Supreme Court Dismisses Plea Challenging RBI Notifications Allowing Exchange Of ₹2000 Notes Without ID Proof

The Supreme Court on Monday refused to entertain a plea challenging Reserve Bank of India (RBI) and State Bank of India's (SBI) notifications that permit exchange of Rs. 2000 currency notes without requirement of any identity proof. The plea was filed by Advocate Ashwini Upadhyay and it argued that the Government's decision not to insist upon requirement of identity proof for exchange of Rs. 2000 denominations banknotes encouraged black money, money laundering, profiteering, and other such activities. The matter was listed before a bench comprising CJI DY Chandrachud and Justice PS Narasimha.

At the very outset, the Chief Justice said–

"Mr Upadhyay, suppose you take a 2000 Rs note and you give it to a shopkeeper. Forget that, let's take a 500 Rs note. Would a shopkeeper ask you to show your identity card and then only sell you vegetables? No."

He added that the RBI's contention was that the purpose of the Rs 2000 currency notes had been served and the same was withdrawn as legal tender. However, Upadhyay insisted that the decision was perverse and arbitrary in nature. He contended that they are with people doing illegal activities and hence if the currency exchange is allowed without any ID-proof, it will result in money laundering. Since Rs.2000 notes are mostly used by middle class people, the holders will definitely have a bank account and hence a direction that the money has to be deposited in one's bank account will not prejudice anyone, he suggested.

The bench, seemingly insistent upon dismissing the plea, stated that the decision fell within the ambit of executive policy and not judicial discretion. CJI Chandrachud added–

"You cannot equate desirability with legality. What you're saying may be desirable but the converse of it may not be arbitrary."

Continuing his arguments, Upadhyay submitted–

"This notification gives way to legalising black money."

However, the bench was quick to shoot the argument down. CJI DY Chandrachud remarked–

"Even taking your argument to furthest, it doesn't convert black money into white. This is not a modality for conversion. A large amount of money changes hands in land transactions. Will you then ban land transactions?"

With this, the plea was dismissed.

Earlier, the matter was mentioned by Upadhyay before the Supreme Court vacation bench comprising Justice Sudhanshu Dhulia and Justice KV Viswanathan. However, the bench had noted that there was no urgency to take up the matter and had asked Upadhyay to move before a regular bench for the same.

Previously, Upadhyay's plea was also dismissed by the Delhi High Court's division bench comprising Chief Justice Satish Chandra Sharma and Justice Subramonium Prasad. While dismissing the plea, the Delhi High Court had observed that the purpose of issuing the denominations of Rs 2000, which was to meet the currency requirement of the economy in an expeditious manner in November 2016 when all Rs. 500 and Rs.1000 denomination banknotes were declared to be not legal tender, had been achieved. Thus, the Government's decision not to insist upon requirement of identity proof for exchange of Rs. 2000 denominations banknotes could not be considered as perverse, arbitrary or something which encouraged black money, money laundering, profiteering etc.

Through his plea, Upadhyay had also prayed that RBI and SBI be directed to ensure that the Rs. 2000 currency notes were deposited in respective bank accounts only, so that the no one could deposit the money in other accounts. As per the plea, this would ensure that people having black money and disproportionate assets could be identified easily. He had also sought a direction for appropriate steps against the black money and disproportionate asset holders in order to “weed out corruption, benami transaction, and secure fundamental rights of citizens.”

The RBI had announced its decision to withdraw Rs. 2000 notes from circulation this year itself. However, it added that the currency will continue as Legal Tender. It permitted people to deposit Rs 2000 banknotes into their bank accounts and/or exchange them into banknotes of other denominations at any bank branch.

Case Title: Ashwini Kumar Upadhyay v. Union Of India And Ors. SLP(C) No. 12034/2023

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