Five years after demonetisation, SC still to set up a bench to hear the petitions challenging it

It took less than 24 hours for the first set of petitions to be filed against the Modi government’s demonetisation decision. Eight weeks later, at least 41 petitions had been filed in courts across the country.

But five years later, nothing has happened in the petitions. Even the Supreme Court bench that was supposed to hear the matter has not been formed.

Among the first to file a petition before the Supreme Court was Sangam Lal Pandey, a lawyer from Uttar Pradesh. He remembers filing it around 2 pm on November 9, 2016. He argued that the government’s decision was “arbitrary” and would cause a “huge inconvenience” to the public, so should be quashed.

Since then, he has filed four applications between 2017 and 2019 asking for a bench to be constituted to hear the matter.

“But there have been no hearings on that,” he said.

How it all transpired

The decision that has attracted these petitions was announced by Prime Minister Narendra Modi on November 8, 2016, at 8 pm. He appeared on television to inform Indians that Rs 500 and Rs 1,000 notes would stop being legal tender after midnight.

In one stroke, 86% of India’s currency had become worthless paper.

For a majority of Indians, who were entirely dependent on cash, this was nothing short of a calamity. The next morning, they had trouble even buying food and essentials.

Anticipating the crisis that would follow, advocates Vivek Kumar Sharma and Sangam Lal Pandey went to the Supreme Court on November 9, 2016, challenging the move.

The petitioners wanted the notification announcing demonetisation to be quashed. They argued a sweeping decision like this should not be taken overnight and listed the problems that citizens would face as a consequence – for instance, in the absence of cash, it would be impossible to pay for medical treatment in private hospitals, to bear marriage expenses or purchase inputs to sow the next crop.

On November 15, 2016, the Supreme Court told Mukul Rohatgi, who was the Attorney General then: “We are not interfering with it. But we want you to ensure that inconvenience caused to the public is minimal. They shall not suffer.”

On November 25, 2016, in an affidavit filed in the Supreme Court, the Centre claimed it was ensuring that currency notes would be replaced at a large scale and had formed a high-level committee to monitor the entire exercise on a day-to-day basis. It also argued that demonetisation would help curb black money and cut terrorism funding, among other benefits.

But this did not stop the spate of petitions. In 2016, at least 20 petitions were filed before the Supreme Court and 21 petitions were filed in High Courts across the country. These included petitions before the High Courts of Bombay, Delhi, Rajasthan, Hyderabad, Kerala.

The petitioners included Communist Party of India (Marxist) General Secretary Sitaram Yechury, state general secretary of the Indian National League M Seeni Ahamed, a 74-year old Non-Resident Indian who could not deposit old notes because he was not in India, the wife of a 49-year-old street vendor who collapsed after standing in a queue for six hours, the Idukki District Cooperative Bank.

At the heart of it, most petitions claimed that the move was against the Constitution as well as the Reserve Bank of India Act 1934, which governs legal tender and the issuance and withdrawal of notes. The petitioners argued that existing laws do not give the government the power to abruptly and arbitrarily withdraw all notes of a particular denomination.

The petitioners also maintained that the move had hampered the Constitutional and fundamental rights of Indians, such as the right to property (Article 300A), right to equality (Article 14), right to carry on any trade, business or occupation (Article 19) and right to life and right to livelihood (Article 21).

The petitioners asked for a slew of relief measures, such as extending the time limit for depositing demonetised currency, relaxing limitations on withdrawing money from bank accounts, expanding the use of the demonetised notes for a broad range of purposes and re-evaluating the bar on district co-operative banks from accepting and exchanging demonetised notes.

The Supreme Court steps in

On December 16, 2016, a three-judge Supreme Court bench led by TS Thakur, who was then the chief justice of India, passed an important order. It barred any other court from hearing petitions related to this matter to “avoid multiplicity of hearing and conflicting decisions on the same subject matter”. However, it gave the option to people to file applications in the case already pending before the Supreme Court.

It also framed nine questions to be considered. These questions pertained to the legality of demonetisation when considered under the Reserve Bank of India Act and the Constitution of India. The court was to also consider the extent of judicial review it can exercise in reviewing fiscal policy and whether demonetisation “suffers from procedural and/or substantive unreasonableness” and “excessive delegation of legislative powers” since it was carried out by a Ministry of Finance notification and not an act of parliament.

Given that these questions also had a constitutional bearing, it said that the matter would be heard by a constitutional bench of five Supreme Court judges. The chief justice was supposed to constitute the bench.

The court also asked the government to issue notifications to deal with how district co-operative banks can exchange the demonetised notes and on the regulations around withdrawal of money. For other issues, such as extending the time limit for depositing money, it left the decision to the government “with a hope that the Government will be responsive and sensitive to the problems encountered by the common man”.

The current status of the case

The December 2016 order in which the court framed the nine questions and referred the matter to a larger bench was the last substantive order in the case.

Almost five years later, the bench to hear the matter has not yet been formed.

Several interventions have subsequently been filed. They have been tagged with the main petition. Vivek Kumar Sharma, who was one of the lawyers to file the petition on November 9, 2016, told Scroll.in that after the court stayed other proceedings and allowed for the filing of intervention applications, more than 100 such applications had been filed.

Expectations from courts

The Supreme Court has held in several cases that it should not get into economic policy matters since those were best left to experts. However, it has maintained that it has the power to look into the legality and constitutionality of these methods. Therefore, given the human cost involved in demonetisation and the way it was carried out, lawyers have argued that a review by the Supreme Court would not constitute judicial overreach.

“On the contrary, it would merely be performing its rightful role in India’s constitutional structure,” wrote lawyer Suhirth Parthasarathy.

Sharma, one of the petitioners, said that some benefit came out of the petitions – the petitioners were able to make suggestions to the government, some of which it accepted. However, the main aim of the petitions was to provide relief to the public, which did not happen. Now, all that remains is the academic question of whether demonetisation was lawful.

Kamini Jaiswal, a Supreme Court advocate who was arguing one of the petitions challenging demonetisation told Scroll.in: “What we could do is bring to the notice of the Hon’ble Supreme Court the illegality and lack of planning in the act of demonetisation, the gravity of the situation and the injustice resulting to the common man on the streets...But the Supreme Court did nothing.”

She added: “It was a major failure on the part of the Supreme Court to ignore the sensitivity of the issue, especially when it came to citizens’ right to livelihood and right to life.”