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On demonetisation, Supreme Court says no flaw in Centre's decision making process

By | Reported by Utkarsh Anand | Written by Aryan Prakash
Jan 02, 2023 12:00 PM IST

The top court said the Centre had the power to demonetise all series of a bank note, adding the November 8, 2016 decision can't be said to be unreasonable nor was it hit by the doctrine of proportionality.

The Supreme Court on Monday affirmed the Narendra Modi government's demonetisation move in 2016, stating there was no flaw in the decision making process.

A bank staff member counts Indian 500 rupee notes to give to customers on November 24, 2016, in the wake of the demonetisation of old 500 and 1000 rupee notes
A bank staff member counts Indian 500 rupee notes to give to customers on November 24, 2016, in the wake of the demonetisation of old 500 and 1000 rupee notes

Justice BR Gavai read out the majority view on behalf of himself and justices SA Nazeer, AS Bopanna and V Ramasubramanian.

The top court said the Centre had the power to demonetise all series of a bank note, adding the November 8, 2016 decision can't be said to be unreasonable nor was it hit by the doctrine of proportionality.

The Supreme Court said it is not relevant whether the objective behind the decision was achieved or not.

The top court said adequate consultation took place between the Centre and the Reserve Bank of India before the note ban decision. However, Justice BV Nagarathna differed from the majority view and rendered a dissenting judgment.

On December 7, the bench had reserved its verdict after hearing elaborate arguments from the government and the petitioners who argued that the note ban decision was arbitrary, unconstitutional and contrary to the powers and procedure prescribed under the Reserve Bank of India Act.

The Centre had justified the decision to demonetise 1000 and 500 notes, stating that the decision was taken to crack down on fake currency, black money and terror financing. The petitioners had claimed that the objectives had nothing to do with note ban as such exercise was undertaken by countries facing hyperinflation or the need to do away with unusable currency notes.

Senior Congress leader P Chidambaram, who had appeared on behalf of the petitioners, welcomed the dissenting judgment, calling it a slap on the wrist of the government.

“We are happy that the minority judgement has pointed out the illegality and the irregularities in the Demonetisation. It may be only a slap on the wrist of the government, but a welcome slap on the wrist”, he tweeted.

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