Govt’s 2016 decision on note ban, valid, does not suffer from legal flaws: Supreme Court

New Delhi, Jan 02: The Supreme Court has rejected 58 petitions that challenged the Union Government's 2016 decision to demonetise the Rs 500 and Rs 1,000 currency.

A five judge Bench held that the decision was part of the Executive's Economic Policy and hence cannot be reversed. The Bench also held that the decision making process is not flawed.

A batch of 58 petitions were filed in the Supreme Court challenging the decision by the Union Government to demonetise the Rs 500 and Rs 1,000 notes. Prime Minister Narendra Modi in an address to the nation had announced that the two currencies will no longer be legal tender.

The Bench said that the decision on demonetisation does not suffer from any legal or Constitutional flaws. It also held that the petitions can be placed before an appropriate Bench of the Chief Justice of India to decide on issues linked to the main issue relating to the validity of the demonetisation process.

Further the Bench held that the 52 day window provided for the exchange of demonetised currency notes with legal tenders is not unreasonable and cannot be extended now. The Supreme Court said in the 1978 demonetisation, the window for the exchange of the demonetised currency was three days, which was extended by another five days.

The Bench noted that the Centre is required to take action after consultation with the Reserve Bank of India. There was consultation for six months between the government and the RBI in this regard, said Justices S Abdul Nazeer, BR Gavai, AS Bopanna, V Ramasubramanian.

Justice B V Nagarathna the fifth judge on the Bench however gave a dissenting view. She said that demonetisation could have been executed through an act of Parliament and not by the government.

The petitioners argued that the decision by the Centre to ban the two currencies led to Rs 10 lakh crore being wiped out of circulation overnight. The petitions also said that decision ought to be struck down as the decision could not have been taken by the government.

The government on its part argued that the court cannot decide on a mater when no tangible relief can be granted. It would be like putting the clock back or unscrambling a scrambled egg. The decision on demonetisation was a well considered one and part of a larger strategy to combat the menace of fake money, terror financing, black money and tax evasion.