The Supreme Court has scrupulously held itself back from interfering with the ongoing demonetisation exercise. It has refused to halt it in its tracks and refused to extend the deadline for deposit of bad notes beyond the officially notified date -- 30 December 2016.
What has surprised the cognoscenti is its decision to refer to a five-member constitution bench the challenges to the constitutionality of demonetisation despite futility writ large on it given the fact that already a lot of water has flown down the bridge. In other words, the ongoing demonetisation exercise is like an arrow that has left the bow.
Rishis in epics had the power to divert the arrow on calming down so it targeted an evil instead of a good soul at whom they had initially aimed it in seething rage. The Modi government has no such sage powers although the demonetisation arrow right from the beginning was targeted at not one but several evils.
The SC constitution bench it seems would be constrained to uphold constitutionality of demonetisation for the following reasons:
1) If quinquennial amnesty schemes have survived challenge, demonetisation too should because at the end of the day it is also a measure to neutralize black money as the Wanchoo Committee pointed out way back in 1971. The committee while recommending demonetisation was scathing in its criticism of amnesty schemes.
2) The RBI website gives a graphic account of the currency regime. The Reserve Bank of India Act, 1934 vests the RBI to print currency notes in the denominations specified by the central government. All these reinforce the view that while the RBI is bound by its promise to pay the bearer the sum specified in the currency note, it is not bound to keep the same note in circulation. The central government is empowered to decide upon the denominations from time to time. One must remember a currency note is the prime example of a fungible financial instrument.
3) Right to property is no longer a fundamental right. The government enjoys the latitude to put reasonable fetters on one’s property rights. What the heck, demonetisation is not even a fetter. It only asks owners of demonetized notes to either exchange or deposit the old notes into their accounts. No one can smugly insist that he would sit on the old notes for eternity and when he does choose to bestir, the government and the RBI will have to honor their commitment without demur. To encourage such notions is preposterous.
While it is not kosher to second guess the honorable Supreme Court, it is unlikely it would strike down the 8 November 2016 as being unconstitutional for the foregoing reasons. In addition, it knows that striking it down would be precipitous indeed cataclysmic as the notes immobilized cannot be revived except at a great cost engendering turmoil and confusion.
Remember it has wisely refrained from staying the ongoing demonetisation. Normally a stay or absence of one does not presage what is to come in the final ruling but in this case the refusal to stay does herald what is ultimately going to come from the constitution bench.
The worst case scenario therefore is the Constitution bench while disapproving of demonetisation would be constrained to let the ongoing one pass albeit grudgingly. To be sure that would prevent future demonetisation. Alternatively it might choose to give guidelines to prevent the inconveniences the ongoing exercise has subjected people to a la the guidelines it gave it the famous Vishaka case on sexual harassment at workplaces.
In the event, it does look as if the SC’s efforts would be academic given the fact that the bogey of constitutionality has been raised by detractors only to slight Modi their bête noire.
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Updated Date: Dec 17, 2016 13:29:18 IST