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USE OF AADHAR DATA BY THE BANKS AND NBFC’S  From the beginning of June 17, the Aadhar and Other Laws (Amendment)Bill, 2019 has been introduced in the ensuring session of Parliament.AMENDMENTAs per the new Aadhar Amendment Act, You can now use your Aadhaar numbers on a voluntary basis to comply with the regulator's Know-Your-Customer (KYC) norms. The Reserve Bank of India introduced important amendments to the Master Direction on KYC along with updating its list of documents eligible for identification of individuals.To understand the customers and financial dealings better, the KYC details fundamentally enables banks and other regulated entities including financial institutions, payment system providers, NBFC’s, prepayment instrument issuers and agents of the Money Transfer Service Scheme. This eventually helps them in managing their risks better.In end-February, the Union Cabinet had approved the promulgation of Aadhaar and Other Laws (Amendment) Ordinance, 2019, to push through the above amendments. The Ordinance, which allows offline verification' of an individual's identity, without authentication, through modes specified by the Unique Identification Authority of India (UIDAI), among others, got the presidential nod in March. It further allows the voluntary use of the 12-digit unique number as identity proof for opening bank account or procuring mobile phone connection and gives minors an option to exit from the Aadhaar programme on attaining 18 years of age. EFFECTS The RBI notification reads that the banks have now been permitted to carry out Aadhar authentication/offline- verification of an individual who voluntarily uses Aadhar number for identification purpose. However, that is subject to the condition that this is submitted as issued by the Unique Identification Authority of India (UIDAI), the Aadhaar-issuing body.Further changes regarding the norms of KYC is that all non-individual customers, such as partnership firms and companies, have to compulsorily submit the Permanent Account Number (PAN) besides the other entity- related documents. The notification also reads that the PAN/form No. 60 of the authorised signatories shall also be obtained adding to that “For existing bank account holders, PAN or Form No 60 is to be submitted within such timelines as notified by the Government, failing to which account shall be subjected to temporary ceasing till PAN or Form No 60 is submitted”. Moreover, the regulated entities have to give the customer an accessible notice and a reasonable opportunity to be heard before blocking an account.However, in any case wildcat use of identity information by a requesting entity or offline verification seeking entity would be punishable with imprisonment up to three years or fine which may extend to Rs 10,000 or in case of a company the fine may extend to Rs 1 lakh. Penalisation for unauthorized access to the Central Identities Data Repository and also data tampering is proposed to be extended to 10 years each from the present three years. SUPREME COURT’S VERDICT ON AADHARThe Supreme Court has delivered its much awaited judgment in the Aadhaar case in September 2018. The majority (comprising Dipak Misra ex-CJI, AK Sikri J., AM Khanwilkar, J. and Ashok Bhushan J.) upheld the constitutionality of the Aadhaar Act, 2016 and the Aadhaar project. They list down a few provisions of the Aadhar act like those on the disclosure of personal information, cognizance of offence and use of Aadhar by private entities. A dissenting opinion invalidating the entire Aadhar scheme along with the act was delivered by DY. Chandrachud J. Section 33(1) of the Aadhar Act prohibits the revelation of information which includes identity information or authentication records, provided it is by an order of a court not inferior to that of a District Judge. The majority opinion read down this provisions stating that an individual, whose information is sought to be released, shall be afforded an opportunity of hearing the right to challenge and such order was passed by approaching the higher court. The impacted individual would also be able to object to the disclosure of information on accepted grounds in law, including Article 20(3) and Article 21 of the Constitution.Section 47 of the Aadhaar Act notoriously provided for the cognizance of offence under the Act only on a complaint made by the UIDAI or any officer or person authorised by it. The majority opinion made it clear that it needs to be amended to include within its scope the provision of filing of such a complaint by an individual whose rights have been violated by under the Aadhaar Act. Section 57 permitted the use of the Aadhaar ecosystem for establishing the identity of an individual ‘for any purpose’. Well, all such provisions was read down to intend that such a purpose has to be backed by law. Moreover, any of such law if ever made would be subject to judicial scrutiny. Further, to minimize any potential misuse