The centre’s decision six years ago to demonetise currency notes of Rs 500 and Rs 1,000 passed the Supreme Court’s test Monday in a majority 4-1 verdict. (File Photo)Demonetisation Case Order Highlights: 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).
Following the Supreme Court’s verdict, the Bharatiya Janata Party launched a scathing attack on the Congress and its former president Rahul Gandhi. Former Union Minister and senior BJP leader Ravi Shankar Prasad asked if the Wayanad MP would apologise to the nation now for his ‘campaign against the demonetisation scheme’. Hitting back, the Congress and the Nationalist Congress Party (NCP) said the BJP government at the Centre cannot absolve itself of blame for the distress the people of the country suffered due to the decision to scrap high-value currency notes.
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.
A worker fixes a board displaying the after-effects of demonetisation and other tax reforms by the central government, prior to a protest by the Congress party at Azad Maidan in Mumbai. (Express file photo by Nirmal Harindran)
Noting that the demonetisation action should not be seen as a standalone measure, the Centre said it was “one of the critical steps in the series of transformational economic policy steps” and “a major step to fight the menace of fake currency notes, storage of uncounted wealth and financing of subversive activities”. (File)
People form a long queue outside an ATM in Bank Square, Sector 17 of Chandigarh, to withdraw money on December 10, 2016, a month after Indian government announced the demonetisation of banknotes of Rs 500 and Rs 1,000. (Express Photo by Kamleshwar Singh)
In upholding the Centre’s 2016 decision to demonetise currency notes of Rs 500 and Rs 1,000, Supreme Court gives a wide interpretation to the law on the decision-making process and extends the benefit of doubt to the government on the key events leading up to the decision.
The majority ruling by four judges accepts all contentions of the Centre: from who can initiate the proposal for demonetisation, whether the decision was needed to be done in haste and secrecy to the court’s adjudication being essentially an “academic” exercise.
The majority view also places reliance on the “record” submitted by the government after the hearing was complete and the Court reserved its verdict to hold that the RBI was sufficiently consulted on the issue. It is from this record, which the petitioners were not given an opportunity to reply to, that the Court holds that the Centre and RBI discussed the demonetisation issue for over six months. (Read More)
In the Supreme Court’s majority opinion upholding the government’s demonetisation order of November 8, 2016, Justice B R Gavai — writing for himself and Justices S Abdul Nazeer, A S Bopanna, and V Ramasubramanian — reframed the questions referred to the Constitution Bench into six issues. In her dissenting judgment, Justice B V Nagarathna disagreed with the reasoning and conclusions in the majority opinion.
1. Whether the power available to the Central Government under sub-section (2) of Section 26 of the RBI Act can be restricted to mean that it can be exercised only for “one” or “some” series of bank notes and not “all” series in view of the word “any” appearing before the word “series” in the said sub-section, specifically so, when on earlier two occasions, the demonetisation exercise was done through the plenary legislation? (Read More)
Six years after Prime Minister Narendra Modi announced the demonetisation of Rs 500 and Rs 1,000 notes, a five-judge constitutional bench of the Supreme Court has upheld the controversial decision. The 4:1 verdict on Monday rejected the petitions challenging demonetisation, and upheld its legality, with the majority concluding that there was no flaw in the decision-making process. However, the dissenting judgment, authored by Justice B V Nagarathna, has not only called the entire exercise not in accordance with the law but has also raised crucial questions over the RBI’s institutional independence. The central bank would do well to heed those questions.
Justice Nagarathna notes that the proposal for demonetisation “originated” from the central government and that the recommendation was “obtained” from the RBI in the form of an opinion. She points out that the records contained phrases such as — “as desired” by the central government, and that the government had “recommended” — which showed that there was “no independent application of mind” by the RBI. (Read More)
As the Supreme Court upheld, by a 4:1 majority, the Centre’s demonetisation decision of 2016, opposition parties on Saturday said the majority judgment has neither endorsed the wisdom of the decision nor commented on its impact and outcomes.
“To say that demonetisation has been upheld by Supreme Court is totally misleading and wrong,” AICC general secretary in charge of communication, Jairam Ramesh, said.
