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

Nazeer J: What was the lifespan of an ordinance under the Govt of India Act? What happened to the 1946 ordinance? Was it made into an Act?

Chidambaram: I'll look into these.

BVN J: Are you suggesting that a separate law or ordinance had been made in this regard, it would have been valid?

Chidambaram: Yes, but if you do it by notification...That's a separate argument.

Chidambaram: Let's take one demonination - Rs 500. This could have been issued in many series. Why did they add 'any series' in S 26(2)? It must have some meaning. This is why they made a special legislation to demonetise all series in '46.

Chidambaram: They declared all notes of that denomination. Whether S 26 conferred that power is the question. The Parliament thought, and imo rightly, that the power was not conferred by the section. Hence, plenary legislation was passed.

Chidambaram: One, this plenary legislation was notwithstanding anything in S 26. Two, it is not any series of high denomination banknotes, but all. Three, this was done by a separate legislation.

Chidambaram takes the Court through the 1946 Act that prefaced the 1946 demonetisation.

"It was not under the RBI Act, even though it was available. They relied on the plenary legislation under the Govt of India Act"

Chidambaram: Parliament had the same power in 1946, 1978 as it had in 2016. Yet, before the earlier episodes, an act was passed, unlike in 2016, when no act was passed.

Chidambaram contended that S 26(2) should be read down. The word ‘any’ in the section should not be interpreted to mean ‘all’.

"Any series means any specified series and not all series."

Chidambaram points out that only high-denomination notes were demonetised in 1946 and 1978, which represented a very small proportion of the total currency in circulation, 11.5 % ('46) and 0.6% ('78).

"This is why there was no hue and cry."

Chidambaram talks about why currency is demonetised - currency becoming worthless, hyperinflation.

"Rs 10,000 was practically worthless. In 1968, even a 1000 note was a rare possession. If you had a 100 note, you were considered a rich man."