New Delhi, May 23 : The Reserve Bank of India (RBI) presented its defense before the Delhi High Court on Tuesday, stating that the withdrawal of Rs 2000 notes is not a demonetization move but rather a statutory exercise aimed at operational convenience. The court was addressing a plea filed by lawyer Ashwini Kumar Upadhyay, who argued that the notifications issued by the RBI and SBI allowing the exchange of Rs 2000 banknotes without proof were arbitrary and contrary to laws enacted to combat corruption.
The bench, comprising Chief Justice Satish Chandra Sharma and Justice Subramonium Prasad, assured that it would pass an appropriate order on the public interest litigation presented by the lawyer. Upadhyay clarified that his challenge was not against the decision to withdraw the Rs 2000 banknotes but rather against the exchange of the currency without the requirement of a slip or identity proof. He advocated for allowing the exchange of Rs 2000 banknotes through deposit into bank accounts, arguing that excluding ID proof would only benefit mafias, gangsters, and individuals involved in criminal activities.
Representing the RBI, senior advocate Parag P Tripathi emphasized that the court should not interfere in such matters as the decision to allow the exchange of Rs 2000 banknotes was made for operational convenience. He clarified that the exercise should not be considered as demonetization since the Rs 2000 banknote was not widely used, and other denominations still cater to the currency needs of the public. Tripathi stated that none of the petitioner’s claims raised constitutional issues.
After hearing the arguments from both sides, the court reserved judgment on the matter. The petitioner’s plea contends that the notifications issued by the RBI and SBI, enabling the exchange of Rs 2000 banknotes without a requisition slip or identity proof, are arbitrary, irrational, and violate Article 14 of the Indian Constitution. The petitioner highlights the concerns regarding the hoarding of large amounts of currency by separatists, terrorists, Maoists, drug smugglers, mining mafias, and corrupt individuals.
The plea also emphasizes that high-value cash transactions are the primary source of corruption and various illegal activities such as terrorism, naxalism, separatism, radicalism, gambling, smuggling, money laundering, kidnapping, extortion, bribing, and dowry. The petitioner urges the RBI and SBI to ensure that Rs 2000 banknotes are only deposited in respective bank accounts. The plea suggests that depositing the currency in bank accounts would facilitate the identification of individuals possessing black money and disproportionate assets.
On May 19, the RBI announced the withdrawal of Rs 2000 currency notes from circulation, stating that existing notes could be deposited in bank accounts or exchanged until September 30. The RBI clarified that the Rs 2000 banknotes would continue to be legal tender. To ensure operational convenience and avoid disruptions in bank branches, the RBI allowed the exchange of Rs 2000 banknotes into other denominations up to a limit of Rs 20,000 at a time, starting from May 23.
In a communication to the chief general managers of all its local head offices, the State Bank of India (SBI) informed the public that the exchange of Rs 2000 notes up to a limit of Rs 20,000 at a time could be done without the need for a requisition slip. The communication dated May 20 also stated that no identity proof was required during the exchange process.
