NEW DELHI, Jan 2 (PTI): Supreme Court judge Justice B V Nagarathna said on Monday practices like hoarding black money and counterfeiting coupled with corruption are “eating into the vitals” of our society and economy and any measure intended to strike at them must be commended.
In her dissenting verdict on the demonetisation issue, Justice Nagarathna said it is beyond the pale of doubt that the demonetisation measure, which was aimed at eliminating such “depraved practices”, was well-intentioned.
More than six years after the Centre’s decision to demonetise the Rs 1,000 and Rs 500 denomination notes, the Supreme Court in a 4:1 majority verdict upheld the 2016 move, saying the decision-making process was not flawed merely because the procedure emanated from the government.
Related Posts:
However, Justice Nagarathna said she wished to differ on the reasoning and conclusions arrived at in the majority judgement with regard to exercise of power by the Centre under sub-section (2) of section 26 of the Reserve Bank of India Act, 1934 by issuance of the November 8, 2016 notification.
“In view of the aforesaid conclusions, I am of the considered view that the impugned notification dated November 8, 2016 issued under sub-section (2) of section 26 of the Act is unlawful. In the circumstances, the action of demonetisation of all currency notes of Rs 500 and Rs 1,000 is vitiated,” Justice Nagarathna said.
In her 124-page dissenting judgement, she noted that demonetisation was an initiative of the central government targeted to address disparate evils plaguing the nation’s economy, including practices of hoarding black money, counterfeiting, which in turn enable even greater evils including terror funding, drug trafficking, emergence of a parallel economy, money laundering including ‘Hawala’ transactions.
“The measure is reflective of concern for the economic health and security of the country and demonstrates foresight. 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,” she said.
Justice Nagarathna said the measure has been regarded as unlawful only on a purely legalistic analysis of the relevant provisions of the RBI Act and not on the objects of demonetisation.
“Practices such as hoarding ‘black’ money, counterfeiting, etc., when coupled with corruption, are eating into the vitals of our society and economy. Any measure intended to strike at such practices, and thereby eliminate off shoots thereof….must be commended,” she said.
Justice Nagarathna said such measures are necessary to sanitize the economy and society, and enable it to recover from the plague caused by such evils.
“Therefore, it cannot be denied that demonetisation in the instant case was a well-intentioned proposal. However, in my separate opinion I shall proceed to legalistically examine whether demonetisation, as well-intentioned as it may have been, was carried out in accordance with the procedure established under law,” she said.
In her verdict, Justice Nagarathna referred to history and instances of demonetisation, including in India.
She noted that the first demonetisation in India was carried out on January 12, 1946 and an ordinance was promulgated which demonetised currency notes of Rs 500, Rs 1,000 and Rs 10,000 which were in circulation, primarily to check the unaccounted hoarding of money.
“By the end of 1947, out of a total of Rs 143.97 crores of high denomination notes, notes of the value of Rs 134.9 crores had been exchanged. Thus, notes worth Rs 9.07 crores went out of circulation or not exchanged,” Justice Nagarathna noted.
The judgement noted that the second demonetisation was carried out in India in 1978 and the stated objective of the measure was to nullify black money supposedly held in high denomination currency notes.
“During this demonetisation exercise, out of a value of Rs 146 crores demonetised notes, currency notes of value of Rs 124.45 crores were exchanged and a sum of Rs 21.55 crores, or 14.76 per cent of the demonetised currency notes, were extinguished,” she noted.
Justice Nagarathna noted in her verdict that the French were the first to use the term “demonetize” in the years between 1850-1855 and in world history, there are several instances of demonetisation.
The majority verdict gave its stamp of approval to the Centre’s 2016 decision to demonetise the Rs 1,000 and Rs 500 denomination notes, saying the decision-making process was neither flawed nor hasty.
Scrutinising the entire record on demonetisation, the apex court said the decision to scrap the high-value currency notes did not suffer from flaw or illegality as there was consultation between the Reserve Bank of India (RBI) and the Union government for a period of six months before the impugned notification was issued.
The top court’s judgment came on a batch of 58 petitions challenging the demonetisation exercise announced by the Centre on November 8, 2016.
