CUTTACK: The Orissa High Court has held that the provision mandating Aadhaar-PAN linkage for demat accounts stands on firm constitutional and legal footing and does not warrant the court’s interference.
The observation came while disposing former MP Tathagata Satapathy’s petition challenging a private bank making his savings-cum-demat account at a branch in Bhubaneswar “dormant” on the ground that it was not linked to Aadhaar in July 2023.
“While concerns regarding data security and privacy are acknowledged, they do not outweigh the compelling need for regulatory oversight in the securities market. Adequate safeguards have been implemented to mitigate risks, and the measure remains a proportionate and reasonable restriction on privacy,” Justice SK Panigrahi observed in his February 14 judgment, full text of which was released on February 24 (Monday).
In his petition filed in January 2024, Satapathy contended that he deliberately did not enrol under Aadhaar since it has been his consistent stance in Parliament that biometric data should not be collected from citizens unwilling to enrol under Aadhaar. Since he has not enrolled, furnishing an Aadhaar enrolment number to the bank for operation of the ‘Invest Right App’ demat account does not arise.
Noting that the bank had made the account active since June 3, 2024, Justice Panigrahi said the grievance of the petitioner has already been resolved, leaving no subsisting dispute that requires adjudication. This makes the petition purely an academic discourse, he added.
The HC judge said the very system mandating to link Aadhaar with PAN and demat accounts designed to prevent tax evasion and money laundering may inadvertently expose people to new risks if adequate safeguards are not in place. As financial institutions and regulatory bodies increasingly rely on Aadhaar for verification, the risks associated with a compromised database could have far-reaching consequences for the economy and public trust in digital governance.
“Thus, the need of the hour is to strengthen the security framework of Aadhaar by implementing state-of-the-art encryption, multi-layered authentication protocols and stringent access controls,” Justice Panigrahi observed.
Underlining that government must prioritise cyber security measures, conduct regular audits and ensure data protection laws are rigorously enforced, he said transparency in addressing data breaches along with proactive steps to fortify Aadhaar infrastructure is essential to instil confidence in the system.
“Without these measures, the very objective of Aadhaar-PAN linkage i.e. to ensure financial transparency and curb fraud may be undermined by the risk of data breaches and privacy violations,” Justice Panigrahi further observed.