SC doesn't agree to Centre's plea Aadhaar would curb banking frauds

The Centre's argument that Aadhaar would help curb ills like terrorism and banking frauds today did not find favour with the Supreme Court which said the bank officials were "hand-in-glove" with fraudsters and scams do not happen because the culprits are unknown.

The top court also questioned the government for asking the entire population to link their mobile phones with Aadhaar "just to catch a few terrorists" and asked what would happen if the authorities, through administrative orders, ask the citizens to part with their DNA, semen and blood samples as part of their Aadhaar demographics.

A five-judge constitution bench headed by Chief Justice Dipak Misra, hearing a clutch of petitions challenging the validity of Aadhaar and its enabling 2016 law, prima facie disagreed with the submission and said Aadhaar was "not the solution" to banking frauds.

"There is no doubt about the identity of fraudsters. The bank knows whom it is giving loan and it is the bank officials who are hand-in-glove with the fraudsters. Aadhaar can do little to stop it," the bench, which also comprised justices A K Sikri, A M Khanwilkar, D Y Chandrachud and Ashok Bhushan, said.

"Banking fraud does not happen because of multiple IDs", the bench told Attorney General K K Venugopal, representing the Centre, who had submitted that biometrics were safe and could solve problems like "money laundering, bank frauds, income tax evasion and terrorism".

"Aadhaar will not prevent an individual from operating layers of commercial transactions. It would not prevent bank frauds either," the bench said, adding that it may only help the authorities in finding out non-existent beneficiaries of schemes like MGNREGA.

Elaborating, the bench said a person in different capacities and through various entities could enter into multi-layered commercial transactions and take loans which are not "illegal per se".

Venugopal then submitted that linking of Aadhaar with mobile would help in catching terrorists, planning to bomb a place.

"Do terrorists apply for SIM cards? It is a problem that you are asking the entire 120 crore people to link their mobile phones with Aadhaar just to catch a few terrorists," the bench asked him.

It said the government may have "legitimate State interest", but the issue was whether to catch a few, 120 crore people can be asked to link Aadhaar with mobile. "Mere legitimate state interest does not ensure proportionality," it added.

The bench also said that the State suspends internet services to control the violent situations and nobody questions its authority. But the issue arises when all citizens are asked to link their mobiles with Aadhaar.

The top law officer then said Aadhaar may help in ensuring upliftment of people who are below poverty line and such persons constituted 67 per cent of the total population when the Britishers left and now it stood at 27 per cent.

To this, the bench said "the gap (between rich and poor) is widening from independence and today. 67 per cent wealth is with one per cent of people."
"This may not pass the proportionality test," the bench said, adding that "the heart of the matter is as to how far you can stretch the (Aadhaar) net."