It's regulation, not deprivation, government tells SC on notes ban

It's regulation, not deprivation, government tells SC on notes ban

"The act of cancelling legal tender character of existing series of Rs 500 and Rs 1,000 bank notes is only a reasonable restriction and regulatory in nature", the government said in an affidavit filed on Thursday.

The government's affidavit in the Supreme Court defending the demonetisation decision was filed just a day ahead of crucial hearing in the matter in the top court.

The government also told the court that the demonetisation scheme does not amount to infringement of fundamental rights and is a "reasonable restriction".

The central government has told the Supreme Court that the decision to recall old Rs 500 and Rs 1,000 notes was done at the behest of the RBI Board.

In its affidavit, the Centre said there was a clear distinction between "regulation" and "deprivation" as the public was "not (being) deprived from using the money or the value for the legal tender" they possess.

It also defended its decision to introduce Rs 2,000 denomination currency notes, saying that it was done in view of the erosion in the purchasing power of the rupee on account of inflation. Seeking to know the ground reality, the court said that the hearing on the validity of the note ban could take place later.

"Since the digitisation is in progress at desired pace, government has chose to stop the use of old Rs 500 notes at petrol pumps from December 2, which otherwise would have been till December 15", he said that this fact has been brought in the affidavit. The Centre submitted that the present value of Rs 1,000 currency note has eroded by 59.4 percent in PPP terms.

The Centre rejected arguments that the government has no power to demonetise as the authority is vested only with the RBI, which, it said, is under its management and control.

Earlier, a bench of Chief Justice T.S. Thakur and Justice D.Y. Chandrachud initially said it would first hold a hearing on the inconvenience being faced by the public and steps taken to address them.