SC upholds legality of 2016 note ban decision

The Supreme Court on Monday closed at least the legal chapter of the debate on the 2016 demonetisation policy by ruling 4-1 that the Union government was empowered to take the decision, and that due process was followed.

- Utkarsh Anand

NEW DELHI: The court also refused to be drawn into ruling on the economic merits of the policy, citing its lack of expertise, and said that enough time was given to people to exchange the currency, and that there was no room to allow anyone to exchange the demonetised notes now. "Individual interests must yield to the larger public interest," it added.

The Bharatiya Janata Party (BJP) hailed the verdict as an endorsement of its policy, which came under severe criticism at the time. The Congress pointed out that the ruling was restricted to the issue of the executive's powers and the procedure followed, and not about the merits of demonetisation. It also hailed the dissenting judgment that said the move should have been ratified by parliament.

Six years after the decision by the Narendra Modi government took the country by surprise, justices SA Nazeer, BR Gavai, AS Bopanna and V Ramasubramanian held that the Centre was empowered under the pertinent laws to demonetise all series of bank notes of ₹500 and ₹1,000 denominations by issuing an executive order on November 8, 2016.

Justice Gavai, writing the judgment on behalf of himself and the three other judges in majority, affirmed the government's argument that demonetisation has reasonable nexus with curbing fake currency, black money, drug trafficking and terror financing, and that the government is the "best judge" to decide appropriate methods of addressing the issue, in consultation with the Reserve Bank of India (RBI).

Penning down a dissenting judgment, justice BV Nagarathna, however, termed the demonetisation decision "unlawful" on the ground that "the procedure followed for the same was not in accordance with law", even as the judge lauded the move as a "well-intentioned" step for the "betterment of the nation".