BREAKING - Delhi High Court Dismisses PIL Challenging RBI's Decision To Withdraw Rs 2,000 Currency Notes From Circulation

The Delhi High Court on Monday dismissed a public interest litigation challenging the Reserve Bank of India's decision to withdraw Rs 2,000 notes from circulation.

A division bench of Chief Justice Satish Chandra Sharma and Justice Subramonium Prasad rejected the plea moved by advocate Rajneesh Bhaskar Gupta. 

The court observed that the RBI was well within its power to issue the Notification in question which is only a part of the “currency management system.”

“The Notification in question is only a direction to the banks not to issue Rs.2000 banknotes which is well within the right of the RBI. The Circular in question is not a direction to print or discontinue to print Rs.2000 banknotes which is the domain of the Central Government and Courts generally do not interfere in policy matters unless the decision is completely arbitrary,” the court said.

The bench had earlier also dismissed a similar PIL filed by advocate Ashwini Kumar Upadhyay which challenged notifications issued by RBI and State Bank of India permitting exchange of Rs. 2000 currency notes without requirement of any identity proof.

Observing that the RBI has the right to advise banks not to circulate notes of a particular denomination for the purpose of currency management, the bench dismissed the plea and said that the authority neither exceeded its powers conferred under the RBI Act nor violated the Banking Regulation Act, 1949.

”The RBI has only instructed the banks not to issue to its customers notes of Rs.2000 denomination in order to ensure that Rs.2000 banknotes are not in circulation though they remain to be legal tender. The fact that the permission to exchange Rs.2000 notes is available only till 23.09.2023 does not mean that RBI has issued a direction that from 23.09.2023 Rs.2000 banknotes will be demonetized,” the court said.

Besides arguing that the RBI has no independent power under the Reserve Bank of India Act to take such decision, Gupta’s PIL also contended that the decision of withdrawal of the banknote only after 4-5 years of circulation within specific deadline was "unjust, arbitrary and against the public policy".

"It is respectfully submitted that the Respondent no.1 i.e. RBI has no independent power under the Reserve Bank of India Act, 1934 to direct the non-issue or the discontinuance of issue of bank notes of any denominational values and the said power is vested only with the Central Government under section 24 (2) of the RBI Act, 1934," Gupta said.

Submitting that the impugned circular did not mention that central government had taken the decision, the PIL submitted that no other reason except 'Clean Note Policy' was given by the RBI to take such a "big arbitrary decision" of withdrawing the banknotes from circulation "without analysing the expected problems of the public at large".

"As per the provision of clean note policy of RBI, damaged, counterfeit, or soiled banknote of any denomination is withdrawn from circulation and newly printed banknotes are circulated in the marked but it is not happening in the present case, only denomination of Rs.2000/- is being withdrawn within a specific date/deadline and no new similar banknote is given by the RBI in circulation," Gupta further said in the PIL.

Alleging that small vendors and shopkeepers had stopped taking Rs 2,000 note, the PIL submitted that RBI had not cleared as to what is the benefit to the RBI or National Economy after withdrawing the denomination of Rs.2000 banknote from circulation. However, the PIL added, the hardship faced by the citizens is very well known as seen during demonetisation of Rs 500 and Rs 1000 notes in 2016.

"It is respectfully submitted that denomination of Rs.2000 printed in the year 2016 and later on is in very good condition with strong safety measures and need not required to be withdrawn from the circulation under Clean Note Policy or otherwise. Moreover, Clean Note Policy only requires withdrawal of damaged, counterfeit, or soiled notes from circulation and not all good banknotes," Gupta had argued.

The PIL further stated that crores of rupees have been spent from public exchequer on the printing of Rs 2000 notes and the same "will be wasted" due to such withdrawal.

"It is respectfully submitted that it could not be ruled out that RBI notification/Circular under challenge will be leading panicked citizens to line up at banks across the country in this hot weather of May/June/July which may cause loss of many life like the period of demonetization in the year 2016 when more than 100 citizens lost their life i'or wrong policy decision of demonetization of Rs. 1OOO and Rs.500 by the Centre Govt, and now the same thing is happening in the name of Clean Note Policy of RBI without any statutory power,” the plea said.

Title: RAJNEESH BHASKAR GUPTA versus Reserve Bank of India & Anr.

Citation: 2023 LiveLaw (Del) 539

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