Supreme Court: In a 1448-pages detailed judgment, the 5- Judge Bench comprising of CJ Dipak Misra and A.K. Sikri, A.M. Khanwilkar, Dr D.Y. Chandrachud and Ashok Bhushan, JJ., by a majority of 4:1, declared the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 to be valid and not violative of the fundamental right to privacy. However, certain orders and/or circulars making the citing of Aadhaar number mandatory have been held unconstitutional and struck down. Justice Sikri delivered the leading opinion for CJ Dipak Misra and himself and A.M. Khanwilkar, J. While Justice Chandrachud delivered a dissenting opinion and Justice Bhushan also delivered a separate opinion in which he broadly agreed with A.K. Sikri, J.
The leading issue was whether Aadhaar Act violates the right to privacy? The Court, per majority, answered in the negative. Justice Sikri stated all matters pertaining to an individual do not qualify as being an inherent part of right to privacy. Only those matters over which there would be a reasonable expectation of privacy are protected by Article 21. The Aadhaar scheme is backed by the statute, i.e., the Aadhaar Act. It also serves legitimate State aim, which can be discerned from the Introduction to the Act as well as the Statement of Objects and Reasons which reflect that the aim in passing the Act was to ensure that social benefit schemes reach the deserving community. Aadhaar Act meets the test of proportionality. The inroads into the privacy rights where these individuals are made to part with their biometrics information, is minimal. It is coupled with the fact that there is no data collection on the movements of such individuals, when they avail benefits under Section 7 of the Act thereby ruling out the possibility of creating their profiles. The Aadhaar Act meets the test of balancing as well. As far as subsidies, services and benefits are concerned, their scope is not to be unduly expanded thereby widening the net of Aadhaar, where it is not permitted otherwise.
The salient points regarding constitutionality of the Aadhaar Act, 2016 and incidental issues are delineated hereinafter; also, the provisions, orders or circulars that have been struck down or read down or clarifies are mentioned:
A.K. Sikri, J. (for CJ Dipak Misra and himself and A.M. Khanwilkar, J.)
- Adhar project does not create surveillance State; this is ensured by the manner in which the project operates. Security measures, as per the provisions of Section 29 (3) read Section 38 (g) as well as Regulation 17 (1)(d) of the Authentication Regulations, are strictly followed and adhered to.
- Section 7 is the core provision of the Aadhaar Act and it satisfies the condition of Article 110 of the Constitution. Thus, the Aadhaar Act was validly passed as Money Bill.
- Section 139-AA of the Income Tax Act, 1961 which mandates quoting of Aadhaar for filing IT Returns and applications for PAN is not violative of the right to privacy. It satisfies the test of permissible limits and therefore is not unconstitutional.
- Rule 9 of the Prevention of Money Laundering (Maintenance of Records) Rules, 2005 which mandates linking of Aadhaar with bank accounts in its present form does not meet the test of proportionality, violates the right to privacy.
Circular dated 23 March 2017, mandating linking of Aadhaar with mobile number held to be illegal, unconstitutional and thereby was quashed.
Clarification of a few provisions:
- Authentication records are not to be kept beyond period of six months.
- Metabase relating to transaction held to be impermissible; needs amendment.
- Section 33(1) read down; an individual whose information is sought to be released, shall be afforded an opportunity of hearing.
- Section 57 partially unconstitutional insofar as it enables body corporate or individual to seek authentication.
- Benefits and services as mentioned in Section 7 should be those which have the colour of same kind of subsidies etc., namely, welfare schemes of the Government whereby Government is doing out such benefits which are targeted at a particular deprived class. It would cover only those benefits etc. the expenditure whereof has to be drawn from the Consolidated Fund of India. On that basis, CBSE, NEET, JEE, UGC etc., cannot make the requirement of Aadhaar mandatory as they are outside the purview of Section 7 and are not backed by any law.
- For enrollment of children under Aadhaar Act, it would be essential to have consent of their parents. On attaining majority, they would have the option to exit from the project.
- Requirement of Aadhaar not to be mandatory for school admission of children as it is neither a service nor subsidy.
Dr D.Y. Chandrachud, J., gave a 23-points conclusion to the opinion wherein he dissented from the majority. In his opinion, the entire Aadhaar programme, since 2009, suffers from the constitutional infirmities and violations of fundamental rights. The enactment of the Aadhaar Act does not save the Aadhaar project. The Aadhaar Act, the Rules and Regulations framed under it, and the framework prior to the enactment of the Act are unconstitutional.
The opinion of Justice Chandrachud can be summarized in the following paragraph as stated by the dissenting Judge himself:
“Creating strong privacy protection laws and instilling safeguards may address or at the very least assuage some of the concerns associated with the Aadhar scheme which severely impairs informational self-determination, individual privacy, dignity and autonomy. In order to uphold the democratic values of the Constitution, the government needs to address the concerns highlighted in this judgment which would provide a strong foundation for digital initiatives, which are imminent in today’s digital age. However, in its current form, the Aadhaar framework does not sufficiently assuage the concerns that have arisen from the operation of the project…”
Ashok Bhushan J., divided the batch of cases into two parts, firstly, the challenge to Executive’s Scheme dated 28 January 2009 notified by the Government of India, by which the Unique Identification Authority of India was constituted to implement the UIDAI Scheme, and secondly, challenge to the Aadhaar Act, 2016. The learned Justice broadly agreed with the leading opinion of Justice Sikri. However, Rule 9 of the Prevention of Money Laundering (Maintenance of Records) Rules, 2005 which is struck down as violative of right to privacy by A.K. Sikri J., was upheld by Ashok Bhushan, J.
