[Demonetisation] What the petitioners will argue before the Supreme Court Constitution Bench

The Supreme Court on Wednesday agreed to hear submissions by petitioners in a batch of 58 pleas challenging the Central government's 2016 demonetisation that devalued ₹500 and ₹1,000 bank notes [Vivek Narayan Sharma v Union of India]..A Constitution Bench of Justices S Abdul Nazeer, BR Gavai, AS Bopanna, V Ramasubramanian and BV Nagarathna agreed to hear the parties on the scope of their arguments in order to determine whether the issue had become infructuous. "In order to declare the issues academic or infructuous also we need to examine since both parties do not agree," said the the five-judge bench in response to the argument of the Central government that nothing survived in the matter and hearing it would be an academic exercise..The Bench then proceeded to hear Senior Advocates P Chidambaram and Shyam Divan, who asserted that the issues are still alive and that the Court ought to decide on the constitutional validity of the actions..To buttress his argument, Divan referred to the decision of the Supreme Court Constitution Bench with regard to the exercise of demonetisation carried out in the year 1978, which was eventually decided 18 years after, in 1996."One thing I might just point out: as far as 77' 78' demonetisation is concerned, that decision eventually came in 1996 by Constitution Bench which examined the statute and thereafter went into individuals grievances," he submitted. .Former Union Minister Chidambaram went on to put forth before the Court the broad grounds that would be taken by the petitioners to challenge the demonetisation exercise. .1. Section 26(2) of the Reserve Bank of India (RBI) Act allows government to declare all series of a particular denomination as being no longer legal tender Chidambaram argued that the provision conferred on the government a power that was too wide, and it required to be read down to mean only "a specific series of a denomination" as opposed to all series of a denomination."If not read down, Section 26(2) confers an unguided, uncanonised power and is liable to be struck down under Article 14 & 19. Lives of humans and livelihoods of millions were lost or affected," he reasoned. .2. The decision-making process was deeply flawedThe senior counsel explained to the Court that for the purpose of demonetisation, the suggestion should have emanated from the RBI based on ample research, followed by the government reflecting on it and passing an order. However, in this case the RBI was sent a letter by the government asking for a recommendation as to whether ₹1,000 and ₹500 rupee notes should be demonetised."The Cabinet was transmitted the recommendation...the Cabinet was waiting. This recommendation comes to the government and is accepted. Within minutes, government makes the notification and the Prime Minister goes on television to announce demonetisation," he elaborated. .3. The recommendation did not consider relevant factorsIt was further submitted that the recommendation did not consider factors such as the capacity of printing presses to print notes for substituting the cancelled currency or the fact that ATM machines were not calibrated to dispense ₹2,000 notes. "As per my information, it was not disclosed to the board that by demonetising the ₹500 and ₹1,000 rupee notes, 86.4 per cent of currency would be withdrawn. No prudent Cabinet Minister or board member would agree to this," said Chidambaram..4. The objectives were not achievedThe senior counsel went on to submit that the objectives of demonetisation - to deal with fake currency and black money - were false objectives and were not achieved by demonetisation. .5. The test of proportionalityThe five-judge Bench was also urged to apply the test of proportionality to the recommendation of the RBI as well as the decision of the government while taking into account that the lives of hundreds were lost and livelihoods of millions were affected..6. Powers of the CourtFinally, it was contended that despite the passage of time since the exercise took place, the top court had the power to grant declaratory relief and mould relief..While the Attorney General R Venkataramani and Solicitor General Tushar Mehta urged the Court to consider the limits of judicial review in the context of economic policy, the Court was persuaded by the petitioners' argument that while the policy itself may not be examined deeply, the procedure adopted for demonetisation was amenable to its jurisdiction.In this regard, the Court directed the government to file its additional replies and present its arguments before the Bench on November 9..[Read our live coverage of the hearing here]