The Bombay High Court (HC) has ordered Yes Bank to pay Rs50,000 in compensation to a private company after it wrongfully insisted on Aadhaar as a mandatory document for opening a bank account—despite the Supreme Court having struck down such a requirement.
The division bench comprising justice MS Sonak and justice Jitendra Jain ruled in favour of Microfibers Pvt Ltd (petitioner) which had filed a writ petition in 2018 after Yes Bank refused to open a bank account without submission of an Aadhaar. The court observed that the Bank’s insistence on Aadhaar between September 2018 and January 2019 was unjustified and contrary to the apex court’s ruling in justice KS Puttaswamy (Retd) vs Union of India.
In its
order on 26 June 2025, the bench says, "...we agree with the counsel for the petitioner that there was no justification for not opening the bank account after 26 September 2018. The bank account was ultimately opened in January 2019. Therefore, for a period of three to four months, the petitioner was unable to rent out the premises."
While the HC found the claim of Rs10 lakh to be exaggerated, it acknowledged the hardship caused by Yes Bank’s failure to act promptly following the Supreme Court’s verdict in September 2018.
"In a matter of this nature, we would have ordinarily relegated the petitioner to the alternate remedy. But the Rule was issued on the prayer for compensation in 2018. The counsel pointed out that the petitioner does not undertake any business as such, and the renting of the only premises held by the Company provided some relief to the 84-year-old surviving director and her unmarried daughter. Considering these peculiar circumstances, we do not relegate the petitioner to the ordinary remedies," the HC says.
Microfibers argued that due to Yes Bank’s refusal, it was unable to rent out its only commercial premises in Mumbai for nearly a year, resulting in a loss of income. The company claimed damages of Rs10 lakh, asserting that the founder-director had passed away and the surviving family—an 84-year-old widow and an unmarried daughter—were financially dependent on the rental income from the premises.
The Court further took into account that, despite its earlier order in November 2018 allowing the Bank to respond to the compensation claim, Yes Bank failed to file any reply. “In a matter of this nature, we would have ordinarily relegated the petitioner to alternate remedies. But given the facts, the age of the surviving director, and the circumstances, we are not doing so,” the bench held.
The HC directed Yes Bank to pay Rs50,000 to the petitioner within eight weeks from the date a copy of the order is served on the Bank. The matter was disposed with no additional costs.
The ruling serves as a strong reminder to banks and financial institutions to comply strictly with constitutional safeguards and Supreme Court directions concerning the use of Aadhaar, particularly where it is not legally mandated.
In April 2025, taking a serious note of verified workers not getting paid due to not linking their bank accounts with Aadhaar, the Supreme Court directed the Delhi government to explain which law says bank accounts cannot be operated without Aadhaar.
In an order on 2 April 2025, a bench of justice Abhay Oka and justice Ujjal Bhuyan questioned the Delhi government regarding not paying subsistence allowance to 5,907 eligible workers affected by the graded response action plan (GRAP) restrictions since their bank accounts were not linked with Aadhaar.
As per the Prevention of Money-laundering (Maintenance of Records) Third Amendment Rules, 2019, if a citizen wishes to receive any benefit or subsidy under any scheme notified under Section 7 of the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016 (18 of 2016), it is mandatory to submit Aadhaar number to the bank.
On 26 September 2018, the Supreme Court declared Section 57 of the Aadhaar Act unconstitutional and clarified that bank account-holders, e-wallet or mobile wallet users and mobile subscribers are no longer required to use or link their Aadhaar number with these services.
The apex court clearly ruled that a person or account-holder cannot be forced to link his/ her bank account/s with Aadhaar. "This linking is made compulsory not only for opening a new bank account but even for existing bank accounts with a stipulation that if the same is not done then the account would be deactivated, with the result that the holder of the account would not be entitled to operate the bank account till the time seeding of the bank account with Aadhaar is done. This amounts to depriving a person of his property. We find that this move of mandatory linking of Aadhaar with bank account does not satisfy the test of proportionality," the SC had said. (
Read: Supreme Court Upholds Aadhaar; Says Private Entities, Including Banks, Mobile Operators Cannot Demand Aadhaar)
(Writ Petition No. 1706 of 2018 Date: 26 June 2025)
2) As far as I know, companies do not have Aadhar.