Won’t go into whether note ban objectives were met: SC
NEW DELHI: The Supreme Court on Thursday indicated that it would not be considering whether or not the objectives of the demonetisation exercise of 2016 were met, and would only look at whether the Centre’s move was in keeping with its powers under the RBI Act, and if due process was followed.
The five-judge Constitution bench hearing a bunch of petitions challenging the demonetisation notification of November 8, 2016 said: “What can be done now? It is over. We can only consider whether (under) Section 26(2) of RBI Act, (the) power (to carry out the exercise) was available to Centre and (if) the procedure was followed.” This section gives the Union government the power to declare, based on a recommendation of RBI’S board, that “any series of bank notes of any denomination shall cease to be legal tender...”.
The issue is whether the Centre’s move to invalidate all ₹500 and ₹1,000 denomination currency notes, comes under the defilation nition of “any series”.
The apex court’s approach is in keeping with what it said at the beginning of the hearing, when it was pointed out that the demonetisation exercise goes back six years and that the clock cannot be turned back.
The court’s reiteration on Thursday came after senior advocate P Chidambaram, representing one of the petitioners, argued that the government “miserably failed” in achieving any of the objectives listed for undertaking demonetisation.
The November 2016 notification of the government stated that demonetisation would curb circuof fake currency, crack down on unaccounted wealth, and prevent black money being used for subversive activities such as drug trafficking and terrorism.
The bench headed by Justice S Abdul Nazeer said: “If we say, the procedure was followed but objective not achieved, may not be relevant.” The bench added: “The impact of a governmental action may not have any effect on its validity... It is better to concentrate on Section 26(2) argument than dwell on objectives.”
Chidambaram said, “This is the worst decision-making process that is deeply flawed and which makes a mockery of rule of law.”
He said that by the 2016 notification, 86.4% of currency was taken out of circulation.
The petitioners have also sought to challenge the November 2016 decision on matters of law, arguing that Section 26(2) of RBI Act allows the government to declare “any series” of bank notes of any denomination to be illegal tender, and that demonetising all series of bank notes belonging to a particular denomination requires a separate law.