of stored data, the court struck down section 27(1) of the Aadhaar Act which allowed storage of authentication data for five years. Now the court has mandated the deletion of such data after six months. It also urged the government to bring in a robust data protection law along the lines of the recommendations made by the Justice BN Srikrishna Committee report.CONCLUSIONAadhaar increasingly resembles a good idea marred by terrible execution. The rush to expand enrolment had led to all sorts of franchisees being roped in to enroll people and indiscriminate authorization of agencies to collect data and authenticate identity by using the Unique Identification Authority of India (UIDAI) database — that would certainly be the most charitable explanation for the incidents of deviations from ideal Aadhaar-related practice that generally get reported. UIDAI says that Aadhar Data which includes biometric is safe. Whereas the reality says that it is just the biometric data that can be described as not having been breached. Does the authority  intends to say that accessing other details relating to name, gender, address, date of birth and phone number from the Aadhaar database is proof of Aadhaar security? Last year, an incident came to light of local storage of the biometric data accessed from the Aadhaar database for the purpose of identification. Data security is not just a question of the technical soundness of the electronic fortification built around a database. It is also, and for practical purposes, primarily, a question of the protocols surrounding usage of the database and human usage of those protocols. The authority seems to appear suffering from serious lapses on the latter count. Moreover, the absence of a stringent data protection law further raises the suspicion of misuse of citizen’s data. This translates to largely unchecked collection of data which further emboldens groups who have their prying eyes on this massive database.   

In my previous blogs, I have explained about MOU [better known as MEMORANDUM OF UNDERSTANDING] and how does it work. Also, that a Memorandum of Understanding or “MOU” is used at a variety of places starting from business, divorce, partnership firms, companies, familial relationships, government organisations, between Foreign and Indian Nationals etc. It is the general notion that a “MOU” is non biding and has got no legal validity in India. In my present blog, I shall discuss about another unanswered question which have had contrasting views and try to discuss each aspect and then conclude and comment upon the validity of “MOU” in India. The basic stressing areas shall include the following1.     Introduction to the validity of “MOU”2.     Legal position of “MOU” in Indian Law3.     Enforceability of “MOU”a.      In General b.     International “MOU”c.      “MOU” between two countries 4.     Landmark Judgments 5.     Personal Opinion6.     Conclusion INTRODUCTION TO THE VALIDITY OF “MOU”A “MOU” is generally said to be a ‘non-binding agreement’ which does not have any legal enforceability and thus acts merely as a ‘letter of intent’ between two parties who mutually agree or disagree to do or not to something and on the basis of which another legally binding instrument is executed keeping all the previous understandings outlined in such “MOU” and giving it effect. As such we can decipher two things 1.     A “MOU” is merely a statement of understanding between two or more parties which when made has no enforceability in the eyes of law as such an agreement has no intention to create a legal bond between such persons. As a result of which, if in case there is a breach of such “MOU” there is no relief. 2.     It is a well-established rule of law that – “All contracts are agreements but, all agreements are not contracts”. This is so because for a contract to be valid it needs to fulfil all the essential ingredients mentioned u/s 10 of The Indian Contract Act, 1872. One of which is – “an intention to create legal relationship between the parties to such contract”. However, now the question arises that what if A “MOU” is drafted in such a manner that is fulfills all the ingredients of section 10??? Can such a “MOU” be a valid contract and be legally enforceable in a court of law???Can such a “MOU” compel the other person to oblige to the same and the breach of such “MOU” will be treated similar to that of a breach of contract??? It is also true that ‘Nomenclature’ of a contract or an agreement is not an index to determine the validity or invalidity of the same. Stating an agreement to be a “MOU” does not explicitly denote that such contract is non-binding.LEGAL POSITION OF “MOU” IN INDIAN LAWAs mentioned above, now that we can understand the fact that it is not necessary for a “MOU” to be non-binding. The question of whether such a “MOU” is legally binding or not depends upon the intent of the parties to create a legal relationship to that extent. Therefore, we can say that the legal position of “MOU” in Indian Law depends upon the intent by which such a document is made and thus such an intention of creating a legal relationship by way of such a “MOU” plays a pivotal role in determining the legal position of the same. Also, it must be noted that the construction of such “MOU” holds primary importance in setting the legality and the construction of words play a pivotal role in the same. If the parties intend to create a legal binding effect to a “MOU” then,a.      