Demonetisation: No Supreme Court stay, but CJI says ‘give relief’

New Delhi: The Supreme Court on Tuesday declined to stay the government’s order demonetising the Rs 500 and Rs 1,000 currency notes, but directed the Centre to take steps to reduce the inconvenience for citizens, saying “you cannot have a surgical strike” against them.

“You (Centre) can have a surgical strike against black money but you can’t have a surgical strike against the people of the country,” said a bench comprising Chief Justice T.S. Thakur and Justice D.Y. Chandrachud, pointing to the long queues at banks and ATMs. The judges, hearing a batch of four PILs against the demonetisation, told attorney-general Mukul Rohatgi: “We don’t want to question the government’s fight against black money, but something needs to be done to help the common man. We are only looking into if more measures can be taken to ease the situation. People should not suffer at any cost. Ensure that inconvenience caused to the public is minimal.”

“Carpenters, maids, vegetable sellers are dependent on cash. Are you capable of reducing their trauma? Your aim is to wipe out black money, but people are traumatised standing in queues for hours doing nothing,” the bench said.

“They (Centre) call it a surgical strike. You (Kapil Sibal, appearing for a petitioner) call it carpet bombing. The object of such measures is against people hoarding cash,” the judges said.

Observing that fighting the black money menace was a “laudable” step, they urged the Centre to “consider taking steps to ease the pain of the people” and also consider raising the limit of cash withdrawals. “Why can’t it be raised to a reasonable level so that there are less number of people standing in queues,” the bench said.

The suggestions include continued acceptance of the Rs 500 and Rs 1,000 notes in private hospitals, including diagnostic centres; all forms of public transport; all grocery, fruit ad vegetable stores; all wedding-related events and services; legal fees and bail bonds.

The CJI asked the attorney-general if steps like enhancing the withdrawal cap, asking more authorities to accept old currency till an extended date, more speedy replenishment of ATMs could be taken. The CJI said people hoarding money would have to deposit it, otherwise it is gone.

Explaining the magnitude of the problem, the AG said the government had so far received Rs 3.25 lakh crores in banks as deposits, but had new notes worth Rs 55,000 crores in circulation. He said because of a crunch in currency note availability, there will be some problem but the printing presses across the country were working day and night to meet the situation. The AG said increasing the withdrawal cap might result in a few people withdrawing more money while others may not get anything in the limited time.

The AG said: “Black money is used for terrorism and it ruins the economy. We estimate the total money (Rs 500 and `1,000 notes) in circulation to be Rs 15-16 lakh crores and expect people to deposit Rs 10-11 lakh crores in banks. The rest Rs 4-5 lakh crores was being used in the Northeast and Jammu & Kashmir to fuel trouble for India, and that will be neutralised. In a surgical strike, there will be some pain and suffering. The government is monitoring the situation round the clock. It has already issued six notifications granting exemptions till November 24, and increasing the limit. The highest authority (Prime Minister Narendra Modi) was constantly reviewing it.”

The CJI said: “The real purpose of the Centre is to force those who have hoarded cash at home to deposit it in banks and explain the source of the money. The Centre’s objective is not illegal, but in the process collateral damage is faced by the common man, who has to stand in queue for hours.”

Senior counsel Kapil Sibal argued that the Centre did not have the power under Section 26(2) of the RBI Act for blanket removal of currency notes of certain denominations but only to cancel a particular series. Mr. Sibal also argued that the public was being severely inconvenienced and the Centre had no power to restrict the amount of withdrawal of hard-earned money as banks were only “trustees of money and no power beyond that”.

“How can there be a cap on withdrawing my own money, that is also taxed,” Mr Sibal said, referring to the promise written on a Rs 500 currency note. He said 11 people had died so far and private hospitals were not taking cash for medical treatment.

He said: “People are dying; lakhs of poor people are without a ATM card or bank account. They are not getting wages. We are not asking for a stay of the demonetisation. People in rural areas and the Northeast are suffering a lot, patients can’t pay their bills in private hospitals, farmers can’t buy seeds as withdrawal limits are small.”

The court did not issue notices to the Centre or the RBI but asked them file a comprehensive affidavit detailing the steps taken so far and other proposed measures to ameliorate the harassment and inconvenience caused to citizens due to the demonetisation.