According to the Supreme Court, there was consultation between the Centre and the RBI prior to demonetisation.
The Supreme Court on its first working day of 2023 came with a historic 4-1 majority decision, the Supreme Court backed Prime Minister Narendra Modi’s 2016 note ban today and declared that it was “not relevant” if the overnight ban’s goal was accomplished. One judge objected, calling the action “unlawful”.
A five-judge Constitution bench with Justice S. A. Nazeer as its chief judge—who will retire on January 4—issued its decision. It denied a number of petitions that contested the Centre’s decision to demonetize the Rs. 500 and Rs. 1000 notes in 2016, saying that the Executive’s economic policy precludes reversing the decision..
The Supreme Court agreed with the government’s assertion that the Center and the RBI had spoken before demonetization. The Supreme Court ruled that there was a justifiable connection for such a measure to be introduced, and that the notion of proportionality did not apply to demonetization.
The court ruled that the notification from November 8, 2016, announcing the decision to discontinue the high-value currency notes, cannot be judged irrational and overturned due to the decision-making process.However, Justice Nagarathna disagreed with the majority judgement on the issue of the Centre’s powers under Section 26(2) of the RBI Act. “Parliament should have debated the demonetisation law; the process should not have been carried out through a gazette notification. Parliament cannot remain silent on a matter of such critical importance to the country “According to Justice Nagarathna.
Imortant summary points from SC verdict
The central government’s order to prohibit 1,000 and 500 notes was lawful, according to a constitution bench, and the decision-making process could not be criticised simply because the Center proposed the measure.
The Reserve Bank of India (RBI) and the Centre must confer before taking any action, the court ruled, and there is a “inbuilt safety” in place. Four out of the five judges agreed that the consultation continued for six months.
The Supreme Court ruled that whether the goal was met or not is “unimportant,” adding that the 52-day period given to exchange the banned notes was not unreasonable. “In economic policy, there must be great restraint. The wisdom of the court cannot used to replace the wisdom of the executive “Justice BR Gavai read the order out loud.
The Centre’s notes ban was deemed “vitiated and unconstitutional” by Justice BV Nagarathna in a forceful dissenting opinion, but he added that the status quo could not be reinstated at this time. The judge stated that a Parliamentary act may have been used to carry out the decision.
The court decided that the demonetisation directive was “an exercise of power contrary to law and unlawful,” adding that it was completed in only 24 hours.
The problems associated with demonetisation make one wonder whether the central bank had visualised these,” said Justice Nagarathna.
The Center’s overnight decision to outlaw 1,000 and 500 rupee notes contested in 58 petitions. The action eliminated from circulation 10 lakh crore.
Millions of people compelled to stand in line for cash, according to petitions, and this resulted in great hardship for them.
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