The Bombay High Court ruled in favor of a group of Kolhapur residents, directing the Reserve Bank of India (RBI) to accept ₹20 lakh in old demonetised currency notes seized during an Income Tax raid.
This raid occurred on December 26, 2016, just days before the government's deadline of December 31, 2016, for depositing ₹500 and ₹1000 notes, which had been invalidated. The petitioners received their confiscated funds back on January 17, 2017, after the RBI's cut-off date and subsequently faced issues depositing the notes at banks.
Their appeal to the RBI was denied because they missed the stipulated deadline. Represented by advocate Udaya Sankar Samudrala, the residents argued that the delay was not their fault, as the currency was in government custody during the crucial period.
The RBI, defended by senior advocate Venkatesh Dhond, invoked the Specified Bank Notes (Cessation of Liabilities) Act, 2017, which requires the submission of serial numbers for deposits made after the deadline. They claimed the petitioners could not provide these numbers due to neglect during the seizure process.
The court acknowledged the petitioners' plight and found it unjust to penalize them for circumstances beyond their control. On February 27, the division bench of Justice A.S. Chandurkar and M.M. Sathaye ordered the RBI to accept the deposit and ensure the full value of ₹20 lakh was returned to the petitioners within a week.
A group from Kolhapur was in possession of ₹20 lakh when the government announced demonetisation in November 2016, mandating the deposit of ₹500 and ₹1000 notes before December 31, 2016. They planned to deposit this amount into their joint account, but a raid by the income tax department on December 26 led to the confiscation of their cash.
After the investigation, the assistant director of income tax informed the police on January 10, 2017, that the cash would not be retained, and it was returned to the petitioners on January 17, 2017. However, the Reserve Bank of India (RBI) refused to accept the deposit as the deadline had passed.
The group then sought legal recourse from the Bombay High Court through advocate Udaya Sankar Samudrala, arguing they could not be held responsible for missing the deadline due to the seizure. Senior advocate Venkatesh Dhond, representing the RBI, cited the Specified Bank Notes Act, stating that the group needed to provide the serial numbers of the notes, which the tax and police officers failed to record.
On February 27, the division bench of justices A.S. Chandurkar and M.M. Sathaye ruled in favor of the petitioners, stating they were not at fault for not meeting the deadline. The bench permitted the petitioners to deposit the ₹20 lakh with the RBI and instructed the apex bank to verify the notes and provide the equivalent exchange amount.
