The Delhi High Court was informed by the Reserve Bank of India (RBI) on Friday that the decision to remove Rs 2,000 notes from circulation is only a “currency management exercise and not demonetisation.”
On a PIL filed by petitioner attorney Rajneesh Bhaskar Gupta contesting RBI's decision, the central bank defended its choice. According to the RBI Act, the PIL claimed that it does not have the independence necessary to make such a determination.
Senior Advocate Parag P. Tripathi, who appeared on behalf of the bank, requested the court to postpone hearing the case since the bench had already reserved judgement in a related PIL brought by petitioner attorney Ashwini Upadhya.
“This is not demonetization; it is a monetary management exercise. Prior to this, the bench has reserved judgement on a case. Let that order arrive, and then we can have it, is what I'm asking. The majority of the material would have been resolved there. It is fundamental to economic policy, according to Tripathi.
The petitioner claims that it is “unjust, arbitrary, and contrary to public policy” for the banknotes to be withdrawn after 4-5 years with a set timeframe.
“The RBI has no authority over this. The RBI Act makes no mention of RBI having the authority to make such a choice on its own. If the federal government had made the choice, I would have understood,” the petitioner claimed.
The court scheduled the subject for the next hearing on May 29 after hearing from the parties.
A brief remark on the case was requested from the parties.
The court has been notified by RBI's legal counsel that a different petition with the identical subject matter has already been heard. He offers a Monday listing prayer. Monday,” the court declared.
According to the PIL, the RBI, as Respondent No. 1, lacks the independent authority required by the Reserve Bank of India Act, 1934, to order the withdrawal of any denominational value banknotes. According to section 24 (2) of the RBI Act of 1934, the Central Government alone has this authority.
The PIL emphasises that the questioned circular omits to state that the central government has decided to remove the banknotes.
It claims that, despite taking such a big and arbitrary action as removing the banknotes from circulation, the RBI has not fully considered the possible consequences for the general population and has only offered the “Clean Note Policy” as a reason.
The PIL states that damaged, fake, or dirty banknotes of any denomination are normally pulled from circulation and replaced with freshly issued ones, citing the terms of the RBI's clean note policy.
Advocate Gupta highlights in the PIL that “in the present case, however, only the Rs 2,000 denomination is being withdrawn within a specific deadline, without any indication that the RBI is introducing a similar replacement banknote into circulation.”
According to the PIL, small vendors and shops have already stopped taking the Rs 2,000 currency, raising worries about the effects of its withdrawal.
It also claims that the RBI has not clarified what advantages the withdrawal of the Rs 2,000 denomination would bring to the RBI or the national economy. The PIL also called attention to the well-known difficulties that people had to deal with when the 500 and 1,000 rupee notes were demonetised in 2016.
“It is respectfully argued that the Rs 2,000 denomination, printed in 2016 and beyond, continues to have strong security characteristics and is not in need of being withdrawn from circulation, whether on the basis of the Clean Note Policy or for any other reason. Additionally, rather than requiring the removal of all undamaged banknotes, the Clean Note Policy expressly requires the withdrawal of damaged, fake, or filthy banknotes, according to Gupta in the PIL.
A major portion of public monies were used to produce the Rs 2,000 notes, which would be wasted as a consequence of their removal, according to the PIL.
It is politely stated that there is a chance that the RBI's contested announcement or circular may cause worried people to wait at banks throughout the nation in the sweltering months of May, June and July. Similar to the demonetisation era in 2016, when over 100 persons died as a result of the Central Government's poor policy choice to demonetize the Rs 1,000 and Rs 500 notes, this circumstance might result in the loss of multiple lives. Now, despite the lack of any formal authority, a similar situation is playing out under the guise of the RBI's Clean Note Policy, claims Gupta.
