Legal Challenges to Demonetisation in India: A Comprehensive Analysis
India's Prime Minister Narendra Modi announced the demonetisation of high-value currency notes in 2016, a move that sparked considerable debate and legal challenges. This article delves into the legal grounds raised against the demonetisation, focusing on its constitutionality, implications, and broader ramifications.
Introduction to Demonetisation
During his tenure, Prime Minister Narendra Modi has implemented several controversial policies, including demonetisation. The term ldquo;demonetisationrdquo; refers to the withdrawal of older high-value banknotes from circulation, effectively invalidating them as legal tender. The key question arises: was demonetisation a necessary measure or did it infringe upon constitutional rights?
Proponents and Critics of Demonetisation
Proponents argue that demonetisation was a ldquo;surgical strike against black moneyrdquo; and a vital step against corruption and tax evasion. Critics, however, believe it was poorly executed and more harmful than beneficial, leading to economic turmoil and suffering among common citizens.
Legal Grounds Raised Against Demonetisation
A petition in the Supreme Court of India challenges the legality of demonetisation, citing five significant grounds:
1. Excessive Delegation of Power
The petition argues that Section 262 of the Reserve Bank of India Act 1934 empowers the central government to demonetise notes without adequate legislative oversight. This delegation of power is seen as unconstitutional, as it allows the central government to fix the effective date without giving notice to the public. The petition suggests that the government must provide a reasonable notice period before implementing such measures.
2. Need for Legislative Action
Citing precedent from 1978, the petition claims that demonetisation of such magnitude should be carried out through parliamentary legislation rather than a simple gazette notification. It references Section 26A of the RBI Act, which mandates that high-denomination notes cease to be legal tender only through an amendment to the RBI Act, not through a notification. The government's position, as argued by the Attorney General, was that demonetisation could be implemented through a notification to maintain confidentiality.
3. Fundamental Right Violations
The petition argues that the sudden demonetisation violated the fundamental rights under Article 19(1)(g), as it involved a significant economic impact without sufficient public interest. The abrupt nature of the notification caused inconvenience and precluded essential constitutional rights, making it incompatible with the exception provided in Article 19(6).
4. Independence of the Reserve Bank of India (RBI)
The petition questions the independence of the RBI in the demonetisation process. It asserts that the central government did not allow the RBI to make an independent recommendation but instead dictated the outcome. The RBI Act requires the central board to provide independent recommendations, not mere assent from the government. The petition asks for the court to examine the full record of consultations before the RBI's recommendation was made.
5. Reasonableness of the Decision
Lastly, the petition draws on a Supreme Court judgment from 1954, Saghir Ahmad v State of Uttar Pradesh, which emphasized the need for reasonableness in legal decisions. It highlights cases where the government failed to exempt essential services from the demonetisation impact, thereby violating fundamental rights to health and access to justice.
Conclusion
The legal challenges to demonetisation highlight the need for a more transparent and constitutionally sound process in such policy decisions. By examining the constitutional implications and the implementation of such measures, the Supreme Court can ensure that the measures taken by the government are both necessary and justifiable.