: Aadhaar verdict: India Inc, startups and experts react

Sep 28, 2018

The Supreme Court on Wednesday upheld the constitutional validity of Aadhaar, but with conditions.

Justice A.K. Sikri pronounced the majority judgment on behalf of himself, Chief Justice of India Dipak Misra and Justices A.M. Khanwilkar and Ashok Bhushan. However, Justice D.Y. Chandrachud gave a dissenting judgment.

The following are the reactions from exerts from various sectors:

Aarthy Venkat,

“While the Aadhaar Act has been upheld to be constitutional, the striking down of Section 57 comes as a blow to private organisations and entities. We are awaiting notification from UIDAI. The impact of the judgment is massive,” remarked Aarthy Venkat of the Bengaluru-based startup Venkat added that the judgment of the Supreme Court raises concerns for startup ecosystems which derive their core strength from the UIDAI.

Alok Shende, Ascentius Consulting

“For the designated financial institutions, Aadhaar-based authentication process made instantaneous loan approval or account opening possible and thus Aadhaar circumvented the traditional paper trail based authentication process that took on an average, 2-3 days to complete. With the promulgation of this Supreme Court judgment, the old paper-based process will be back in vogue, thus causing delays and inconvenience to the users and longer latency for banks and fintech players,” said Alok Shende.

Ajay Bhargava, Khaitan and Co.

Ajay Bhargava opined that by striking down Section 57 of the Aadhaar Act, the Supreme Court has highlighted the urgent need for a robust proper data protection law in the country. “Such observation coincides with the introduction of the Personal Data Protection Bill, 2018. This means that Indian companies may have to revise standard operating procedures in the near future,” said Bhargava.

Gopal Bohra, N. A. Shah Associates LLP

“The apex court has applied a balanced approach, making it mandatory to use Aadhaar at places such as filing of income tax returns, atleast for those individuals who are eligible to obtain Aadhaar numbers and also restricting the data sharing with private parties. This ruling, which makes the linking of Aadhaar with PAN mandatory, will help government in curbing tax evasion,” observed Gopal Bohra.

Ramesh Mamgain, Commvault

“This (verdict) will go a long way in protecting user data, ensuring that there are fewer risks in data leakages. However, private enterprises will need to get their act together quickly to migrate to GDPR (General Data Protection Regulation) norms and ensure that secondary data is managed securely across locations,” pointed out Ramesh Mamgain.

Bhavin Patel, LenDenClub

“This step may affect the fintech as well as other financial companies which use only Aadhaar as their identity verification mechanism. Though the verdict is not affecting us, we believe that this will be a regressive move for fintech companies as they will eventually move to the traditional mode of verifying individuals and thereby the turnaround time for processing loans will increase considerably,” said Bhavin Patel.

Patel said the Supreme Court upheld Aadhaar’s constitutional validity at a time when there has been many questions regarding data security, surveillance state and privacy problem, and added that the verdict has cleared many doubts.

Patel also pointed out that the SC highlighted some of the flaws in Aadhaar law due to which private companies have been barred from using Aadhaar for identity verification.

Amit More, Finzy

“Today’s verdict has upheld most of the provisions in the Aadhaar Act and ruled that it does not breach privacy. Simultaneously, a few provisions have been struck down since the honourable court concluded that they could have infringed into privacy or exposed personal information. Most significant from fintech industry perspective is the Section 57 of the Aadhaar Act, which provides that private companies could ask consumers for Aadhaar details for identification purposes.” said Amit More.


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