In a significant ruling, the Bombay High Court has directed the Reserve Bank of India (RBI) to accept old demonetised currency notes amounting to ₹20 lakh from a group of Kolhapur residents, following a procedural delay caused by an Income Tax department raid. The court’s decision came after the seized notes, confiscated just before the demonetisation deadline in 2016, were returned to the petitioners post the cut-off date.
The controversy began in November 2016, when the Government of India demonetised ₹500 and ₹1000 notes and set December 31, 2016, as the deadline for depositing the invalidated currency in bank accounts. The Kolhapur group, however, faced an unforeseen hurdle when their cash was seized during an Income Tax raid on December 26, 2016. The subsequent release of their funds on January 17, 2017, occurred after the RBI’s stipulated deadline, leading to their inability to deposit the demonetised notes.
Upon approaching the RBI to deposit the returned amount, they were turned away due to the missed deadline. This led the aggrieved party to seek legal recourse, represented by advocate Udaya Sankar Samudrala. They argued that the delay was not their fault as the currency was in governmental custody during the critical period.
The RBI, represented by senior advocate Venkatesh Dhond, countered by citing the Specified Bank Notes (Cessation of Liabilities) Act, 2017. The Act stipulates that holders of demonetised currency needed to provide the serial numbers of the notes for depositing them post the deadline. According to the RBI, the absence of these serial numbers in their records barred the bank from accepting the notes.
In response, the petitioners’ advocate pointed out that it was the responsibility of the tax and police authorities to record these serial numbers at the time of the seizure—a step that was neglected, leading to the current predicament.
After considering the arguments, the division bench of Justice A.S. Chandurkar and M.M. Sathaye sided with the petitioners on February 27. The justices held that since the demonetised notes were out of the petitioners’ possession during the deadline, it would be unjust to penalize them. They ordered the RBI to allow the deposit of the specified bank notes and to facilitate the exchange of the same within one week of the deposit, ensuring the petitioners receive the full value of ₹20 lakh.
