VIVEK NARAYAN SHARMAversusUNION OF INDIA

                            [2016] 7 S.C.R. 798


A                     VIVEK NARAYAN SHARMA
                                     v.
                            UNION OF INDIA
                   (Writ Petition (Civil) No. 906of2016)
B                         DECEMBER 16, 2016
           [T.S. THAKUR, CJI, A.M. KHANWILKAR AND
                   DR. D.Y. CHANDRACHUD, JJ.)
    Demonetization:
c         Reserve Bank of India Act, 1934 - ss. 26(2), 7, 17, 23, 24, 29
    and 42 - Notification dated November 08, 2016 whereby old
    currency notes of Rs. 500 and Rs. 1000 demonetized - Vires of
    Notification - Nine questions framed - In view of general public
    importance and far reaching implications, matters referred to Five
    Judge Bench.
D
          Bar on District Cooperative Banks to accept deposits or
    exchange of demonetized currency of Rs.500/- and Rs. I 0001- -
    Challenge to - Held: Decision is the outcome of financial policy,
    adopted on the basis of experience - There is apprehension that
    the possibility of demonetized notes being converted or exchanged
E
    without proper audit, control or supervision - Furthe1; the District
    Cooperative Banks not directly under the control of the Reserve
    Bank of India but within the purview of NABARD - Dispensation
    provided by NABARD not in conformity with the strict regime
    provided under the provisions of Banking Regulation Act, 1949
F   and Reserve Bank of India Act, 1934 - Thus, no inclination to
    suspend the bar as an interim measure - Banking Regulation Act,
    1949 - Reserve Bank of India Act, 1934.
         District Cooperative Banks precluded from utilizing the
    demonetized notes deposited with them between lJ th to 14th
G   November 2016, when it was so permitted by RBI - Challenge to -
    Held: Instructions of Under Secretary to Government of India that
    RBI has recommended that the Specified Bank Notes (SBNs) collected
    by the DCCBs between !0th and 14th November 2016 may be
    exchanged after audit of the veracity of the KYC documents by
    NABARD - Issuance of suitable Notification by the Competent
H
                                    798
       VIVEK NARAYAN SHARMA v. UNION OF INDIA                              799


Authority within two days - Policy of replacement of legal tender          A
notes as applicable to Public Sector Banks and other Banks would
be applied even in the case of District Cooperative Banks for
exchange of demonetized currency.
      Extension of time limit for exemption for use of demonetized
currency notes of Rs.5001- and Rs.1000/- -Held: Whether exemption          B
period should be extended or not must be best left to the judgment
of the Government - No interim direction can be issued to the
Government in the said matter - Government can take appropriate
decision.
      Denial of right to withdraw the prescribed amount of                 c
Rs.2.J,0001- per week per account holder, in spite of Notification
issued by Reserve Bank of India permitting such withdrdwal - Non-
availability of enough volume of legal tender currency - Held: As
per Attorney General, the Government has already made it amply
clear that it would take around 50 days time to streamline the cash
flow and the period is still not exhausted - Authorities are working       D
to the best of their ability to defuse the crisis of cash flow situation
by printing new notes - To maintain complete secrecy to unearth
the black money, new currency notes could not be printed well in
advance - Authorities to fulfill their commitment made in terms of
the Notification permitting withdrawal to the extent possible and          E
review the decision periodically and take necessary corrective
measures.
       Transfer Petitions: Transfer Petitions by Union of India for
withdrawing all writ petitions/proceedings pending in the various
High Courts and to hear those cases along with the writ petitions           F
pending in this Court - Held: Such withdrawal would be just and
proper, to avoid multiplicity of hearing and conflicting decisions
on the same subject matter - Issuance of notice in the respective
Transfer Petitions and stay of the further proceedings of the writ
petitions/proceedings in the concerned High Court as also pending
in any High Court - No other court to entertain, hear or decide any         G
writ petition/proceedings on the issue of demonetization of the old
notes.
    CIVIL I CRIMINAL ORIGINAL                       I   APPELLATE
JURISDICTION: Writ Petition No. 906 of20l6.
                                                                           H
800            SUPREME COURT REPORTS                        [2016] 7 S.C.R.


