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TMI Blog2023 (1) TMI 337X X X X Extracts X X X X X X X X Extracts X X X X ..... exercise was done through the plenary legislations? - HELD THAT:- While holding that the word any in the context would mean all , this Court observed that a right of appeal is always conferred by a statute. It has been held that, while conferring such right, a statute may impose restrictions, like limitation or pre-deposit of penalty or it may limit the area of appeal to questions of law or sometime to substantial questions of law. It has been held that whenever such limitations are imposed, they are to be strictly followed. It has been held that in a case where there is no limitation, the right of appeal cannot be curtailed by this Court on the basis of an interpretative exercise. It is clear that it is a settled principle that the modern approach of interpretation is a pragmatic one, and not pedantic. An interpretation which advances the purpose of the Act and which ensures its smooth and harmonious working must be chosen and the other which leads to absurdity, or confusion, or friction, or contradiction and conflict between its various provisions, or undermines, or tends to defeat or destroy the basic scheme and purpose of the enactment must be eschewed. The primary and foremos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Merely because on earlier two occasions the Government decided to take recourse to plenary power of legislation, this, by itself, cannot be a ground to give a restricted meaning to the word any in sub-section (2) of Section 26 of the RBI Act. As already discussed herein above, the legislative intent could not have been to give a restricted meaning to the word any in sub-section (2) of Section 26 of the RBI Act - we are unable to accept the contention that the word any has to be given a restricted meaning taking into consideration the overall scheme, purpose and the object of the RBI Act and also the context in which the power is to be exercised. We find that the word any would mean all under sub-section (2) of Section 26 of the RBI Act. In the event it is held that the power under sub-section (2) of section 26 of the RBI Act is construed to mean that it can be exercised in respect of all series of Bank notes, whether the power vested with the Central Government under the said sub-section would amount to conferring excessive delegation and as such, liable to be struck down? - HELD THAT:- Though the Court found the power under Section 5(2)(b) of the Gold (Control) Act, 1968 suffer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the rule-making power conferred under Section 186 of the Finance Act, 2017. Status of the RBI - HELD THAT:- This Court has noted that the RBI, which is a bankers' bank, is a creature of statute. It has large contingent of expert advice relating to matters affecting the economy of the entire country. It has been held that the RBI plays an important role in the economy and financial affairs of India and one of its important functions is to regulate the banking system in the country. It has been held that it is the duty of the RBI to safeguard the economy and financial stability of the country - It can thus be seen that this Court has held that the RBI is the sole repository of power for the management of currency. It is also vested with the sole right to issue bank notes and to issue currency notes supplied to it by the Government of India. It has been held that the RBI has an important role to play in evolving the monetary policy of the country. The RBI is an expert body entrusted with various functions with regard to monetary and economic policies. Perusal of the scheme of the RBI Act would reveal that it has a primary role in the matters pertaining to the management and reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , is without substance. The Court must defer to legislative judgment in matters relating to social and economic policies and must not interfere unless the exercise of executive power appears to be palpably arbitrary. The Court does not have necessary competence and expertise to adjudicate upon such economic issues. It is also not possible for the Court to assess or evaluate what would be the impact of a particular action and it is best left to the wisdom of the experts. In such matters, it will not be possible for the Court to assess or evaluate what would be the impact of the impugned action of demonetization - the legislative and quasi-legislative authorities are entitled to a free play, and unless the action suffers from patent illegality, manifest or palpable arbitrariness, the Court should be slow in interfering with the same. It can thus be seen that confidentiality and secrecy in such sort of measures is of paramount importance. When demonetization was being done in the year 1978, R. Janakiraman, who had drafted the Ordinance, was not permitted to communicate with anyone including the Bank s central office at Bombay. It would thus show as to what great degree of confidential ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... monetized notes have ceased to be a legal tender and have ceased to be the liabilities of the RBI under Section 34 of the RBI Act and the guarantee of the Central Government under sub-section (1) of Section 26 of the RBI Act, a window is provided by Section 4 of the 2017 Act. Clause (i) of sub-section (1) of Section 4 of the 2017 Act deals with a citizen of India who makes a declaration that he was outside India between 9th November 2016 and 30th December, 2016, subject to such conditions as may be specified, by notification, by the Central Government. Accordingly, a notification is issued by the Central Government on 30th December 2016 - The provisions of sub-section (2) of Section 4 of the 2017 Act are somewhat analogous to the provisions in sub-sections (1) and (2) of Section 8 of the 1973 Act. Sub-section (3) of Section 4 of the 2017 Act provides that any person, aggrieved by the refusal