DEMONETISATION Valid Or Not? : Supreme Court Constitution Bench Hearing- LIVE UPDATES

Chidambaram emphasised the opinion of Sir Chintaman Dwarakanath Deshmukh, the first Indian to be appointed as the Governor of the RBI.

"I can only infer that RBI Governor was reluctant, which is why they brought a separate act."

Chidambaram takes the court through RBI's own publication on demonetisation.

"This is what the RBI thought. This is history, but history throws light, Milord."

Chidambaram: There are two steps in demonetising currency - first is withdrawal, and second is to go to the Govt which then declares that it is no longer legal tender. I wanted to demonstrate how reasonable, considered power is exercised.

Chidambaram: In phases, without causing any inconvenience, RBI withdraws old notes. The public is given sufficient time to exchange the notes.

BVN J: This withdrawal of old series isnt demonetisation because it continues to be legal tender.

Chidambaram: This is application of mind, exercising your limited power...This is not S 26(2). But this is an example of how the RBI goes about it. 

Chidambaram: RBI has been following a policy of phasing out certain series of banknotes from time to time. In 2014, for instance, it withdrew all older series of banknotes printed before 2005.

Chidambaram: When the RBI proposes the withdrawal of any one or more series of denominations, it must mean that there has been application of mind, relevant factors have been taken into consideration. This is a constitutional power.

Chidambaram: If you allow such a wholesale power, nothing needs to be taken into account, and nothing needs to be eschewed. That is an absolute power. 

Chidambaram: What if the govt decides to demonetise 99.99% of the currency? Can this be permitted? The Parliament was in dark about this.

Nazeer J: Are you giving up your first argument?

Chidambaram: What are the guidelines that the Parliament has prescribed?

Gavai J: There are in-built safeguards. Govt cannot do it on its own, but has to act on the recommendation of the Central Board?