The party also criticised the BJP, which demanded an apology from Rahul Gandhi in the wake of the SC verdict. It said Prime Minister Narendra Modi should, in fact, apologise, as his “Tughlaqi decision” had devastated small- and medium-scale businesses, destroyed the informal sector, and finished off livelihoods of lakhs of families. (Read More)
The Government’s demonetisation initiative reflected a concern to address “disparate (economic) evils,” showed “foresight,” and was motivated by the “best intentions and noble objects,” but the way it was done, it violated the law and highlighted how the central bank didn’t apply an independent mind. Because it “arose” from the Centre, the Government should have brought an ordinance or a law in Parliament to implement the noteban rather than get Reserve Bank of India to give a recommendation and issue a notification the way it did.
This is the central argument of the dissenting ruling of Justice B V Nagarathna that, in effect, argues how the Government’s actions undercut the institutional primacy of the RBI.
Disagreeing with the majority view which upheld the demonetisation process, Justice B V Nagarathna held that the measure “was not in accordance with law.” (Read More)
According to sub-section (1) of Section 26 of the Reserve Bank of India Act, 1934, every bank note shall be legal tender at any place in India in payment or on account for the amount expressed therein and shall be guaranteed by the central government. This provision is subject to sub-section (2) of Section 26 of the Act.
Sub-section (2) of Section 26 of the Act applies only when a proposal for demonetisation is initiated by the central board of the bank by way of a recommendation being made to the central government. The said recommendation can be in respect of any series of bank notes of any denomination which is interpreted to mean any specified series of bank notes of any specified denomination.
The expression “any series of bank notes of any denomination” has been given its plain, grammatical meaning, having regard to the context of the provision and not a broad meaning. Thus, the word “any” will mean a specified series or a particular series of bank notes. Similarly, “any” denomination will mean any particular or specified denomination of bank notes. (Read More)
The centre’s decision six years ago to demonetise currency notes of Rs 500 and Rs 1,000 passed the Supreme Court’s test Monday in a majority 4-1 verdict with four judges on a five-judge Constitution Bench holding that the November 8, 2016, notification withdrawing the legal tender of these notes “does not suffer from any flaws in the decision-making process”.
While Justices S Abdul Nazeer, B R Gavai, A S Bopanna and V Ramasubramanian upheld the Government’s move, Justice B V Nagarathna disagreed with the “reasoning and conclusions” in the majority judgment.
Rejecting arguments against the Government’s decision-making process, Justice Gavai, writing for the Bench, said the court had “scrutinised the entire record, i.e., the communication dated 7th November 2016 addressed by the Secretary, Department of Economic Affairs, Ministry of Finance to the Governor, RBI, the Minutes of the Meeting of the Central Board dated 8th November 2016, the recommendations by the RBI dated 8th November 2016 and the Note for the Cabinet Meeting held on 8th November 2016”. (Read More)
Finance Minister Niramala Sitharaman Monday welcomed the Supreme Court judgement upholding the decision of the BJP government at the Centre to demonetise high value currency notes in November 2016.
"Welcome the Hon'ble Supreme Court's judgement today on Demonetization. A five-judge Constitution Bench (via a 4-1 majority) has upheld the Demonetization after carefully examining the issue & has dismissed several petitions challenging the decision," Sitharaman said in a series of tweets.
"There were consultations between the Centre & RBI for a period of 6 months. There is a reasonable nexus to bring such a measure & it satisfies the test of proportionality. Decision-making process cannot be faulted merely because the proposal emanated from the Centre," she said, quoting the judgement.
CPI General Secretary D Raja on Monday said citizens should give due consideration to the "dissent judgment" in the Supreme Court's verdict on demonetisation, as it has questioned certain basic issues over the policy decision.
The Parliament was not given the opportunity to discuss the pros and cons of the demonetisation policy when it was announced "surprisingly" and "suddenly" by Prime Minister Narendra Modi back in 2016, he said. "The majority upheld the demonetisation but a dissent has been recorded. The dissent judgment has questioned certain basic issues and our citizens need to give due consideration to the dissent judgment also. Why I am saying this? Parliament is supreme in our democracy," the former Rajya Sabha member said.
