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SC upholds Centre’s 2016 decision on demonetisation

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-By 4:1 majority verdict, Supreme Court upholds Centre’s 2016 decision on demonetisation
-There has to be great restraint in matters of economic policy, court cannot supplant wisdom of executive
-SC dismisses batch of pleas challenging Centre’s 2016 decision on demonetisation, upholds move
-Notification dated November 8, 2016 valid, satisfies test of proportionality

Justice B R Gavai
-Centre’s decision-making process cannot be flawed as there was consultation between RBI and govt
-Not relevant whether objective achieved or not

Justice B V Nagarathna
-Justice Nagarathna differs from Justice B R Gavai’s judgment on point of Centre’s powers under section 26(2) of RBI Act
-Justice Nagarathna, in her minority verdict, holds that demonetisation of Rs 500 and Rs 1,000 currency notes was vitiated, unlawful
-Scrapping of Rs 500, Rs 1,000 series notes had to be done through legislation, not through notification
-Parliament should have discussed law on demonetisation, process should not have been done through gazette notification

NEW DELHI: By a majority verdict, the Supreme Court on Monday upheld the government’s 2016 decision to demonetise the currency notes of Rs 1,000 and Rs 500 denominations.

A five-judge Constitution bench of the apex court, headed by Justice S A Nazeer, said the Centre’s decision-making process could not have been flawed as there was consultation between the Reserve Bank of India (RBI) and the Union government.

The court 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.

The apex court said it is not relevant whether the objective behind the decision was achieved or not.

“The notification dated November 8, 2016 valid, satisfies test of proportionality,” the bench, also comprising justices B R Gavai, A S Bopanna, V Ramasubramanian and B V Nagarathna, said.

Justice Nagarathna differed from the majority judgment on the point of the Centre’s powers under section 26(2) of the RBI Act.

The top court’s judgment came on a batch of 58 petitions challenging the demonetisation exercise announced by the Centre on November 8, 2016.

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