Senior Advocate P Chidambaram, who was appearing for one of the petitioners, concluded his arguments before a five-judge Constitution bench dealing with demonetisation issues. The court will continue the hearing next week as another advocate from the petitioner side will make his submissions against the government’s decision to demonetize currency notes of 500 and 1000 in 2016.
Chidambaram, who argued for nearly five hours, has taken the court from the demonetisation history. He called demonetization an extreme step, which affects everybody in the country.
He said that if there is one major economic decision taken in the last ten-twenty years, it is demonetisation and this demonetisation failed. He urged the court to declare that power of demonetisation is not available under 26(2) and if it is, then 26(2) itself would be unconstitutional.
Section 26(2) in The Reserve Bank of India Act, deals with the recommendation of the Central Board that the 2[Central Government] may, by notification in the Gazette of India, declare that, with effect from such date as may be specified in the notification, any series of bank notes of any denomination shall cease to be legal tender 3[save at such office or agency of the Bank and to such extent as may be specified in the notification].
The senior advocate also submitted that the Central government cannot on its own initiate any proposal relating to currency notes.
He also pointed out that at the time of demonetisation the currency in circulation was Rs 17.9 lakh crore and today, according to RBI, it is 32.18 lakh crore and actually the currency in circulation has increased.
Opposing the government decision, the senior lawyer said that power on currency-related issues is not given to the executive government as they can starve people of cash, and cripple their daily activities by not putting enough cash in circulation. Mentioning that only a small percentage of total note was demonetised in 1946 and in 1978 therefore it did not create any hue and cry and did not affect the people.
The court asked are you suggesting that if a separate law had been made in this case, it would have been valid.
Chidambaram said that if the law had been made in parliament, this may have been valid because parliament would have debated this thoroughly and taken into account of consequences of withdrawing 86.4 per cent of total currency.
A five-judge bench of Justices Abdul Nazeer, BR Gavai, AS Bopanna, V Ramasubramanian and BV Nagarathna was hearing petitions relating to challenging the Centre’s decision to demonetize currency notes of Rs. 500 and 1,000 in 2016.