Money Seized Before Permissible Date Of Deposit: Bombay High Court Directs RBI To Accept Demonetised Currency; Facilitate Receipt Of Legal Tender In Exchange
The Bombay High Court also directed the RBI to verify the notes and, upon confirmation, exchange them for legal tender.
The Bombay High Court has directed the Reserve Bank of India to accept demonetised currency notes worth Rs. 20,00,000 which were seized from the Petitioners before the 30th December 2016 deposit deadline.
The Court also directed the Reserve Bank of India (RBI) to verify the notes and, upon confirmation, exchange them for legal tender within seven days of receipt. The Petitioners had approached the Court after the demonetised notes in Rs. 500 and Rs. 1,000 denominations were seized by the police on 26th December 2016, just days before the official deadline for depositing them.
A Division Bench of Justice AS Chandurkar and Justice MM Sathaye held, “The Income Tax Department having indicated that it did not intend to seize the said specified bank notes pursuant to which the Police Authorities returned the same to the petitioners on 14th January 2017, we find that the petitioners can be permitted to deposit the aforesaid specified bank notes for the value of Rs.20,00,000/- bearing the serial numbers indicated in AnnexureI to the affidavit dated 24th October 2018 with the 4th respondent. This would facilitate receipt of legal tender for the same value by the petitioners.”
Advocate Udaya Sankar Samudrala appeared for the Petitioners, while Senior Advocate Venkatesh Dhond represented the Respondents.
Brief Facts
The Income Tax Department, after conducting an inquiry, decided not to seize the currency and directed the police to return it to the Petitioners after the deadline had passed. However, by that time, the RBI had stopped accepting demonetised notes, leaving the Petitioners unable to exchange their money.
The RBI opposed the Petition citing the Specified Bank Notes (Cessation of Liabilities) Act, 2017 (the Act), and the notification by the Ministry of Finance, which required Petitioners to provide serial numbers of the seized currency for verification.
Court’s Reasoning
“By the time the Income Tax Department directed release of the specified bank notes on 10th January 2017 and they were actually received by the petitioners from the Police Authorities on 14th January 2017, the said specified bank notes ceased to be legal tender,” the High Court remarked.
The Bench noted that after the specified date, it was not permissible for the RBI to have accepted the said specified bank notes in the light of the provisions of the Act and the Notification dated.
However, the Court also noted that the Petitioners later submitted an affidavit listing the serial numbers of the notes.
“Since the serial numbers of the specified bank notes that were seized from the petitioners and returned thereafter are now available, the apprehension expressed on behalf of the Reserve Bank of India that the value of the aforesaid specified currency notes could not be paid to the petitioners in the absence of such serial numbers is taken care of,” the Bench stated.
“The availability of the serial numbers of the specified bank notes would also satisfy the requirement of Rule 2(a) of the Rules of 2017. We therefore do not find any reason to deny the petitioners the benefit of receiving the value of the aforesaid specified bank notes. As stated above, the seizure of the said specified bank notes was on 26th December 2016 which is prior to the permissible date of deposit which was 30th December 2016,” the Court explained.
Consequently, the Court ordered, “The 4th respondent shall verify the said specified bank notes with their numbers as indicated in Annexure-I to the affidavit of the petitioner no.1 dated 18th October 2018. After completing the necessary formalities, the amount equivalent to the said specified bank notes shall be made over to the petitioner no.1 on behalf of all the petitioners.”
Cause Title: Ramesh Bapurao Potdar & Ors. v. The Union of India & Ors. (Neutral Citation: 2025:BHC-AS:10232-DB)
Appearance:
Petitioners: Advocates Udaya Sankar Samudrala, Sujit Upadhyay and Shivesh Upadhyay
Respondents: Senior Advocate Venkatesh Dhond; Advocates D.P. Singh, Dhaval Patil, Shreyas Menkudale and Arjun Gupta
