The Delhi High Court adjourned making a verdict on a lawsuit contesting the Reserve Bank of India’s (RBI) decision to cease producing Rs 2,000 notes on Tuesday.
According to a division bench made up of Chief Justice Satish Chandra Sharma and Justice Subramonium Prasad, the RBI does not have the jurisdiction to cease manufacturing banknotes or take them out of circulation; only the Centre does so.
In a Public Interest Litigation (PIL) challenging the RBI’s decision, the petitioner’s attorney, Rajneesh Bhaskar Gupta, argued that the RBI lacked the independent authority necessary by the RBI Act to make such a finding.
The petitioner claimed that the RBI lacked the unique jurisdiction granted to the Central government under section 24 (2) of the RBI Act, 1934, to order the non-issuance or discontinuance of banknotes of any denomination.
The petitioner’s senior counsel, Sandeep P. Agarwal, said that he is curious to know how the RBI established that the notes in question had a predetermined lifetime.
The Central government establishes the deadline for printing and reissuing banknotes, however sections 22 and 27 of the RBI Act give the RBI exclusive power to do so.
According to senior attorney Parag P. Tripathi, who is representing the RBI, the high court already dismissed another PIL on the same circular or announcement, and in light of the Supreme Court’s ruling, a court cannot have several PILs on the same issue.
The high court on Monday rejected an appeal by petitioner lawyer Ashiwini Upadhyay against RBI and State Bank of India (SBI) announcements that permit the exchange of withdrawn Rs 2,000 notes without an identifying document.
The claim had been dismissed by the court, which noted that the decision to cease printing banknotes with a face value of Rs 2,000 did not mark the start of demonetisation.
The elimination of the banknotes after 4-5 years, within a set timescale, has been considered to be “unjust, arbitrary, and contrary to public policy,” according to the current appeal.
“The RBI is unable to control this. The RBI Act includes no reference to RBI’s independence in making such a decision. I would have understood if the national government had made the decision, the petitioner had earlier said.
The Reserve Bank of India Act, 1934 requires the RBI, as Respondent No. 1, to have independent power before it may order the withdrawal of any denominational value banknotes, the PIL claims. Section 24 (2) of the RBI Act of 1934 states that only the Central Government is granted this power.
The PIL focuses on the fact that the circular in question omits to mention that the Central government has decided to discontinue issuing banknotes.
It asserts that while taking such a significant and arbitrary move as withdrawing the banknotes from circulation, the RBI has simply used the “Clean Note Policy” as justification and has not properly taken into account the potential effects on the general populace.
The PIL claims that according to the guidelines of the RBI’s clean note policy, banknotes that are damaged, fraudulent, or unclean are typically withdrawn from circulation and replaced with newly issued ones.
In the PIL, Attorney Gupta said that “in the present case, however, only the Rs 2,000 denomination is being withdrawn within a specific deadline, without any indication that the RBI is putting into circulation a similar replacement banknote.”
Small merchants and establishments have reportedly already stopped accepting the Rs 2,000 money, according to the PIL, raising concerns over the consequences of its disappearance.
Additionally, it asserts that the RBI has not made clear what benefits the elimination of the Rs 2,000 denomination will have for the institution or for the overall economy. The PIL also drew reference to the well-known challenges that individuals faced after the demonetization of the 500 and 1,000 rupee notes in 2016.
“The Rs 2,000 denomination, produced in 2016 and after, continues to have robust security qualities and is not required to be removed from circulation, whether on the basis of the Clean Note Policy or for any other reason, it is respectfully claimed. Additionally, Gupta claims in the PIL that the Clean Note Policy clearly mandates the withdrawal of tainted, fraudulent, or dirty banknotes rather than only mandating the removal of all intact banknotes.
According to the PIL, a significant amount of public funds were utilised to make the Rs 2,000 notes, and their withdrawal would result in a waste of those funds.
It is kindly claimed that there is a possibility that anxious people may queue at banks throughout the country in the hot months of May, June and July as a result of the RBI’s contentious notification or circular. This situation might lead to the loss of many lives, much as the demonetisation period in 2016, when over 100 people perished as a consequence of the Central Government’s terrible policy decision to demonetize the Rs 1,000 and Rs 500 notes. According to Gupta, a similar scenario is now emerging under the pretence of the RBI’s Clean Note Policy despite the absence of any statutory authority.
