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Aadhar Judgement-Its Implication on Indian Telecom Industry

Aadhaar scheme of Indian Government was designed in the year 2006 and introduced in our country in the year 2009 with the functioning of an Central Authority namely UIDAI ( Unique Identification Authority of India). Under this Project till date between 1 to 2 billion people of India enrolled themselves . Due to much aggressiveness by Government and its agencies its use has been widened day by day by providing many benefits to its users.

"Aadhaar" is India's universal identity project that seeks to give every Indian resident a method & means to identify themselves for various purposes. To avail this, residents signed up to obtain a 12-digit identification number (Aadhaar Number) upon submission of certain demographic and biometric details which was de-duplicated and stored in a database (CIDR). The organization/Authority seeking identification could authenticate the individual's details by querying the CIDR (Aadhaar Authentication). To grant statutory authority to the Aadhaar project, the Indian Parliament in 2016 enacted the "Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 (Aadhaar Act)".

Justice K.S. Puttaswamy (Retd.) and Mr. Pravesh Khanna, initially challenged the Aadhaar Scheme of Government by filing Writ Petition (Civil) No. 494 of 2012. In 2012 Aadhaar scheme was not a Law . In the writ petition the scheme was primarily challenged on the ground that it violates fundamental rights of the billions and billions of citizens of India, namely, right to privacy falling under Article 21 of the Constitution of India. Afterward other parties also joined in the same Litigation. So many orders were passed in this petition from time to time by the Supreme Court of India. In 2016, with the passing of the Aadhaar Act, (The Aadhaar (Targeted Delivery of Financial And Other Subsidies, Benefits And Services) ACT, 2016) these petitioners filed another writ petition challenging the ultra vires of the Aadhaar Act.

Re-verification Circular of DoT:
On 23rd March,2017 Department of Telecommunication released a Circular directing all Telecom Companies to Re-verify all existing mobile subscribers through Aadhaar based E-KYC process. This Circular also challenged in this matter. It was argued by the petitioners that such a linking of the SIM card with Aadhaar number violates their right to privacy.

Section- 7 & 57 of the Aadhaar Act
Section 7 says that the Centre or a State may use Aadhaar card to establish the identity of a person to provide him subsidy, benefit or service for which the expenditure is incurred from the Consolidated Fund.

Section 57 of the Aadhaar Act allowed private parties to authenticate the identity of individuals who intended to use their services using the Aadhaar Authentication process. Under this section, private parties could carry out Aadhaar Authentication, by means of contract for any purpose that they saw fit.

Apart from other provisions the provisions of Section 7 & 57 was under challenge in this present Writ Matter.

Final Verdict of the Apex Court
While delivering the final verdict on 26th Sept, 2018 Justice A K Sikri, speaking for the majority observed that "not only the circular of 23rd March, 2017 lacks backing of a law, it fails to meet the requirement of proportionality as well. It does not meet 'necessity stage' and 'balancing stage' tests to check the primary menace which is in the mind of the respondent authorities. There can be other appropriate laws and less intrusive alternatives. For the misuse of such SIM cards by a handful of persons, the entire population cannot be subjected to intrusion into their private lives. It also impinges upon the voluntary nature of the Aadhaar scheme. We find it to be disproportionate and unreasonable state compulsion. It is to be borne in mind that every individual/resident subscribing to a SIM card does not enjoy the subsidy benefit or services mentioned in Section 7 of the Act."

With this observation Honorable Supreme Court declared the Circular of Department of Telecommunication dated March 23, 2017 as unconstitutional.

Takeaway relating to Telecom Company:
Ø People now no longer require linking Aadhaar card with their mobile number.
Ø Private and corporate entities cannot access data; contractual provisions cannot ask for Aadhaar data.

Implications on Telecom Industry:
Private Telecom operators, which used Aadhaar authentication as part of their electronic infrastructure, have been affected as these companies relied on the biometric database for doing e-KYC (electronic-know your customer) since the 23rd March,2017 Circular of Department of Telecommunication.