of the RBI to credit the value of the notes under sub-section (2), can make a representation to the Central Board of the RBI within fourteen days of the communication of such refusal to him. This provision is somewhat analogous with sub-section (3) of Section 8 of the 1973 Act. The RBI does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tte of India specifying the date w.e.f. which any specified series of bank notes of any specified denomination shall cease to be legal tender and shall cease to have the guarantee of the Central Government. (vi) The provisions of the Act do not bar the Central Government from proposing or initiating demonetisation. It could do so having regard to its plenary powers under Entry 36 of List I of the Seventh Schedule of the Constitution of India. However, it has to be done only by an Ordinance being issued by the President of India followed by an Act of Parliament or by plenary legislation through the Parliament. The Central Government cannot demonetise bank notes by issuance of a gazette notification as if it is exercising power under subsection (2) of Section 26 of the Act. In such circumstances when the Central Government is initiating the process of demonetisation, it would not be acting under subsection (2) of Section 26 of the Act but notwithstanding the said provision through a legislative process. (vii)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 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any action taken by the Central Government or the Bank pursuant to the issuance of the Notification dated 8th November, 2016. This direction is being issued having regard to Article 142 of the Constitution of India. Hence, no relief is being granted in the individual matters. SLP disposed off. - 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. 1010/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk 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 excessive delegation of legislative power thereby rendering it ultra vires the Constitution; (vii) What is the scope of judicial review in matters relating to fiscal and economic policy of the Government; (viii) Whether a petition by a political party on the issues raised is maintainable under Article 32; and (ix) Whether District Co-operative Banks have been discriminated against by excluding them from accepting deposits and exchanging demonetized notes. 4. Vide the said order dated 16th December 2016, this Court also directed that, if any other writ petitions/proceedings were pending in any High Court, further hearing of those matters should also remain stayed. This Court further directed that no other Court should entertain, hear or decide any writ petition/proceeding on the issue of or in relation to or arising from the decision of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank Notes (Cessation of Liabilities) Ordinance, 2016 (hereinafter referred to as the 2016 Ordinance ) was promulgated by the Hon ble President of India. Subsequently, the Parliament enacted the Specified Bank Notes (Cessation of Liabilities) Act, 2017 (hereinafter referred to as the 2017 Act ), which received the assent of the then Hon ble President of India on 27th February 2017. 9. Section 3 of the 2017 Act provides that, on and from the appointed day, notwithstanding anything contained in the RBI Act or any other law for the time being in force, the SBNs which had ceased to be legal tender in view of the impugned Notification of the Government of India, shall cease to be liabilities of the RBI under Section 34 of the RBI Act and shall cease to have the guarantee of the Central Government under sub-section (1) of Section 26 of the RBI Act. 10. Section 4 of the 2017 Act provides for a grace period in case of certain classes of persons holding such SBNs on or before the 8th day of November, 2016 for tendering, with such declarations or statements, at such offices of the RBI or in such other manner as may be specified by it. One of the classes of persons who was provided a grace p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk of India. 3. Having heard submissions, which remained inconclusive, and before proceeding further with the matter, it was felt, that this Court should ascertain from the Union of India (a) whether the Central Government intends to exercise the power conferred by clause (4)(1)(ii) of Ordinance 10 of 2016; and (b) if the answer to (a) is in the negative, the reason why the Central Government chose not to exercise its jurisdiction. An affidavit may accordingly be filed by the Central Government, explaining its position to this Court. 4. Needful be done within two weeks from today. 5. Post for hearing on 11th April, 2017. 14. In pursuance of the directions issued by this Court, a short affidavit came be to be filed on behalf of the Union of India on 7th April, 2017. It was stated in the said affidavit thus: 26. In view of the above and those to be urged at the time of hearing, it is most humbly submitted that the Central Government took a conscious decision that no necessity or any justifiable reason exists either in law or on facts to invoke its power under Section 4(1)(ii) of the Ordinance to entitle any person to tender within the grace period the specified bank notes. 15. The ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it will have to be held that the words any series mean any specified series and not all series of bank notes. 20. Shri Chidambaram submits that, if it is held that the Central Government is conferred with the power under sub-section (2) of Section 26 of the RBI Act to demonetize currency notes of all series , then a situation may arise wherein the bank notes issued on the previous day can be demonetized on the very next day. He submits that, as a result of the demonetization done on 8th November 2016, even the currency notes issued on the previous day of the denominational value of Rs.500/- and Rs.1,000/- had become illegal tender. 