Petitioner R S Kelkar said the RBI has not taken this loss to its profit and loss account and the Centre is also not accounting this loss in its accounts presented to Parliament.

This loss is stored in a currency and gold revaluation account in RBI's balance sheet. It is on the valuation of investments done by the RBI from proceeds of market stabilisation scheme (MSS).

The MSS bonds were also issued illegally and unconstitutionally, the PIL claims. The RBI borrowed a sum of Rs 161,058 crore (Rs 1610.58 billion) by virtue of MSS bonds till January 18 this year.

These bonds were issued after an MoU was signed by the Centre and the RBI in March 2004 without informing Parliament, the PIL said.

Ironically, the country is paying interest on this amount at 7.5 per cent per annum and the proceeds are being invested in foreign exchange -- especially in US Treasury -- yielding almost no returns.

Over and above this loss of interest, the country has also suffered this loss of more than Rs 65,065 crore on valuation, according to the PIL.

Chief Justice Swatanter Kumar and Justice V M Kanade of the Bombay High Court heard the matter on Thursday and adjourned it for two weeks as the RBI sought time to file its version. 

The petition calls for the amount of Rs 161,058 crore lying with the RBI in a separate identifiable cash account be transferred to the consolidated fund of India and placed before Parliament.

In this context, article 266 of the Constitution provides for the formation of consolidated fund. All tax receipts and borrowings of the Government -- internal as well as external -- need to be credited to this fund. No amount can be spent from this fund without the permission of Parliament.

Further, article 292 defines the borrowing power of government and it is expected that Parliament will put a limit on government borrowings.

In the past 60 years, Parliament has not made any such law, said the PIL. Hence, the Government thinks that it has unlimited borrowing power.

"Since April 2004, the RBI is illegally issuing MSS bonds on behalf of the government and keeping the borrowed money without crediting it to the consolidated fund of India. The interest on these new borrowings is being paid from the said fund."

The petition also said the Comptroller and Auditor General of India should audit RBI accounts and file a report to the President who can put it before both the houses of Parliament. The PIL also sought a stay on the MoU and on issuance of fresh MSS bonds.