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    Indian demonetisation is null and void

    Posted by Ivo Cerckel on May 22nd, 2017

    This Presidential power cannot be delegated [to government].

    Moreover, the notification of the decision does not indicate its legal basis.

    1.
    On 8 November 2016, the Government of India announced the demonetisation, the withdrawal of legal tender status of all rupee 500 and eupee 1,000 banknotes of the Mahatma Gandhi Series.

    In January 2017, President Pranab Mukherjee delivered a speech on why demonetisation is bad news for India.
    (FULL TEXT: President Pranab Mukherjee’s speech on why demonetisation is bad news for India
    New Delhi, January 5, 2017 | UPDATED 01:15 IST
    http://indiatoday.intoday.in/story/president-pranab-mukherjee-demonetisation-pm-modi-indian-economy-pluralistic-economy/1/850502.html

    The blogger has no knowledge of Indian (constitutional) law but this speech seems to mean that demonetisation was not a decision of the President.

    The RBI (Reserve Bank of India, the country’s central bank) notice dated : Nov 08, 2016 Withdrawal of Legal Tender Status for ? 500 and ? 1000 Notes: RBI Notice Press Release : 2016-2017/1142
    https://rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=38520
    “Government of India vide their Notification no. 2652 dated November 8, 2016 have withdrawn the Legal Tender status of ? 500 and ? 1,000 denominations of banknotes of the Mahatma Gandhi Series issued by the Reserve Bank of India till November 8, 2016.
    This is necessitated to tackle counterfeiting Indian banknotes, to effectively nullify black money hoarded in cash and curb funding of terrorism with fake notes.
    +
    “For more details members of the public may visit RBI website http://www.rbi.org.in and Government web site http://www.finmin.nic.in for further information and details.” END OF QUOTE

    One immediately sees that neither RBI nor the government of India provide the legal
    (as opposed to the factual reasons,
    i.e, as opposed to the tackling of counterfeiting Indian banknotes, the effective nullifying of black money hoarded in cash, the curbing of the funding of terrorism with fake notes)
    which allow “them” (it will appear that this is a power of the President and this power cannot be delegated) to decree the withdrawal of the Legal Tender status of certain denominations of banknotes.

    This means that there is a problem with the motivation of demonetisation.

    Googling for
    “\www.finmin.nic.in demonetisation”
    https://www.google.co.in/#q=www.finmin.nic.in+demonetisation
    leads one of press release with the following letterhead
    ” Government of India
    ” Ministry of Finance
    ” Department of Economic Affairs
    ” *******
    ” Press Release”

    The Office of the President is not being mentioned.

    Disclaimer: the blogger has no knowledge of Indian (constitutional) law.

    2.
    What’s in a name?

    An article “Why demonetisation notification is illegal and violates the Constitution” in the December 11, 2016 Economic Times says that the demonetisation notification is also likely unconstitutional on three counts. First, it violates the constitutional right to property under Article 300A. In Jayantilal v RBI, in the context of the 1978 demonetisation, the Supreme Court held that demonetisation is not merely a regulation of property, as the government is presently arguing, but constitutes compulsory acquisition of a “public debt” owed to the bearer of the notes declared illegal.
    http://economictimes.indiatimes.com/news/economy/policy/why-demonetisation-notification-is-illegal-and-violates-the-constitution/articleshow/55916594.cms

    The case is
    Jayantilal Ratanchand Shah vs Reserve Bank Of India & Ors on 9 August, 1996
    Equivalent citations: JT 1996 (7), 681 1996 SCALE (5)741
    https://indiankanoon.org/doc/1199635/

    As he emphasised already, this blogger has no knowledge of Indian (constitutional) law.

    The blogger can however read.

    Oxford University Press timely published in 2016 “The Oxford Handbook of the Indian Constitution”, edited by Sujit Choudhry, Madhav Khosla, and Pratap Bhanu Mehta.

    The blogger then goes searching for this judgment in the said Handbook. The Handbook does not mention the case. This is no critique, not of the Handbook, nor of the Economic Times.

    In a previous life in the Southern Low-Countries, Punjabi refugees helped this blogger practice legal gymnastics and even legal acrobatics.

    The blogger started this section 2.2 by asking “What’s in a name?”

    The “Table of Cases” in the quoted Handbook refers to a case
    Jayantilal Amrit Lal Shodhan vs F.N. Rana And Others on 5 November, 1963
    Equivalent citations: 1964 AIR 648, 1964 SCR (5) 294
    https://indiankanoon.org/doc/1964341/

    the references to case are on pp 318 and 455 of the Handbook, says the “Table of Cases” .

    On p. 318, in Chapter 18 “Executive”, of the Handbook Shubhankar Dam quotes an excerpt from the 1963 judgment which this blogger understands as teaching that the power […] to declare a financial emergency [is not a power] of the Union Government; [ but that this power is] vested in the President under the Constitution and [is] incapable for being delegated or entrusted to any other body.

    Full excerpt
    The power to promulgate Ordinances under Art. 123; to suspend the provisions of Arts. 268 to 279 during an emergency; to declare failure of the Constitutional machinery in States under Art. 356; to declare a financial emergency under Art. 360; to make rules regulating the recruitment and conditions of service of persons appointed to posts and services in connection with the affairs of the Union under Art. 309-to enumerate a few out of the various powers-are not powers of the Union Government; these are powers vested in the President by the Constitution and are incapable of being delegated or entrusted to any other body or authority under Art. 258(1).
    https://indiankanoon.org/doc/1964341/

    3.
    Section 1 has demonstrated that the Office of the President is not being mentioned in the demonetisation notification.

    Section 2 has however demonstrated that the power to order demonetisation is not a power of the Union Government; but this power is vested in the President under the Constitution and is]incapable for being delegated or entrusted to any other body.

    Conclusion: demonetisation is null and void

    Ivo Cerckel
    ivocerckel@yahoo.com

    One Response to “Indian demonetisation is null and void”

    1. Ivo Cerckel Says:

      In my post. I said that declaring a financial emergency is not a power of the Union Government; but that this power is vested in the President under the Constitution and is incapable for being delegated or entrusted to any other body. I also said that the notification of the decision does not indicate its legal, as opposed to factual, basis or motivation. I therefore concluded that the notification is null and void. Those two arguments are linked of course. If the decision had indicated its legal basis, the reading of that basis would have made clear that this was a power reserved for the President.

      To demonstrate that the demonetisation decision had not been taken by the President, I invoked two things.
      One, the letterhead of the press release of the notification of the decision does not mention the Office of the President,
      Two, the President has criticised demonetisation.

      A third argument I forgot of course is that the announcement of the decision was made by Government and by Prime Minister but not by the President, If the President had taken the decision should it not have been the President or at least the Office of President who had to announce, or at least to publicise the decision in His (the President’s or at least his Office’s) name?

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