21. Shri Chidambaram submits that if sub-section (2) of Section 26 of the RBI Act is not read down in the aforesaid manner, then the said Section would be vulnerable to be challenged on the ground that it confers an unguided, uncanalised and arbitrary power upon the Executive Government. He submits that, in such a situation, the said provision is liable to be struck down on the ground that it violates Articles 14, 19, 21 and 300A of the Constitution of India. He submits that the fact that the demonetization of all series of high denominational currency n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oard. The word may used therein, postulates exercise of discretion and, therefore, the discretion so exercised by the Central Government must be exercised after considering the matter carefully, as to whether the recommendation of the RBI is required to be accepted or not. 25. Learned Senior Counsel, therefore, submits that it is implicit in sub-section (2) of Section 26 of the RBI Act that the Central Board constituted under Section 8 of the RBI Act must devote sufficient time to apply their mind while making a recommendation, particularly when a major step like demonetization is to be taken. 26. Learned Senior Counsel submits that, however, in the present case, the decision-making process is deeply flawed. He submits that, under Section 8 of the RBI Act, the only channel for non-government Directors to come on the Central Board of the RBI is through clause (c) of sub-section (1) of Section 8 of the RBI Act. He submits that, usually, experts in trade and commerce, economists, industrialists, etc. are nominated in the said category. However, on the date on which the decision for demonetization was taken by the Central Board i.e. 8th November, 2016, there were only 3 independent Dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that there is no record available to show that there was application of mind to the relevant factors by the Central Board, so also by the Central Government. He submits that it is also not clear as to whether there was any Cabinet note based on the recommendation of the Central Board, which was placed before the Cabinet for consideration. He submits that the Hon ble Prime Minister went on National Television at 8.00 p.m. on 8th November 2016, in a slot that had already been booked by the Government since all channels telecasted the speech at 8.00 p.m., and announced the decision on demonetization. He submits that the decision-making process was pre-meditated and rushed, which depicted a non-application of mind and was deeply and fatally flawed. It is thus submitted that the procedure adopted was in total violation of the procedure contemplated under sub-section (2) of Section 26 of the RBI Act. 31. Shri Chidambaram further submits that neither the RBI nor the Central Government took into consideration the relevant factors and eschewed irrelevant factors before making such a far-reaching recommendation and decision respectively, that would have serious consequences. He submits tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idambaram further submits that the objectives stated in the impugned Notification were false and illusory which could not have been achieved and which, in fact, were not achieved. He submits that one of the objectives was to weed out fake currency notes that were causing adverse effect on the economy. Another objective was to stop the use of high denomination bank notes for the storage of unaccounted wealth. Learned Senior Counsel submits that, when a fake currency note is detected by a Bank Officer, he is obliged to impound it, report it and give the same to the RBI. The RBI is required to destroy the note, thus taking the fake currency note out of possible circulation. It is submitted that the Annual Report of the RBI for the year 2016-2017 reported that only fake currency of the value of Rs.43.3 crore was detected in the nearly Rs.15.31 lakh crore of currency exchanged through the banking system. It is submitted that this represented 0.0028% of the total currency notes that were returned/exchanged through the banking system/RBI. 36. Learned Senior Counsel submitted that, in fact, the Indian Express quoted a senior Directorate of Revenue Intelligence (DRI) official who said that, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elied on the judgment of this Court in the case of K.S. Puttaswamy (Retired) and another (Aadhaar) v. Union of India and another (2019) 1 SCC 1 and Internet and Mobile Association of India v. Reserve Bank of India (2020) 10 SCC 274. 40. Learned Senior Counsel submitted that though, while exercising the power of judicial review, it may not be permissible for this Court to examine the correctness of the decision, however, this Court can very well exercise its powers to examine the correctness of the decision-making process. He submits that the decision-making process in the present case is totally flawed. He submits that neither the Central Board while making the recommendation nor the Central Government while taking the decision have followed the procedure as prescribed in sub-section (2) of Section 26 of the RBI Act. He submits that, in any case, they have failed to take into consideration the relevant factors which were required to be taken into consideration and have taken into consideration those factors which were false from the very inception and have subsequently been proved to be so. He, therefore, submits that this Court is entitled to exercise its powers of judicial review ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ior Counsel submitted that the Hon ble Prime Minister, in his speech on 8th November 2016, gave a categorical assurance that the rights and interests of honest, hard-working people would be fully protected. A specific assurance was also given that if there may be some who, for some reason, are not able to deposit their old five hundred or one thousand rupee notes by 30th December 2016, they could go to specified offices of the RBI upto 31st March 2017 and deposit the notes after submitting a declaration form. He submits that a person of a stature no less than the Hon ble Prime Minister of India has given an assurance that such persons would be able to go to specified offices of the RBI upto 31st March 2017 and deposit the notes after submitting a declaration form. It is further submitted that in the Press Note published on the same day, i.e. 8th November 2016, an assurance was given to the following effect: (x) For those who are unable to exchange their Old High Denomination Bank Notes or deposit the same in their bank accounts on or before December 30, 2016, an opportunity will be given to them to do so at specified offices of the RBI on later dates along with necessary documentat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of sub-section (1) of Section 4 of the 2016 Notification. 