Supreme Court Demonetisation Decision: Impact On Policymaking?
Even policy has to be methodized in accordance with law. This requirement has been breached in the instant case, says Aman Lekhi.
The central government did no wrong. That in one sentence is the essence of the Supreme Court's majority view on the 2016 demonetisation exercise.
The apex court, by a 4:1 majority, endorsed the government's decision on legality. The minority view concluded that demonetisation should've been done via a legislative process.
Where the majority and minority agreed was on the government's "noble" intentions.
Any measure aimed at eliminating offshoots of terror funding, drug trafficking, the emergence of a parallel economy, and money laundering must be applauded, Justices BR Gavai, SA Nazeer, AS Bopanna, and V Ramasubramanian held.
The majority went on to dismiss the hardships faced by the citizens in words that some experts have criticised as an "indelible stain in judicial history".
Individual interests must yield to the larger interests of the community or the country as indeed every noble cause claims its martyr.Majority View
The minority opinion of Justice BV Nagarathna too was kind towards the policy objective of demonetisation.
At no point has any suggestion been made that the measure was motivated by anything but the best intentions and noble objects for the betterment of the nation. The measure has been regarded as unlawful only on a purely legalistic analysis of the relevant provisions of the Act and not on the objects of demonetization.Minority View
To elaborate on the legalistic analysis, the majority held that the central government, under section 26(2) of the RBI Act, is empowered to cancel all currency notes of all denominations. Restrictive meaning cannot be given to word "any" in Section 26(2) of RBI Act. Interpretation that advances the purpose of the legislation must be followed, and one that leads to absurdity must be avoided. So, central government's power can be exercised for all series of bank notes, the majority view said.
The lone dissenter Justice Nagarathna, however, concluded that demonetization, when it originates from the central government, has to be by way of legislation. When only a series of notes of a particular denomination is to be demonetised, then section 26(2) of RBI Act is applicable. And when all notes of a particular denomination are to be demonetised, then it has to be via a legislative process rather than executive action
BQ Prime spoke to experts on the implications of the Supreme Court's decision on policy making
"The Method Was Devoid Of Legal Sanction"
Even policy has to be methodized in accordance with law. This requirement has been breached in the instant case.
It is here that the declaration of law by Supreme Court assumes significance as through its judgments, Constitutional values get embedded in the system.
The dissent is therefore important as it emphasises preeminence of Constitutionalism over fiat of public officials.Aman Lekhi, Senior Advocate
The limitations on power and prescriptive requirements of action control arbitrariness in the exercise of authority. A subjective view of what is good cannot be allowed to govern governmental action.
Administrative Law Principles Violated
- Senior Advocate Dushyant Dave
India lost almost 1.5-2% of its GDP as a result of demonetization. There was large-scale unemployment. The informal sector that fuels the country's trade came to a grinding halt. The real reason to ban the notes was to curb the menace of black money, but now that black money is back in the market with a bang.
I'm in complete disagreement with the majority view. The RBI Act expressly provides that the process must start with the central bank. The RBI alone has the capacity and competence to initiate this process.
The minority view is absolutely correct because there was no independent dialogue between the government and the RBI. The RBI merely put a stamp on an executive decision. There was no real application of mind which is required in a serious economic issue such as this.
In administrative law there is one principle which is settled by the court, that if a statute provides for a certain thing to be done in a particular way, it shall be done only in that way and no other way. If it is done in any other way, then it is void.
"Supreme Court Ensured Its Judgment Has No Impact"
- Alok Prasanna, Co-Founder, Vidhi Centre for Legal Policy
Having delayed the judgment for six years, the Supreme Court has ensured that its judgement, while of definite academic interest, has no impact on anything
The last time demonetization happened, the Supreme Court took 16 years to deliver a judgement. The impact of that judgement, irrespective of the outcome, was also nil.
The Supreme Court took a view that hardships faced by the people had reasonable nexus with the objective sought to be achieved.
It’s not the job of the judges to look into the consequential analysis of the of the measures taken by the government.
The court cannot look into whether the object has been met or not before pronouncing something as lawful or unlawful. It is not the court’s job to hand over a report card to the Centre on the success or otherwise of its measure.Alok Prasanna, Co-Founder, Vidhi Centre for Legal Policy