Demonetisation: SC soughts Centre's response on whether district cooperative banks can be allowed deposits in demonetised notes.

New Delhi: The Supreme Court on Friday sought the Centre's response on issues like whether district cooperative banks could be allowed to accept deposits in demonetised notes with some stringent regulations and why banks are unable to allow minimum weekly withdrawals of Rs 24,000 to customers.

The hearing, in which the Centre accused some advocates of politicising the issue in the garb of the public interest litigation, also witnessed the bench headed by Chief Justice T S Thakur expressing dismay over lawyers breaching decorum of the court by out-shouting each other.

While the high-decibel hearing was on, the bench, also comprising Justices A M Khanwilkar and D Y Chandrachud, said though demonetisation has been carried with long term beneficial aims, its immediate concern was to ease the inconvenience of the people and asked Attorney General Mukul Rohatgi to apprise it on 14 December on issues relating to district cooperative banks and the non-adherence to fixed weekly withdrawal limits by the banks.

Further the bench said it would like to know the government's stand on the demand for extending the order for hospitals to accept the fees in demonetised notes.

Keeping in mind that the law under which the 8 November notification was issued for demonetisation has been challenged, the bench proposed to frame legal questions and told Rohatgi that since a detailed and long hearing would be required, he should ponder over whether the matter can be referred to a five-judge constitution bench.

The bench said it would take a decison on 14 December on the plea of the Centre that proceedings in various high courts on petitions relating to demonetisation be stayed and transferred either to the apex court or one of the High Courts for adjudication.

"Every day new petitions are being filed in the Supreme Court and in High Courts. The High Courts are adjourning the case for one day or two days... law officers are being asked to appear," Rohatgi said and asked the bench to consider staying the proceedings in High Courts and transferring them either to the Supreme Court or to one high court.

The bench also considered submissions of senior advocate Kapil Sibal, appearing for one of petitioners opposing the demonetisation, and the Attorney General in framing legal issues to be deliberated upon by it in future hearing.

"We can straightaway frame the questions. The first one can be: whether the 8 November notification is ultra-vires to the Section 26 (2) (power to demonetise) of the Reserve Bank of India Act," the bench said.

Indicating that it was "open to the idea of sending the matters to a five-judge bench", the bench said the second question could be whether the demonetisation "falls foul of" Article 300A which says that no person shall be deprived of his/her property without a provision in law.

Whether the decision is unconstitutional as it violates Article 14 (equality before the law) and Article 19(1)(g) (freedom to practice profession and occupation) under the Constitution, it said.

Accepting Sibal's suggestion, the bench said the question that the restriction on withdrawal of "legitimate and taxed money" by the banks is violative of various fundamental rights.

"Whether district cooperative banks have been discriminated against by denial of the permission to accept deposits," the bench posed.

Sibal said he has also challenged the validity of the RBI Act provision on the ground of "excessive delegation of power" to demonetise currency notes.

Then came the suggestion of the Attorney General who said that a question was "what is the scope of judicial review in the matters of fiscal/economic policy". The bench accepeted the suggestion.

Raising the issue of CPI(M) filing the PIL in the instant matter, Rohatgi said another question would be "can a political party file the public interest litigation?"

The bench, during the hearing, asked Attorney General about the benefits and objectives of the demonetisation.

 Demonetisation: SC soughts Centres response on whether district cooperative banks can be allowed deposits in demonetised notes.

Supreme Court, AFP.

Referring to the 8 November notification, Rohatgi said it was for fighting blackmoney, ill-gotten money used for terror financing and curbing fake currency.

He said the Rs 500 and Rs 1,000 currency notes constituted 86 percent of total currency and the move was kept secret to make demonetisation effective.

"It was not possible to print ten lakh crore currency in advance and re-calibrate all ATMs in advance. The cat would have been out of the bag. There is bound to have been some kind of inconvenience," the Attorney General said.

He referred to the recent decision of the Centre to incentivise digital transcations and said that people would be benefitted if they pay for their rail and air tickets and other services digitally.

Rohatgi said around 12 lakh crore demonetised currency notes have come back to the banking system.

He submitted that economic policy decisions should not be judicially reviewed.

While Rohatgi was making submissions, senior advocate and former finance minister P Chidambaram said there are only four lakh crore new currency notes that have been pumped and since there are only four printing press of RBI and the Centre, it was not possible to substitute demonetised currency notes before six-to-seven months.

Chidambaram, Sibal and former foreign minister and senior advocate Salman Khurshid, appearing for different clients, were quite vocal and critical of the Centre's move on demonetisation.

Chidambaram said that the government is "rationing" the currency distribution because the short fall is going to continue for quite sometime.

He raised the issue of district cooperative banks which have been barred from accepting deposits in old demonetised notes and said that lakhs of peoples, specially farmers, are suffering due this.

"I don't see any farmers here. This is all bogey," the Attorney General responded curtly.

When the bench sought to know about the feasibility of allowing cooperative banks to accept deposits with stricter regulations, Rohatgi said it cannot be done as there are several practical impediments.

Dealing with some of the impediments, he said accounts with the cooperative banks are not "KYC (know your customer) compliants" and as the societies are the account holders, it would be difficult to ascertain which individual member has deposited what amount.

Instead of RBI, these cooperative banks are being regulated by the National Bank for Agriculture and Rural Development (NABARD) and it is the matter of common knowledge as to who run these banks in various states, Rohatgi said.

As lawyers were trying to out-shout each other for being heard, the CJI expressed his dismay, saying, "I have served 23 years on the bench and never seen such an unruly behaviour from the advocates."

The CJI said that he was in his last week as a judge and would be "going with a heavy heart" that lawyers behave in such a manner on sensitive issue like demonetisation. The bench then cited the example of Chidambaram waiting patiently for his turn and said that you all should look at him.

The Attorney General said that there are over one lakh societies in the country and "only God knows how many persons are behind them (societies)."

He refuted the submission of Chidambaram that farmers are at the receiving end saying "This is all in the air. They can go and deposit in a nearby State Bank branch or any other bank".

When Sibal said that many farmers have no other bank accounts, Rohatgi said they can open now also.

The top court had on 2 December asked the Centre to spell out the measures taken to ease suffering of and inconvenience to the people in rural areas.

The Centre had on 24 November filed an affidavit in the apex court on demonetisation and had said that the "bold move" would eradicate black money and slush funds operating since Independence which cast a "parallel economy" hitting the poor and the middle class.

On 29 November , the apex court had agreed to hear pleas of 14 cooperative banks of Kerala seeking its nod to transact business like banks and others seeking demonetisation of any currency note higher than Rs 100 denomination.

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Updated Date: Dec 10, 2016 14:12:28 IST