The Financial Express
The Supreme Court on Monday ruled that the Centre’s decision to demonetise currency notes of the denomination of Rs 500 and Rs 1,000 on November 8, 2016, was legally valid and satisfies the test of proportionality. Justice BV Nagarathna, however, pronounced a dissenting judgment, holding that the 2016 notification by the central government was unlawful.
In a late-night address on November 8, 2016, which took the nation by surprise, Prime Minister Narendra Modi announced that high-value currency notes of Rs 500 and Rs 1,000 denominations were being demonetised, implying that they would cease to be legal tender. The Prime Minister, in his address, said the decision was based on the intent to curb the menace of black money.
A five-judge Constitution bench headed by Justice S A Nazeer assembled to deliver its verdict on the matter today, the first day after its winter recess break. Justice Nazeer is set to retire on January 4. Other members of the Constitution bench included Justices B R Gavai, B V Nagarathna Justices, A S Bopanna and V Ramasubramanian.
The top court was hearing a batch of 58 petitions challenging the notes ban exercise.
The court held that the notification from 2016 announcing demonetisation cannot be struck down on the ground of decision-making process. The top court also held that power under Section 26 (2) of RBI Act can be used to demonetise whole series of banknotes and not any particular series. “Any” cannot be given restrictive meaning, the court said.
In a dissenting verdict, Justice BV Nagarathna held that demonetisation of the whole series of Rs 500 and Rs 1000 currency notes had to be done through legislation and not through a gazette notification.
“Parliament is a miniature of the country. Parliament which is the centre of democracy cannot be left aloof in a matter of such critical importance,” Justice Nagarathna said, as quoted by Live Law.
On December 7, the apex court had directed the union government and the Reserve Bank of India (RBI) to place before it relevant records and had reserved the verdict. The arguments of Attorney General R Venkataramani, the RBI’s counsel and the petitioners’ lawyers, including senior advocates P Chidambaram and Shyam Divan were heard.
On November 17, the Centre had told the Supreme Court that the demonetisation decision of the union government in 2016 was a “well-considered” decision and a part of a larger strategy to combat the “menace of fake money, terror financing, black money and tax evasion”. The Reserve Bank of India, too, stated in its affidavit before the Supreme Court that due process was followed and that it was the one that recommended a decision to demonetise high-value currency notes to the central government.
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