Thread by @lawbarandbench

#SupremeCourt Constitution Bench led by Justice S Abdul Nazeer to continue hearing pleas challenging the 2016 demonetisation of 500, 1000 rupee notes.

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Hearing starts.

Justice Nazeer: I think we should be able to finish today. Unless Mr (Jaideep) Gupta takes long or Mr (P) Chidambaram chooses to reply.

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Gupta: Power was not unguided as RBI is the expert body here.

Justice Gavai: That is what the ld AG also said.

Gupta cites a judgment.

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Justice Gavai: Even Mr Chidambaram says, RBI has the power dealing with currency.

Gupta: Also that this section should be read as 'some' series not all. That is all i wish to add

Justice Gavai: He said if it is not construed as any series, then it is unguided.

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Gupta: Substance of letters there on record. The RBI Board approved it on 8th and then the Cabinet finalised the decision.

Bench discusses.

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Gupta: Arguments that it was hasty etc may be with respect to the decision not the procedure. We had the quorum, we have categorically taken that stand.

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Justice Nazeer: But filing the affidavit at this stage, Mr Gupta?

Gupta: If my lords does not want I will not place.

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Gupta gives details of "561th meeting of the answering Respondent" that approved the demonetisation exercise. Quorum requirements were fulfilled.

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Gupta: No plea that there was a lack of quorum. That was a fishing expedition, no procedural lapse. Now to the judicial review of the decision.

Justice Gavai: Even they have said we cannot review correctness of the decision, only if decison ...

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Justice Gavai:...-making procedures were complied with. That has been held.

Gupta: Proportionality and Wednesbury principals will apply. I come to the decision itself.

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Gupta now takes Court through the objectives of demonetisation, argues they had an 'obvious' nexus so review should not be done of an economic policy decision.

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Gupta: When it is economic policy, those two principles cannot be given full reign.

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Gupta: Wednesbury principle will not apply as only seeing if considerations were relevant or not. But this too, economically or legally?

Justice Gavai: Legal compliance we can examine at the most.

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Gupta reiterates that
Proportionality principle also not attracted, cites judgment.

Gupta: Full blown application of Proportionality test cannot be applied in economic policy decision.

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Gupta: Not a single bank has suffered any loss.

Chidambaram: Lordships currently banned VC exchange. Though its trading, the ban on the exchange was currently struck down.

Justice Ramasubramanian: Two bills were introduced. In a lighter vein, it was from VC to PC.

SC: Parliament then did not have the mind to ban it directly. But the transactions were allowed on banking channels but not crypto currency.

Chidambaram: But point is you have to justify it.

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Justice Nagarathna: Merits of the decison, the govt ought to know what is best for the people. But what was taken on record, whether all procedures were followed we can look into.

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Gupta objects to his juniors handing over SCC online citation.

Gupta: Please do not do this. Tove me the regular one.

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Gupta: Why quibble over why all series were banned, printing press had to print afresh? That expenditure is a pittance to achieve the aim. That is not an argument of law, or to be submitted in a court of law.

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Gupta goes through pleadings.

Gupta: We will demonstrate that PSUs had options.

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Gupta: Remonetisation cannot be planned, unless demonetisation was in a big way much prior. All the notes cannot be exchanged the very next day. Can it be said that 86% cash being wiped out has to be considered? I respectfully submit that these questions should not be gone into.

Gupta responds to Sr Adv Shyam Divan's contentions: This heart-stop argument cannot stand. That he thought that the deadline will be extended. Can it be accepted?

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Gupta reads from Pleadings

Gupta: Is Section 4(1) unconstitutional? Because then 4(2) cannot extend the deadlines. Our stand was we have to verify because beyond that the statute does not allow it.

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Justice Gavai: What is the date fixed by the notification dated 8th Nov 2016?

Gupta: 31st December.

Gavai: That power would be Independent of subsection 1 of section 4.

Gupta: Question is if 4(2) can be read independent of 4(1).

Gavai: Then a reference to 4(3) would have been there.

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AG: We have notes on the 'series' issue.

Bench discusses.

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Justice Gavai: According to you, even if it was right to property taken away since time was given to exchange?

Gupta: Yes.

Justice Nagarathna: What about people who came on 31st after banking hours?

Gupta: Those days bank officers held up the system, worked 24*7.

Justice Nagarathna: People who have to pay labourers' wage, they had to stand in long queues.

Justice Nazeer: You are saying two months given only for exchange, transactions illegal?

Gupta: Yes.

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Justice Nazeer: Is there a reported case of anyone approaching the banks on December 31 but not able to exchange notes? Mr Chidambaram has also been fair in saying there was no such case.

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Gupta: I think notes were only deposited and money credited, not exchange.

Chidambaram: No no, i had exchanged. But banks only had so much cash.

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Gupta reiterates the time period and extensions to deposit old notes.

Justice Nazeer asks about yardstick for arbitrariness in this case.

AG R Venkataramani: Manifest would mean it does not require further explanation.

Gupta: Courts put a line normally.

