SC to consider demonetization initiative of Modi administration, requests affidavits from RBI and the Centre

The Supreme Court on Wednesday announced that it will investigate how the Narendra Modi administration decided to implement demonetization in 2016. The Supreme Court directed the Reserve Bank of India and the Centre to submit thorough affidavits.

On November 9, the case will be heard by a five-judge Constitutional bench presided over by Justice SA Nazeer. The bench ruled that it is the constitution bench’s responsibility to respond when a question is brought forward.

The bench stated that although it is aware of the “Lakshman Rekha” about judicial review of government policy choices, it will need to analyse the 2016 demonetisation judgement in order to determine whether the matter has devolved into merely an “academic” exercise.

According to attorney general R. Venkataramani, the issue would largely remain academic unless the 1978 High Denomination Bank Notes (Demonetisation) Act is challenged in an appropriate context.

The SC panel, which also included Justices BR Gavai, AS Bopanna, V Ramasubramanian, and BV Nagarathna, declared that it must investigate the situation because neither party was in agreement before it could say whether the exercise was academic or futile.

“We always know where the Lakshman Rekha is, but the manner in which it was done has to be examined. We have to hear from the counsel to decide that,” the bench said.

When the government eliminated the 500 and 1,000 currency notes on October 12, the Supreme Court was hearing a number of petitions against the demonetisation initiative.

The issue has not become academic and must be decided by the highest court, according to senior attorney P Chidambaram, who is representing one of the parties. According to him, this type of demonetisation requires a special act of Parliament.