The Madras High Court while dealing with a writ petition filed against the circular of the Department of Banking Operations & Development (DBOD) of the Reserve Bank of India (RBI) held that the circular of the RBI recommending banks to frame their own policy for the purpose of restricting ceiling limit is not violative of the Banking Regulation Act.

Justice N. Sathish Kumar while dismissing the writ petition said –

"The Circular of the Reserve Bank includes various guidelines and recommended the banks to frame their own policy for restricting the ceiling limit in non-base branches. In such a view of the matter the same cannot be found to be violative of the Banking Regulation Act. Therefore, merely because the circular has been issued which is in the recommendatory nature, suggesting such a ways and means to fix the ceiling limit in order to prevent the frauds by third parties in non-base branches, such circular cannot be violative of the Act."

The Court further stated that the first petitioner is only a bearer of the cheque and the second petitioner is a drawer.

The Court also observed that "When the bank has made their own policy only for the purpose of putting up restrictions in the non-base bank. When the account holder consciously opened the account with all the restrictions in honouring the cheques in non-base branch cannot complain that the same is violative of the property right. When the Reserve Bank have power under statute to frame necessary guidelines and the banks also framed their own policy to prevent the fraud, it cannot be said that such restrictions in fact, violate the property right of the writ petitioners."

Advocate Sunny Sheen appeared for the petitioner while Advocate A.K. Sriram appeared on behalf of the respondents.

Brief Facts –

The second petitioner was an account holder with the ICICI Bank and had issued a cheque for Rs. 48,000/- in favour of the first petitioner to withdraw the amount on his behalf. The amount was required for the purpose of paying the fees and expenses for the second petitioner's son's admission. At the time when the first petitioner presented the same at one of the branches of the bank, he was not given the amount. It was informed to him that the amount below Rs. 15,000/- alone could be honoured.

The petitioner argued that he could not even withdraw money for his emergency needs if the amount is over Rs. 50,000/-. The cheque was returned stating that the third-party cash withdrawal limit exceeds the non-base branch. The respondent on the other hand contended that the RBI issued circular directing banks to fix suitable ceilings beyond which no cash withdrawal should be allowed unless the account holder was directly present for withdrawal.

The Court, therefore, noted –

"Considering the above judgement and further fact that the 1 st petitioner is only a bearer of the cheque and the 2 nd Petitioner is a drawer. He has not filed the writ petition for any such relief. He has been impleaded only during the hearing of the case on 30.09.2022 after 14 years of the writ petition. That itself indicated that he has been impleaded only to support the case of the 1 st petitioner. Even assuming that for claiming compensation same ought to have made only within a period of limitation."

The Court further held that "Accordingly I do not find any merits in the writ petition and the Writ Petition is dismissed. However, it is for the Reserve Bank and banks to modify the restrictions taking note of the online facilities available and the entire system is on Internet, to enhance the ceiling limit to balance the rights of the parties and banks."

Accordingly, the Court dismissed the petition.

Cause Title – G. Deepa v. The General Manager and others

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Madras High CourtJustice N. Sathish KumarReserve Bank of IndiaBanking Regulation Act

Swasti Chaturvedi