All Good With Note Ban

A 4:1 Constitution Bench verdict absolved the Narendra Modi government of rushing in with demonetisation, but the dissenting verdict notes the RBI did the government’s bidding without applying its mind

- Vikram Kilpady

A five-judge Constitution bench of the Supreme Court recently held that the decision to demonetise Rs 500 and Rs 1,000 notes announced on November 8, 2016, by Prime Minister Narendra Modi was not flawed. The bench, led by Justice S Abdul Nazeer, comprised Justices BR Gavai, AS Bopanna, V Ramasubramanian and BV Nagarathna. The 4:1 verdict was near unanimous that the Executive's decision was fine and hunky dory, the lone dissenting judge, Justice BV Nagarathna, noted the origin of the initiative rose from the Executive and not from the Reserve Bank of India, the domain specialist and arbiter of all things to do with currency notes. Justice Gavai, who authored the majority verdict, noted that demonetisation satisfied the test of proportionality and therefore did not suffer from any flaw in the decision-making process. Dismissing the batch of 58 petitions, Justice Gavai continued that the notification to demonetise the aforesaid currency notes is not liable to be set aside in the face of hardship to individual citizens. Individual interests must yield to the larger public interest sought to be achieved, the order reads.

Justice Nagarathna underlined that the Reserve Bank of India Act doesn't provide for the government to initiate the demonetisation of currency notes. The Act's subsection 2 of Section 26 notes that such a measure should be at the instance of the RBI's Central Board.

Exactly 1,232 days after November 8, 2016, the population's drill of waiting outside ATMs and banks to get new notes or to exchange their old notes for the new Rs 500 and the Rs 2,000 came in handy when the first Covid lockdown was imposed, again by an 8pm announcement, again by PM Modi.