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HomeNewsBusinessEconomySC upholds demonetisation by 4:1 majority: Understanding the verdict through 10 points

SC upholds demonetisation by 4:1 majority: Understanding the verdict through 10 points

The constitutional validity of demonetisation was challenged in the Supreme Court through a series of writ petitions as early as November 2016.

January 02, 2023 / 12:40 IST
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The Supreme Court on Monday upheld the government's 2016 decision to demonetise the Rs 1,000 and Rs 500 currency notes.

Moneycontrol takes us through the De-Mo verdict in 10 essential points.

  1. The constitutional validity of demonetisation was challenged in the Supreme Court through a series of writ petitions as early as November 2016. In December 2016, a three-judge bench of the apex court referred the issue to a larger Constitution Bench considering the importance and far-reaching implications of the case.
  2. A five-judge Constitution Bench of the apex court, headed by Justice SA 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.
  3. 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.
  4. "The notification dated November 8, 2016 valid, satisfies test of proportionality," the bench, also comprising justices BR Gavai, AS Bopanna, V Ramasubramanian and BV Nagarathna, said.
  5. SC Justice Gavai said that the power available to Centre under Section 2(26) of the RBI Act can be exercised on all series of bank notes. He said that it appears from records that the there was a consultation between the central government and the RBI. The decision-making process cannot be faulted because the proposal emanated from central government. Moreover, the notification does not suffer from any flaws, the notification is not unreasonable.
  6. Justice Nagarathna differed from the majority judgment on the point of the Centre's powers under section 26(2) of the RBI Act.  Also read | The De-Mo case: What the lawyers said for and against the matter
  7. In her dissenting judgement, Justice Nagarathna said that Justice Gavai's judgement does not consider that only RBI’s Board can recommend demonetisation. She added that powers of central government to demonetise have to be exercised through a legislative process.
  8. "Parliament is often referred to a nation in miniature. It cannot be left alone on such a subject of importance," said Nagarathna. She added that the powers of the central government being vast, it should be exercised in a plenary purpose. Discussion with respect to demonetisation is required and ordinance or legislation is required for demonetisation.
  9. After the judgement, senior advocate P Chidambaram, appearing for the petitioners, tweeted, "Once the Hon'ble Supreme Court has declared the law, we are obliged to accept it. However, it is necessary to point out that the majority has not upheld the wisdom of the decision; nor has the majority concluded that the stated objectives were achieved. In fact, the majority has steered clear of the question whether the objectives were achieved at all."
  10. The top court's judgment came on a batch of 58 petitions challenging the demonetisation exercise announced by the Centre on November 8, 2016.
(With inputs from PTI)
Moneycontrol News
first published: Jan 2, 2023 12:40 pm

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