By Venkatesh Raghavan*
The November 8, 2016, demonetisation of all INR 500 and INR 1000 currency notes, has been robustly ratified by a Constitutional Bench of the Supreme Court carrying the weight of a 4:1 majority, on January 2, 2023. The sole dissenting voice came from Justice BV Nagarathna, who ruled that it was ultra vires the Constitution though being done with good intentions and given to elaborate planning.
The majority four judges of the Constitutional Bench who endorsed the government’s decision of 2016 comprised Justices S Abdul Nazeer, BR Gavai, AS Bopanna and V Ramasubramanian. They upheld the government’s decision to demonetise as legally valid as well as in conformance with proportionality tests.
Soon after the verdict was out, there was an intense war of words between spokespersons of the ruling Bharatiya Janata Party, the Congress Party and the Nationalist Congress Party (NCP). The bone of contention in the battle of verbal diatribes was the untold suffering the demonetisation decision caused to the common people besides numerous deaths that resulted due to age-related ailments of those who had to stand in long queues outside banks to get the banned currencies replaced.
Interestingly on the legal front, both the Reserve Bank of India and the Union Government have made no mention of the critiques that were received against their justifications in favour of demonetising INR 500 and INR 1,000. Their respective affidavits filed in the SC struck a consensus note, setting earlier departures apart, and stating that due process of law followed from both sides and the due recommendation was as per procedural requirements.
The majority of four judges of the 5-member Bench sounded that there was no flaw in the decision-making process. The process of consultation between the Centre and the RBI was sufficiently addressed in arriving at the decision, they averred. The dissenting voice, however, brought into question the nature of the functioning of the autonomous body, the Reserve Bank of India (RBI). She further said the demonetisation exercise failed to conform to the process of law to be followed, and that it should have rather been presented in Parliament as an ordinance or a law before directly communicating with the RBI for a recommendation to issue such a notification.
While senior BJP leaders including Ravi Shankar Prasad hailed the favourable verdict as a moral victory for the government, the Congress Member of Parliament (MP) Jairam Ramesh laid emphasis on the dissenting Judge’s remark that Parliament should not have been bypassed in issuing this notification. It was also pointed out by other Opposition leaders that the Supreme Court’s verdict had stuck to merely the legal and technical aspects of the demonetisation process and failed to address the social and economic impact that caused a lot of hardship to the masses.
This was also in reference to small and medium-scale business houses suffering untold misery on the verge of closure besides “utter destruction” that took place in the country’s informal sector that employed a huge chunk of the country’s workforce. It was further stated by experts researching the economic impacts of the move that over 50 lakh people were faced with job losses due to this surprise move that was forced down the nation’s throats. Women, daily wage workers, drivers, electricians and masons comprised a significant chunk of this jobless lot.
*Senior journalist
