Earlier today, Supreme Court's five-judge Constitution Bench in a 4:1 majority found the Centre's 2016 economic policy on demonetization lawful. Justice BR Gavai authored the majority opinion on behalf of Justices A Abdul Nazeer, AS Bopanna, and V Ramasubramanian.
The top court said it was not competent enough to second guess the executive's financial and economic policies and the same should be left to a body of experts. This is apart from the fact that we have not found any flaw in the decision-making process, the majority opinion read.
Justice BV Nagarathna—the sole dissenter—said demonetization, though well-intentioned was not carried out in accordance with the procedure established under law.
BOOM highlights key observations from the verdict.
Parliament, State legislatures not skilled experts; technicalities best left to specialists: Justice BR Gavai
- "It is not the function of this Court or of any other Court to sit in judgment over such matters of economic policy and they must necessarily be left to the Government of the day to decide since in such matters with regard to the prediction of ultimate results, even the experts can seriously err and doubtlessly differ."
- "The decision-making process is also sought to be attacked on the ground that the decision was taken in a hasty manner. We find that the 'hasty' argument would be destructive of the very purpose of demonetization. Such measures undisputedly are required to be taken with utmost confidentiality and speed. If the news of such a measure is leaked out, it is difficult to imagine how disastrous the consequences would be."
- "…criticism (against the government) should not be hastily expressed. It has been held that what is best is not always discernible, and the wisdom of any choice may be disputed or condemned. It has been held that mere errors of government are not subject to judicial review. It is only the palpably arbitrary exercises which can be declared void."
- "In any case, mere errors of judgment by the government seen in retrospect is not subject to judicial review. In such matters, legislative and quasi-legislative authorities are entitled to a free play, and unless the action suffers from patent illegality, manifest or palpable arbitrariness, the Court should be slow in interfering with the same."
- "It has been consistently held that Parliament and the State Legislatures are not bodies of experts or specialists. They are skilled in the art of discovering the aspirations, the expectations and the needs of the people whom they represent. It has been held that they function best when they concern themselves with general principles, broad objectives and fundamental issues instead of technical and situational intricacies which are better left to better equipped full-time expert executive bodies and specialist public servants."
- "If the impugned Notification had a nexus with the objectives to be achieved, then, merely because some citizens have suffered through hardships would not be a ground to hold the impugned Notification to be bad in law."
Demonetisation well intention, but decision-making process flawed: Justice BV Nagarathna
- "The use of words/phrases such as, "as desired" by the Central Government; Government had "recommended" the withdrawal of the legal tender of existing Rs.500/- and Rs.1,000/- notes; recommendation has been "obtained"; etc., are self-explanatory. This demonstrates that there was no independent application of mind by the Bank. Neither was there any time for the Bank to apply its mind to such a serious issue. This observation is being made having regard to the fact that the entire exercise of demonetisation of all series of banknotes of Rs.500/- and Rs.1,000/- was carried out in twenty-four hours."
- "Demonetisation of banknotes at the behest of the Central Government is a far more serious issue having wider ramifications on the economy and on the citizens, as compared to demonetisation of banknotes of a given series of a given denomination on the recommendation of the Central Board of the Bank by the issuance of a gazette notification by the Central Government."
- "It is beyond the pale of doubt that the said measure (demonetisation), which was aimed at eliminating these depraved practices (black money, hawala transactions), was well-intentioned. At no point has any suggestion been made that the measure was motivated by anything but the best intentions and noble objects for the betterment of the Nation. The measure has been regarded as unlawful only on a purely legalistic analysis of the relevant provisions of the Act and not on the objects of demonetisation."
- "It need not be emphasised that the Bank, being the only institution, which carries out the function of currency management and formulates credit rules in the country, is recognized as having a say in the issuance of currency notes, and also in specifying the denominations of the notes, as well as the design and form of the bank notes."
- "A Parliament is often referred to as a "nation in miniature"; it is the basis for democracy. A Parliament provides representation to the people of a country and makes their voices heard. Without a Parliament, a democracy cannot thrive; every democratic country needs a Parliament for the smooth conduct of its governance and to give meaning to democracy in the true sense."
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