47. Learned Senior Counsel further submitted that, in view of clause (ii) of sub-section (1) of Section 4 of the 2017 Act, the Central Government is empowered to provide a grace period to such class of persons and for such reasons as may be specified, by notification. He submits that the said power is coupled with a duty. It is, therefore, submitted that when there are genuine cases, the Central Government is bound to exercise the power under clause (ii) of sub-section (1) of Section 4 of the 2017 Act and provide grace period to the applicant and persons like him. 48. Shri Divan further submits that the Circular of the RBI dated 31st December 2016 is also discriminatory, inasmuch as in the case of Resident Indians, there is no monetary limit for tender of SBNs. However, insofar as the Non-Resident Indians (NRIs) are concerned, the tender is restricted to a maximum of Rs.25,000/- per individual depending on when the notes were taken out of India as per relevant FEMA Rules. Learned counsel submits that an additional liability is imposed upon the NRIs to produce a certificate issued by the Indian Customs on arrival through Red ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... OF UNION OF INDIA 52. Shri R. Venkataramani, learned Attorney General ( A.G. for short), at the outset, submits that the action taken vide the impugned notification stands ratified by the 2017 Act. It is, therefore, submitted that with the executive action being validated by the will of Parliament, the challenge to the same would not survive. 53. The learned A.G. submits that the word any appearing before the words series of bank notes in sub-section (2) of Section 26 of the RBI Act should be construed as all . Learned A.G. relies on the following judgments of this Court in support of his submission that the word any will have to be construed to be all . (i) The Chief Inspector of Mines and another v. Lala Karam Chand Thapar etc. (1962) 1 SCR 9 (ii) Banwarilal Agarawalla v. The State of Bihar and others (1962) 1 SCR 33 (iii) Tej Kiran Jain and others v. N. Sanjiva Reddy and others (1970) 2 SCC 272 (iv) Lucknow Development Authority v. M.K. Gupta (1994) 1 SCC 243 (v) K.P. Mohammed Salim v. Commissioner of Income Tax, Cochin (2008) 11 SCC 573 (vi) Raj Kumar Shivhare v. Assistant Director, Directorate of Enforcement and another (2010) 4 SCC 772 54. The learned A.G. submits that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to have a different meaning. He relies on the judgment of this Court in the case of Maharaj Singh v. State of Uttar Pradesh and others (1977) 1 SCC 155 in support of his submission. 59. The learned A.G. submits that the alternative submission that if the word any is not given any restricted meaning then sub-section (2) of Section 26 of the RBI Act will have to be held to be invalid on the ground of vesting of excessive delegation, is also without substance. The learned A.G. submits that the RBI is not just like any other statutory body created by an Act of legislature. It is submitted that it is a creature created with a mandate to get liberated even from its creator. It is submitted that the guiding factors for exercise of power under sub-section (2) of Section 26 of the RBI Act have to be found from Section 3 of the RBI Act as well as from its preamble. It is submitted that the RBI Act was enacted for the purposes of taking over the management and regulation of the currency from the Central Government as per Section 3 of the RBI Act. The preamble of the RBI Act also states that the RBI has been constituted to regulate the issue of bank notes . It is submitted that the words tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or Rayon Silk Mfg. (Wvg.) Co. Ltd. v. The Asstt. Commissioner of Sales Tax and others (1974) 4 SCC 98 (vi) Ramesh Birch and others v. Union of India and others 1989 Supp. (1) SCC 430 (vii) M/s Gammon India Limited Etc. v. Union of India Others (1974) 1 SCC 596 (viii) Prabhudas Swami and Another v. State of Rajasthan and Others AIR 2003 RAJ 190 (ix) Rojer Mathew v. South Indian Bank Ltd. represented by its Chief Manager and Ors. (2020) 6 SCC 1 (x) The Registrar of Co-operative Societies, Trivandrum and another vs. K. Kunjabmu and others (1980) 1 SCC 340 (xi) Darshan Lal Mehra and others v. Union of India and others (1992) 4 SCC 28 63. The learned A.G. also relies on the judgments of the U.S. Supreme Court in the cases of Yakus v. U.S. 321 U.S. 414 (1944) and Federal Energy Administration v. Algonquin SNG. Inc. 426 U.S. 548 (1976) in support of his submission. 64. Insofar as the contention of the petitioners with regard to the impugned action being susceptible to challenge on the ground of proportionality is concerned, the learned A.G. submits that the reliance placed on the judgment of this Court in the case of Internet and Mobile Association of India (supra) is wholly misconceived. