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The RBI informed the Delhi High Court on Friday that the removal of banknotes having a value of Rs 2000 from circulation was a “currency management exercise” and a matter of economic policy.
The subject was scheduled for hearing on May 29 by the court, which was considering a public interest lawsuit contesting the RBI’s decision to remove the currency from circulation.
The RBI requested that a panel led by Chief Justice Satish Chandra Sharma postpone hearing the case because the court had reserved judgement on another PIL involving the withdrawal notification.
“List the matter on Monday. Give a small note also,” the bench, which also comprised Justice Subramonium Prasad, told the parties.
Rajneesh Bhaskar Gupta’s current petition, according to RBI counsel senior advocate Parag P Tripathi, was “misplaced” because the removal of banknotes with a denomination of Rs 2000 was a “currency management exercise” rather than demonetisation and a question of economic policy.
“Your lordship has reserved order with respect to this purported demonetization issue in an earlier writ petition. Bring on that order. After then, your lordship may have it, he said.
Earlier this week, the court had indicated that it will issue a ruling regarding the lawyer Ashwini Kumar Upadhyay’s claim that the RBI and SBI had issued notices allowing the exchange of Rs 2000.
banknotes without proof were arbitrary and against the laws enacted to curb corruption.
The decision to facilitate their exchange was made for operational convenience, the RBI had stated at the time, and the withdrawal of Rs 2000 notes was not demonetisation but rather a statutory process.
According to the petitioner in this case, only the Government could have made the decision to stop issuing Rs 2000 currency notes because the RBI lacks the authority to do so.
In his petition, the petitioner claimed that section 24 (2) of the RBI Act, 1934, which gives the Centre exclusive authority over the issue of banknotes of all denominations, does not grant the RBI any independent authority to direct the non-issue or discontinuance of issue of banknotes of any denominational values.
It added that the RBI notification gave no other reason except “Clean Note Policy” for the “big arbitrary decision of withdrawing the Rs 2000 denomination banknotes from circulation without analysis of the expected problems of the public at large”.
“RBI has not cleared so far what is the benefit to the RBI or National Economy after withdrawing the denomination of Rs.2000/- banknote from circulation, however the hardship to the citizen of the country is very well known and seen during the demonetization of denomination of Rs.500 and Rs 1000 in the year 2016 and withdrawn of Rs.2000 is not much different from previous demonetization,” the plea said.
On May 19, the Reserve Bank of India (RBI) had announced withdrawal of Rs 2,000 currency notes from circulation, and said existing notes in circulation can either be deposited in bank accounts or exchanged by September 30.
The bank notes in Rs 2,000 denomination will continue to be a legal tender, the RBI said in a statement.
In order to ensure operational convenience and to avoid disruption of regular activities of bank branches, the RBI has said exchange of Rs 2,000 bank notes into bank notes of other denominations can be made up to a limit of Rs 20,000 at a time at any bank starting from May 23.
In a communication to chief general manager of all its local head offices, State Bank of India (SBI) informed that the facility of exchange of Rs 2,000 notes by public up to a limit of Rs 20,000 at a time will be allowed without obtaining any requisition slip.
“Further, no identity proof is required to be submitted by the tenderer at the time of exchange,” the communication dated May 20 said.
(With PTI Inputs)
