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4:1, SC Upholds the Demonetisation Decision Six years after an eventful night, the Supreme Court upholds the decision and deems the demonetisation "legal"

By Paromita Gupta

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Entrepreneur India

On Monday, as the court was reinstated after the winter recess, the Supreme Court announced two clashing verdicts on a 58-batch petition appeal to challenge the 2016 Demonetization move to obsolete INR 500 and INR 1000 notes. The petitions have been filed with regards to various aspects of the decision.

The verdict was announced by a Constitution Bench headed by Justice S A Nazeer and comprising B R Gavai, A S Bopanna, V Ramasubramanian, and B V Nagarathna. Justice Gavai and Justice Nagarathna rolled out two contradicting judgments on the matter. With Justices A S Bopanna and V Ramasubramanian siding with Justice Gavai's verdict, the court declared that it found the demonetisation decision 'legal'.

Talking about the critical issue "Whether the power under Section 26(2) RBI Act can be used for the whole series?", Justice Gavai's judgment holds that the power under Section 26(2) of RBI Act can be used to demonetise whole series of bank notes and not any particular series.

Justice Gavai's judgment stated that Section 26(2) of the RBI Act can be used to demonetize the entire series and not just particular series and added that "Any" cannot be used in a restrictive manner. However, Justice BV Nagarathna stated that his viewpoints differ from Justice Gavai's on the powers of Central Government under the Section 26(2) of the RBI Act.

Justice Nagarathna's judgement states that the proposal originated from the Central Government and that RBI's opinion was requested. She further added that there was no 'independent mind' application on behalf of the RBI on demonetization. Hence, it cannot be considered that RBI recommended the move under the act. She further stated that "Any series" under Section 26(2) RBI Act cannot mean "all series".

Meanwhile, Justice Gavai stated that the decision making process cannot be faulted due to the proposal originating from the Central Govt.

Justice Nagarthna shared that the demonetization of the INR 500 and INR 1000 currency notes were "unlawful" and "vitiated", and further added that the measure was well-intentioned and well-thought off, hence, the measure is declared unlawful purely on legal grounds and not on the basis of objects. Hence, no relief was given to the petitioners.

Paromita Gupta

Entrepreneur Staff

Features Writer with Entrepreneur India

Covering news and trends in AI and Metaverse segments. An avid book reader running her personal blog on the side. You may reach me at 

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