Breather for centre on note ban, SC upholds act, Justice B V Nagarathna opposes

NEW DELHI: The Supreme Court upheld the central government's act of 2016 banning notes of Rs 1,000 and Rs 500. While four of the five judges upheld the Centre's action, only B V Nagaratna opposed the demonetisation. The majority judgment was read by Justice B R Gavai. The case was considered by a five-judge constitution bench comprising Justices S Abdul Nazeer, B R Gavai, A S Bopanna, V Ramasubramanian and B V Nagarathna.

Gavai clarified that the court's intervention in economic issues like demonetisation is not good. It cannot be said there is anything wrong with centre’s action, Gavai said in the judgment. Whether the target was achieved is not relevant. The government can take a decision in consultation with the RBI. The records show that adequate consultations were held. If necessary, the government can take a decision after consulting the regulatory board. Justice Gavai in the judgment, pointed out that the action cannot be misunderstood just because the central government has issued a directive.

However, Justice B V Nagarathna pointed out that he could not agree with the judgment that the procedures were followed fully. Procedures including gazette notification had to be followed. Proceedings should have followed the law. Was there unanimity in the board of RBI? Legislation by Parliament was required. The act of suspending Parliament is not legal. It is understood that the recommendation was received in one day, Justice B V Nagarathna said in the judgement.

58 pleas challenging the note ban came before the Supreme Court. The petitioners argued that the government has no right to take a decision to ban demonetisation.
The central government had earlier given an affidavit stating that the note ban was part of the measures to ban black money. The explanation in the affidavit is that the demonetization was not a unanimous action of the government and was implemented on the instructions of the RBI to control parallel economy.

The central government had also argued that the right of the Supreme Court to review its judgments on economic matters was limited. The centre had on November 8 in 2016 banned Rs 500 and Rs 1000.