Aadhaar linkages case: ASG Mehta says Aadhaar could prove helpful in PMLA cases

The Supreme Court Constitution Bench of Chief Justice Dipak Misra and Justices AK Sikri, AM Khanwilkar, DY Chandrachud and Ashok Bhushan resumed hearing on the batch of petitions challenging the validity of Aadhaar Act and Aadhaar linkages on Thursday (April 12) with Additional Solicitor General (ASG) Tushar Mehta saying that Aadhaar could prove helpful in detecting the Prevention of Money Laundering Act (PMLA) cases.

Mehta started the arguments by citing various sections of PMLA. “Section 12 of the PMLA deals with the Banking companies, financial institutions and intermediaries to maintain records. Section 15 deals with Procedure and manner of furnishing information by banking company, financial institution and intermediary.”

Mehta further referred section 73 of the PMLA which deals with the rule making power under the Act itself. “The definitions are itself borrowed from the Aadhaar Act, and that’s why, it has been challenged,” further emphasizing on the Rule 9 which makes it mandatory to verify records of the identity of the clients.

“The identification done via Aadhaar is only a one-time process. An individual doesn’t have to go through the process of Aadhaar for every transaction done by them,” said Mehta.

Justice Chandrachud questioned Mehta: “Does Aadhaar actually come under the rules?

Mehta replied: “Yes. Under Rule 9 and 4,” reading out rule 9(4) which deals with the identification of the beneficiary owner for the purposes of rule 9. “The challenge is not on the fact that the rules are ultra vires to the PMLA but the challenge is on the basis that the rules are ultra vires to the Aadhaar.”

Justice Sikri asked: “Indirectly you’re making Aadhaar compulsory for everyone because everyone needs Aadhaar to open a bank account.”

Mehta responded: “I can have a driving licence which is fake, but faking an identity proof which contains my fingerprints is impossible.”

Senior advocate Shyam Divan objected: “For the purposes of verification, have the verification one time, what is the point of having it every time?”

“The act of money laundering and black money is rampant. The entire thing is for the larger public interest. If I have Rs 100 crore, how will I convert it into white money? Only by risk taking games. In order to curb such activities, there is a residuary power provision. Residuary power to notify any activity by the central government — rule 6. This provision exhibits zero tolerance on money laundering and black money,” answered Mehta.

Justice Sikri questioned Mehta: “Isn’t there any other method to keep a check on such activities? Is it necessary to bring everyone under the sweep of Aadhaar?”

Mehta explained: “Such activity is a known method, even to the legislatures.”

Justice Sikri while mentioning an example of the unaccounted money under the income tax act said: “If the Aadhaar is not linked to the bank account, the account becomes non-operational temporarily.”

Justice Sikri further cited article 21 of the constitution, emphasising the procedure established by law and said that there must be a procedure established by law, a legal backing in the form of a legislation.

Mehta continued: “Deprivation of rights should be only by the procedure established by law. Rules become law per se.”

Justice Chandrachud asked: “Closing your account is operating your account.”

To which Mehta replied: “If the law provides for the procedure, it also provides for the non compliance of the procedure.”

Senior Advocate Rakesh Dwivedi appearing for the State of Gujarat referred to section 12(1)(c) of the Aadhaar Act, answering to the tax related query questioned by the CJI.

Justice Sikri said to Dwivedi: “The identity is verified at that time under whatever law was prevailing. Now, you cannot say another method of verification is to be done.”

Mehta said: “For the left over queries asked previously, a note will be circulated on Monday to resolve the same. The amount of fake accounts and cross border implications not only ruins the economy of the country but also corrupts the trust of its people.

“Mainly the scheme focuses on: 1) Zero tolerance to money laundering, 2) Curbing black money and 3) Reaching to that faceless person because of whom these activities takes place, even if a few individuals are troubled. This is the least we can do to the nation.”

Dwivedi countered: “Most of the lawyers have got their Aadhaar cards somewhere in 2013. However, no one has been caught. Everyone went to the enrollment station on their own. No one was invited or forced to get himself/herself enrolled in the Aadhaar. The lawyers can’t even say they didn’t understand what they were signing up for. At that time, even sample forms were not present. Even section 7 was not there.

“We all just walked across only to have one individual-one identity. Instead of having ration card for one place, another identity proof for another. No government is interested in the surveillance of the individuals. The government may survey famous individuals or where scams are involved, etc.”

Dwivedi further cited an example of a poor individual. “The government of India will never put such a person under surveillance that too on the basis of Aadhaar. No government needs Aadhaar to surveillance anyone.”

Justice Chandrachud pondered: “You can’t deny that technology has immense power. You don’t need Aadhaar for surveillance. Technology can do way better than Aadhaar itself.”

Dwivedi continued: “There has been a host of confusion. The Act clearly says that no one has the power to acquire tool to analyse the information of an individual. It is completely prohibited. The only empowerment under the Act is for authentication.”

Justice Chandrachud again queried: “What is the purpose of storing meta data?”

Dwivedi responded: “Meta data of the transaction and not the entire information of an individual.”

While referring to UIDAI Chief’s presentation on Aadhaar, Justice Chandrachud said: “In the presentation his entire information was visible.”

Dwivedi challenged the petitioners to bring their information in the newspaper or news channel while denying the allegations put forth via  UIDAI chief’s presentation.

Justice Chandrachud said a lot of private companies were willing to seek the information.

Dwivedi explained how the authentication process via nic.in worked.

“Under this process, citing an example of AIIMS, the government will get the information that AIIMS wishes to seek the confidential information. Now AIIMS situated in which city has requested for the information, is not known,” said Dwivedi.

Justice Chandrachud said: “Today we don’t have a data protection act at all. Even though you are not allowed to keep the data, what about the requesting entities? This is what actually is going on; commercial surveillance. You, as an individual, are a source of commercial information for a market.”

Justice Sikri agreed with the contentions of Justice Chandrachud and said: “For any videos you watch online, even though you don’t pay an penny, you pay the price of who you are.”

Justice Chandrachud reiterated: “Any information of every Indian is sensitive because it is available. For any other criteria, storing of fingerprints for that particular purpose is justified but when fingerprints are stored in a central repository for the authentication purpose, that creates a problem.”

Dwivedi said: “No where it is been said that the requesting entity is using it for surveillance. Section 32(3) applies to them. Section 29 is also applicable- restrictions on who can use the information.

“Article 1(3) of the data protection act of European union says that no human rights can hinder the outflow of data across the countries of European union. However, our Act says that no outflow of data per se will occur. What one can complain about is the enforcement part. Those who commit breach must be prosecuted. Every consent given by the individual for the usage of his biometric data will be protected by an agreement which will be subject to section 8 and chapter 6 of the Aadhaar Act. Section 29(3) r/w section 29(1) completely bars the sharing of core biometrics. Section 29(1) has an overriding effect. Section 29(2)&(3) are to be read together.”

—India Legal Bureau