New Delhi: The Supreme Court on Monday ruled in a 4:1 verdict that the Central government’s 2016 demonetisation decision was valid.
The one dissenting judgment came from justice BV Nagarathna, who said the government notification on demonetisation was “unlawful” and the process of banning all currency notes of Rs 1,000 and Rs 500 should not have been initiated by the Central government.
In her strong dissent, Justice Nagarathna agreed with the 58 petitioners challenging the demonetisation notification, and said that as per section 26 of Reserve Bank of India (RBI) Act, the central board of RBI should have independently recommended demonetisation, and it should not have been done through the government’s advice.
There was no independent application of mind by the RBI, she argued.
“In my considered view, action of demonetisation by November 8 notification was unlawful. But status quo ante cannot be restored now since it was in 2016… it was an exercise of power, contrary to law, and therefore unlawful,” she said.
She made it clear that she wasn’t questioning the noble objectives of demonetisation, but only the legal viewpoint.
“Demonetisation was, beyond a pale of doubt, well-intentioned. Best intention and noble objects are not under question. The measure has been regarded as unlawful only on a purely legal analysis, and not on the objects of demonetisation,” she said.
Justice Nagarathna was also of the opinion that, like in previous instances, demonetisation in 2016 could have been initiated through an Act of Parliament, and not through executive notification.
“After perusing the documents and records submitted by Centre and RBI, phrases like ‘as desired by Centre government’ shows there was no independent application of mind by RBI,” Justice Nagarathna noted.
