The five-judge Constitution bench of Justices S Abdul Nazeer, BR Gavai, AS Bopanna, V Ramasubramanian and
BV Nagarathna delivered the verdict on a batch of pleas challenging the Central government’s
2016 demonetisation. The Supreme Court upheld by a 4:1 majority, the Union Government’s
decision to demonetize Rs. 500 and Rs. 1000 currency notes six years ago.
Observation of Constitution Bench
- Central government in consultation with RBI can bring in demonetization under Section 26(2) of RBI Act.
- Demonetization notification is valid and satisfies the test of proportionality. Period for exchange of
old notes not unreasonable.
- There was consultation between the Central government and the RBI for a period of 6 months.
There was a reasonable nexus to bring such a measure.
- Power available to Centre cannot be mean that it is in relation to only specific
series of bank notes. It is for all series of bank notes.
- RBI does not have any independent power to bring in demonetization.
