A five-judge constitution bench headed by Chief Justice Dipak Misra, hearing petitions challenging Aadhaar and its enabling 2016 law, also red-flagged certain provisions of the Prevention of Money Laundering Act (PMLA) and Rules made under it and asked the Centre how could bank accounts be suspended and then frozen if they are not linked to Aadhaar.
The bench also referred to the testimony of Facebook CEO Mark Zuckerberg before the US Congress to press home the point that technology was a powerful enabler of mass surveillance, which could even influence elections in a major democracy like the US.
"Can you deprive a person of his property (money)? Can a rule be made beyond the scope of the law? The consequence here leads to deprivation. One cannot withdraw his own money as the account is not linked... first, the account is suspended and then it may be blocked after six months. Can you do this," asked the bench, which also comprised Justices AK Sikri, AM Khanwilkar, DY Chandrachud and Ashok Bhushan.
The Prevention of Money Laundering Act's rule 9(4) has been challenged by the petitioners on the ground of proportionality, the top court said, adding "what is the need to make Aadhaar compulsory when there are other officially valid documents available."
Senior advocate Rakesh Dwivedi, appearing for the Unique Identification Authority of India (UIDAI) and the Gujarat government, initiated the submissions by sharing his experience during Emergency days and said he too had faced surveillance and intelligence officers used to keep a tab on public speeches made by persons against the authorities.
The governments of the day have been putting important persons and political opponents under surveillance and it has ample means to do that, he said.
"No government needs Aadhaar to surveil its own people. There are tools available to do this," he said, adding that for example, it can monitor bank accounts for unusual activities under a master circular.
The bench responded by saying that those days of Kharak Singh (who had moved Supreme Court against police surveillance long back) are gone and now data has massive power which can provide "a goldmine of information" for commercial exploitation by private entities.
"The point is that technology is a powerful enabler of mass surveillance," the bench said, adding that elections in one of the most powerful nations has been believed to have been influenced due to misuse of leaked data.
The bench referred to the ongoing testimony of Facebook CEO Mark Zuckerberg by the US lawmakers who accused him of failing to protect personal information of many Americans from alleged Russians's design to upset US Presidential polls.
Mr Dwivedi then said that UIDAI's technology cannot be compared with algorithms of Google and Facebook and moreover, section 33 of Aadhaar Act makes misuse of data punishable and the law is more robust and if there was any issue, it could be regarding its enforcement.
The counsel referred to the Aadhaar law and said the UIDAI had no power to analyse data at all and "I challenge the other side to show us the provision to that effect and if that power is there, then please strike that down".
The bench questioned UIDAI about the meta data and the lawyer replied with a hypothetical example. He said "suppose the Apollo Hospital seeks authentication of my Aadhaar number, UIDAI would authenticate without knowing as to which Apollo hospital I have visited and for what kind of treatment."
The bench said UIDAI may not be knowing the details, but there were possibilities of commercial misuse of the information at the end of the "requesting entity" and said at present, "we do not have a robust data protection law".
"You (UIDAI) control what you can control," the bench said, referring the misuse of data and meta data at the end of public and private entities which seek authentication of Aadhaar of citizens from UIDAI.
The bench gave the example that even judges in an African country can get the access to his or her chamber by using his finger prints, which are used only for the purpose of the entry and the problem was that such data was being stored at a central repository.
Earlier during the day, Additional Solicitor General Tushar Mehta, also representing UIDAI, referred to the PMLA and its Rules and said amendments were made considering the larger public interest.
The bench then referred to the Section 12(1) (c) of the PMLA and said that if at the time of opening bank accounts, identity documents, as per the existing norm, are being taken, then what was the need of mandatory seeding of accounts with Aadhaar.
It asked whether the centre can make non-seeding of accounts punishable through Rules.
"Rules become part of the law once passed by Parliament," Mr Mehta said, adding that the consequence like suspension of bank accounts fell under reasonable restrictions prescribed under Article 21 (right to life) of the Constitution.