SC queers pitch on demonetisation: Can govt be sued through class action suits?

It is by now abundantly clear that the war on black money unleashed by the Narendra Modi government is not a simple one -- and we need to mix apples and oranges and and a slew of raw vegetables to get a clearer picture on the pains and gains of the demonetisation drive launched on 8 November.

 SC queers pitch on demonetisation: Can govt be sued through class action suits?


Political costs and benefits may be counted in the electoral process. The BJP might take cold comfort from the fact that the next general elections are more than two years away to blunt the opposition campaign on the large-scale human costs involved in terms of sufferings caused to traders, labourers.

After all, there is sufficient time to make up with the goodwill that can be generated through a combination of fiscal elbow room arising out of a surge in tax revenues.

But the game queered last week when the Supreme Court was drawn into the situation, and further complicated by increasing reports of how things are going wrong -- and not just in terms of the human costs and productivity losses.

Two key issues arising from the Supreme Court's questions may embarass, or worse still, choke the government. One, if there was a lack of preparedness -- crucial to any war, including one on black money. Secondly, and more ominous, whether legal and fundamental rights of citizens have been violated, especially the right to property.

Can the government be sued for damages caused by demonetisation through class action suits? That question may arise in the coming days.

Class actions are typically envisaged in cases involving shareholder rights in the context of changes in company law that took effect this year, but consumers can also take up class action suits as it happened against Nestle on behalf of consumers of Maggi noodles.

Consumers can potentially file a class action suit before the National Consumer Disputes Redressal Commission (NCDRC) under Section 12 (1) C of the Consumer Protection Act on behalf of all suffering consumers. However, banking companies are exempt from this.

Now, banks may be exempt but the government is not. The Supreme Court ruled last year that the government is not "supremely immune" and may be ordered to pay damages for wrongful acts committed by its officers. If the ruling is any indication, there is no sovereign immunity for the government, although it is accepted in common law. As of now, the Supreme Court is maintaining a tantalising ambivalence on the issue.

The big question: can the Union cabinet or the bureaucracy suffer on this account or be held to answer in tangible terms? Any comment on inadequate or faulty planning in the implementation of demonetisation measures may amount to nothing more than a stricture. But a class action claim can potentially result in an indictment.

Either way, the political consequences are not easy for the government, because any remark by the Supreme Court is better ammunition for the opposition than polemical outbursts on the suffering of common people.

(The author is a senior journalist. He tweets as @madversity)

Updated Date: Dec 12, 2016 16:19:18 IST