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The number of cases being mounted over RBI for its April 6 circular is increasing from a steady pace. We’ve already seen how a small Ahmedabad based company CoinRecoil challenged the circular in Delhi High Court, and how a London based company that goes by the name of Flintstone Technologies also filed a second petition against RBI in the same court. Now in a major development 4 leading cryptocurrency exchanges of country have also filed their own petition against RBI in Supreme Court.
They’ve collectively filed a writ petition in Supreme Court under Article 32 of Constitution, and like CoinRecoil their petition also challenges the constitutional validity of RBI circular. The number of petition is Writ Petition no. 373/2018, and its first hearing has happened already on 1st of May in the court of Justice Adarsh Goel and Justice Indu Malhotra. A notice has also been issued to RBI for next hearing, which is likely to happen on 11th of May now.
The Cryptocurrency exchanges who have moved to the Supreme Court, along with their Shareholders, against the RBI are (1) Coindelta Exchange run by Bitfair Technologies Pvt. Ltd., Gurgaon;(2) Koinex Exchange run by Discidium Internet Labs Pvt. Ltd., Mumbai; (3) Throughbit Exchange run by Throughbit technologies Pvt. Ltd., Bangalore and; (4) CoinDCX run by Neblio Technologies Pvt. Ltd., Mumbai. Only a month has passed since the Reserve Bank of India, vide Circular issued on April 6, 2018, directed the regulated banks and payment platforms to
immediately suspend their services for Crypto currencies, in the following words:
“… it has been decided that, with immediate effect, entities regulated by the Reserve Bank shall not deal in VCs or provide services for facilitating any person or entity in dealing with or settling VCs. Such services include maintaining accounts, registering, trading, settling, clearing, giving loans against virtual tokens, accepting them as collateral, opening accounts of exchanges dealing with them and transfer / receipt of money in accounts relating to purchase/ sale of VCs.”
As per the current status of the Crypto litigation in the Supreme Court, prior to the latest joint Writ Petition by four exchanges, two Writ Petitions in public interest are pending for deciding the legality/illegality of Crypto currencies.
The first Writ Petition no. 1071/2017 was filed in Public interest under Article 32 of the Constitution by Mr.Vijay Pal Dalmiya Advocate before the Supreme Court of India in which he sought a ban on the sale and purchase of Cryptocurrencies on the ground that it is used in anti-national, illegal and nefarious activities such as terrorism funding, illegal trade of arms and drugs, bribery, money laundering, tax evasion, payment of ransom etc. He also argues that the sale and purchase of Crypto currency including Bitcoin violate or have a bearing on various existing laws of India including Reserve Bank of India Act, 1934; the Foreign Exchange Management Act, 1999; the Coinage Act, 1906; the Securities Contracts (Regulation) Act, 1956; the Sales of Goods Act, 1930; the Payment and Settlement Systems Act, 2007 and Indian Contract Act, 1872.
The second Writ Petition no. 1076/2017 under Order 38 of Supreme Court Rules 2013 read with Article 142, was filed in public interest by Mr. Dwaipayan Bhowmick Advocate in which he sought a direction to regulate the flow of Cryptocurrency and to ensure that the Cryptocurrency be made accountable to the Exchequer.
The RBI dictum was followed by a public outcry on this unexpected step which adversely affected the interest of large number of Cryptocurrency ventures and start-ups. In the first attempt to assail the Circular of RBI, Kali Digital Eco-systems Pvt. Ltd. which runs the exchange “CoinRecoil”, approached the High Court of Delhi by way of a Writ Petition no. 3677/2018 crying infringement of its Right to equality (Article 14) and Right to carry on trade [Article 19 (1) (g)] guaranteed under Part III of the Constitution of India. Just after this, another exchange namely moneytradecoin.com approached the High Court of Delhi challenging the RBI Circular. Considering the similarity of issue in both the Writ Petitions the Court has tagged the matters and the same are likely to be heard on 24 th May, 2018.
The joint Writ Petition filed by the four exchanges came to be heard before the Court of Justice Adarsh Goel and Justice Indu Malhotra on May 1, 2018, who after examining the issue involved, issued notice to Reserve Bank of India and tagged the matter with the other two pending Writ Petitions. All the Writ Petitions are likely to be listed for hearing before the Court on May 11, 2018.
It is notable that all the stake holders of the crypto community have approached the Court for protection of their right, whereas the Crypto holder/investor still remains unvoiced. It will be interesting to expect a move from the investors also for having their stance heard as one of the interested and the most affected party!
We’ll keep an eye on the developments of all these cases and bring you more updates regarding when they come out, so keep checking back.