Day 26 Arguments

Constitutionality of Aadhaar Act

April 10th 2018

On the 25th day of arguments, the Attorney General of India Mr. KK Venugopal  had argued that faulty implementation is not sufficient ground to strike down an Act. The 26th day of arguments began with Mr. Venugopal arguing that an action can be validated by a subsequent Act. He stated that Section 59 of the Aadhaar Act provides retrospective effect.


Mr. Venugopal then pointed out that the Aadhaar enrollment form says that the scheme is free and voluntary and has provisions for recording informed consent. Here, Chandrachud J pointed out that the previous versions of the forms did not have any reference to biometric data, and it was only inserted in the third version of the form. Mr. Venugopal responded that the previous versions were ‘hardly used’ as the government had only mandated enrollment of one crore individuals.


To emphasise that invasion of privacy is minimal, Mr. Venugopal said that the UIDAI had refused to provide biometric data to the CBI, in connection with a rape, saying that biometric data could not be shared without the individual’s consent. The UIDAI in that situation had complied with Chandrachud J’s principle of ‘reasonable expectation of privacy’ in the Right to Privacy judgement. The state would not collect biometric information except for the benefit of the individual himself.


Mr. Venugopal went on to say that even ‘when there was no right to privacy’, the government acted in a bonafide manner when they enacted the Aadhaar Act. Thus, its actions are not retrospectively void. Chandrachud J pointed out that judgements after Kharak Singh have affirmed the right to privacy.


Mr. Venugopal cited a few cases on excessive delegation to argue that the Aadhaar Act is not a case of excessive delegation. Chandrachud J remarked that the problem with Section 2(g) of the Aadhaar Act is not excessive delegation of legislative powers, but lack of proportionality.



Next, Mr. Tushar Mehta began his arguments. He is representing and arguing for the UIDAI. He began by stating that in the Right to Privacy judgement, all nine judges had affirmed that right to privacy is not absolute and can be reasonably restricted. Secondly, an Act can be invalid if it fails the test of proportionality or the test of manifest arbitrariness. These tests have been examined, although in the context of Article 19, in the Binoy Viswam case, where the Court exhaustively examined the issue of PAN-Aadhaar linkage.


Mr. Mehta argued that PAN numbers have been mandatory since 1989. All demographic information that is now required under the Aadhaar scheme was required under the PAN scheme, including thumb impressions. The Court pointed out that thumb impressions are an alternative for people who cannot sign. Mr. Mehta said that his point is that people were giving thumb impressions. Justice Sikri pointed out that in any case, this thumb impression is only on the form. Chandrachud J added that there no authentication is required to use the PAN card. Mr. Mehta clarified that he merely wished to point out that the PAN regime has been in place since 1989. The Aadhaar regime, on the other hand, is required to ensure de-duplication through robust technology. There was empirical data to show the larger public interest.


Mr. Mehta argued that “larger public interest” is a valid restriction on the right to privacy. CJI Dipak Misra pointed out that ‘legitimate state interest’ and ‘larger public interest’ are not very different. Mr. Mehta responded that there was ‘larger public interest’ in mandating this linking – the prevention of income tax fraud, stopping the accumulation of black money, and deterring terrorism. He argued that the comprehensive coverage of Aadhaar, with its uniqueness, makes the process of de-duplication more systematic. In contrast, the PAN system is not as effective. Multiple PAN cards facilitate money laundering. They have also facilitated the growth of large shell companies with fake shareholders who open numerous bank accounts with fake ID cards. Around 11.35 lakh cases of fraudulent PANs have been detected. The Aadhaar scheme can be used to ensure that one individual has only one PAN card. Further, the Shah Committee SIT on Black Money had also recommended the creation of a database and a central KYC registry.


Mr. Mehta argued that PAN cards issued on existing ID proofs could be forged. The use of biometrics prevents this. He argued that demographic data is not enough. As opposed to the PAN card scheme, where verification of original documents is only at 0.02%, verification in Aadhaar is 100%. He alleged that duplicate Aadhaar cards are almost non-existent. He argued that in 2009, there were plans for a biometric PAN card, but when the Aadhaar scheme was conceptualized, the government discarded the idea.


When Mr. Mehta began quoting statistical data to show the difference between number of PAN card holders and the tax base, Sikri J said that the figures do not reveal how much of this difference is caused by duplicate PANs. Mr. Mehta argued that India is a tax non-compliant society. Those who evade taxes are a burden on those who pay their taxes honestly. He also emphasized India’s obligations under international legal instruments such as the Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS). He argued that fake PANs were a major embarrassment for the country with respect to these international obligations.


In the course of Mr. Mehta’s arguments, Chandrachud J pointed that duplication as in PAN is possible even with Aadhaar cards. To this, Mr. Mehta agreed that no system could be foolproof, but as the Aadhaar used a better technology, it must be implemented. Mr. Mehta argued that the Court had applied all the tests for privacy violations in the Binoy Viswam judgement. Further, the Right to Privacy judgement retrospectively ratifies the Binoy Viswam judgement as this bench was not sitting in appeal over that judgement, the observations in Binoy Viswam could not be reopened.


With this, the 26th day of arguments concluded. The matter will be next heard on April 11th 2018.