JAYANTILAL RATANCHAND SHAH DEVKUMAR GOPALDAS AGGARWAL Vs. RESERVE BANK OF INDIA:RESERVE BANK OF INDIA

JUDGEMENT

(1.) The Constitutional validity of the High Denomination Bank Notes (Demonetisation) Act, 1978 (hereinafter referred to as the 'Demonetisation Act') and the legality of certain orders passed thereunder are under challenge in these petitions under Art. 32 of the Constitution of India. The Act replaced an Ordinance, hearing a similar title, which was promulgated by the President and had come into force on January 16, 1978. To appreciate the contentions raised on behalf of the petitioners it will be necessary, at this stage to refer not only to the relevant provisions of the Demonetisation Act but also of the Reserve Bank of India Act, 1934 ('R.B.I. Act' for short), which empowers Reserve Bank of India ('Bank' for short) to issue bank notes and imposes an obligation upon it to exchange those notes.

(2.) The Bank has been constituted under the R.B.I. Act to regulate the issue of bank notes and the keeping of reserve with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage. Section 22 of that Act provides that the Bank shall have the sole right to issue bank notes. Section 24, which prescribes the denomination of the notes, reads as under :

(3.) Section 26 lays down that every bank note shall be legal tender at any place in India in payment or on account of the amount expressed therein and shall be guaranteed by the Central Government. It further lays down that on recommendation of the Central Board the Central Government may, however, by notification in the Gazette of India declare that with effect from such date as may be specified in the notification any series of bank notes of any denomination shall cease to be legal tender except at such office or agency of the Bank and to such extent as may be specified in the notification. The other section of the R.B.I. Act relevant for our purposes is Sec. 39 which imposes on the Bank as express obligation to issue, rupee coin or notes of lower values on demand, in exchange for bank notes and currency notes of the Government of India.