Note ban: Will SC redefine separation of power with its decision on demonetisation?

The decision of demonetisation is gradually moving towards the most important scrutiny. After being criticised and lauded by the opposition parties and public, in unequal measures, now it is Supreme Court’s turn; which is the final interpreter of the constitutional provisions, to judge its merit.

With the Supreme Court taking stock of the situation, that too with some very strong observations, the decision of demonetising Rs 500 and Rs 1,000 notes has come under most serious scrutiny.

As reported by The Times of India, amid the overlapping arguments of numerous counsels appearing for various petitioners challenging the demonetisation move, the Supreme Court on Friday said that it would hear all the petitions on 2 December.

Note ban: Will SC redefine separation of power with its decision on demonetisation?

A file image of people queuing in the line outside ATM. Reuters

Apart from the petitions that challenge the demonetisation, the apex court will also hear one filed by the central government to transfer various petitions filed in various high courts across the country that include the High Courts of Delhi, Bombay, Karnataka, Kerala, Andhra Pradesh, Calcutta and Rajasthan.

Numerous public interest litigations (PILs) and petitions have been filed in various high courts and the apex court challenging the decision of note ban which was announced on 8 November.

On Friday, Senior SC lawyer Kapil Sibal, representing one of the petitioners, argued before the Supreme Court bench that "people were starving in the streets as there was no cash at all in the banks or ATMs."

While Sibal remarked that demonetisation is illegal, Attorney General Mukul Rohatgi, representing the Centre, defended the move stating that it is a serious attack on black money and corruption.

Hosts of petitions were filed in various courts across the country after 9 November, calling for the stay on the decision. However, on 15 November, SC bench comprising Chief Justice TS Thakur and DY Chandrachud refused to stay the decision of demonetising but at the same time asked the Centre to file an affidavit giving details of steps taken to ease inconvenience faced by citizens due to long queues at banks and ATMs.

It looked like the apex court was sending a clear message that while it is concerned about people, it would not interfere in the government’s decision.

However, if we go by the past one week's observations made by the apex court, it is clear that Supreme Court might interpret the decision in all detail. However, in doing so it might once again fuel the debate on separation of power and judicial overreach, which has already started.

Former Cabinet Secretary TSR Subramanian in his recent article writes, "The SC’s intervention, even in matters fully in the domain of the Executive, are clearly essential when there is inaction by the Executive. The danger, of course, is that having ‘tasted blood’, the process will not stop. In matters purely in the province of the Executive, where the Executive consciously takes action (well or ill, it is a matter of opinion), it is important that there should be no judicial overreach. All aspects of a particularly major issue may not be available in the course of a short discussion or hearing."

He adds, "The apex court does not have the machinery to embark on a total and meaningful appraisal of the losses and gains from a major policy step. The long-term policy-making for the economy should be entirely in the province of the Executive. In the matter of the current demonetisation, it will be a dangerous precedent for the apex court to come in with their own approach or comments or observations or directions”.

However, there are many who feel that government’s move was illegal and the court's intervention is a must. In her recent article, published in National Herald, Senior Supreme Court lawyer Indira Jaising  criticised the decision and questioned its legality. Jaising writes: "Demonetisation amounts to the extinguishment of the public debt owed by the Government to the holder of the demonetised note. A currency note is a movable property in the hands of the holder. The Supreme Court has held in a series of judgements that deprivation of property by State jurisprudentially speaking could have three dimensions (a) a ‘taking’ of property by the government as in the case of land acquisition, (b) it could be in the form of an ‘extinguishment’ of right in the property as happened during land reforms where the tiller became the owner, (c) in certain situations even modification of property rights could amount to deprivation of property."

"Interestingly, the Supreme Court in Jayantilal Shah Vs RBI AIR 1997 SC 370, while upholding the validity of the High Denomination Bank Notes (Demonetisation) Act, 1978, held that demonetisation results in extinguishment of a public debt which amounts to the deprivation of property and therefore could be done only by law.The Notification dated 8 November thus appears to be entirely outside the law laid down by the Supreme Court. It is completely without authority of any law," she adds.

Given the fact that serious questions are being raised about the legality of government's decision, the Supreme Court seriously taking up the case becomes even more obvious

The apex court, which warned the Centre that the post-demonetisation situation is ‘serious’ enough to cause ‘riots’, on 23 November questioned the Central government that "why it has not appointed the anti-corruption ombudsman in the last two years if it was really concerned about checking corruption and bringing probity in public life".

As reported by the Indian Express, a bench led by Chief Justice of India TS Thakur observed that the law to have Lokpal was passed after a prolonged struggle by civil society and it must become functional regardless whether the incumbent government wants it or not. This was a clear dig at the government’s demonetisation move which it claims is meant to check corruption and bringing probity in public life.

Over the last one week, Supreme Court has slammed government on several occasions for the hardships that people are facing due to demonetisation. On 23 November, the apex court said that "the common man should not be made to suffer" in the course of demonetising and told the Centre that "the objective to tackle black money and fake currency may be laudable but everyone with old currency cannot be treated as hoarders of black money".

The report further states that the bench led by CJI TS Thakur asked the government to "justify under law its notifications for demonetising Rs 500 and Rs 1,000 notes, apart from listing various steps it has taken since 8 November to make sure inconvenience to people is mitigated".

In this context, the fact remains that now the fate of demonetisation will largely depend on how the highest court of the land sees it. While the apex court concern about the hardship of people is valid, it is also true that its decision on demonetisation will redefine the constitutional separation of power — as it has done several times in past.

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Updated Date: Nov 25, 2016 19:15:45 IST

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