#demonetisation #supremecourt #demonetisation2016
Demonetisation is the act of withdrawing a particular type of currency from circulation. In India, demonetization refers to the government's decision in 2016 to withdraw certain high-denomination banknotes from circulation and replace them with new notes. This decision was taken in an effort to crack down on illegal activities such as tax evasion and money laundering, which were thought to be facilitated by the use of high-denomination notes.
The decision to demonetize certain banknotes was controversial and was challenged in the Supreme Court of India. The Supreme Court upheld the government's decision to demonetize the banknotes, but it also directed the government to take steps to minimize the inconvenience caused to the public as a result of the demonetization.
As a result of the demonetization, the government put in place a number of measures to ensure that the process of exchanging old banknotes for new ones was carried out smoothly. These measures included setting up special counters at banks to exchange old banknotes, increasing the supply of new banknotes, and allowing individuals to deposit old banknotes in their accounts. Despite these measures, the demonetization caused widespread disruption and inconvenience to the public, and it was criticized by some for its impact on the economy and on small businesse
1. The Supreme Court today upheld the Hon’ble Prime Minister Narendra
Modi's 2016 notes ban in a landmark 4-1 majority judgment and said the
the decision could not be faulted just because the Centre initiated it.
The majority held that the Centre's notification dated November 8, 2016, is valid and
satisfies the test of proportionality.
Reading out the majority judgment, Justice BR Gavai said demonetization had
a reasonable nexus with the objectives (eradicating black marketing, terror
funding, etc.) sought to be achieved. It is not relevant whether the objective was
achieved or not, he added.
2. It may be noted that some 58 petitions challenged the Centre's decision to
ban ₹ 1,000 and ₹ 500 currency notes overnight. ₹ 10 lakh crore was wiped out of
circulation by the move.
3. Petitions argued that it was not a considered decision and caused
immense hardships to millions of citizens, who were forced to queue up for
cash.
4. The Hon’ble Court held that the e Centre is required to act in consultation
with the Reserve Bank of India (RBI) and there is an " inbuilt safeguard", the
Supreme Court said. The judges noted that there was consultation between
the two for six months.
5. The government had argued that the court cannot decide on a case when no
tangible relief can be granted. It would be like " putting the clock back" or
" unscrambling a scrambled egg", the center said. It also said demonetization
was a "well-considered" decision and part of a larger strategy to combat the
menace of fake money, terror financing, black money, and tax evasion.
6. It is "not relevant" whether the objective was achieved or not, the Supreme
Court ruled. "There has to be great restraint in matters of economic policy.
Court cannot supplant the wisdom of executive with its wisdom," said Justice
BR Gavai, reading out the order of the five-judge Constitution bench.
7. In a strong dissenting judgment, Justice BV Nagarathna called the notes ban
initiated by the Centre "vitiated and unlawful" and said the move could have
been executed through an act of Parliament.
8. The November 8 (2016) demonetisation notification was "an exercise of power
contrary to law", said the judge, noting that the entire exercise was carried out
in 24 hours.
9. "The problems associated with demonetisation make one wonder whether the
central bank had visualised these," said Justice Nagarathna.
10. She said documents and records submitted by Centre and the RBI, which
included phrases like "As desired by the Central Government", show there was
"no independent application of mind by the RBI".
11. The demonetisation exercise cannot be struck down on grounds of
proportionality, the Supreme Court said, adding that the period of 52 days
given for the exchange of notes was not unreasonable.
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