Unchartered Ocean of Policy Decision V / The Demonetization Recommendation


Shri P. Chidambaram submits, result of demonetization was disastrous. If Notification No. 3407(E) [08.11.2016] had a nexus with objectives to be achieved, it would not be bad in law merely because some citizens suffered through hardships.

It will not be proper for Court to enter into an area which should be best left to experts. We do not possess expertise to question whether object with which demonetization was effected is served or not. Small Scale Industrial Manufactures Association v. Union of India, (2021) 8 SCC 511 had an occasion to consider scope of judicial review of economic and fiscal regulatory measures. It is more than settled, Court gives a large leeway to Executive and Legislature in matters of economic policy.

Hon’ble Justice B.R. Gagai, Vivek Narayan Sharma v. Union of India, [Writ Petition (Civil) No. 906 of 2016].

I do not deem it necessary to answer all questions framed.

Being mindful of limited scope of judicial review permissible in matters concerning economic policy, I shall limit my examination to determining whether process in issuance of Notification No. 3407(E) [8.11.2016] was correct. This is well within limits of ‘Lakshman Rekha’ Court has carefully drawn for itself.

When a statute contemplates a specific procedure to be adhered to in order to arrive at a desired end, such procedure cannot be substituted by an alternative procedure which is not contemplated.

It emerges with no ambiguity, proposal for demonetization originated from ‘Central Government’ who could not have exercised power under Section 26(2) of The Reserve Bank of India Act, 1934 for issuance of Notification No. 3407(E) [08.11.2016]. It was an exercise of power contrary to law. Section 26(2) has inherently a very restricted operation and is limited only to an initiation by ‘Central Board’.

Hon’ble Justice B.V. Nagarathna, Vivek Narayan Sharma v. Union of India, [Writ Petition (Civil) No. 906 of 2016].


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