‘Court can’t fold hands and sit because it is an economic policy’: SC on demonetisation

Justice Nagarathna said the courts will not go into the merits of the decision, but it can always go into the manner it was taken

The Supreme Court on Tuesday, while taking up petitions challenging the Centre’s decision for demonetisation, said it "cannot fold its hand and sit" because it is an economic policy.

The top court also sought to know the details regarding the quorum of the RBI's board members which met and recommended demonetisation.

Appearing for the RBI, senior advocate Jaideep Gupta submitted before a five-judge of Justices Abdul Nazeer, B R Gavai, A S Bopanna, V Ramasubramanian and B V Nagarathna, that the objective of the demonetisation policy was to curb black money and fake currencies, and not a single bank suffered loss.

Gupta submitted that there is no challenge to the decision on constitutional grounds, and therefore, the proportionality principle should only be applied to the extent, which the Attorney General’s note also suggested that there should be a nexus between the objective and the method.

Read | 'Don't put the clock back,' Centre tells SC as court puts demonetisation under scanner

Beyond that it will be against the run of play, as far as economic policy decisions are concerned and being an economic policy measure, the court will not review the decision, he said.

Justice Nagarathna said the court will not go into the merits of the decision, but it can always go into the manner it was taken, and the two things are totally different.

“Because it is an economic policy, the court cannot fold its hand and sit. Merits of the decision, it is for the government in its wisdom it knows what is best for the people, but while taking that decision what was the material on record, relevant considerations,” Justice Nagarathna said.

In the day-long hearing, the RBI’s counsel informed the bench that ample opportunities were given to people to exchange their notes.

Senior advocate P Chidambaram, representing a petitioner, said the government should confidently defend the decision and also the decision-making process (involved in 2016 demonetisation), and place those documents before the court.

He said that if the government were to adopt a route through the Parliament, then the parliamentarians would have stopped the policy but they did not follow the legislative route. Chidambaram submitted that the RBI Governor must be fully aware of the fact that in 1946 and 1978, RBI opposed demonetisation and resorted to plenary power of legislature.

He asked the court to examine the documents to see whether the decision-making was fair and not arbitrary.

During the hearing, the apex court also inquired into the number of members present in the RBI’s Central Board meeting, which decided to make the recommendation regarding the demonetisation in 2016.