Demonetisation verdict: Modi govt’s note ban was valid, says Supreme Court

In a majority 4-1 verdict, four judges on a five-judge Constitution Bench dismisses a batch of petitions challenging the Centre’s 2016 decision to demonetise Rs. 500 and Rs. 1000 currency notes and said that there was no flaw in the decision making process

A five-judge Constitution bench headed by Justice S A Nazeer, upheld the centre’s decision six years ago to demonetise currency notes of Rs 500 and Rs 1,000.

Four of the five judges on the Constitution Bench ruled in favour of the government, holding that the November 8, 2016, notification withdrawing the legal tender of these notes “does not suffer from any flaws in the decision-making process.”

While Justices S Abdul Nazeer, B R Gavai, A S Bopanna, and V Ramasubramanian affirmed the government’s decision, Justice B V Nagarathna disagreed with the majority judgment’s “reasoning and conclusions.”

The Bench said that the decision to get rid of high-value currency notes, which was announced on November 8, 2016, cannot be called unreasonable and thrown out because of a flawed decision-making process.

It went on to say that the decision had a reasonable connection to its objectives, such as eradicating black money and terror funding, and that whether or not those objectives were met was irrelevant.

On December 7, the apex court ordered the Centre and the Reserve Bank of India (RBI) to submit the necessary records about the government’s 2016 decision and reserved its ruling.

A total of 58 petitions contesting the Centre’s November 8, 2016 announcement of the demonetisation process have been heard by the Supreme Court.

In November 2016, Prime Minister Narendra Modi surprised everyone by announcing on TV that all 500 and 1,000 rupee notes, which make up 86% of the money in circulation, would be banned, in an effort to combat undeclared “black money” and corruption.

However, the action, also known as demonetisation, severely harmed India’s cash-based economy. It resulted in losses for  many industrial units and businesses, causing an economic downturn and months of financial uncertainty for cash-dependent Indian citizens.

Thousands of people waited in line for days outside banks and ATMs, seeking to exchange their banknotes. Eventually, the government issued 500 and 2,000 rupee banknotes.

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the Economic Times – ET Edge Insights, its management, or its members

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