted to the Council of States under Article 109, and when it is presented to the President for assent under Article 111, the certificate of the Speaker of the House of the People signed by him that it is a Money Bill

Constitution of India under Articles 107 to 117 indicates the following kinds of Bills:
(i) General Bills (Art 107)
(ii) Money Bills (Art 110)
(iii) Appropriation Bills (Art 114)
(iv) Financial Bills (Art 117)

As per the Rajya Sabha website, Financial Bills can be further sub-divided in two categories i.e. Category-I and Category II.

If Aadhaar would be passed as an ordinary bill or, at best, as a Financial Bill-Category-II. That would have required the approval of the Rajya Sabha as well.

Article 199 is the equivalent provision relating to Money Bills that is applicable to State Legislatures.
It should be noted that passing a Bill as money Bill is much easier than that of an ordinary Bill for the reason being that the provisions regarding passing for a bill as money bill are relaxed in comparison to an Ordinary Bill.

A Bill can be introduced either in the Rajya Sabha or in the Lok Sabha. If a Bill is First introduced in the Rajya Sabha, and a question arises as to whether it is a Money Bill, Article 110(3) makes it clear that this doubt of question cannot be resolved by the Chairman or Deputy Chairman of the Rajya Sabha but will have to be referred to the Speaker of the Lok Sabha and his/her decision on this issue will be Final. This is the main reason for Finality; there was never any intention to place the Speakers certificate beyond judicial review.

Aadhar Act

The Aadhaar Bill was first introduced as a Money Bill in 2016. This Bill contained 59 sections of which only section 7 referred to the Consolidated Fund of India and the relevant portion of that section reads as follows:
7. Proof of Aadhaar number necessary for receipt of certain subsidies, benefits and services, etc. The Central Government or, as the case may be, the State Government may, for the purpose of establishing identity of an individual as a condition for receipt of a subsidy, benefit or service for which the expenditure is incurred from, or the receipt there from forms part of, the Consolidated Fund of India, require that such individual undergo authentication, or furnish proof of possession of Aadhaar number or in the case of an individual to whom no Aadhaar number has been assigned, such individual makes an application for enrolment.

Article 110 Vis-A-Vis Section 7 of Aadhar Law

Article 110(1) of the Constitution specifically states that a Money Bill must contain only provisions that deal with the matters enumerated therein.

Section 7 refers to expenditure which is incurred from the Consolidated Fund of India but Article 110(d) covers only expenditure charged to Consolidated Fund of India. Significantly, the expenditure on the Aadhaar scheme is not charged to the Consolidated Fund of India.

So the only question arise what are expenditure which are charged upon consolidated fund of India?

Article 112(3) enumerates expenditure which is charged to the Consolidated Fund of India.
It reads as follows:
(3) The following expenditure shall be expenditure charged on the Consolidated Fund of India-
(a) the emoluments and allowances of the President and other expenditure relating to his office
(b) the salaries and allowances of the Chairman and the Deputy Chairman of the Council of States and the Speaker and the Deputy Speaker of the House of the People;
(c) debt charges for which the Government of India is liable including interest, sinking fund charges and redemption charges, and other expenditure relating to the raising of loans and the service and redemption of debt;

(d) (i) the salaries, allowances and pensions payable to or in respect of Judges of the Supreme Court,
(ii) the pensions payable to or in respect of Judges of the Federal Court,
(iii) the pensions payable to or in respect of Judges of any High Court which exercises jurisdiction in relation to any area included in the territory of India or which at any time before the commencement of this Constitution exercises jurisdiction in relation to any area included in a Governors Province of the Dominion of India;

(e) the salary, allowances and pension payable to or in respect of the Comptroller and Auditor General of India;
(f) any sums required to satisfy any judgment, decree or award of any court or arbitral tribunal;
(g) any other expenditure declared by this Constitution or by Parliament by law to be so charged.

The other provisions which create such charge are Articles 146(3), 148(6), 273(1), 275(1), 290, 291(1)(a), 293(2) and 322 of the Constitution.

Aadhaar Judgment - Ks Puttaswamy v/s Union of India:

was whether the Aadhaar (Targeted Delivery of Financial and Other Subsidies, BenefIts and Services) Act, 2016 was rightly passed as a Money Bill. By a majority, it was held that it was indeed a Money Bill while the dissenting judgment of Chandrachud J. held to the contrary.

