SC upholds Centre’s note ban decision with 4-1 verdict

NEW DELHI: The five-judge Constitution bench of the Supreme Court has upheld the central government’s demonetisation decision by 4-1 majority. The SC verdict has become a relief to the government. Justice BV Nagarathna dissented from the majority judgement stating that demonetisation was an unlawful exercise of power.

Meanwhile, the BJP has hailed the SC verdict and the Congress has pointed out the dissenting opinion.

The Constitution Bench headed by Justice Abdul Nazeer gave the verdict after hearing the 58 pleas challenging the note ban.

Justice BR Gavai read the judgment upholding the central government's action under Section 26(2) of the RBI Act and Justices Abdul Nazeer, AS Bopanna and V Ramasubramanian has agreed to it.

Justice BV Nagarathna dissented stating that, “In my considered view, action of demonetisation by November 8 notification was unlawful. But status quo ante cannot be restored now since it was in 2016,”. She added that she is not questioning the 'noble objectives' of the exercise itself, but only the legal viewpoint.

The verdict was declared yesterday as Justice Nazeer was retiring on January 4. The hearing on the pleas were completed on December 7, 2022.

Prime Minister Narendra Modi announced the ban of 500 and 1,000 notes on November 8, 2016, while addressing the nation.

Government has sole authority

The majority judgment says that the court's intervention in economic matters like note ban is not good. The government has authority in economic matters. The action of central government is constitutionally correct. It is clear from the records that adequate discussions were held. The Centre can take a decision in consultation with the Reserve Bank. The documents show that discussions were held with the RBI as early as six months ago. Whether the goal was achieved is not relevant now.

RBI

The dissenting judgment states that the RBI has the power to initiate demonetisation proceedings. The Reserve Bank did not take the decision independently. This is indicated by the reference 'as desired by the central government’ in the documents. As per Section 26(2), government cannot ban all series of notes. The decision should have been taken by legislation. If secrecy was required it could have been enforced by Ordinance. Action taken without including Parliament is not right.

2016

Value of total currency: Rs 16.4 lakh crore

Banned currency value: Rs 15.41 lakh crore

Aim of demonetisation:

1. Prevent black money.

2. Prevent counterfeiting.

3. To stop terror funding.