We Don't See How Aadhaar Can Prevent or Detect Bank Frauds, Says SC

New Delhi: At a time when massive bank frauds, involving names such as Nirav Modi and Vijay Mallya, are in the limelight, the Supreme Court on Thursday observed that Aadhaar cannot stop bank frauds.

The court disagreed with a submission made by Attorney General KK Venugopal that Aadhaar can check all bank frauds.

While the Centre's top law officer made this point to assert efficacy of the Aadhaar system, the judges on the Constitution Bench remarked that Aadhaar can do little to stop it.

"Aadhaar doesn't have anything to do with bank frauds...Aadhaar is not a solution for bank frauds," said the Bench.

The Attorney General’s argument was rebutted mostly by Justices AK Sikri and DY Chandrachud, who observed that Aadhaar may not be a solution to all the ills, and, in particular, Bank frauds.

"Here banks know the identity of fraudsters. It is not that identities are not known when loans etc are granted. But frauds take place because bank officials are hand-in-glove with the fraudster. Aadhaar can do little to stop it," said the judges.

Justice Chandrachud added that nothing in Aadhaar prevents individuals from carrying out a chain of commercial activities for series of transactions.

"We don't see how Aadhaar can prevent or detect bank frauds in such cases. We can understand when you talk about frauds in welfare schemes but in case of bank frauds, we don't see what Aadhaar can do," said the judge.

They also pointed out that although the Central government may project Aadhaar as an effective tool to bridge inequalities in the society but the fact of the matter remains that inequalities have only been on the rise. "There is no question of India having bridged the inequalities," commented Justice Sikri.

Both the judges also made a point that legitimacy of the purpose is one argument to make in defence of Aadhaar but the government will have to also satisfy the Bench on the issue of proportionality.

AG will resume his arguments post lunch.

The Bench is hearing a clutch of PILs that have challenged the validity of Aadhaar.