The high court warned that future non-compliance could lead to higher damages

metro india news  I mumbai

In a significant judgment, the Bombay High Court ruled against Yes Bank for delaying Microfibers Pvt. Ltd.’s account opening in 2018 over its refusal to provide Aadhaar details. Delivered by Justices M.S. Sonak and Jitendra Jain, the decision reinforces the limits on private entities’ authority to mandate Aadhaar, aligning with the Supreme Court’s 2018 Puttaswamy verdict, which restricted Aadhaar use to specific government welfare schemes.

The case began when Yes Bank denied account processing without Aadhaar, despite the company offering alternative identification. This contravened Section 57 of the Aadhaar Act, which the Supreme Court had declared unconstitutional for private sector use. Advocate Bhasin, representing Microfibers, praised the ruling as a major step toward protecting privacy rights and noted his ongoing legal challenges to Aadhaar-PAN linking under Section 139AA of the Income Tax Act.

The Supreme Court is set to hear the PAN-Aadhaar linkage case on July 15, 2025. This judgment comes amid growing scrutiny of Aadhaar, the world’s largest biometric ID system, which has enrolled over 1.3 billion residents since 2009. UIDAI data shows a 15% increase in Aadhaar-related complaints since 2023, indicating rising public concern. The verdict also coincides with IRCTC’s new policy requiring Aadhaar for Tatkal tickets in the first 30 minutes—a move raising fresh legal alarms.

Legal experts suggest the Bombay High Court ruling may trigger lawsuits against banks and firms still demanding Aadhaar. A 2024 National Institute of Public Finance and Policy report estimated Aadhaar compliance costs the economy ₹12 billion annually. The case follows a 2023 Delhi High Court fine on a telecom operator for similar Aadhaar insistence, indicating a judicial push to uphold privacy norms.

Privacy advocates welcomed the decision, calling it a warning to corporations exploiting Aadhaar beyond legal limits. “This is a wake-up call,” said a spokesperson for the Internet Freedom Foundation. The ruling may influence India’s $300 billion digital economy, prompting companies to consider alternate identity verification methods.

UIDAI has yet to comment but is expected to release guidelines by mid-July 2025. The Reserve Bank of India, on June 30, urged banks to comply with court directives to avoid penalties. Maharashtra has seen a 10% rise in account openings without Aadhaar since the Puttaswamy verdict. Microfibers will donate its ₹50,000 compensation to a legal aid fund. The ruling has drawn international attention, with the EU citing it as a potential GDPR model. A recent UN resolution on digital privacy echoes the judgment, potentially easing compliance for small businesses.

Critics point to Aadhaar’s data vulnerabilities, including a 2022 breach impacting 100 million users. The court warned that future non-compliance could lead to higher damages, potentially deterring misuse. Opposition parties have called for a parliamentary debate on Aadhaar’s private-sector use in the upcoming monsoon session.