"When the demonetisation policy was announced by Prime Minister, surprisingly, suddenly, midnight, Parliament was not consulted. Parliament was not given the opportunity to discuss its pros and cons," the Communist leader added. The government has not said anything in Parliament and it is not ready to place a White Paper explaining everything in Parliament, he said. Demonetisation has proved to be "horrific" for the common people, he added. (PTI)
Law Minister Kiren Rijiju on Monday accused the Congress of attempting to "twist" the issue of demonetisation and "misinform" people after opposition leaders played down the Supreme Court verdict upholding the government's 2016 decision.
In a series of tweets, he also slammed P Chidambaram for projecting the dissenting verdict in the 4:1 majority decision as a "slap on the wrist" of the government. Rijiju asserted that "the Supreme Court never examines the impact of a decision like demonetisation. That question could never have been raised for consideration of the court as it is essentially for the executive."
Chidambaram had claimed that the dissenting verdict on demonetisation is a "slap on the wrist" of the government as it has pointed out the "illegality and irregularities" in the decision.
Hitting out at Prime Minister Narendra Modi over demonetisation, president of AIMIM (All-India Majlis-E-Ittehadul Muslimeen) president Asaduddin Owaisi on Monday challenged the BJP to celebrate 'Demonetisation Day.' He slammed the Modi government over the reason cited for the demonetisation that was decided upon to primarily check flow of black money, among others. He claimed demonetisation affected the economy.
According to Owaisi, the decision (on demonetisation) was wrong as it led to a decline in the growth of the GDP to 4 per cent in 2019-2020 from 8.3 per cent in 2016-17. "We want to tell the Prime Minister why don't you celebrate 'Demonetisation Day'. If demonetisation was a success and if they think it was a success we challenge the BJP why don't they celebrate 'Demonetisation Day'.
The Prime Minister knows that women, daily wage workers, artisans, drivers, electricians, and masons were affected owing to demonetisation. Why doesn't the BJP celebrate 'Notebandi Divas'," the Hyderabad MP said. Quoting a report, Owaisi said 50 lakh people lost employment. (PTI)
Demonetisation was a shockingly cruel policy enacted under false pretences. It did not achieve any of its stated objectives: A cashless economy, a revenue bonanza for the government, cleaning the system of illicit money, or stopping terror finance. It inflicted needless suffering and made fools of citizens, who willingly acquiesced.
But the tragedy was followed by an institutional farce. The Supreme Court evaded pronouncing on the legality of the measure for six years. Now it has, as was widely expected, upheld the legality of demonetisation in a 4-to-1 decision. But even farce can sometimes have lasting institutional consequences. In this instance, it will depend on whether we heed the warnings of the dissent. Read the Express Opinion by Pratap Bhanu Mehta
Circulation of Fake Indian Currency Notes (FICN) in the country continues to pose a challenge even after the 2016 demonetisation, whose one of the key objectives was to eradicate counterfeiting of notes.
According to report of the National Crime Control Bureau (NCRB), FICN with the face value of Rs 245.33 crore has been seized by the law enforcement agencies across the country since 2016 -- the year the Centre demonetised Rs 1,000 and Rs 500 notes.
The highest amount of FICN with the face value of Rs 92.17 crore was seized in 2020 while the lowest with the face value of Rs 15.92 crore was seized in 2016. In 2021, FICN of Rs 20.39 crore face value was seized in the country, of Rs 34.79 crore in 2019, Rs 26.35 crore in 2018 and Rs 55.71 crore in 2017, the NCRB data showed.
According to the RBI annual report, published in May 2022, the number of fake currency notes of 500 denomination detected by the banking system more than doubled to 79,669 pieces in 2021-22 fiscal over the previous year. (PTI)
It is "misleading and wrong" to say the Supreme Court has upheld demonetisation, the Congress said on Monday, adding that the majority apex court verdict on the matter deals with the limited issue of the process of decision-making not with its outcomes.
The verdict has nothing to say on whether the stated objectives of demonetisation were met, AICC general secretary Jairam Ramesh said.
