Supreme Court of India. PTI
New Delhi: Supreme Court has upheld the central government’s 2016 decision to demonetise currency notes of Rs 1,000 and Rs 500 denominations.
The verdict says that the power under Section 26(2) of the RBI Act can be used to demonetise whole series of bank notes and not any particular series.
A five-judge Constitution bench headed by Justice S A Nazeer, who will retire on January 4, pronounced its verdict on the matter.
The Supreme Court has heard a batch of 58 petitions challenging the demonetisation exercise announced by the Centre on 8 November, 2016.
The apex court held that the Centre’s notification dated 8 November, 2016 is valid and satisfies the test of proportionality.
Justice BR Gavai, while reading out the judgement, said demonetisation had a reasonable nexus with the objectives (eradicating black marketing, terror funding among others) sought to be achieved.
It is not relevant whether the objective was achieved or not, he added.
The bench also held that the prescribed period of 52 days for currency exchange cannot be said to be unreasonable.
The top court had, on 7 December, directed the Centre and the Reserve Bank of India (RBI) to put on record the relevant records relating to the government’s 2016 decision and reserved its verdict.
It heard the arguments of Attorney General R Venkataramani, the RBI’s counsel and the petitioners’ lawyers, including senior advocates P Chidambaram and Shyam Divan.
Calling the scrapping of the Rs 500 and Rs 1,000 currency notes deeply flawed, Chidambaram had argued that the government cannot on its own initiate any proposal relating to legal tender, which can only be done on the recommendation of the RBI’s central board.
Resisting the apex court’s attempt to revisit the 2016 demonetisation exercise, the government had said the court cannot decide a matter when no tangible relief can be granted by way of “putting the clock back” and “unscrambling a scrambled egg”.
The RBI had earlier admitted in its submissions that there were “temporary hardships” and that those too are an integral part of the nation-building process, but there was a mechanism by which the problems that arose were solved.
In an affidavit, the Centre told the top court recently that the demonetisation exercise was a “well-considered” decision and part of a larger strategy to combat the menace of fake money, terror financing, black money and tax evasion.
With inputs from agencies
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