Factual Background
Microfibers Pvt Ltd, as the petitioner, encountered severe difficulty in renting out its property in Mumbai as it didn’t have a bank account under its name. In January 2018, the petitioner had applied to Yes Bank Ltd. (the respondent) for opening a bank account. But the bank insisted on Aadhaar Card requiring production while opening the account. The petitioner had asserted that it was not legally viable that such a condition be levied, particularly in the context of interim orders issued by the Supreme Court of India to the extent that seeking Aadhaar for opening a bank account was inappropriate.
In spite of the representations, the bank failed to comply, and the petitioner had lodged a writ petition in June 2018. The bank thereafter submitted a detailed reply but, following the historic judgement of the Supreme Court in Justice K.S. Puttaswamy (Retd) & Anr Vs. Union of India & Ors, which strikes down the compulsory use of Aadhaar for services, the bank consented not to mandate Aadhaar for opening the account. The bank account was then opened in January 2019.
The petitioner claimed a compensation of Rs. 10 lakhs for the loss of rental income during the period from January 2018 to January 2019 and put the loss directly at the door step of the bank’s denial to open the account in the case of non-Aadhaar.
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Rationale Behind the Case
The main argument was with the insistence of the bank on Aadhaar as a mandatory document for opening a bank account and whether such insistence was against the interim orders of the Supreme Court and the final order in the Justice K.S. Puttaswamy (Retd) & Anr vs Union of India & Ors, that asserted privacy as a fundamental right and struck down mandatory Aadhaar linkage to bank accounts.
The petitioner’s inability to open a bank account resulted in financial loss, as in the absence of a bank account, the premises could not be leased out. The petitioner asked for compensation in the form of loss, citing inconvenience brought about by the bank’s failure to honor the Supreme Court’s instructions.
Notable Arguments
The petitioner’s case was especially compelling in presenting the real effect of the bank’s denial. The petitioner emphasized the financial struggle on the family, which consisted of elderly surviving director and her spinster daughter who depended on the rental income for survival.
The petitioner further drew attention to the incoherence of the bank’s stand with the Supreme Court rulings which had made it clear that Aadhaar cannot be compelled to be opened for bank account purposes. This line of reasoning emphasized the importance of obeying constitutional principles and judicial dicta while handling administrative decisions.
But the bank initially rationalized its Aadhaar demand but eventually gave in to the Supreme Court order, promising to open the account without Aadhaar.
Court Judgment
In its judgment dated 26th June 2025, the Bombay High Court appreciated the plight of the petitioner as well as the bank’s failure to honor the Supreme Court orders promptly. The court noted that while the petitioner’s claim for Rs. 10 lakhs were exaggerated, the three to four-month waiting period from opening the bank account in September 2018 (when the Supreme Court struck down the Aadhaar linking requirement) to January 2019 meant the loss of rental income.
The court directed the bank to provide a compensation of Rs. 50,000 to the petitioner within a period of eight weeks. The court held that the bank had not furnished any reply on the claim for compensation even after being given an opportunity to do so. The court also recognized the special situations of the petitioner like the unavailability of alternative remedies and the reliance of weak family members on the income from rent.
The writ petition was disposed off on these directions, and no order as to costs was made.
Legal Implications and Analysis
Lower Court vs. High Court
The case evokes the judicial oversight in ensuring that there is compliance with orders of the Supreme Court at the institutional and administrative level. The coordinate bench and the subordinate courts had already observed the bank’s commitment to open the account without the use of Aadhaar, but the lag by the bank in implementation necessitated additional judicial action.
High Court decision reaffirms the doctrine that the institutions must strictly obey constitutional directives and Supreme Court decisions, specifically on basic rights such as privacy and against discrimination.
Increased Legal Impact
- Aadhaar and Right to Privacy: The case discusses the impact of the Supreme Court’s judgment in Puttaswamy on Aadhaar policies, specifically on how Aadhaar cannot be made mandatory for opening bank accounts.
- Bank Accountability: Banks must align their policies with the requirements of law and may not place unreasonable conditions that infringe upon rights or involve undue complexity.
- Compensation for Non-Conformity: The decision sets a precedent by which concerned individuals are entitled to litigate for compensation for losses arising from institutional non-compliance with legal guidelines, even if the amount demanded is reduced by the court.
- Banking Services Access: The case brings to the fore the value of irreplaceable access to banking infrastructure by individuals and entities, impacting their way of life and economic endeavors.
While the case is exceptional, it resonates with the broader judicial interest in systemic failures and protection for vulnerable parties as seen in other judicial interventions like the Suo Moto PIL on the transfer of girls from observation homes upon attaining majority. The two cases share a commonality in the judiciary performing its role of safeguarding rights and promoting institutional accountability.
Conclusion
The decision of Microfibers Pvt Ltd Vs. Yes Bank Ltd is a significant judicial pronouncement upholding the supremacy of constitutional rights over administrative procedure. It interprets that the banks cannot require Aadhaar as a mandatory document for opening an account after the Supreme Court’s Puttaswamy judgment. The compensation provided by the court, though meager, is a strong message about institutional responsibility and protection of the citizens’ rights.
This decision is an eye-opener for banks to align their policies with legal standards and not subject customers to avoidable hardships. It also indicates the positive role being played by the judiciary in rectifying grievances that have been caused due to non-conformity with constitutional standards.
Sources
- Microfibers Pvt Ltd Vs. Yes Bank Ltd & Ors, Bombay High Court, Writ Petition No 1706 of 2018, Judgment dated 26 June 2025.
- Justice K S Puttaswamy (Retd) and Anr Vs. Union of India and Ors (2019) 1 SCC 1.
- Times of India, ‘HC to bank: SC ruled Aadhaar not must to open a/c; pay ₹50k for delay’ (Mumbai, 26 June 2025)
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