Even if demonetisation objective was not achieved, entire exercise not invalidated: AG R Venkataramani to Supreme Court

Attorney General (AG) for India R Venkataramani argued before the Supreme Court on Monday that even if the initial objective of the 2016 demonetisation exercise was not achieved, the entire policy could not be invalidated [Vivek Narayan Sharma v. Union of India]..The AG urged a Constitution Bench of Justices S Abdul Nazeer, BR Gavai, AS Bopanna, V Ramasubramanian and BV Nagarathna to take a macro view of the government’s endeavours in battling black money, fake currency and terror financing instead of viewing demonetisation as a stand-alone measure.“Every minute of governance looks at targets. The five-year plan has targets and then over a period of time, targets are either met or not met for a number of reasons.”He said that the ground that the notification failed to achieve its objectives was not enough to strike down a law..He went on to state that the procedure adopted by the government as well as the Reserve Bank of India (RBI) was in consonance with the law, contrary to the petitioners’ contentions.“You are looking at the management of currency and declaration of certain instruments as legal tender. Is it possible to suggest that RBI or government will act in isolation?” the AG asked.He explained that the two act in consultation with each other when making important monetary policy decisions such as demonetisation.“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,” he added..Additionally, on the interpretation of Section 26 of the RBI Act, the Centre argued that when there was a choice between two interpretations, the Court should avoid the interpretation which would reduce the legislation to futility.The word “any” must receive such construction that would effectuate the policy of Section 26 (2), the AG said.The AG also stated that Section 26(2) did not amount to excessive delegation since the transfer of powers for management of currency by itself could not suffer the vice of excessive delegation..It was also put before the Court that since the Specified Bank Notes (Cessation Of Liabilities) Act, 2017 had virtually incorporated the notification in Section 3, the Parliamentary law must be considered, and not the notification.“Then notification does not exist as an independent instrument of law and Parliament has applied its mind. Therefore, what we’ll be looking at is Parliamentary law and not the notification.”.On the issue of the cut-off date for exchanging old notes being arbitrary, the AG said that it was impossible in a matter like this to consider all permutations and combinations.“I am not saying that hardship has to be completely ignored. Hardships will inevitably happen, I am not closing my eyes to that at all. The government also did not close its eyes to it.” he explained..The AG argued against the contention of the petitioners that the Court ought to apply the test of proportionality in this case to test the validity of the exercise.“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.”.After the Central government concluded its submissions, Senior Advocate Jaideep Gupta began presenting the RBI's case..The senior counsel summarised the points he would be addressing:1) The withdrawal of all series of denominations is well within the powers of the RBI as per Section 26 (2) of the RBI Act;2) The proposition that unless phrase “any” in sub-section 2 is read as “some”, the power conferred by such section becomes unguided, uncanonised and arbitrary is without basis;3) The procedure laid down under 26(2) has been followed and the process cannot be criticised on the ground of procedural lapse by the RBI or Central government;4) The decision to recommend and the decision of the cabinet to accept recommendation is not subject to judicial review;5) In the sphere of economic policy, the Wednesbury principles are of little or no use. The principle of proportionality also cannot be applied to judicial review of economic policy;6) The petitioners have failed to establish that relevant factors have not been considered;7) It is extremely important that no restrictions are placed on economic policy-making by RBI or Government of India by laying down guidelines;8) The 2017 Act has given relief to certain categories of people, subject to verification by the RBI. Individual cases of hardships that have not been provided by the Act, cannot be gone into;9) Section 4 of the 2017 Act is unconstitutional is without any basis;10) Courts cannot issue futile or academic writs when an issue has become infructuous. Declaratory relief in such cases will not be given if it involves factual adjudication..The Court will continue hearing the RBI's arguments tomorrow..Previously, the court heard Senior Advocates P Chidambaram and Shyam Divan, who appeared for the petitioners. Read a detailed report on their arguments here and here. Read more about the Central government's affidavit here..[Read our live-coverage of the hearing below]