SC to examine constitutional validity of demonetisation

New Delhi: The Supreme Court on Friday indicated that it will examine the constitutional validity of the demonetisation of Rs 500 and Rs 1000 notes from the night of November 8 and if necessary consider referring the batch of petitions for adjudication by a five-judge Constitution Bench.

Chief Justice T.S. Thakur, sitting with Justice D.Y. Chandrachud gave this indication when senior counsel Kapil Sibal, appearing for petitioners insisted that he wanted to challenge the constitutional validity of the measure and not just confine to the problems faced by the people.

Sibal suggested that a larger bench of five-judges should hear the petitions as several constitutional issues are involved. At the outset, he said that the RBI rules did not allow anybody to prevent anyone from withdrawing their rightful and legitimate money from the bank and the banks were only trustees of the money.

Sibal told the court, “People are starving on the roads as they don’t have money. There are some really serious issues here. There is a lot of inconvenience. Markets are closed. They (government) don’t have the capacity to print the new currency. What are they going to do about it?”

Attorney General Mukul Rohatgi, however said that it was not necessary to refer the matter to a Constitution Bench. He suggested that hearing can be deferred so that the petitions transferred from various High courts can also be heard together and rejected the charge that people are starving on roads.

One of the petitioners, advocate Manohar Lal Sharma, told the court that the new Rs 2000 notes lose colour and can be easily faked. He said “all the banks are closed. Maximum cash has gone into BJP hands before demonetisation.”

Accepting AG’s suggestion, the CJI said court will further hear on December 2, everyone on various questions and asked Sibal and others to come out with legal propositions for the consideration of the court.

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

The Centre had justified the move and said in view of the counterfeit notes and activities related to it, the preparatory steps for implementation of this decision had to be taken in utmost secrecy.

The suddenness of announcement of the scheme without sufficient prior information is necessary since given the enormity of the impact. It should not be difficult to appreciate that the element of secrecy and surprise is essential for such scheme to succeed.

The affidavit said “If prior notices in any form were to be given, then the scheme should not have been there in the first place. The gigantic dimensions and the possibilities of compromising on secrecy were taken into consideration. If elaborate prior arrangement for distribution of new currency were made prior to the announcement of scheme the very objective of the scheme would have been defeated.”

It said, “Further the scheme impacts several sectors in the short term, but promises larger benefits to the economy in the medium term. It is a well known fact that black money terror, terrorists and their operations from within an across the border of the country is constant skirmishes at the border both northern and north eastern. Existence of large account of unaccounted money has seriously undermined national security over the last few decades.”

Explaining how currencies are used for terrorist activities, the Centre said the destabilizing efforts of anti national elements, often supported and abetted by hostile external forces have manifested in varying forms.

Trans-border terrorism, left wing extremism, espionage, sabotage, insurgencies, activities of organized crime syndicates, organized criminal groups, drug syndicates, gun running human trafficking abetment of communal riots, etc are a few variants where unaccounted money which played a seminal role will now be curbed, it said.