On the effects of the Demonetisation of Rs. 500/- and Rs. 1,000/- currency notes in 2016, nearly 58 challenging petitions were filed in various High Courts. Later, the apex court directed for the transfer of all these cases to it. A five judge Constitutional Bench of Supreme Court of India dealt with the case and delivered its verdict on 2nd January 2023. The majority of 4 judges upheld the demonetisation decision taken by the Union government; but expressed that it cannot interfere in the outcome of the objectives.
The one dissenting judge decided that the decision of the government is not as per rule of the law. The value of the Parliament might have been harnessed in it.
The objectives of demonetisation were set as unearthing black money and bringing it back from foreign banks, ending counterfeit currency, ending terror funding, corruption and reducing cash flow in the economy.
The outcome of demonetisation execution was entirely different.
l As per the RBI, currency in circulation has gone up from Rs. 17.7 lakh crores to Rs. 30.88 lakh crores now – an increase of 71.84 per cent.
l 99.3 per cent of the demonetised currency notes have come to the RBI through the banking channel, defeating the predicted lock of the black money. In fact the black money was converted into white.
l Common people who were in possession of a few demonetised currency notes had to spend months in long queues outside the bank premises for the exchange of their notes. About 120 people lost their life countrywide due to the suffering caused by day-long standing in the queues.
l Many SMEs were closed; thereby many lost their jobs and livelihood.
l The alternative availability of the currency notes was not planned for the demonetisation of high value notes of Rs. 500/- and Rs. 1,000/- whose share in the total circulation of currency notes then was at 86 per cent, the highest level of demonetisation ever announced.
The apex court may express that it can’t interfere in the outcome of the demonetisation exercise in relation to the objectives set by the Union government.
But it is the minimum caution to be reckoned by the Union government to make preparatory arrangement for the currency circulation prior to the announcement of demonetisation, a massive exercise of demonetising 86 per cent of the total currency notes in circulation in the country. There is no evidence on the part of the Union government of such a preparation for the alternative.
The verdict given by the dissenting judge says the demonetisation exercise is unlawful and it doesn’t fall within the provisions of the RBI Act. Alternatively, it is said that the Union government might have amended the legislation and acted upon or else might have promulgated ordinance owing to the secrecy associated with the exercise.
The dissenting judge has praised the apex legislature of the country as a ‘nation in miniature’ and further said, “The objectives of demonetisation were noble and well intentioned, but the process undertaken was bad in law. Nothing, however, can be done to restore the situation to ‘status quo ante’, but the judgment could act prospectively.”
Overall, the apex court judgment has exposed the callous attitude of the rulers at the Centre and the scant respect for the genuine legislative mode to tread on, the ‘noble and well intentioned’ exercise of the demonetisation 2016.
Though the stand of the apex court is to uphold the demonetisation by the Union government, the lesson to be learned by the rulers is that it is important to implement only something good for the people and the country. Will the rulers at the Centre come forward to do so at least in future?
