Bombay High Court: In a case wherein the bank notes of denomination of Rs 500 and Rs 1,000 were seized from the petitioners on 26-12-2016, before they could deposit the said demonetized bank notes in the bank before the deadline, that is, 30-12-2016, the Division Bench of A.S. Chandurkar* and M.M. Sathaye, JJ., opined that the petitioners could be permitted to deposit the specified bank notes for the value of Rs 20,00,000 bearing the said serial numbers with Respondent 4, as this would facilitate receipt of legal tender for the said value by the petitioners.
By a Notification dated 8-11-2016 issued by the Ministry of Finance, specified bank notes in the denomination of Rs 500 and Rs 1,000 were declared not to be legal tender. The bank notes were to be recalled from 10-11-2016 to 30-12-2016 and the time to deposit bank notes was permitted till 30-12-2016.
The petitioners stated that they were jointly holding the said bank notes of the value of Rs 20,00,000 on 8-11-2016. They intended to deposit the same in their bank accounts by 30-12-2016, however, on 26-12-2016, a search and raid was conducted at their residence and bank notes of the value of Rs 20,00,000 and silver ingots for the value of Rs 26,99,320 were seized. The petitioners received summons from the Assistant Director of Income Tax, Unit-III, Kolhapur on 28-12-2016 and 6-1-2017 summoning them for recording their statements under Section 131 of the Income Tax Act, 1961. A letter dated 10-1-2017 was issued to the Police Inspector, Shahuwadi Police Station, Kolhapur in which it was stated that based on enquiries made, it was decided not to seize cash of Rs 20,00,000 and silver ingots at the said juncture.
The petitioners after receiving the bank notes, on 17-1-2027, visited RBI’s specified office in Mumbai to deposit the said notes, but the same were not accepted and they were informed that after 30-12-2016, it was not permissible to accept the same. The petitioners issued a notice regarding the same and thereafter approached this Court praying that Respondent 4, the General Manager, Department of Currency Management, RBI be directed to accept the specified bank notes.
Counsel for the respondents referred to the provisions of Section 5(a) of the Specified Bank Notes (Cessation of Liabilities) Act, 2017 and the Notification dated 12-5-2017 issued by the Ministry of Finance and contended that it would be necessary for the petitioners to furnish serial numbers of the specified bank notes that had been seized by the Police Authorities prior to 30-12-2016, as in absence of indication of such serial numbers, RBI was precluded from accepting the bank notes and thereafter exchange them for legal tender.
The Court stated that since the serial numbers of the specified bank notes that were seized from the petitioners and returned thereafter were now available, the apprehension expressed by RBI that the value of the specified currency notes could not be paid to the petitioners in the absence of such serial numbers was taken care of.
The Court noted that the seizure of the specified bank notes was on 26-12-2016, which was prior to the permissible date of deposit which was 30-12-2016 and the Income Tax Department stated that it did not intend to seize the said specified bank notes pursuant to which the Police Authorities returned the same to the petitioners on 14-1-2017. The Court thus opined that the petitioners could be permitted to deposit the specified bank notes for the value of Rs 20,00,000 bearing the said serial numbers with Respondent 4, as this would facilitate receipt of legal tender for the said value by the petitioners.
Thus, the Court issued the following directions:
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The petitioners should deposit the bank notes bearing the requisite serial numbers with Respondent 4.
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Respondent 4 should verify the specified bank notes with their numbers and after completing the necessary formalities, the amount equivalent to the said specified bank notes should be made over to Petitioner 1 on behalf of all the petitioners.
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While accepting the said amount, Petitioner 1 should indemnify Respondent 4 from any future claim of Petitioners 2 to 8.
[Ramesh Bapurao Potdar v. Union of India, 2025 SCC OnLine Bom 575, decided on 27-2-2025]
*Judgment authored by: Justice A.S. Chandurkar
Advocates who appeared in this case:
For the Applicants/Petitioners: Udaya Sankar Samudrala with Sujit Upadhyay and Shivesh Upadhyay, Advocates.
For the Respondents: D.P. Singh, Advocate for Respondents 1 to 3; Venkatesh Dhond, Senior Advocate with Dhaval Patil, Shreyas Menkudale, Advocates, i/by K. Ashar & Co., for Respondents 4 to 6; Arjun Gupta, Advocate for Respondents 7 and 8.
