The Supreme Court on its first working day of 2023 upheld the decision of the Central government taken in 2016 to demonetise the currency notes of ₹500 and ₹1000 denominations. In a 5 judge bench 4 judges voted in favour of upholding note ban whereas one judge dissented.A five-judge Constitution bench headed by Justice S A Nazeer, who will retire on January 4, pronounced its verdict on the matter.
It dismissed a batch of petitions challenging the Centre’s 2016 decision to demonetise Rs. 500 and Rs. 1000 currency notes and said the decision, being Executive's economic policy, cannot be reversed. Supreme Court accepted the government's views that there was consultation between the Centre and the RBI before demonetisation. There was a reasonable nexus to bring such a measure, and we hold that demonetisation was not hit by doctrine of proportionality, the Supreme Court stated.
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.Justice Nagarathna, however, differed from the majority judgment on the point of the Centre's powers under section 26(2) of the RBI Act. "Parliament should have discussed the law on demonetisation, the process should not have been done through a gazette notification. Parliament cannot be left aloof on an issue of such critical importance for the country," Justice Nagarathna said.