In view of the aforesaid discussion and observations, the writ petitions, transferred cases, special leave petition, contempt petitions and all the pending applications were accordingly disposed of. [K.S. Puttaswamy v. Union of India (Aadhaar-5 Judge), (2019) 1 SCC 1, decided on 26-09-2018]
Supreme Court: The Bench comprising of CJ Dipak Misra and AM Khanwilkar, Dr DY Chandrachud and Ashok Bhushan JJ., in an order, refused to take on record the Srikrishna Committee report on data privacy and protection.
Attorney General K K Venugopal stated that the Srikrishna committee report is in the public domain and that if the court wanted the Centre would place the same on record. But CJI on consultation with the other judges on the bench declined to do so.
The Srikrishna Committee laid down the measures that could be adopted in order to protect the personal information of the citizens, the role and duties of the data processors and rights of Individuals along with the penalties for violation of the data protection measures.
[Source: The Pioneer]
Reserve Bank of India (RBI) has made linking of national biometric ID Aadhaar to bank accounts mandatory as part of its updated ‘Know Your Customer (KYC)’ guidelines. This, however, will be subject to the final decision of the Supreme Court on making of Aadhaar mandatory, RBI stated in its Master Direction – Know Your Customer (KYC) Direction, 2016 (updated as on April 20, 2018).
Till now, an Officially Valid Document (OVD) for address proof together with Permanent Account Number (PAN) issued by the Income Tax Department and a recent passport size photograph were the key KYC documents. But in the amended Customer Due Diligence (CDD) procedure, RBI said, “The Aadhaar number, the PAN or Form No. 60” need to be obtained from an individual who is eligible for applying for the biometric ID. RBI has done away with sections relating to the use of other OVD by banks for address and identity proof.
For residents of Jammu and Kashmir, Assam or Meghalaya, who do not submit Aadhaar or proof of application of enrolment for Aadhaar, the bank may obtain a “certified copy of an OVD containing details of identity and address and one recent photograph,”.
RBI said Aadhaar number shall not be sought from individuals who are not residents. “From an individual who is not eligible to be enrolled for an Aadhaar number, or who is not a resident, the following shall be obtained: PAN or Form No. 60, one recent photograph and a certified copy of an OVD containing details of identity and address.”
In terms of the provisions of Prevention of Money-Laundering Act, 2002 and the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005, Regulated Entities (REs) are required to follow certain customer identification procedures while undertaking a transaction either by establishing an account based relationship or otherwise and monitor their transactions. REs take steps to implement provisions of Prevention of Money-Laundering Act, 2002 and the Prevention of Money-Laundering (Maintenance of Records) Rules, 2005, as amended from time to time, including operational instructions issued in pursuance of such amendment(s).
The revised Master Direction is in accordance with the changes carried out in the PML Rules vide Gazette Notification GSR 538(E) dated June 1, 2017 and thereafter and is subject to the final judgment of the Hon’ble Supreme Court in the case of Justice K.S. Puttaswamy (Retd.) v. Union of India (Aadhaar case).
Read the Directions HERE.
[Master Direction DBR.AML.BC.No.81/14.01.001/2015-16]
Gujarat High Court: A Division Bench comprising of R. Subhash Reddy, CJ. And Vipul M. Pancholi, J., adjourned a writ petition filed in the form of a public interest litigation seeking directions to permit the students to register themselves for taking Joint Entrance Examination (Main), 2018 and National Eligibility-cum-Entrance Test, 2018.
The petitioner prayed that the students should be allowed to take the above said examinations without quoting Aadhar Number or receipt of application of Aadhar Enrolment ID. In support of the prayer, learned counsel for the petitioner relied on the order passed by the Supreme Court in UIDAI v. CBI, (2017) 7 SCC 157, wherein the Court directed all the Authorities not to make Aadhar compulsory for any requirement. Further, no person shall be deprived of any service for want of Aadhar Number in case he is otherwise eligible/entitled.
While deciding the petition, the High Court took notice of the fact that the JEE examination had already been conducted. Further, the matter relating to Aadhar linkage to various schemes was pending before the Supreme Court. In view of the stated fact, the High Court was not inclined to grant any direction at present. The matter was directed to be placed on board on March 28, 2018. [Patel Abidali Yusufbhai v. Ministry of Human Resource Development, Union of India, WP (PIL) No. 227 of 2017, order dated 27.2.2018]
Under the provisions of recently introduced section 139AA of the Income Tax Act, 1961 (the Act), with effect from 01.07.2017, all taxpayers having Aadhaar Number or Enrolment Number are required to link the same with Permanent Account Number (PAN). In view of the difficulties faced by some of the taxpayers in the process, the date for linking of Aadhaar with PAN was initially extended till 31st August, 2017 which was further extended upto 31st December, 2017.
It has come to notice that some of the taxpayers have not yet completed the linking of PAN with Aadhaar. Therefore, to facilitate the process of linking, it has been decided to further extend the time for linking of Aadhaar with PAN till 31.03.2018.
Ministry of Finance