The ‘unlawful’ and ‘vitiated’ decision of demonetisation affected the economy so much so that it is yet to recover fully, and claimed more than 100 innocent lives while standing in long queues to exchange their demonetised notes, experts tell Mohd. Naushad Khan and welcome the dissenting judgement of Justice B.V. Nagarathna, saying that it will be remembered in the history of the Supreme Court.

How can the consciousness of a man allow to write that demonetisation was a good chapter in the economic history of India when he himself had almost collapsed while standing in a long queue in front of a bank’s window to exchange demonetised notes even though the majority judgement of the 5-judge bench of the Supreme Court found no fault in demonetisation.

The dissenting judgement reflected the hardship, pain and suffering of the people as the dissenting Supreme Court Judge termed demonetisation decision as ‘unlawful’ and ‘vitiated’. Can we even bother to find out the meaning of demonetisation from the families of victims who had lost their lives in queues in front of banks with trauma of financial insecurities lurking in their conscious and subconscious minds and its impact on mental health?

The statement made by Parvesh, 38, a household help, to PTI is more than enough to visualise the gory tale of demonetisation. He said, “It was the worst time of my life. Worse than even Covid-19, because during Covid, there was at least some help from the government and society at large. But during demonetisation, we were left alone to suffer.” (The Telegraph)

Only researchers can find out the emotional and psychological impact of demonetisation on individuals and societies coupled with adversity of the pandemic. Apart from loss of life, the socio-psychological impacts can be more damaging than what meets the eye.

The Supreme Court in October last year said, “It is aware of the ‘Lakshman Rekha’ on judicial review of the government’s policy decisions but will have to examine the 2016 demonetisation decision to conclude whether the issue has become a mere ‘academic’ exercise.

However, the verdict was delivered on January 2 by a 5-judge Constitution Bench led by Justice S. Abdul Nazeer who was set to retire on January 4. SC, in its majority judgment, upheld the Centre’s demonetisation policy and said that decision making was not flawed.

According to Arun Kumar, a retired professor of Economics at the Jawaharlal Nehru University and author of Demonetisation and Black Economy, “Due to demonetisation, an economy that had been expanding at a healthy 8 per cent abruptly stopped for months. According to data, the economy has yet to be fully recovered from the damage it took in 2016. International experts have used India’s experience with demonetisation as a case study to better understand what happens to an economy when such a rapid action is taken.”

Professor Kumar added, “Undoubtedly, a broken process produced faulty policies that was ineffective, damaged democracy, and had a significant negative impact on the general people, particularly the poor. Images of closed markets, the closure of tiny and micro businesses, and long line-ups at banks are just a few examples that show this. The method used to develop a policy affects how it is implemented as well as the results. Can it then be stated that the procedure was legal, although formally, and that the accomplishment of the goals is irrelevant?”

On the judgement, Sankarshan Basu, a professor in the Finance and Accounting Area at the Indian Institute of Management Bangalore (IIMB), said, “The verdict of the SC is paramount and as an Indian it is the duty of every citizen of the country to respect and honour the same. But at the same time, one may obviously dissent and in this particular case, while I respect and honour the 4–1 verdict of the SC, I tend to agree more with the dissenting judgement of Justice Nagarathna.”

“There are enough and more flip-flops that the Central Government has performed in the whole demonetisation exercise, right from the day it was announced by the Prime Minister on November 8, 2016 till today. In a sense, if the government does believe that it can dictate the RBI into doing things, why was an independent RBI made subservient to the government via the Ministry of Finance? And if the law does allow the government to dictate terms, maybe the bench could have highlighted the flaw in that – something that implicitly Justice Nagarathna has done,” said Professor Basu.

“It seems that the honourable Court has not suspected the intention without going into the details of the immediate adverse effects on people and economy,” said Professor Naushad Ali Azad, who was head of the department of Economics and Dean, Faculty of Social Science, Jamia Millia Islamia.

