2016 (12) TMI 1015 - SC - Indian Laws

Demonetization - Forbid the District Cooperative Banks from accepting deposits and exchanging demonetized notes - Held that - The learned Attorney General on instructions submitted that the policy of replacement of legal tender notes as applicable to Public Sector Banks and other Banks will be applied even in the case of District Cooperative Banks for exchange of demonetized currency with the legal tender currency. We accept the assurance given by the learned Attorney General in this behalf. Extension of time limit for exemption for use of demonetized currency notes of ₹ 500/- and ₹ 1000/- at specified counters - Held that - Whether the exemption period should be extended or not must be best left to the judgment of the Government of the day with a hope that the Government will be responsive and sensitive to the problems encountered by the common man. Accordingly, we decline to issue any interim direction to the Government in the matter of extending the period of exemption and leave it open to the Government to take appropriate decision in that behalf, as may be advised. Denial of right to withdraw the prescribed amount of ₹ 24,000/- per week per account holder, in spite of Notification issued by the Reserve Bank of India permitting such withdrawal - Held that - Considering the stand taken by the learned Attorney General, we may commend to the Authorities to fulfill their commitment made in terms of the stated Notification permitting withdrawal of ₹ 24,000/- per account holder of the Bank per week to the extent possible and review that decision periodically and take necessary corrective measures in that behalf. In our opinion, besides the observations made hitherto, no other direction can be given at this stage by way of an interim relief. Writ Petitions/proceedings pending - Held that - It would be just and proper to withdraw all the Writ Petitions/proceedings pending in different High Courts across the country and to be heard by this Court along with the Writ Petitions which are already pending in this Court raising same or similar issues, to avoid multiplicity of hearing and conflicting decisions on the same subject matter. Accordingly, we issue notice in the respective Transfer Petitions and by way of interim direction, stay the further proceedings of the Writ Petitions/proceedings in the concerned High Court.We further direct that no other Court shall entertain, hear or decide any Writ Petition/proceedings on the issue or in relation to or arising from the decision of the Government of India to demonetize the old notes of ₹ 500/- and ₹ 1000/-, as the entire issue in relation thereto is pending consideration before this Court in the present proceedings.

Summary

Issues involved:
1. Validity of notification dated 8th November 2016 under the Reserve Bank of India Act, 1934
2. Compliance with Article 300(A) of the Constitution
3. Constitutionality under Articles 14 and 19
4. Legality of cash withdrawal limits violating Articles 14, 19, and 21
5. Procedural and substantive reasonableness under Articles 14 and 19
6. Excessive delegation of legislative power under Section 26(2)
7. Scope of judicial review on fiscal and economic policy
8. Maintainability of political party petition under Article 32
9. Discrimination against District Cooperative Banks

Analysis:
The Supreme Court admitted multiple Writ Petitions and special leave petitions, raising crucial questions for consideration. The issues included the validity of the November 8, 2016 notification under the Reserve Bank of India Act, compliance with Article 300(A) of the Constitution, constitutionality under Articles 14 and 19, legality of cash withdrawal limits violating Articles 14, 19, and 21, procedural and substantive reasonableness under Articles 14 and 19, excessive delegation of legislative power under Section 26(2), scope of judicial review on fiscal and economic policy, maintainability of a political party petition under Article 32, and discrimination against District Cooperative Banks.

The Court highlighted concerns regarding District Cooperative Banks being restricted from accepting deposits or exchanging demonetized notes. The exclusion of these banks and the financial stress caused by freezing deposited demonetized notes were discussed. The Court declined to suspend the restriction, considering it a financial policy outcome based on experience. It was emphasized that District Cooperative Banks are not directly under the control of the Reserve Bank of India but NABARD, leading to differences in regulatory regimes.

Regarding withdrawal limits and currency exchange, the Court noted grievances about banks not honoring the prescribed withdrawal amount due to currency availability issues. The Government assured efforts to streamline cash flow and replace demonetized notes with legal tender progressively. The Court recommended fulfilling commitments made in notifications permitting withdrawals and periodic reviews for corrective measures.

Transfer Petitions by the Union of India aimed to centralize all related cases in the Supreme Court to avoid conflicting decisions. The Court stayed proceedings in High Courts to prevent multiplicity of hearings and conflicting judgments. It directed that no other court should entertain similar cases related to demonetization, consolidating all matters for consideration before the Supreme Court. Petitioners were allowed to intervene in pending proceedings related to demonetization.