Implications Of The Aadhaar Judgment

It is likely that the UIDAI will issue guidelines/ instructions setting out how the Aadhaar Judgment will be operationalized and will also hopefully clarify some of the key questions that have arisen

This note discusses some of the key implications of the decision of the Supreme Court of India (SC) in the case of Justice K.S. Puttaswamy (Retd.) v. Union of India on September 26, 2018 (Aadhaar Judgment) that examined the constitutional validity of the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 (Aadhaar Act).

The majority comprising Justice A.K. Sikri, former Chief Justice of India Dipak Misra, Justice A.M. Khanwilkar and Justice Ashok Bhushan (who wrote a concurring opinion) upheld the constitutionality of the provisions of the Aadhaar Act, with certain exceptions. Justice D.Y. Chandrachud issued the sole dissenting opinion.

Implications on Aadhaar-based e-KYC Authentication Legal framework for e-KYC authentication:

Section 57 of the Aadhaar Act permitted the use of the Aadhaar number of a person to establish the identity of an individual by the State, body corporate or any person pursuant to either a legal requirement or a contractual arrangement. Under Section 57, private entities (banks, NBFCs, financial services entities, telecom operators) used Aadhaar as a means to onboard customers and undertake e-KYC authentication.

Constitutionality of Section 57 of the Aadhaar Act:

The SC has found Section 57 to be unconstitutional on the ground that it allows private entities to use Aadhaar authentication to establish the identity of an individual for any purpose which was held to be too broad. The SC read down the meaning of for any purpose to mean a purpose backed by law and struck down the provision permitting use of Aadhaar authentication by private entities pursuant to a contract.

Constitutionality of Rule 9 of the Prevention of Money Laundering (Maintenance of Records) Rules, 2005 (PML Records Rules):