New Delhi: Five-judge Constitution bench of the Supreme Court pronounced its verdict on 58 petitions challenging the Centre’s November 8, 2016 decision to demonetise currency notes of Rs 1,000 and Rs 500 denominations. The verdict came in favour of the Union government and is a big relief to the Centre and RBI.
Supreme Court says that there was consultation between the Centre and the RBI and the bench held that the policy was ‘not hit by the doctrine of proportionality’.
Two differing opinions, one authored by Justice BR Gavai and another authored by Justice BV Nagarathnaare were delivered in the verdict.
The petitioners argued that any power to demonetise is only on the recommendation of the RBI’s Central Board but the process violated the RBI Act by demonetising ‘all series’ of Rs 500 and Rs 1000 currency notes. Meanwhile, the Centre said that demonetisation was a step to tackle fake currency notes, unaccounted wealth and terrorism financing.
RBI said that the process under the RBI Act to make a recommendation to the Centre was followed and the prescribed quorum was met in the RBI’s Central Board meeting that decided to make the recommendation.
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Justice Nagarathna: centre having obtained consent of the bank board the notification was brought out the next day#Demonetisation
— Bar & Bench (@barandbench) January 2, 2023
# Justice BV Nagarathna differs from Justice Gavai’s judgment on the powers of the Central Govt under Section 26(2) RBI Act.
# Supreme Court holds that the power under Section 26(2) of the RBI Act can be used to demonetise the whole series of banknotes.
# Supreme Court holds that demonetisation policy cannot be struck down.
# Justice Gavai: In view of multifarious activities legislature can consider working on the details. We have emphasized on the primary role of RBI to regulate bank notes as important role of the economic structure of the country
# Justice Gavai: we hold that in present case Centre if required to take a decision after consulting the regulatory board can take the same.
# Verdict on Demonetization shortly.
