Demonetization of High Denomination Bank Notes without Legislative backing to haunt Narendra Modi

At around 8:00 PM on 8 November, 2016, the Prime Minister of India, went to address the nation on national television DD, the decision by his Council of Ministers in conjunction with the Reserve Bank of India, of demonetization of High Denomination Currency Notes of Rs. 1000 and Rs. 500.

While the decision is without doubt laudable and bound to impact millions who may have hoarded a stock of dirty & black money / Fake Indian Currency Notes (FICN) at that point of time, there is a severe legislative lacuna in the Modi’s implementation of the Demonetization which will haunt the government when they bring crooks to face the law before judicial fora, simply because no legislation – An Act of Parliament or the more appropriate, Ordinance by President of India, as in previous cases of demonetization, the most recent in 1978 – exists to penalize or prosecute them.

The fact of the matter is that the demonetization has been brought into force by a mere statement of the Prime Minister and followed up with Press Releases / FAQs by the Ministry of Finance / Reserve Bank of India and not in a proper manner which would have involved an Ordinance approved by the Council of Ministers and the President of India and thereafter also presented before the Parliament of India for post-facto approval as a fait accompli.

There is a difference between Rule of Law and Rule by Decree. Rule by decree is a style of governance allowing quick, unchallenged creation of law by a single person or group, and is used primarily by dictators, absolute monarchs and military leaders. The expression is also sometimes used as a pejorative when describing actions of democratic governments that are perceived to unduly bypass parliamentarian scrutiny. Rule by decree allows the ruler to arbitrarily create law, without approval by a legislative assembly. (Source : Wikipedia)

Unfortunately, the course adopted by Modi Government falls squarely within the ambit of Rule by decree as distinguished from the preferred Rule of Law. Mind it, the confidentiality and shock factor of the impending news could have been maintained if the Presidential Ordinance route was taken, something for which precedents exists – the 1978 Presidential Ordinance on Demonetization (The High Denomination Bank Notes (Demonetisation) Act, 1978).

We must note clause (1) of Article 20 of The Constitution of India, which reads as “No person shall be convicted of any offense except for violation of the law in force at the time of the commission of the act charged as an offense, nor be subjected to a penalty greater than that which might have been inflicted under the law in force at the time of the commission of the offence.

This leads us to a peculiar situation where actions such as ::

(i) continued acceptance by unscrupulous persons of demonetized currency which had ceased to be legal tender after 12:00 PM on 8 November 2011.

(ii) other violations of the provisions of Press Releases by Ministry of Finance, Government of India and the Reserve Bank of India;

are public wrongs but not illegal because there is no legislation / law in force at the time of the commission of the act charged as offense which declares it to be illegal and prescribes provisions for penalizing and / or prosecuting such acts / offenses.

For Example, Section 4 of the 1978 Act (supra) prohibited transfer and receipt of high denomination notes after demonetization. Section 10 of the 1978 Act (supra) provided for penalties & prosecution for violations of the 1978 Act.

This misjudgement by the Narendra Modi Government in implementing a proposal of such humongous impact on the people and economy of India without a legislative backing has left a gaping loophole which will definitely be exploited by the unscrupulous.

The Courts are in my opinion unlikely to be lenient on the Narendra Modi Government on a matter which involves the Fundamental Rights (here Article 20) enshrined in the Constitution of India, howsoever, good and noble the intentions of the Government of the day maybe. The Courts have taken the liberty, at great lengths in the past, in the name of interpretation / construction of statutes, supplied a casus omissus in a section or proviso thereto in the name of ironing out the creases but none to the extent of creating or imagining a law where there exist none.

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