Thread by @barandbench

[Demonetisation] #SupremeCourt will continue hearing arguments in a batch of pleas challenging the Central government's 2016 move that devalued ₹500 and ₹1,000 bank notes.

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Hearing begins.

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Attorney General for India R Venkataramani begins: I will run through my additional note of submissions.

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AG on excessive delegation: I look at the procedure under 26(2).. when we go to it's interpretation.. Page 10, I have tried to look at how when the Act has virtually incorporate the notification..

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AG: The notification has been affirmatively dealt with by the parliament and the notification does not exist as an independent instrument of law and parliament has applied it's mind.

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AG: Therefore, what we are looking at is a parliamentary law and not the notification.

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AG: There are two primary reasons that 26 cannot be considered excessive delegation..

1) Section 3 of the RBI Act transfers the complete powers of the RBI for taking over management of currency to the central government.

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AG: 2) It is not the case that Section 26 empowers a further authority to delegate to exercise its powers. The transfer of powers for management of currency by itself cannot suffer the vice or excessive delegation.

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AG takes court through judgments on excessive delegation.

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Court: Their argument is that RBI has supremacy.

AG: You are looking at the management of currency and declaration of certain instruments as legal tender. Is it possible to suggest that RBI or govt will act in isolation?

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AG: I am trying to say that the RBI and the government in an important monetary policy where Section 26 aids both of them.. in that context, there is no question of delegation to government or RBI.

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AG: They Act in consultation.. consultation may not be expressly stated in the provision. It is the life of the whole act.

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AG: Therefore to say that the Act should have said that government will act in consultation, in the following parameters, write down everything.. not necessary at all.

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AG: Flexibility of an instrument of law.. even the functions it has to discharge that will be kept in mind.

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AG: The procedure laid down under Section 26 was followed in this case. The scheme of S 26 (2) providing for an interaction with the RBI under Central government must be seen from a very special policy perspective

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AG: The use of the word "recommendation" deserve to be seen in the context of the integrated role played by RBI & central government, acting together, in the promotion of public interest.

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AG: Recommendation must recieve a flexible approach in the subject matter of legal tender are not matters that can be dealt with exclusively by RBI.

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AG: It is fallacious to read section 26(2) in isolation- it cannot be seen as a mere demonetisation measure. The comparison to the 46' and 78' legislations is superficial.

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AG on the interpretation of Section 26: Even in the practical matters the petitioners arguments cannot be accepted as it would lead to an anomalous situation wherein the government would technically be permitted to issue..

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AG: .. separate notifications for each series but would be prohibited from issuing a common notification for all series. Would lead to chaos and uncertainty.

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AG: 2017 Act is a complete legislation by itself. Here we have a situation where s 26 power has been exercised, parliament addresses all connected questions.

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AG: Here there is a reference to a notification under statute. Parliament looks at it, and gives its affirmation. That's a very imp distinction between 46 78 and this law.

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AG: The question of going back to the notification and looking at those infirmities if any.. are you saying parliament is pursuing false objectives?

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AG: Whatever arguments we are addressing regarding Constitutional validity have to be addressed agains the parliamentary legislation.

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AG: To ask the court to say, I went abroad, I want my dignity to be protected.. millions of people travel across the globe.

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AG: How do you take this kind of decision? It is impossible in a matter of such magnitude. Certainly some acts will fall somewhere.. I'm not saying ignor hardships.

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AG: Test of proportionality cannot be pressed into service. It cannot always be the case that an object can be achieved by more than one set of means.

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AG: All means and measures that may be found necessary from time to time to ensure the integrity of currency management will also remain a purpose of importance.

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AG: There can hardly be any debate on the importance of the purpose.

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AG: It cannot be said that currency management can be handled through other measures or without the principle of bank notes as legal tender.

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AG: There is no alternative less invasive measures. The three evils sought to be addressed breed on paper currencies. The question as to whether a government should explore non currency management measures

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AG: .. as better or wise choices is not a matter for court nor a subject of judicial review.

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AG: The government is duty bound to address these evils, if necessary by resorting to currency management and the tool of section 26(2).

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AG: It is submitted that the suggestion for adoption of proportionality without rigorous scrutiny of his application can lead to open ended, moral or political reasoning which will always be avoided.

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AG:courts are conscious of the fact that complexity of economic regulation deals with complex set of factors, the scope for error, experimentation and other similar factors.

