NEW DELHI: In her lone dissenting opinion, Justice B V Nagarathna on Monday found the Centre’s notification on demonetisation unlawful and vitiated as it had procedural flaws. Section 26(2) of the RBI Act, she said, is only applicable when the proposal for demonetisation is initiated by the Central Board of the RBI. Since the 2016 proposal was initiated by the Centre, she said it could not be given effect through a notification, adding the entire process was done in 24 hours.
The Centre, she added, can issue a notification if it accepts the recommendation by the RBI’s Central Board. But in the absence of a recommendation by the Central Board, demonetisation can be carried out only by enacting a plenary legislation or law.
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“The powers of the Central Government being vast, the same have to be exercised only through a plenary legislation or a legislative process rather than by an executive act by the issuance of a notification in the Gazette of India. It is necessary that the Parliament which consists of the representatives of the People of this country, discusses the matter and thereafter approves and supports the implementation of the scheme of demonetisation,” she said.
Terming the decision-making process as tainted with non-exercise of discretion by the RBI’s Central Board, she said the RBI acted at the behest of the Centre and did not render an independent opinion to the government.