"The Supreme Court verdict is on the process of demonetisation and not on its outcomes. If anybody has to apologise, it has to be the Prime Minister, because the 'Tughlaki' decision taken by him on November 8, 2016 destroyed lakhs of MSMEs, the informal sector, and livelihood of lakhs of people, and we continue to face the negative impact it had on our economy," Ramesh said. (PTI)
Communist Party of India (Marxist) General Secretary Sitaram Yechury on Monday reacted to the decision of the Supreme Court's Constitution bench on demonetisation and said that the Court has not declared the decision 'right'.
"The Supreme Court only justified that Central government has the right to take the decision of demonetisation but have not said that demonetisation was right," Sitaram Yechury said.
Speaking to news agency ANI Sitaram, Yechury said, "The Supreme Court has not said that demonetisation was right and a dissenting judge said that the decision taken by the government was to be taken by the Reserve Bank of India (RBI), but here the opposite thing happened and the government sought an opinion from the RBI. If the government had to take a decision on Demonetisation, then it is wrong to bypass the parliament. There was a need to take the opinion of the Parliament and this is the decision of the dissenting judge which is correct. (ANI)
The Nationalist Congress Party and the Congress on Monday slammed the Narendra Modi government for demonetisation, their statements coming on a day when the Supreme Court upheld the 2016 move saying the decision did not suffer from any legal or constitutional flaw. The two parties said the Bharatiya Janata Party government at the Centre cannot absolve itself of blame for the distress the people of the country suffered due to the decision to scrap high-value currency notes.
"Despite the (SC) verdict, the BJP government must be held accountable for the downfall of the economy due to demonetisation and the loss of many lives due to the disastrous, ill planned process," NCP national spokesperson Clyde Crasto said. He said the move failed in exposing blast money as 99 per cent of demonetised notes came back to the banks.
"Where did the black money disappear. There is more currency in circulation in the market today than before. So what happened to digital payment if the idea was to minimize cash transactions,'' Crasto questioned. (PTI)
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.
On Monday, (January 2) the Supreme Court upheld the government’s decision to demonetise currency notes of Rs 500 and Rs 1,000 by a 4:1 majority. Rather than the effect of the decision, the court was to consider whether the recommendation for the policy came from the government or the RBI.
“From the record, it appears that there was a consultative process between central govt and RBI for over 6 months before the decision was taken,” the top court observed in a majority judgement written by Justice B R Gavai.
In a surprise announcement on the evening of November 8, 2016, Prime Minister Narendra Modi said in a televised address to the nation 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. Read more
While the Supreme Court on Monday upheld the Centre’s decision, taken on November 8, 2016, to demonetise Rs 500, and Rs 1000 notes, Justice B V Nagarathna, who was part of the 5-judge bench, differed with the majority order. In her judgment, Justice Nagarathna asserted that the scrapping of Rs 500, Rs 1,000 series notes had to be done through legislation, and not through notification. She also differed from the majority’s view on point of the Centre’s powers under section 26(2) of RBI Act.
“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,” said Justice B V Nagarathna.
The top court by a 4:1 majority verdict upheld the Centre’s 2016 decision on demonetisation. Read more
In affidavits submitted to the Supreme Court hearing a clutch of petitions on demonetisation in which the verdict is scheduled January 2, the government said it was a “well-considered” decision and the consultation process with the Reserve Bank of India had begun in February 2016, a good nine months before Prime Minister Narendra Modi’s announcement on November 8, 2016.
The RBI, too, in its affidavit said that due process was followed and it was the one that recommended the demonetisation.
What the Government and the RBI affidavits don’t mention is the fact that the RBI’s recommendation for the noteban – a procedural requirement – came after the central bank critiqued many of the government’s justifications. These were put on record just hours before the announcement of the decision as minutes of the RBI’s Central Board meeting. Read more
The Supreme Court Monday upheld the Centre’s decision to demonetise Rs 500 and Rs 1000 currency notes in November 2016. A bench constituting five judges pronounced the verdict on 58 petitions challenging the Centre’s decision, and asserted that the notification did not suffer from any flaw and satisfied the proportionality test.