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AG: Therefore, courts grant the legislature and the executive latitude and play in the joints in matters involving interplay between principles, facts and policy.

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AG: Judicial review of economic policy may be restricted to where the court may only determine if there is a rational nexus with the object sought to be achieved to the means. Any other test would impinge of the freedom of legislature.

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AG: Should the government keep aside all its considerations and only look at evils sought to be curtailed. The balance will be the real test.

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AG: To say that hardships have not been adverted to is taking it o an excessive length.

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Bench rises for lunch. Hearing to continue at 2 pm.

Bench re-assembles.

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AG: This is not a case where a non-classificatory arbitrariness test will be applied. If apply the nexus test, this case passes the test.

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AG shows a judgment on principle of proportionality.

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AG shows court the 1978 parliamentary debates.

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Court: In 78' directly act was made?

AG: Yes, ordnance was directly followed by act.

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Justice Nazeer: Only Mr Chidambaram can explain to us these dynamics.

Sr Adv Chidambaram: What was done in 2016 is a very different power. That was plenary legislation. This is under the RBI Act by the executive.

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AG: Executive policy are given effect with goals.. this does not preclude the possibility that some objectives may not be achieved to the fullest or there may be something left to be desired in their implementation

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AG: This does not, however, mean that the policy is per se bad or that it deserves to be struck down.

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AG: In such a case, it is the action under the law rather than the law itself which can be held invalid. There is presumption that unless proven otherwise the execution of the law is being done in a fair manner.

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AG: It has been held that as long the trial and error is bone fide and with best intention, such decisions cannot be questioned as illegal.

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AG takes court through case law.

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AG: Don't look at it in isolation.. It is not one of the processes. You are looking at a huge mountain and 26 is a sledgehammer. It cannot knock out a mountain.

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AG: We are touching the live nerve of the country's economic policy where one important step was thought to be necessary. This balancing would have had all kinds of issues.

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AG concludes arguments.

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Senior Advocate Jaideep Gupta begins submissions for the Reserve Bank of India.

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Sr Adv Gupta: 1) The withdrawal of all series is well-within the jurisdiction conferred on the RBI under 26(2).

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Sr Adv Gupta: My Ld friend has given your lordship a list of cases. There are judgments of this court which say "any" usually means in common parlance "any" or "all".

I just want to add two aspects.

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Sr Adv Gupta: First is, their contention is that it should be read as "some" series. What is that some? Is it one, two, three, all - 1?

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Sr Adv Gupta: To say that, any means some creates confusion in that section.

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Sr Adv Gupta: There might be situations where all the money may be demonetised. You are being invited to take away the power which permits the Central government to withdraw the entire currency.

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Sr Adv Gupta: Because RBI deals with monetary poli-making, all its provisions must be given a wide amplitude.

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Sr Adv Gupta: The second judgment will show that when you construe a section that confers powers on the RBI, your lordships do it to give wide powers to the RBI. Because these are matters that the RBI is best suited..

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Court: Their argument is quite to the contrary. Mainly, they have referred to the decision-making process.

Sr Adv Gupta: Therefore, that is an argument in the alternative because they say you do not have the power.

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Court: No, they say government does not, RBI does. There was virtually no argument against the RBI. They were supporting you.

Sr Adv Gupta refers to one of the petitioners' affidavit.

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Sr Adv Gupta: Discussions started earlier. Demonetisation was such a decision, that discussion will always be fragmented. You will collect info from here & there.

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Sr Adv Gupta: As per the section, the last two steps - recommendation by RBI and decision by Centre- the fallacy is that they have said recommendation is first step.

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Sr Adv Gupta: If you look at 26 (2), it does not talk about the process of initiation. It only says, it will not end without these two. The penultimate step is recommendation. A situation like this can be initiated in many ways

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Sr Adv Gupta: It can certainly be initiated by the Central government! Black money, terrorism- it is perfectly normal for the Centre to raise the question. recommendation can go either way. We could have said no.

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Sr Adv Gupta: There also, the Centre has a discretion. This is the process.

Court: Even if you don't recommend, Centre may go ahead.

Gupta: It would then have to bypass the RBI.

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Sr Adv Gupta: Time or speed does not itself mean that something is wrong with the decision. There is a letter where they have raised the question and we recommended.

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Sr Adv Gupta: The process is followed. There is another canard here that there was a coram. The coram was met.

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Bench rises. Hearing to continue tomorrow.

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