The pending litigations in the Supreme Court relating to demonetisation will throw up an interesting debate. But before we go to the specific questions articulated by the apex court and referred to the Constitution Bench, certain factual scenario has to be taken note of. It is 40% of the quantum of currency demonetised that has been made available as bank notes. The Reserve Bank of India has been able to infuse around Rs 5 lakh crore of the new legal tender as in notes of Rs 500 and Rs1000. The substitution has been throttled by 60% so far. The observations of the Supreme Court, while not passing any interim order, should be understood by the executive in the right perspective. The fetter stipulating the cap on the withdrawal of Rs 24,000 per week has been noticed as one of the unconstitutional factors impeding the rights of depositors and the flow of money in the economy. The hope has been that the cash flow will be streamlined in 50 days. That is not far away. The oral remarks of the apex court indicate a periodic review of the ceiling.
There are also reports on the distress in trading of harvested paddy in most areas in Odisha. The choking of the cooperative banks and the lack of adequate liquidity at the grassroots cooperative bank level (new currency) are also creating their own havoc.
Serious and severe damage has been caused to the grassroots agro-rural sector. The frequently changing decisions and rules regarding withdrawals and deposits have crippled the sector. Apart from cereals to paddy crops to cash crops like tea and other plantations and from horticulture to vegetable cultivation onto plantations, weavers, craftsmen, daily-wage or weekly-wage earners of different categories have all been gruelled enough to have understood that a hardship was being undertaken for no great cause. The kneejerk decision by amending rules and orders can be well-represented by restriction of Rs 5,000 per deposit into a bank from December 20 onwards. When these are the last 10 days for enabling deposits without any ceiling and withdrawals with illegal restrictions imposed on them, the compulsions for stifling the flow of deposits are not explicable. The government has not poured in equivalent number or value of notes in remonetising the demonetised currency. A large percentage still lingers as shortage. 10% of the ATMs have been nonfunctional. Valuable manpower is wasted on unproductive activity of queuing up at banks with illegally imposed restrictions regarding carrying out transactions of one’s own money. First, there is a breach of promise by annulling (by an order) the solemn promise of the RBI represented by its Governor to pay a certain sum and then to choke the inflow so as to substantially reduce and not be remonetised to the appropriate extent. Coupled with this is the lack of liquidity of the new currency in rural areas. Agriculture in terms of handling the output and the input for the sowing operation is in an utterly crippled situation. With this, the overemphasis on the newly-added prime objects of demonetisation, namely, digitisation and turning India cashless. As was expressed in this column earlier, no country in the world is cashless. In fact, right to pay in cash is a corollary to the rights, including the fundamental rights, vested in every Indian. It is conceivable that high-value transactions are made through banking operation by use of electronic device. Even in large economies like the USA or the several countries constituting the European Union, 40% to 50% of the gross transactions are in cash. Electronically-recorded transactions are also over-intrusive into right to privacy. Through the details of payments to your pharmacy, your ailments can be known and from the list of your weekend purchase, the quality and quantity of your undergarments can be guaged. To pay by cash is definitely a part of one’s right, but it can be regulated, as has already been said, for high-value transactions.
There is an atmosphere of being in terrorem, that is also not conducive to developmental investments. Available reports indicate that the RBI Board of Directors met on November 8 at 5.30 pm to resolve and forward their recommendation and by 6.30 pm, the same evening the Cabinet was in session. About an hour later, demonetisation was announced. The decision was directed and scripted. There is no reasoning out or democratic decision-making. Frequent changes of the rules of the game, almost daily, made the life of the average person miserable. The vulnerable sections of the society have been subjected to a lot of harassment. Not to replenish cash to the extent it is deposited into the banking system is a betrayal of faith and trust. Unnecessary drumming up of a frightening atmosphere has been counterproductive. The entire scheme of events reveals the RBI did not rise to the occasion in the manner one would have expected. It subjected itself, as per the available reports, to the government’s dictate or, for that matter, of the Prime Minister. The manner in which the currency famine is pinching the common man and the impact of the sporadic but repeated changes in the rules of the game have irked the common citizen hounded by the glimpses of financial emergency. The adventure is going to be costly.
But the system of our democracy permits judicial review of even so-called policy matters if they are unconstitutional or otherwise patently illegal. It would be worthwhile to list out the important queries that would concern the Constitution Bench of the Supreme Court.
The queries mainly are:
1. Whether the notification of November 8 is ultra vires Section 26(2) and Sections 7,17, 23, 24, 29 and 42 of the RBI Act, 1934.
2. Does the notification contravene the provisions of Article 300-A of the ConstitutionIJ
3. Assuming the notification has been validly issued under the RBI Act, whether it is ultra vires Articles 14 and 19 of the Constitution.
4. Whether the limit on withdrawal of cash from the funds deposited in bank accounts has no basis in law and violates Articles 14, 19 and 21.
5. Whether the implementation of the impugned notification(s) suffer(s) from procedural and/or substantive unreasonableness and thereby violates Articles 14 and 19 and, if so, to what effect.
6. In the event that Section 26(2) is held to permit demonetisation, does it suffer from excessive delegation of legislative power, thereby rendering it ultra vires the ConstitutionIJ
7. What is the scope of judicial review in matters relating to fiscal and economic policy of the governmentIJ
8. Whether a petition by a political party on the issues raised is maintainable under Article 32.
9. Whether district cooperative banks have been discriminated against by excluding them from accepting deposits and exchanging demonetised notes.
By the time the Constitution Bench answers these queries, a few months should have elapsed, and we and our economy would still be breathing, though limping. The queries go to the root of the matter and are of far-reaching consequences. They have been articulated despite repeated submissions of the learned Accountant General that the court is not to enter into the domain of economic and financial policy. This question is frontally posed in the queries. But if the so-called “policy” is kept beyond pale of judicial review altogether, it would cause an imbalance in checks and balances amongst the three organs of the state. The Supreme Court’s verdict would have to go into certain areas which no doubt involve policy. But the formulation of concept of and implementation of the policy cannot be above the rule of law. After the bearer bond and BAlCO cases, an epoch-making case is going to lay down fine-tuned parameters of constitutionalism and rule of law. No form of terror is civilised. Meanwhile, the de or remonetisation has touched each one of us and has touched people around us in differently negative manner with different intensity. The pain has to be remedied and a new beginning has to made, ensuring that financial discipline has some certainties and are the product of appropriate investigation and study. But this revival and resurgence rests in the hands of the affected and harmed. They have a cause to undo certain injustices. The pinch has reached every home of the humblest of Indians. Concerted thinking and cohesive action could arrest the deteriorating situation. None of us can be the left out of this common cause. And this certainly concerns us!
(The writer, a Senior Advocate, is a former All India Service officer, a former diplomat, a former editor, a former president of Orissa High Court Bar Association and a former Advocate General of Odisha. jayantdas@hotmail.com)