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The Supreme Court supports demonetisation, stating that the Centre and RBI consulted for six months.

Monday, the Supreme Court confirmed by a 4:1 majority the Centre’s 2016 decision to demonetize Rs 500 and Rs 1,000 banknotes.

The majority judgement by Justices S Abdul Nazeer, B R Gavai, A S Bopanna, and V Ramasubramanian found no defect in the 8 November gazette notification and determined that it met the proportionality test.

Justice Gavai’s ruling, which rejected the claim that the Reserve Bank of India (RBI) should have made the suggestion for demonetisation, stated that it appeared from the records that the government and the RBI consulted for six months.

The court also rejected the petitioner’s contention that the phrase “any” in section 26(2) of the RBI Act should be interpreted as some and not all and that the Centre can, therefore only demonetise a certain series of a denomination’s currency.

The majority opinion stated that, when reading statutes, the present trend is to adopt a pragmatic interpretation rather than a pedantic one. It was said that interpretations that lead to absurdity must be avoided and that an interpretation that advances the statute’s purpose must be followed.

Accordingly, the court ruled that the provision cannot be construed in a restricted manner to suggest that Centre can only exercise power for a single series.

On the petitioner’s claim that earlier demonetisation decisions were executed through laws passed by Parliament, the court stated that the simple fact that this was the case in the past does not suggest that the Centre lacks authority.

Justice B V Nagarathna, who dissented from the majority verdict, stated that the documents did not demonstrate the central bank’s independent application of mind.

While acknowledging that the recommendation might have originated from either the RBIs Central Board or the government, Justice Nagarathna stated that in the case of the latter, it should have been through plenary legislation and not notification.

Justice Nagarathna ruled that the notification was unconstitutional and that the decision to demonetize banknotes was invalid.

She emphasised, however, that “demonetisation was a central government programme designed to combat various problems… [It is] without reasonable doubt that such a measure…was well-intended…displays foresight… It has never been suggested that the measure was motivated by anything other than good motives and noble goals for the nation’s betterment.”

Justice Nagarathna stated that she had determined the policy to be unconstitutional based solely on a legalistic review of the pertinent clauses of the Act, and not on the purposes of demonetisation.



Hi, my name is Nisha and I'm an educational journalist based in India. I've always been passionate about the power of education to transform lives, and that's what led me to pursue a career in journalism focused on this area. I completed my Bachelor's degree in English from Hindu College in Delhi in 2013 and then went on to earn my Master's in Journalism and Mass Communication from the Indian Institute of Mass Communication in 2017. During my studies, I also completed several short-term courses on Education in India, Sociology, and other related subjects to deepen my knowledge in this field. I'm particularly interested in improving access to quality education in rural areas, where students often face significant challenges. I've worked on a number of initiatives to address this issue, including advocating for better policies, resources, and practices that can make a difference. As an educational journalist, I'm passionate about using my platform to highlight important issues in the education space. I've covered a wide range of topics, including the impact of technology in the classroom, innovative approaches to teaching and learning, and the challenges facing students from marginalized communities. One of the things I love most about my work is the opportunity to constantly learn and grow. I'm an avid reader and believe that reading is key to expanding one's knowledge and perspective. I'm always seeking out new ideas and insights to help me better understand the world around me. In summary, as an educational journalist, I'm dedicated to using my skills and expertise to make a positive impact in the field of education. I'm committed to improving access to quality education for all students and to using my platform to raise awareness about important issues in this area.

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