Ashok Kumar (Karta) & Ors. vs The Deputy Governor & Ors.
2016 Latest Caselaw 435 Del

$~11
*    IN THE HIGH COURT OF DELHI AT NEW DELHI
+      W.P.(C) 5026/2014 & CM No.2893/2016 (of R-5 for condonation of
       20 days delay in filing CA)
       ASHOK KUMAR (KARTA) & ORS.                ..... Petitioners
                   Through: Ms. Vandana Sharma, Mr. Samundra
                            Jain and Mr. Abhay Singh Kushwaha,
                            Advs.
                               Versus
    THE DEPUTY GOVERNOR & ORS.                    ..... Respondents
                  Through: Mr. J.P. Sengh, Sr. Adv. with Mr.
                            H.S. Parihar, Mr. K.S. Parihar and Ms.
                            Vanessa Singh, Advs. for R-1&2.
                            Mr. Rajat Sharma and Mohd.
                            Nadeem, Advs. for R-3.
                            Mr. Vivek Singh and Mr. Randhir
                            Kumar, Advs. for R-4.
                            Mr. Ashish Prakash, Mr. Ramesh
                            Kumar and Mr. Amrendra Singh,
                            Advs. for R-5.
                            Mr. M.C. Saluja and Mr. Rajvinder
                            Singh, Advs. for R-6.
                            Mr. Kush Sharma, Adv. for R-7.
CORAM:
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
                          ORDER

% 20.01.2016

1. The 45 petitioners claim to be carrying on business of money

exchange of soiled, mutilated and torn Indian Currency Notes and have filed

this petition impleading the Reserve Bank of India (RBI), Punjab National

Bank (PNB), State Bank of Bikaner & Jaipur (SBBJ) and Bank of India

(BOI) as respondents thereto and seeking a direction to the said respondents

to permit the petitioners to exchange the soiled, mutilated and imperfect

Indian Currency Notes, as per the Scheme circulated by the respondent RBI.

2. The petition was entertained and counter affidavits have been filed.

3. The senior counsel for the respondent RBI has at the outset contended

that since the petitioners claim to be carrying on business in the exchange of

soiled, mutilated and imperfect Indian Currency Notes i.e. they buy such

Currency Notes by paying to the holder thereof less than the value of the

Currency Notes and then present the Currency Notes to the RBI/other Banks

for exchange and which business is illegal, they are not entitled to any such

direction. The counsels for the other Banks have also voiced the same view.

4. However, on enquiry as to whether the said business is barred or

prohibited under any Law, Rule or Regulation, none is shown. It is also not

the case of respondent that the Scheme circulated by RBI for exchange of

soiled, mutilated and imperfect Indian Currency Notes places any prohibition

on such business or limits in any manner the number of Currency Notes

which any one individual can present at a time for exchange.

5. I am of the view that without such a business being barred by any

Law, Rule or Regulation made under a Law or otherwise shown to be illegal

or against public policy, the respondents cannot object to the grant of relief,

if any to the petitioners on the principle of the petitioners and their customers

from whom they purchase such Currency Notes being in pari delicto. To

me, it appears that it matters not to the respondents, for what value the

petitioners have acquired the soiled, mutilated and imperfect Currency Notes

which are presented for exchange at the Counter of the respondent RBI or

other Banks; that is a matter of agreement between the holder of the

Currency Notes who has transferred / sold the same to the petitioners and the

petitioners. As long as the petitioners or any of them are lawful holders

thereof, they would be entitled to present the same for exchange. Experience

of life shows that the task of visiting the Bank and having the soiled /

mutilated Currency Notes exchanged is a tedious and time consuming one,

often not worth the value of the Currency Notes to be exchanged. In such a

scenario, persons such as the petitioners, easily accessible in the markets, fill

the vacuum by purchasing such Currency Notes at a discount and taking over

the task aforesaid of visiting the Bank, standing in a queue and having the

Currency Notes exchanged, for the consideration of course of having paid

discounted value thereof.

6. Article 301 of the Constitution of India guarantees freedom of trade

and commerce and Article 304 empowers the legislature to by law place only

such restriction thereon as are reasonable and required in public interest.

(see The District Collector of Hyderabad Vs. Ibrahim & Co. (1970) 1 SCC

386). Article 19(1)(g) also confers it a status of fundamental right and

Article 19(6) again permits reasonable restrictions thereon to be placed only

by law made in interest of general public. The respondents have not cited

any law by which the trade and business of soiled / mutilated Currency Notes

may be restricted.

7. The counsels for the respondents have next contended that the Master

Circular dated 1st July, 2013 of the respondent RBI directing the Banks to

provide the service inter alia of exchanging soiled / mutilated / defective

Currency Notes is for the facility of the citizens and members of the public;

individual citizens, members of public would approach the RBI or the Banks

for exchanging a few Currency Notes at a time; on the contrary the

petitioners, since are carrying on business therein, present a large number of

Currency Notes together for exchange and which poses administrative

difficulties in exchange thereof. It is informed that exchange of a soiled,

mutilated and imperfect Currency Note entails a detailed examination thereof

by an expert to judge the genuineness thereof as well as computation of the

value to be paid therefor in accordance with the said Master Circular and all

of which takes time.