A          Under Article 32 of the Constitution of India.
                                      WITH
             W. P. (C) No. 908/2016, W. P. (C) No. 913/2016, W. P. (C) No.
      91612016, W. P. (C) D. 37946/2016, W. P. (C) No. 92912016, W. P. (C)
      No. 93012016, W. P. (C) No. 943/2016, W. P. (Cr!.) No. 162/2016, W. P.
B     (C) No.951/2016, W. P. (C) No. 95212016, W. P. (C) No. 953/2016, W.
      P. (C) No. 954/2016, W. P. (C) No. 958/2016, W. P. (C) No. 95712016,
      T. P. (C) No. 2018-2022/2016, W. P. (C) No. 971/2016, W. P. (C) No.
      972/2016, SLP (C) No. 3535612016, T. P. (C) No. 2030-2038/2016, W.
      P. (C) No. 978/2016, W. P. (C) D. No. 40114/2016, W. P. (C) No. 944/
c     2016, SLP (C) No. 35805/2016, W. P. (C) No. 99612016, W. P. (C) No.
      997/2016, T. P. (C) No. 1958-1967/2016, T. P. (C) No. 1982-1996/2016,
      W. P. (C) No. I006/2016, W. P. (C) No. I 008/2016, W. P. (C) No. I 009/
      2016, W. P. (C) No. I0 I0/2016, W. P. (C) No. 1011/2016, S.L.P.(C) No.
      3675712016.

D          Petitioner-in-person.
             Mukul Rohatgi, AG, Tushar Mehta, Maninder Singh, ANS
      Nandkarni,ASG, Kapil Sibal, Salman Khurshid, B. H. Marlapalle, Basant
      R., V. Giri, P. V. Surendranath, Jaideep Gupta and Arvind V. Savant,
      Sr. Advs. Ms. Kamini Jaiswal, TalhaAbdul Rehman, Jatinder Pal Singh,
E     Shumaila Altaf, Gaurav Gosh, Santi Ranjan Das, Anindo Mukherjee,
      Mrs. Sarla Chandra, Tripurari Ray, Asad Alvi, Ms. Saba Asad Al vi, D.
      Vidyanandam, Zaki Ahmed Khan, Ms. Satya Mitra, Manoj Prasad,
      Ashutosh Dubey, Harshul Singh, Kritika Khurana,Ankur Prakash, Karuna
      Nundy, T.R.B. Sivakumar,Adeeba Mujahid, Jabbar Shaikh, Ms. Pratiksha
      Sharma, Kuna! Kanungo, Amit Khemka, Sunil Kumar Gupta, Ankur
 F    Prakash, Rishi Sehgal, Varchana Taneja, Viplav Sharma, Dhaval
      Deshpanda, Ms. Aparna Jha, C.R. Jaya Sukin, Ms. Niharita Dudeja,
      Sonu Lohia,A.Arockia Raj,Ajit Wagh,Aditya Gaggar, Yogesh Abhinao,
      Ms. Manju Jetley, Shariq Ahmed, Amit Kishore Sinha, Sunil Kumar
      Verma, R.D. Upadhyay, Mohd. Shahid Hussain, Z.U. Khan, H.S. Saran,
G     M.T. George, Ms. Kavitha K.T., Adv. lmtiaz Ahmed, Mrs. Naghma
      lmtiaz, Mr. Ahmed Zargham, Adil Singh Boparai, Ms. Roshni W. Anand,
      Ms. Azra Rehma, Mis Equity Lex Associates., Kislay Panday, Ankur
      Gogia, Arjun Singh Bhati, Ms. Liz Mathew, lzhar Alam, Vijendra Kasana,
      Ms. Niharika Dudeja, Ms. Sadhna Kumar, M.P. Parthiban, Mathews J.
      Nedumpara, A.K. De, Saurabh Kirpal, Nikhil Rohatgi, Mrs. Anil Katiyar,
H
       VIVEK NARAYAN SHARMA v. UNION OF INDIA                                 801



