New Delhi: More than six years after the Centre demonetised the currency notes of Rs 1,000 and Rs 500 denomination, the Supreme Court on Monday upheld the decision to be valid and legal.
By a majority of 4:1, a five-judge Constitution Bench led by Justice S Abdul Nazeer declared that the November 8, 2016 decision didn’t suffer from any illegality and such an economic policy decision of the government could not be reversed.
Justice Nazeer is scheduled to retire on January 4.
The majority judgment came from Justice Nazeer, Justice BR Gavai, Justice AS Bopanna and Justice V Ramasubramanian.
Pronouncing the judgment for the majority, Justice Gavai said the decision could not be faulted as there was consultation between the RBI and the government even as he said the petitions should be placed before an appropriate Bench by the CJI to look into the validity of the demonetisation process.
Dismissing 58 petitions challenging the demonetisation, the majority declared that the notification dated November 8, 2016 was valid and satisfied the test of proportionality; and it’s not relevant if the objective was achieved or not.
However, Justice BV Nagarathna differed from the majority on the Centre’s powers under Section 26(2) of the RBI Act. While noting that it was a well-intended exercise aimed at curbing black money and terror-funding, she found fault with the process of demonetisation.
However, Justice Nagarathna didn’t quash the demonetisation of the currency notes of Rs 1,000 and Rs 500 in November 2016.
The full text of the verdict is awaited.
While reserving its verdict, the Bench had on December 7 directed the Centre and the Reserve Bank of India (RBI) to furnish records relating to demonetisation in a sealed cover.
The Centre had defended demonetisation, saying it was a major step to fight “the menace of fake currency notes, storage of unaccounted wealth, and financing of subversive activities”. In an affidavit filed in response to petitions challenging demonetisation, the Ministry of Finance had said it was not a “standalone or isolated economic policy action”.
However, asserting its power of judicial review, the Supreme Court had said during the hearing that it would not be a silent spectator and sit quietly with folded hands only because demonetisation was an economic policy decision.