Case Analysis on INTERNET AND MOBILE ASSOCIATION OF INDIA VS RESERVE BANK OF INDIA Shreya Khandelwal Case Analysis Sun, Jul 02, 2023, at ,01:53 PM CASE NAME – INTERNET AND MOBILE ASSOCIATION OF INDIA VS RESERVE BANK OF INDIAFacts-The Reserve Bank of India on 5th April 2018, issued a document which directed banks across India to stop any dealing in virtual currencies and to not [provide any services to any such companies who were also dealing in virtual currencies. The document also directed the banks to exit/ terminate their relationship with all those companies/ individuals who were trading in virtual currencies. Following this announcement, a circular was released on 6th April 2018 which also mentioned the same directives.The Indian and Mobile Association of India filed a writ petition to challenge the order given by the Reserve Bank of India. ISSUES-The issues raised were- Does the Reserve Bank of India have the authority to issue such directive? Is the directive of the Reserve Bank of India against the spirit of the Fundamental Right of practicing trade and commerce freely as mentioned in the Constitution. RULES- Reserve Bank of India Act, 1934 Banking Regulation Act, 1949 The Payment and Settlements Act, 1936 ARGUMENTS- The appellant (The Indian and Mobile Association of India)- The appellant firstly argued that RBI does not have the capacity to forbid the trading of virtual currencies because these currencies are not legal tenders but tradeable digital commodities which do not fall under the gambit of Reserve Bank of India Act 1934 or Banking Regulation Act, 1949. Secondly, the appellant stated that all the other stakeholders including Ministry of Finance and Security and Exchange Board of India, took the trading of virtual currencies in a positive manner, but RBI is the only body which has raised the issues.Thirdly the appellants stated that all the major economies in the world, multinational financial institutions have studied the blockchain and cryptocurrencies but have found nothing malicious. Even the attempt of the Government of India to bring about a legislation hasn’t reached any conclusion.Fourthly, the RBI should have also considered that institutions like IAMAI, must have taken all the requisite measures, ensured the compliance of all the norms by the concerned parties.Lastly, the RBI should have considered the fact that not every cryptocurrency is anonymous. Had this extreme step of banning the crypto currency been taken by the RBI, they should have only banned the anonymous cryptocurrencies. Also, the appellants also argued that the fundamental right to practice trade and commerce freely was also violated by the directives of the RBI. The Respondent (The Reserve Bank of India)- Firstly, the Reserve Bank of India argued that the virtual currencies in question fail to qualify the parameters to be considered as a currency. Virtual Currencies are neither store of value, medium of exchange, nor a unit of measurement. These currencies can be used for illegal transaction or activities like terrorism which can threaten national security. These currencies can also affect the monetary stability of the Indian Economy. These unregulated currencies neither have accountability nor any responsibility towards the investor. No one can be held accountable nor redressable for the collapse of virtual currency market.Secondly, the RBI argued that the step taken by them is rightly within their powers given to them via the Reserve Bank of India Act, 1934, the Banking Regulation Act, 1949 and the Payment and Settlement Systems Act, 2007. The step was taken to protect public interests and protect them from the immensely volatile market of cryptocurrencies. Thirdly, the RBI argued that they have not violated any fundamental right. The RBI has the ability to caution public and investors against potential security risks.Fourthly, the RBI stated that the directives issues is not a sudden step. The RBI has been evaluating and monitoring the situation and the trading platforms of the virtual currencies for the past 5 years. Lastly, the RBI argued that the compliance norms issued, and measures taken are far below the required standards and other norms which are subjected to other payment and monetary mechanisms. Also, the anonymity in question, renders these norms ineffective. CONCLUSION-The Supreme Court recognised the fact that the RBI in their 5 years of surveillance did not find any irregularity nor any feasible reason which might adversely impact the monetary system. The Supreme Court also stated that the Inter-Ministerial committee which was constituted to formulate a framework for Crypto-token Regulation Bill, 2018, also ruled that initiating a ban on the trading of the virtual currencies was an extreme step and the objective of the RBI could have achieved by other regulatory and mechanisms. The Supreme Court relied on the judgement given in State of Maharashtra vs Indian Hotel and Restaurants Association and decided to rule out the ban on virtual currencies by the Reserve Bank of India. REFERENCES- https://indiankanoon.org/doc/12397485/ Mythri Jonnala, Internet and Mobile Association of India versus Reserve Bank of India, The LexWarrier: Online Law Journal, (2020) 5, pp. 143 – 147, ISSN (O): 2319-8338 Anirudh. “Internet and Mobile Association of India V. Reserve Bank of India.” Legal Service India - Law, Lawyers and Legal Resources, www.legalserviceindia.com/legal/article-3912-internet-and-mobile-association-of-india-v-reserve-bank-of-india.html. Accessed 27 June 2023.