Back
1980 Supreme(Gau) 14
GAUHATI HIGH COURT
K.N.Saikia, J.
Somi Horam Tongkhul Naga -Appellant
Versus
Union of India -Respondent
Civil Rule No. 104 of 1980
Decided On : 29-02-1980
R.K.Manisana Singh, M.A.Laskar
The Reserve Bank's satisfaction in exchanging demonetized notes must be based on objective considerations and proper inquiry, but the Court declined to prescribe specific guidelines due to the complex nature of the Reserve Bank's functions and the need to prevent illicit financial transactions.
Headnote:
DEMONETIZATION - HIGH DENOMINATION BANK NOTES (DEMONETIZATION) ACT, 1978 - SECTIONS 3, 4, 5, 6, 7, 8 - RESERVE BANK OF INDIA ACT, 1934 - SECTIONS 22, 23, 24, 26, 39 - INTERPRETATION - VALIDITY OF DEMONEITIZATION - EXCHANGE OF DEMONETIZED NOTES - PROCEDURE - SATISFACTION OF RESERVE BANK - GUIDELINES - FUNDAMENTAL RIGHT TO PROPERTY.
Fact of the Case:
Petitioner, a Scheduled Tribe member from Manipur, held Rs. 1,68,000 in one-thousand rupee notes in 1978. He attempted to deposit the notes with the Reserve Bank of India (RBI) in Gauhati after hearing rumors of demonetization but was asked to submit various documents and explanations. His appeal to the Central Government under Section 8(3) of the High Denomination Bank Notes (Demonetization) Act, 1978, was rejected.
Finding of the Court:
The Court held that the petitioner failed to provide sufficient information and explanations regarding the source of the notes, despite being given ample opportunity. The Reserve Bank's satisfaction in such matters cannot be subjective and must be based on objective considerations. However, the Court declined to prescribe specific guidelines for the Reserve Bank, considering the complex nature of its functions and the need to prevent illicit financial transactions.
Issues: 1. Whether the petitioner was given adequate opportunity to adduce evidence and explain the source of the demonetized notes. 2. Whether the Reserve Bank's satisfaction in exchanging demonetized notes can be subjective or must be based on objective criteria. 3. Whether the petitioner's fundamental right to property was violated by the demonetization process.
Ratio Decidendi: 1. The Court found that the petitioner was given adequate opportunity to explain the source of the notes, as evidenced by the various communications and requests for information from the Reserve Bank. 2. The Court held that the Reserve Bank's satisfaction in exchanging demonetized notes cannot be purely subjective but must be based on objective considerations and proper inquiry. 3. The Court determined that the petitioner's fundamental right to property was not violated since demonetized notes cease to be legal tender and their value can only be received in accordance with the provisions of the Demonetization Act.
Final Decision: The Court dismissed the petition, finding no merit in the petitioner's arguments and concluding that there was no substantial or procedural violation in the process followed by the Reserve Bank.
2. The petitioner belongs to the Scheduled Tribe of Tankghul Naga of Manipur and has been carrying on Agar wood business as lessee of Agar Mahals from time to time. He held Rs. 1,68,000/- (Rupees one lakh sixty-eight thousand only) in one-thousand rupee notes in 1978. In course of his business he had to remain in interior jungles, and hearing a rumour of demonetisation in the early part of 1978, he came to Imphal and thence to Gauhati to deposit the said notes, prepared a list thereof and submitted to the Currency Officer, Issue Department of the Gauhati Branch of the Reserve Bank of India who acknowledged the same by receipt dated 23-1-78 to the effect that the declaration of the petitioner was received and payment of the value of notes would be made only if the Reserve Bank of India were satisfied after making necessary enquiry that the reasons for the failure to submit the notes toe exchange in time were genuine, and that the petitioner would be informed in. due course. The petitioner was thereafter asked to submit a certificate from the Income-tax Officer, and to clarify as to the source from where the notes were received by him furnishing full and clear informations. The petitioner replied that he was an ignorant hillman, did not maintain any books of account concerning his business and was not in a position to produce any documentary evidence. He stated that the money came to his possession in different periods during the tenures of his leases. By a letter dated 4-11-78 he was required to furnish further necessary information including documentary evidence of Agar lesseeship and sources of his funds. The petitioner furnished some more informations, but ultimately received a letter on 19-7-79 from the Reserve Bank of India, Gauhati Branch, rejecting the prayer for exchange value of the notes. He served a notice on 28-11-79 upon the Reserve Bank of India demanding justice, else he would file a writ petition in the High Court. It appears that this notice was treated as an appeal by the Central Government under Section 8 (3) of the Act and it passed the impugned order dated 7-2-1980, rejecting the appeal. Prom the order it Is clear that the petitioner was given an opportunity to show cause as to why his appeal should not be treated as tune-barred and rejected on that ground alone. A reply dated 30-1-1980 was received from the petitioner where he did not show sufficient cause. Consequently, the appeal was rejected on that ground as well as on merits finding no reason to interfere with the order which had been passed after careful consideration of the facts of the case.
3. Mr. Manisena Singh, the learned counsel for the petitioner submits that the petitioner was not given adequate Opportunity to adduce evidence and the satisfaction of the Reserve Bank cannot be subjective but should be objective and this Court should prescribe the guidelines for consideration. Counsel submits that the petitioner's fundamental right to property has been denied in this case.
4. The above contentions have to be considered in the light of the provisions of the High Denomination Bank
Notes (Demonetisation) Act, 1976 under which demonetisation was made, as also of the provisions of the Reserve Bank of India Act 1934 which empowers the Reserve Bank of India to issue the Bank Notes and imposes the obligation upon it to exchange the notes.
5. The Reserve Bank of India has been constituted to regulate
