The Supreme Court remarked orally on Friday during the hearing of the appeals challenging demonetisation that the Reserve Bank of India should take into account the legitimate applications made by those who missed the deadline for exchanging the demonetised currency notes.

The five-judge panel, which is made up of Justices S. Abdul Nazeer, B.R. Gavai, A.S. Bopanna, V. Ramasubramanian, and B.V. Nagarathna, is debating a number of issues, including whether the Union Government's decision to demonetize notes with denominations of Rs. 500 and Rs. 1000 was legitimate.

Justice Gavai pointed out that 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 utilized if the central bank is satisfied as to the authenticity 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.

The extension of the deadlines for exchanging demonetised banknotes is non-negotiable, according to India's attorney general R Venkataramani, although the Reserve Bank will take specific instances into consideration if the applicants meet the necessary requirements and the central bank is satisfied. Speaking of the "700 odd applications" the Reserve Bank received after the grace period to credit the value of demonetised notes, Venkataramani added, "A series of extensions cannot be granted with respect to the extension of time because it will introduce endless uncertainties in the process."

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 attorney Shyam Divan argued vehemently that the Reserve Bank of India and the central government could not disregard the Prime Minister's assurances made in his address to the nation regarding the time granted to exchange old currency notes. The petitioner, who had left behind Rs. 1.62 lakhs in cash when he travelled abroad in April 2016, was unable to exchange his money when he eventually returned to the country in February 2017. After walking the court through a collection of announcements, notices, circulars, and press releases from the Press Information Bureau, Reserve Bank, and Ministry of Finance 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."

"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 Title: Vivek Narayan Sharma v. Union Of India and other connected matters

Citation: WP (C) No. 906/2016

Link: https://main.sci.gov.in/supremecourt/2016/37662/37662_2016_3_501_39921_Order_24-Nov-2022.pdf