Petition to SC Asks for Removal of RBI Directors Over Note Ban
The RBI headquarters in Mumbai. (Photo: Reuters)
The RBI headquarters in Mumbai. (Photo: Reuters)

Petition to SC Asks for Removal of RBI Directors Over Note Ban

A petition has been filed in Supreme Court seeking removal of the present Board of Directors of the Reserve Bank of India for not following its mandate and recommending demonetisation of Rs 1000 and Rs 500 currency notes on the advice of the Centre.

The petition said that the central bank has failed to “prepare a plan, feasibility and impact assessment of note-banning and chose to act on the advice of Central Government, without application of mind”.

It further said that RBI has played a pivotal role in the recently carried out note-banning exercise by the central government.

The plea reads:

However, on deeper examination of the Reserve Bank of India Act 1934, it transpires that RBI has failed to follow the mandate, purpose and effect of the said Act and gave recommendation for Note-Banning under Section 26(2) of the Act, merely on the advice of Central Government, which was in fact issued by Central Government, just a day before the announcement of the note-banning on 8 November 2016.

It said that RBI has accepted before the parliamentary panel that on 7 November 2016, the government had advised it that its central board may consider withdrawal of the legal tender status of the currency notes in denominations of Rs 500 and Rs 1000 and subsequently on 8 November, it had advised withdrawal of legal tender status of these high denomination notes.

Respondent No 2 (Centre) pre-decided note-banning without the recommendation of RBI Board, as is mandated under law and to defeat the ends of law, scrupulously used RBI to recommend the same just to eye-wash the people of the nation. And RBI recommended note-banning without real application of mind, collection and analysis of real data and calculation of impact assessment of the same on various categories of population, trade, business and activities

The petition also sought directions to the Centre for appointment of new Board of Directors of RBI.

The Supreme Court is already examining a host of related issues, including the constitutional validity of the demonetisation notification.