No Absolute Right to Deposit Demonetised Notes: Rajasthan High Court Upholds RBI Curbs on District Co-operative Banks

The petitioner, a Primary Agricultural Credit Society in Barmer district, works within the three-tier co-operative credit structure (para 2). After the Centre's notification of 08.11.2016 under Section 26(2) of the RBI Act withdrew legal tender of Rs.500 and Rs.1000 notes, District Central Co-operative Banks were first allowed to accept them, but later RBI circulars restricted this (paras 2.1-2.4). The society says it held Rs.16,17,500 in such notes and could not deposit them; its representations brought no final resolution (paras 2.3, 2.5). It sought quashing of the circulars and directions for acceptance or NABARD scrutiny of the notes; six similar petitions were heard together (paras 1, 1.1).

The Bench noted that demonetisation itself was not under challenge, its validity having been upheld by the Constitution Bench in Vivek Narayan Sharma, and that review of economic policy examines legality, not wisdom (paras 5.1-5.2). The question was only whether the circulars, as applied to District Central Co-operative Banks and these societies, fitted the parent notification (para 5.3). The notification left the manner of exchange and deposit to the RBI and conferred no unqualified right on every category of institution (paras 5.5, 5.9). The RBI, as the statutory regulator, may issue circulars to operationalise such decisions (para 5.8). The exclusion addressed concerns about audit mechanisms, technological preparedness, supervisory reach and misuse of the notes (para 5.11). The circulars did not dilute the notification; they regulated the channels for dealing with the notes (para 5.12). Earlier deposits by some institutions created no vested right to identical treatment, and hardship alone cannot invalidate such measures (paras 5.13-5.14). NABARD could not act contrary to RBI directions, and Articles 19(1)(g) and 300-A were not violated (paras 5.15-5.16).