In a recent ruling, the Orissa High Court held that the Aadhaar-PAN linkage for Demat accounts is a valid requirement under the Income Tax Act and SEBI regulations and does not violate the right to privacy. The petitioner, Tathagata Satapathy, a senior citizen and former Member of Parliament, filed a writ petition against HDFC Bank claiming that the suspension of his Demat account for lack of Aadhaar linkage was illegal and violated his fundamental rights. The petitioner’s counsel argued that Aadhaar was not mandatory when he opened the account in 2017 and that the Supreme Court’s ruling in K.S. Puttaswamy (2018) had established that Aadhaar cannot be forced for banking transactions. Read More: ICAI introduces New Balance Sheet Format for Non-Corporate Entities, Increased Audit Reporting and Compliance Forecasted HDFC Bank countered that the Demat account was suspended in compliance with SEBI and CBDT circulars, which required Aadhaar-PAN linkage for securities market transactions. The bank clarified that the action was taken pursuant to NSDL’s directive under SEBI’s KYC framework and that it had no discretion to override regulatory requirements.

Raise Funds Smarter – Your Guide to SME IPO Success- Click here to enroll The respondents further argued that Aadhaar-PAN linkage is mandatory under Section 139AA of the Income Tax Act, as upheld by the Supreme Court in Binoy Viswam (2017). The petitioner countered that the Supreme Court had upheld Aadhaar-PAN linkage for tax compliance but it had explicitly ruled against its mandatory use for bank accounts. The petitioner claimed that Demat accounts, being linked to bank accounts, should not require Aadhaar. The court rejected this argument, distinguishing bank accounts from Demat accounts, stating that the securities market is separately regulated by SEBI, which has independent KYC norms. Read More: Insolvency Proceedings Against Personal Guarantor at Threshold Stage: Supreme Court removed HC’s Interdict [Read Judgement] A single bench led by Justice S.K. Panigrahi observed that Aadhaar-PAN linkage serves a legitimate state interest in preventing tax evasion, money laundering, and financial fraud. The court cited Supreme Court rulings that recognized the right to privacy as not absolute and subject to reasonable restrictions if backed by law, legitimate state purpose, and proportionality. Want a deeper insight into the Income Tax Bill, 2025? Click here The court also observed that the petitioner’s Demat account had been reactivated during the pendency of the case making the dispute academic but proceeded to clarify the legal position for future cases. The Orissa High Court dismissed the petition.