Reasoning of Majority for upheld Aadhar as Money Bill: (a) The Aadhaar Bill was a Money Bill as it had a substantial nexus with the appropriation of funds from the Consolidated Fund of India and was directly connected with Article 110 of the Constitution
(Justice Sikris opinion for himself, and Misra & Khanwilkar JJ).

(b) section 7 would be covered by clauses (c) and (e) of Article 110 (1). The expenditure for the Aadhaar scheme is chargeable to the Consolidated Fund of India. (Bhushan J., in a concurring view)

Thus, the majority view has introduced a new concept of substantial nexus with the appropriation of funds and direct connection .

The Minority View Chandrachud J. held that the Aadhaar Bill was not a Money Bill.

Historical reasons of Article 110, the learned Judge emphasized the significance of bicameral legislation and the importance of the Rajya Sabha as a check against the abuse of power by Lok Sabha.

The legislative history of the Aadhaar Act itself. The provision of a unique identity was first contemplated by the National Identification Authority of India Bill, 2010 which was introduced in the Rajya Sabha on December 3, 2010. Obviously, this Bill was not a Money Bill. It also faced several objections by the Standing Committee of the Finance and this Bill lapsed because of the change in government in 2014. Although the earlier Bill did not contain a provision that was similar to section 7 of the present Aadhaar Act, it still would not make the present enactment as a Money Bill.

Issues With Majority View:
The majority introduces a test of substantial nexus with the appropriation of funds and direct connection. This will enable any future Parliament to introduce any Bill with just one provision that has a substantial nexus with the appropriation of funds and direct connection and it would pass muster as a Money Bill.

The majority has wrongly presumed that expenditure under section 7 is charged to the Consolidated Fund of India. Article 112(3) of the Constitution specifically enumerates expenditure that will be charged to the Consolidated Fund of India. Expenditure on the Aadhaar scheme is incurred from the Consolidated Fund of India and will not be covered by Articles 110(c) or 110(e). Consequently, Article 110(g) will also have no application.

It completely destroys the meaning of the word only, which is a deliberate restriction on the powers of the Lok Sabha. A Bill need not be sent to the Rajya Sabha if it is a Money Bill. All other Bills have to go to the Rajya Sabha for approval. Therefore, any Bill, which has various substantive provisions, in addition to Clause (a) to (g), cannot passed as a Money Bill.

In the Constituent Assembly Debates, the proposal to delete the word only in Article 110 was made by Ghanshyam Singh Gupta. This was specifically rejected.

Finance Act, 2017 And Reference To Large Bench:

The Finance Act 2017 which brought in provisions concerning the functioning of tribunals was challenged on the ground that it was passed a money bill. It was the argument that the same was not a money bill and passing the same couching it as a money bill was done to circumvent the Rajya Sabha. The Central government had, in turn, placed reliance on the Aadhaar judgment to make its case.

This led to the Court examining the Aadhaar judgment in detail particularly in relation to Article 110 of the constitution.

The Supreme Court today stated that the majority judgment in Aadhaar did not elucidate and explain the scope and ambit of sub-clauses (a) to (f) to clause (1) of Article 110 of the Constitution, a legal position and facet which arises for consideration in the present case and assumes considerable importance

The Court concluded that the majority judgment in the Aadhaar case pronounced the nature of the Aadhaar act without first delineating the scope of Article 110(1) and principles for interpretation or the repercussions of such process. The majority dictum in Aadhaar judgment did not substantially discuss the object of the word only in Article 110(1) and provides little guidance on the repercussions of a finding when some of the provisions of an enactment passed as a Money Bill do not conform to Article 110(1)
(a) to (g), the Court ruled.

Upon an extensive examination of the matter, we notice that the majority in K.S. Puttaswamy (Aadhaar-5) pronounced the nature of the impugned enactment without first delineating the scope of Article 110(1) and principles for interpretation or the repercussions of such process. It is clear to us that the majority dictum in K.S. Puttaswamy (Aadhaar-5) did not substantially discuss the effect of the word only in Article 110(1) and provides little guidance on the repercussions of a finding when some of the provisions of an enactment passed as a Money Bill do not conform to Article 110(1)(a) to (g).

Its interpretation of the provisions of the Aadhaar Act was arguably liberal and the Courts satisfaction of the said provisions being incidental to Article 110(1)(a) to (f), it has been argued is not convincingly reasoned, as might not be in accord with the bicameral Parliamentary system envisaged under our constitutional scheme.

