India

Supreme Court says we need to examine demonetisation, Lakshman Rekha there

In announcing that they are aware of “Lakshman Rekha” concerning government policy, the Constituent Bench from the Supreme Court Wednesday said it will review the process followed and the way in which it demonetisation exercise of 2016 was executed before deciding if the matter is now purely academic.

The matter will be discussed on November 9.

Justice B V Nagarathna, one of the five judges on the Constitution Bench that heard several petitions challenging the demonetisation of the Rs 1,000 and 500 currency notes, declared, “The wisdom of the government is a factor in the issue, and we are aware of which part of the Lakshman Rekha stands. However, the way it’s carried out and the process could be scrutinized. For this, we must listen… any declaration, either way, is recorded for posterity, and the Bench of Constitution should decide either way or another.”

The remarks were made in the context of when the Centre made the claim that, in light of changes that followed and the advancement of time, the issue had turned into an academic matter.

Following a preliminary hearing the bench, presided over by Justice S Abdul Nazeer, and comprised of justices B R Gavai, A S Bopanna, and V Ramasubramanian. The bench asked to the Centre as well as the Reserve Bank of India to respond in response to petitions.

(In November, 2018 (In November 2018, Deccan Era reported that just four hours prior to the time that the Prime Minister declared demonetisation on November 8 2016. The Central Board of the RBI approved the plan, but it also denied, in writing, two of the most important arguments such as counterfeit notes and black money that he planned to announce in his address to the nation.

In the minutes from the 561st session of the RBI’s Central Board, which was held at the New Delhi at 5.30 pm on the day, revealed that central bank’s directors described this decision as “commendable” however they also cautioned that the demonetisation “will be a short-term negative impact on GDP growth for the year ahead”.

The RBI directors, following the receipt of the draft proposal for the plan from the Ministry of Finance on November 7, 2016, stated that the reasoning of the government, that the elimination of HD (high denomination) currency notes worth Rs 1,000 and Rs 500 will aid in reducing black money and stop the circulation of fake cash was not really a good idea.)

Attorney General R Venkataramani told the Bench that the problem cannot be dealt with in the abstract, but must be considered in the right context. “The challenges are academic, and have consequences for the politics,” he said.

Attorney General Tushar Mehta too said that the subject is academic and that the individual cases of hardship are able to be examined independently.

Senior lawyers Shyam Divan, and P Chidambaram, appearing for the petitioners, were against this , claiming that it involved matters that were of Constitutional significance.

Justice Nagarathna said “when issues that are of Constitutional significance are raised to the court, it is the responsibility for the court to address the questions” and wondered if this is now an act of denial in the current case.

Chidambaram explained that the issue regarding whether the federal government is able to apply the Reserve Bank of India Act 1934 to demonetize all money notes of a certain denomination is still a hot topic and if it’s not addressed, the government could revisit it in the near future, too.

The issue has to be analyzed in light of the principle of proportionality as well as 86% notes on currency were invalidated by the ruling.

Mehta claimed that it is the case that the Supreme Court has not applied the doctrine of proportionality in the test of economic policy. He said that the doctrine is in essence reserved to the executive and is dependent on factors such as terror funding.

The Bench has said that it can claim that the issue is academic only if both sides agree , but in this instance there is an argument and opposing argument.

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