The central government on Thursday said that its decision to demonetise Rs 500 and Rs 1,000 currency notes did not violate the fundamental rights of the people as it has only imposed "reasonable restrictions" in pursuance to its objective of eliminating black money and counterfeit currency.
"The respondents (Centre's) act of cancelling legal tender character of existing series of Rs 500 and Rs 1m000 bank notes is only a reasonable restriction and regulatory in nature. Merely because there is restriction on the public to use the old high denomination notes, the regulation cannot be held to be illegal or unreasonable restriction as there is no infringement of fundamental rights for the citizens," it said in its reply filed before the apex court.
The government cited the Section 26 (2) of the Reserve Bank of India Act, 1934, to defend its decision.
The section says: "On recommendation of the Central Board the (Central Government) may, by notification ... , declare that, with effect from such date ... , any series of bank notes of any denomination shall cease to be legal tender ...."
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.
Pointing out that currency note of Rs 1,000 denomination was reintroduced in year 2000, the Centre said: "Barring short-lived exceptions, Indian has consistently seen moderate to high inflation since then, thus progressively eroding the value of money in purchasing power parity (PPP) terms,"
The government said this in its affidavit filed by the Union Finance Ministry before the apex court which is set to hear a batch of petitions challenging the decision to demonetise Rs 500 and Rs 1,000 currency notes.
The court will also hear the government's plea seeking the transfer of cases filed before different high courts and subordinate court challenging the demonetisation either to top court itself or Delhi High Court.
Making a distinction between regulation and deprivation, the government on Thursday said no one has been deprived from using the notes of different denomination or issuing cheques or e-transfer. All that has happened, that too for a limited period, is the restriction on the withdrawal of the money from their accounts.
The government has also sought to describe these restrictions as "reasonable".
This appears to be the government's response to senior counsel Kapil Sibal, appearing for one the petitioners before the top court, asking under what law people could be restricted from withdrawing their own money from their bank account.
As in its first affidavit, the government on Thursday give details of the steps it had taken to ameliorate the hardships being faced by the people and to encourage them to take recourse to cashless transactions.