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count of patent arbitrariness, the learned A.G. submitted that in view of the settled legal position, the said contention is also not tenable. It is submitted that what is postulated under sub-section (2) of Section 26 of the RBI Act is that the Central Government may take a decision on the recommendation of the Central Board. It is submitted that in the present case, there was, in fact, a recommendation by the Central Board recommending demonetization. The decision by the Central Government has been taken after considering the said recommendation. It is, therefore, submitted that the procedure as provided in sub-section (2) of Section 26 of the RBI Act stands duly complied with. The learned A.G. submitted that the RBI is not only an expert body but a very special institution charged with a duty of conceiving and implementing various facets of economic and monetary policy. It is submitted that there cannot be a straitjacket formula in the discharge of its duty. Learned A.G. submits that in any case, it is a settled law that this Court should not interfere with the opinion of experts and leave it to experts who are more familiar with the problems they face. Reliance in this respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the number of tax payers; (iii) 25% growth in filing income-tax returns; (iv) significant increase in returns filed by corporate tax payers; (v) substantial growth in new PAN numbers. 70. The learned A.G. submits that, whereas self-assessment tax in the year 2015-16 was Rs.55,000 crore and Rs.68,000 crore in the year 2016-2017, it has jumped to Rs.1,00,000 crore in the year 2017-18. The learned A.G. further submitted that, as a direct benefit of demonetization, the volume of Unified Payments Interface (UPI) transactions shot up from 1.06 crore in 2016-2017 to 90.5 crore in 2017-18 and further to about 5000 crore in 2021-22. The value of the UPI transactions also grew 1210 times in 2021-22 as compared to 2016-17. It is submitted that the real GDP growth in the year 2017-18 was higher than the average annual growth of 6.6% in the decade (2010-11 to 2019-20). 71. The learned A.G. further submitted that there have also been various indirect benefits. Action against domestic black money resulted in undisclosed income of Rs.82,168 crores. Surveys conducted in 63,691 cases led to undisclosed income of Rs.84,396 crores getting deducted. The employees provident fund organization (EPFO) e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be based on certain declarations being made by the party whose veracity cannot be verified. It is submitted that this would also provide a loophole for non-genuine bank note holders to channelize their unaccounted money through the window. It is submitted that, incidentally, the law enforcing agencies are still recovering significant amount of SBNs from the individuals. 76. The learned A.G. further submitted that, as of now, Rs.10,719 crore of SBNs are still in circulation. It is submitted that in any case, in view of the provisions of clause (i) of sub-section (1) of Section 4 of the 2017 Act, 77,748 applications involving an amount of Rs.284.25 crore were received from resident and non-resident Indians by the five designated Regional Offices of the RBI during the grace period. Out of this, a total of 57,405 cases (74% of the total applications received) amounting to Rs.221.95 crore (78% of the total amount under these applications) have been accepted and the amounts have been credited to their KYC compliant bank accounts. It is submitted that out of the total cases, 20,343 cases were rejected due to various reasons. The learned A.G. submits that it will not be permissible for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the advice of the experts that the RBI has in its contingent. Shri Gupta also relies on the judgment of the Constitution Bench of this Court in the case of Joseph Kuruvilla Velukunnel v. Reserve Bank of India and others 1962 Supp (3) SCR 632 in support of this submission. 81. Shri Gupta further submitted that the contention that the decision-making process is faulty on account of not following the procedure under sub-section (2) of Section 26 of the RBI Act is also without substance. The learned Senior Counsel submits that the procedure under sub-section (2) of Section 26 of the RBI Act contemplates two things i.e. recommendation of the Central Board and the decision by the Central Government. It is submitted that both these requirements stand fully satisfied in the present case. He submits that though it is the contention of the petitioners that the procedure is flawed, however, the petition itself is bereft of such averments. Shri Gupta submits that the Constitution Bench of this Court in the case of Ram Kishore Sen and others v. Union of India and others (1966) 1 SCR 430 has held that the burden of proof primarily lies on a person who complains that the procedure prescribed ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n no infringement of the rights of the citizens. As a matter of fact, no currency is being taken away. Full value of the legitimate currency has been exchanged. It is submitted that non-cash transactions such as credit card, debit card, on-line transaction, etc. were permitted even during the period between 8th November 2016 and 31st December 2016. In any case, it is submitted that immediately after the demonetization was notified, in spite of enormity of operations, immediate steps were taken for the betterment of the public and to ensure adequate cash supply. It is submitted that various measures were taken in order to alleviate the genuine grievances of the citizens, which have been enumerated in paragraphs 11 to 17 of the affidavit dated 19th December 2018 filed on behalf of the RBI. It is, therefore, submitted that the proportionality test would not be applicable in the present case. 83. Shri Gupta relying on the judgment of this Court in the case of Small Scale Industrial Manufactures Association (Registered) v. Union of India and others (2021) 8 SCC 511 submits that normally, it is not within the domain of any court to weigh the pros and cons of the policy or to scrutinize i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee and others v. Ramakrishna Mission Vivekananda Centenary College and others (2011) 5 SCC 464. VI. SUBMISSIONS IN REJOINDER 87. Shri P. Chidambaram, learned Senior Counsel, in rejoinder, almost reiterated his earlier submissions. He submitted that there are two methods of demonetization of currency, one is by legislative method and the other under sub-section (2) of Section 26 of the RBI Act. He reiterated that the word any will always have to be read in the context of the provisions and if read in that manner, the only meaning that can be given to the word any in sub-section (2) of Section 26 of the RBI is some . In this respect, he relies on the judgment of this Court in the case of Union of India v. A.B. Shah and others (1996) 8 SCC 540. 