Apex Court Validates PM Modi’s 2016 Note Ban, Says – It Could Not Be A Failure As Centre Initiated It

The Supreme Court (SC) validates Prime Minister Narendra Modi’s 2016 note ban in a majority today. The SC has said the decision could not be failed just because the Centre initiated it. The note ban exercise cannot be struck down on grounds of proportionality, the Supreme Court said, adding that the period of 52 days given for the exchange of notes was not unreasonable.

Supreme Court says, the Centre is required to take action after consultation with the Reserve Bank of India (RBI) and there was consultation between the two for six months. This was the notion of the four judges in the five-member bench.

SC On Note Ban

Justice BV Nagarathna gave a dissenting judgment, said demonetization could have been executed through an act of Parliament and not by the government.

The Supreme Court held that there was a reasonable nexus with the objectives sought to be achieved. Some 58 petitions had challenged the Centre’s decision of November 2016 to ban ₹ 1,000 and ₹ 500 currency notes. Rupees 10 lakh crore wiped out of circulation overnight because of the move. Petition argued that it was not a considered decision of the central government. It should be struck down by the court.

The government argued that the court cannot decide a matter when no tangible relief can be granted.  It would be like “putting the clock back” or “unscrambling a scrambled egg”, the center said. It also said demonetization was a “well-considered” decision and part of a larger strategy to combat fake money, terror financing, black money and tax evasion.

The five-judge Constitution bench headed by Justice SA Nazeer heard the arguments before the winter breaks. The other members of the bench are Justices BR Gavai, AS Bopanna and V Ramasubramanian.

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Officials On Note Ban

The center said the demonetization was a “well-considered” decision. Part of a larger strategy to combat the menace of fake money, terror financing, black money and tax evasion.

Former Union Minister and senior advocate P Chidambaram argued, the center has not examined alternates to control fake currency or black money.

The government, he said, cannot initiate any proposal on legal tender on its own. This, he said, can only be done on the recommendation of the central board of the Reserve Bank of India (RBI).

The RBI admitted that there were “temporary hardships” which are part of the nation-building process. The problems were solved by a mechanism, it said in its submission.

-Bharat Express