A Constitution bench of the Supreme Court Monday held in the demonetisation judgment that the parliament and the State legislatures are not bodies of experts, and they function best when dealing with general principles, and not technical and situational intricacies [Vivek Narayan Sharma v Union of India].
A bench of Justices S Abdul Nazeer, BR Gavai, AS Bopanna, V Ramasubramanian and BV Nagarathna further said that parliament and State legislatures cannot visualise and provide for new, strange, unforeseen and unpredictable situations arising from the complexity of modern life and the ingenuity of modern man.
"It has been consistently held that parliament and the State legislatures are not bodies of expert 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," the Court said.
“It has been held that a good deal of latitude has to be held to be permissible in the case of taxing statutes and welfare legislations,” the bench underscored.
The observations were made in its judgment dismissing a batch of petitions challenging the Central government's 2016 decision to demonetise currency notes of ₹1,000 and ₹500.
Justice BV Nagarathna delivered a dissenting verdict in the case holding that the Central government's 2016 exercise was unlawful.
The Court was dealing with an issue regarding excessive delegation to the Central government in relation to Section 26(2) of Reserve Bank of India Act (RBI Act) in the case challenging the validity of the Central government's move of 2016 to demonetise ₹500 and ₹1,000 notes.
To determine this issue, the Court said that the object of the entire RBI Act must be taken into account.
Since the RBI was created to regulate the issue of bank notes and is an expert body entrusted with various functions with regard to monetary and economic policies, the bench found that there were sufficient grounds to delegate.
“It is equally settled that insofar as the economic, monetary and fiscal policies are concerned, the same are best left to the experts possessing requisite knowledge.”
Another aspect that was taken into account was the nature of body to which the delegation is to be made.
“In the present case, the delegation is made to the Central Government and not to any ordinary body”, read the judgment.
Further, while discussing that the exercise of judicial review in such matters was narrow, the Court said that mere errors of judgment by the government seen in retrospect cannot be 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,” the Court stated.
[Read Judgment]