The Centre is required to consult with the Reserve Bank of India (RBI), and there is a “inbuilt safeguard,” according to the Supreme Court. The judges noted that the two had been in contact for six months.
The Supreme Court ruled that it is “unimportant” whether the goal was met or not. “In economic policy, there must be great restraint. The wisdom of the court cannot be used to replace the wisdom of the executive “Justice BR Gavai read out the five-judge Constitution bench’s order.
In a strong dissenting opinion, Justice BV Nagarathna called the Centre’s notes ban “vitiated and unlawful,” and said it could have been implemented through an act of Parliament.
The November 8, 2016, demonetisation notification was “an exercise of power contrary to law,” according to the judge, who noted that the entire process was completed in 24 hours.
“The problems associated with demonetisation make one wonder if the central bank anticipated these,” Justice Nagarathna said.
She claimed that documents and records submitted by the Centre and the RBI, which included phrases like “as desired by the Central Government,” demonstrate “no independent application of mind” by the RBI.
The Centre’s decision to ban 1,000 and 500 currency notes overnight was challenged in 58 petitions. The move removed 10 lakh crore from circulation.
Petitioners claimed that the decision was rash and caused enormous hardship for millions of citizens who were forced to queue for cash.
The Supreme Court ruled that the demonetisation exercise could not be overturned on grounds of proportionality, adding that the 52-day period for exchanging notes was not unreasonable.
The government argued that the court could not rule on a case if no tangible relief could be granted. It would be like “turning back the clock” or “unscrambling a scrambled egg,” according to the centre.
It also stated that demonetisation was a “well-thought-out” decision that was part of a larger strategy to combat the threat of counterfeit money, terror financing, black money, and tax evasion.