In October 2015, a 3-judge bench of the Supreme Court of India referred challenges to the Aadhaar program to a constitution bench. One of the primary concerns of this petition was to decide on the existence of a fundamental right to privacy, which has since been upheld. Other similar petitions, concerned with the legitimacy of Aadhaar had been tagged with this petition. While the existence of the fundamental right to privacy has been upheld, challenges against the Aadhaar programme and linking services to this programme were yet to be adjudicated upon.
The final hearing commenced on January 17, 2017. Summaries of the arguments advanced in the previous hearings can be found here.
Senior Counsel Shyam Diwan and Arvind Datar commenced the day’s proceedings by remarking on the deadline of March 31st for bank account linking and asking for interim relief.
Senior Counsel Datar then discussed the validity of the Prevention of Money Laundering rules, followed by a discussion on constitutional classification of citizens based on their choice to have an Aadhaar number.
Mr. Datar commented on the disparity between the Supreme Court’s orders and the Aadhaar Act, stating that there had been an ‘unprecedented case of disobedience of court orders’ and that this could fall under Section 2(c) of the Contempt of Court Act.
Mr. Datar then went on to discuss the Prevention of Money Laundering Act’s Maintenance of Record rules. He stated that certain rules were in contradiction of RBI regulations.
He also remarked on the requirement of Aadhaar for bank account linking under the PMLA rules, stating that this was in contradiction to the voluntary nature of the Aadhaar Act.
Mr. Datar further stated that it was not open to the executive to make a rule, and that certain rules were passed when the Supreme Court was at its peak of stating that Aadhaar is voluntary and will only be used for limited purposes.
The discussion then turned toward Article 300 of the Constitution and the deprivation of property. Justice Chandrachud stated that in the present scenario, property was not being forfeited. Mr. Datar clarified that under Article 300, the scope was deprivation of property, which could be temporary or permanent.
Further on the topic of constitutionality, Chief Justice Misra stated that the consequences of a statute could not vitiate the statute itself. Mr. Datar stated that the effect of the statute was an important consideration. To which the CJI responded stating that the impact doctrine was what should be taken into consideration.
Mr. Datar also commented on the encompassing nature of Aadhaar, stating that a citizen would now need a number from ‘delivery to deliverance’. Further on banking and its related aspects, he stated that a passbook could only be retrieved with an Aadhaar number and commented on its contractual ramifications.
He reiterated that all the affidavits had mentioned that Aadhaar was meant to be voluntary.
Mr. Datar then moved on to discuss the unconstitutionality of the PMLA rules. He stated the PMLA rules classified citizens into two groups, one that opts for Aadhaar and another that chooses not to. The discussion then moved on to the consequences of this classification under Article 14 of the Constitution.
He stated that the law recognizes both classes of people. He also stated that it was a citizens right to choose whether they would part with certain information or not and incidentally whether they choose to have an Aadhaar number. However, due to Aadhaar being made essential for certain services, the choice is vitiated.
He referred to the Article 14 argument and manifestly arbitrary divisions under the Ram Krishna Dalmia case and remarked on the similar division of people into categories.
He stated that the Aadhaar act violated all three aspects of these tests.
He further questioned the rational nexus of what was to be achieved by the PMLA rules since it created two distinct divisions of people. With regard to Rule 9, he stated that there was no rational nexus with the Act. Mr. Datar then went on to a discuss a similar case on call drops where the applicability of two inconsequential rules was being discussed.
Justice Chandrachud stated that the facts of this case were different than the one in the call drop case, stating that the RBI master circular would come under the ambit of the Banking Regulation Act and the rules would come under the PMLA Act. Mr. Datar responded stating that RBI master circular derived power from both the legislations.
Mr. Datar then went on to discuss the Lal Baba Hussain case of 1955. With regard to the case, he discussed the concern at the time with voting in certain constituencies in Bombay and the requirement of proving one’s identity.
Justice Chandrachud stated that this was seemingly a case of failure of natural justice.
Mr. Datar stated that the issue was with classification and the problems that arise with forcing people to prove their citizenship.
He stated that an entire group of people could not be classified as a ‘suspect’ group for their choice of not having an Aadhaar number.
He also questioned the purpose of linking bank accounts to Aadhaar numbers, stating that there was no mischief to be corrected or addressed in the first place and that there were applicable KYC norms for banking.
Mr. Datar further stated that the entire object of the PMLA Act was to prevent money laundering and that the rules had no rational nexus with the object of the Act.
Commenting on the voluntary nature of Aadhaar under the Aadhaar Act, he stated that as per a Hohfeldian analysis, a right under one statute could not become a corresponding duty under another statute.
He reiterated that Aadhaar was only meant for establishing identity and that it should not be used GST and other such purposes.
The next hearing is scheduled for the 7th of March, 2018.