Order
1. Writ petitions are admitted. Issue notice on the writ petitions, special leave petitions and other applications. The respondents may file reply affidavit within six weeks. Rejoinder, if any, within three weeks thereafter.
2. We have heard the learned counsel for the parties at some length. In our opinion, the following important questions fall for our consideration in this batch of petitions:
2.1 (i) Whether the Notification dated 8-11-2016 is ultra vires Section 26(2) and Sections 7, 17, 23, 24, 29 and 42 of the Reserve Bank of India Act, 1934?;
2.2 (ii) Does the Notification contravene the provisions of Article 300-A of the Constitution?;
2.3 (iii) Assuming that the Notification has been validly issued under the Reserve Bank of India Act, 1934, whether it is ultra vires Articles 14 and 19 of the Constitution?;
2.4 (iv) Whether the limit on withdrawal of cash from the funds deposited in bank accounts has no basis in law and violates Articles 14, 19 and 21?;
2.5 (v) Whether the implementation of the impugned notification(s) suffers from procedural and/or substantive unreasonableness and thereby violates Articles 14 and 19 and, if so, to what effect?
2.6 (vi) In the event that Section 26(2) is held to permit demonetisation, does it suffer from excessive delegation of legislative power thereby rendering it ultra vires the Constitution?;
2.7 (vii) What is the scope of judicial review in matters relating to fiscal and economic policy of the Government?;
2.8 (viii) Whether a petition by a political party on the issues raised is maintainable under Article 32?; and
2.9 (ix) Whether District Cooperative Banks have been discriminated against by excluding them from accepting deposits and exchanging demonetised notes?
3. Keeping in view the general public importance and the far-reaching implications which the answers to the questions may have, we consider it proper to direct that the matters be placed before the larger Bench of five Judges for an authoritative pronouncement. The Registry shall accordingly place the papers before the Hon'ble the Chief Justice for constituting an appropriate Bench.
4. We may now advert to the issues which are of immediate concern. The first issue is about the restriction placed on the District Cooperative Banks to accept deposits or exchange of demonetised currency of Rs 500 and Rs 1000. Two broad aspects have been presented before us. The first is about the complete exclusion of the District Cooperative Banks from accepting deposits or exchanging demonetised notes. The second is about the avoidable financial stress on the District Cooperative Banks because of freezing the deposited demonetised notes received by the District Cooperative Banks between 11-11-2016 and 14-11-2016, which is stated to be around Rs 8000 crores (Rupees eight thousand crores).
5. The first point whether the decision of the authority to forbid the District Cooperative Banks from accepting deposits and exchanging demonetised notes, may require detailed hearing. It is only upon acceptance of challenge to that decision, that the bar placed on the District Cooperative Banks can be lifted. We are not inclined to suspend that bar as an interim measure. This is especially when the decision is the outcome of financial policy which the respondents claim to have adopted on the basis of experience. In particular, an apprehension has been expressed about the possibility of demonetised notes being converted or exchanged without proper audit, control or supervision. The District Cooperative Banks, it has been urged, are not directly under the control of Reserve Bank of India but within the purview of Nabard. The dispensation provided by Nabard is, according to the Attorney General, not in conformity with the strict regime provided under the provisions of the Banking Regulation Act, 1949 and the Reserve Bank of India Act, 1934.
6. Reverting to the second aspect, of District Cooperative Banks being precluded from utilising the demonetised notes deposited with them between 11-11-2016 to 14-11-2016 (when it was so permitted by Reserve Bank of India), the learned Attorney General has invited our attention to the written instructions received by him from the Under-Secretary to the Government of India dated 14-12-2016. The relevant extract of the said Letter reads thus:
“In this regard, it is to inform that as regards the deposits of specified bank notes (SBNs) collected by DCBs, RBI has recommended that the SBNs collected by the DCBs between 10-11-2016 and 14-11-2016 may be exchanged with their linked currency chests after a 100% audit of the veracity of the KYC documents of the SBN depositing customers of DCCB, is conducted by Nabard, the supervisor and to the extent of such verified SBNs only. For SBNs deposited by Primary Agricultural Credit Societies (PACS) also, similar 100% audit of the KYC documents of the members of the PACS should be conducted by Nabard and to the extent of such verified SBNs only, exchange value will be given by the linked currency chest. In either case, the linked currency chest will subject those SBNs to usual checks, especially relating to finding out FICN.”
