In a recent judgement by Hon’ble Supreme court in case of INTERNET AND MOBILE ASSOCIATION OF INDIA vs. RESERVE BANK OF INDIA, it was held that “in the light of the above discussion, the petitioners are entitled to succeed and the impugned Circular dated 06-04-2018 is liable to be set aside on the ground of proportionality. Accordingly, the writ petitions are allowed and the Circular dated 06-04-2018 is set aside. The Statement dated 05-04-2018, though challenged in one writ petition, is not in the nature of a statutory direction and hence the question of setting aside the same does not arise.”
The issue has been discussed in detail by Hon’ble Supreme court in its 180 page judgement out of which we would discuss few important points.
In the above judgement there were various issues discussed which includes:
Discussion about report by European parliament on virtual currencies.
Adverse effects faced by Banks, if any because of virtual currencies.
Freezing of accounts by bank of person dealing in virtual currencies wherein in case of one of the petitioners Hon’ble supreme court mentioned that:
“There is still one more issue left. It is the freezing of the account of Discidium Internet Labs Pvt. Ltd., which is petitioner no. 6 in WP (C) No. 373 of 2018. This company seems to have had an amount of Rs. 12,05,36,667.83/- in current account no. 3677101984 with the Central Bank of India, Worli, Mumbai. When the petitioner made a request on 21-05-2018 to close the account and issue a demand draft, the Central Bank replied that they had referred the matter to their higher authorities/regulators. Therefore, petitioner no. 6 has come up with an application in I.A. No. 110424 of 2019 for appropriate directions.
But we think that the lukewarm response of RBI in this regard is wholly unjustified. Admittedly, the activities carried on by the petitioner no. 6 were not declared as unlawful. It is the positive case of RBI that they did not in fact freeze the accounts of petitioner no. 6. Therefore, RBI is obliged to direct the Central Bank of India to defreeze the account and release the funds. Hence, RBI is directed to issue instructions forthwith to the Central Bank of India, Worli branch, to defreeze the current account no. 3677101984 of petitioner no. 6 in WP (C) No. 373 of 2018 and to release the funds lying in the account to the company together with interest at the rate applicable. There will be no order as to costs.”
It also added the following observation:
“Till date, RBI has not come out with a stand that any of the entities regulated by it namely, the nationalized banks/scheduled commercial banks/cooperative banks/NBFCs has suffered any loss or adverse effect directly or indirectly, on account of the interface that the VC exchanges had with any of them.”
Thus on the basis of above observations and findings Supreme court set aside the circular and directions issued by RBI with regard to virtual currencies.
You can download: RBI Circular, Supreme Court order.
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