Delhi HC refuses to interfere with cash withdrawal restrictions post demonetization

Delhi HC refuses to interfere with cash withdrawal restrictions post demonetization [read order]

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After the demonetisation of currency notes of ₹ 1000 and 500, the restriction imposed is only with regard to cash withdrawal from a bank account over the counter, but there are no restrictions or limits for operating the bank account by non-cash method, such as cheques, demand drafts, credit or debit cards, mobile wallets and electronic fund transfer mechanisms or the like. Further, the decision to withdraw the bank notes of specified amount w.e.f. 09.11.2016 is to be implemented is a policy decision which is beyond the scope of powers of judicial review. This was held by a division bench of Delhi high court, comprising Chief Justice G. Rohini and Justice V. Kameswar Rao, on 2 December 2016, in the case of Ashok Sharma v. Union of India & Anr. [W.P.(C) 11130/2016].

Previously, the said writ petition had been dismissed by the high court on 25 November 2016. He had filed an application for recall of the said order. The high court agreed to recall the said order and restored his writ petition. But, after rehearing the petition on merits, the court again dismissed the petition.

The main contention of the petitioner was that the money which is lying with the banks prior to 08.11.2016 has no connection with the declaration that the bank notes of the denomination of Rs.500 and Rs.1000 shall cease to be legal tender and therefore, immobilisation of bank transactions of the money deposited prior to 08.11.2016 is illegal. It is also contended that the Central Government and the Reserve Bank of India are not empowered under Section 26 of the Reserve Bank of India Act, 1934 to impose conditions as stipulated under Clause 2(vi) of the Notification dated 08.11.2016.

In view of the Supreme Court being seized of the issue relating to the validity of the said Notification, the high court considered the matter only to the limited extent of tenability of the restrictions imposed under Clause 2(vi) on cash withdrawals from a bank account over the counter.

The court held that the restriction imposed under Clause 2(vi) of the said Notification is only with regard to cash withdrawal from a bank account over the counter. There are no restrictions or limits for operating the bank account by non-cash method. This is clear from Clause (vii) of the said Notification which provides that there are no restrictions on the use of any non cash method of operating the account of a person including cheques, demand drafts, credit or debit cards, mobile wallets and electronic fund transfer mechanisms or the like. Therefore, the high court held that the contention of the petitioner that Clause 2(vi) infringes the right of the account holder to withdraw from his account on demand is factually incorrect and misconceived.

High Court also held that no distinction can be drawn between the bank deposits of the period prior to 8.11.2016 and after 8.11.2016 since the whole purpose of the restrictions imposed on cash withdrawal for a specified period i.e., up to 30.12.2016 appears to be to meet the demand of liquid cash in circulation in the light of the ban imposed on the bank notes of the denominations of Rs.500 and Rs.1000 under the Notification dated 8.11.2016.

The court further added that the manner in which the decision to withdraw the bank notes of specified amount w.e.f. 09.11.2016 is to be implemented is a policy decision which is beyond the scope of powers of judicial review. The law is well settled that the Court can only interfere if the policy framed is absolutely capricious or not informed by reasons or totally arbitrary and founded ipse dixit offending the basic requirement of Article 14 of the Constitution of India. It is also a settled principle of law that the Court cannot strike down a policy decision taken by the Government merely because it has been contended that another decision would have been fairer or more scientific or logical or wiser. The wisdom and advisability of the policies are ordinarily not amenable to judicial review unless the policies are contrary to statutory or constitutional provisions or arbitrary or irrational.

In view of these reasons, the high court declined to interfere with the order of the Central Government vide which restrictions have been placed on the amount which can be withdrawn from banks in the form of cash up to 30 December 2016.

Read full order of the court: Click here to read the order.

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