Bombay High Court Allows Family To Exchange ₹20 Lakh 'Demonetised' Notes As Income Tax Department Had Seized The Currency

The Bombay High Court recently came to the aid of a group of people from Maharashtra's Kolhapur district and ordered the Reserve Bank of India (RBI) to accept their demonetised notes worth Rs 20 lakhs, which were seized by the Income Tax in December 2016 and returned to them after the deadline to exchange the old notes.

A division bench of Justices Atul Chandurkar and Milind Sathaye noted that the IT Department had seized the notes on December 26, 2016 and the deadline for exchanging the old notes was December 31, 2016.

"The Income Tax Department having indicated that it did not intend to seize the said specified bank notes pursuant to which the Police Authorities returned the same to the petitioners on January 14, 2017, we find that the petitioners can be permitted to deposit these specified bank notes for the value of Rs.20,00,000 bearing the serial numbers indicated in Annexure- I t with the RBI. This would facilitate receipt of legal tender for the same value by the petitioners. We therefore do not find any reason to deny the petitioners the benefit of receiving the value of these specified bank notes," the judges said in the order passed on February 27.

According to the petitioners, the IT Department raided their premises and seized their Rs 20 lakhs, which they jointly possessed along with silver ingots worth Rs 26.99 lakhs, on December 26, 2016. The petitioners were planning to get their money exchanged since the Central government had on November 8, 2016 had declared that the notes of the denomination of Rs 500 and Rs 1000 would be illegal after December 31, 2016.

The petitioners pointed out that the IT Department after recording their statements and conducting a thorough enquiry decided not to seize the said money and therefore, returned the amount to the local police station on January 14, 2017 with a directive to return the money back to the petitioners. The police returned the money to the petitioners only on January 17, 2017, which was well after the deadline to get the notes exchanged. 

Thereafter, when the petitioners approached the RBI, the central bank refused to accept the said notes since they were no longer a legal tender. Therefore, the petitioners moved the HC and got a relief. 

Appearance: 

Advocates Udaya Sankar Samudrala, Sujit Upadhyay and Shivesh Upadhyay appeared for the Petitioners

Advocate Dhirendra Pratap Singh represented the Union Government.

Senior Advocate Venkatesh Dhond along with Advocates Dhaval Patil, Shreyas Menkudale instructed by K Ashar & Co. represented the RBI and its Officials. 

Advocate Arjun Gupta represented IT Department. 

Case Title: Ramesh Potdar vs Union of India (Writ Petition No 2926 of 2017)

Citation: 2025 LiveLaw (Bom) 89

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