If you assured Rs 24,000 withdrawal, should you not keep the promise? Apex court asks govt

Updated - January 16, 2018 at 01:13 AM.

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If the government has assured people they can withdraw Rs 24000 of their own legitimate and taxed money a week from the bank, it should stick to its promise and ensure that a system is in place, the Supreme Court told the Centre on Friday.

"You yourself said withdrawals can be up to Rs 24,000 a week. This is the limit you have prescribed. Can you assure us that banks will deny people this amount... Once you say people can withdraw Rs 24000, that promise must be kept," Chief Justice of India T.S. Thakur addressed Attorney-General Mukul Rohatgi, appearing for the Centre.

The Bench, also comprising Justices A.M. Khanwilkar and D.Y. Chandrachud, said if there is a cash crunch post-demonetisation, the government should be transparent about it and fix a lower cap for withdrawal.

"People are going to the banks for Rs 24000 and they are paid Rs 2,000, Rs 5,000 or Rs 8,000. Fix a cap of at least Rs 10,000," Chief Justice Thakur said, identifying this as an immediate measure the government should take care of to alleviate public suffering.

Senior advocate P. Chidambaram pointed out that "each bank has its own rule about the amount that can be withdrawn".

"How can a family live on Rs 2,000 in a place like Delhi? There should be no discrimination," Chidambaram asked.

Rohatgi countered that each member of a family can withdraw up to Rs. 24000 a week. "How much more does a family need to spend in a week?" he asked.

"Not every member of a family will have a bank account. There may be cases of one bank account operated by a family of five. Banks run dry in half a day. Only 35 per cent ATMS have some money. In the seven north-eastern states, there are only some 5,000-odd ATMs... a poor family must be allowed to withdraw it's own money," Chidambaram said.

At one point, Rohatgi asked who were the "poor people" who had come to court against demonetisation. He said the PILs heard were those filed by lawyers and district co-operative societies.

He denied submissions that 91 people died in the aftermath of demonetisation.

"Ninety-one deaths do not occur when people do not have money," Rohatgi claimed.

Noting that the new Rs 2,000 bank notes look like "Monopoly money", Chidambaram submitted that demonetised notes of Rs 500 and Rs 1,000 notes approximately worth Rs 12 lakh crore were physically deposited back into the banking system. However, in contrast, only Rs 3 lakh crore new notes are in circulation.

"So there is no option for the government but to ration money," Chidambaram said.

He said there are four prints - two owned by RBI and two by the government - churning out a capacity Rs 3 crore new notes a month.

"Note for note replacement will take at least six months," Chidambaram submitted.

"There is no black money in the hands of the daily wage labourer. How do they survive? The court has to address this issue immediately. Banks say they have no cash. How can the government restrict the legitimate withdrawal of legitimate money... This is plain breach of trust," senior advocate Kapil Sibal submitted.

"You know there is no money... There are limitations to cash disbursal now," Rohatgi intervened.

"Then your actions are unreasonable," Sibal retorted.

At this point, the court asked Rohatgi whether the "expectations" from the demonetisation exercise were ever put on record somewhere.

"Was there any application of mind as to how much money will come in and how much you need to print? Was there a plan or was it done on an impulse?" Chief Justice Thakur asked Rohatgi.

"Of course there was a plan. Our expectation was that Rs 10 to 11 lakh crore to come into the system... now it has been reduced to a trickle," Rohatgi replied.

Similarly, the apex court asked the government why it was not allowing district central co-operative banks from taking deposits.

The government has maintained that these co-operative banks have lax systems to check the inflow of counterfeit currency. "We are not willing to relax in the case of co-operative banks," Rohatgi submitted. He said the accounts in these banks are held by societies run by suspect managements

"It is one thing to completely stop something, it is another to intelligently control it. You have, we believe, very capable officials who can devise a mechanism. After all, if you could embark on such a large demonetisation scheme, you can see to these small matters," Chief Justice Thakur told Rohatgi.

Chidambaram said the district co-operative banks were the lynch pin of the co-operative sector. He said 97 per cent of the individual and group accounts in them had KYC.

Sibal said district co-operative banks in Kerala alone have 60 lakh customers and without deposits and frozen withdrawals, the entire banking system would "go under".

Noting that digital mode of transactions envisaged by the government would take time, the apex court asked the government to immediately resolve the issues of restriction in withdrawal of money and saving district co-operative banks from post-demonetisation collapse.

The court has scheduled a hearing on Decembet 14.

Published on December 9, 2016 12:04