SC directs Centre, RBI to submit records behind demonetisation decision

Lengthy wait: People queue outside RBI to exchange their old ₹500 and ₹1,000 notes, in New Delhi, in November 2016. File Photo

KRISHNADAS RAJAGOPAL

 

NEW DELHI

The Supreme Court on Wednesday directed the Union government and the Reserve Bank of India (RBI) to place on record the “relevant records” of the 2016 demonetisation policy.

Representing the Centre before a Constitution Bench led by Justice S. Abdul Nazeer, Attorney General R. Venkataramani said the documents would be handed over to the court in a sealed cover.

The Bench, also comprising Justice B.R. Gavai, A.S. Bopanna, V. Ramasubramanian and B.V. Nagarathna, reserved the case for judgment.

The court had said it would not remain a mute spectator without judicially reviewing the procedure or manner in which ₹500 and ₹1,000 currency notes were withdrawn as legal tender in November 2016.

“Just because it is an economic policy, the court cannot fold its hands and sit… The court will go into the manner in which the decision was taken,” Justice Nagarathna had addressed the government and the RBI.

Senior advocate P. Chidambaram, for the petitioners, had submitted that the RBI had “meekly submitted to the government’s recommendation to withdraw 80% of the currency in the market after a deliberation of just one hour in one day”.

He had said finding the objectives of the 2016 demonetisation exercise was like looking for a “black cat in a dark room”. He had submitted that the government cannot “frighten” the court to not judicially review the policy by saying that judges were not experts in economic policy.

The government had countered that demonetisation was a “transformational economic policy step” which led to a phenomenal growth in digital transactions while choking the evils of black money, terror funding and counterfeiting. It claimed that demonetisation was a “critical” part of a policy push to “expand formal economy” and thin the ranks of the informal cash-based sector.

The central bank, represented by senior advocate Jaideep Gupta, said demonetisation was done on the recommendation of the RBI.