SC posts 9 questions on demonetisation to Constitution Bench

The Supreme Court on Friday refused to tinker with the move to do away with the use of now-defunct high-value currency notes for public utilities, in government hospitals and for rail tickets but referred to a Constitution Bench the issue of validity of the government's demonetisation decision.

The apex court, which framed nine issues for adjudication by a five-judge Constitution Bench for authoritative pronouncement on the government's demonetisation decision, also refrained from making any amendment to the directive to limit weekly withdrawals at Rs 24,000.

It hoped that the government will "fulfil this commitment" to the extent possible keeping in mind the "hardships and sufferings" faced by the general public.

A three-judge bench headed by Chief Justice T S Thakur, which declined to extend the exemptions on the demonetised currency notes of Rs 1000 and Rs 500, left it to the judgement of the government to review it hoping that it would be responsible and sensitive in dealing with it.

"Whether the use of demonetised currency notes would be extended or not, it is on the government of the day as it is the best judge. We hope that the government would be responsible and sensitive in dealing with it," the bench, also comprising Justices A M Khanwilkar and D Y Chandrachud, said.

While examining the plea for passing directions to ease the inconvenience of the people on the contentions that banks were not allowing withdrawal of Rs 24,000 a week, the bench took note of the submissions of Attorney General Mukul Rohatgi that 50 days’ time of streamlining cash inflow had not been exhausted.

It also took into account the submission of the government that 40 per cent of the demonetised currency has been replaced with the pumping in of new currency notes of Rs 2000 and Rs 500.

Taking this submissions on record, the bench said "no other directions can be given at this stage" and "we hope that the government will fulfil the commitment of Rs 24,000 withdrawal per week to the extent possible and review it periodically".

The apex court also accepted the assurance given by the attorney general that Rs 8,000 crore collected by district cooperative central banks (DCCBs) across the country between November 11 and 14 will be allowed to be exchanged with new currency notes as per the rules applicable to all banks.

The government also got a relief as the bench stayed the proceedings on pleas challenging the November 8 demonetisation notification pending before different high courts and said that only apex court would hear them.

"We find it just and proper to order withdrawal of all the writ petitions in various high courts and all the matter will be heard by the Supreme Court. On all the transfer petitions, we are issuing notice and ordering stay of proceedings on writ petitions in various high courts.

"No other courts in the country shall entertain any writ petitions relating to the demonetisation issues. We make it clear that the petitioners in the high courts are free to intervene in the Supreme Court," the bench said.

While holding that the challenge to November 8 notification was in the arena of "public importance" as complaints of inconvenience have been brought, it said there was a need for a direction for referring it to a larger bench for "authoritative pronouncement by five judges" and the chief justice will constitute a bench for the purpose.

The court said that important questions that need to be considered are whether the November 8 notification is ultra vires to Section 26 (2) (power to demonetise) of the Reserve Bank of India Act.

The second question it said is whether the demonetisation "falls foul of" Article 300A of the Constitution which says that no person shall be deprived of his/her property without a provision in law.

The court said it needs to be examined whether the decision is unconstitutional violating Article 14 (equality before the law) and Article 19(1)(g) (freedom to practise profession and occupation) and whether the limit and restriction on withdrawal of "legitimate and taxed money" by the banks is violative of various Fundamental Rights.

The bench said the fifth question that needs to be examined is whether the demonetisation move suffers from procedural lapse affecting the citizens' Fundamental Rights under Articles 14 and 19.

Further, the bench said it has to be examined whether the exercise, carried under section 26 of the RBI Act, suffered from excessive delegation of power to demonetise currency notes.

It also included the question raised by the attorney general as to what is the scope of judicial review in the matters of fiscal/economic policy for examination.

The apex court said that the larger bench would also go into the issue raised by the attorney general that can a political party file the public interest litigation as has been done in the case by the Communist Party of India-Marxist.

The bench also said it has to be examined whether district cooperative banks have been discriminated against by denial of the permission to accept deposits and exchange the demonetised currency notes.

Image: People queueing up outside a bank in Lucknow. Photograph: PTI Photo.