JANUARY 2, 2023
On Monday, a five-judge Constitution bench of the Supreme Court delivered its judgment on a bunch of petitions that challenged the validity of the Modi government’s November 2016 decision to demonetize Rs 500 and Rs 1,000 currency notes. The top court upheld the government’s decision and dismissed the petitions.
Most petitions challenged the validity of the shock move that meant currency notes worth 86% of the money in circulation became “worthless pieces of paper”. While some petitions sought a new window for exchanging scrapped notes, which could not be exchanged within the deadline.
There will be two separate judgments by the bench of Justices S Abdul Nazeer, BR Gavai, AS Bopanna, V Ramasubramanian and BV Nagarathna. It is not clear whether the two judgments are concurring or dissenting.
DEFENCE AND CRITICISM
Prime Minister Narendra Modi’s announcement of the demonetization decision sparked massive confusion and chaos for several weeks as people scrambled for new currency notes, forming winding queues before banks and ATM kiosks for days. It was also reported that some people died waiting to have their money exchanged.
The government has defended its move, originally meant to boost India’s digital economy and address the issue of black money and terror financing. However, a section of experts and the political opposition have criticized demonetization, saying it caused immense hardship to people, disrupted small businesses and hit the country’s economic growth hard.
One of the things that have driven this criticism is that much of the demonetized currency came back to the system, dashing hopes of killing large amounts of black cash.
WHAT THE COURT VERDICT MEANS IN 2022
The economy and society have, by now, absorbed the shock of the demonetization decision in six years. Many experts have said the court order now will, at best, be an “academic exercise”.
During the hearing in November-December, the Supreme Court had indicated that it might not scrap demonetization as ‘the clock cannot be turned back’. But the top court also said that the arguments might lead it to lay down guidelines for such exercises in future.
On December 7, the Supreme Court had asked the Modi government and the Reserve Bank of India to place on record all relevant records relating to the demonetization decision.
Petitioners’ counsel and Congress leader P Chidambaram has argued that the government cannot initiate any proposal relating to legal tender as this can happen only on the recommendation of the RBI’s central board.
On behalf of the government, Attorney General R Venkataramani has resisted judicial scrutiny at this point in time, saying the Supreme Court cannot decide a matter when no tangible relief can be granted by way of “putting the clock back” and “unscrambling a scrambled egg”.