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

Chidambaram: My second submission is that this arbitrary executive action is violative of Aa 14, 19, 21. If not read down, it would be unguided and uncanalised power and an instance of excessive delegation, in the absence of any guidelines.

Chidambaram: The effect is the same as the 1946 and 1978 episodes, except that they passed a notification. The ques is, does S 26 give the govt this power? My submission is, no.

Chidambaram takes the court through the notification dated 08.11.2016 [3407(E)] by which denominations of the extant series of Rs 500 and Rs 1000 currency notes ceased to be legal tender.

Chidambaram: What has happened in 2016, has happened. But the court must now clarify that such an uncanalised power cannot be exercised by the executive government, so that this does not happen again.

Chidambaram: Suppose a new series is issued. Can an executive govt demonetise it the very next day? This power does not exist with the govt. If they even assert that they have this power, this court must set the record straight.

Chidambaram: It would also be absurd and arbitrary if this section conferred the power to demonetise notes that were issued a week earlier. You have to apply your mind, and then make a recommendation to the GoI, which may or may not accept.

Chidambaram: 1946 ordinance was made on Jan 12, 1946. S 26A was introduced in 1956.

"This is like making a double lock on the door. Ordinance of 1946 was one lock, S 26A was another lock."

Chidambaram: Therefore, S 26 gave limited powers to demonetise any series of a denomination. If you wanted to demonetise all series of a denomination, you had to pass a special legislation. That is the submission.

Chidambaram turns next to the 1978 ordinance that demonetised high-denomination banknotes, which was later replaced by an act.

"Why did they have to say notwithstanding anything contained in S 26, if this section conferred the power?"

Nazeer J: Another ques, when an Act governs a particular situation, for instance, S 26(2), can you exercise plenary legislation?

Chidambaram: Because S 26(2) did not contain the power to demonetise all series of a denomination.