The Madras High Court Bench here on Thursday welcomed the announcement made by Prime Minister Narendra Modi on Tuesday demonetising Rs. 500 and Rs. 1,000 notes and hoped that the decision would spur the nation’s economic growth by curbing corruption, storage of unaccounted wealth and circulation of fake currency notes for financing subversive activities such as drug trafficking and terrorism.
Dismissing a public interest litigation petition filed by M. Seeni Ahamed, State general secretary of the Indian National League, challenging the Centre’s decision, Justices S. Nagamuthu and M.V. Muralidaran said: “It (demonetisation) is a welcome measure and any panic among the general public is unnecessary. The temporary hardship faced by people could not be a reason for this court to interfere in economic policy decisions of the State.”
Beginning the judgement with a reference to the Prime Minister’s address to the nation on Tuesday, the Division Bench pointed out that the petitioner’s counsel had questioned demonetisation of the two high value currency notes on the ground that the sudden decision had caused great hardship to the common man of the country, and hence, it was in violation of the fundamental right to life guaranteed under Article 21 of the Constitution.
Stating that it was not persuaded by such a “hollow” argument, the Bench recalled that the Centre had taken a similar demonetisation measure about 40 years ago by enacting the High Denomination Bank Notes (Demonetisation) Act, 1978. Then, the Constitutional validity of the Act was challenged before the Supreme Court on the ground that it was in violation of the fundamental right to property under Article 19(1)(f) of the Constitution.
A Constitution Bench of the Supreme Court rejected the argument and dismissed all the petitions on August 9, 1996. “Subsequently, Article 19(1)(f) was repealed, and as of now, right to property is no more a fundamental right. When the Supreme Court had held that demonetisation does not violate the right to property even at a time when it was a fundamental right, it is difficult for us to hold now that the recent demonetisation measure violates any other fundamental right,” the judges said.
‘Notice not possible’
On the argument advanced by the petitioner that the Centre ought to have issued prior notice and given sufficient time for the people to make alternative arrangements before demonetising the two currency notes, the judges said: “The law does not contemplate prior notice before implementing such decisions. Further, in our considered view, the object behind demonetisation itself would have been defeated if any prior notice had been issued by the Centre.”
They went on to state: “Of course, there has occurred some inconvenience to the common man, but at the same time, it cannot be forgotten that people affected by stashing away of black money is the poor and middle class. Any fall in economy will have an adverse effect only on the common man. Hence, the common man has to yield to such measures for curbing anti-social activities such as corruption, storage of unaccounted wealth and use of counterfeit currency for terrorist activities.”
Stating that the Centre was aware of such possible hardships and had taken various measures to ameliorate them at the earliest, the judges concurred with Assistant Solicitor General (ASG) G.R. Swaminathan that the power of judicial review could not be exercised to test the correctness of an economic policy decision taken by the government and give a finding as to whether demonetisation of the currency notes would lead to expected growth of the economy or not.
They also recorded the submission of the ASG that though the denomination of a Rs. 2,000 currency note, let into circulation by the Reserve Bank of India from Thursday, had not been specified in the RBI Act, 1934, the Union Finance Ministry had notified the new denomination on Tuesday by exercising its powers under Section 24(2) of the Act.
