New Delhi, Jan 2: More than six years after the Centre’s decision to demonetise the Rs 1,000 and Rs 500 denomination notes, the Supreme Court in a 4:1 majority verdict on Monday upheld the 2016 move, saying the decision-making process was not flawed merely because the procedure emanated from the government.
Ruling that the decision to scrap the high-value currency notes does not suffer from any legal or constitutional flaw, the top court said there was consultation between the Reserve Bank of India (RBI) and the Union government for a period of six months.
Observing that the decision being the executive’s economic policy cannot be reversed, a five-judge Constitution bench headed by Justice SA Nazeer said there has to be great restraint in matters of economic policy and the court cannot supplant the wisdom of the executive by a judicial review of its decision.
The bench, also comprising justices BR Gavai, AS Bopanna and V Ramasubramanian, said the notification dated November 8, 2016, which announced the decision to scrap the high-value currency notes, cannot be said to be unreasonable and struck down on the ground of decision-making process.
It added that the decision had a reasonable nexus with its objectives, such as eradicating black money, terror funding etc., and it is not relevant whether those objectives were achieved or not.
The apex court said the 52-day window provided for the exchange of the demonetised notes with legal tenders was not unreasonable and it cannot be extended now.
“There was consultation between the Centre and the Reserve Bank of India 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,” the bench said.
“The power available to the Centre under section 26(2) of the RBI Act cannot be restricted to mean that it can be exercised only for some series of notes and not for all series of notes. Merely because on two earlier occasions the demonetisation exercise was by plenary legislation, it cannot be held that such power would not be available to the central government,” Justice Gavai, who read the majority judgment, said.
The bench said section 26(2) does not provide for excessive legislation in as much as there is an in-built safeguard that such a power has to be exercised on the recommendation of the RBI’s central board and that it is not liable to be struck down.
“The notification does not suffer from any flaws in the decision-making process. The notification satisfies the test of proportionality and as such cannot be struck down,” the court said. (PTI)