Justice Nagarathna also said, “In India, human dignity is not only a value but a right that is enforceable. In a human-dignity-based democracy, freedom of speech and expression must be exercised in a manner that would protect and promote the rights of fellow-citizens. But hate speech, whatever its content may be, denies human beings the right to dignity.”

She added that given the specific submission of the petitioners herein that disparaging and vitriolic speeches expressed at various levels of political authority have exacerbated a climate bordering on intolerance and tension in the society, which perhaps may lead to insecurity, it may be appropriate to sound a strong word of warning in this regard.

In a 121-page judgment, Justice Nagarathna said, “A statement made by a minister, if traceable to any affairs of the state or for protecting the government, can be attributed vicariously to the government by invoking the principle of collective responsibility, so long as such a statement represents the view of the government also. If such a statement is not consistent with the view of the government, then it is attributable to the minister personally.”

Supreme Court lawyer Fuzail Ayuubi said, “The majority decision has construed reading of the word “any”, as appearing in Section 26, in favour of the Government and the RBI and has read it as meaning “all” series of notes. One of the strange foundations of the judgment is that the majority decision has held that the Central Government itself recommending to the Central Board of the RBI to recommend demonetisation under Section 26 would not vitiate the process, when that actually implies that the RBI’s recommendation had not been independent.”

“While the hearing itself was conducted far too late after the 2016 demonetisation had already taken its effect, the decision assumes particular importance as the record had been placed before the Court for the first and also the fact that the final decision was taken without much consultation with lightning speed i.e. in 24 hours. It is given this particular facet of the case that the dissenting opinion of Justice Nagarathna is significant and would become precedence in such future unilateral policy actions, as the key takeaway in the dissenting opinion is the need for consultation that the government should have conducted before such a far-reaching decision was taken,” said Advocate Ayuubi.

“The union government breathed a sigh of relief when the court upheld the decision to impose demonetisation, but the ruling has not provided many satisfactory answers. The 2016 demonetisation catastrophe, which claimed hundreds of lives and crippled the economy, was supported by the 4:1 bench decision, this is really unprecedented verdict and unconvincing, too. As per the RBI data 99.3% of the demonetised notes are now back in banks. The Supreme Court has maintained the suspicious silence over to the tall claims of the government justifying the demonetisation madness and the compromised role of the Reserve Bank of India,” said Dr Narender Nagarwal, Faculty of Law Delhi University.

He added, “By sudden demonetisation the government sucked out almost 87% of the money or `15.44 lakh crores in the system. More than 100 people died while waiting in long lines and stampede. The unorganised economy almost collapsed due to demonetisation disaster but the Supreme Court chose to remain unmoved. In this historical judgment, Justice Nagarathna’s dissenting decision will go down in the Supreme Court history and torment the State. Does absolute majority in the parliament also have the authority to destroy the economy, finance, health, federalism, and Constitutionalism? Justice Nagarathna also delves into the nature of the RBI’s role and why an agreement to a proposal forwarded by the Union government cannot be considered a ‘recommendation’ on the RBI’s part.”

“The demonetisation order was “an exercise of power contrary to law and unlawful”, said Justice Nagarathna, noting that the entire exercise was carried out in 24 hours. Justice Nagarathna’s observation is quite balanced and she raised valid points in her dissenting opinion that whether the premier central bank has visualised the problems associated with demonetisation or not. The RBI stand over demonetisation was shabby and against the public interest, the RBI is fully competent to make its opinion independent before the government and if the opinion is not confirmatory with regard to demonetisation decision, the government could have come with Ordinance way or through parliament procedure,” said Nagarwal.

On the dissenting judgement, Nagarwal said, “Justice Nagarathna’s opinion will be remembered in the history of Supreme Court as her observation was loud and clear about the whole process of demonetisation and what illegalities happened in the implementation and process. She observed that the government’s demonetisation decision was “vitiated and unlawful,” but said that the status quo could not be changed at this time and parliament should not be bypassed while carried out the demonetisation process.”

Similar Posts