A.C. Philip, A.D. Tamboli, S. Gowthaman, Varun Punia, P.V. Dinesh,            A
Ajit Sharma, Alok Shukla, M.V. Holamagi, R. Balasubramanian, Ms.
Rekha Pandey, Ajay Sharma, Ms. Movita, Santo sh Kumar, Ms. Diksha
Rai, Ms. Akhila, Prabhas Bajaj, Akshay Amritanshu, Mrs. Anil Katiyar,
Devashish Bharuka, Vikas Mehta, Ms. Anushree Menon, Rajat, Sourabh
Kirpal, Nikhil Rohatgi, N .R. Shonker, Ms. Resmitha R. Chandran, Kuldeep
                                                                               8
S. Parihar, H.S. Parihar, Basava Prabhu Paul, Satyajit Desai, Akash
Kakade, Ms. Anagha S. Desai, Vivek Narayan Sharma, Sidharth
Mahajan, Rajeev Kumar Jha, Ms. Nikita Singh, Ms. Ankita Singh, V.K.
Biju, Ms. Ria Sachthey, P.V. Krishnaiah, Mr. Aditya Kumar, Praveen
Kumar Pandey, C.S.N.M. Rao, Sanjay Kharde, Sunil Kumar Verma,
M.P. Vi nod, Dileep Pillai, Ajay Kr. Jain, Atul S. Vi nod, Vibhakar Mishra,    c
Nischal Kumar Neeraj, Umesh P. Wadhwani, V.K. Sidharthan, Ms.
Resmitha R. Chandran, Satbir Singh Pillania, Satish Kumar and M.P.
Parthiban, Advocates for the appearing pa1iies.
      The following Order of the Court was delivered
                              ORDER                                            D

      I. Writ Petitions are admitted.
      2. Issue notice on the Writ Petitions, special leave petitions and
other applications. The respondents may file reply affidavit within six
weeks. Rejoinder, if any, within three weeks thereafter.                       E
      3. We have heard the learned counsel for the parties at some
length. In our opinion, the following important questions fall for our
consideration in this batch of petitions:
      (i) Whether the notification dated 8th November 2016 is ultra vi res
          Section 26(2)and Sections 7, 17,23,24,29 and 42 of the Reserve       F
          Bank of India Act, 1934;
      (ii) Does the notification contravene the provisions of Article
          300(A) of the Constitution;
      (iii) Assuming that the notification has been val idly issued under
          the Reserve Bank of India Act, 1934 whether it is ultra vires        G
          Articles 14 and 19 of the Constitution;
      (iv) Whether the limit on withdrawal of cash from the funds
           deposited in bank accounts has no basis in law and violates
           Articles 14, 19 and 21;
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802             SUPREME COURT REPORTS                           [2016] 7 S.C.R.


A           (v) Whether the implementation of the impugned notification(s)
                suffers from procedural and/or substantive unreasonableness
                and thereby violates Articles 14 and 19 and, if so, to what
                effect?
            (vi) In the event that Section 26(2) is held to permit demonetization,
B                does it suffer from excessive delegation oflegislative power
                 thereby rendering it ultra vires the Constitution;
            (vii)What is the scope of judicial review in matters relating to
                 fiscal and economic policy of the Government;
            (viii) Whether a petition by a political party on the issues raised is
c                maintainable under Article 32; and
            (ix)Whether District Co-operative Banks have been discriminated
                against by excluding them from accepting deposits and
                exchanging demonetized notes.

