Why the Aadhaar Act’s Future Isn’t Set in Stone Yet

While the apex court has left the door open on whether it was actually a money Bill, any change will be contingent on how fast it acts in setting up the seven-judge bench and deciding the review petitions.

Last week, the Supreme Court passed a landmark verdict upholding the constitutionality of the Finance Act, 2017, while striking down the Rules framed under it.

However, the judgment is notable for its decision to refer the “issue and question of money Bill as defined under Article 110(1) of the constitution, and certification accorded by the speaker of the Lok Sabha in respect of Part-XIV of the Finance Act, 2017” to a larger bench.

Article 110 of the constitution deems a Bill to be a money Bill “if it contains only provisions dealing with” a list of specified matters in ‘clauses (a)-(f)’ – such as pertaining to taxation, the Consolidated Fund, the Contingency Fund – and any issue incidental to these matters.

Part XIV of the Finance Act dealt with the administration of 26 tribunals. The petitioners argued that its inclusion in the Act and the importance of the word “only” in Article 110 meant that the entire Finance Act lost its colour as a money Bill and could not have been passed without the assent of the Rajya Sabha.

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Arguments were also advanced by relying on the constituent assembly debates’ emphasis on the word “only” in Article 110, on the importance of a bicameral legislature and the powers of judicial review over the certification of a Bill as a money Bill by the Lok Sabha speaker.

The Centre responded by arguing that the dominant character of the Finance Bill was that of a money Bill. Hence, any incidental matter would also draw the colour and characteristic of a money Bill. Further, it took the stand that the certification by the speaker was final and could not be called into question in view of Article 110(3) and Article 122(1).

The court was faced with conflicting precedent on the scope of judicial review and whether certification by the speaker was an irregularity of procedure (which was not reviewable) or substantive illegality (which was reviewable by courts). In support of its arguments, the government relied heavily on the Aadhaar judgment, where the majority had upheld the certification of the Aadhaar Act as a money Bill. The petitioners too relied on the Aadhaar judgment, specifically the concurring opinion of Justice Ashok Bhushan and the dissent authored by Justice D.Y. Chandrachud.

Noting both parties’ interpretations of the Aadhaar judgment, the court observed that the majority in the Aadhaar judgment “did not elucidate and explain the scope and ambit of” Article 110(a)- (f), specifically on the use of the word “only”.

It went on to state:

“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 offers 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 Court’s 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. Without expressing a firm and final opinion, it has to be observed that the analysis in K.S. Puttaswamy (Aadhaar-5) makes its application difficult to the present case and raises a potential conflict between the judgements of coordinate Bench.” (Emphasis added)

It is clear that the court’s observations above – doubting the correctness of the Aadhaar judgment – as well as its reference of the money Bill issue to a larger bench, will necessitate a re-examination of the Aadhaar judgment. This is significant because various review petitions had been filed in the aftermath of the Aadhaar judgment, partly on the majority’s decision to uphold the classification of the Aadhaar Bill as a money Bill. These petitions are still pending, and will most likely be tagged with the reference or await the decision of the reference.

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In either event, if the majority’s decision in the Aadhaar judgment on the issue of money Bill is found incorrect, the entire edifice of the judgment, and in fact, of the entire Act, crumbles. The controversial Section 7, which requires proof of an Aadhaar number for the receipt of certain benefits, subsidies or services will no longer apply.

In these circumstances, the government will have no option but to pass the Aadhaar Act afresh, after getting a majority vote in both houses of parliament. Such legislative consultation could prove to be a game changer and result in a rethink about the need, use and costs of exclusive biometric authentication systems in fighting poverty.

However, any such change will be contingent on how fast the Supreme Court acts – in setting up the seven-judge bench, in deciding the reference and in deciding the review petitions.

The introduction of Aadhaar, through an executive notification, was first challenged in 2012 before the Supreme Court, and was finally decided in 2018. One would only hope that it would not take the court as long to put an end to this issue and provide much needed finality.

Vrinda Bhandari is a New Delhi-based lawyer.