Supreme Court of India.

Demonetisation Anniversary: A review of how the Supreme Court's inaction made it a fait accompli

In the aftermath of the Prime Minister’s announcement on demonetisation, Supreme Court gave the impression that it was about to list the petitions challenging it for hearing by a constitution bench. Instead, by its sheer refusal to grant a stay, or ensure expeditious hearing, it let the petitions become infructuous, writes PARAS NATH SINGH.


ON November 8, 2016, PM Narendra Modi, in a televised address at 8 pm, announced that currency notes of Rs. 500/- and Rs. 1000/- would cease to be legal tender. What followed thereafter was total chaos. Long queues outside ATMs and banks were the order of the day for months. People were given 15 days to deposit the demonetized currency into their accounts, with the expectation being that those holding onto untaxed “black money” would be caught.

Fate of petitions challenging demonetisation before higher judiciary

The decision to demonetize the high currency notes also raised the issue of its legal validity. Numerous petitions were filed in the different high courts challenging the Centre’s notification on the demonetization. A number of petitions were also filed at the Supreme Court. The Union Government had also moved transfer petitions in the Supreme Court seeking transfer of all petitions from the high courts to the Supreme Court.

On December 16, 2016, a three-judge bench comprising the then Chief Justice of India (CJI) T.S. Thakur and Justices A.M. Khanwilkar and D.Y. Chandrachud, by a detailed order, refused to grant any interim relief against the decision announcing demonetization. The bench, however, framed nine questions for the determination by a larger bench. They are:

  1. Whether the notification dated 8th November 2016 is ultra vires Section 26(2) and Sections 7,17,23,24,29 and 42 of the Reserve Bank of India Act, 1934;
  2. Does the notification contravene the provisions of Article 300(A) of the Constitution;
  3. Assuming that the notification has been validly issued under the Reserve Bank of India Act, 1934 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) suffers 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 demonetization, does it suffer from excessive delegation of legislative power thereby rendering it ultra vires the Constitution;
  7. What is the scope of judicial review in matters relating to fiscal and economic policy of the Government;
  8. Whether a petition by a political party on the issues raised is maintainable under Article 32; and
  9. Whether District Co-operative Banks have been discriminated against by excluding them from accepting deposits and exchanging demonetized notes”

The bench also stayed the proceedings before the high courts and issued notice on the transfer petitions moved by the union government. By an interim direction in the same order, the apex court restrained all the high courts from entertaining petitions on the subject matter of demonetization of old currency notes.

It has been five years since the three-judge bench referred the matter to a larger bench but no bench has been constituted till now. This huge delay in deciding the legality of the demonetization has made the matter fait accompli. Even if the Court now wishes to examine the matter, it will be difficult to turn the clock back after 5 years.

In 2017, a 71-year-old woman, Sarla Shrivastav, filed another such plea. She urged the Supreme Court to allow her to deposit Rs 1.7 lakh worth of old currency notes, which she said belonged to her late husband. She said she was not aware of this money and found it in a “steel kothhi (tank)” (sic) in her house in January 2017. The apex court said such petitioners should file intervention applications in the main case, which it had referred to the Constitution bench. The court said that the same Constitution bench would decide on their individual grievances as well.

Also read: Modi’s Claim on Success of Demonetisation Is a Blatant Untruth

Since December 16, 2016, the Supreme Court has had five Chief Justices successively.  They are Justices J.S. Khehar,  Dipak Misra,  Ranjan Gogoi,  S.A. Bobde and the incumbent Chief Justice of India, N.V. Ramana. None of them constituted a larger bench to decide the issues framed by a three-judge bench to examine the legality of the demonetization exercise.

Several constitutional benches constituted in the last five years 

It is not the case that no larger bench had been constituted since December 2016. Since then the respective Chief Justices have had formed larger benches to decide various sets of matters. For example, the then CJI J.S. Khehar constituted a five-judge bench to examine the validity of the Triple Talaq practice. He also formed a nine-judge bench to rule over whether citizens had the right to privacy under the Constitution, an issue that arose in the Aadhaar matter.

His successor, CJI Dipak Misra formed a five-judge bench to decide numerous constitutional issues such as the validity of Aadhaar, the constitutional validity of Sections 377 (unnatural offences) and 497 (adultery) of the Indian Penal Code, the issue of women’s entry into the Sabarimala temple in Kerala, and the power tussle between the union government and the Delhi government, among several matters.

CJI Gogoi formed a larger bench to decide the Ayodha land dispute matter, even though there was no referral order referring the matter to a larger bench. Later, CJI Bobde formed a nine-judge bench to review the Sabarimala verdict and connected matters.  However, the first wave of the COVID-19 marred this hearing.

Also read: Sabarimala Reference: of legal U-turns and infidelity to process of law

During the COVID-19 crisis, a five-judge bench of the Supreme Court heard the Maratha reservation matter and handed down the judgment.

The problem with inconsistency in listing matters 

At the same time issues such as the validity of the revocation of Article 370 (pending before a 5-judge bench), the validity of the Citizenship (Amendment) Act, 2019, and the validity of the scheme of electoral bonds are not being listed, making one wonder whether these will meet the same fate as that of the demonetisation cases.

Also read: Union government will continue with ‘conglomerate capitalist’ policies till electoral bonds scheme is struck down

There are no parameters available in the public domain guiding the Master of Roster in deciding the listing of cases, prioritizing the hearing of one case over another, and the constitution of benches. The administrative side of the judiciary is surrounded by secrecy and there is little in the public domain explaining this odd pattern of listing cases.

In the case of the first demonetisation in 1978, the Supreme Court finally heard and disposed of the petitions challenging it in 1996, when a Constitution bench upheld the High Denomination Bank Notes (Demonetization) Act, 1978.  The Supreme Court apparently assumes that in the case of petitions raising contentious issues, distance of time will help it arrive at objective decisions.

While it may be a valid assumption for historians wanting to pass judgments on historical events, for the Supreme Court to follow a similar philosophical approach to litigations before it will only mean erosion of people’s faith in its ability to render expeditious justice.

(Paras Nath Singh is a Delhi-based lawyer. The views expressed are personal.)

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