"Aware Of Lakshman Rekha" But Will Probe Demonetisation: Supreme Court

After noting that there is a line — "Lakshman Rekha" — to how far courts can go on challenges to government policy decisions, the Supreme Court today said it will still hear petitions against the 2016 demonetisation of high-value currency notes. It listed the matter for November 9.

It wants the central government to "keep ready" the files about the decision to ban Rs 500 and Rs 1,000 notes — over 80 per cent of all notes then in circulation — announced in a sudden, late-evening address by PM Narendra Modi as an "anti-corruption" measure. 

Documents from the Reserve Bank of India and the Union Cabinet have so far not been made public despite pleas under the Right to Information Act. The court wants the Centre and RBI to file responses in affidavits by the next hearing.

One of the chief questions the court wants to answer is whether the hearings will now be a mere "academic" exercise after six years. New high-value notes have since been put into circulation even as people lined up for days to exchange the cancelled notes.

Not that the petitions came late.

It was within days of the ban that several people went to court and questioned the Constitutional validity of rendering notes worthless unless exchanged within a deadline. But the issue didn't get a detailed hearing for long periods.

It was first referred to a Constitutional bench of five judges in December 2016, barely a month after the note ban.

It's being heard now as Constitutional Benches were finally formed by the previous Chief Justice, NV Ramana, before he left office about two months ago. Other matters before these benches include the reservation to Upper Castes on the basis of income, and the end of special status to Jammu and Kashmir.

On demonetisation, among the various questions put to the bench is: Did the note ban violate Article 300A of the Constitution that says no person shall be deprived of their property unless by the authority of law?

Senior advocate P Chidambaram, a former Finance Minister, has argued that this kind of demonetisation required a separate act of Parliament. Similar demonetisation was carried out in 1978.

He further argued that “recommendation (for demonetisation)should have emanated from the RBI with facts and research… and the government should have considered. It was the reverse here.”

For the government, Solicitor General Tushar Mehta said the court's time should not be "wasted" on academic issues. But lawyer Shyam Divan, representing one of the petitioners, said he was surprised at the phrase "waste of Constitutional Bench's time".

The bench headed by Justice SA Nazeer eventually said that when an issue arises before a Constitutional Bench, it is its duty to answer.

"We will have to hear and give an answer whether it's academic, not academic, or beyond the scope of judicial review. The point in the case is the government policy and its wisdom, which is one aspect of the matter," it said.

"We always know where the Lakshman Rekha is, but the manner in which it was done has to be examined," added the bench, also comprising Justices BR Gavai, AS Bopanna, V Ramasubramanian, and BV Nagarathna.