Note ban controversy still unsettled?

The Supreme Court's judgment on demonetisation is hardly likely to settle the controversy over whether the decision was right. The judgment has certainly disappointed many for ignoring people's suffering caused by the decision. The verdict followed the expected pattern. Had it been a unanimous decision of the five-judge constitution bench, it would have, most likely, gone unnoticed, as in the recent past, we have not seen the government losing any case.

But Justice BV Nagarathna saved the judgment from becoming an unnoticed verdict. She disagreed with the four co-judges and discussed some critical issues for democracy's survival. She declared the decision to demonetise the Rs 500 and Rs 1,000 currency notes to be illegal and argued about issues that have troubled civil society in recent years. The most important among them is the primacy of Parliament.

"In my considered opinion, the vast powers of the Central Government must be exercised only through plenary legislation or a legislative process, rather than through an executive act by the issuance of a notification in the Gazette of India. It is necessary that the Parliament which consists of the representatives of the People of this country, discusses the matter and thereafter approves and supports the implementation of the scheme of demonetisation," she says.

"The Parliament enables its citizens to participate in the decision-making process of the government," she points out.

"Over the years, the functions of Parliament have no longer remained restricted merely to legislating. Parliament has, in fact emerged as a multifunctional institution encompassing in its ambit various roles viz. developmental, financial and administrative surveillance, grievance ventilation and redressal, national integrational, conflict resolution, leadership recruitment and training, educational and so on. "The multifarious functions of Parliament make it the cornerstone on which the edifice of Indian polity stands and evokes admiration from many a quarter," she further argues.

Her verdict also brings to light the manner in which the decision was taken.

"As noted from the records submitted by the Central Government as well as the Reserve Bank of India in the instant case, the Central Government wrote to the Central Board of the Reserve Bank of India on November 7, 2016 about its proposal to demonetise all series of bank notes of denominations of Rs 500 and Rs 1,000, which were in circulation, and on the very next day ie, November 8, 2016, a meeting of the Central Board of the Bank was held at New Delhi at 5:30 pm and shortly thereafter, the gazette notification was issued.

Such a swift action would indicate that the Central Board of the Bank had hardly twenty-four hours to consider the proposal of the Central Government and hence, hardly any time to apply its mind independently to the proposal," she says. The chronology and records cited in the Supreme Court also bring forth the contradiction between the thinking of the government and the Central Board of the RBI.

"It is clear from the records submitted that the Central Government "assured" the Central Board of the Bank that sufficient safeguards would be taken while embarking on the process of demonetization and that it would also result in reducing bank notes in the economy and a switch over to the digitalisation of the economy," she says. The public posture of the government was different. It was emphasising that the measure would weed out fake currency, curb black money, and stop terror funding.

Justice Nagarathna points out how the government secured a recommendation from the Central Board of the RBI. According to her, the board lacked the authority to recommend the demonetisation of all series of notes.

"Government initiated the process of demonetization by formulating a proposal in this regard and subsequently secured the imprimatur of the Bank on such proposal. In fact, the Central Board of the Bank has no jurisdiction to "recommend" demonetisation of bank notes of "all series" of "all denomination" to the Central Government," she says.

However, the sufferings of the people largely were not considered by the Court. The majority verdict of four of five judges said, "If the impugned Notification had a nexus with the objectives to be achieved, then, merely because some citizens have suffered through hardships would not be a ground to hold the impugned Notification to be bad in law."

Justice Nagarathna has acknowledged the sufferings but only to a limited extent.

"According to the petitioners, around 86 per cent of the volume of currency notes of the total currency in circulation in the Indian economy was demonetised. They also stated that the people of India were exposed to undue hardships owing to the lack of financial resources and had to undergo not only a severe financial crunch but were also exposed to other socioeconomic and psychological hardships. The problems associated with the measure of demonetisation would make one wonder whether the Central Board of the Bank had visualised the consequences that would follow. Whether the Central Board of the Bank had attempted to take note of the adverse effects of demonetisation of such a large volume of bank notes in circulation"

Was it sufficient on the part of the court? Was it not required to examine the excesses done to people in the name of the public good?

Does it mean that her verdict does not serve any purpose? She has answered the question in the verdict. "In the present case if a declaration is made to the effect that the impugned action was unlawful, such declaration would only have the effect of deterring future measures from being carried out in a like manner, in order to save such measures, from the vice of unlawfulness," she says. She has cited the SR Bommai case, "which was unable to grant any immediate relief, but later changed the way the majority was determined in the state assemblies."

(The author is a senior journalist. He has experience of working with leading newspapers and electronic media including Deccan Herald, Sunday Guardian, Navbharat Times and Dainik Bhaskar. He writes on politics, society, environment and economy)