88. Shri Chidambaram further submitted that from the perusal of the affidavit filed on behalf of the Central Government as well as the RBI, it is clear that the procedure emanated from the Central Government, which was through the advice given by the Government to the RBI in its communication dated 7th November 2016. The affidavit would clearly show that the RBI acted on the advice of the Central Government and gave its recommendation in a mech ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder in view of the impugned notification, shall cease to be liabilities of the RBI under Section 34 of the RBI Act and shall cease to have the guarantee of the Central Government under sub-section (1) of Section 26 of the said Act. It is submitted that this is also clear from the affidavit dated 16th November 2022 filed on behalf of the Union of India. 92. Shri Divan further submitted that the 2017 Act can neither be construed to validate the impugned notification nor can it be held that it is a piece of incorporation by reference. It is submitted that the argument with regard to the impugned notification having merged in the 2017 Act is also without substance. The learned Senior Counsel submits that it is simply a plenary parliamentary declaration. 93. Taking further his argument, Shri Divan submits that clause (i) of sub-section (1) of Section 4 of the 2017 gives a power to the Central Government which is coupled with a duty. It is submitted that genuine cases like that of the applicants/petitioners viz., Malvinder Singh and Sarla Shrivastav, who is the applicant/petitioner in I.A. No. 152009 of 2022, should be given some window to exchange the SBNs. It is submitted that there i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether the RBI has an independent power under sub-section (2) of Section 4 of the 2017 Act in isolation of provisions of Section 3 and Section 4(1) thereof to accept the demonetized notes beyond the period specified in notifications issued under sub-section (1) of Section 4? VIII. STATUTORY SCHEME 96. Before we proceed to consider the various issues reframed by us, we find it appropriate to refer to the scheme of the RBI Act. 97. The preamble of the RBI Act would itself reveal that the RBI Act was enacted since it was found expedient to constitute a Reserve Bank of India to regulate the issue of Bank notes and for the keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage. The preamble of the RBI Act would also show that it was amended in the year 2016 with effect from 27th June 2016 by Act No. 28 of 2016. Post amendment, it was stated in the preamble that, whereas it was essential to have a modern monetary policy framework to meet the challenge of an increasingly complex economy, and whereas the primary objective of the monetary policy is to maintain price stability while keepin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all be separated and kept wholly distinct from the Banking Department, and the assets of the Issue Department shall not be subject to any liability other than the liabilities of the Issue Department as defined in Section 34. Sub-section (2) of Section 23 provides that the Issue Department shall not issue bank notes to the Banking Department or to any other person except in exchange for other bank notes or for such coin, bullion or securities as are permitted by the RBI Act to form part of the Reserve. 103. Sub-section (1) of Section 24 of the RBI Act provides that, subject to the provisions of sub-section (2), bank notes shall be of the denominational values to two rupees, five rupees, ten rupees, twenty rupees, fifty rupees, one hundred rupees, five hundred rupees, one thousand rupees, five thousand rupees and ten thousand rupees or of such other denominational values, not exceeding ten thousand rupees as the Central Government may, on the recommendation of the Central Board, specify in this behalf. Sub-section (2) of Section 24 of the RBI Act provides that the Central Government may, on the recommendation of the Central Board, direct the non-issue or the discontinuance of issue o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the various judgments of this Court, which we will refer to in the paragraphs to follow. In this background, we will consider the issues that fall for our consideration. ISSUE NO. (i) : WHETHER THE POWER AVAILABLE TO THE CENTRAL GOVERNMENT UNDER SUB-SECTION (2) OF SECTION 26 OF THE RBI ACT CAN BE RESTRICTED TO MEAN THAT IT CAN BE EXERCISED ONLY FOR ONE OR SOME SERIES OF BANK NOTES AND NOT ALL SERIES IN VIEW OF THE WORD ANY APPEARING BEFORE THE WORD SERIES IN THE SAID SUB-SECTION, SPECIFICALLY SO, WHEN ON EARLIER TWO OCCASIONS, THE DEMONETIZATION EXERCISE WAS DONE THROUGH THE PLENARY LEGISLATIONS? 