Narendra Modi government on Tuesday surpassed a major legal hurdle after the Supreme Court refused to stay its notification demonetising Rs 500 and Rs 1,000 currency notes but told it to reduce the inconvenience of the people, saying "you cannot have surgical strike" against them.
"You (Centre) can have a surgical strike against blackmoney but you cannot have surgical strike against the people of the country," a bench comprising Chief Justice T S Thakur and Justice D Y Chandrachud said, pointing to the long queues at banks and ATMs.
"Carpenters, maids, vegetable sellers are dependent on cash. Are you capable of reducing their trauma? Your aim is to wipe out blackmoney but people are traumatised standing in queues for hours doing nothing," the bench said.
"They (Centre) call it surgical strike. You (Kapil Sibal appearing for a petitioner) call it carpet bombing. The object of such measures is against the people hoarding cash,"it said.
Earlier, Livelaw had reported that Sangam Lal Pandey, an advocate, had filed a writ in the Supreme Court to quash the "illegal and arbitrary announcement". It sought to “commanding the opposing party (centre) to provide stipulated time to the citizens of India” for “their necessary” activities like “medical, marriage ceremonies, farmers and middle and lower class citizens for their necessary requirements and education etc.”
While observing that fighting the blackmoney menace was a "laudable" step, it asked the Centre to "consider taking steps to ease the pain of the common people" and also consider raising the limit of cash withdrawals.
"Why can't it be raised to a reasonable level so that there is less number of people standing in the queue," the bench said, adding that the inconvenience part has to be looked into.
The government told the apex court that the situation was being constantly monitored at the highest level and just now, it has been decided that the banks would allow from today the withdrawal of Rs 50,000 per current account per week and the facilities would also be available to companies.
The apex court did not issue notices to the Centre or the RBI and asked them file a comprehensive affidavit detailing steps taken so far and other proposed measures to ameliorate the harassment and inconvenience caused to citizens due to demonetisation of the high value currency notes.
The government, represented by Attorney General Mukul Rohatgi, came fully prepared to defend its ambitious step aimed at curbing blackmoney and counterfeit currency used in financing terror and extremist violence saying the target was to "catch the big fish" which the previous governments could not do in last 50 years.
The bench concluded the day's hearing by asking the Centre and the RBI to be open to suggestions from various stakeholders and posted the matter for further hearing on November 25 of four PILs questioning the 8 November demonetisation notification.
While senior advocate Kapil Sibal, appearing for one of the PIL petitioners, was candid that he was not seeking any stay on the notification but was highlighting the harassment and inconvenience caused to common people particularly in the remote parts of the country, other petitioners insisted on their demand for stay, even at the fag end of the hearing.
"We will not be granting any stay," the bench bluntly said while observing that "the real purpose is to force those who have hoarded cash at home to deposit in bank and explain the source of money. But in the process, collateral damage is being faced by common men who have to stand in queue for hours together."
The succour to the Modi government came when the bench remarked that the Centre's objective was not "illegal" but appeared to be "laudable", though there was inconvenience and "collateral damage" to the common people by the so-called "surgical strike" against the blackmoney and fake currency.
Rohatgi's focus of argument was that there was no legal basis for opposing the Centre's move to demonetise the higher denomination currency notes aimed at "catching big fish" and the common man in this country have waited for 50 years for his Fiat car, his phone and gas connection.
"The people are willing to wait," Rohatgi said, adding that some amount of pain will be there as detection of fraud is also the emphasis of the government, as he defended the Centre's decision which was in complete compliance of section 26(2) of the Reserve Bank of India Act.
The present "surgical strike has to be seen in the context of safety and security of the nation, its border, and financial terrorism unleashed through fake currency," he argued.
"The attack is on those who have stashed huge amount of currency," he said, adding that the surgical strike of this nature has to be carried out in complete secrecy and it was not possible to come out with Rs 10 lakh crore worth of currency in one go as there was a need for recalibration of ATM machines across the country.
The Centre, which had filed a caveat in the matters, sought dismissal of the pleas saying they were "misconceived" as the idea behind demonetisation was the circulation of large number of fake currency, used to finance terrorism in various parts of the country including Jammu and Kashmir and northeastern states.
Rohatgi said there were as many as 24 crore bank accounts including 22 crore opened under the 'Jan Dhan Scheme' and the Centre was hopeful to "ramp up" the outflow of cash to banks, post offices and two lakh ATMs across the country.
"Two lakh ATM machines could not have been re-calibrated in advance to be in tune with the new notes as the cat would have been out of the bag," Rohatgi said, adding that "secrecy is the key to such actions".
The Attorney General said there were approximately one lakh branches of various banks and two lakh ATMs besides the post offices across the country to dispense cash to the people and restriction on withdrawal was there to ensure that the money be paid to maximum number of people.
He responded to the submission of Sibal by stating that the senior Congress leader was advancing arguements on "complete misconception" that demonetisation was against RBI provisions.
When Rohatgi said that economic policy matters should not be interfered with by the courts, the bench responded saying "We will not interfere with the economic policy of government, but are only bothered about the hardship caused to people".
Sibal, appearing for one Adil Alvi, said he has also challenged the constitutional validity of the notification as the provision of the RBI has not been complied with.
He referred to section 26(2) of RBI Act and said the government was not authorised to demonetise all series of currency notes of high denominations in one go.
There has to be a legislation if the government wants to demonetise the entire series of Rs 500 and Rs 1,000 currency notes, Sibal said, adding that in 1978, a law was brought to demonetise the currency notes of particular denominations.
Sibal then highlighted the inconvenience faced by the common people in remote areas like Bastar in Chhattisgarh, Uttarakhand, Himachal Pradesh and northeastern states in getting their own money from banks and ATMs and said it was a "surgical strike against the common man."
"How can there be a cap in withdrawing my own money, which is also taxed," he said and referred to the promise written on a Rs 500 currency note.
He said that 11 people have died so far and private hospitals are not taking cash for treatment.
"Government says it is a surgical strike on black money. It is a carpet bombing on the common man," Sibal said.
During the hearing, Rohatgi, who was asked about the quantum of new currency that can be printed in a day for infusion in the banking system, said he could not answer it in "open court for security reasons. I can only say they are working 24 hours a day to reach every part of the country".
The court, which agreed with his concern, was told by the AG that till now Rs 3.25 lakh crore have been deposited in banks since 9 November. Notes worth Rs 55,000 crore were currently in circulation through banks, ATMs and post offices.
He said according to the Centre, the size of blackmoney was around Rs 15-16 lakh crore and it was expected that people would deposit Rs 10-11 lakh crore in the banks while the remaining Rs 4-5 lakh crore was being used to foment terror and other nefarious activities which has been neutralised.
The apex court, on 10 November, had agreed to hear pleas against the 8 November decison of the Narendra Modi government that these notes are no longer a legal tender.
Out of the four PILs on the demonetisation issue, two were filed by Delhi-based lawyers Vivek Narayan Sharma and Sangam Lal Pandey, while two others were filed by individuals, S Muthukumar and Adil Alvi.
The petitioners had alleged that the sudden decision had created chaos and harassment to public at large and the notification of the Department of Economic Affairs, Ministry of Finance be either quashed or deferred for some time.
The pleas had also sought either quashing of the notification or a direction to the Centre for grant of "reasonable time frame" to citizens to exchange the demonetised currency notes to avoid difficulties being faced by the people.
The Prime Minister, in a televised address to the nation, had declared that high denomination notes of Rs 500 and Rs 1000 will no longer be legal tender from 8-9 November midnight. He had said the government has declared a "decisive war" against black money and corruption.
With inputs from PTI