Express News Service
NEW DELHI: More than six years after the Centre decided to ban legal tender of Rs 500 and 1000 notes, a five-judge Constitution bench of the Supreme Court on Monday upheld the same by a majority of 4:1.
The majority view which was authored by Justice BR Gavai was agreed to by Justices S Abdul Nazeer, A S Bopanna, and V Ramasubramanian.
Ruling that the notification dated 8/11/2016 by which the decision was implemented does not suffer from any flaw and satisfies the proportionality test, the majority opined that from the record, it appears that there was consultation between the RBI and the Centre for a period of 6 months.
“The action cannot be hit by the doctrine of proportionality. In the 1978 act, the period was only three days which was further extendable by five days. In the present case, the period provided (for the exchange of the demonetised notes) was 52 days and it cannot be said to be an unreasonable period”, the majority also opined.
“The power available to the Centre under section 26(2) of the RBI Act cannot be restricted to mean that it can be exercised only for some series of notes and not for all series of notes. Merely because on two earlier occasions the demonetisation exercise was by plenary legislation, it cannot be held that such power would not be available to the central government,” Justice Gavai, who read the majority judgment, said.
ALSO READ | Misleading to say SC upheld demonetisation; verdict doesn’t deal with outcome, says Congress
Justice BV Nagarathna in her dissenting view ruled that centre’s action initiated by notification dated 8/11 was an exercise of power contrary to law and unlawful. “Power of Centre being vast can be exercised through a plenary legislation rather than by an executive act by issuance of a notification,” she said.
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Differing from the majority view, Justice BV Nagarathna said that demonetisation of bank notes at the behest of the Central government is a far more serious issue having an effect on the economy and citizens.
She further ruled that when a statue contemplates a specific procedure to be adhered to in order to arrive at the desired end, such procedure cannot be substituted by an alternate procedure.
Observing that the decision being the executive’s economic policy cannot be reversed, the bench said there has to be great restraint in matters of economic policy and the court cannot supplant the wisdom of the executive by a judicial review of its decision.
ALSO READ | What was demonetisation actually going after, riding roughshod over the public?
The plea before the top court had also challenged the validity of the notification dated November 8, 2016, issued under the Reserve Bank of India Act, 1934 on the ground that it was violative of Articles 14, 19, 21 and 300A of the Constitution of India.
On December 16, 2016, a three-judge bench of the SC refused to grant interim relief against the decision of demonetisation but had framed questions to be determined by a larger bench.
Justice B R Gavai
Centre’s decision-making process cannot be flawed as there was consultation between RBI and govt
Not relevant whether objective achieved or not
Justice B V Nagarathna
Justice Nagarathna differs from Justice B R Gavai’s judgment on point of Centre’s powers under section 26(2) of RBI Act
Justice Nagarathna, in her minority verdict, holds that demonetisation of Rs 500 and Rs 1,000 currency notes was vitiated, unlawful
Scrapping of Rs 500, Rs 1,000 series notes had to be done through legislation, not through notification
Parliament should have discussed law on demonetisation, process should not have been done through gazette notification
NEW DELHI: More than six years after the Centre decided to ban legal tender of Rs 500 and 1000 notes, a five-judge Constitution bench of the Supreme Court on Monday upheld the same by a majority of 4:1.
The majority view which was authored by Justice BR Gavai was agreed to by Justices S Abdul Nazeer, A S Bopanna, and V Ramasubramanian.
Ruling that the notification dated 8/11/2016 by which the decision was implemented does not suffer from any flaw and satisfies the proportionality test, the majority opined that from the record, it appears that there was consultation between the RBI and the Centre for a period of 6 months.
“The action cannot be hit by the doctrine of proportionality. In the 1978 act, the period was only three days which was further extendable by five days. In the present case, the period provided (for the exchange of the demonetised notes) was 52 days and it cannot be said to be an unreasonable period”, the majority also opined.
“The power available to the Centre under section 26(2) of the RBI Act cannot be restricted to mean that it can be exercised only for some series of notes and not for all series of notes. Merely because on two earlier occasions the demonetisation exercise was by plenary legislation, it cannot be held that such power would not be available to the central government,” Justice Gavai, who read the majority judgment, said.
ALSO READ | Misleading to say SC upheld demonetisation; verdict doesn’t deal with outcome, says Congress
Justice BV Nagarathna in her dissenting view ruled that centre’s action initiated by notification dated 8/11 was an exercise of power contrary to law and unlawful. “Power of Centre being vast can be exercised through a plenary legislation rather than by an executive act by issuance of a notification,” she said.
WATCH |
Differing from the majority view, Justice BV Nagarathna said that demonetisation of bank notes at the behest of the Central government is a far more serious issue having an effect on the economy and citizens.
She further ruled that when a statue contemplates a specific procedure to be adhered to in order to arrive at the desired end, such procedure cannot be substituted by an alternate procedure.
Observing that the decision being the executive’s economic policy cannot be reversed, the bench said there has to be great restraint in matters of economic policy and the court cannot supplant the wisdom of the executive by a judicial review of its decision.
ALSO READ | What was demonetisation actually going after, riding roughshod over the public?
The plea before the top court had also challenged the validity of the notification dated November 8, 2016, issued under the Reserve Bank of India Act, 1934 on the ground that it was violative of Articles 14, 19, 21 and 300A of the Constitution of India.
On December 16, 2016, a three-judge bench of the SC refused to grant interim relief against the decision of demonetisation but had framed questions to be determined by a larger bench.
Justice B R Gavai
Centre’s decision-making process cannot be flawed as there was consultation between RBI and govt
Not relevant whether objective achieved or not
Justice B V Nagarathna
Justice Nagarathna differs from Justice B R Gavai’s judgment on point of Centre’s powers under section 26(2) of RBI Act
Justice Nagarathna, in her minority verdict, holds that demonetisation of Rs 500 and Rs 1,000 currency notes was vitiated, unlawful
Scrapping of Rs 500, Rs 1,000 series notes had to be done through legislation, not through notification
Parliament should have discussed law on demonetisation, process should not have been done through gazette notification
