SC backed PM Modi’s demonetisation was valid, one Judge disagrees
New Delhi: The Supreme Court’s five members constitutional bench on Monday backed the notes ban by Prime Minister Narendra Modi’s 2016 in a landmark 4-1 majority judgment.
The constitutional bench heard more than 58 petitions challenged the Centre’s decision to ban ₹1,000 and ₹500 currency notes overnight. ₹10 lakh crore was wiped out of circulation by the move. The petitioners in their petitions argued that it was not a considered decision and caused immense hardships to millions of citizens, who were forced to queue up for cash.
The disagreed Judge Justice BV Nagaratna calling the move unlawful. The remaining four Judges said that it was not relevant whether the objective of the overnight ban was achieved. The Supreme Court constitution bench said the Central Government’s November 8th, 2016 order to ban ₹ 1,000 and ₹ 500 currency notes is valid and the decision-making process could not be faulted just because the Centre initiated the move.
The Union Government told to the Court that is required to act in consultation with the RBI and there is an inbuilt safeguard. This consultation did take place for six months, four of the five Judges said.
Justice BR Gavai reading out the order said that it is not relevant whether the objective was achieved or not. The period of 52 days given to exchange the banned notes was not unreasonable. There has to be great restraint in matters of economic policy. Court cannot supplant the wisdom of executive with its wisdom.
In a strong dissenting judgment, Justice BV Nagaratna called the notes ban initiated by the Centre vitiated and unlawful, but said status quo could not be restored now. The move could have been executed through an act of Parliament, said the Judge. The demonetisation orders wasan exercise of power contrary to law and unlawful, noting that the entire exercise was carried out in 24 hours, she said.
She also said the problems associated with demonetisation make one wonder whether the central bank had visualised these. She said documents and records submitted by Centre and the RBI, which included phrases like as desired by the Central Government, show there was no independent application of mind by the RBI.
It also said demonetisation was a well-considered decision and part of a larger strategy to combat the menace of fake money, terror financing, black money and tax evasion.