Introduction:
‘Right to property’ is one of the most contentious rights. Nevertheless, the right has always been protected by the Constitution of India since its enforcement. The right to property has initially evolved as a fundamental right under Art.31 of the Constitution as originally enacted under the Constitution in 1950. It had then undergone various amendments and taken the current form under Art. 300A as a constitutional right rather than a fundamental right. Though the Constitution explicitly provides for violation of one’s right to property with the authority of law, the evolution of doctrine of eminent domain keeps a check on such deprivation of private property of an individual. The Doctrine of Eminent domain has evolved over a series of judgments in the Indian History and has been read into the provisions of the Constitution in order to protect the right. The present paper tries to ascertain how the demonetization as it happened on 8th November 2016 in India is violative of the right to property of an individual guaranteed by the Indian Constitution.
Property in its widest meaning:
The expression ‘property’ under the Constitution denotes a bundle of rights arising from ownership and proprietary interests in a property. The Courts have given the expression the widest interpretation possible. In the case of Delhi Cloth & General Mills Co. Ltd. v. Rajasthan SEB , referring to the case of Madan Mohan Pathak v. Union Of India & Ors, it was held by the Hon’ble Supreme Court that the concept of property cannot be interpreted in a narrow pedantic manner nor adopt any doctrinal or legalistic approach in its interpretation. The Court further held that any legal right which can be enforced through a court is a right in the nature of property within the meaning of Art.31 (that has now been re-enacted as Art. 300A). It has also been held in M.M. Pathak’s case that even an actionable claim is 'property' in Art.31 and can be compulsorily acquired. The SC has held in Bombay Dyeing & Co. v. State of Bombay,, that money and choses in action is undoubtedly property and as such can be compulsorily acquired under Art. 31(2).
How demonetization violates right to property ?
The Central Government has issued a notification through the Gazette on 8th November 2016 that demonetized the then existing denomination notes of Rs.500 and Rs.1000. The demonetization policy adopted by the Government through the notification provided for exchange of the notes with a lower denomination notes up to a specific limit of Rs.4000 for a specified period of time, withdrawal limit of Rs.2000 in an ATM and Rs.10000 from the Bank, and depositing of the notes in their respective Bank Accounts. The Government has provided for an exchange facility for the demonetized notes subject to certain limitations on the amount of exchange and withdrawal.
Art. 300A of the Constitution provides that ‘No person shall be deprived of his property save by the authority of law.’ The meaning of the term ‘deprivation’ under Art.300A as discussed by the High Court of Calcutta in the case of Manmatha Nath Kayal v. District Manager, ‘conveys the idea of taking away that which one has, or withholding that which one may have. To take something from; to keep from acquiring, using, or enjoying something; to take away, end, injure, or destroy.’ And, the Court also discussed that even a temporary deprivation would constitute deprivation of property under the Constitution. That being the position, the limitation put up on the exchange of notes and withdrawal of money from the Banks for a specified period of time amounts to deprivation of property as the demonetized notes constituted money and the term ‘property’ under the constitution includes ‘money’. Demonetization of notes, by itself, does not amount to deprivation of one’s money. But, a limit on the exchange and withdrawal of one’s notes, and the obligation of the people to deposit the amount in the banks accounts constitutes a temporary deprivation of property. And, the deprivation of one’s own money without any benefit would amount to violation of his/her right to property. The State has no power to violate the right to property save by the authority of law.
