Demonetisation Case Order Live Updates: A Constitution Bench of the Supreme Court Monday upheld by a 4:1 majority the decision taken by the central government six years ago in 2016 to demonetise currency notes of Rs 500 and Rs 1,000 denominations. The majority, comprising Justices S Abdul Nazeer, B R Gavai, A S Bopanna, V Ramasubramanian, held that the Centre’s notification dated November 8, 2016, was valid and satisfied the test of proportionality.
Justice BV Nagarathna in her dissenting view held that though demonetisation was well-intentioned and well thought of, it has to be declared unlawful on legal grounds (and not on the basis of objects).
On December 28, 2022, The Indian Express had reported that both the central government and the RBI omitted from their respective affidavits submitted to the Supreme Court that the RBI’s recommendation for the noteban — a procedural requirement — came after the central bank critiqued many of the government’s justifications. While the government, in its affidavit, said that it was a “well-considered” decision and the consultation process with the RBI had begun in February 2016, the central bank, too, said that due process was followed and it was the one that recommended the demonetisation.
Jairam Ramesh, Member of Parliament and General Secretary (Communications) All India Congress Committee, said the Supreme Court’s verdict on demonetisation has not specified whether the stated goals of this ‘disastrous’ decision were met or not.
Ramesh has issued a statement in reaction to the Supreme Court’s Monday verdict upholding the decision of the Central government taken in 2016 to demonetise the currency notes of Rs 500 and Rs 1000 denominations.
Ramesh said in his statement, “The Supreme Court has only pronounced on whether Section 26 (2) of RBI Act, 1934 was correctly applied or not before announcing demonetisation on November 8 2016. Nothing more, nothing less. One Hon’ble Judge in her dissenting opinion has said that Parliament should not have been bypassed.” (ANI)
Kerala Finance Minister K N Balagopal on Monday said the Supreme Court verdict upholding the Centre’s 2016 decision to demonetise the Rs 1,000 and Rs 500 denomination notes only looked into its legal and technical aspects.
The minister said practically the economic and social impact of the Union government’s decision was very serious and detrimental to the growth of various sectors, the minister said.
He said the serious impact that demonetisation had on India’s social and economic growth has been proved in the studies by various economists and financial experts. Read more
A Constitution Bench of the Supreme Court has upheld by a 4-1 majority the Centre’s November 8, 2016 decision to withdraw from circulation currency notes of Rs 500 and Rs 1,000 denominations. Justice B V Nagarathna in her dissenting view held that although the government’s demonetisation exercise was well-intentioned and thought-through, it was unlawful on legal grounds.
Read what Justice Nagarathna said in her dissenting judgment
The BJP on Monday hailed the Supreme Court judgment upholding the government’s demonetisation exercise as ‘historic’ and slammed the Congress for its campaign against the decision and asked if its leader Rahul Gandhi will tender an apology after the verdict.
Former law minister and BJP leader Ravi Shankar Prasad asserted that the demonetisation done in 2016 proved to to be the “biggest blow” to terrorism by curbing terror funding. It boosted income tax and cleansed the economy, he claimed. Read more
Demonetisation of the high-value currency notes of Rs 500 and Rs 1,000 did not have any discernible impact on currency in circulation (CIC) in the country, which has soared by almost 83 per cent since its announcement on November 8, 2016. The Supreme Court on Monday upheld the decision of the government on demonetisation.
On November 8, 2016 Prime Minister Narendra Modi had announced demonetisation of old Rs 1,000 and Rs 500 banknotes and one of the key objectives of the unprecedented decision was to promote digital payments and curb black money flows.
According to the Reserve Bank data, the CIC in value terms soared from Rs 17.74 lakh crore on November 4, 2016, to Rs 32.42 lakh crore on December 23, 2022. (PTI)
The Supreme Court in a 4:1 majority verdict on Monday upheld the government’s 2016 decision to demonetise Rs 1,000 and Rs 500 denomination notes. Following is a timeline of events in the case:-
🔴 November 8, 2016: Prime Minister Narendra Modi addresses nation and announces demonetisation of high-value currency notes of Rs 500 and Rs 1000.
🔴 November 9, 2016: Plea filed in Supreme Court challenging decision.
🔴 December 16, 2016: Bench headed by then chief justice T S Thakur refers question of validity of the decision and other questions to a larger bench of five judges for authoritative pronouncement.
🔴 August 11, 2017: Unusual deposits of Rs 1.7 lakh crore during demonetisation, says RBI paper. In nominal terms, excess deposits accrued to the banking system due to demonetisation estimated in the range of Rs 2.8-4.3 lakh crore, it says.
🔴 July 23, 2017: Massive searches, seizures and surveys by Income Tax department over the last three years lead to the detection of around Rs 71,941 crore worth “undisclosed income”, Centre tells SC.
🔴 August 25, 2017: RBI issues new Rs 50 and Rs 200 denomination banknotes.
🔴 September 28, 2022: SC constitutes constitution bench headed by Justice S A Nazeer, says it will consider if pleas challenging demonetisation are an academic exercise.
🔴 December 7, 2022: SC reserves verdict on pleas challenging demonetisation and directs Centre and RBI to put on record relevant records for its perusal.
