PIL says only Centre can withdraw notes, RBI says managing money its domain; HC reserves order

The division bench of Chief Justice Satish Chandra Sharma and Justice Subramonium Prasad reserved its verdict after hearing arguments from both sides.

Appearing for Gupta, senior advocate Sandeep P Agarwal submitted, “I am not challenging the powers. If they want to discontinue Rs 2,000 notes, (the) direction has to come from the Central government.” He also said, “How will bank notes continue to be legal tender when it has been withdrawn?”

He referred to an article published in the Reserve Bank of India Occasional Papers on the RBI’s Clean Note Policy, which stated that the central bank came out with the Clean Note policy to overcome the problem of soiled, mutilated notes. It was thereafter submitted that the “Clean Note policy does not provide that they can withdraw notes”.

The RBI, represented by senior advocate Parag Tripathi, submitted that Delhi HC had dismissed a PIL against the same notification on Monday and argued that the Supreme Court has said there can’t be “serial PILs” — where the first challenges one aspect and then a second PIL challenges another aspect.

He also said, “Rs 2,000 notes had come for a specific purpose, and the purpose has been satisfied.”

In the previous hearing, the RBI had argued that this exercise was only for exchange of notes, and after September 30 — the deadline for exchanging currency notes of Rs 2,000 denomination — a decision may be taken after seeing a result of the exchange.

In his plea, Gupta has stated that the RBI has no independent power under the Reserve Bank of India Act, 1934, to direct non-issue or discontinuance of issue of bank notes of any denominational values and that power is vested only with the Centre under Section 24 (2) of RBI Act, 1934.

Among other reliefs, the PIL seeks quashing of the RBI notification concerned, and all subsequent notifications in this regard, whereby the RBI has taken “arbitrary unreasonable decision” to withdraw Rs 2,000 banknotes from circulation.