Home / Politics / Policy /  Demonetisation: Judicial review of fiscal policy impermissible, Centre tells SC

New Delhi: The centre on Friday told the Supreme Court that a judicial review of the demonetization scheme was “impermissible", even as the court raised questions about the scheme and its implementation.

Attorney general Mukul Rohatgi contended that the courts could not interfere with fiscal and economic policy. “Ultimately, the scope of judicial review must be decided," the government’s top law officer said.

A bench headed by Chief Justice T.S. Thakur was hearing a batch of petitions challenging the Reserve Bank of India’s (RBI) 8 November notification demonetizing Rs500 and Rs1,000 notes.

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The bench asked the government to consider providing some interim relief without affecting its objectives, such as fixing an assured minimum withdrawal limit.

Senior advocate P. Chidambaram, representing one of the petitioners, pointed out that banks have been facing a shortage of funds and are not in a position to even disburse Rs24,000 a week per person, in spite of government orders.

“When you fixed the cap at Rs24,000 per week on your own, you must have checked if the system can take that burden, haven’t you," the court asked the attorney general.

“See if you can fix a limit below, which the bank manager can’t send you away or ration currency," the apex court bench added.

The government has sought the transfer of various cases filed in the high courts against demonetization to Supreme Court. The apex court, on its part, said that it would frame broad questions on the petitioners’ challenges to the demonetization scheme.

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“Depending on the questions framed, the high courts can take a call whether to hear the cases or send them here instead," the bench observed.

Lawyers for the petitioners, Kapil Sibal and Chidambaram, offered suggestions to the court on how the questions could be framed.

The court is also likely to examine whether RBI’s notification scrapping Rs500 and Rs1,000 notes needed the Parliament’s nod, which was objected to by the government. To this, Sibal countered with “the power given to RBI by Parliament is unconstitutional. It is a case of excessive delegation".

Other issues that are likely to be taken up by the apex court include whether district cooperative banks can be barred from accepting and disbursing scrapped currency, procedural lacunae and gaps in the implementation of the scheme.

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The government, however, clarified there is no change in its stand as far as district cooperative banks are concerned.

Rohatgi also told the court that more than Rs11.5 trillion has come back into the system since 8 November and that RBI has introduced more than Rs4 trillion in new currency. “It has far exceeded our expectations," he said.

The government also said that given the push for a digital economy, the entire value of scrapped currency might not be replaced with new notes. The court, however, said that “pushing the country to a digital era cannot be an objective of demonetization".

The case will be heard next on 14 December.

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