🔴 January 2, 2023: SC in a 4:1 majority verdict upholds decision to demonetise the Rs 1,000 and Rs 500 denomination notes. Says decision making process was not flawed, has to be great restraint in matters of economic policy and court cannot supplant wisdom of the executive by a judicial review of its decision.
🔴 January 2, 2023: Justice B V Nagarathna renders dissenting view, says scrapping of the whole series of Rs 500 and Rs 1,000 currency notes had to be done through a legislation and not through a gazette notification. (PTI)
Launching a scathing attack on the grand old party and its former president Rahul Gandhi, Patna Sahib MP and BJP veteran Ravi Shankar Prasad asked Monday if the Wayanad MP would apologise to the nation now for his campaign against the demonetisation scheme.
“Mr Chidambaram, I condemn your comment on the majority judgment. You don’t read the judgment, you ignore with impunity the majority and pick up the minority to make an uncharitable comment. Congress is anti-poor. The biggest beneficiaries of the demonetisation have been the poor due to the digital transactions and plugging of leakages through DBT,” he added.
In the final outcome, the Supreme Court upheld demonetisation by 4:1 majority, with most of the justices holding the decision to be legal. Justice BV Nagarathna dissented to hold that the November 8, 2016 notification was unlawful. (Live Law)
While giving a dissenting judgment, Justice B V Nagarathna, however, said: “The measure was well-intentioned and well thought of. It targeted evils such as black money, terror funding and counterfeiting. The measure is declared unlawful purely on legal grounds and not on the basis of objects.”
“Demonetisation of all currency notes of Rs 500 and Rs 1000 is unlawful and vitiated. However, having regard to the fact that the notification has been acted upon, this declaration of law will act only prospectively and will not affect actions already taken. Hence, no relief is being given in the petitions,” the Justice added. (Live Law)
“The action of demonetisation initiated by the Central Govt as per Nov 8, 2016 notification is unlawful. But status quo ante cannot be restored at this point of time. What relief can be given now? Relief needs to be moulded. The problems associated with demonetisation make one wonder whether the Central Bank had visualised these,” said Justice B V Nagarathna while giving a dissenting judgment.
“The record demonstrates there was no independent application of mind by the RBI. There was no time for the bank to such an independent application of mind,” Justice Nagarathna said in the court.
“If demonetisation is to be initiated by the central govt, such power is to be derived from Entry 36 of List I which speaks of currency, coinage, legal tender, and foreign exchange. My views on each of the questions have differed from Gavai J’s response to the questions he has framed. When the proposal for demonetisation originates from the Central Govt, it is not under Section 26(2) RBI Act. It is to be way of legislation, and if secrecy is needed, then by way of an Ordinance. As per Section 26(2), the proposal for demonetisation to emanate from the central board of the RBI. Demonetisation of all series of notes at the instance of Central Govt is a far more serious issue than the demonetisation of particular series by the bank. So, it has to be done through legislation than through executive notification,” Justice Nagarathna said in the court.
“Parliament is a nation in miniature. Parliament’s views on demonetisation are critical and of utmost importance,” says Justice Nagarathna.
Justice B V Nagarathna Monday gave dissenting judgment on point of the Centre’s powers under section 26(2) of the RBI Act. “The judgement proposed by Gavai J does not recognise that Act does not envisage initiation of the demonetisation of banknotes by the central govt.” (Live Law)
Senior Advocate P Chidambaram on Thursday termed the decision-making process leading to the Centre’s 2016 move to demonetise currency notes of Rs 500 and Rs 1,000 as “deeply flawed”. He told a five-judge Constitution bench of the Supreme Court, presided by Justice S Abdul Nazeer, which is hearing a clutch of petitions challenging demonetisation, that the process could have started only from the RBI.
Chidambaram referred to the Preamble of the Reserve Bank of India Act, 1934, which said the right to regulate the issue of banknotes is entirely with RBI. It also generally operates the currency and the credit system. “That is why anything to do with currency must have emanated from the Reserve Bank of India,” he argued. He said the government could have exercised the power to demonetise only on RBI’s recommendation.
The Centre has told the Supreme Court it began consultations with the Reserve Bank of India in February 2016 — at least eight months before notifying demonetisation i.e., withdrawal of legal tender character of Rs 500 and Rs 1,000 notes, on November 8, 2016.
“It was taken after extensive consultation with the RBI and advance preparation… The then Finance Minister had stated in the Parliament… that Government consultation with RBI began in February 2016; however, the process of the consultation and the decision-making were kept confidential,” it said in an affidavit.
Six years ago, on this day, November 8, the Government of India announced the demonetisation of all banknotes of Rs 500 and Rs 1,000, as a step against accumulation and circulation of domestic black money.
Prime Minister Narendra Modi, in his televised address to the nation on November 8, 2016, said that the two banknotes will be “just worthless piece of paper,” with immediate effect, and went on to introduce new notes of Rs 2,000 and Rs 500 for public circulation.
While many have pegged it as a “bold” move, the Opposition, over the years, has criticised the BJP government, calling the decision a “failure”.
