September 21, 2023

Delhi HC dismisses plea challenging RBI’s decision to withdraw Rs 2000 note from circulation

The Delhi High Court on Monday dismissed a Public Interest Litigation (PIL) seeking direction to quash the Reserve Bank of India’s (RBI) decision to withdraw the Rs 2000 denomination banknotes from circulation. This was the second such PIL challenging the May 19 decision of RBI.

The Division bench of Justice Satish Chander Sharma and Justice Subramonium Prasad decided to dismiss the petitions. The RBI has opposed the plea, stating that Rs 2000 notes continue to be legal tender. The same bench recently dismissed a plea which challenged the permission to exchange Rs 2000 currency notes without any identity proof following the withdrawal of the highest-value currency notes from circulation. Through the plea, it had sought direction to RBI and the Ministry of Finance, Govt. of India to issue a notification/circular for the public at large clarifying the estimated life span of each denomination banknote which is presently in circulation and also estimated time/year of being withdrawn from circulation in future by RBI under Clean Note Policy or otherwise. Petitioner Rajneesh Bhaskar Gupta through plea argued that the RBI has no independent power under the Reserve Bank of India Act, 1934 to direct the non-issue or the discontinuance of issue of bank notes of any denominational values and the said power is vested in only with the Central Government under section 24 (2) of the RBI Act, 1934.

The plea further submitted that as per the reasoning given by the present RBI Governor, if the estimated life span of denomination of Rs.2000 is about 4-5 years then all other banknotes like Rs.500, Rs.200. Rs.100, Rs.50 Rs.20 Rs.10 Rs.5 etc. printed in the same year of banknote of Rs.2000/- must have a same estimated life span and are presumed to be withdrawn under the same Clean Note Policy of RBI at any time without considering the consequences/hardship of the same upon the public at large. The small vendor/shopkeeper has stopped taking Rs 2000 banknotes after the RBI Notification/circular in question and not considering that the legal validity of the said note remains valid till September 2023 which creates an unprecedented situation for the public at large having such notes and only the remedy is left to move to the bank in his/her official working hours for depositing/exchanging the said Rs 2000 banknotes, stated the petition. On May 19, the RBI decided to withdraw the Rs 2000 denomination banknotes from circulation but said it will continue to remain as legal tender. However, RBI has advised banks to stop issuing such banknotes with immediate effect.

The Rs 2000 denomination banknote was introduced in November 2016 under Section 24(1) of the RBI Act, 1934, primarily to meet the currency requirement of the economy in an expeditious manner after the withdrawal of the legal tender status of all Rs 500 and Rs 1000 banknotes in circulation at that time. The objective of introducing Rs 2000 banknotes was met once banknotes in other denominations became available in adequate quantities. Therefore, the printing of Rs 2000 banknotes was stopped in 2018-19. People can exchange or deposit their Rs 2,000 notes in bank branches and regional branches of RBI. A non-account holder also can exchange Rs 2000 banknotes up to a limit of Rs 20,000 at a time at any bank branch. September 30 has been decided as the last date for the purpose of completing the exercise in a time-bound manner and to provide adequate time to the public. RBI may later revisit the September deadline based on the situation going ahead. (ANI)