The Delhi High Court, on Thursday, asked the Reserve Bank of India (RBI) and State Bank of India (SBI) to respond to a petition seeking to direct the authorities to take back the decision to prohibit UPI payments on cryptocurrency exchange WazirX.
A Bench of Chief Justice DN Patel and Justice Jyoti Singh issued notice to SBI, RBI, National Payments Corporation of India and the Department of Financial Services, and asked them to respond to the petition. The court listed the matter for further hearing on December 24.
‘An arbitrary decision’
Petitioner Arnav Gulati, a law student and an investor, argued that he, along with the numerous account holders of SBI and registered users of WazirX, are aggrieved by the prohibition, which is arbitrary, and goes against the Supreme Court ruling in the case of Internet and Mobile Association of India, where the court had struck down the RBI circular prohibiting all banks to deal with any virtual currency or provide services for facilitating any entity in dealing with them.
“The Respondent No 1 (SBI) is directly involved in the matter as they have blocked and restricted the users and merchants to use the UPI deposits option on the crypto exchanges, thereby leaving users with no option but to use other payment deposit options, which take more time to get completed and extra charges like convenience fees, GST charges or service charges are charged, making it difficult for retail investors and users to get the funds on time,” said the petition.
“That the decision of Respondent No I is arbitrary, hasty, absurd, unreasonable and irrational, as all the respondents have never restricted the banks or other institutions in dealing with cryptocurrencies.
“That the Respondent No 2 (RBI) and others clarified in their notices and interviews that there is no objection with the Unified Payment Interface (hereinafter referred as UPI) system in the cryptocurrency exchanges and, therefore, the petitioner has approached this court to directing the Respondent No 1 (SBI) to take effective steps and take back the decision of prohibiting UPI Payments in the cryptoexchanges,” the petitioner added.
‘Violates SC judgment’
Advocates Siddharth Acharya and Simarjeet Singh Satia, representing the petitioner, said the SBI’s decision to block UPI services for WazirX is arbitrary and violative of the Supreme Court judgment of March 2020.
The lawyers said the PIL involved the interest of almost one crore retail investors of the WazirX crypto exchange platform, and sought direction to the authorities to take effective steps and take back the decision of prohibiting UPI payments in the crypto exchanges.
The plea said that in April 2018, the RBI issued a circular prohibiting all banks to deal with any virtual currencies or provide services for facilitating any person or entity in dealing with or settling them, including Bitcoins. Such services included 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 virtual currencies, it said, adding that thereafter all the transactions related to cryptocurrencies via banking institutions were stopped.
“Later, the Supreme Court, in March 2020, passed a final order nullifying the circular of the RBI and paving the way for banks and their customers to deal in cryptocurrency. On the basis of the said order, the RBI issued another circular allowing the institutions under it to deal and facilitate transactions in virtual currencies,” it said.
The plea said that on September 15, SBI prohibited the use of the UPI platform for its account holders in the WazirX cryptocurrency exchange, which has now been challenged.
It sought direction to the RBI to regulate and govern the cryptocurrency sector, and thereby making provisions for the payment interfaces and decisions.