The Supreme Court has upheld the central government’s decision to demonetise Rs 500 and Rs 1,000 notes in 2016. A five-judge constitution bench has dismissed all the petitions challenging the Centre’s 2016 demonetisation decision.
The Supreme Court says that there was a consultation between the Center and the RBI before demonetisation. However, in a five-judge bench, one judge has expressed disagreement on the decision of demonetisation.
November 8, 2016. 8 p.m. Prime Minister Narendra Modi’s voice- “From today midnight i.e. 12 o’clock on November 8, 2016, the currently issued currency notes of Rs. 500 and Rs. 1,000 will no longer be legal tender, that is, these currencies will be legally invalid. The old notes are now only of paper. Will remain like one piece.” Now after 6 years the decision of the Supreme Court has come on this decision of PM Modi.
A five-judge bench of the Supreme Court has given its verdict on the petitions challenging demonetisation.
The court said in its judgment-
58 petitions against demonetisation
The petitions against the central government’s decision of demonetisation claim that the due process required for demonetisation was not followed and the decision was taken arbitrarily.
A five-judge constitution bench headed by Justice SA Nazeer has given its verdict on the matter. This bench includes Justice Abdul Nazir, Justice BR Gavai, Justice AS Bopanna, Justice V Ramasubramanian, and Justice BV Nagaratna. Justice SA Nazir is going to retire on 4 January 2022.
A five-judge constitution bench headed by Justice S Abdul Nazeer had reserved the verdict on December 7, 2022, after hearing the detailed arguments of the petitioners, the Center and the Reserve Bank of India (RBI).
Let us tell you that 10 lakh crore rupees were withdrawn from circulation overnight due to the demonetisation decision of the government.
The petitioners had argued that the process laid down in Section 26(2) of the RBI Act, 1934 had been abandoned in the demonetisation decision. Section 26(2) of the Act states that “[RBI] on the recommendation of the Central Board, the Central Government may, by notification in the Gazette of India, declare that, with effect from such date as to… No series shall remain legal tender except at such office or agency of the Bank and to the extent specified in the notification.
Senior advocate P Chidambaram, appearing for one of the petitioners, argued that as per the rule, the recommendation should have been “taken out” by the RBI, but in this case, the central bank was advised by the government, after which it made the recommendation. He said that when the previous governments did demonetisation in 1946 and 1978, they did so through a law made by the Parliament.
Center had put these arguments before the court
Refuting the allegations, senior advocate Jaideep Gupta, representing RBI, had said that “the section does not talk about the process of initiation. It only says that the process will not end without the last two steps mentioned in it…” He also said, “We (RBI) recommended…”
Attorney General R Venkataramani tried to explain that demonetisation was not an isolated act, but part of a comprehensive economic policy, and hence it is not possible for the RBI or the government to act in isolation. “They work in consultation …”