No procedural lapse in demonetisation of 500 and 1,000 currency notes in 2016: RBI to SC

The Reserve Bank of India (RBI) Tuesday told the Supreme Court that there was "no procedural lapse" in the demonetisation of '500 and '1,000 currency notes in 2016.

Senior advocate Jaideep Gupta, appearing for the RBI, told a constitution bench of five Judges that "no judicial review lies once there is no procedural lapse". He informed the bench that the central board of RBI met on November 8, 2016 and recommended demonetisation to the Centre, the recommendation went to the Cabinet and the Cabinet took a decision on the same.

Gupta told the bench that the petitions challenging the demonetisation are on a "fishing expedition" indulging in "casual arguments". On the charge that the quorum of the central board of RBI was incomplete on the day the demonetisation was executed, the RBI counsel said the quorum, as per the regulation, was complete.


"Just because some posts were vacant doesn't mean that the decision by the board will be vitiated," Gupta argued. He added that demonetisation was a significant economic policy decision and judicial review of an economic policy decision is not to be gone into. He further argued that economically relevant decisions for economic policy can be taken only by the legislature.

On hardship faced by people, he contended that "temporary hardships" cannot become an impediment in "nation building".

The constitution bench verbally remarked that "court cannot fold its hands" simply because it is an economic policy decision. It added that the court can examine whether the laid down procedure was followed for taking the decision and the material taken into consideration.

Attorney general R Venkataramani argued that an economic policy decision cannot be looked into in isolation.

Appearing on behalf of the petitioners, former finance minister P Chidambaram argued that the proposal of demonetisation "emanated" from the government and it was the government which "advised" the RBI.