VIVEK NARAYAN SHARMA versus UNION OF INDIA

Citation: [2023] 1 S.C.R. 1 · Decided: 02-01-2023 · Supreme Court of India · Bench: A.S. BOPANNA

Cited by 13 judgment(s) · cites 63 · see the full citation network in Lexace

Judgment (excerpt)

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VIVEK NARAYAN SHARMA
v.
UNION OF INDIA
(Writ Petition (Civil) No.906 of 2016)
JANUARY 02, 2023
[S. ABDUL NAZEER, B.R. GAVAI, A.S. BOPANNA,
V. RAMASUBRAMANIAN AND B. V. NAGARATHNA, JJ.]
Demonetisation – Notification No. 3407(E) dated 8th
November 2016 by which 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 – Act or policy of
‘demonetisation’ – Interpretation of sub-section (2) of s.26 of the
Reserve Bank of India Act, 1934 – Meaning of “any” series of
“any” denomination – Power of the Central Government to initiate
and carry out demonetisation in absence of recommendation to this
effect by the Central Board of the Reserve Bank of India – Held
[per B.R. Gavai, J. (for himself and for S. Abdul Nazeer, A.S. Bopanna,
and V. Ramasubramanian, JJ.) (majority judgment)]: The power available
to the Central Government under sub-section (2) of s.26 of the 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 – The power can be exercised for all series of bank notes –
Merely because on two earlier occasions, the demonetization
exercise was by plenary legislation, it cannot be held that such a
power would not be available to the Central Government under
sub-section (2) of s.26 of the RBI Act – Sub-section (2) of s.26 of
the RBI Act does not provide for excessive delegation inasmuch as
there is an inbuilt safeguard that such a power has to be exercised
on the recommendation of the Central Board – As such, sub-section
(2) of Section 26 of the RBI Act is not liable to be struck down on
the said ground – The impugned Notification dated 8th November
2016 does not suffer from any flaws in the decision-making process;
and satisfies the test of proportionality and, as such, cannot be
struck down – The period provided for exchange of notes vide the
impugned Notification dated 8th November 2016 cannot be said to
be unreasonable – The RBI does not possess independent power
   [2023] 1 S.C.R. 1
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SUPREME COURT REPORTS
[2023] 1 S.C.R.
under sub-section (2) of s.4 of the 2017 Act in isolation of the
provisions of ss.3 and 4(1) thereof to accept the demonetized notes
beyond the period specified in notifications issued under sub-section
(1) of s.4 of the 2017 Act – Held [per B.V. Nagarathna, J. (minority
judgment)]: Sub-section (2) of s.26 of RBI Act applies only when a
proposal for demonetisation is initiated by the Central Board of
RBI by way of a recommendation being made to the Central
Government – The Central Government cannot demonetise bank
notes by issuance of a gazette notification as if it is exercising power
under sub-section (2) of s.26 of the RBI Act – In such circumstances
when the Central Government is initiating the process of
demonetisation, it would not be acting under sub-section (2) of s.26
of the RBI Act but notwithstanding the said provision through a
legislative process – When such power is exercised by the Central
Government by means of a legislation, it is by virtue of Entry 36,
List I of the Seventh Schedule of the Constitution of India which
deals with currency, coinage and legal tender; foreign exchange
which is a field of legislation – When the Central Government
proposes demonetisation of any bank note, it must seek the opinion
of the Central Board of the RBI – The opinion of the Central Board
of RBI ought to be an independent and frank opinion – On receipt
of a negative opinion from the Central Board of the Bank, the Central
Government which has initiated the demonetisation process may
still intend to go ahead with the said process after weighing the
pros and cons only by means of an Ordinance and/or Parliamentary
legislation but not by issuance of a gazette notification – The Central
Government in such circumstances cannot resort to exercise of power
under sub-section (2) of s.26 of the RBI Act by issuing a notification
in the Gazette of India as if it were exercising executive powers –
Even if the Central Board of RBI concurs with the proposal of the
Central Government, the Central Government would have to
undertake a legislative process and not carry out the measure by
simply issuing a gazette notification – The action of demonetisation
initiated by the Central Government by issuance of the impugned
notification dated 8th 

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