D           4. Keeping in view the general public imp011ance and the far
      reaching implications which the answers to the questions may have, we
      consider it proper to direct that the matters be placed before the larger
      Bench of five Judges for an authoritative pronouncement. The Registry
      shall accordingly place the papers before Hon 'ble the Chief Justice for
      constituting an appropriate Bench.
E
            5. We may now advert to the issues which are of immediate
      concern. The first issue is about the restriction placed on the District
      Cooperative Banks to accept deposits or exchange of demonetized
      currency of Rs.500/- and Rs. I 0001-. Two broad aspects have been
      presented before us. The first is about the complete exclusion of the
F     District Cooperative Banks from accepting deposits or exc11anging
      demonetized notes. The second is about the avoidable financial stress
      on the District Cooperative Banks because of freezing the deposited
      demonetized notes received by the District Cooperative Banks between
      11th and 14th November 2016, which is stated to be around Rs.8000/-
      Crore (Rupees Eight Thousand Crore).
G
            6. The first point whether the decision of the Authority to forbid
      the District Cooperative Banks from accepting deposits and exchanging
      demonetized notes, may require detailed hearing. It is only upon
      acceptance of challenge to that decision, that the bar placed on the District
      Cooperative Banks can be lifted. We are not inclined to suspend that bar
H
       VIVEK NARAYAN SHARMA v. UNION OF INDIA                                 803



as an interim measure. This is especially when the decision is the outcome    A
of financial policy which the respondents claim to have adopted on the
basis of experience. In particular, an apprehension has been expressed
about the possibility of demonetized notes being converted or exchanged
without proper audit, control or supervision. The District !=ooperative
Banks, it has been urged, are not directly under the control of the Reserve
                                                                               B
Bank oflndia but within the purview ofNABARD. The dispensation
provided by NABARD is, according to the Attorney General, not in
conformity with the strict regime provided under the provisions of Banking
Regulation Act, 1949 and the Reserve Bank oflndia Act, 1934.
      7. Reverting to the second aspect, of District Cooperative Banks
being precluded from utilizing the demonetized notes deposited with them
                                                                               c
between 1 lth to 14th November 2016 (when it was so permitted by the
Reserve bank of India), the learned Attorney General has invited our
attention to the written instructions received by him from the Under
Secretary to the Government oflndia dated 14th December 2016. The
relevant extract of the said letter reads thus:                                D
          "In this regard, it is to inform that as regards the deposits of
      Specified Bank Notes (SBNs) collected by DCCBs, the RBI has
      recommended that the SBNs collected by the DCCBs between
      I 0th and 14th November 2016 may be exchanged with their linked
      currency chests after a I 00% audit of the veracity of the KYC           E
      documents of the SBN depositing customers of DCCB is
      conducted by NAB ARD, the supervisor and to the extent of such
      verified SBNs only. For SBNs deposited by Primary Agricultural
      Credit Societies (PACS) also, similar 100% audit of the K YC
      documents of the members of the PACS should be conducted by
      NABARD and to the extent of such verified SBNs only, exchange            F
      value will be given by the linked currency chest. In either case,
      the linked currency chest will subject those SBNs to usual checks,
      especially relating to finding out FICN ."
     For that purpose, suitable Notification can be issued by the
Competent Authority within two days. We commend to the Competent               G
Authority to do so.
    8. Learned counsel for the District Cooperative Banks, however,
submitted that the Reserve Bank of India must assure that the entire
amount offered by the District Cooperative Banks for exchange after
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804             SUPREME COURT REPORTS                           [2016] 7 S.C.R.


