Friday, March 29, 2024

“Unlawful:” What Justice BV Nagarathna said about overnight note ban?

The Supreme Court backed Union government’s 2016 notes ban today in a 4-1 majority judgment and said it was “not relevant” whether the objective of the ban was achieved.

One judge disagreed, calling the overnight ban “unlawful”.

In a strong dissenting judgment, Justice BV Nagarathna called the notes ban initiated by the Union “vitiated and unlawful” but said status quo could not be restored now.

The move could have been executed through an act of Parliament, said the judge.

The demonetisation order was “an exercise of power contrary to law and unlawful”, said the judge, noting that the entire exercise was carried out in a day.

“The problems associated with demonetisation make one wonder whether the central bank had visualised these,” said Justice Nagarathna.

The judge said documents and records submitted by Centre and the RBI, which included phrases like “As desired by the Central Government”, show there was “no independent application of mind by the RBI”.

The majority opinion was that the Union is required to act in consultation with the Reserve Bank of India (RBI) and there is an “inbuilt safeguard”. The other four judges noted that there was consultation between the two for six months.

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