Power to withdraw banknotes lies with Centre, petitioner to Delhi HC on Rs 2K note issue

The Delhi High Court on Tuesday reserved its judgement on a plea filed in opposition to the Reserve Bank of India (RBI)’s choice to withdraw Rs 2,000 notes from circulation.

A division bench of Chief Justice Satish Chandra Sharma and Justice Subramonium Prasad was advised that the RBI can’t withdraw from circulation or discontinue banknotes and solely the Centre has such powers.

The bench was listening to petitioner lawyer Rajneesh Bhaskar Gupta’s plea filed as a Public Interest Litigation (PIL) difficult the RBI’s choice arguing that it lacks the impartial authority, as per the RBI Act, to make such a choice.

The petitioner submitted the RBI has no impartial energy to direct non-issuance or discontinuance of banknotes of any denominational worth and this energy is vested solely with the Central authorities below part 24 (2) of the RBI Act, 1934.

Appearing for the petitioner, senior advocate Sandeep P. Agarwal, mentioned that he desires to know as to how the RBI got here to the conclusion that the notes in query have a stipulated life span.

“The RBI’s energy is restricted solely to issue and re-issue banknotes below part 22 and 27 of the RBI Act, however the interval for issuing such notes is fastened by the Central authorities.”

Senior advocate Parag P. Tripathi, representing the RBI, mentioned the excessive courtroom has already dismissed one other PIL on the identical round/notification, and as per the Supreme Court’s order, a courtroom can’t have serial PILs on the identical issue.

On Monday, the excessive courtroom dismissed a plea by petitioner lawyer Ashiwini Upadhyay difficult RBI and State Bank of India (SBI) notifications, that allows trade of the withdrawn Rs 2,000 notes with none identification proof.

The courtroom had dismissed the plea observing that call to dispense with Rs 2,000 denomination banknotes will not be a choice in direction of demonetisation.

However, the present petition has contended that the withdrawal of the banknotes after 4-5 years, with a selected deadline, is deemed “unjust, arbitrary, and opposite to public coverage”.

“This is past the jurisdiction of the RBI. There is not any provision within the RBI Act saying that RBI can take such a choice independently. I’d have understood if the central authorities had taken the choice,” the petitioner had earlier mentioned.

The PIL says: “It is respectfully submitted that the RBI, as Respondent no 1, doesn’t possess impartial energy below the Reserve Bank of India Act, 1934, to direct the non-issue or discontinuance of any denominational worth banknotes. Such energy is completely vested with the Central Government, as said in part 24 (2) of the RBI Act, 1934.”

The PIL highlights that the round in query fails to point out that the choice to withdraw the banknotes has been made by the Central authorities.

It argues that the RBI has supplied no rationalization aside from the “Clean Note Policy” for taking such a big and arbitrary step of withdrawing the banknotes from circulation, with out adequately contemplating the potential repercussions for most of the people.

Referring to the provisions of the RBI’s clear note coverage, the PIL factors out that broken, counterfeit, or dirty banknotes of any denomination are sometimes withdrawn from circulation and changed with newly printed ones.

“However, within the current case, solely the Rs 2,000 denomination is being withdrawn inside a selected deadline, with none indication of the RBI introducing the same substitute banknote into circulation,” advocate Gupta mentioned within the PIL.

The PIL raises issues over the affect of withdrawing the Rs 2,000 banknote, claiming that small distributors and shopkeepers have already ceased accepting it.

It additional argues that the RBI has not supplied any clarification concerning the advantages to both the RBI or the nationwide financial system from withdrawing the Rs 2,000 denomination. The PIL additionally drew consideration to the well-known hardships confronted by residents through the demonetisation of Rs 500 and Rs 1,000 notes in 2016.

“It is respectfully contended that the Rs 2,000 denomination, printed in 2016 and thereafter, stays in wonderful situation with sturdy security measures and doesn’t necessitate withdrawal from circulation, be it below the Clean Note Policy or some other grounds. Furthermore, the Clean Note Policy particularly mandates the withdrawal of broken, counterfeit, or dirty banknotes, fairly than the withdrawal of all intact banknotes,” Gupta states within the PIL.

The PIL additionally highlights {that a} vital quantity of public funds have been utilised for printing the Rs 2,000 notes, which can go to waste because of their withdrawal.

“It is respectfully argued that there’s a risk that the RBI’s challenged notification/round might induce anxious residents to queue up at banks throughout the nation through the sizzling climate of May, June, and July. This state of affairs could lead on to the lack of quite a few lives, comparable to the interval of demonetisation in 2016 when over 100 residents misplaced their lives due to the inaccurate coverage choice of demonetising Rs 1,000 and Rs 500 notes by the Central Government. Now, the same state of affairs is unfolding within the title of the RBI’s Clean Note Policy, regardless of the absence of any statutory authority,” Gupta argued.

(With inputs from IANS)