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SUPREME COURT OF INDIA
S. Abdul Nazeer, B.R. Gavai, A.S. Bopanna, V. Ramasubramanian, B.V. Nagarathna, JJ.
Vivek Narayan Sharma – Petitioner
Versus
Union of India – Respondent
Writ Petition (Civil) No.906 of 2016 with T.P.(C) No. 1958-1967/2016, W.P.(C) No. 1011/2016, SLP(C) No. 36757/2016, W.P.(C) No. 40/2017, W.P.(C) No. 47/2017, W.P.(C) No. 41/2017, W.P.(C) No. 260/2017, T.P.(C) No. 607/2017, T.P.(C) No. 588/2017, T.P.(C) No. 626/2017, T.P.(C) No. 585/2017, T.P.(C) No. 582/2017, T.P.(C) No. 638/2017, W.P.(C) No. 568/2018, W.P.(C) No. 1018/2019, W.P.(C) No. 683/2020, T.C.(C) No. 9/2017, W.P.(C) No. 908/2016, W.P.(C) No. 913/2016, W.P.(C) No. 916/2016, W.P.(C) No. 1026/2016, W.P.(C) No. 943/2016, W.P.(Crl.) No. 162/2016, W.P.(C) No. 951/2016, W.P.(C) No. 929/2016, W.P.(C) No. 930/2016, W.P.(C) No. 944/2016, T.P.(C) No. 1982-1996/2016, W.P.(C) No. 952/2016, W.P.(C) No. 953/2016, W.P.(C) No. 958/2016, W.P.(C) No. 957/2016, SLP(C) No. 35356/2016, T.P.(C) No. 2030- 2038/2016, W.P.(C) No. 978/2016, W.P.(C) No. 1025/2016, SLP(C) No. 35805/2016, W.P.(C) No. 997/2016, W.P.(C) No. 1008/2016, W.P.(C) No. 1010/2016, W.P.(C) No. 1009/2016, W.P.(C) No. 996/2016, W.P.(C) No. 1006/2016, T.P.(C) No. 47- 67/2017, T.P.(C) No. 659/2017, W.P.(C) No. 223/2017, SLP(C) No. 14272/2017, SLP(C) No. 14131/2017, SLP(C) No. 14216/2017, W.P.(C) No. 341/2018, W.P.(C) No. 193/2018, W.P.(C) No. 316/2018, MA 1552/2018 in W.P.(C) No. 626/2017, W.P.(C) No. 971/2016, T.P.(C) No. 2018-2022/2016, W.P.(C) No. 972/2016, W.P.(C) No. 389/2018
Decided On : 02-01-2023
Per B.R. Gavai, J. (With S. Abdul Nazeer, A.S. Bopanna & V. Ramasubramanian, JJ.)(Majority View)
(A) Specified Bank Notes (Cessation of Liabilities) Act, 2017 – Section 3 – Demonetisation – Constitutionality of – By demonetization, right vested in notes was not taken away – Only restrictions were with regard to exchange of old notes with new notes which were also gradually relaxed from time to time – There was no restriction on non-cash transactions like debit card, credit card, net banking, online transactions etc. – Even if there were reasonable restrictions on right to property, said restrictions were in public interest of curbing evils of fake currency, black money, drug trafficking and terror financing – As such, doctrine of proportionality is fully satisfied – If there is a direct nexus between restrictions and object of action, then a strong presumption in favour of constitutionality of the action naturally arises. (Paras 273, 277, 278 and 280)
(B) Reserve Bank of India Act, 1934 – Section 26(2) – Specified Bank Notes (Cessation of Liabilities) Act, 2017 – Section 3 – Demonetisation – Constitutionality of – Power available to Central Government under sub-section (2) of Section 26 of RBI Act cannot be restricted to mean that it can be exercised only for ‘one’ or ‘some’ series of bank notes and not for ‘all’ series of bank notes – Power can be exercised for all series of bank notes – Merely because on two earlier occasions, demonetization exercise was by plenary legislation, it cannot be held that such a power would not be available to Central Government under sub-section (2) of Section 26 of RBI Act;(ii) Sub-section (2) of Section 26 of RBI Act does not provide for excessive delegation inasmuch as there is an inbuilt safeguard that such a power has to be exercised on recommendation of Central Board – As such, sub-section (2) of Section 26 of RBI Act is not liable to be struck down on said ground – Impugned Notification dated 8th November 2016 does not suffer from any flaws in decision-making process – Impugned Notification dated 8th November 2016 satisfies test of proportionality and, as such, cannot be struck down on said ground – Period provided for exchange of notes vide impugned Notification dated 8th November 2016 cannot be said to unreasonable – RBI does not possess independent power under sub-section (2) of Section 4 of 2017 Act in isolation of provisions of Sections 3 and 4(1) thereof to accept demonetized notes beyond period specified in notifications issued under sub-section (1) of Section 4 of 2017 Act. (Paras 280, 303 and 304)
(C) Interpretation of Statute – Rules of Construction – Interpretation which makes textual interpretation match contextual has to be preferred – A statute is best interpreted when reason and purpose for its enactment is ascertained – Statute must be read first as a whole and then section by section, clause by clause, phrase by phrase and word by word – If statute is looked at in context of its enactment with glasses of statute-maker, provided by such context, its scheme, sections, clauses, phrases and words may take colour and appear different than when statute is looked at without glasses provided by context. (Para 297)
Result : Reference answered.
