Supreme Court Issues Notice to Axis Bank Over Refusal to Accept Demonetised Notes

Supreme Court Issues Notice to Axis Bank Over Refusal to Accept Demonetised Notes

Supreme Court Issues Notice to Axis Bank Over Refusal to Accept Demonetised Notes

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The Supreme Court issued a notice to Axis Bank following a company’s petition claiming the bank refused to accept demonetised currency worth Rs 3.2 crore in violation of RBI guidelines.

The Supreme Court issued a notice to Axis Bank in response to a petition by a company alleging that the bank refused to accept demonetised notes worth Rs 3.2 crore. The company had allegedly attempted to deposit in December 2016. 

This comes one-and-a-half years after the Supreme Court validated the Union government’s November 8, 2016, decision to demonetise Rs 1,000 and Rs 500 currency notes.

The company’s advocate, Nalin Kohli, argued before a bench of Justices B R Gavai and K V Viswanathan that the company was not challenging the demonetisation decision itself but was aggrieved by Axis Bank’s arbitrary refusal to accept the deposit of the demonetised notes. Kohli contended that this refusal was in violation of RBI orders related to demonetisation, despite the company being KYC compliant.

Representing the RBI, senior advocate Jaideep Gupta stated that it was up to Axis Bank to explain its refusal to accept the demonetised notes. He noted that the November 8, 2016, notification allowed for the deposit of demonetised currency notes in banks until December 30, 2016. Another notification issued on December 31, 2016, made it an offence to hold demonetised currency notes after December 30, with penalties for holders.

Kohli argued that Axis Bank was obliged to receive demonetised currency notes presented by the KYC-compliant company. Additionally, he asserted that the RBI had an obligation to ensure that the company received valid currency in exchange for the demonetised notes, as each demonetised note contained a written promise by the RBI governor to pay the bearer the specified amount.

The bench issued a fresh notice to Axis Bank, asking it to respond within three weeks. This decision followed the RBI counsel’s statement that the court needed to hear from the bank to determine if it had a valid reason for not accepting the demonetised notes.

On January 2, 2023, a bench of Justices S Abdul Nazeer, B R Gavai, A S Bopanna, V Ramasubramanian, and B V Nagarathna had, by a four-to-one majority, validated the November 8, 2016, demonetisation decision carried out through an ordinance. Justice Nagarathna dissented.

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