We Gave The Recommendation For Demonetisation, All Procedures Followed : RBI Tells Supreme Court

Insinuating procedural impropriety without having concrete evidence, when allegations of procedural lapses were denied by both the central government and the Reserve Bank of India, was nothing but a 'fishing and roving enquiry', Senior Advocate Jaideep Gupta, appearing on behalf of the central bank, told the Supreme Court on Monday. "The process was followed. For instance, we have stated on affidavit that the quorum as determined by the regulations was met. In these matters, the burden typically lies with the person making an allegation. They have not said with certainty that the quorum requirements were not met, but only attempted to shift the burden onto us. This is a highly prejudicial line of argument," he submitted before the Constitution Bench hearing a batch of 58 petitions challenging the Union Government's decision to demonetise high-value currency notes of Rs 500 and Rs 1,000 in November 2016. The five-judge Bench, comprising Justices S. Abdul Nazeer, B.R. Gavai, A.S. Bopanna, V. Ramasubramanian, and B.V. Nagarathna, is considering, inter alia, the legality of the November 8 circular that set the policy in motion, six years after it sent shockwaves through the nation.Justice Nazeer categorically stated, "You have to answer only one question which is whether you were taken into confidence by the government before demonetisation or had some intimate knowledge about this policy decision." He added, "Frankly, there was no argument made against the Reserve Bank. The petitioners have only accused the Central Government of administrative impropriety. On the contrary, they have supported you." Gupta informed the Bench that the deliberations about the proposed monetary policy began in February, although it was conducted in a 'fragmented manner', in the interest of confidentiality. According to the senior counsel, secrecy and speed were of paramount importance in this process, without which the demonetisation exercise would be 'stillborn' from the beginning. In an attempt to illustrate, he said, "Momentous decisions are taken in this court in a matter of minutes. Similarly, when the Central Board of the Reserve Bank convenes, they have readily available information." Justice Nazeer sharply rebutted, "Do not compare this court with that. Do you know for how many days we study to get ready for a miscellaneous day?" Conceding, Gupta explained that his intention was to demonstrate that the time taken or the speed at which the recommendation was prepared did not automatically imply that there was 'something wrong' with the decision-making process or the decision itself. Engaging head-on with the claim that the recommendation to demonetise high-value currency should have emanated from the central bank under Sub-section (2) of Section 26 of Reserve Bank of India, 1934, Gupta asserted that the last two steps in this process, that is, a recommendation by the Reserve Bank, and a decision from the Central Government, were materially complied with. "It is fallacious to argue that the process must be initiated by the Reserve Bank because the section does not talk about the process of initiation. It only says that the process will not end without the last two steps outlined in it," he elaborated. He also said, "A situation like this can be initiated in many ways, and most definitely, by the central government. Terrorism, for instance, is a problem about which the Reserve Bank does not have intimate knowledge. It is perfectly normal for the central government to raise the question, in response to which, the Reserve Bank formulates a recommendation. This recommendation could have gone either way. We could have said no. That is what happened during the last two demonetisation episodes." Then, he added, "Or, we could have said yes. And that is what we did in this case." Justice Bopanna asked again, "Were you consulted?" In response, Gupta succinctly replied, "We gave the recommendation."Earlier, Senior Advocate and formerinance minister, P. Chidambaram had vehemently argued that the decision-making process that led to the banknote demonetisation was "deeply flawed" and informed the Bench that the central government was still "holding back" four crucial documents that they had been directed to furnish. "We still do not have the November 7 letter from the Union Government to the Reserve Bank of India, the agenda note placed before the Central Board of the Reserve Bank, the minutes of the Central Board meeting and their recommendations, and the actual Cabinet decision on November 8. These documents have not yet been placed in the public domain, despite the passage of six years," the senior counsel had submitted. He had also told the Bench that the government had shied away from disclosing details such as who attended the critical November 8 meeting of the Central Board, whether the minimum number of directors as prescribed under the Reserve Bank of India Act, 1934 and the rules and regulations made under it, was present, or...

We Gave The Recommendation For Demonetisation, All Procedures Followed : RBI Tells Supreme Court

Awstika Das

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