The apex court upheld the decision taken by the Central Government six years ago to demonetise these currency notes in a 4:1 majority judgement.
The apex court, in its verdict, held that:
Read more for top quotes from the SC’s ruling on noteban
Former Union Finance Minister P Chidambaram on Monday said the majority verdict by the Supreme Court has steered clear of the question whether the objectives of the demonetisation exercise were achieved at all.
The 'minority' judgement pointed out the 'illegality' and the 'irregularities' in the demonetisation, Chidambaram said on Monday soon after the apex court made its verdict.
"Once the Hon'ble Supreme Court has declared the law, we are obliged to accept it. However, it is necessary to point out that the majority has not upheld the wisdom of the decision; nor has the majority concluded that the stated objectives were achieved," the senior Congress leader said in a tweet. "In fact the majority has steered clear of the question whether the objectives were achieved at all," he said.
"We are happy that the minority judgement has pointed out the illegality and the irregularities in the demonetisation. It may be only a slap on the wrist of the government, but a welcome slap on the wrist," he noted. (PTI)
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)
Justice Nagarathna, in her dissenting view, said: "Legislation made in secrecy is an ordinance. The Centre’s powers are vast for the demonetisation of all currency and must be exercised only through plenary legislation and not just a gazette notification."
The Supreme Court has held that demonetisation cannot be struck down on the grounds of proportionality.
"We find that the three purposes are proper purposes and there was a reasonable nexus between the objects and the means to achieve the objects. Action cannot be struck down on the basis of the doctrine of proportionality," it said. (Live Law)
The Court stated that its interpretation of the RBI Act is “pragmatic and not pedantic”.
"The central government's decision was after RBI board’s approval which shows in-built safeguard against centre’s powers. It cannot be said that there is excessive delegation of power under the RBI Act to the Centre which is answerable to the Parliament." the court observed.
"From the record, it appears that there was a consultative process between central govt and RBI for over 6 months before the decision was taken," the top court observed.
"We have emphasised on the primary role of RBI to regulate banks noted as the important role of the economic structure of the country. A delegation is made to the Central government which is answerable to Parliament which in turn is answerable to the citizens of the country. The centre is required to take the action after the consultation with the Central Board and there is an inbuilt safeguard. There has to be great restraint in matters of economic policy. The court cannot supplant the wisdom of executive with its wisdom. Decision-making process cannot be faulted merely because the proposal emanated from the centre," the judgment stated. (Live Law)
"Though initially 9 issues were framed, we have reframed 6 issues. The issues framed are -- Whether the power under Section 26(2) RBI Act can be used for the whole series? Whether the impugned notification dated Nov 8 2016 is liable to struck down on the ground of proportionality. Restrictive meaning cannot be given to word "any" in Section 26(2) of RBI Act. The modern trend is of pragmatic interpretation. Interpretation which leads to absurdity must be avoided. The purposes of the Act must be considered while interpretation," Justice Gavai read out from the judgment. (Live Law)
The bench has assembled now. Justice BR Gavai is reading out the judgment.
According to the apex court cause-list — the list of business of the court, there will be two judgments, one by Justice B R Gavai and another by Justice B V Nagarathna. It remains to be seen whether these are concurring or dissenting views.
Six years after Prime Minister Narendra Modi’s demonetisation experiment, some commentators and economists are now citing strong growth in Goods & Services Tax (GST) collections to claim that demonetisation was a success, or at least not the disaster it was purported to be.
Apparently, 23 quarters after demonetisation, last quarter’s strong GST collections are evidence of increasing formalisation of India’s economy and hence, the fulfilment of demonetisation’s stated goals. This is as bizarre as former US President Donald Trump claiming in November 2018 that since it was among the coldest months on record in America, global warming and climate change are a hoax. Read more
Welcome to our Live Blog. The Supreme Court is set to deliver Monday, the first day post its winter recess, the verdict on a batch of petitions challenging the government’s November 2016 decision to demonetise Rs 500 and Rs 1,000 currency notes. Stay tuned as we bring you the latest news updates on the hearing of the case.