Being a Bench of equal strength as that in K.S. Puttaswamy (Aadhaar-5), we accordingly direct that this batch of matters be placed before Hon'ble the Chief Justice of India, on the administrative side, for consideration by a larger Bench.

Test of Federalism:

Article 1 of the Constitution states that India shall be a Union of States. Thus, the states are constitutionally recognized units and not mere convenient administrative divisions. H.M. Seervai, in his commentary Constitutional law of India (p 166, 3rd Edn.) has summed up the federal nature of our constitution by observing that the federal principle is dominant in our constitution. (PB SAWANT, J. on behalf of himself and Kuldip Singh, J in S.R. Bommai v. Union of India)

Federal Character of the constitution is a basic structure of the constitution. (S.M. Sikri C.J, Kesavananda Bharati v. State of Kerala AIR1973 SC 1461)

A Constitution reflects the hopes and aspirations of people. Constitution is not a gate but a road. (H.R. Khanna, J, Kesavananda Bharati v. State of Kerala AIR1973 SC 1461)

The fact that under the scheme of our constitution, greater power is conferred upon the centre vis-A-vis the states doesnt mean that states are mere appendages of the centre. The center cannot tamper with their powers. More Particularly, the courts should not adopt an approach, an interpretation, which has the effect of or trends to have the whittling down the powers reserved to the states. (BP Jeevan Reddy , J in S.R. Bommai v. Union of India)

The Rajya Sabha or Council of States is the upper house of the bicameral Parliament of India. In the Indian federal structure, the Rajya Sabha is a representative of the States in the Union legislature (hence the name, Council of States). For this reason, the Rajya Sabha has powers that protect the rights of States against the union.
Having the Rajya sabha in the legislative system at center which is undermined by the constitution of India is an essential illustration of federal character of the constitution of India.

However at the same time, the Constitution of India places some restrictions on Sabha powers in certain areas. For instance, money bill can be introduced only in the Lok Sabha by a minister and only on recommendation of President of India. When the Lok Sabha passes a money bill then the Lok Sabha sends money bill to the Rajya Sabha for 14 days during which it can make recommendations. Even if Rajya Sabha fails to return the money bill in 14 days to the Lok Sabha, that bill is deemed to have passed by both the Houses.

Also, if the Lok Sabha rejects any (or all) of the amendments proposed by the Rajya Sabha, the bill is deemed to have been passed by both Houses of Parliament of India in the form the Lok Sabha finally passes it. Hence, Rajya Sabha can only give recommendations for a money bill but Rajya Sabha cannot amend a money bill. This is to ensure that Rajya Sabha must not add any non money matters in money bill. There is no joint sitting of both the houses with respect to money bills, because all final decisions are taken by the Lok Sabha.

It should be recorded that the constitution of India has empowered the Rajya sabha with ample power alike of the lok sabha but at the same time marginal biasedness is been made in favor in lok sabha as in compare to Rajya sabha. As it has already been submitted that the Article 110 which defined money bill is one of those instances where powers of Rajya sabha has been sacrificed. However at the same using Article 110 to pass any ordinary bill on name of money bill would itself be against the very objective behind giving marginal biasedness favor the lok sabha. Article 110 has used the word only in order to keep a check of federalism.

Conclusion:
Thus, under the opinion of author passing AADHAR Act as money bill while using Article 110 despite its failure of consonance to the word only and failure to bring itself into the grounds so as to comply the menace of Article 110 is nothing but prima facie failure to pass the Test of federalism.

Disclaimer:
The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any agency of the Indian government. Examples of analysis performed within this article are only examples. They should not be utilized in real-world analytic products as they are based only on very limited and dated open source information. Assumptions made within the analysis are not reflective of the position of any Indian government State.

References:

1. https://www.constitution.org/cons/india/tamnd46.htm
2. https://main.sci.gov.in/
3. https://www.barandbench.com/news/breaking-correctness-of-aadhaar-judgment-doubted-by-supreme-court-7-judge-bench-will-now-decide
4. https://scroll.in/latest/943618/supreme-court-doubts-correctness-of-aadhaar-judgement-refers-it-to-a-larger-bench

Written By: Shubham Budhiraja
The author is company secretary by qualification and has completed its CS management trainee with a reputed corporate law firm. Further, he is a Second Year Law student at faculty of law, University of Delhi. He is enrolled as Para Legal volunteer with Delhi State Legal Service authority and is an active Participant in Moot Court.
Ph no: +91965405531
Email: [email protected], [email protected]