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IN THE HIGH COURT OF DELHI AT NEW DELHI
Satish Chandra Sharma, Subramonium Prasad, JJ.
Rajneesh Bhaskar Gupta – Appellant
Versus
Reserve Bank of India & Anr. – Respondents
W.P.(C) 7487 of 2023 & CM APPL. 29068 of 2023
Decided On : 03-07-2023
RBI Notification - Currency Management - RBI Act, 1934, Section 24(1); Banking Regulation Act, 1949, Section 35A - The RBI issued a notification directing banks not to issue Rs.2000 denomination banknotes to customers, as a part of its currency management system. The notification did not discontinue the legal tender status of Rs.2000 banknotes. The court held that the RBI has the sole right to issue banknotes and can advise banks on currency management. The notification was found to be within the RBI's powers and not in violation of the Banking Regulation Act, 1949.
Fact of the Case:
The Petitioner filed a Public Interest Litigation seeking to quash a notification issued by the RBI directing banks not to issue Rs.2000 denomination banknotes to customers. The Petitioner argued that the RBI does not have the power to issue such directions and that the power to issue or withdraw banknotes lies with the Central Government.
Finding of the Court:
The court found that the RBI's notification was a part of its currency management system and did not discontinue the legal tender status of Rs.2000 banknotes. The court held that the RBI has the sole right to issue banknotes and can advise banks on currency management. The court dismissed the Writ Petition, stating that the RBI's notification was within its powers and not in violation of the Banking Regulation Act, 1949.
Issues: 1. Whether the RBI had the power to issue a notification directing banks not to issue Rs.2000 denomination banknotes to customers. 2. Whether the notification violated the Banking Regulation Act, 1949.
Ratio Decidendi: The RBI has the sole right to issue banknotes and can advise banks on currency management. The notification was found to be within the RBI's powers and not in violation of the Banking Regulation Act, 1949.
Final Decision: The Writ Petition was dismissed, and the court held that the RBI's notification was within its powers and not in violation of the Banking Regulation Act, 1949.
JUDGMENT
Satish Chandra Sharma, C.J. The present Public Interest Litigation has been filed by the Petitioner seeking an appropriate writ, order or direction for quashing the Notification issued by the Reserve Bank of India (hereinafter referred to as `the RBI') vide press release dated 19.05.2023, bearing RBI/2023-24/32 DCM(Plg) No.S-236/10.27.00/2023-24 (hereinafter referred to as `the Notification in question'), and all other subsequent notifications in this regard. The Petitioner has prayed for the following prayers:
"(a) Allow the present writ petition and subsequently issue the writ of mandamus/certiorari or any other appropriate writ or order or direction quashing the RBI Notification/press release vide RBI/2023-24/32 DCM(Plg) No.S-236/10.27.00/2023-24 dated May 19, 2023 and all other subsequent notifications in this regard whereby the RBI has taken arbitrary unreasonable decision to withdraw the Rs.2000 denomination banknotes from circulation under the clean note policy or otherwise.
(b) Pass an order directing to the Respondent no.1 & 2 i.e. RBI and Ministry of Finance, Govt, of India to issue notification/circular for public at large clarifying the estimated life span of each denomination banknote which are presently on circulation and also estimated time/year of being withdrawn from circulation in future by RBI under Clean Note Policy or otherwise.
(c) Pass an order directing to the Respondent no.1 & 2 i.e. RBI and Ministry of Finance, Govt, of India not only to mention year of printing on each banknote but also estimated life span of such banknote in view of the Clean Note Policy of the RBI.
(d) Pass an order directing to the Respondent no. 1 & 2 i.e. RBI and Ministry of Finance, Govt, of India to inform the public at large by appropriate notification/circular at least one year before as and when any banknote of any denomination is to be withdrawn from circulation by the Central Govt, or RBI under Clean Note Policy or otherwise.
(e) Pass an order directing to the Respondent no.1 & 2 i.e. RBI and Ministry of Finance, Govt, of India to issue notification/circular to all the banks removing the deadline/last date of depositing/exchanging the denomination of Rs.2000/- banknote from circulation under Clean Note Policy or otherwise, which is now 30th September, 2023.
(f) Pass any other order (s) as deemed fit and proper in the interest of the public at large."
2. The Notification in question reads as under:
"RBI/2023-24/32
DCM(Plg) No.S-236/10.27.00/2023-24
May 19, 2023
The Chairman/Managing Director/Chief Executive Officer
All Banks
Dear Sir/Madam,
Rs.2000 Denomination Banknotes - Withdrawal from Circulation; Will continue as Legal Tender
Rs.2000 denomination banknote was introduced in November 2016 under Section 24(1) of RBI Act, 1934 primarily to meet the immediate currency requirement of the economy after withdrawal of the legal tender status of all Rs.500 and Rs.1000 banknotes in circulation at that time. With fulfilment of the objective of introduction of Rs.2000 denomination and availability of banknotes in other denominations in adequate quantity, printing of Rs.2000 banknotes was stopped in 2018-19.
2. Further, majority of the Rs.2000 denomination notes were issued prior to March 2017, have completed their estimated lifespan and are not observed to be commonly used for transactions anymore. Therefore, it has been decided that, in pursuance of the "Clean Note Policy" of the Reserve Bank of India, the Rs.2000 denomination banknotes shall be withdrawn from circulation. The Rs.2000 banknotes will continue to be legal tender.
3. Accordingly, to implement the decision stated above, the following plan of action has been formulated which, the banks shall follow meticulously:
A. Handling of existing stock and receipts All banks shall discontinue issue of Rs.2000 denomination banknotes with immediate effect. ATMs/Cash Recyclers may also be reconfigured accordingly.
Banks holding Currency Chests (CCs) shall ensure that no withdrawal of Rs.200
Courts should defer to legislative judgment in economic policy matters and not interfere unless the exercise of legislative judgment appears to be palpably arbitrary.
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