Supreme Court's important comment on demonetisation, 'Demonetisation decision making process not flawed'

 

• The court said that the notification dated November 8, 2016 announcing the decision to demonetise high denomination currency notes cannot be said to be unreasonable and has been set aside on the ground of decision making process .

The Supreme Court in a 4:1 majority verdict on Monday upheld the government's 2016 decision to demonetise ₹1,000 and ₹500 notes, saying the decision-making process was not flawed.

The court said that the notification dated November 8, 2016 announcing the decision to demonetise high denomination currency notes cannot be said to be unreasonable and quashed the same on the basis of decision making process Is.

On January 4, a five-judge constitution bench headed by Justice S A Nazeer, who is retiring, gave its verdict in the matter. The apex court's verdict came on a batch of 58 petitions challenging the demonetisation exercise announced by the Center on November 8, 2016.

The Supreme Court held that the power under Section 26(2) of the RBI Act can be exercised to demonetise the entire series of bank notes and not a particular series. "any" cannot be given a restricted meaning

Here are the top quotes by Supreme Court justices:

The Supreme Court says that there was a consultation between the Center and the RBI before demonetisation. There was a reasonable nexus for bringing such a measure, and we hold that the demonetisation was not affected by the principle of proportionality.

SC said demonetisation cannot be held unconstitutional on the ground of excessive delegation. Court says there are inbuilt safeguards.

The decision-making process cannot be blamed just because the proposal came from the central government. Justice Gavai said.

"It is not relevant whether the objective was achieved or not," he said.

"The prescribed period of 52 days cannot be said to be unreasonable."

Justice Nagaratna differed with the majority decision only on the point of Centre's powers under Section 26(2) of the RBI Act. In their minority judgement, they held the demonetisation of ₹500 and ₹1,000 currency notes as tainted, illegal.

He said, "On perusal of the records submitted by RBI, the words are "desired by the Central Government"... indicating that no independent application was made by RBI. The entire exercise was done in 24 hours."

SC Justice BV Nagarathna says that demonetisation of ₹500, ₹1,000 series notes was to be done through law and not through notification.

He said that RBI did not apply independent mind, only opinion was sought which cannot be termed as recommendation.

He said that the Parliament should have discussed the law on demonetisation, the process should not have been done through gazette notification.