A constitutional law expert clarifies why the Modi government can’t prevent Indians from accessing their cash
In the late hours of Nov. 08, prime minister Narendra Modi plunged India into an economic unknown. He unveiled a monetary experiment without historic parallels
In the late hours of Nov. 08, prime minister Narendra Modi plunged India into an economic unknown. He unveiled a monetary experiment without historic parallels. Immediately, 86% of all Indian currency notes by value became tender that was prohibited. Motley exchanges, the million haggles, and several handshakes that motor India’s market screeched to a halt. Cash disappeared.
The demonetisation move came with strict limits on cash withdrawals. Citizens that are banked abruptly had their accounts restricted. Income, taxed lawfully brought in, and deposited, was fenced out of reach. People, for now, are restricted to Rs24,000 ($350) a week, and businesses, large and small-scale, max out at Rs50,000 ($730). But even retrieving this is laborious and, sometimes, fatal. Long queues snake from bank branches, and dozens have reportedly died awaiting their turn. As many seethed against the strange fiats and their even application, the government responded to-be- farmers, marrieds, and few others may now get larger, but still measly, sums.
Is the diet, this rationing, lawful?
The constitutional right to property: a primer
The Indian constitution vows a right. Post 300A says: “No person will be deprived of his property save by authority of law.” The 1950 version, the first constitution, feted it protected through two provisions: Articles 19 and 31 respectively. But the constitutional sunrise brought intense wrangles over these provisions. Having an eye on land redistribution, legislators batted to get a poor reading of the right to property. Particularly the ones in supreme court, judges, insisted on the opposite: A strong right to property was their mantra.
The unceasing duels between parliament and the supreme court on vigour, its reach, and the right, made them mandatory. Ultimately, bruised and fed up, the Janata Party-led parliament deleted it in 1978. Property was a fundamental right—the only right erased in the constitution. But it lingers; it wasn’t deleted, simply demoted. Article 300A was inserted and property bears as a constitutional right.
What separates essential from constitutional rights? Both are rights, scribed in the constitution and, important. But both aren’t equally protected. Restrictions on fundamental rights require only, fair and acceptable laws; limitation on constitutional rights require laws. In other words, stronger justifications are demanded by restrictions on fundamental rights.
Three things must certanly be investigated: Is cash “property”? Do withdrawal limitations deprive” men of their property? If so, which “ law authorises this deprivation?
The first of these is easy. Cash is property. It truly is hardly in dispute. Rigorously, though, cash hasn’t been rationed: Anyone in lawful possession of legal tender is free to transact without limitation. In getting bank accounts, the limitations are. However, these accounts, too, are property.
Deprivation is a word that is vague.
At a vicious extreme is the compulsory acquisition of title. The state, say, gets property as well as the title . Both: title and property are lost by the owner. This obviously is loss.
In the middle are far more dignified possibilities. Temporary acquisition is an excellent example. Possession is lost by the owner. Title, though, remains; the person is still the legal owner. This often occurs during emergencies. The state may want, say, property for various uses. The owner is ousted for some time, when the emergency abates, and possession is returned. This, too, is deprivation, albeit a temporary one.
Choices that are moderate populate the other extreme. The state may only restrict the use of, or accessibility to, one’s property. It acquires nothing, neither possession nor title. This usually happens. Neighbourhood houses, say, are ruined by a fire. Some are completely razed; others less so. But fire, the cops along with other authorities may limit owners from accessing property and their houses. Demands that are investigative and safety anxieties may briefly trump owners with their properties.
The limitations on bank withdrawals, it seems, are at this mild ending. The authorities hasn’t taken over—acquired—bank vaults. Nor has it commandeered individuals’s savings for temporary use. The rationing simply limits access to bank accounts for a while. (We do not know for how long.) Is this privation, too?
Jitendra Srivastava, a Jharkhand public servant. His pension accrued over 36 years was paid out, shortly after. Only 90% was disbursed; the remainder was docked. Srivastava had supposedly committed pecuniary irregularities and sleuths were on his trail. The state promised to pay out his 10% once cleared of wrongdoing.
An agitated Srivastava challenged the state’s miserly actions. Gratuity pension, and superannuation pay are n’t rewards, judges emphasised; they are “property.” Persons have a right to them. To withhold pension is to deprive a person of his property, the judges appear to suggest. The state was directed to pay out in full, for no law authorised such docking.
His pension couldn’t be withheld.
Most Indians that are banked aren’t suspected of any wrongdoing. To restrict their accounts hurl them into catastrophes and, would be to interrupt their orderly lives, break their strategies. If that isn’t privation, it means nothing whatsoever. As the supreme court put it, to deprive is always to interfere with the right to enjoyment of property. The rules on cash rationing certainly do this.
Cash is property and limited accessibility, even transitory, is privation. A law, consequently, is mandatory.
But does it? Section 26(2) merely authorises the authorities to notify the RBI principal board’s conclusion to demonetise bank notes; nothing more, nothing less. It surely makes no reference to bank accounts.
Possibly an ability to limit accounts may be implied, that's, read into, the provision? No.
Super Cassettes Industries is the owner of T-Series, India’s greatest music label. Radio City, India’s first private Frequency Modulation (FM) radio station, began broadcasting Super Cassettes’ tunes in 2001 and financially profited from it. This was odd: a third party exploiting the copyrighted works of another entity.
Copyright law confers on the creators of works that are original a bundle of rights. These rights are exclusive to the copyright holders; they count as property. What the law states also recognises an exception: compulsory licensing. To put it simply, a third party may be granted the right to manipulate copyrighted works in the event the owner unreasonably refuses to cause them to become available by the registrar of copyrights.
A significant caveat: Under Indian law, a compulsory licence may be given the issue is finally decided and after both parties are heard. Radio City, nonetheless, was allowed permission early. Hearings were and the matter awaited final disposition. Super Cassettes objected to the tacit power to give interim licences.
The supreme court agreed. “Law” in Article 300A, they clarified, refers to an explicit law. There’s no room for powers that are tacit. The idea is straightforward: Deprivation is a big deal; it breaks their lives and hurts individuals. The energy must be expressly conferred by Parliament to it; it can't be inferred by reasoning.
This principle fatally undermines the authorities’s claim about the RBI law. It doesn't explicitly authorise limitations on bank accounts.
We're, then, left with a void. To restrict access to bank accounts would be to deprive men of the property. But no law, it seems, authorises this. The policy is clearly in violation of Article 300A.
Why law matters
He berated the policy and its execution as , an “organised loot [and] legalised plunder.” Is there any state, he asked prime minister Modi, “where people have deposited their money but… are prohibited to get [it]”? Singh should have continued: Is there prime minister Modi, any law, which authorises limitations on the people’s right to withdraw their deposits?
Many questions will be, canvassed by a battery of lawyers, for and against. The court, too, must do its part. It should inquire what Singh didn't: What law authorises this cash rationing?
It really is worth belabouring: Policies, howsoever worthy, aren’t exempt in the weights of legality. Limitations, its laws, and the constitution issue. They're n’t trifles, irritants expecting sacrifice in the altar certainties that are furious, of popular will, and righteous causes.