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Madras HC accepts petition challenging mandatory Aadhaar linking for pension and PF

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The Madras High Court has accepted a petition that challenges a notification mandating linking of Aadhaar with Universal Account Number (UAN) for availing pension and provident fund benefits, according to The Wire. The petitioner, Elisha Ebenezer, a software engineer, challenged a notification dated January 4, 2017 “as void, defective and unconstitutional for being violative of Articles 14, 21 and 300A of the Constitution of India and further contrary to the principles laid down by the Supreme Court in KS Puttaswamy (Retired) v. Union of India (Aadhaar case)”. A division bench of Justices S Manikumar and Subramonium Prasad have directed the Employee Provident Fund Organisation to respond.

What the petition says

It says that initially, the EPFO (Employees’ Provident Fund Organisation) issued a notification that mandated linking EPF accounts with pensioners’ Aadhaar. Also, under the Pension Scheme, Aadhaar was required for providing a “digital life certificate” to pensioners under the Jeevan Praman Scheme of the government. Then, a circular in April 2015 said that the Aadhaar number of employees should be recorded to ensure the implementation of this scheme for pensioners. Following that, an interim order passed in October 2015 by the Supreme Court allowed the EPFO to continue recording the Aadhaar of employees for this purpose. The petition recounts that even though the constitutional validity of Aadhaar [Aadhaar (Targeted Delivery of Financial and other Subsidies, Benefits and Services) Act, 2016] was pending before the SC, the Ministry of Labour and Employment issued a notification in January 2017 “making it mandatory for members of the Employee’s Pension Scheme to furnish their Aadhaar number to even continue their membership”. According to the petition, Clause 1(1) of this notification reads:

“Members and pensioners of the Employees’ Pension Scheme desirous of continuing to avail pension and membership to the Employees’ Pension Scheme by availing the Central Government’s contribution and subsidy under the said Scheme, are hereby required to furnish proof of the possession of Aadhaar number or undergo Aadhaar authentication as per the procedure laid down by the Employees Provident Fund Organisation for better and hassle free identification through Aadhaar.”

‘Violative of the Aadhaar Act’

On the basis of the January 2017 notification, the EPFO notified its commissioners several times to “ensure the seeding of Aadhaar with the UAN of every pension member”. The petition however, said that the circular is “violative of the voluntary character of the Aadhar enrolment process as provided in the Aadhar [sic] Act”.

“Since every person who is a member of the Provident Fund is automatically a member of the Pension Fund, in effect, every employee enrolled with the Provident Fund was required to seed Aadhaar with their UAN.” [emphasis ours]

It further claims that that this notification “altered the manner” in which Aadhaar was used by the EPFO because before this notification, Aadhaar was limited to members who had already started receiving their pensions and needed to provide Life Certificates each year so that they could continue receiving their pension. According to the petitioner:

“After the notification, all members of the Pension Scheme would have to seed their Aadhaar with their UAN just to continue their membership in the Pension Scheme. It is to be noted that there is no option provided to opt out of the Pension Scheme either in the Act or the Rules. Therefore, if an employee is to get the benefit of their compulsory membership of the Pension Scheme, they have to link UAN with their Aadhaar.” [emphasis ours]

The petition also cites the Puttaswamy verdict, stating that despite upholding the constitutional validity of the Aadhaar Act, the majority judgment by the SC restricted the use of Aadhaar, especially for matters like pension. The petition argued:

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“I and II Respondent [government and EPFO respectively] can no longer mandate compulsory linking of Aadhaar with UAN or even Aadhaar based life certificates for the receipt of pension. The Hon’ble Supreme Court has clearly held that for earned benefits, Section 7 of the Aadhaar Act would not apply.”

The petition says that linking Aadhaar with UAN “is not proportional to the intended prevention of diversion of subsidy”:

“The present requirement of linking UAN with Aadhaar interferes with my right to operate and deal with my Provident Fund, which has no government contribution. It also prevents me from saving for my old age or access the amounts saved till date in my pension account.”

‘Violation of property rights’

Arguing that employees’ pension fund includes regular contributions from her/his salary, the petition says these are “deferred wages”, and depriving pensioners of their pension due to non-linkage of Aadhaar and UAN would be a violation of the right to property under Article 300A of the Constitution. It also highlights portions of the SSC verdict on Aadhaar, stating that Aadhaar linkage is to be mandatory only for “targeted benefits”, and argues that such mandatory linkage “manifestly arbitrary”.

‘Unreasonable state compulsion’

The petition also calls the mandatory linkage of Aadhaar with UAN as “unreasonable state compulsion” which was “held to be illegal at page 479a of the Aadhaar judgment”. It notes that this is a violation of Article 21 of the Constitution.

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