110. It is strenuously urged by the learned Senior Counsel appearing on behalf of the petitioners that the word any used in sub-section (2) of Section 26 of the RBI Act will have to be given a restricted meaning to mean some . It is submitted that if sub-section (2) of Section 26 of the RBI Act is not read in such manner, the very power available under the said sub-section will have to be held to be invalid on the ground of excessive delegation. It is submitted that it cannot be construed that the legislature intended to bestow uncanalised, unguided and arbitrary power to the Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or thing of the sort named, without limitation as to which, and thus collectively of every one of them . One of the illustrations given is - I challenge anyone to contradict my assertions . Certainly, this does not mean that one only is challenged; but that all are challenged. It is abundantly clear therefore that any one is not infrequently used to mean every one . But, argues Mr Pathak, granting that this is so, it must be held that when the phrase any one is used with the preposition of , followed by a word denoting a number of persons, it never means every one . The extract from the Oxford Dictionary, it is interesting to notice, speaks of an assertion concerning a being or thing of the sort named ; it is not unreasonable to say that, the word of followed by a word denoting a number of persons or things is just such naming of a sort as mentioned there. Suppose, the illustration I challenge any one to contradict my assertions was changed to I challenge any one of my opponents to contradict my assertion . Any one of my opponents here would mean all my opponents - not one only of the opponents. While the phrase any one of them or any similar phrase consisting of any one , followe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmative sentences, asserts, concerning a being or thing of the sort named, without limitation. It held that it is abundantly clear that the word any one is not infrequently used to mean every one . 114. It could be seen that the Constitution Bench, after giving the matter full and anxious consideration, came to the conclusion that the words any one of the directors was an ambiguous one. It held that in some contexts, it means only one of the directors, does not matter which one , but in other contexts, it is capable of meaning every one of the directors . It held that which of these two meanings was intended by the legislature in any particular statutory phrase has to be decided by the courts on consideration of the context in which the words appear, and in particular, the scheme and object of the legislation. 115. After examining the scheme of the Mines Act, 1952, the Constitution Bench of this Court further observed thus: But, argues Mr Pathak, one must not forget the special rule of interpretation for penal statute that if the language is ambiguous, the interpretation in favour of the accused should ordinarily be adopted. If you interpret any one in the sense suggested by him, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t case, the legislature has not employed the word one after the word any . It is settled law that it has to be construed that every single word employed or not employed by the legislature has a purpose behind it. 117. On the very date on which the judgment in the case of The Chief Inspector of Mines and another v. Lala Karam Chand Thapar etc. (supra) was pronounced, the same Constitution Bench also pronounced the judgment in the case of Banwarilal Agarawalla (supra), wherein the Constitution Bench observed thus: The first contention is based on an assumption that the word any one in Section 76 means only one of the directors, and only one of the shareholders . This question as regards the interpretation of the word any one in Section 76 was raised in Criminal Appeals Nos. 98 to 106 of 1959 (Chief Inspector of Mines, etc.) and it has been decided there that the word any one should be interpreted there as every one . Thus under Section 76 every one of the shareholders of a private company owning the mine, and every one of the directors of a public company owning the mine is liable to prosecution. No question of violation of Article 14 therefore arises. [emphasis supplied] 118. Anothe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and may be employed to indicate all or every as well as some or one and its meaning in a given statute depends upon the context and the subject-matter of the statute . The use of the word any in the context it has been used in clause (o) indicates that it has been used in wider sense extending from one to all 121. This Court held that the word any is of wide amplitude. It means one or some or all . Referring to Black s Law Dictionary, the Court observed that the word any has a diversity of meaning and may be employed to indicate all or every as well as some or one . However, the meaning which is to be given to it would depend upon the context and the subject-matter of the statute. 122. In the case of K.P. Mohammed Salim (supra), this Court was considering the power of the Director General or Chief Commissioner or Commissioner to transfer any case from one or more assessing officers subordinate to him to any other assessing officer or assessing officers. This Court observed thus: 17. The word any must be read in the context of the statute and for the said purpose, it may in a situation of this nature, means all. The principles of purposive construction for the said purpose may be r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or decision of the Appellate Tribunal would mean all decisions or orders of the Appellate Tribunal and all such decisions or orders are, subject to limitation, appealable to the High Court on a question of law. [emphasis supplied] 125. While holding that the word any in the context would mean all , this Court observed that a right of appeal is always conferred by a statute. It has been held that, while conferring such right, a statute may impose restrictions, like limitation or pre-deposit of penalty or it may limit the area of appeal to questions of law or sometime to substantial questions of law. It has been held that whenever such limitations are imposed, they are to be strictly followed. It has been held that in a case where there is no limitation, the right of appeal cannot be curtailed by this Court on the basis of an interpretative exercise. 