Demonetisation chaos

Faced with “too much chaos” caused by a large number of petitions the Supreme Court has deferred the hearing of demonetisation cases to Monday. Broadly the court is being asked to judge three issues: countrywide hardships caused by the November 8 announcement, cooperative banks' contention that allowing only state-run and private banks to exchange cash was discriminatory as they too operated according to the RBI's guidelines and whether the government action is constitutionally valid. At an earlier hearing the Supreme Court had refused to stay the government notification. At the same time it had refused to shut the doors of justice at the critical juncture.

“Carpenters, maids, vegetable sellers are dependent on cash. Are you capable of reducing their trauma? Your aim is to wipe out black money but people are traumatised standing in queues for hours doing nothing,” the bench had observed. The apex court is clearly worried about the “collateral damage” that demonetisation has caused. Giving an inkling of its thinking, the bench had remarked that the Centre’s objective was not “illegal” but appeared to be “laudable”. Still, a senior advocate for some of the petitioners, Kapil Sibal, insists that he wants to challenge the constitutional validity of the move since, according to him, the RBI rules do not allow anybody to prevent anyone from withdrawing their rightful and legitimate money from the bank.

Even though Section 26(2) of the RBI Act empowers the government to demonetise through a gazette notification, in 1978 the Morarji Desai government had taken the precaution of issuing an ordinance providing legislative backing to the step even though it affected a much smaller segment of the population then. Frequent arbitrary changes made after the PM’s November 8 announcement  are open to judicial scrutiny. The court may perhaps also like to examine whether the withdrawal of the legal tender status of 86 per cent of the currency in circulation violates certain fundamental rights such as the right to life (deaths have occurred and these have been attributed to demonetisation), the right to pursue any occupation, trade and business (hit by lack of currency) and the executive notification being discriminatory against the poor who are without bank accounts.