New Delhi: By a majority verdict, the Supreme Court on Monday upheld the government’s 2016 decision to demonetise the currency notes of Rs 1,000 and Rs 500 denominations.
A five-judge Constitution bench of the apex court, headed by Justice S A Nazeer, said the Centre’s decision-making process could not have been flawed as there was consultation between the Reserve Bank of India (RBI) and the Union government.
The court said the notification dated November 8, 2016, which announced the decision to scrap the high-value currency notes, cannot be said to be unreasonable and struck down on the ground of decision-making process.
The apex court said it is not relevant whether the objective behind the decision was achieved or not.
“The notification dated November 8, 2016 valid, satisfies test of proportionality,” the bench, also comprising justices B R Gavai, A S Bopanna, V Ramasubramanian and B V Nagarathna, said.
Justice Nagarathna differed from the majority judgment on the point of the Centre’s powers under section 26(2) of the RBI Act.
The top court’s judgment came on a batch of 58 petitions challenging the demonetisation exercise announced by the Centre on November 8, 2016.
The top court had, on December 7, directed the Centre and the Reserve Bank of India (RBI) to put on record the relevant records relating to the government’s 2016 decision and reserved its verdict.
It heard the arguments of Attorney General R Venkataramani, the RBI’s counsel and the petitioners’ lawyers, including senior advocates P Chidambaram and Shyam Divan.
Calling the scrapping of the Rs 500 and Rs 1,000 currency notes deeply flawed, Chidambaram had argued that the government cannot on its own initiate any proposal relating to legal tender, which can only be done on the recommendation of the RBI’s central board.
Resisting the apex court’s attempt to revisit the 2016 demonetisation exercise, the government had said the court cannot decide a matter when no tangible relief can be granted by way of “putting the clock back” and “unscrambling a scrambled egg”.
The RBI had earlier admitted in its submissions that there were “temporary hardships” and that those too are an integral part of the nation-building process, but there was a mechanism by which the problems that arose were solved.
In an affidavit, the Centre told the top court recently that the demonetisation exercise was a “well-considered” decision and part of a larger strategy to combat the menace of fake money, terror financing, black money and tax evasion.
The Supreme Court has heard a batch of 58 petitions challenging the demonetisation exercise announced by the Centre on November 8, 2016.
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