TOP COURT’S MAJORITY VERDICT FINDS NO FLAW IN CENTRE’S NOTE BAN MOVE

A Constitution Bench of the Supreme Court on Monday upheld the Union Government’s November 2016 decision to demonetise Rs 500 and Rs 1000 currency notes. 

A five-judge Constitution bench dismissed a batch of petitions challenging the Centre’s 2016 decision to demonetise Rs 500 and Rs 1000 currency notes and said the decision, being the Executive’s economic policy, cannot be reversed. Supreme Court bench said, “There was consultation between the Centre and the RBI on before demonetisation. There was a reasonable nexus to bring such a measure, and we hold that the doctrine of proportionality did not hit demonetisation.” 

The apex court had reserved its judgments on the batch of 58 petitions on December 7. 

While four judges on the bench led by Justice Abdul Nazeer delivered the majority opinion upholding demonetisation, Justice B.V. Nagarathna held it unlawful. Justice B.R. Gavai, who read out the majority’s judgment said that Section 26(2) of the Reserve Bank of India (RBI) Act, which empowers the Centre to demonetise, cannot be interpreted only in relation to specific series of bank notes. The bench opined that the section should be read to mean all series of bank notes. The majority has further noted that from the records it appears that there was a consultation between the Central Government and the RBI for a period of six months. It has therefore been held that in the view of inbuilt safeguards in Section 26(2) of the RBI Act, it cannot be struck down on the grounds of excessive delegation. The majority has further held that the period for the exchange of notes, which was 52 days, cannot be said to be unreasonable. 

Earlier, it had asked the Centre and Reserve Bank of India to place before it the records pertaining to the 2016 demonetisation decision in a sealed envelope. It had said that it has the power to examine the manner in which the decision for demonetisation was taken adding that “the judiciary cannot fold its hands and sit just because it is an economic policy decision”. 

The top court’s remarks came when the Reserve Bank of India counsel made the submission that judicial review cannot apply to economic policy decisions. 

The RBI had told the apex court about the objective of the demonetisation policy to curb black money and fake currencies. Attorney General R Venkatramani had said that the economic policy of demonetisation was connected to a social policy where three evils are attempted to be addressed.