Bombay HC Orders RBI To Accept Rs 20 Lakh In Old Demonetised Notes

The Bombay High Court has ordered the Reserve Bank of India (RBI) to accept the old demonetised currency of Rs 20 lakh from a set of Kolhapur residents. The petitioners lost their money when the Income Tax department grabbed it in a raid, days ahead of the December 31, 2016, deadline to deposit demonetised Rs 500 and Rs 1,000 notes. By the time the funds were released, the RBI had ceased to accept old notes, rendering the petitioners incapable of swapping them. The group had collected Rs 20 lakh and was going to deposit it in their common account after the government declared demonetisation in November 2016. But on December 26, 2016, the Income Tax department raided them and confiscated the cash.

Upon finalising its probe, the department chose to refund the money. On January 10, 2017, the assistant director of income tax told the police that the department had no cause to retain the seized cash. The money was returned to the petitioners on January 17, 2017. They were refused when they tried to deposit it in the RBI since the deadline had expired.

The petitioners, who were moved by advocate Udaya Sankar Samudrala, approached the Bombay High Court, contending that they were not able to do so because of no fault of theirs. Their lawyer urged that the authorities had seized money and the time taken to return it meant they could not deposit the amount on time.

Senior counsel Venkatesh Dhond, who represented the RBI, referred to the Specified Bank Notes (Cessation of Liabilities) Act, 2017, and a May 2017 finance ministry notification. He claimed that the RBI could accept only demonetised notes whose serial numbers were noted and given. Without those details, he argued, the RBI was statutorily prevented from accepting the notes and giving them in exchange for valid tender.

The petitioners had responded by stating that police and tax officials were supposed to note down the serial numbers when the cash was seized. Since this was not accomplished, they were left out of doing what RBI was asking for.

On February 27, a division bench of Justice A.S. Chandurkar and Justice M.M. Sathaye delivered a verdict in favour of the petitioners, holding that they cannot be penalised for reasons beyond their control. The court recognised that the petitioners did not possess the notes at the time the deadline was over and held that they should be permitted to deposit the Rs 20 lakh with the RBI.

The court asked the petitioners to submit the notes to the RBI within a week. The RBI was asked to check the cash and exchange it with legal tender.

This decision reiterates the need for fairness in instances when people could not follow demonetisation regulations owing to official actions. The judgement provides a precedence for others, who might have encountered the same problems because of legal seizures or procedural delays. By declaring that the petitioners should not pay the price for administrative errors, the Bombay High Court has protected rightful claimants from access to their due money.

The case points to the continuing manifolds of demonetisation, even years after the policy was put into action. Though demonetisation was meant to stem black money and fake currency, procedural issues have resulted in legal battles for those who are trapped in exceptional situations.