Opposition MPs on Tuesday moved a resolution in Lok Sabha against the ordinance on Specified Bank Notes Cessation of Liabilities, promulgated by the President on Dec 30. N K Premachandran, RSP MP from Kollam (Kerala), tells Liz Mathew that the government’s move to bring a Bill on note ban is illegal.
What were your reservation against the Bill?
Demonetisation announced by the Prime Minister and the subsequent notifications were illegal. They did not have any legal legislative backing. Demonetisation can be done only by a legislation, not by notification. When demonetisation notification is made under Section 26(2) of RBI Act, the legal tender character and guarantee were live by virtue of Section 26(1) – that all currencies issued by RBI are guaranteed by the government. According to Section 34(1), the government and RBI have the liability to honour all currencies in circulation. Without making appropriate changes in Section 26(1) and 34(1), the notification issue was incomplete, improper, and illegal.
So you call it illegal?
Yes, Manmohan Singh’s observation that it was a legalised plunder is not correct. It is an illegal plunder.
While introducing the Bill, Arun Jaitley argued that RBI was competent to pass the order.
By virtue of notification 3407, all currencies of Rs 1,000 and Rs 500 ceased to become legal tender. That means legal tender character of the currencies were not totally lost. Subsequent notification 3408 said that Rs 1000 and Rs 500 could be used for limited purposes – in hospital, petrol pumps, etc. Section 26(2) of RBI Act does not empower the government to revive notes which were already declared as ‘not legal tender’. How can you revive the life of a person who is already dead? Both notifications are illegal. I think even Arun Jaitley is aware of the legal position…that’s why he has come with a legislation.
You are saying it may not withstand judicial scrutiny?
The matter is pending before Supreme Court and a Constitution Bench is expected to look into it. Suppose the apex court declares it illegal, who will be responsible for all the chaos and deaths?
The PM argued that it was a step taken for the poor — a decision the earlier government could not take due to fear of electoral backlash.
Demonetisation has adversely affected the poor and the marginalised sections, not the rich. The previous government did not go for demonetisation not due to poll prospects but because it understood the evil consequences of demonetisation.