The Rajasthan High Court has dismissed a batch of petitions filed by primary agricultural credit societies challenging the Reserve Bank of India’s 2016 circulars that prohibited District Central Co-operative Banks from accepting or exchanging demonetised Rs.500 and Rs.1,000 notes, holding that the restrictions were lawful, uniform, and driven by legitimate economic concerns.
The dispute stemmed from the post-demonetisation regulatory framework introduced in November 2016, after the Central Government withdrew the legal tender status of specified bank notes and authorised the RBI to regulate their exchange. While co-operative banks were initially allowed to accept deposits of the old notes, subsequent RBI circulars reversed this position, effectively preventing primary agricultural credit societies, operating at the village level under NABARD oversight, from depositing demonetised currency received in routine operations.
Claiming that this froze their working capital and disrupted statutory functions, the societies alleged arbitrariness, discrimination, and violation of Article 14, arguing that similarly placed institutions had been allowed to deposit notes before the restrictions were imposed.
A Division Bench of Dr Justice Pushpendra Singh Bhati and Justice Anuroop Singhi rejected the challenge, accepting the State’s stand that the RBI was empowered to issue regulatory directions during an unprecedented monetary transition. The Court held that mere hardship could not invalidate measures taken in public interest, observing that “mere hardship or inconvenience, howsoever genuine, cannot by itself be a ground for invalidating regulatory measures taken in furtherance of a legitimate economic objective.”
It found that the exclusion of District Central Co-operative Banks was based on objective factors such as audit vulnerabilities, technological limitations, and supervisory concerns, applied uniformly to all similarly situated institutions. The Bench further clarified that differential treatment backed by rational criteria does not amount to hostile discrimination, and that earlier deposits by some entities did not create any vested right. Concluding that the impugned circulars were neither arbitrary nor unconstitutional, the Court dismissed all petitions.
Case Title: Dudhu Gram Seva Shakari Samiti Ltd. vs. The Union Of India & Ors.
Case No.: D.B. Civil Writ Petition No. 3331/2017
Coram: Justice Pushpendra Singh Bhati, Justice Anuroop Singhi
Advocate for Petitioner: Adv. A.K. Choudhary
Advocate for Respondent: Adv. Sanjay Srivastava, Nimesh Suthar
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