SC backs govt's demonetisation move but flags inconvenience'

New Delhi: Supreme Court refused to stay on Monday the government’s notification demonetising Rs 500 and Rs 1,000 currency notes but asked it to spell out the steps taken to minimise public inconvenience.

“We will not be granting any stay,” a bench comprising Chief Justice T S Thakur and D Y Chandrachud said.

The remarks were made when the court was hearing petitions challenging government’s demonetisation decision.

Senior advocate Kapil Sibal, appearing for one of the petitioners, however, said he was not asking for a stay on the notification but seeking answers from the government about the steps taken to remove public inconvenience.

The bench asked Attorney General Mukul Rohatgi to file an affidavit about the measures already undertaken by the government and the RBI to minimise public inconvenience and also the steps likely to be undertaken in future.

Without issuing any notice to the Centre or the RBI, the bench posted the matter for further hearing on November 25.

During the hearing, the Chief Justice said the objective seems to be laudable “but there is some inconvenience also to the public at large.”

The bench also said, “You (Centre) can have surgical strike against black money but you cannot have surgical strike against people of the country.”

At the outset, the Centre which had filed a caveat in the matter, sought dismissal of the petitions challenging demonetisation on several grounds including that they were “misconceived”.

Attorney General (AG) Mukul Rohatgi, appearing for the Centre, outlined the idea behind demonetisation and said large number of fake currency has been used to finance terrorism in various parts of the country including in Jammu and Kashmir and northeastern states.

He, however, agreed with the bench that some inconvenience to common citizens occurs as this kind of “surgical strike” is bound to have “some kind of collateral damage”.

He also said there were as many as 24 crore bank accounts including 22 crore opened under the ‘Jan Dhan Scheme’ and the Centre was hopeful to “ramp up” the outflow of the cash to banks, post offices and two lakh ATMs across the country.

“Two lakh ATM machines could not have been deliberated in advance to be in tune with new notes as the cash would have been out of the banks,” Rohatgi said, adding that “secrecy is the key to such actions”.

Rohatgi said there were approximately one lakh branches of various banks and two lakh ATMs besides the post offices across the country to dispense cash to common people and the restriction on withdrawal is there to ensure that the money be paid to maximum number of people.

He summed up the submission contending that there was no legal basis for opposing the Centre’s move to demonetise the higher denomination currency notes aimed at “catching big fish” which the previous governments failed to do in last 50 years.

He said the Centre has complied with section 26(2) of the RBI Act and the present “surgical strike has to be seen in the context of safety and security of the nation, its border, and financial terrorism unleashed through fake currency.”

“The attack is on those who have stashed huge amount of currency,” he said, adding that the surgical strike of this nature has to be carried out in complete secrecy and it was not possible to come out with Rs 10 lakh crore of currency in one go as there was a need for recalibration of ATM machines across the country.

The AG was assisted by a team of lawyers, including two Additional Solicitors General, and a senior official from the finance ministry.

Senior advocate Kapil Sibal, appearing for one of the petitioners Adil Alvi, said the petition has also challenged the constitutional validity of the notification as the provision of the Reserve Bank of India Act has not been complied with.

He referred to section 26(2) of the Act and said the government was not authorised to demonetise all series of currency notes of high denominations in one go.

There has to be a legislation if the government wants to demonetise the entire series of Rs 500 and Rs 1,000 currency notes, Sibal said, adding that in 1978, a law was brought to demonetise the currency notes of particular denominations.

Sibal then highlighted the inconvenience faced by the common people in getting their own money from banks and ATMs and said it was a “surgical strike against the common man.”

The apex court, on November 10, had agreed to hear pleas against the November 8 decision of the Narendra Modi government that these notes are no longer a legal tender.

Out of the four PILs on the demonetisation issue, two were filed by Delhi-based lawyers Vivek Narayan Sharma and Sangam Lal Pandey, while two others were filed by individuals, S Muthukumar and Adil Alvi.

The petitioners had alleged that the sudden decision has created chaos and harassment to public at large and the notification of the Department of Economic Affairs, Ministry of Finance be either quashed or deferred for some time.

Sharma, in his plea, had termed the notification of DEA as “dictatorial”, claiming that it did not grant reasonable time to citizens for exchanging the specified bank notes to legitimate notes to avoid “large scale mayhem, life threatening difficulties”.

The plea also sought either quashing of the notification or a direction to the Centre for grant of “reasonable time frame” to citizens to exchange the demonetised currency notes to avoid difficulties being faced by the people.

The Prime Minister, in a televised address to the nation, had declared that high denomination notes of Rs 500 and Rs 1000 will no longer be legal tender from November 8-9 midnight. He had said the Government has declared a “decisive war” against black money and corruption.