A five-judge Constitution bench of the Supreme Court last week decided to examine the validity and the manner in which the government demonetised Rs 500 and Rs 1,000 currency notes in 2016, brushing aside the Centre’s plea “not to waste time on an academic issue”.
A bench of Justices S Abdul Nazir, BR Gavai, AS Bopanna, V Ramasubramanian and BV Nagarathna asked the government and Reserve Bank of India (RBI) to file comprehensive affidavits explaining why the resort to Section 26 of the RBI Act was made to issue a demonetisation notification on November 8, 2016, and detail the deliberations on pros and cons of demonetisation.
Former finance minister and a staunch critic of demonetisation, P Chidambaram, stated it as a mindless exercise that caused extreme hardship to citizens who stood in queues before ATMs for long hours to withdraw small amounts. Many could not buy medicine, get wages and lost jobs. As such, the demonetisation failed to achieve the objectives of blocking black money, terror funding and fake currencies.
Attorney general R Venkataramani said, “If and when required, the government will show these documents. But is it necessary for the court to carry out an academic exercise when the decision has worked itself out? The court would be required to go into a web of entangled aspects that is considered before the government takes an economic policy decision. Should the court step into such an area?” But the court brushed aside the observations of the Attorney general.
Chidambaram said that “The SC had in 1996 decided the validity of the 1978 limited demonetisation. The court can give a ruling which would serve as a guiding light for future demonetisation decisions.” Further he added that both the 1948 and the 1978 demonetisations were done through law passed by Parliament, which was abandoned by the government in 2016 by resorting to the RBI Act.
