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2026 Supreme(Bom) 896

2026 BHC(NAG) 6194
IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH : NAGPUR
URMILA JOSHI-PHALKE, NIVEDITA P. MEHTA, JJ.
Shri Girish Rameshchandra Malani - Appellant
Versus
Reserve Bank of India - Respondent
Writ Petition No. 647 of 2018
Decided On : 22-04-2026
Advocate Appeared :
For the Petitioner : Shri C.N. Deshpande, Shri R.M. Bhangde
For the Respondent : Shri A.J. Gilda, Shri S.S. Hulke, A.G.P.

Advocates:
For the Appellants/Petitioners: C.N. Deshpande
For the Respondents: R.M. Bhangde, A.J. Gilda, S.S. Hulke

Specified bank notes seized by authorities before cut-off date but returned after cannot be denied exchange merely on procedural non-compliance caused by the seizure itself.

Headnote:(A) Specified Bank Notes (Cessation of Liabilities) Act, 2017 - Sections 3 and 4 - Specified Bank Notes (Deposit of Confiscated Notes) Rules, 2017 - Rule 2 - Reserve Bank of India Act, 1934 - Sections 34 and 26(1) - Specified Bank Notes seized by law enforcement agencies prior to cut-off date - Exchange of demonetized currency after seizure by authorities - Conditions requiring serial numbers noted by law enforcement agency and mentioned in court direction cannot be applied rigidly where compliance rendered impossible due to authorities’ actions - Petitioner deprived of opportunity to deposit within prescribed period due to seizure and delayed return - Entitled to exchange value in legal tender upon production of serial number particulars.

(B) Constitutional Writ - Powers of High Court - Directions issued to facilitate exchange of specified bank notes where statutory conditions unfulfilled due to circumstances beyond control of affected party - Relief granted despite non-compliance with procedural requirements.

Facts of the case:
The amount of Rs.2,00,000/- in specified bank notes was seized by police during an election-related check prior to the deposit cut-off date and returned after the prescribed period elapsed. The seized amount was intimated to competent authorities who found it legitimate. Despite requests supported by serial number details, authorities declined exchange. Similar relief granted in decided cases where notes were held by authorities.

Findings of Court:
The petitioner cannot be penalized for circumstances beyond control arising from seizure by authorities. The requirement of serial numbers can be satisfied by details furnished in affidavit. Compliance with Rules cannot be insisted where rendered impossible by authorities. Relief directing acceptance and exchange of demonetized currency ordered.

Issues: Whether High Court can direct exchange of specified bank notes where serial numbers not noted by law enforcement agency and not mentioned in court directions; whether petitioner is entitled to relief despite non-compliance with Rules due to seizure by authorities.

Ratio Decidendi: The provisions constitute an integrated scheme circumscribing RBI’s power; however, conditions cannot be applied rigidly where petitioner had no control and compliance is impossible due to authorities’ act. High Court can direct exchange in such cases to prevent prejudice.

Result: Rule made absolute. Petitioner permitted to tender notes with serial numbers before RBI; RBI directed to verify and exchange value within prescribed timeframe.

Table of Content
1. rbi's defense: statutory restrictions and need for serial numbers in court order. (Para 11 , 12)
2. statutory framework under sbn act 2017 and rules limiting rbi's powers. (Para 16)
3. ruling that petitioner not penalized for circumstances beyond his control. (Para 18)
4. direction to rbi to accept and exchange specified banknotes. (Para 22)

JUDGMENT :

(PER : NIVEDITA P. MEHTA J.)

Rule. Rule made returnable forthwith with consent of the learned Counsel for the parties.

2. On 01/12/2016, the petitioner, Mr. Girish Rameshchandra Malane, was travelling towards Mahur for visiting Renuka Devi Temple and was carrying an amount of Rs.2,00,000/- in cash consisting of 400 currency notes of the denomination of Rs.500/-. During the course of the journey, his vehicle was intercepted by a police patrol team at Keroli Naka in view of the ongoing municipal elections, and the said cash amount was seized as a precautionary measure and deposited at Mahur Police Station and an entry to that effect was made in the General Diary.

3. The said seizure was duly intimated to the Income Tax Department via official communication dated 01/12/2016. Upon examination of the matter, the Income Tax Authorities concluded that the amount was legitimate and did not find it necessary to take any further action with regard to the said amount. It is thus clear that the legitimacy of the amount carried by the petitioner was not in dispute.

4. Accordingly, the amount of Rs.2,00,000/- was returned to the petitioner by the concerned police authorities on 31/12/2016. It is thus clear that though the amount was seized prior to the prescribed date for deposit of specified bank notes, the same came to be returned to the petitioner only after the said date.

5. By a Notification dated 08/11/2016 issued by the Government of India, specified bank notes in the denomination of Rs.500/- and Rs.1,000/- were declared to be no longer legal tender. The said notification provided a window for deposit of such specified bank notes in bank accounts up to 30/12/2016. Thereafter, the Specified Bank Notes (Cessation of Liabilities) Act, 2017 came into force, regulating the manner in which such specified bank notes could be dealt with and providing limited circumstances under which their value could be credited.

6. The petitioner thereafter approached the respondent No.1 – Reserve Bank of India, Nagpur, in the month of January, 2017 with a request to accept the aforesaid amount of demonetised currency notes and to provide equivalent value thereof in legal tender. The said request, however, came to be declined. The petitioner thereafter addressed communications dated 16/03/2017 and 27/04/2017 reiterating his request. In response, the petitioner received a communication informing him that in terms of the Notification dated 12/05/2017 issued by the Ministry of Finance, Government of India, the specified bank notes seized by law enforcement agencies could be accepted subject to fulfillment of certain conditions. Despite such communications, the petitioner was not granted the benefit of exchange of the said amount, which has led to the filing of the present writ petition.

7. Mr. C.N. Deshpande, learned Counsel for the petitioner, submitted that the petitioner was in lawful possession of the amount in question and the same was seized by the authorities prior to the cut-off date i.e. 30/12/2016. The petitioner was thus deprived of the opportunity to deposit the said amount within the prescribed period on account of the action of the authorities themselves as the amount was in their custody till 31/12/2026. It is further submitted that the delay in deposit was entirely beyond the control of the petitioner.

8. Placing reliance on the Notification dated 12.05.2017, it is argued that specified bank notes seized by law enforcement agencies on or before 30.12.2016 are permitted to be tendered at designated offices of the Reserve Bank of India, subject to compliance of conditions. Learned counsel su

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2026 Supreme(Bom) 896

Specified bank notes seized by authorities before cut-off date but returned after cannot be denied exchange merely on procedural non-compliance caused by the seizure itself.

Cases Referred (1)