A     due verification in the form of demonetized notes, will be duly replaced
      by commensurate amount oflegal tender notes contemporaneously. The
      learned Attorney General on instructions submitted that the policy of
      replacement of legal tender notes as applicable to Public Sector Banks
      and other Banks will be applied even in the case of District Cooperative
      Banks for exchange of demonetized currency with the legal tender
B
      currency. We accept the assurance given by the learned Attorney General
      in this behalf.
             9. The other broad point was about extending the time limit for
      exemption for use of demonetized currency notes of Rs.500/- and
      Rs. I 000/- at specified counters as per the relevant Notifications issued
c     in that behalf by the Reserve Bank of India. It was contended that the
      exemption period provided in the concerned notification is expiring.
      Hence, it will not be possible to deposit the demonetized notes at specified
      counters thereafter, even in case ofemergency situation like hospitalization,
      travel by Railway or Air etc. In our opinion, whether the exemption
D     period should be extended or not must be best left to the judgment of the
      Government of the day with a hope that the Government will be responsive
      and sensitive to the problems encountered by the common man.
      Accordingly, we decline to issue any interim direction to the Government
      in the matter of extending the period of exemption and leave it open to
      the Government to take appropriate decision in that behalf, as may be
E     advised.
             I 0. The other serious grievance made by the petitioners is about
      the denial ofright to withdraw the prescribed amount of Rs.24,000/- per
      week per account holder, in spite of Notification issul::d by the Reserve
      Bank of India permitting such withdrawal. It was submitted that if the
 F    Government has issued such Notification after due consideration, it is
      obliged to ensure that its commitment made under the said Notification
      is implemented without any exception. The ground reality, however,
      contends learned counsel, is that the Banks are refusing to pay full amount
      of Rs.24,000/- per account holder per week on the ground of non-
G     availability of enough volume oflegal tender currency. According to the
       learned Attorney General, the Government has already made it amply
      clear that it would take around 50 days time to stream Iine the cash flow.
      That period is still not exhausted. He submits that as of now the Reserve
      Bank of India has been able to infuse around Rs.5,00,000/-Crore (Five
      Lakh Crore) of the new legal tender notes in the form of Rs.500/- and
 H
        VlVEK NARAYAN SHARMA v. UNION OF INDIA                                  805


Rs.2,000/-. That is almost over 40% of the amount of demonetized notes          A
already deposited with the Banks. Further, the Authorities are working
to the best of their ability to defuse the crisis of cash flow situation by
printing new notes. It is further submitted that for the nature of decision
taken by the Government - to unearth the black money or unaccounted
money and to dry up the terror fund and defeat the attempt of circulation
                                                                                 B
of large- scale counterfeit currency, maintaining complete secrecy of
such a d~cision was imperative. For that reason, new currency notes
could not be printed well in advance. He submits that the old demonetized
notes will be replaced by new legal tender notes in the form ofRs.500/-
and Rs.2000/- progressively in right earnest. Considering the stand taken
by the learned Attorney General, we may commend to the Authorities to            c
fulfill their commitment made in terms of the stated Notification pennitting
withdrawal of Rs.24,000/- per account holder of the Bank per week to
the extent possible and review that decision periodically and take
necessary corrective measures in that behalf.
      11. In our opinion, besides the observations made hitherto, no other       D
direction can be given at this stage by way of an interim relief.
       12. That takes us to the Transfer Petitions filed by the Union of
India for withdrawing all Writ Petitions/proceedings pending in the various
High Courts across the country and to hear those cases along with the
Writ Petitions pending in this Court. In our opinion, it would be just and       E
proper to withdraw all the Writ Petitions/proceedings pending in different
High Courts across the country and to be heard by this Court along with
the Writ Petitions which are already pending in this Court raising same
or similar issues, to avoid multiplicity of hearing and conflicting decisions
on the same subject matter. Accordingly, we issue notice in the respective
Transfer Petitions and by way of interim direction, stay the further             F
proceedings of the Writ Petitions/proceedings in the concerned High
Court.
       13. We further direct that if any other Writ Petitions/proceedings
are pending in any High Court, further hearing of those matters shall
also remain stayed in terms of this order. We further direct that no other       G
Court shall entertain, hear or decide any Writ Petition/proceedings on
the issue or in relation to or arising from the decision of the Government
of India to demonetize the old notes of Rs.500/- and Rs. I 000/-, as the
entire issue in relation thereto is pending consideration before this Court
in the present proceedings.                                                      H
806                SUPREME COURT REPORTS                      [2016] 7 S.C.R.



A           14. We make it clear that petitioners before the High Court(s) or
      any other Court in India in respect of proceedings already instituted on
      the subject matter under consideration before this Court, will be free to
      intervene in the Writ Petitions pending consideration before this Court
      on the subject matter of demonetization of old currency notes ofRs.500/-
      and Rs. I 000/-, if so advised.
B
            15. The Registry shall place the matter before the Chief Justice
      for further orders.
      Nidhi Jain                                           Matter referred to CJJ.


c