The construction of the words shall be of such nature ü Use of the word ‘shall’ instead of ‘may’ü ‘would be’ instead of ‘can be’ü ‘should be’ instead of ‘might be’ So, on and so forth. The use of such words tries to create a legal relationship by making the other person liable to do a certain act. The words shall, would, should, instead of may, can, might are of a superior nature and bind the acts which follow after such words. b.     “legal binding clause”ü A “MOU” would be legally binding if the parties thereto agree to insert any such clause, the literal meaning upon reading of which would mean that such a “MOU” intends to create a legal relationship between the parties to the contract and that the breach of such provisions would mean the same as a breach of a contract under the Indian Contract Act, 1872. c.      In consistency with section 10 of the Indian Contract Act, 1872ü If a “MOU” fulfills all the conditions laid down u/s 10 of the Indian Contract Act, 1872 then, such a “MOU” should be treated as a contract as defined in section 2(h) of The Indian Contract Act, 1872. Hence, giving it a legal force. d.     Insertion of a “dispute resolution clause”ü If a “MOU” inserts a dispute resolution clause, then, it binds the parties to perform their obligations as mentioned or specified in such “MOU”. Non performance of which will lead to breach/dispute for which the “MOU” in itself shall contain a clause which shall provide the method in which such dispute shall be resolved in good faith and in an amicable manner. Thus, from the above we can say that – The principle legislation governing “MOU” in India is dealt with the Indian Contract Act, 1872. Also, in order to make a “MOU” legally enforceable it must have a clear intention to bind the parties to a contract whereby both come under specific obligation to perform their part of the duties. ENFORCEABILITY OF “MOU”As has been discussed earlier in this blog, the enforceability of a “MOU” depends upon the principle governing legislation. I.e. The Indian Contract Act, 1872. In light of this, the enforceability of “MOU” can be divided into 3 categories. a.     In General b.     International “MOU”c.      “MOU” between two countries IN GENERALIn the general sense, the enforceability of a “MOU” can be divided into two categories. They are: 1.     When it fulfills the conditions of a Contract as per The Indian Contract Act, 1872.ü If the “MOU” satisfies the conditions laid down u/s 10 of The Indian Contract Act, 1872 then, the performance of such obligations laid down in the “MOU” can be enforced vide The Specific Relief Act, 1963. ü However, such a relief shall only be granted under The Specific Relief Act, 1963 when, the damage caused to the aggrieved party by way of non-performance of obligation cannot be ascertained and compensation for in lieu of such damages fails to become an appropriate remedy. Sen Mukherjee and Co vs. Chhaya Banarjee [AIR 1998 / CAL 252]2.     When it does not fulfill the conditions of a Contract as per The Indian Contract Act, 1872.ü In certain cases, the courts may find that the “MOU” lacks certain requirements to form a valid Contracts and hence the same cannot be enforced. ü However, even in the above circumstance a person has the right to approach to the court on the basis of: Ø Principles of promissory estoppel     &Ø EquityMotilal Padampat Sugar Mills Co. Ltd. vs. State of Uttar Pradesh   [AIR 1979, SC 621]ü Even beyond that, a “MOU” can be held as enforceable merely on the grounds of equity and on the basis of the general principles of equity irrespective of whatever deficiency it holds is still held to be a contract. Subimalchandra Chatterji vs. Radhanath Ray [AIR 1934, CAL 235]INTERNATIONAL “MOU”ü Any International “MOU” is executed in the form of a treaty or a covenant which is then registered under the ‘United Nations Treaty Collection’.ü These International “MOU” should be registered and by doing so one avoids political diplomacy and secrecy.ü The enforceability of a National or International “MOU” does not differ. In both the cases, the enforceability is dependent upon the intention so conveyed through the construction of such “MOU” ü The title of such International “MOU” nowhere mentions whether it is a legally binding document or whether it is non-binding document. It is prudent to mention here that, The International Court of Justice in the year 1994, July 1st [Quatar vs. Bahrain] has expressed their views upon the legality of “MOU” and had also provided various standards to be maintained for the legality of such “MOU”INTERNATIONAL “MOU” BETWEEN COUNTRIESü As it has already been mentioned and is clear now that no “MOU” is legally binding without the clear intention of it making it as binding. ü Nevertheless, there are “MOU” between countries for a variety of reasons and some of them can be as follows. The “MOU” entered between two countries can have the object and purpose of: - 1.     