A five-judge bench of Supreme Court ruled on September 26, 2018 that Aadhaar was

constitutional yet declared it unconstitutional to make Aadhaar mandatory for availing

government services. So, while Aadhaar-PAN linking is mandatory, linking with bank
accounts and mobile numbers are unconstitutional.1

The Supreme Court struck down a part of the provision under section 57 that gave private
persons and entities access to Aadhaar pursuant to a contract. The order stated that “any
purpose” is susceptible to misuse and can only be a purpose backed by law. It also found that
allowing any corporate or person to use Aadhaar for authentication, especially on the basis of
a contract between the corporate and an individual, would enable commercial exploitation of
private data and hence is unconstitutional.

Subsequently, the government introduced several amendments to the law which received Lok
Sabha’s approval in January this year. But the amendment Bill did not receive the assent of
the upper house and lapsed. This prompted the government to take the ordinance route and in
doing so, it has amended three legislations—the Aadhaar Act, the Prevention of Money
Laundering Act and the Telegraph Act by introducing the Aadhaar and Other Laws
(Amendment) Ordinance, 2019, which will come into force after it is promulgated by the
President. The key purpose of the ordinance is to make the use of Aadhaar voluntary and
allow certain entities in the private sector to establish identities by using Aadhaar details.2

The ordinance states that a ‘requesting entity’ can perform authentication only if it complies
with standards of privacy and security issued by the Aadhaar regulator UIDAI and is
permitted under other laws made by the parliament- now under PMLA and Telegraph Act.
Further it also seeks authentication for the purposes determined by the central government.

To safeguard interests of individual citizens, such entity—private or public—must inform the

Aadhaar number holder of alternate and viable means of identification. Services cannot be
denied for refusing to or being unable to undergo authentication by Aadhaar. An individual
will have the option to voluntarily establish his identity by using Aadhaar number but only
after an informed consent. Mandatory Aadhaar number authentication can only be undertaken
pursuant to any law made by the parliament. The stiff penalties put in place by the ordinance
are likely to be a deterrent as well. For instance, failure of an entity to comply with the

1
‘5 historic judgments that changed our lives in 2018’, India Today Web Desk, September 28, 2018 12:28 IST,
https://www.indiatoday.in/fyi/story/5-historic-judgments-that-changed-our-lives-in-2018-1350692-2018-09-27
2
‘The recent Aadhaar ordinance undermines the democratic nature of our polity’, The Telegraph India, March
5, 2019, 12:50 IST, https://www.telegraphindia.com/opinion/the-recent-aadhaar-ordinance-undermines-the-
democratic-nature-of-our-polity/cid/1686228
Aadhaar Act would attract a penalty of Rs 1 crore in addition of up to Rs 10 lakh per day in
case of continuous contravention. Offences like tampering with data, destroying, deleting or
revealing relevant information would attract imprisonment of up to 10 years as opposed to
earlier 3 years.3

3
‘Aadhaar Ordinance: Will Voluntary Use End Up Becoming A Myth?’, Bloomberg Quint, March 11 2019,
11:52 IST, https://www.bloombergquint.com/aadhaar/aadhaar-ordinance-private-entities-grow-teeth-with-the-
latest-amendment#gs.16ac2h