2016 demonetisation was deeply flawed, P. Chidambaram tells SC

New Delhi, Nov 24 (IANS): Senior advocate and Congress leader P. Chidambaram on Thursday told the Supreme Court that demonetisation of Rs 500 and Rs 1000 currency notes was "deeply flawed".

A five-judge bench, headed by Justice S.A. Nazeer and comprising Justices B.R. Gavai, A.S. Bopanna, V. Ramasubramanian, and B.V. Nagarathna, is hearing a clutch of petitions challenging the Centre's 2016 decision on demonetisation.

Chidambaram, representing one of the petitioners, submitted that demonetisation impacted every citizen of the country and questioned Centre's power to invoke Section 26 of the Reserve Bank of India Act to demonetise currency notes.

He said the Centre cannot, on its own, initiate any proposal relating to legal tender, which can only be done on the RBI's central board recommendation and further argued that the decision-making process should be struck down for being "deeply flawed".

"This is the most outrageous decision-making process which makes a mockery of the rule of law," he said, adding that the RBI has the right to regulate the issue of bank notes.

Chidambaram said over 2,300 crore currency notes were demonetised against the backdrop of 300 crore notes per month capability of the government's printing presses, and this would mean it would take several months to print notes.

He said the annual report of the RBI for 2016-2017 stated that only fake currency of a value of Rs 43 crore was detected in the nearly Rs 15.31 lakh crore worth of currency exchanged.

As the bench queried him as to what can be done now, it is over now, Chidambaram replied if the apex court holds that the demonetisation process was flawed, that will be good enough and added that the government will not indulge in such "misadventure" in the future.

The top court will continue to hear next week the batch of petitions challenging the Centre's November 8, 2016 decision to demonetise the currency notes of two denominations.

In an affidavit, the Centre has told the Supreme Court that the November 2016 decision to withdraw legal tender of Rs 500 and 1,000 currency notes was one of the critical steps in the series of transformational economic policy steps and this decision was taken after extensive consultation with the RBI and advance preparations.

The Ministry of Finance, in an affidavit, said: "The withdrawal of legal tender character of a significant portion of total currency value was a well-considered decision. It was taken after extensive consultation with the RBI and advance preparations".

It further added that demonetisation was also a part of larger strategy for combating the menace of fake money, terror financing, black money and tax evasion. "The notification issued on 08.11.2016 was a major step to fight the menace of fake currency notes, storage of unaccounted wealth and financing of subversive activities," it said.



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Comment on this article

  • myna, mysuru

    Fri, Nov 25 2022

    Excellent arguments were put forth by Mr P. Chidambaram before the SC. The nation waits with eagerness to know the sensitivity to the over 100 deaths caused due to demonetisation; loss of business; loss of jobs with the closure of businesses; denial of banks in honouring cheques during the 50 days of the demonetisation period given to exchange currency notes; loss of having legal tender due to non-calibration of ATMs; loss of availability of new currency due to the limitation of the capacity to print the currency notes in India; and the RBI being overruled in the decision making process with the entire decision making on demonetisation made by the Union cabinet as alleged; and demonetisation of over 86% of all series of the currency notes in Rs 500 and Rs 1000 denomination at one go which is a reckless decision without any forethought or awareness of the consequences. Based on the RBI Statistics the lofty ideals for demonetisation announced by the PM seem to have largely failed with over 90% of the currency being exchanged. We hope and pray that the SC may give a decision like the S.R. Bommai case with clear-cut guidelines to the RBI and the Union Government on the methodology to be adopted by the present and successive Governments on demonetisation from now on and such reckless decisions are put to an end. The bold move by the SC to address the appointment of CEC & EC is also praiseworthy and the decision looked forward by the citizens for ensuring the total independence of the Election Commission and ensuring the tenure of CEC & ECs. The elections in India will be free and fair with an independent election commission with constitutional powers if political interference is put to an end.

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  • mohan prabhu, LL.D. QC, mangalore/canada

    Fri, Nov 25 2022

    The simple and straightforward question is: Did the Finance Ministry take the role of RBI in demonetizing the currency, or was it done without statutory authority. SC has slept over the issue too long; should have taken a suo moto cognizance of the case at the first signs of alarm.

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  • Aam Aadmi, Ihaloka

    Thu, Nov 24 2022

    Demonetisation was done to launder BJP black money which coming back as FII money from fake iFII's of India beneficiaries based in tax havens. Some BJP friends has complete prior knowledge of it. Repoop TV is one among them.

    DisAgree Agree [6] Reply Report Abuse

  • Vinod Kumar, Mangalore

    Thu, Nov 24 2022

    Whenever a case has been filed against this govt the court immediately forms 5 panel judge court. Out of the 5 judges 4 are RSS backed, so one can decide the court’s verdict. Is it so difficult for the sitting single judge on illegal matters which are one -to- one clear violation of law in thier law book. Why do they need decision of 5 judges who are picked by govt??????.

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