Supreme Court Unlikely To Interfere With Modi’s Demonetisation Drive
Demonetisation is a policy decision; Supreme Court may not interfere, suggest legal experts.
While the Supreme Court has agreed to consider public interest litigations filed by two lawyers against the Narendra Modi government’s demonetisation drive, legal experts told BloombergQuint that the claims made in both PILs are on weak legal ground.
The two PILs have been filed by Uttar Pradesh-based lawyer Sangam Lal Pandey and New Delhi-based lawyer Vivek Narayan Sharma.
Calling the decision Prime Minister Modi's a “Tughlaki farman”, Pandey has said in his PIL that the move is illegal and arbitrary as decisions cannot be taken overnight without prior notice. Sharma has alleged that the Reserve Bank of India (RBI) failed to give prior notice about the currency discontinuation and the process should therefore be held illegal.
The two petitioners have listed problems faced by citizens, ranging from hospital payments to the cash crunch faced by farmers. Along with quashing of the decision, the two PILs have sought direction to the government to provide adequate time to citizens to prepare for such a move.
Our Lordships May Say No..
The PILs may not be sustainable on the grounds they have cited, former Additional Solicitor General of India and senior advocate Siddharth Luthra said.
Hiccups and hardships in implementation may not be a ground to sustain a challenge to a policy decision. There is no challenge to the administrative decision, which could have invited the court’s consideration, but that is not the case here in the petition.Siddharth Luthra, Senior Advocate
Advocate Zoheb Hossain often represents the Income Tax Department in the Delhi High Court and he too said the PILs are unlikely to succeed as the government’s decision to scrap Rs 500 and Rs 1,000 currency notes is legally valid and being applied uniformly across the country.
“In my view, notwithstanding the grave inconvenience caused to a large population of the country the policy decision as discussed above will pass legal and constitutional muster and being in the realm of policy. The ultimate judge of the actions taken by the government will be the people of India and the correct forum to contest this policy is not in the courts but rather in the political domain,” said Hossain in an interview to BloombergQuint
Article 73 of the Constitution provides that the executive power of the Union will be co-extensive and shall extent to the matters with respect to which the Parliament has power to make laws. Therefore, from a Constitutional perspective the Government’s policy to demonetise the currencies of Rs 500 and Rs 1,000 cannot be said to be without legal competence.Advocate Zoheb Hossain, Senior Standing Counsel, IT Department, Delhi High Court
Alok Prasanna Kumar, senior resident fellow of the Vidhi Centre for Legal Policy, pointed out the apex court is unlikely to interfere with the process.
“The actual legal basis to demonetise is already accepted by a constitution bench in Jayantilal Ratanchad Shah versus Reserve Bank of India judgment. The magnitude today is much larger than it was in 1978 but the court might not interfere,” Prasanna told BloombergQuint.
He added that since it’s a complex economic situation, the court might ask the government about their plan of action but might not interfere in the process per se. “The government is legally correct in going ahead with it,” Prasanna said.
RBI Should Have Given Citizens More Notice?
Sharma’s PIL argues that the demonetisation move violates Reserve Bank of India (RBI) norms.
Banks are closed for public dealing for 9.11.2016 making it more difficult for the Aam Aadmi to obtain legitimate money for purchase of daily utilities and necessities. That under section 26(2) of the Reserve Bank India Act,1934 it is required to give reasonable time to people to make alternate financial arrangements to avoid large scale mayhem and chaos.Vivek Narayan Sharma’s Public Interest Litigation
But Arghya Sengupta of Vidhi Legal said the RBI Act does not mandate prior notice. “As far as my knowledge goes due procedure has been followed. The decision of the RBI’s Central Board was communicated to the government which was followed by a notification by the RBI. All steps have been followed,” Sengupta said.
He added that courts have taken a view in earlier cases that they will not interfere with policy decisions and it will be surprising if they do. “It is a purely economic policy decision. The court can at best ask about the implementation of this decision which is in its domain,” Sengupta opined.
Also Read: Cashless In Rural Uttar Pradesh
Sharma’s PIL claims the sudden demonetisation has led to long queues at banks and post offices and even the purchase of daily essentials will become difficult as RBI has not printed sufficient currency to replace the old notes.
“How would 125 billion citizens of India survive with a meager limit provided in the ambit of said scheme, that too in current scenario, when a small pollution mask comes for more than Rs 2,000 and Inflation is at its all-time peak?” questions Sharma's PIL.
However, advocate Hossain points to the comments made by Prime Minister Modi and Finance Minister Arun Jaitley that an extended period of notice may have defeated the objective behind this policy to curb black money. “ It is well settled that mere inconvenience, howsoever grave, cannot be a ground to set aside a policy decision,” Hossain added.
The apex court will hear both PILs on November 15 along with the Centre’s caveat that has urged the court to hear the government before entertaining any petitions or passing any orders related to the demonetisation exercise.