Prime Minister Narendra Modi’s 2016 note ban was supported by the Supreme Court today, which ruled that the decision making process cannot be faulted merely because the proposal was made by the Central Government.
Demonetisation cannot be invalidated due to lack of proportionality, said Justice Gavai.
The Central Board of RBI and the centre had a six-month-long conversation before the centre was obligated to act, according to the judges.
The centre’s decision to outlaw 1,000 and 500 rupee currencies in November 2016 was contested through petitions. The action caused the overnight wiping out of 10 lakh crore currencies.
The Supreme Court received 58 petitions contesting the banning of notes, contending that the government should not have made such a hasty decision and that the ban should be overturned.
The administration maintained that a case cannot be decided by the court if no real relief can be given. According to the centre, it would be like turning back the clock or unscrambling a scrambled egg.
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Chairman of the Constitution Bench will retire two days after the verdict
The five-judge bench hearing the case includes Justices S Abdul Nazeer, BR Gavai, AS Bopanna, V Ramasubramaniam and Justice BV Nagaratna. Justice S Abdul Nazeer, who is heading the constitution bench, will retire on January 4, 2023, two days after the verdict is pronounced. According to media reports, two judgments are to be read in the constitution bench, which have been written by Justice BR Gavai and Justice BV Nagaratna.
Argument in petition – no right to cancel currency
The petitioners in this case contend that Section 26(2) of the Reserve Bank of India Act does not authorise the government to completely cancel currency notes of a particular denomination. Section 26(2) empowers the Center to cancel currency notes of a particular series and not the entire currency notes.
Demonetisation implemented to deal with black money: Centre
In the Supreme Court, the government defended the decision of demonetisation, saying that it was part of planning and an effective way to deal with problems like fake currency, terror funding, black money and tax evasion. This was the biggest step in the series related to changes in economic policies. The Centre had also said that the decision of demonetisation was taken only on the recommendation of the Central Board of Directors of the Reserve Bank.
Government mentions benefits of demonetisation in court
The Centre in its reply also said that demonetisation has brought many benefits like reduction in fake notes, increase in digital transactions, detection of unaccounted income. In October 2022 alone, a digital transaction of 730 crores took place, that is, a transaction of Rs 12 lakh crores has been recorded in a month, which was 1.09 lakh transactions in 2016, i.e. about Rs 6,952 crore.
PM Modi had announced demonetisation on Nov 8, 2016
On November 8, 2016, Prime Minister Narendra Modi announced the banning of 500 and 1000 rupee notes from 12 midnight in the name of the country. At that time, the government expected that at least Rs 3-4 lakh crore of black money would come out from demonetisation. However, only Rs 1.3 lakh crore of black money came to the fore in the entire exercise.
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