However, the government said that adequate time was provided to exchange or deposit the old currency notes.
The Supreme Court referred to people, like those in prisons, can not be stopped from exchanging the old notes.
It was replying to the Supreme Court's appeal to open a window for genuine people, like the terminally ill and invalids, to name a few, who were unable to deposit their demonetised ₹1,000 and ₹500 notes between November 9 and December 30 previous year.
They said it an affidavit filed in the Supreme Court by Finance Ministry's Under Secretary T Narasimha.
According to the petitioners, the Prime Minister had in his speech on November 8, 2016 assured that old currency would be accepted at select RBI outlets till March 31, 2017. The government said that if such exceptions are allowed, it would defeat the objective of demonetization and will work counter to the ongoing battle against black money.
Prime Minister Narendra Modi in 2016 had announced the demonetisation of 500 and 1000 Rs notes with a deadline of December 31 for people to deposit or exchange the old notes.
The government asserted that granting any further grace period for depositing banned currency notes will defeat the goal of demonetisation, which was done as an exercise in eliminating black money.
Patel, at the meeting, is believed to have said that the RBI hadn't arrived at the final figure just because the counting was still in progress.
The SC-bench led by Chief Justice of India JS Khehar said government would be acting in an unjustified manner, it it disallows those who were "genuinely unable to meet the December 30 deadline".
Earlier, the apex court on March 6 had issued notices to the Centre and RBI on the petitions alleging tweaking of rules on exchanging demonetised currency notes.
These, the government said, forced the government to cancel or restrict exemptions granted.
However, the Ordinance, issued on December 30 last, had specified that only those who were overseas or armed forces personnel posted in remote areas or others who could give valid reasons for not being able to deposit the cancelled notes at banks, could deposit the demonetised currency notes of Rs 500 and Rs 1,000 currency notes till March 31.