J M DSOUZA Vs. RESERVE BANK OF INDIA

JUDGEMENT

(1.) THIS is an appeal from the judgment of Mr. Justice Kania dated January 22, 1946. The appeal has been taken up at this early date because it involves a question of considerable importance and because unless it is determined by 1 o'clock to-morrow afternoon the time for presenting certain high denominational bank notes pursuant to Ordinance III of 1946, which provides for their demonetisation, will have passed. The petitioner, the appellant in this Court, is a person who since the coming into operation of the Ordinance presented a bank note for Rs. 1,000 to the Reserve Bank of India with a demand for payment, which demand was refused by the bank. Accordingly he filed a petition to the Court under Section 45 of the Specific Relief Act, praying for a mandatory order on the bank to discharge and satisfy the unconditional promise to pay to the petitioner the sum of Rs. 1,000 contained in the particular bank note without imposing any condition on the petitioner. Section 45 of the Specific Relief Act provides: Any of the High Courts of Judicature at Calcutta, Madras and Bombay may make an order requiring any specific act to be done or forborne, within the local limits of its ordinary original civil jurisdiction, by any person holding a public office, whether of a permanent or a temporary nature, or by any corporation or inferior Court of Judicature. And then there follow a number of provisos, proviso (being as follows: that such doing or forbearing is, under any law for the time being in force, clearly incumbent on such person or Court in his or its public character, or on such corporation in its corporate character.

(2.) THERE is no doubt that the Reserve Bank is a corporation which comes within the purview of the section, but the principal questions which have been raised are: (1) Whether these proceedings for a mandatory order can be maintained under Section 45 of the Specific Relief Act ? (2) Whether Section 9 of the Ordinance bars these proceedings being taken at all? and (3) Whether the Ordinance on its true construction does take away or affect the petitioner's right as a holder of the bank note to receive payment on demand?

(3.) THE validity of the Ordinance is not, and in view of the decided cases, could not be challenged. But Mr. Munshi on behalf of the petitioner puts his submissions in this way. First of all he points out that a bank note has two qualities: it is legal tender and it is a promise to pay on demand. Next he submits that there is not in the Reserve Bank Act of 1934, which sets up the Reserve Bank and empowers it to issue bank notes, any express statutory obligation to honour and pay for a note on demand but that the law will imply from the statutory power to issue notes a statutory obligation to honour and pay them when issued, and that if that be the true position, Ordinance III of 1946, whilst it has destroyed the quality of the notes as legal tender, has not abrogated or affected in any way this implied obligation of the Bank to pay which, it is said, arises from the statutory power.