Yes Bank Fined Rs 50000 For Insisting On Aadhaar | Bombay High Court Says No Justification To Deny Account Opening | Compensation Granted To Microfibers Pvt Ltd
Sanchayita Lahkar
The High Court of Bombay Division Bench of Justice M.S. Sonak and Justice Jitendra Jain held that there was no justification for refusing to open a bank account in the absence of an Aadhaar card after the Supreme Court’s judgement on 26th September 2018. The Court directed the respondent bank to pay compensation to the petitioner for the delay in opening the account. Noting that the bank did not act even after judicial pronouncements clarified the legal position, the Court found it appropriate to award monetary relief for the period during which the petitioner was unable to rent their premises.
The Bench recorded that despite clear instructions from the Apex Court striking down the requirement of Aadhaar for opening a bank account, the respondent bank failed to comply in a timely manner. Consequently, the petitioner was deprived of rental income for a specific duration. The Court directed the bank to pay Rs. 50,000/- to the petitioner within eight weeks from the date on which a copy of the order is provided. The case was thereby disposed of with no order as to costs.
The petitioner owned premises in Mumbai and faced difficulties in renting them due to the absence of a bank account in the name of the petitioner. Consequently, in January 2018, the petitioner approached the respondent bank with an application for opening a bank account. The bank, in response through communication dated between 24th to 26th April 2018, informed the petitioner that furnishing an Aadhaar card was mandatory for opening the account.
The petitioner challenged this requirement and referred to interim orders passed by the Supreme Court in Justice K.S. Puttaswamy (Retd.) & Anr v. Union of India & Ors that suggested the insistence on Aadhaar for bank account opening was not valid. Despite this, the bank continued to demand Aadhaar, leading the petitioner to file the present writ petition in June 2018.
While the respondent bank did file a detailed reply during the proceedings, a significant development occurred when the coordinate bench of the Bombay High Court, comprising BP Dharmadhikari, J (as his Lordship then was) and Sarang Kotwal, J, recorded a statement by the respondent bank. The bank stated that in light of the Supreme Court’s judgment in Justice K.S. Puttaswamy (Retd.) & Anr v. Union of India & Ors, it was no longer insisting on the Aadhaar card for opening bank accounts. Accordingly, the bench noted the respondent bank's willingness to open the bank account without Aadhaar and issued directions on 29th November 2018.
The directions issued on 29th November 2018 included a directive for the petitioner to contact the bank within one week for opening the account. It also permitted the respondent bank to file a reply concerning the petitioner's claim for damages and issued a rule on that aspect, with expedited hearing ordered.
Subsequently, in January 2019, the bank opened the account in the name of the petitioner. This was confirmed by the petitioner’s counsel during the hearing. However, counsel submitted that the delay from January 2018 to January 2019 had caused financial hardship, particularly due to the inability to rent the property during this time. The petitioner stated that the Founder-Director had passed away and the surviving family, comprising his 84-year-old wife and an unmarried daughter, were dependent on the rental income.
The petitioner submitted that rental income in the concerned locality was estimated at Rs. 1.5 lakhs per month. Therefore, the petition claimed Rs. 10 lakhs as compensation for the financial loss suffered during the period of delay.
The Court took note of the relevant judicial timeline. In April 2018, the bank demanded an Aadhaar card from the petitioner. However, at that time, interim orders of the Supreme Court in Justice K.S. Puttaswamy were in effect. The final judgment in that case was delivered on 26th September 2018, wherein the Supreme Court struck down the mandatory requirement of Aadhaar for opening bank accounts.
Despite this clarification from the Apex Court, the respondent bank only opened the account in January 2019. The High Court held that there was no justification for the delay between the Supreme Court’s judgement and the actual opening of the account.
The Court further observed that although the petitioner did not conduct business, the rental income from the premises was crucial for the sustenance of the surviving director and her unmarried daughter. The Court also recorded that the bank, though given the opportunity, failed to file a reply on the issue of compensation.
The Court recorded, "There was no justification for not opening the Bank account after 26th 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."
It further observed, "Despite our order of 29th November 2018, the Respondent-Bank had not bothered to file any reply on the aspect of the prayer for compensation."
Regarding the impact on the petitioner, the Bench stated, "The learned counsel for the Petitioner submits that from January 2018 to January 2019, the petitioner was unable to rent the premises in Mumbai. He pointed out that the Founder-Director had already passed away and was survived by his 84-year-old wife, one daughter, and the Petitioner. They submitted through the Petitioner that they could gain no income by renting the premises."
On the question of compensation claimed, the Court recorded, "Considering the above circumstances, we believe that the claim for compensation in the amount of Rs. 10 Lakhs is exaggerated and cannot be granted."
However, it stated, "We agree with the learned counsel for the Petitioner that there was no justification for not opening the Bank account after 26th September 2018. The Bank account was ultimately opened in January 2019."
The Court further observed, "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."
It considered the petitioner’s circumstances and held, "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."
On the bank’s conduct, the Bench stated, "No reply was filed by the Bank on the prayer for compensation, despite an opportunity being granted." However, it also noted, "We cannot ignore the fact that the Respondent-Bank, on 29th November 2018, made a statement that it would open the Bank account without insisting on an Aadhar Card, given the decision of the Hon’ble Supreme Court."
The Court directed, "Upon taking into consideration of the above circumstances cumulatively, we direct the Respondent-Bank to pay the Petitioner compensation of Rs. 50,000/- within a period of eight weeks from the date on which the Petitioner provides a copy of this order to the Respondent-Bank."
The matter was disposed of with the following directive: "The Rule in this Petition is disposed of with the above directions. There shall, however, be no order as to costs. All concerned are to act on an authenticated copy of this order."
Advocates Representing the Parties:
For the Petitioners: Mr. Niyam Bhasin, Advocate
Case Title: Microfibers Pvt Ltd vs. Yes Bank Ltd & Ors
Case Number: Writ Petition No. 1706 of 2018
Bench: Justice M.S. Sonak and Justice Jitendra Jain
