Thread by @barandbench

Five-judge Constitution bench of the #SupremeCourt to pronounce its verdict on 58 petitions challenging the Centre’s November 8, 2016 decision to demonetise currency notes of Rs 1,000 and Rs 500 denomination

Verdict at 10:30 am today #Demonetization

The constitution bench to assemble shortly now

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Justice Gavai: I express gratitude to be given the opportunity to author the judgment. Though initially 9 issues were framed, we have taken 6 questions.

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Justice Gavai: Whether the power under Section 26(2) RBI Act can be used for the whole series?: It has been held word any has to be interpreted in light of statutory provisions. Then we have considered statutory interpretation rules

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SC: The rule adopted for interpretation cannot be pedantic. Any interpretation which advances object of the legislature has to be adopted. we hold restrictive meaning cannot be given to word "any "
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Justice Gavai: In view of multifarious activities legislature can consider working of the details. We have emphasized on primary role of RBI to regulate bank noted as imp role of economic structure of the country

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Justice Gavai: we hold that in present case Centre if required to can take decision after consulting the regulatory board can take the same

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Justice Gavai: it has been held that there has to be great deal of restraint before interfering in matters of economic significance and cannot supplant such views with the judicial one. we hold term recommendation has to be construed in statutory sense

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Justice Gavai: there was consultation between the centre and the RBI for a period of 6 months. we hold that there was a reasonable nexus to bring such a measure, and we hold that demonetisation was not hit by doctrine of proportionality

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Justice Gavai: we have held that entire scheme of section 3 and 4 has to be considered. therefore RBI does NOT HAVE AN INDEPENDENT POWER

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BREAKING Justice Gavai: Objective has to be for proper purposes and relation with object of the act. Thus, 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.

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Justice Gavai: There is no excessive delegation as under section 26(2) of RBI act and thus cannot be struck down. Notification is valid and satisfies the test of proportionality. period for exchange of notes cannot be said to be unreasonable

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Justice Gavai: RBI does not have any independent power to bring in demonetization. we have answered the reference. and thus we direct the registry to place the matter before CJI for appropriate directions and all other questions left open

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Justice BV Nagarathna: Justice Gavai's judgment does not recognize the essential fact that Section 26(2) does not take into account the initiation of demonetization.

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Justice BV Nagarathna: I differed on the answers of each of the question as formulated by Justice Gavai
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Justice BV Nagarathna: I have noted that RBI is the bulwark of Indian economy. I have cited history of such demonetisation excercise world over. Court is not to sit over merit of economic or financial decision

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Justice BV Nagarathna: 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.

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Justice BV Nagarathna: i have stated that when demonetisation originates from centre it is not under section 26(2) of the rbi but it is to be by way of legislation, and if secrecy is needed then ordinance is the way

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Justice BV Nagarathna: can centre issue gazette notification to demonetise notes basing on section 26(2) of the RBI act? : can centre demonetise all series of bank notes?

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Justice Nagarathna: demonetisation at the best of cente is far more serious issue affecting citizens as the one done by the banks. Therefore in my view powers being vast of centre same has to be by plenary legislation

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Justice Nagarathna: without parliament a democracy cannot thrive and so that meaning to democracy is given. Parliament cannot be left aloof on such important decisions

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Justice Nagarathna: centre having obtained consent of the bank board the notification was brought out the next day

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Justice Nagarathna: I have held plain meaning of 26(2) has to be given.

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Justice Nagarathna: there is an inherent contradiction in the provision 26(2) itself. Looking at the records submitted by RBI, "it is noted as recommended by the Central govt". This shows there was no independent application of mind by the RBI

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Justice Nagarathna: 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.

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Justice Nagarathna: proposal of demonetisation originated from the central government through its letter to RBI and it did not originate from the bank under Section 26(2). #Demonetisation

Justice Nagarathna: Even if it's assumed that it is so, in light of interpretation given to "any series" by me such recommendation is VOID as applying to all bank notes of 500 and 1000

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Justice Nagarathna: i have relied on the principle that do a thing in a way or don't do it at all. If an action has to be by an statutory instrument that action cannot be through any other instrument than the one which is envisaged

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Justice Nagarathna: in my considered view action of demonetisation by an nov 8 notification was unlawful and this the 2016 act and the notification was also unlawful. But status quo ante cannot be restored now since it was in 2016

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Justice Nagarathna: 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

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Justice Nagarathna: since Rs 2,000 note was also released thereafter it can be seen that the object which centre sought to achieve may not have been achieved at all

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Justice Nagarathna: opinion of central board of bank ought to be Frank and independent one and needs to be given careful consideration. It though may not be binding and it can only go ahead in case of negative recommendation but only through a law or ordinance

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Justice Nagarathna: Nov 8 2016 notification is Unlawful. Action of demonetisation is vitiated. Subsequent ordinance of 2016 and act of 2017 are also unlawful

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Justice Nagarathna: declaration of law laid down hereunder has to be made prospectively and this ruling is under Article 142 of the constitution.

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Justice Nagarathna: demonetisation targeted evils such as terror funding, counterfeiting etc and such a measure targeting deprave practices was well thought of. Measure is unlawful purely on legal grounds and not on basis of objects of #Demonetisation

Justice Nagarathna: all petitions and pending applications stands disposed off

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