Submit demonetisation-related records, Supreme Court to Centre, RBI

The Supreme Court on Wednesday directed the Union Government and the Reserve Bank of India (RBI) to place on record the “relevant records” of the demonetisation policy. 

Representing the Centre before a Constitution Bench led by Justice S. Abdul Nazeer, Attorney General R. Venkataramani said the documents would be handed over to the court in a sealed cover.

The Bench, also comprising Justice BR Gavai, AS Bopanna, V Ramasubramanian and BV Nagarathna, reserved the case for judgment.

The court had said it would not fold its hands and sit without judicially reviewing the procedure or manner in which ₹500 and ₹1000 currency notes were withdrawn from legal tender in November 2016.

“Just because it is an economic policy, the court cannot fold its hands and sit… The court will go into the manner in which the decision was taken,” Justice Nagarathna had addressed the government and the RBI.

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Senior advocate P. Chidambaram, for the petitioners, had submitted that the RBI had “meekly submitted to the government’s recommendation to withdraw 80 per cent of the currency in the market after a deliberation of just one hour in one day”.

He had said finding the objectives of the 2016 demonetisation exercise was like looking for a “black cat in a dark room”. He had submitted that the government cannot “frighten” the court to not judicially review the policy by saying that judges were not experts in economic policy. 

He had flagged how the government had not shared with the court the records of the decision-making process leading to demonetisation. The senior lawyer said the government had not claimed that the demonetisation records were privileged or confidentiality either in its oral arguments or on affidavit.

“A fair decision-making process usually leads to a fair decision. If so, they (government) should be able to confidently defend not only the decision but also the decision-making process,” Chidambaram had submitted.

The government had countered that demonetisation was a “transformational economic policy step” which led to a phenomenal growth in digital transactions while choking the evils of black money, terror funding and counterfeiting. It claimed that demonetisation was a “critical” part of a policy push to “expand formal economy” and thin the ranks of the informal cash-based sector.

The central bank, represented by senior advocate Jaideep Gupta, said demonetisation was done on the recommendation of the RBI. It was not “uncanalised or unguided”. Elaborate arrangements were in place. Reasonable opportunity was given to people to exchange their old notes for new. The exercise was an “integral part of nation-building”.

In one of the hearings, Justice Gavai had highlighted how a comatose person could have exchanged her old notes at the bank for new in the limited window offered to citizens between November 9 and December 31, 2016.

The court had asked whether the government and the RBI could still consider a remedy in the case of citizens who were found genuinely unable to deposit their old notes within the limited time.

The petitioners had submitted that a judgment by the apex court seven years after the 2016 demonetisation would not be a “futile” exercise. They said the court should comment on whether a policy which saw millions endure hardships, unable to access their own hard-earned money, was proportional to the stated objectives for suddenly sucking out a large portion of money out of circulation. They said that the evils of black money, fake currency and terror continue to hold fort.

“Suppose, a government in the future decides to withdraw 99.99 per cent of the currency in circulation… Your Lordships’ judgment may stand in the way of that,” Chidambaram said.

The oral arguments made in court had spread over several days. The challenge to demonetisation was brought to court through nearly 200 petitions by individuals and organisations from across the country and all walks of life.