Some meaningful study ought to have taken place before demonetisation: Shyam Divan argues before Supreme Court

Senior Advocate Shyam Divan argued before the Supreme Court on Friday that the Central government ought to have carried out a meaningful study before implementing demonetisation in 2016 [Vivek Narayan Sharma v. Union of India]..Divan was appearing before a Constitution Bench comprising Justices S Abdul Nazeer, BR Gavai, AS Bopanna, V Ramasubramanian and BV Nagarathna when he strongly rallied for guardrails to be put in place for Section 26 (2) of the Reserve Bank of India (RBI) Act."At a minimum, when you are taking away 86.4 % of currency, there has to be a study. There can't be some general study. There is not one study on demonetisation as a solution," he argued. .Divan underscored that what needed to be looked into was the massive impact of the exercise. "We're talking about 1.2 crore jobs which are lost in the near term. The impact was transient. We're talking about life and livelihood.".He added that while secrecy of a decision like this was of importance, it did not mean that even a minimum assessment could not have been carried out. "I concede that there could be possibilities that the element of secrecy would be lost. But was there ANY study that recommended demonetisation on this scale which would address those particular objects?" he asked. .Divan was representing a senior citizen who was visiting his son in the United States of America when demonetisation was announced. Relying on the assurances of the Prime Minister as well as RBI that there would be an extension of time to exchange bank notes at RBI branches, the petitioner returned to India in February 2017. However, the RBI refused to exchange his notes amounting to ₹1.62 lakh..Divan highlighted that the Ordinance suddenly imposed a hard stop on exchange of notes on December 30 of that year, giving everyone only a day to carry out the exchange. "There's also an element of manifest arbitrariness. We are emboldened because no less than the Prime Minister of India gave an assurance to the people of India. Now, when the PM says you will have RBI counters...and the RBI echo the same sentiment.. isn't it manifestly arbitrary to introduce an ordinance on September 30 which has a guillotine on December 31?".In this regard, he highlighted that as per Section 4 of the Specified Bank Notes (Cessation of Liabilities) Act, the RBI had a duty to exercise its power to allow the exchange of notes in certain cases. "I found that I was absolutely without any recourse. This money had been rendered completely nought. The scheme doesn't contemplate people like me at all," he said..Attorney General for India R Venkataramani also began his submissions for the Central government today. .With respect to specific applications by those such as the petitioner represented by Divan, the AG sought time to consult with the RBI and make conclusive submissions. However, he clarified that the government would not extend the grace period under any circumstances. .The AG primarily focused on the Court's limited power to interfere in matters of economic policy. "Are we not called upon now to work on a very major issue of reformation of a monetary policy? What do we do? I think, let me try this. Then the Court will come and say 'no no I think your trial is bad'.".Further, responding to the submission that the statutory procedure had been reversed since the government sent the RBI a proposal for demonetisation, the AG urged the Court to view this from a flexible point of view."No, the connection between the working of the government and RBI must be seen from a very flexible point of view. It is not a case that the RBI in its functions is impeded by an outside agency like the Government of India.".The Attorney General will continue his arguments on December 5..Yesterday, the Constitution Bench spent the day hearing detailed arguments by Senior Advocate and former Union Minister P Chidambaram on behalf of the petitioners.Read a detailed report on the six grounds argued by Chidambaram here. .The latest affidavit of the Central government in this case reiterated that the move was to fight the menace of fake currency notes, unaccounted income and terror funding.Further, it was not a standalone notification but part of a series of transformative economic policy steps intended to formalise the Indian economy, the Centre had submitted.Read more about the affidavit here..[Read our live coverage of the hearing below]