The Supreme Court today backed Prime Minister Narendra Modi’s 2016 notes ban in a majority judgment and said the decision could not be faulted just because the Centre initiated it.
The demonetisation exercise cannot be struck down on grounds of proportionality, the Supreme Court said, adding that the period of 52 days given for the exchange of notes was not unreasonable.
Centre is required to take action after consultation with the Reserve Bank of India (RBI) and there was consultation between the two for six months, four judges in the five-member bench said.
Justice BV Nagarathna gave a dissenting judgment, saying demonetisation could have been executed through an act of Parliament and not by the government.
Some 58 petitions had challenged the Centre’s decision of November 2016 to ban ₹ 1,000 and ₹ 500 currency notes. ₹ 10 lakh crore was wiped out of circulation overnight because of the move.
Petitions argued that it was not a considered decision of the government and should be struck down by the court.
The government argued that the court cannot decide a matter when no tangible relief can be granted. It would be like “putting the clock back” or “unscrambling a scrambled egg”, the centre said. 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.
The five-judge Constitution bench headed by Justice SA Nazeer heard the arguments before its winter break. The other members of the bench are Justices BR Gavai, AS Bopanna and V Ramasubramanian.