Certainly. Please specify the legal issue or question you would like me to address based on the provided document and key points.
JUDGMENT :
B.R. GAVAI, J.
INDEX
| I. | INTRODUCTION | Paras 1 to 4 |
| II. | BACKGROUND | Paras 5 to 15 |
| III. | SUBMISSIONS OF PETITIONERS | Paras 16 to 51 |
| IV. | SUBMISSIONS OF UNION OF INDIA | Paras 52 to 78 |
| V. | SUBMISSIONS OF THE RBI | Paras 79 to 86 |
| VI. | SUBMISSIONS IN REJOINDER | Paras 87 to 94 |
| VII. | REFRAMED QUESTIONS | Paras 95 |
| VIII. | STATUTORY SCHEME | Paras 96 to 109 |
| IX | ISSUE NO. (i) | Paras 110-158 |
| Precedents construing the word “any” | Paras 112-127 | |
| Purposive interpretation | Paras 128-143 | |
| Construction of sub-section (2) of Section 26 of the RBI Act | Paras 144-157 | |
| X. | ISSUE NO. (ii) | Paras 159-211 |
| Precedents considering delegated legislation | Paras 162-193 | |
| Status of the RBI | Paras 194-202 | |
| Application of the aforesaid principles to the present case | Paras 203-211 | |
| XI. | ISSUE NO. (iii) | Paras 212-262 |
| Scope of Judicial Review | Paras 215-218 | |
| Scope of Judicial Interference in matters pertaining to economic policy | Paras 219-225 | |
| Application of the aforesaid principles to the present case | Paras 226-237 | |
| Recommendation of the RBI | Paras 238-245 | |
| Relevancy of attainment of objectives | Paras 246-262 | |
| XII. | ISSUE NO. (iv) | Paras 263-281 |
| Four-pronged test of proportionality | Paras 266-280 | |
| XIII. | ISSUE NO. (v) | Paras 282-288 |
| XIV. | ISSUE NO. (vi) | Paras 289-303 |
| Contextual and harmonious construction of the provisions of the 2017 Act | Paras 290-299 | |
| XV | ANSWERS TO THE QUESTIONS | Paras 304-305 |
I. INTRODUCTION
1. This reference to the larger bench of Five-Judges arises out of the writ petitions filed challenging the Notification No. 3407(E) dated 8th November 2016 (hereinafter referred to as “the impugned Notification”), issued by the Central Government in exercise of the powers conferred by sub-section (2) of Section 26 of the Reserve Bank of India Act, 1934 (hereinafter referred to as “the RBI Act”), vide which the Central Government declared that the bank notes of denominations of the existing series of the value of five hundred rupees and one thousand rupees shall cease to be legal tender with effect from 9th November 2016, to the extent specified in the impugned Notification. This is popularly known as an act/policy of ‘demonetization’.
2. Immediately after the impugned Notification was issued, several writ petitions challenging the policy of demonetization came to be filed before this Court as also before various High Courts. Transfer Petitions were filed by the Union, seeking transfer of all such matters pending before the High Courts to this Court.
3. A bench of learned three Judges of this Court passed an order dated 16th December 2016 in Writ Petition (Civil) No.906 of 2016 and other connected petitions, observing therein that, in their opinion, following important questions fall for consideration:
“(i) Whether the notification dated 8th November 2016 is ultra vires Section 26(2) and Sections 7, 17, 23, 24, 29 and 42 of the Reserve Bank of India Act, 1934;
(ii) Does the notification contravene the provisions of Article 300A of the Constitution;
(iii) Assuming that the notification has been validly issued under the Reserve Bank of India Act, 1934 whether it is ultra vires Articles 14 and 19 of the Constitution;
(iv) Whether the limit on withdrawal of cash from the funds deposited in bank accounts has no basis in law and violates Articles 14, 19 and 21;
(v) Whether the implementation of the impugned notification(s) suffers from procedural and/or substantive unreasonableness and thereby violates Articles 14 and 19 and, if so, to what effect?
(vi) In the event that Section 26(2) is held to permit demonetization, does it suffer from excess
(1) Demonetisation – Even if there were reasonable restrictions on right to property, said restrictions were in public interest of curbing evils of fake currency, black money, drug trafficking and te....
Courts should defer to legislative judgment in economic policy matters and not interfere unless the exercise of legislative judgment appears to be palpably arbitrary.
The circulars restricting District Central Co-operative Banks from accepting specified bank notes during demonetisation were lawful and did not violate statutory provisions, ensuring financial integr....
Specified bank notes seized by authorities before cut-off date but returned after cannot be denied exchange merely on procedural non-compliance caused by the seizure itself.
The RBI's imposition of directives under Section 35A of the Banking Regulation Act does not necessitate pre-decisional hearings, emphasizing the need for depositor protection over procedural formalit....
(1) Right to carry on trade or business is subject to reasonable restrictions which are imposed in interests of general public.(2) A regulated economy is a critical facet of ensuring a balance betwee....
The cancellation decision was within the authority of the RBI, and the petitioner's admission of guilt and the opportunity of a personal hearing satisfied the principles of natural justice.
The court underscored the executive's authority to restrict publications under emergency conditions, reaffirming the principle that governmental actions taken within the scope of law are not subject ....
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