The Supreme Court on Monday upheld the 2016 government decision to demonetise the Rs 1,000 and Rs 500 notes.
The five-member Constitutional bench of the SC, Justices SA Nazeer, BR Gavai, AS Bopanna, V Ramasubramanian, and BV Nagarathna gave a 4-1 split verdict on the highly polarising topic.
Demonetisation had to be done through Parliament
Justice Nagarathna, who was the junior-most judge in the Constitution bench was the only one to give a dissenting verdict on demonetisation.
Justice Nagarathna said the scrapping of the whole series of Rs 500 and Rs 1,000 currency notes had to be done through legislation and not through a gazette notification as Parliament cannot be left aloof in a matter of such critical importance.
Observing that there was no independent application of mind by the Reserve Bank of India (RBI), Justice Nagarathna said the entire exercise was carried out in 24 hours.
“In my view, the power of the central government being vast has to be exercised through a plenary legislation rather than by an executive act by issuance of notification. It is necessary that Parliament, which consists of the representatives of the people of the country, discusses the matter and thereafter, approves the matter,” she said.
RBI’s opinion is not “recommendation”
The judge said the proposal originated from the Centre while the RBI’s opinion was sought and such an opinion given by the central bank cannot be construed as a “recommendation” under section 26(2) of the RBI Act.
“Parliament is often referred to as a nation in a miniature. It is the basis of democracy. Parliament provides representation to the people of the country and makes their voices heard. Without Parliament, democracy cannot thrive. Parliament, which is the centre of democracy, cannot be left aloof in a matter of such critical importance,” she said.
In her minority verdict, Justice Nagarathna held that the demonetisation of the Rs 500 and Rs 1,000 currency notes was vitiated and unlawful.
Judgement points out irregularities: Chidambaram
Former Finance Minister P Chidambaram, who was also one of the lawyers in the case said that the dissent part of the judgement points out irregularities.
“Once the Honrable Supreme Court has declared the law, we are obliged to accept it. However, it is necessary to point out that the majority has not upheld the wisdom of the decision; nor has the majority concluded that the stated objectives were achieved. In fact, the majority has steered clear of the question whether the objectives were achieved at all,” Chidambaram said in a statement.
“We are happy that the minority judgement has pointed out the illegality and the irregularities in the Demonetisation. It may be only a slap on the wrist of the government, but a welcome slap on the wrist,” he added.
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He also said that the dissenting judgement “will rank among the famous dissents recorded in the history of the Hon’ble Supreme Court”.
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