8. I am of the opinion that as long as the trade/business which the

petitioners are carrying on is not controlled/regulated by law, the aforesaid

factors would not permit the respondents to refuse to exchange the soiled /

mutilated / imperfect Currency Notes so presented by the petitioners, thereby

curtailing the business / trade therein of the petitioners. Such refusal would

amount to restricting by executive fiat what has been permitted by the

Constitution of India to be done by law only. The same cannot be allowed.

9. The Indian Currency Notes contain a promise on the part of the Govt.

of India / RBI to pay to the bearer thereof the value thereof and as long as the

petitioners are the bearer of the said Currency Notes, even though soiled /

mutilated / imperfect, by lawfully acquiring the same from earlier bearer

thereof, the respondents are bound to exchange the same in terms of the

Master Circular of the RBI.

10. The Master Circular is not informed to contain any limitation on the

number of soiled, mutilated and imperfect Currency Notes which can be

presented at a time for exchange in accordance therewith and in the absence

of any such restriction, no grievance can be made by the respondents of a

large number of such Currency Notes being presented for exchange at a time.

11. I am a little surprised to find in the Master Circular aforesaid a

provision for the respondents to pay not the full value of the Currency Notes

but only some percentage thereof, depending upon the state in which the

soiled, mutilated and imperfect Currency Note is. On enquiry, the senior

counsel for the respondent RBI has explained that the said provision has

been made, as often different parts of the same Currency Note are presented

at different times for exchange and such a provision has been made to

prevent a person holding only a part of a Currency Note from receiving the

full value thereof and with the Govt. of India / RBI becoming liable to pay

for the remaining part of the Currency Note as and when presented. It is also

stated that the same is as per Section 28 of the Reserve Bank of India Act,

1934.

12. I am of the view that with the leaps in technology, the respondent RBI

should have a relook on the technology for printing of Currency Notes to

ensure that in the event of mutilation thereof, the value thereof is paid to one

person only and is not claimed repeatedly as well at the scheme of exchange

of soiled / mutated Currency Note so that bona fide bearer thereof is not

deprived of full value thereof. It prima facie appears that benefit with

advantage can be taken of computerisation to ensure that once a full value of

a soiled / mutilated Currency Note has been paid, it is not repaid, by

requiring the numbers of the Currency Note of which value has been paid to

be entered in a central grid or the like.

13. To me it appears that natural mutilation of Currency Note should not

come in the way of last bearer / holder thereof realising the full value

thereof; the State / Government, on the possibility of becoming liable to pay

some value of such Currency Note to holder of another part thereof, cannot

withhold the full value, thereby profiteering therefrom to the prejudice of the

citizen.

14. However the petitioners have not challenged the Act, Rules and

Regulations in this regard and the aforesaid is mentioned only since the

questions in that regard arose during the hearing.

15. That still leaves for consideration the form of relief which can be

granted to the petitioners.

16. The senior counsel for the respondent RBI and the counsels for other

Banks state that they are exchanging the Currency Notes in accordance with

the Master Circular aforesaid and the Rules and Regulations and the

petitioners have not made out any case of violation thereof by any of the

Banks. It is stated that when a large number of Currency Notes are presented

for exchange, time would automatically be taken in examination thereof and

only thereafter they can be exchanged in accordance with the Master

Circular and the Rules.

17. Per contra, the counsel for the petitioners states that the Banks, in

practice do not accept the soiled, mutilated and imperfect Currency Notes

and such denial is not in writing or otherwise recorded but by asking the

petitioners to visit repeatedly or by simply not accepting or accepting a few

soiled / mutilated Currency Notes at a time, even though there is no Rule or

Regulation in this regard.

18. The position / version of the petitioners can be well envisaged.

However no purpose would be served in generally issuing directions in this

regard and of enforcement whereof or detection of violation thereof, there

are no means. Such direction would be to the same effect as the Master

Circular aforesaid of RBI and with which RBI and the Banks are in any case

expected to abide.

19. The respondent RBI should therefore itself consider laying down a

procedure for exchange of soiled, mutilated and imperfect Currency Notes,

presented in small number or in bulk, so that those presenting / applying for

the same know what to expect and are able to have a record of their

application and dealing thereof by the Banks so that grievance of non-

compliance with proof can be made and action against erring Bank can be

taken. Even if time is to be taken to assess the genuineness and value of the

soiled, mutilated and imperfect Currency Notes presented for exchange, the

applicant should be informed of the same. I reiterate, the grievance of

impediments put in exchange and absence of well defined procedure thereof

with time schedules, is a serious one, discouraging and depriving a citizen of

the value of soiled / mutilated Currency Note and thereby breaking the

promise printed thereon.

20. A decision in this regard be taken by the respondent RBI within six

months. The mechanism prescribed should also ensure that if any of the

Banks do not comply therewith, the aggrieved person has proof thereof and

is able to take his remedy in accordance with law and / or complain to the

respondent RBI.

The petition is disposed of.

No costs.

RAJIV SAHAI ENDLAW, J.

JANUARY 20, 2016 bs..