RBI Should Consider Genuine Applications To Exchange Demonetised Notes Of Persons Who Missed Deadline, Says Supreme Court During Hearing

Justice Gavai pointed out that a power was vested in the Reserve Bank of India under Sub-section (2) of Section 4 of the Specified Bank Notes (Cessation of Liabilities) Act, 2017, which must be exercised if the central bank is satisfied as to the genuineness of a claim. "Because this element of satisfaction and discretion exists, there is also a corresponding duty to decide whether a particular case is genuine. Rejection of claims in genuine cases would be an arbitrary exercise of power," the judge said.

Justice Gavai added, "You would also not like to open a pandora's box, but if there are genuine cases, the Reserve Bank will have to consider them." At the same time, Justice Gavai conceded that the apex court could not "sit in appeal" over the decision rendered by the central bank as to the genuineness of a claim, as long as relevant factors was taken into account while making that determination.

The Attorney-General also disputed the contention that demonetising high-value banknotes amounted to compulsory acquisition of property and as such, subject to the discipline of Article 300A. He said, "There is an exchange provision available under the Act. Therefore, there is no acquisition of property at all. If an exchange provision had not been given under the Act, then this article could have been invoked." He submitted. He added, "The next question is where the line must be drawn for fixing of a date. This was ascertained on the basis of criteria that the government found suitable. Unless any mala fide intentions can be imputed to the government, this is not amenable to judicial review."

Senior Advocate Shyam Divan, appearing on behalf of an aggrieved petitioner who had left behind Rs 1.62 lakhs in cash when he travelled abroad in April 2016 but could not exchange his money when he finally returned to the country in February 2017, strenuously argued that the assurances made by the Prime Minister in his address to the nation with respect to the time granted to exchange old currency notes could not be ignored by the Reserve Bank of India and the central government. The senior counsel, after taking the court through a compilation of notifications, notices, circulars, and press releases issued by the Ministry of Finance, the Reserve Bank, and the Press Information Bureau, said, "All these were completely consistent with the prime minister's assurance. Everyone – the prime minister, government bureau, finance ministry, press bureau, Reserve Bank – was speaking in one voice. Broadly, the representation was that end of December was not going to be a hard stop with respect to the exchange of notes."

These sentiments were also echoed by Advocate Prashant Bhushan. He was representing a bereaved wife who sought to exchange her husband's savings, which she discovered only after the expiry of the window for exchanging old notes. "There would be many such people who cannot come to this court. The Prime Minister said that the window would be open till the end of March, in his address to the nation. This sudden extinguishing of the window, or even fixing of such an arbitrary deadline which prevents genuine people from using or exchanging their hard-earned money, is wrong," Bhushan told the Bench.

"Even if there is a rule, an application may be written for a deviation from the rule. Genuine applications may have to be considered by the authority. That may be read into this Section 4(2)."the Attorney-General admitted.  "That is what we are saying, we are not asking you to extend the date," Justice Gavai clarified.

Case TitleVivek Narayan Sharma v. Union Of India [WP (C) No. 906/2016] and other connected matters