CITATION –  10 SCC 274
1) Rohinton Fali Nariman,
2) Aniruddha Bose
3) V. Ramasubramanian
Reserve Bank of India (RBI) issued a circular dated 6th april,2018. The circular do prohibits the bank and other entities too from trading in virtual currencies. Moreover the circular do barred the banks to provide any kind of services to any individual or entity dealing or setting virtual currencies. The prohibition issued by the Reserve Bank of India had a negative effect on the Indian economy as because the mediums (the bank accounts), through which virtual currencies were traded could no longer be maintained or operated therefore an end to the business through virtual currencies do prevailed. In reference of the same, at the time of issuance of the circular by Reserve Bank of India there was no legislation passed imposing a ban on the trade of virtual currencies. In other words the virtual currency was separated from the assets of the economy. The reason why Reserve Bank of India issued the circular was there concern which was related to the hacking of the virtual currencies.
1. The petitioner contended that Reserve Bank of India do lacks the jurisdictions to disallow the trade of virtual currency (crypto currency) moreover the ban imposed by RBI is based on the mis-understanding of RBI.
2. The Petitioner also contended that the Virtual currency or the crypto currencies are not a kind of currency note or coin but a medium of exchange or a store of value.
The court was of the view that although Reserve Bank of India has wide powers and do plays an important role in the upliftment of Indian economy, but here they are unable so show any sought of damage suffered by it’s regulated entities. Therefore the guidelines issued by the Reserve Bank of India, directing the banks to stop dealing or providing services to the entities trading in virtual currencies are illegal hence unenforceable.
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