Demonetisation Case: Opportunity for Supreme Court to settle relevance of "subsequent events" in deciding validity of executive decision

The hearing in the challenge to the demonetisation before the Constitution Bench of the Supreme Court threw up an interesting issue – whether subsequent events can be a ground to be taken into consideration while deciding validity of an executive decision.

The argument made by the petitioners was that the subsequent events have established that demonetisation has failed to tackle the so-called objectives i.e. fake currency, terrorism, drug trafficking, etc.

Interestingly, the petitioners had previously conceded that the said facts only demonstrate the incongruity of the decision and may not be a sound legal ground to support the challenge when it come to the parameters of the judicial review of the decision.

Mohinder Singh Gill judgment

This issue of relevance of subsequent events, while it continues to be grey, has seen a line of precedents beginning with the 1978 decision of the apex court in Mohinder Singh Gill v. Chief Election Commissioner.

In that case, the Supreme Court held that orders are not like old wine becoming better as they grow. To put it simply, it was held that the validity of the statutory orders must be judged on the grounds mentioned and cannot be supplemented by fresh reasons in the form of an affidavit or otherwise.

Otherwise, an order bad in the beginning may, by the time it comes to court on account of a challenge, get validated by additional grounds later brought out, the Court said.

Deviation from Mohinder Singh Gill's case

Subsequently, in the judgments in Chairman, All India Railway Recruitment Board v. K Shyam Kumar and PRP Export v. Chief Secretary, Govt. of Tamil Nadu, the Supreme Court created an exception for testing the validity of the orders by permitting to take into account "subsequent events in the larger public interest".

It was held that the decision-maker can always rely upon subsequent materials to support the decision already taken when a larger public interest is involved.

Interestingly words used were "decision-maker", though if the benefit of judicial review is extended to the decision-maker, it should also logically stand extended to the decision-challenger.

But certainly, there won’t be any doubt that it would include the decision-giver, that is, the Court, which can always look at the subsequent events (if the said exceptions are correct).

The Supreme Court in PRP Export decision said that the High Court in that case was "right in examining the subsequent events as well in a case where larger public interest is involved".

This exception carved out by the apex court now leads to an interesting development of law as regards the impact of post-decisional events in cases of larger public interest.

However, what is noteworthy is that both the said cases gave the benefit of the subsequent events to the State or its agencies.

Absurdities of deviation from Mohinder Gill

Justice Rohinton Nariman at the 105th Birth Celebration of Justice VR Krishna Iyer described the dilution of the Mohinder Singh Gill's decision as unfortunate. That is so, because decision-making has to stand on its own footing. Ends can never justify the means. This is because the exception clearly leads to certain absurdities.

For example:

- Once the decision maker is given the benefit, the same benefit will be claimed by the decision-challenger also and logically requires to be granted;

- Many such decisions would now be governed by the events which may or may not happen, leading to a lack of consistency in decision-making since it brings in the element of luck and destiny;

- An erroneous decision with favourable subsequent events will become valid while an impeccable decision followed by unfavourable subsequent events might become invalid;

But on the other hand, if the exception to Mohinder Gill’s case is accepted as the norm, it will lead to State’s decision being more rational and proportional. It will bring more transparency in the challenge and the judicial review process, more so when cases like demonetisation, etc. are under challenge.

Conclusion

The demonetisation case represents a good opportunity for the Supreme Court's Constitution Bench to authoritatively lay down the law on the above issues.

The Court can overrule the dilution of Mohindar Singh Gill's case in K Shyam Kumar and PRP Export cases.

Alternatively, it may lead the Court to look into petitioner's assertion of the subsequent events in the larger public interest which have failed to justify the demonetisation.

If so done, it will lead to a new development of law wherein the decision-challenger will also be able to take benefit of the exception created by K Shyam Kumar and PRP Export judgments. Thus, now the decision-challenger will stand on the same footing as the decision-maker in the process of judicial review.

Hopefully, the Court will choose to engage with these issues and bring some much needed clarity instead of shying away from it.

Masoom K Shah is a lawyer practicing before the Gujarat High Court.

The views are of the author and do not necessarily reflect the views of Bar & Bench.