The verdict will force private sector companies to move from an online authentication model to an offline one which would be both expensive and time consuming than the ekyc model. It will also increase the risk of Penalty to operators and also create hurdles in crime detection.

I) Increase in Cost
The Offline process required a lots infrastructure, Manpower and Man-hour. Every company need to appoint lots of manpower for supervising and finalizing the physical EKYC by offline process and procedure along with infrastructures like Printing of Customer Application Forms ,managing ware houses and other allied infrastructure for safe storage of CAF, machineries for scanning and retrieval. The return to paper-based processes would result in wastage of existing investments and infrastructure also. With Aadhaar, the cost was approximately Rs 30 per new subscriber acquisition. But with verification going back to old ways, the cost of acquisition of a customer with compliance is expected to jump to Rs 250-300.Hence it is expected that the cost will be 10 times more.

II) Delay in Customer Delight
In the offline model of authentication, telecom companies have to collect paper forms with signature, photographs, transporting to verification center and call up the customer to cross-verify submitted details, which ideally takes around 24-48 hours to verify a customer, which may lead to delays in getting phone connections. The delayed and cumbersome process of authentication might discourage customers to avail such services.

III) Difficult in Crime Detection
Previously there have been numerous instances where non-verification of SIM cards have posed serious security threats. Having regard to the same, Honrable Apex Court given direction in Lokniti Foundation v. Union of India & Anr. for the linking of SIM card with Aadhaar and it is pursuant to those directions that the Telecom Regulatory Authority of India (TRAI) recommended for e-verification process.

Now after this judgment, there are apprehensions from various quarters that again offline verification process will encourage criminals, antisocial elements and terrorists to mislead investigating agencies by various methods as we all witness earlier.

IV) Increase in risk of Penalty
The greatest mistake is to imagine that human never err. Error is not a fault of our knowledge, but a mistake of our judgment giving assent to that which is not true. Due to so many reasons there are chances of error in authentication and verification of physical Customer Application Forms by the employees of Telecom Companies. No company can assure for 100 percent error free physical verification process through its employees or vendors by whatever method they may apply, which may lead to penalty by the regulator, which in turn affect the cost of the companies.

The judgement of the Supreme Court has reduced the Aadhaar scheme to a method of identification that can be used largely for State related functions. There is a significant lack of clarity as to many aspects of the judgment. Telecom operators are also confused about the Supreme Court's directive that authentication records obtained via Aadhaar that are already with them should not be stored beyond six months. Telecom operators need clarity on what documents need to be destroyed. All the telcos store the KYC details which have the subscriber's address and identity proof. Lately, they are linked to Aadhaar for easier verification. But now does this mean telcos have to destroy just the Aadhaar number or the documents linked to it?" Clarification is also needed on the methods that can be used to destroy the data.

There is every apprehension that the subscribers may ask to delink their Aadhaar number with the mobile numbers in the days ahead.

In the coming weeks and months, the Government is likely to issue orders and directions that will provide greater clarity on all these various issues. For now, the future of the entire Aadhaar project remains uncertain.

Recently Apex Advisory Council for Telecom in India (ACT) suggested for minor modifications to the DoT guidelines...allowing consumer application form (CAF) to be embedded with photograph and scanned images thereby digitize the end to end process for on boarding of new subscribers by making it completely paperless.

Hope Government will understand the ground reality arising out of compliance to the Apex Court's Judgment and come forward for a solution and support to the industry, which has been working & supporting tirelessly for a digital India.

It remains to be seen as to how the Aadhaar Act will be amended to address these practical problems keeping the spirit of the judgment intact. If the Parliament decides to come up with a new legislation to overcome certain parts of the judgment, such move is likely to be hotly contested. Even if enacted, the law will be subject to judicial scrutiny. 

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