Just because demonetisation is an economic policy decision, we won’t sit with folded hands: SC

New Delhi, December 6

Asserting its power of judicial review, the Supreme Court on Tuesday said it will not be a silentspectator and sit quietly with folded hands only because demonetisation was an economic policy decision.

“Just because it is an economic decision, does not mean we will fold our hands and sit. We can always examine the manner in which the decision was taken,” Justice BV Nagarathna, one of the five judges on the Constitution Bench hearing petitions challenging the Centre’s November 2016 decision to demonetise currency notes of Rs 500 and Rs 1,000.

Justice Nagarathna also referred to the social and economic hardships and distress faced by the common people as a result of demonetisation.

The judge’s comments came after senior counsel Jaideep Gupta, representing the RBI, sought to emphasise that only a limited judicial review could be done on issues relating to economic policymaking.

“The proportionality principle should be applied only to the extent of testing whether a reasonable nexus existed between the stated objectives and the monetary policy of demonetisation,” Gupta submitted.

Led by Justice S Abdul Nazeer, the five-judge Constitution Bench is examining the legality of the November 8, 2016 demonetisation decision. Other judges on the Bench are Justices BR Gavai, AS Bopanna, V Ramasubramanian, and BV Nagarathna.

Senior advocate P Chidambaram, representing some of the petitioners, asked the Centre to come clean on the decision making process. “They have not claimed any privilege. Then, let them place the documents to be viewed by this court. Without these documents and in the absence of material therein, it cannot be decided whether the decision-making process was flawed,” Chidambaram told the Bench.

Terming the Centre’s November 8, 2016 decision to demonetise currency notes of denomination of Rs 500 and Rs 1000 as “deeply flawed”, Chidambaram had earlier urged the Supreme Court to declare it unconstitutional.

The Centre has defended demonetisation, saying it was a major step to fight “the menace of fake currency notes, storage of unaccounted wealth, and financing of subversive activities”. In an affidavit filed in response to petitions challenging demonetization, the Ministry of Finance said it was not a “standalone or isolated economic policy action”.