For that purpose, suitable notification can be issued by the competent authority within two days. We commend to the competent authority to do so.
7. The learned counsel for the District Cooperative Banks, however, submitted that Reserve Bank of India must assure that the entire amount offered by the District Cooperative Banks for exchange after due verification in the form of demonetised notes, will be duly replaced by commensurate amount of legal tender notes contemporaneously. 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 demonetised currency with the legal tender currency. We accept the assurance given by the learned Attorney General in this behalf.
8. The other broad point was about extending the time-limit for exemption for use of demonetised currency notes of Rs 500 and Rs 1000 at specified counters as per the relevant notifications issued in that behalf by Reserve Bank of India. It was contended that the exemption period provided in the notification concerned is expiring. Hence, it will not be possible to deposit the demonetised notes at specified counters thereafter, even in case of emergency situation like hospitalisation, travel by railway or air, etc. In our opinion, 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.
9. The other serious grievance made by the petitioners is about the denial of right to withdraw the prescribed amount of Rs 24,000 per week per account-holder, in spite of notification being issued by Reserve Bank of India permitting such withdrawal. It was submitted that if the Government has issued such notification after due consideration, it is obliged to ensure that its commitment made under the said notification is implemented without any exception. The ground reality, however, contends the learned counsel, is that the banks are refusing to pay full amount of Rs 24,000 per account-holder per week on the ground of non-availability of enough volume of legal tender currency. According to the learned Attorney General, the Government has already made it amply clear that it would take around 50 days' time to streamline the cash flow. That period is still not exhausted. He submits that as of now Reserve Bank of India has been able to infuse around Rs 5,00,000 crores (Rupees five lakh crores) of the new legal tender notes in the form of Rs 500 and Rs 2000. That is almost over 40% of the amount of demonetised notes already deposited with the banks. Further, the authorities are working to the best of their ability to defuse the crisis of cash flow situation by printing new notes.
10. It is further submitted that for the nature of decision taken by the Government—to unearth the black money or unaccounted money and to dry up the terror fund and defeat the attempt of circulation of large-scale counterfeit currency, maintaining complete secrecy of such a decision was imperative. For that reason, new currency notes could not be printed well in advance. He submits that the old demonetised notes will be replaced by new legal tender notes in the form of Rs 500 and Rs 2000 progressively in right earnest. Considering the stand taken by the learned Attorney General, we may commend to the authorities to fulfil their commitment made in terms of the stated notification permitting withdrawal of Rs 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.
11. In our opinion, besides the observations made hitherto, no other direction can be given at this stage by way of an interim relief.
12. That takes us to the transfer petitions filed by the Union of India for withdrawing all the writ petitions/proceedings pending in the various High Courts across the country and to hear those cases along with the writ petitions pending in this Court. In our opinion, 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 High Court concerned.
13. We further direct that if any other writ petitions/proceedings are pending in any High Court, further hearing of those matters shall also remain stayed in terms of this order.
14. 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 demonetise the old notes of Rs 500 and Rs 1000, as the entire issue in relation thereto is pending consideration before this Court in the present proceedings.
15. We make it clear that the petitioners before the High Court(s) or any other court in India in respect of proceedings already instituted on the subject-matter under consideration before this Court, will be free to intervene in the writ petitions pending consideration before this Court on the subject-matter of demonetisation of old currency notes of Rs 500 and Rs 1000, if so advised.
16. The Registry shall place the matter before the Chief Justice for further orders.