Authority of law :
The bear reading of Article 300A of the Constitution says that no person shall be deprived of his property save by the authority of law. That is to say, the State has the power to deprive a person of his property with the authority of law provided that the law is subject to the doctrine of eminent domain. And, the expression ‘law’ under Art. 300A refers to a ‘legislation’. It has been held in the case of Bishambar Dayal Chandra Mohan v. State of U.P., that such power cannot be exercised by the State through an executive fiat or order except by the authority of law and the word ‘law’ in the context of Art.300A must mean “an Act of Parliament or of a State Legislature, a rule or a statutory order, having the force of law, that is positive or state made law”. Non-compliance with the requirement of legislative sanction would amount to violation of Art.300A. The demonetization policy of the Government has been enforced through a notification issued on 8th November 2016 and the notification does not have any legislative backing. Lack of legislative backing while depriving a person’s right to his property would lead to violation of right to property. Also, the notification issued by the Government is an executive notification and does not have the bearing of law. It cannot be construed as law in pursuance of Article 300A and in light of the Supreme Court judgments to that effect as law means an Act of the Parliament or of State legislature. The demonetization policy adopted by the Government on 8th November 2016 that deprives a person of his property cannot be said to be valid is it has not been enacted through the authority of law and thus, violative of the Constitution.
Doctrine of Eminent Domain:
Even if the notification is to be considered as a law under the Constitution, the law depriving a person of his property should satisfy the requirements of doctrine of eminent domain under Art.300A of the Constitution. In the light of the judgment of the Hon’ble Supreme Court in K.T. Plantation (P) Ltd. v. State of Karnataka, a law depriving of a person of his property under Art. 300A should be subjected to the doctrine of eminent domain. Though not explicitly mentioned in Art.300A of the Constitution, the Court has read the doctrine into the words of the Article and held that a law depriving a person of his property must be for public purpose and the right to claim compensation is also in-built in the Article. When the State has to deprive one of his property, it has to justify both the grounds. The ambit of public purpose is not under the domain of the Court and the Court has no power to interfere into the scope of public purpose unless the purpose is too irrational and against the principle of natural justice. And the compensation for deprivation of one’s property need not be adequate, but it cannot be illusory. The amount of compensation has to be justified in the Court of law. The demonetization policy has been adopted by the Government for the purpose of eradication of unaccounted wealth, banning of fake currency notes and for the well-being of the economy which would amount to public purpose fulfilling the first requirement of Art.300A. The demonetization policy provided for the right to deposit one’s money in their respective bank accounts and no deprivation of property has been caused to that effect. However, a limitation is put on the withdrawal and exchange of the money for two months which constitutes a temporary deprivation of one’s property. And, the inconvenience or the damage caused to the public due to restrictions on the access to one’s own property constituting deprivation of property has to be compensated by the Government. The Government has provided for no compensation to the public for deprivation of their property for a temporary period of time, by reason of which, the public has suffered huge losses due to the lack of sufficient means to access to their monies. Thus, the demonetization policy of the Government is invalid as it goes against the requirements of Art.300A, thereby, violating the right to property.
Conclusion:
In contemplation of the abovementioned, the notification issued by the Government demonetizing the then existing denomination notes of Rs.500 and Rs.1000, is in violation of right to property under article 300A of the Indian constitution based on two grounds. Firstly, the notification would not fall within the scope of the term ‘law’ in article 300A. Deprivation of property can be said to be valid only if a law is passed in the Parliament or State legislature to that effect. Secondly, even if it is considered to be a law under 300A, it has to comply with the two requirements of the doctrine of eminent domain, namely public purpose and compensation. The demonetization policy has been enforced for the public purpose, but no compensation has been provided to the public for the deprivation of their property. Therefore, the demonetization policy adopted by the Government leads to violation of a constitutional right and is liable to be held as unconstitutional.
The demonetization created a huge chaos amongst the public as people were short on cash at hand and had to suffer huge inconvenience and losses due to non-access to their monies. People had to wait in despair in huge queues in front ATM’s and banks ending up not getting cash or getting limited amount making them stand again the next day. It was very difficult to run the businesses without sufficient cash-flow and the economy had a great downfall. Analyzing the after-effects of the demonetization, it can be argued that the policy in-effect did not actually sub-serve the public purpose for which it was enforced and instead created a lot of damage to the general public who were not compensated for the violation of their right to property.
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