Linking Of Employees' UAN With Aadhar: Delhi High Court Extends Deadline For Establishments & Industries Till November 30

Linkage of employees' Aadhaar cards with their UAN (Universal Account Number) was made mandatory by the EPFO in June 2020.

In a petition filed by the Association of Industries & Institutions challenging the said order, Justice Pratibha M. Singh has passed the following interim directions:

• Insofar as the employees qua whom Aadhaar numbers have already been provided to the EPFO are concerned, the provident fund shall be permitted to be deposited by the employers without awaiting verification from the Unique Identification Authority of India. The process of verification shall however continue;
• Insofar as those persons for whom the Aadhaar number seeding is yet to take place are concerned, the date for completing the seeding and verification shall stand extended till 30th November, 2021.
• In the meantime, employers shall be permitted to deposit the provident funds in respect of employees for whom seeding has not taken place and no coercive measures shall be taken against them for non-seeding of Aadhaar numbers with UANs.
• During this period, the EPFO would appoint a Grievance Redressal Officer who can be contacted by the Petitioner's members or any other employer, to ensure that the deposits are not delayed and are made in a timely manner, in terms of the provisions of the Act and the Scheme.

It has further clarified that insofar as the difficulties which were faced by the employers during the period from 1st June, 2021 to 15th June, 2021 during which period the EPFO's software was amended, no coercive measures shall be taken against the employers for the time being in respect of such belated payments.

Arguments

The Petitioner had argued that mandatory linkage was causing hardship for employees, who do not have Aadhaar card and employers are being forced to not employ those people, who do not have proper Aadhaar card.

It was stated that mismatch between the Aadhaar database and the EPFO database is another impediment in linking the two.

Other grounds urged by the Petitioner are as follows:

• EPFO portal was activated on 1st June, 2021 and ECRs were generated only if the seeding was done with the Aadhaar. However, if the ECR is not generated, the employer would be liable to pay various penalties and suffer consequences of non-deposit of dues
• Migrant workers who have moved from cities back to their villages or have joined back the employer after the lock down period ended, are unable to arrange for supporting documents for seeding of Aadhaar number with the UAN under the EPFO.
• Invocation of Section 142, for making seeding mandatory, is itself wholly misplaced as the said provision can be used only for the benefits "under this Code or rules, regulations or schemes made or framed thereunder". When the Code itself is not notified, the issuance of the impugned circular, under Section 142, is legally unsustainable.

Counsel appearing for EPFO on the other hand argued that the EPF Act is for the benefit of employees and not a single employee has come forward before this Court challenging the seeding. The employer is merely a conduit.

He added that restrictions being imposed for seeding with Aadhaar are in the interest of the employees themselves, as this ensures that the benefits under the scheme of the EPF Act are extended purely to the employees and are not in any manner diverted and pilfered by employers or any unverified persons

Findings

The Court observed that as per EPFO's own admission, there are 29,26,479 persons whose contributions have been received in the last one year but whose UANs are yet to be seeded with their Aadhaar

"This is a substantial number of persons," said the Court.

It further observed that it cannot ignore the fact that mismatch between the Aadhaar data and the UAN data would require time to be corrected since the names of persons, their date of birth, addresses, phone numbers, etc. would need to be properly verified to ensure that the data matches.

"The non-deposit of provident fund or the belated deposit of provident fund has enormous consequences for both the employees as well as the employers," it observed.

Accordingly, it passed the aforementioned interim directions. However, it is made clear that these directions are subject to adjudication of the following legal issues:

• Whether Section 142 of the Code on Social Security, 2020 can form the basis of the seeding of the UAN with Aadhaar?
• Whether mandatory seeding of UAN with Aadhaar is permissible considering the various judgments of the Supreme Court culminating in K.S. Puttaswamy (Retd) & Anr. v. Union of India & Ors.
• Whether seeding of UAN with Aadhaar achieves the objectives which are being stated by the EPFO i.e., to plug leakages and to ensure that the welfare schemes properly reach the concerned population.

The Court has now directed EPFO to place on record the complete data relating to the verification/seeding of Aadhaar at least one week before the next date of hearing, i.e., November 10.

Advocates Sudhir Kumar Gupta and Puneet Gupta appeared for Petitioner. Advocates Siddharth and Amit Kumar for Respondent.

Case Title: Association Of Industries And Institutions v. Union of India & Anr.

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