Company says Axis Bank refused to accept demonetised notes, Supreme Court issues notice

NEW DELHI: One-and-a-half years after validating the Union govt's Nov 8, 2016, decision to demonetise Rs 1,000 and Rs 500 currency notes, SC has entertained a petition by a company which complained that Axis Bank had refused to accept demonetised notes worth Rs 3.2 crore in breach of RBI guidelines.
Appearing for the company, advocate Nalin Kohli argued before a bench of Justices B R Gavai and K V Viswanathan that it was not challenging the decision to demonetise certain currency notes but was aggrieved by the bank's arbitrary decision not to accept the deposit of Rs 3.2 crore in violation of RBI orders relating to demonetisation and despite the company being KYC compliant.
RBI, through senior advocate Jaideep Gupta, said it was for Axis Bank to explain its refusal to accept the demonetised notes in Dec 2016. The Nov 8, 2016, notification had allowed deposition of demonetised currency notes in banks till Dec 30, 2016. Another notification issued on Dec 31, 2016, made it an offence to hold demonetised currency notes after Dec 30 and made the holder liable for penalty
Kohli said apart from the bank being obliged to receive demonetised currency notes presented before it by the KYC-compliant company, it was also obligatory for RBI to ensure that the company received the amount in exchange of valid currency notes as each demonetised note contained a written promise by RBI governor to pay the bearer an amount specified on the currency note. The bench issued fresh notice to Axis Bank and asked it to respond within three weeks after RBI counsel said court would have to hear the bank and find out whether it had a valid reason not to accept the demonetised notes. A bench of Justices S Abdul Nazeer, Gavai, A S Bopanna, V Ramasubramanian and B V Nagarathna had by four to one majority on Jan 2, 2023, validated the Nov 8, 2016, demonetisation decision carried out through an ordinance. Justice Nagarathna had dissented.