In a major verdict, the Supreme Court on Monday upheld the validity of 2016 note ban. The top court ruled that demonetisation cannot be struck down on the grounds of proportionality. The Centre’s decision was upheld with a majority of 4:1.
The five-judge Constitution bench headed by Justice S.A Nazeer, B R Gavai, B V Nagarathna, A S Bopanna and V Ramasubramanian pronounced the verdict. SC pronounced its judgement on a batch of pleas challenging the government’s 2016 decision to demonetise notes of Rs 1,000 and Rs 500 denominations.
Justice Gavai said that we find the three purposes are proper purposes and there was a reasonable nexus between the objects and the means to achieve the objects, Live Law reported. Action cannot be struck down on the basis of the doctrine of proportionality, SC pointed out.
Supreme Court holds that the power under Section 26(2) of RBI Act can be used to demonetise the whole series of banknotes and not any particular series. “Any” cannot be given restrictive meaning, Live Law reported.
The four judges in the five member bench said it was observed that the Centre had implemented the ban after consultation with RBI for six months. They also said that the period of 52 days given for the exchange of notes was not unreasonable.
However, Justice Nagarathna in her dissent held that demonetisation of the whole series Rs 500, Rs 1,000 currency notes had to be done through legislation and not through a gazette notification, Live Law reported. “The action of demonetisation initiated by the Central government as per the November 8, notification is unlawful,” she said. The note ban could have been implemented by parliament law, she said.
