SC upholds demonetisation, says ‘whether objective achieved or not is irrelevant’

In a majority judgement, the Supreme Court on Monday (January 2) upheld the Narendra Modi government’s decision to ban the Indian currency notes of ₹500 and ₹1,000 in 2016 and said that the move cannot be faulted only because it came from the Centre.

A Constitution bench comprising five judges gave its verdict after hearing 58 petitions challenging the validity of demonetisation move.

Justice BR Gavai delivered the verdict on behalf of himself and justices SA Nazeer, AS Bopanna and V Ramasubramanian, while Justice BV Nagarathna was the sole judge to dissent with the judgment.

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“Decision making process cannot be faulted merely because the proposal emanated from the Central government…there was a reasonable nexus with the objectives sought to be achieved…it appears there was a consultation between the Reserve Bank of India (RBI) and the Central government over a period of six months,” Justice Gavai said.

The Constitutional bench said that the 52-day window given by the government to get the notes exchanges was not unreasonable.

The bench added that that the move to demonetise the said notes cannot be struck down on the grounds of proportionality. “Whether objective of demonetisation achieved or not is not relevant.”

Justice Nagarathna, who gave a dissenting judgment, said: “Judgment by Justice Gavai does not recognise that the Act does not envisage initiation of demonetisation by the central government.”

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Justice Nagarathna said she differs with the judgment by Justice Gavai on each of the six issues framed by the court in the case.

Asserting that demonetisation had wide ramifications on the economy and citizens, she said that if it came from the government and not the RBI then it should have been done through a legislation or by an Ordinance, not a gazette notification.

The Supreme Court judge said the objective of the Centre may have been sound but was not in accordance with law. She, however, said that although the note ban was “unlawful,” the status quo ante as of November 8, 2016 cannot be restored now.

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