Demonetisation unlawful; RBI did not apply mind, consider hardships to people: Justice BV Nagarathna dissents

Supreme Court judge Justice BV Nagarathna delivered a dissenting verdict in the case challenging the validity of the Central government's move of 2016 to demonetise ₹500 and ₹1,000 notes. In her dissenting opinion in the demonetisation verdict delivered on Monday, Justice BV Nagarathna of the Supreme Court held that the Central government's 2016 exercise was unlawful..In her dissenting opinion, Justice Nagarathna held that the Central government's 2016 exercise was unlawful.The judge noted that there was no application of mind on the part of the Reserve Bank of India (RBI) while considering the demonetisation proposal sent by the Central government."Looking at the records submitted by RBI, it is noted that it says "as recommended by the Central government". This shows there was no independent application of mind by the RBI. Such a proposal with serious economic ramifications must be placed before the Central Board of Bank so that there is an application of mind by the experts.".There was no independent application of mind by the RBI.Justice BV Nagarathna .She went on to state,"Petitioners say that 86% of currency in circulation in country was demonetised. It makes me wonder if RBI thought about such implications which included socio-economic hardships as well.".The judge delivered her dissent to the majority opinion rendered by Justice BR Gavai dismissing the batch of pleas challenging the 2016 demonetisation exercise. The following are the highlights of Justice Nagarathna's verdict:.Action of demonetisation by November 8 gazette notification was unlawful and the 2016 Act and notification were also unlawful. But status quo ante cannot be restored now since it was done in 2016. RBI is the bulwark of Indian economy. I have cited history of such demonetisation exercise world over. Court is not to sit over merit of economic or financial decision. Examining Section 26(2) would not mean to sit over the merits of demonetisation and thus it is well within the lakshman rekha as drawn by this Court. Demonetisation at the behest of the Centre is a far more serious issue affecting citizens than when it is done by the banks. Therefore, in my view, powers of the Centre being vast, the same has to be by plenary legislation. Without Parliament, a democracy cannot thrive...Parliament cannot be left aloof on such important decisions. In light of interpretation given to "any series" (under Section 26 of RBI Act) by me, such recommendation is VOID as applying to all bank notes of ₹500 and ₹1,000 Since ₹2,000 note was also released thereafter, it can be seen that the object which the Centre sought to achieve through demonetisation may not have been achieved at all. Opinion of Central Board of RBI ought to be frank and independent one and needs to be given careful consideration. Though it may not be binding, it can only go ahead in case of negative recommendation, but only through a law or ordinance. .Read more about the majority judgment here..[Read Judgment]