A bench of Chief Justice D N Patel and Justice Jasmeet Singh issued notice to the Centre, Facebook and WhatsApp and sought their stand on the petition by May 13.
WhatsApp told the bench during the hearing that private conversations of individuals are protected by end to end encryption.
The petitioner, Harsha Gupta, urged the court for some interim orders as the Facebook-owned WhatsApp intends to bring its policy into effect from May 15.
The court then listed the matter for hearing on May 13.
Sood said the users were not being provided the option to deny the collection and/or use of the data for purposes other than that for which the information is sought.
"WhatsApp has offered its users a 'take it or leave it' offer which coerces the users to consent to share their data with third-party companies to use WhatsApp's services," he argued in court.
"Further the said terms of services are instances of abuse of dominant position by WhatsApp," the petition filed through advocate Dhruv Gupta has said.
Senior advocate Kapil Sibal, appearing for WhatsApp, said the messaging platform has not violated any laws or rules.