Vivek Dixit, a resident of Delhi, has filed a writ petition before the Supreme Court challenging the Reserve Bank of India’s (RBI) decision to restrict the withdrawal limit to ₹40,000 for customers of Punjab and Maharashtra Cooperative Bank Limited (PMC). The RBI had restricted the withdrawal of deposits to ₹40,000 on October 14.
The petitioner has stated that Article 32 of the Constitution (right to individuals to move to the Supreme Court to seek justice) makes Section 35A of the Banking Regulation Act, 1949, and Section 16(1) of the Deposit Insurance Credit Guarantee Corporation Act, 1961, unconstitutional.
Mr. Dixit has moved the apex court for a directive that neither the RBI nor any other authority can restrict depositors with any withdrawal limits from any public sector bank and multi-State urban cooperative scheduled banks.
The petition seeks for a declaration that if a bank does not have sufficient assets to allow all depositors to withdraw their money, then the Central government should be duty-bound to financially back the bank with infusion of capital.
The petitioner states that the RBI has interpreted Section 35A as including the right to restrict the withdrawal of amounts from the accounts of the depositors in certain circumstances.
The petition states that the Section does not say so and in any case must be read down to exclude the right of the Union of India or the RBI to restrict withdrawal of deposits. If not, the Section is unconstitutional for vagueness and being overboard, the plea says.
“Such a section cannot be interpreted as including the power of the RBI to restrict withdrawal of deposits of depositors. A specific law would be needed for that purpose and such a law does not exist,” states the petition. Such a law that takes away the rights of depositors to withdraw their deposits would also be unconstitutional on the grounds of proportionality.
The petition states: “Instead of penalizing depositors for bank frauds and other illegalities committed by persons in high places in the banks and cooperatives societies and in government, a less drastic measure could be resorted to, namely that the government would curtail unnecessary public expenditures.”