Exchanging resources between themselves 2.     Exchanging technology between themselves 3.     Student exchange programs4.     Exchange of technical support 5.     Military Support 6.     Understanding of peace 7.     Understanding of trade 8.     Understanding of allies          ETCü The above list though not exhaustive, mentions some of the reasons why two countries enter into a “MOU” and act accordingly. ü Also, every “MOU” must not be formally designed and executed, but those which have been formally designed and executed must be registered and include the exchange of some monetary value with the same. LANDMARK JUDGMENTSGiven below are a list of landmark judgments which have been held to be useful in deciding the legality or non-legality of “MOU” CASE LAWS WHERE “MOU” HAS BEEN DECLARED AS A LEGALLY BINDING DOCUMENT 1.     BrikramKishore Parida v. Penudhar Jena2.     Structural Waterproofing & Ors. v. Mr. Amit Gupta3.     Jai Beverages Pvt. Ltd. v. State of Jammu and Kashmir and Ors4.     Millenia Realtors Private Limited v. SJR Infrastructure Private Limited 5.     Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh6.     M/s. Nanak Builders and Investors Pvt. Ltd. v Vinod Kumar Alag7.     Kollipara Sriramulu vs. T. Aswathanarayana &OrsCASE LAWS WHERE “MOU” HAS NOT BEEN DECLARED AS A LEGALLY BINDING DOCUMENT 1.     Monnet Ispat and Energy Ltd. v. Union of India and Ors2.     Jyoti Brothers v. Shree Durga Mining Co PERSONAL OPINIONAfter going through all the above details, facts, and decisions one can conclusively conclude that a “MOU” is generally a non-binding agreement made for the purpose of making another agreement which shall rely upon the principles of such “MOU” and then carter them into a legally binding agreement. Going by the same logic it is stated by the courts that any agreement which is made for the purpose of making another agreement cannot be given the legal status of an agreement. So, to say, an agreement for an agreement is not enforceable. However, now the question arises that – if a “MOU” which is said to be an agreement on the basis of which another agreement is made which then becomes a contract and the breach of such contract shall be legally bending but not a “MOU”. Then, would it be right to say that 1.     A pre-mortgage agreement 2.     A pre-sale agreement 3.     A pre-lease agreement           ETCOr, any such agreement which has the same purpose that which of a “MOU” merely having different names as mentioned above shall also come under the same purview and shall not be legally binding? To which I can deduce the following: - 1.     Mere heading of any agreement shall not be used as an index to come to the decision of its legality or illegality. The contents of the same shall hold value and the agreement in full shall be taken into consideration with respect to equity and principles of promissory estoppel. 2.     The construction and use of words in such agreement shall also be taken into consideration which will further help the reader to analyse the same and conclude whether such agreement was made with an intention to comply with or was it made just for namesake and was merely a promise. 3.     Insertion of various clauses like “legal binding” “indemnification” “damage” “breach” which shall show the clear intention to make such agreement legally binding would play a pivotal role. 4.     A “MOU” is said to be an agreement which needs to fulfil the valid requisites of a contract u/s 10 of The Indian Contract Act, 1872 as it is the guiding principle legislation. Hence it can be said that if any agreement [irrespective of its nomenclature] fulfils the conditions as laid down u/s 10 of such act shall be deemed to be legal and enforceable. CONCLUSION From the above we can finally come to the conclusion that: - 1.     Any agreement to be a contract shall fulfil the provisions of section 10 of The Indian Contract Act, 1872. 2.     An agreement may or may not be legally binding depending upon the intention between the parties who enter into a contract. 3.     In its generic definition a “MOU” is defined to be a non-binding document, however, if there lies a clear intention of compliance then such “MOU” shall be binding. 4.     It is a well-established rule of law that if a “MOU” fulfils all the conditions laid down u/s 10 of The Indian Contract Act, 1872 then, such a “MOU” shall be legally binding. 5.     Apart from everything a “MOU” can be enforceable in spite of deficiencies on the grounds of equity and promissory estoppel as held in the case of Subimalchandra Chatterji vs. Radhanath Ray [AIR 1934, CAL 235].