High Court Dismisses Plea Challenging RBI Decision On Rs 2,000 Banknote Exchange

The bank notes in Rs 2,000 denomination will, however, continue to be a legal tender, the RBI had said in a statement.

NEW DELHI: The Delhi High Court on Monday dismissed a petition challenging the notifications enabling the exchange of Rs 2,000 denomination currency notes without any requisition slip and ID proof, saying it has been done to avoid inconvenience to citizens, and the court cannot sit as an appellate authority on a policy decision. The high court maintained it cannot be said that the government's decision is perverse or arbitrary or it encourages black money, money laundering, profiteering or abets corruption.

A bench of Chief Justice Satish Chandra Sharma and Justice Subramonium Prasad said this is purely a policy decision of the government and courts should not sit as an appellate authority over the decision taken by the government. The high court said the Public Interest Litigation (PIL) is devoid of merits and dismissed the petition filed by advocate Ashwini Kumar Upadhyay who challenged the notifications by the RBI and SBI enabling exchange of Rs 2,000 banknotes without requisition slip and identity proof.

The petitioner had claimed a large amount of currency notes has reached either an individual's locker or has been hoarded by separatists, terrorists, Maoists, drug smugglers, mining mafias and corrupt people. The plea asserted the notifications were arbitrary, irrational and offended Article 14 of the Constitution (equality before law).

The Reserve Bank of India (RBI) defended before the high court its notification, saying it is not demonetisation but a statutory exercise. It said the decision was taken to allow exchange of Rs 2,000 denomination currency notes for operational convenience and the court cannot interfere in such matters. Upadhyay had clarified that he was not challenging the decision to withdraw Rs 2,000 banknote but assailed the exchange of the currency without any slip or identity proof.

On May 19, the RBI had announced withdrawal of Rs 2,000 currency notes from circulation, and said existing notes in circulation can either be deposited in bank accounts or exchanged by September 30. The bank notes in Rs 2,000 denomination will, however, continue to be a legal tender, the RBI had said in a statement.

The high court, in its judgement, said the government's decision is only to withdraw Rs 2,000 denomination banknotes from circulation for the reason that the purpose of issuing these notes has been achieved, which was to meet the currency requirement of the economy in an expeditious manner in November, 2016 when all Rs 500 and Rs 1,000 denomination banknotes ceased to remain legal tender.

To meet the situation at that point of time, the government took a decision to bring banknotes of Rs 2,000 denomination to ensure adequate supply of money to meet the day-to-day requirements of the people, it said. "Six years after the said decision, the government has now decided to withdraw Rs 2,000 denomination banknotes from circulation which is not being used commonly. Banknotes of Rs 2,000 shall continue to be a legal tender and this policy is only for exchange of banknotes having denomination of Rs 2,000 with other banknotes....In order to facilitate the exchange of Rs 2,000 denomination banknotes with other denomination banknotes, the government has given a window of four months to the citizens and in order to avoid inconvenience to citizens, the government is not insisting of providing any kind of identification," the high court said.

It said to ensure there is a smooth transition, banks have provided facilities for conversion of these banknotes to other denomination banknotes till September 2023. The high court noted it is not a case of demonetisation but withdrawal of Rs 2,000 denomination currency notes from circulation. "For this purpose, the government has taken a decision not to insist upon the requirement of identity proof for exchange of Rs 2,000 denominations banknotes so that everybody can exchange the same with the other denomination banknotes. Therefore, it cannot be said that the decision of the government is perverse or arbitrary or it encourages black money, money laundering, profiteering or it abets corruption," it said.

The petition said cash transaction in high value currency is the main source of corruption and is used for illegal activities like terrorism, naxalism, separatism, radicalism, gambling, smuggling, money laundering, kidnapping, extortion, bribing and dowry, and the RBI and SBI should ensure that Rs 2,000 banknotes are deposited in bank accounts only.

"Recently, it was announced by the Centre that every family should have an Aadhaar card and bank account. Therefore, why is the RBI permitting to exchange Rs 2,000 banknotes without obtaining identity proof.

"It is also necessary to state that 80 crore BPL (below poverty line) families receive free grains. It means 80 crore Indians rarely use Rs 2,000 banknotes. Therefore, petitioner also seeks direction to RBI and SBI to take steps to ensure that Rs 2,000 banknotes are deposited in bank accounts only," the plea stated.

Depositing Rs 2,000 currency notes in bank accounts will ensure people having black money and assets disproportionate to their legal sources of income could be identified easily, the plea said. In order to ensure operational convenience and to avoid disruption of regular activities of bank branches, the RBI has said exchange of Rs 2,000 bank notes into bank notes of other denominations can be made up to a limit of Rs 20,000 at a time at any bank starting from May 23.

In a communication to chief general managers of all its local head offices, the State Bank of India (SBI) informed that the facility of exchange of Rs 2,000 notes by public up to a limit of Rs 20,000 at a time will be allowed without obtaining any requisition slip.