Mumbai, Apr 23 The Bombay High Court has directed the Reserve Bank of India to exchange demonetised Rs 500 notes worth Rs 2 lakh that were seized from a man during demonetisation and returned to him after the prescribed period.
In its order on Wednesday, the court’s Nagpur bench of Justices Urmila Joshi-Phalke and Nivedita Mehta said the man cannot be held at fault as the notes were seized by the police before the cut-off date and remained in their custody till after the exchange window closed.
The directive to the RBI was passed on a petition filed by one Girish Malani.
“The petitioner cannot be placed in a disadvantageous position on account for an act for which he is not responsible,” the court said.
In his petition, Malani said he was travelling towards Mahur with 400 currency notes, each of Rs 500 denomination, on December 1, 2016, when police seized the money.
His vehicle was intercepted by a police patrol team in view of the ongoing municipal elections, and the Rs 2 lakh cash was seized as a precautionary measure and deposited at the Mahur police station.
The seizure was intimated to the Income Tax department, which later concluded that the money was legitimate and no further action was necessary.
The notes were returned to Malani on December 31, 2026.
The Government of India issued a notification on November 8, 2016, declaring currency notes of Rs 500 and Rs 1,000 as not legal. The notification permitted citizens to deposit the said currency notes for exchange in their banks up to December 30, 2016.
In January 2017, Malani approached the RBI seeking to exchange the notes. His request was, however, declined.
In his plea, Malani said the money lawfully belonged to him and that he was deprived of the opportunity to deposit the demonetised currency notes and have them exchanged for legal tender.
The plea said that as per the government notification, currency notes seized by law enforcement agencies on or before December 30, 2016, were permitted to be tendered to the RBI, subject to compliance with certain conditions.
Despite such compliance, the RBI refused to accept Malani’s currency notes and provide an exchange, the petition said.
The RBI opposed the plea, claiming that the condition specifying that the serial numbers of the currency notes had to be noted down by the law enforcement agency was not complied with in the present case.
The high court, however, noted that the compliance of conditions cannot be applied in a rigid manner where the fault does not lie with the person but with the authorities.
“The petitioner (Malani), therefore, had no control over the amount during the relevant period,” HC said, adding he can thus be permitted to deposit the amount and seek exchange from the RBI.
The bench directed Malani to deposit the demonetised notes with the RBI within one week, which shall then verify and tender legal exchange within seven weeks thereafter.
