Demonetisation Challenge: "What Can Be Done Now?", Asks Supreme Court; Lay Down Law To Prevent "Similar Misadventures" In Future, Says P Chidambaram

A Constitution Bench of the Supreme Court on Thursday continued hearing a batch of 58 petitions challenging the controversial decision of the Union Government to demonetise currency notes of Rs 500 and Rs 1000, effectively leading to 86% of the currency being pulled out of the economy in one fell swoop. To illustrate how cash usage has become more robust despite the government's claim that the high-value banknote demonetisation in 2016 made way for a "cash-less" economy, Chidambaram informed the Bench that the total value of the currency in circulation increased from Rs 17.97 lakh crores in 2016, at the time of demonetisation, to Rs 32.18 lakh crores today. The fact that it was the Central Government that had issued a "virtual command", which was then "merely and meekly" accepted by the Reserve Bank, demonstrated a "perverse reversal of procedure", the senior counsel contended. Section 26 Must Be Either Read Down or Struck Down as Unconstitutional The main submissions put forth by the former Finance Minister were with respect to the width and the breadth of Sub-section of Section 26 of the RBI Act, which empowers the central government, on the recommendation of the Reserve Bank, to declare that "any series of banknotes of any denomination" would cease to be legal tender. Other Submissions Chidambaram also contended that the government had designed "false and illusory objectives" to justify demonetising Rs 500 and Rs 1000 currency notes.