1. Factual Background and Procedural History
The petitioner, Microfibers Pvt. Ltd., owned premises in Mumbai but faced considerable hardship in leasing the property due to the non-availability of a corporate bank account. In January 2018, the petitioner approached Yes Bank Ltd. to open a current account. The bank, by communication dated 24–26 April 2018, refused to process the application, citing the mandatory requirement of an Aadhaar Card.
The petitioner contested this stance, drawing attention to interim orders of the Supreme Court in Justice K.S. Puttaswamy (Retd.) v. Union of India (Writ Petition (C) No. 494 of 2012), which had restrained mandatory enforcement of Aadhaar for non-subsidy-based services. Despite this, the bank persisted with its refusal, compelling the petitioner to file Writ Petition No. 1706 of 2018 before the Bombay High Court in June 2018.
During the proceedings, the bank filed a reply but later, on 29 November 2018, made a statement before a coordinate bench (Dharmadhikari & Kotwal, JJ.) that after the Supreme Court’s final decision in Justice Puttaswamy (26 September 2018), it no longer insisted on Aadhaar for bank account openings. Consequently, the court directed that the petitioner’s account be opened without the Aadhaar requirement and issued Rule on damages.
Despite this order, Yes Bank failed to file a reply regarding the compensation claim. The petitioner contended that the refusal caused rental losses between January 2018 and January 2019, estimating damages at ₹10 lakhs. On 26 June 2025, the Division Bench of M.S. Sonak and Jitendra Jain, JJ., delivered the present judgment on the compensation issue.
2. Identification of Legal Issues
The High Court addressed the following primary issues:
- Whether the insistence on an Aadhaar Card for opening a bank account in 2018–2019 was legally justified post-Justice Puttaswamy judgment.
- Whether the petitioner was entitled to compensation for the delay caused by the bank’s unlawful insistence on Aadhaar.
- To what extent can a writ court grant monetary relief under Article 226 in cases involving administrative or procedural illegality by private banks.
3. Arguments of the Parties
Petitioner’s Submissions
- The bank’s insistence on Aadhaar was contrary to interim and final orders of the Supreme Court in Justice Puttaswamy (Retd.) v. Union of India, which held that Aadhaar could not be made mandatory for opening or operating bank accounts.
- Due to the refusal, the company was unable to lease its premises for nearly a year, suffering substantial economic loss.
- The petitioner sought ₹10,00,000 as compensation, estimating monthly rent in the area at ₹1.5 lakh.
- The petitioner also emphasized the personal hardship faced by the deceased founder’s surviving family, including an 84-year-old widow and an unmarried daughter who depended on the rental income.
Respondent Bank’s Submissions
- The bank did not appear at the final hearing, despite service.
- Previously, the bank had conceded (in November 2018) that post-Puttaswamy, it no longer required Aadhaar for account opening and had opened the petitioner’s account in January 2019.
- However, it failed to file a reply on the issue of compensation as directed earlier.
4. Court’s Analysis and Reasoning
The Court acknowledged that at the time of the bank’s refusal (April 2018), interim Supreme Court orders permitted banks to open accounts if applicants produced proof of having applied for Aadhaar. However, upon the Supreme Court’s final judgment on 26 September 2018, it was categorically held that Aadhaar could not be mandated for banking or financial services.
Therefore, from 26 September 2018 onwards, no impediment existed to opening the petitioner’s account. Yet, the account was opened only in January 2019—after an unjustified delay of over three months. The Court noted that:
- Yes Bank had failed to comply with its earlier undertaking and had not filed any reply regarding compensation despite the opportunity.
- The petitioner’s claim of ₹10 lakhs was excessive, considering that the bank had ultimately rectified the issue.
- Nevertheless, the petitioner suffered a clear deprivation of income and inconvenience during the period of delay.
While ordinarily the Court would have relegated the petitioner to an alternative civil remedy, it declined to do so due to the peculiar circumstances — the company’s inactive business status, the advanced age of its director, and the limited relief sought.
The Court invoked its discretionary writ jurisdiction under Article 226, emphasizing that where administrative rigidity by financial institutions causes genuine hardship, courts are empowered to award token or reasonable compensation to ensure accountability. The reasoning reflects a balance between administrative fairness and judicial restraint, ensuring that relief remains proportionate.
5. Final Conclusion and Holding
The Bombay High Court held that:
- The bank’s insistence on Aadhaar for opening a corporate account after the Puttaswamy judgment was unjustified and contrary to law.
- The petitioner was entitled to compensation for the unreasonable delay between September 2018 and January 2019.
- The Court directed Yes Bank Ltd. to pay ₹50,000 as compensation within eight weeks of receiving the order.
No order as to costs was made, and all concerned were directed to act upon an authenticated copy.
This judgment underscores the judiciary’s role in safeguarding citizens from overreach by financial institutions, especially where statutory interpretation has been conclusively settled by the Supreme Court. It reaffirms that compliance with constitutional and privacy safeguards is mandatory, not discretionary, for banks and corporate entities.
FAQs:
1. Can banks require Aadhaar for opening a new bank account?
No. Following the Supreme Court’s decision in Justice K.S. Puttaswamy (Retd.) v. Union of India (2018), banks cannot mandate Aadhaar for opening or maintaining accounts, except where specifically authorized by law.
2. What remedies exist if a bank unlawfully refuses to open an account?
An affected party may approach the bank’s grievance cell, the Banking Ombudsman, or file a writ petition under Article 226 if the refusal violates statutory or constitutional rights.
3. Can compensation be claimed against a bank for procedural delays or unlawful refusals?
Yes, compensation may be awarded where the bank’s conduct causes measurable hardship or violates rights, as seen in Microfibers Pvt. Ltd. v. Yes Bank Ltd., where the Court awarded ₹50,000.
4. Does the Aadhaar judgment apply to both individuals and companies?
Yes. The Supreme Court’s ruling extends to all entities — individuals and corporations alike — restricting mandatory Aadhaar requirements for non-subsidy-based services like banking.
5. What is the significance of the Microfibers Pvt. Ltd. v. Yes Bank ruling?
It reinforces the constitutional protection of privacy and ensures corporate compliance with Supreme Court mandates, establishing accountability for banks that act beyond lawful authority.
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