26/09/2018 11:20 AM IST | Updated 26/09/2018 3:21 PM IST

Aadhaar Verdict: Supreme Court Says UIDAI’s Aadhaar Card Is Legal

While the judgement means Aadhaar is still mandatory for filing tax returns and to access welfare schemes, bank accounts don't have to be linked to it anymore.

B Mathur / Reuters
The Supreme Court upheld the validity of linking Aadhaar to PAN cards, suggesting that anyone who pays income tax will have to have an Aadhaar number anyway.

NEW DELHI— India's Supreme Court has upheld the constitutionality of the controversial Aadhaar identity project, based on the biometric and personal details of over a billion Indians.

The majority judgement of the court read down Section 57 of the Aadhaar Act of 2016, holding that private companies cannot insist on Aadhaar numbers from citizens to provide services.

The court upheld the validity of linking Aadhaar to PAN cards, suggesting that — should the government wish it — anyone who pays income tax will have to have an Aadhaar number anyway.

However, the court held the linking of Aadhaar numbers to bank accounts, as mandated by an amendment to the Prevention of Money Laundering Act of 2002, was unconstitutional.

The court also held that educational institutions and bodies like the Central Board for Secondary Education (CBSE) and University Grants Commission (UGC), and schools and colleges, cannot ask for Aadhaar details of potential candidates.

READ: Pan Card, Bank Account, Mobile Number: Who Can, And Who Can't, Ask For Your Aadhaar Number?

Chief Justice of India Dipak Misra, and Justices AK Sikri and AM Khanwilkar delivered a concurrent majority judgement, while Justices DY Chandrachud and Ashok Bhushan delivered separate opinions.

The majority judgement, read out in a packed courthouse by Justice Sikri, relied heavily on the court's landmark 2017 Privacy judgement.

"I think it is a victory for the government and the Aadhaar authority," advocate Rakesh Dwivedi, who appeared for the UIDAI and the government of Gujarat, told NDTV. "This whole judgement, including Justice Chandrachud's, ought to be looked at holistically and the government should take note of the points raised by him and see if they need to modify the law to make the system stronger."

"Ultimately everybody is trying to ensure with minimal invasion of privacy of individual you can achieve your objective," Dwivedi said.

"Today the Supreme Court has passed a historic judgement on Aadhaar," said Supreme Court Advocate Prashant Bhushan. "They have held several parts of the Aadhaar act to be unconstitutional."

The court's decision restricting private companies from demanding Aadhaar numbers, Bhushan said, would come as a relief.

The decision will have a ripple effect on the Indian government's plans to use Aadhaar as the primary proof of identity for citizens to access food rations, pay their taxes, buy property and even access private services like bank accounts and mobile phones.

The ruling will also affect India's software, payments, and technology companies that have made Aadhaar-enabled payments, and data-gathering, a central plank of their business models.

The ruling elicited mixed reactions from Aadhaar's many critics.

"Some sections have been struck down, which is a relief," said Reetika Khera, who has written extensively on Aadhaar. "But the big disappointment is section 7 should have been struck down, which effectively makes Aadhaar mandatory for many essential government services."

"The court seems to have taken all the assurances of the government at face value," Khera said. "Even though we know that on the ground the government has been violating its assurances to the court. It would have been good if the Supreme Court had pulled up the government on this."

Chandrachud's Dissent

While a three-judge majority, on the five-judge bench, upheld the constitutionality of Aadhaar, Justice Chandrachud delivered a dissenting opinion.

Justice Chandrachud said it was unconstitutional to pass the Aadhaar Act as a money bill, and held that the programme as a whole violated the the privacy of individuals. He said it was unconstitutional for banks and telephone companies to collect Aadhaar numbers and called on phone companies to destroy all existing aadhaar records in their possession with immediate effect.

    The Case

    In May this year, a constitutional bench comprising Chief Justice Dipak Misra and Justices AK Sikri, AM Khanwilkar, DY Chandrachud and Ashok Bhushan reserved its order on 27 petitions challenging the constitutional validity of the Aadhaar.

    The case witnessed 38 days of arguments spread over four months. While Attorney General KK Venugopal represented the centre, senior advocates such as Kapil Sibal, P Chidambaram, Rakesh Dwivedi, Shyam Divan, Arvind Datar and Rakesh Dwivedi appeared for various parties who had filed petitions against Aadhaar.

    The case against Aadhaar was argued on the following fronts:

    The key thrust of a majority of petitions related to how the Aadhaar database was being used as a tool of mass surveillance. In arguments, petitioners drew attention to the landmark 2017 judgement in Puttaswamy versus Union of India, where the court held that Indians had a right to privacy, and argued that Aadhaar—by design—violated the privacy of individuals and put them at the mercy of the state.

    As Divan, a key advocate for the petitioners, stated, "Our stand is that eminent domain does not extend to the human body."

    The constitutionality of the Union government's strategy to pass the Aadhaar Act as a money bill in 2016 formed another major point of argument. The petition, filed by Congressman Jairam Ramesh, alleged that the Act was passed a money bill to "bypass the scrutiny of the Rajya Sabha".

    Petitioners also drew attention to how the widespread use of Aadhaar in government schemes, and frequent system errors, had actually restricted access for some of the country's poorest citizens. The problem was particularly acute in the public distribution system for food rations, the petitioners argued.

    Data Leaks

    The government, for its part, maintained that the Aadhaar system could not be used for surveillance, despite much evidence to the contrary. It also insisted that the system could not be used to build detailed citizen profiles, despite having been proved wrong.

    The Aadhaar system, the government held, had led to a reduction in corruption and leakages in public schemes, particularly the public distribution system.

    "The Aadhaar Act meets the standards and has adequate safeguards. The Aadhaar Act is a just, fair, and reasonable law. It is in pursuance of a larger public interest, including preventing dissipation of social welfare benefits, prevention of black money and money laundering..." Venugopal had told the court.

    Several Aadhaar-related data leaks in recent months have proved otherwise.

    HuffPost India will update this story as more information is available.

    This headline of this copy has been updated to reflect the ambiguity on whether Aadhaar is mandatory or not