’Demonetisation is valid’: SC says Centre’s decision-making process cannot be ’flawed’

Mangalore Today News Network

New Delhi, Jan 02, 2023: The Supreme Court has pronounced its judgment today on a batch of pleas challenging the government’s 2016 decision to demonetise currency notes of Rs 1,000 and Rs 500 denominations. In its verdict, Supreme Court said ’2016 demonetisation is valid. Justice B R Gavai said Centre’s decision-making process cannot be flawed as there was consultation between RBI and govt. SC dismisses batch of pleas challenging Centre’s 2016 decision on demonetisation. "Not relevant whether objective achieved or not," Justice B R Gavai of Supreme Court on demonetisation. A five-judge Constitution bench headed by Justice S A Nazeer, who will retire on January 4, has pronounced its verdict on the matter on January 2.

 

Pronouncing the majority judgment, Justice Gavai said that the decision-making process cannot be faulted merely because the proposal emanated from the Central government. Justice Gavai added that there was consultation between the Centre and the RBI for a period of six months. "We hold that there was a reasonable nexus to bring such a measure, and we hold that demonetisation was not hit by the doctrine of proportionality," said the majority judgment.

Justice Nagarathna said examining Section 26(2) would not mean to sit over the merits of demonetisation and thus it is well within the lakshman rekha as drawn by this court. The bench said there has to be great restraint in matters of economic policy and the court cannot supplant the wisdom of the executive with its wisdom. Justice Nagarathna differed from the majority view, and delivered a dissenting judgment.

Justice Nagarathna differed from the majority judgment on the point of powers of the Central government under Section 26(2) RBI Act. The detailed judgment in the matter will be uploaded later in the day.

During the hearing, the Centre had told the Supreme Court that the November 2016 decision to withdraw legal tender of Rs 500 and 1,000 currency notes was one of the critical steps in the series of transformational economic policy steps and this decision was taken after extensive consultation with the RBI and advance preparations.

The Ministry of Finance, in an affidavit, said: "The withdrawal of legal tender character of a significant portion of total currency value was a well-considered decision. It was taken after extensive consultation with the RBI and advance preparations".

It further added that demonetisation was also a part of a larger strategy for combating the menace of fake money, terror financing, black money and tax evasion. "The notification issued on 08.11.2016 was a major step to fight the menace of fake currency notes, storage of unaccounted wealth and financing of subversive activities", it said.

Why did people file petition against 2016 demonetisation? Here’s all you need to know

Supreme Court today gave a verdict in favour of the 2016 demonetisaton. Justice B R Gavai says Centre’s decision-making process cannot be flawed as there was consultation between RBI and govt. SC has further dismissed batch of pleas challenging Centre’s 2016 decision on demonetisation. But, why did people file a petition against it? Check here.

- Demonetisation created a lot of confusion and chaos across country and as a result, fifty-eight petitions were filed in the Supreme Court challenging the notes ban, arguing that it was not a ’considered’ decision of the government and court should put it down.

- The government, however argued that the court cannot decide a matter when no tangible relief can be granted. It would be like "putting the clock back" or "unscrambling a scrambled egg", the centre said.

- A five-judge Constitution bench headed by Justice SA Nazeer heard the arguments before its winter break and on December 7, suspended the verdict.

- In its defense, the centre said the demonetisation was a "well-considered" decision and part of a larger strategy. They further stated that this decision was taken to combat the menace of fake money, terror financing, black money, and tax evasion.

- RBI’s view on note ban: The RBI admitted that there were "temporary hardships" which are part of the nation-building process.

Courtesy: Zee News