Position in India
What is Bitcoin?
The Constitution of India provides for matters in respect of which the Central Government has powers to regulate and legislate. To understand if Bitcoin are capable of government review, an analysis of the Indian Constitution has been undertaken. In this regard, Article 246 read with Seventh Schedule of the Constitution enumerates the list of activities that the Central Government and the State Governments are allowed to legislate. Entry 36 and 46 of List I of the Seventh Schedule of the Constitution states that the Central Government is allowed to legislate in respect of currency, coinage, legal tender, foreign exchange and bills of exchange, cheques, promissory notes and other like instruments respectively. If Bitcoin (as discussed below) falls within the purview of any of the above outlined categories of instruments, then the Central Government would have exclusive powers to legislate. In the hierarchy of laws, the Constitution is supreme. All laws are subordinate to the Constitution. A law may be struck down as being unconstitutional due to lack of legislative competence or because it violates fundamental rights.100 Decisions of the Union or State Executive, including decisions of statutory authorities, constitutional functionaries and quasijudicial authorities may be challenged in a State High Court under the Constitution. Rules, regulations, notifications and circulars passed by authorities under the relevant statute may also be challenged on the ground that the same violate the Constitution. The Constitution empowers, and the Supreme Court of India (“Supreme Court”) has recognized, authorities created under a statute to delegate certain functions to subordinate authorities.101 To facilitate in the effective implementation of government policies certain executive authorities have the power to pass rules and regulations which have the force of law. These rules and regulations are subordinate to the parent law and cannot transgress the limits set out by the parent law. Rules and regulations cannot confer excessive discretion on subordinate authorities. It is also settled law that authorities acting in furtherance of a statute must carry out their functions in a manner that best achieves the objectives of the statute. These principles are designed to reduce the scope of discretion and eliminate arbitrariness in executive action. Ordinarily, decisions of these authorities may be challenged in appeal before an appellate authority. However, in exceptional circumstances, where there is an egregious violation of fundamental rights, principles of natural justice or when an authority acts in violation of its jurisdiction, an aggrieved party may file a petition in the State High Court. It is important to note that while challenging the decision of a statutory authority, generally the scope of appeal is limited and there is a high degree of deference by courts. The Supreme Court has recognized that in matters relating to economic policy, courts must not interfere unless arbitrariness is writ large in the decision making process. Even in cases where intervention of the court is justified, the court would only examine the decision making process and not the decision itself.
The principal laws concerning Bitcoin are:
i. The Constitution of India, 1950;
ii. The Foreign Exchange Management Act, 1999 (“FEMA”);
iii. The Reserve Bank of India Act, 1934 (“RBI Act”);
iv. The Coinage Act, 1906 (“Coinage Act”);
v. The Securities Contracts (Regulation) Act, 1956 (“SCRA”);
vi. The Sale of Goods Act, 1930 (“Sale of Goods Act”); and
vii.The Payment and Settlement Systems Act, 2007 (“Payment Act”).
viii.Indian Contract Act, 1872 (“Contract Act”)
II. FEMA, RBI and Coinage Act The three statutes together define and regulate the issuance, utilization and disposal of currencies (and money). The terms legal tender and bank notes have not been clearly defined in any of the three aforementioned statutes. However, from an analysis of the provisions of the relevant regulatory statute, the nature and characteristics of the terms legal tender and bank notes have been determined.
100. Gwalior Rayon Silk Manufacturing (Weaving) Company Ltd. V. Asst. Comm. Sales Tax (1974) 2 SCR. 101. Section 2(h) of The Foreign Exchange Management Act, 1999
What is Bitcoin?
The Constitution of India provides for matters in respect of which the Central Government has powers to regulate and legislate. To understand if Bitcoin are capable of government review, an analysis of the Indian Constitution has been undertaken. In this regard, Article 246 read with Seventh Schedule of the Constitution enumerates the list of activities that the Central Government and the State Governments are allowed to legislate. Entry 36 and 46 of List I of the Seventh Schedule of the Constitution states that the Central Government is allowed to legislate in respect of currency, coinage, legal tender, foreign exchange and bills of exchange, cheques, promissory notes and other like instruments respectively. If Bitcoin (as discussed below) falls within the purview of any of the above outlined categories of instruments, then the Central Government would have exclusive powers to legislate. In the hierarchy of laws, the Constitution is supreme. All laws are subordinate to the Constitution. A law may be struck down as being unconstitutional due to lack of legislative competence or because it violates fundamental rights.100 Decisions of the Union or State Executive, including decisions of statutory authorities, constitutional functionaries and quasijudicial authorities may be challenged in a State High Court under the Constitution. Rules, regulations, notifications and circulars passed by authorities under the relevant statute may also be challenged on the ground that the same violate the Constitution. The Constitution empowers, and the Supreme Court of India (“Supreme Court”) has recognized, authorities created under a statute to delegate certain functions to subordinate authorities.101 To facilitate in the effective implementation of government policies certain executive authorities have the power to pass rules and regulations which have the force of law. These rules and regulations are subordinate to the parent law and cannot transgress the limits set out by the parent law. Rules and regulations cannot confer excessive discretion on subordinate authorities. It is also settled law that authorities acting in furtherance of a statute must carry out their functions in a manner that best achieves the objectives of the statute. These principles are designed to reduce the scope of discretion and eliminate arbitrariness in executive action. Ordinarily, decisions of these authorities may be challenged in appeal before an appellate authority. However, in exceptional circumstances, where there is an egregious violation of fundamental rights, principles of natural justice or when an authority acts in violation of its jurisdiction, an aggrieved party may file a petition in the State High Court. It is important to note that while challenging the decision of a statutory authority, generally the scope of appeal is limited and there is a high degree of deference by courts. The Supreme Court has recognized that in matters relating to economic policy, courts must not interfere unless arbitrariness is writ large in the decision making process. Even in cases where intervention of the court is justified, the court would only examine the decision making process and not the decision itself.
The principal laws concerning Bitcoin are:
i. The Constitution of India, 1950;
ii. The Foreign Exchange Management Act, 1999 (“FEMA”);
iii. The Reserve Bank of India Act, 1934 (“RBI Act”);
iv. The Coinage Act, 1906 (“Coinage Act”);
v. The Securities Contracts (Regulation) Act, 1956 (“SCRA”);
vi. The Sale of Goods Act, 1930 (“Sale of Goods Act”); and
vii.The Payment and Settlement Systems Act, 2007 (“Payment Act”).
viii.Indian Contract Act, 1872 (“Contract Act”)
II. FEMA, RBI and Coinage Act The three statutes together define and regulate the issuance, utilization and disposal of currencies (and money). The terms legal tender and bank notes have not been clearly defined in any of the three aforementioned statutes. However, from an analysis of the provisions of the relevant regulatory statute, the nature and characteristics of the terms legal tender and bank notes have been determined.
100. Gwalior Rayon Silk Manufacturing (Weaving) Company Ltd. V. Asst. Comm. Sales Tax (1974) 2 SCR. 101. Section 2(h) of The Foreign Exchange Management Act, 1999
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