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Demonetisation Judgment
The Supreme Court’s judgment, upholding the constitutional validity of the demonetisation of `500 and `1,000 notes, is legally right but comes too late to be of any appreciable legal interest. It highlights the phenomenon of the Court determining the outcome of a case without actually deciding the case, and raises worrying questions about the abdication of responsibility by the Court.
Was the 2016 demonetisation of the `500 and `1,000 notes legally valid? The question which probably had relevance in 2016 has become stale in 2023. The answer afforded by the Supreme Court in Vivek Narayan Sharma v Union of India (2023) that indeed it was legal is, at best, academic. Nonetheless, the five-judge bench judgment provides the public a glimpse into the exercise and also an occasion to reflect on the demonetisation itself.
In this column, I propose to go into the Court’s interpretation of Section 26 of the Reserve Bank of India (RBI) Act, 1934, why it upheld the demonetisation exercise as legally valid and what the judgment tells us about the state of two institutions: the Supreme Court of India and the RBI.
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