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2016 demonetisation was deeply flawed, P. Chidambaram tells SC
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IANS | 24 Nov, 2022
Senior
advocate and Congress leader P. Chidambaram on Thursday told the
Supreme Court that demonetisation of Rs 500 and Rs 1000 currency notes
was "deeply flawed".
A five-judge bench, headed by
Justice S.A. Nazeer and comprising Justices B.R. Gavai, A.S. Bopanna, V.
Ramasubramanian, and B.V. Nagarathna, is hearing a clutch of petitions
challenging the Centre's 2016 decision on demonetisation.
Chidambaram,
representing one of the petitioners, submitted that demonetisation
impacted every citizen of the country and questioned Centre's power to
invoke Section 26 of the Reserve Bank of India Act to demonetise
currency notes.
He said the Centre cannot, on its own, initiate
any proposal relating to legal tender, which can only be done on the
RBI's central board recommendation and further argued that the
decision-making process should be struck down for being "deeply flawed".
"This is the most outrageous decision-making process which
makes a mockery of the rule of law," he said, adding that the RBI has
the right to regulate the issue of bank notes.
Chidambaram said
over 2,300 crore currency notes were demonetised against the backdrop of
300 crore notes per month capability of the government's printing
presses, and this would mean it would take several months to print
notes.
He said the annual report of the RBI for 2016-2017 stated
that only fake currency of a value of Rs 43 crore was detected in the
nearly Rs 15.31 lakh crore worth of currency exchanged.
As the
bench queried him as to what can be done now, it is over now,
Chidambaram replied if the apex court holds that the demonetisation
process was flawed, that will be good enough and added that the
government will not indulge in such "misadventure" in the future.
The
top court will continue to hear next week the batch of petitions
challenging the Centre's November 8, 2016 decision to demonetise the
currency notes of two denominations.
In an affidavit, the Centre
has told the Supreme Court that the November 2016 decision to withdraw
legal tender of Rs 500 and 1,000 currency notes was one of the critical
steps in the series of transformational economic policy steps and this
decision was taken after extensive consultation with the RBI and advance
preparations.
The Ministry of Finance, in an affidavit, said:
"The withdrawal of legal tender character of a significant portion of
total currency value was a well-considered decision. It was taken after
extensive consultation with the RBI and advance preparations".
It
further added that demonetisation was also a part of larger strategy
for combating the menace of fake money, terror financing, black money
and tax evasion. "The notification issued on 08.11.2016 was a major step
to fight the menace of fake currency notes, storage of unaccounted
wealth and financing of subversive activities," it said.
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Customs Exchange Rates |
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