Rajasthan High Court declines to hear cooperative society’s plea on demonetized notes, citing Supreme Court bar.

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Case Name

Sewaniyala Gram Seva Sahakari Samiti Limited vs. State of Rajasthan & Ors. (High Court of Rajasthan)

S.B. Civil Writ Petition No. 3446/2017

Date: 25th March 2017

Key Takeaways

• The Rajasthan High Court refused to entertain the writ petition due to a Supreme Court order that centralized all demonetization-related litigation before itself.
• The case highlights the procedural impact of the Supreme Court’s directive in “Vivek Narayan Sharma vs. Union of India” [Writ Petition (Civil) No.906/16], which effectively paused all similar cases in other courts.
• The cooperative society was left without judicial recourse at the High Court level for its specific grievance regarding the deposit of demonetized currency.
• The judgment underscores the importance of judicial hierarchy and respect for Supreme Court orders in ongoing national matters.

Issue

Can the High Court entertain a writ petition seeking permission to deposit demonetized ₹500 and ₹1000 notes, when the Supreme Court has already barred all other courts from hearing such matters?

Facts

• Petitioner: Sewaniyala Gram Seva Sahakari Samiti Limited, a cooperative society registered under the Rajasthan Cooperative Societies Act, 2001.
• Situation: The society had ₹6,01,000 in old ₹500 and ₹1000 notes as of 8 November 2016, the day before these notes ceased to be legal tender.
• Problem: The society’s bank (Barmer Central Cooperative Bank Limited) refused to accept the demonetized notes, stating that cooperative banks were not authorized to accept them. The society was advised to open an account in a nationalized bank, but no such bank in Barmer district was willing to open a new account for this purpose.
• Actions Taken: The society made several representations to local authorities and the State Minister for Finance, but received no relief.
• Legal Step: The society filed a writ petition in the Rajasthan High Court seeking directions to allow the deposit of the demonetized notes.

Arguments

Petitioner (Sewaniyala Gram Seva Sahakari Samiti Limited)

• Sought a direction to permit the deposit of ₹6,01,000 in demonetized notes into its bank account.
• Argued that the refusal by both cooperative and nationalized banks left the society with no way to deposit its legitimate funds.
• Highlighted efforts made through representations to authorities, which were unsuccessful.

Respondents (State of Rajasthan, Registrar of Cooperative Societies, Barmer Central Cooperative Bank, Regional Director of RBI)

• The main response was procedural: the High Court noted the Supreme Court’s order barring all other courts from hearing demonetization-related cases.

Key Legal Precedents

• Vivek Narayan Sharma vs. Union of India [Writ Petition (Civil) No.906/16]:
• The Supreme Court, by order dated 16.12.2016, directed that no court other than the Supreme Court shall entertain, hear, or decide any writ petition or proceedings related to the Government of India’s demonetization decision, as the entire issue was pending before the Supreme Court.
• Section 26(2) of the Reserve Bank of India Act, 1934:
• This section was cited as the legal basis for the Central Government’s demonetization notification, acting on the recommendation of the Reserve Bank of India’s Board of Directors.

Judgement

• Decision: The Rajasthan High Court dismissed the writ petition.
• Reasoning: The court cited the Supreme Court’s order in “Vivek Narayan Sharma vs. Union of India,” which barred all other courts from hearing cases related to demonetization while the matter was sub judice before the Supreme Court.
• Order: The writ petition was not entertained and was dismissed accordingly.

FAQs

Q1: Why did the High Court refuse to hear the case?

A: The Supreme Court had already issued an order that no other court could hear cases related to demonetization, as the issue was pending before it.

Q2: What was the petitioner seeking?

A: The cooperative society wanted permission to deposit ₹6,01,000 in old ₹500 and ₹1000 notes into its bank account.

Q3: What legal basis did the government have for demonetization?

A: The government acted under Section 26(2) of the Reserve Bank of India Act, 1934, based on the RBI Board’s recommendation.

Q4: What should similar petitioners do?

A: Since the Supreme Court centralized all such cases, petitioners would need to wait for the Supreme Court’s decision or approach it directly.

Q5: Did the High Court comment on the merits of the petitioner’s claim?

A: No, the High Court did not address the merits and dismissed the case solely on procedural grounds due to the Supreme Court’s order.