Justice Nagarathna's Dissent in Demonetisation Case Matters. 

Very creditable & courageous for the junior most & only woman judge on this bench, Justice Nagarathna to dissent & hold that the exercise for the Note ban was arbitrary & without proper application of mind

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Published on - 02 January, 2023

The Supreme Court on Monday affirmed the Narendra Modi government's demonetisation move in 2016, stating there was no flaw in the decision making processJustice BR Gavai read out the majority view on behalf of himself and justices SA Nazeer, AS Bopanna and V Ramasubramanian.

The top court said the Centre had the power to demonetise all series of a bank note, adding the November 8, 2016 decision can't be said to be unreasonable nor was it hit by the doctrine of proportionality and it is not relevant whether the objective behind the decision was achieved or not.

Justice B.R. Gavai, delivering the majority judgment of the Bench, supported by Justices S. Abdul Nazeer, A.S. Bopanna, V. Ramasubramanian, said the court can exercise only a limited judicial review in matters of economic policy. It cannot supplant the views of the experts. The records do not show any flaw in the use of decision-making powers of the government. There was a prior consultation between the government and the RBI dating back six months prior to November 8, 2016.

The sole woman judge, Justice B.V. Nagarathna, on the Bench however disagreed with the majority, saying the demonetisation exercise, undertaken on the government's initiative and based on a mere notification in the official gazette instead of a plenary legislation in the Parliament, was plainly unlawful and vitiated.

Justice Nagarathna said she was not questioning the object of demonetisation. It may have been "noble and well-intentioned", but the process undertaken was bad in law.

"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 said demonetisation process was illegal but as the process took place six years ago, it cannot be reversed. She says as demonetisation resulted in very harsh situations for the citizens, it should have been done only after passing a legislation in Parliament. She observed . "RBI should initiate the demonetisation process and not the Centre. As this was reversed in 2016, the demonetisation decision was legally flawed," she said.

She even touched upon the statistical data and observed It has been brought on record that 98% bank notes were exchanged. This suggests the measure itself was not effective as it was sought to be. “

Former Finance Minister P. Chidambaram said the dissent part of the judgement points out irregularities. Chidambaram in a statement said, "Once the Hon'ble Supreme Court has declared the law, we are obliged to accept it. However, it is necessary to point out that the majority has not upheld the wisdom of the decision; nor has the majority concluded that the stated objectives were achieved. In fact, the majority has steered clear of the question whether the objectives were achieved at all."

Supreme Court advocate Prashant Bhushan tweeted “Very creditable & courageous for the junior most & only woman judge on this bench, Justice Nagarathna to dissent & hold that the exercise for Noteban was arbitrary & without proper application of mind.

This mindless decision taken by PM alone destroyed economy & lives of Millions”

However there are other few things also be need to be observed. The Supreme Court has only pronounced on whether Section 26(2) of RBI Act, 1934 was correctly applied or not before announcing demonetisation on November 2016, Nothing more, nothing less. One Hon'ble Judge in her dissenting opinion has said that Parliament should not have been bypassed. 

It has said nothing on the impact of demonetisation which was a singularly disastrous decision. It damaged the growth momentum, crippled MSMEs, finished off the informal sector & destroyed lakhs and lakhs of livelihoods. 

The verdict has nothing to say on whether the stated objectives of demonetisation |were met or not. None of these goals- reducing currency in circulation, moving to cashless economy, curbing counterfeit currency, ending terrorism & unearthing black money-was achieved in significant measure. 

The majority Supreme Court verdict deals with the limited issue of the PROCESS of : decision making not with its OUTCOMES. To say that demonetisation has been upheld by the Honourable Supreme Court is totally misleading and wrong. 

As a CJ of the U.S. Supreme Court famously said "A dissent is an appeal to the brooding spirit of the law, to the intelligence of a future day."

To know more about the ramifications of the Demonetisation decision do read the book  Demonetisation And Black Money by CR Reddy


                                                                             Wordsmithery


Creditable - of a quite good standard that cannot be criticized, though not excellent


Dissent - disagreement with official or generally agreed ideas or opinions


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