Gupta: If it is a standalone provision, RBI can do it. 4(1) not needed. Their writ does not stand, we cannot go into relief. It will create difficulties in future.

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AG begins his submissions for the day: May refer to my notes. We are talking about grace and window periods. Latter is an addition. If these windows for retrieving property was not made available it would have been a serious issue. Court must have serious norms to check them.

AG: My suggestion is court may not. Nobody is disputing the hardships. Removing the cut off dates like a chess game which my lords may not get into, these are the imponderables that arise.

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AG: We are looking at is a wider social policy where there evils ought to be addressed. They need to be woven together for a forward approach. When we moved from a controlled to market economy. Moving from one framework to another, nation...

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AG: keeps moving. Essence of policy will be weakened.

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AG reading from pleadings.

Hearing to resume at 2pm.

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Hearing resumes.

Advocate ML Sharma reads from pleadings.

Sharma: I am PIL petitioner.

Justice Nazeer: Hope you were listening to us. Please do not repeat what was said.

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ML Sharma says 33k crore spent, and by law President should have issued such a notification. Sorry I am little upset, nervous.

Justice Nazeer: Why? Is anyone interrupting you? You must be in an AC room i suppose.

Sharm: not so rich.

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A Counsel: Till before 8th, Indian residents could exchange unlimited notes. I will stress promissory estoppel.

Justice Gavai: Against a statute?

Counsel: Cannot overturn a right.

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Chidambaram: Govt of the day on 2 occassions held that the way to demonetise all currency was the legislative way. Under Section 26 you cannot demonetise all series. The 'any' will always be contextual.

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Chidambaram: Guidelines are either found in the preamble, or in the statment of reasons/objectives. Nothing in these that will guide Section 26 of the RBI Act, no other provision throws light on it.

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Chidambaram reads from Act.

Chidambaram: Earlier only 1 Re. coin issued by Govt, rest by Governor.

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Chidambaram: Now only 20 Rs coins I have seen. Therefore ...

Justice Ramasubramanian: Dr Venkatramanan had the ocassion of signing the notes as both Finance Secretary and Governor.

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Chidambaram: 24(2) uses the word Central govt may on the recommendation of the RBI, 26 says the RBI Board may, by recommendation of the Central govt.
My submission is it is only if Central board recommends that GoI can act, that cannot be reserved. Here RBI meekly surrendered...

Chidambaram: after deliberating for an hour.

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Justice Gavai asks the Senior Counsel to respond to contention that Court cannot review economic policy.

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Chidambaram reads from pleadings on how RBI took the decision.

Chidambaram: Why are they holding the minutes back? These documents are absolutely necessary to decide the issue. We must know what material they had, what consideration they did. We are not considered with the...

Chidambaram: decision but with the process of decision making.

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Chidambaram: They need to show they had considered the enormity and proportionality of their decision. Without it, it is blind leading the blind.

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Chidambaram: They can also claim privilege only if they claim on Affidavit. Not as per RK Garg.

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Chidambaram: Suppose it was 24 minutes (after Central board resolution) that Govt approved it, would Court have upheld it given the ramifications? There is no eg of demonetisation in the circumstances aa was done. Why can they not defend the decision making process? They ...

Chidambaram: should be able to confidently defend.

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Justice Nagarathna: The ld AG submitted that the Central government cannot look at it as a myopic quotation. Since they have to look at National security, ridding the economy of black money etc, can they not initiate the demonetisation process?

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Chidambaram: RBI Governors have said those two objectives cannot be achieved by demonetisation. They have to then do so by plenary power of legislation.

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Chidambaram: We are looking for a black cat in a white room, and whether it exists we do not know. My lordships may see if the decision making grounds were arbitrary or not and eschewed relevant considerations.

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Chidambram: Word monetary policy cannot stop this Court from looking into these things. Cannot be frightened citing experts took a call.

Justice Nazeer: Evidence Act says Court is expert's expert.

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Chidambaram: Black and fake currency will always be there. Demonetisation is never considered a part of monetary policy, that only deals with price stability and supporting growth.

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Chidambaram: They had to defer to the RBI.

[Reads from pleadings]

Chidambaram: It is their candour that they are saying some objectives may failed, but I am not asking my lords to decide on outcome but the process. Did the decision making take into account the enormity?
A bogey is our first saying it was validated by Parliament!
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*Correction*: bogey being raised

Chidambaram: So the Bill was passed because of its duties under the RBI Act, not to validate the exercise.

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Chidambaram: Bommai judgment is absolutely clear [reads]

Chidambaram: Power is not to demonetise 86%, some govt will demonetise 95% or more. In Parliament we would not have allowed it. Let them show deference to you and place the papers. Let the decison making be clear.

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Sr Adv Shyam Divan says he will take about 45 minutes.

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Bench adjourns the next matter to after the vacations.

Justice Nazeer: Next is miscellaneous week. Initially we thought it is a dead case and now see! (Laughs)

Adv: Can I appear on VC?

Justice Nazeer: 2 weeks? No we are tired.

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SC allows virtual appearance after noting that counsel had said.

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