126. Shri P. Chidambaram, learned Senior Counsel relied on the judgment of this Court in the case of Union of India v. A.B. Shah and others (supra). In the said case, the High Court was considering an appeal preferred by the Union of India wherein it had challenged the acquittal of the accused by the learned trial court, which was confir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the context in which the word(s) appear(s) and in particular, the scheme and object of the legislation. Purposive interpretation 128. We find that for deciding the present issue, it will also be necessary to refer an important principle of interpretation of statutes i.e. of purposive interpretation. 129. Legislation has an aim, it seeks to obviate some mischief, to supply an inadequacy, to effect a change of policy, to formulate a plan of government. That aim, that policy is not drawn, like nitrogen, out of the air; it is evidenced in the language of the statute, as read in the light of other external manifestations of purpose [Some Reflections on the Reading of Statutes, 47 Columbia LR 527, at p. 538 (1947)]. 130. This is how Justice Frankfurter succinctly propounds the principle of purposive interpretation. It is thus necessary to cull out the legislative policy from various factors like the words in the statute, the preamble of the Act, the statement of objects and reasons, and in a given case, even the attendant circumstances. After the legislative policy is found, then the words used in the statute must be so interpreted such that it advances the purpose of the statute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion be a rational activity. A coin toss will not do. This is also the rationale which is at the core of my own views for the belief that purposive interpretation is the most proper system of interpretation. This system is proper because it guarantees the achievement of the purpose of law. There is social, jurisprudential, hermeneutical, and constitutional support for my claim that the proper criterion for interpretation is the search for law s purpose, and that purposive interpretation best fulfills that criterion. A comparative look at the law supports it, as well. I will discuss each element of that support below. 134. The learned Judge emphasized that purposive interpretation is the most proper system of interpretation. He observed that this system is proper because it guarantees the achievement of the purpose of law. The proper criterion for interpretation is the search for law s purpose, and that purposive interpretation best fulfills that criterion. 135. The principle of purposive interpretation has also been expounded through a catena of judgments of this Court. A Constitution Bench of this Court in the case of M. Pentiah and others v. Muddala Veeramallappa and others (1961 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... words, and even the structure of the sentence. Where the main object and intention of a statute are clear, it must not be reduced to a nullity by the draftsman's unskilfulness or ignorance of the law, except in a case of necessity, or the absolute intractability of the language used. Nevertheless, the courts are very reluctant to substitute words in a Statute, or to add words to it, and it has been said that they will only do so where there is a repugnancy to good Sense. : see Maxwell on Statutes (10th Edn.) p. 229. In Seaford Court Estates Ltd. v. Asher [(1949) 2 AER 155, 164] , Denning, L.J. said: when a defect appears a judge cannot simply fold his hands and blame the draftsman. He must set to work on the constructive task of finding the intention of Parliament and then he must supplement the written word so as to give force and life to the intention of the legislature . A judge should ask himself the question how, if the makers of the Act had themselves come across this ruck in the texture of it, they would have straightened it out? He must then do as they would have done. A judge must not alter the material of which the Act is woven, but he can and should iron out the cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 SCR 577] , Govindlal v. Agricultural Produce Market Committee [(1975) 2 SCC 482 : AIR 1976 SC 263 : (1976) 1 SCR 451] and Babaji Kondaji v. Nasik Merchants Coop. Bank Ltd. [(1984) 2 SCC 50] [emphasis supplied] 140. M.N. Venkatachaliah, J. speaking for the Constitution Bench of this Court in the case of Tinsukhia Electric Supply Co. Ltd. v. State of Assam and others (1989) 3 SCC 709 observed thus: 118. The courts strongly lean against any construction which tends to reduce a statute to futility. The provision of a statute must be so construed as to make it effective and operative, on the principle ut res magis valeat quam pereat . It is, no doubt, true that if a statute is absolutely vague and its language wholly intractable and absolutely meaningless, the statute could be declared void for vagueness. This is not in judicial review by testing the law for arbitrariness or unreasonableness under Article 14; but what a court of construction, dealing with the language of a statute, does in order to ascertain from, and accord to, the statute the meaning and purpose which the legislature intended for it. In Manchester Ship Canal Co. v. Manchester Racecourse Co. [(1904) 2 Ch 352 : 16 TLR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity must be ruled out. A statute must be construed in such a manner so as to ensure that the Act itself does not become a dead letter and the obvious intention of the legislature does not stand defeated unless it leads to a case of absolute intractability in use. The court must adopt a construction which suppresses the mischief and advances the remedy and to suppress subtle inventions and evasions for continuance of the mischief, and pro privato commodo, and to add force and life to the cure and remedy, according to the true intent of the makers of the Act, pro bono publico . The court must give effect to the purpose and object of the Act for the reason that legislature is presumed to have enacted a reasonable statute. (Vide M. Pentiah v. Muddala Veeramallappa [AIR 1961 SC 1107] , S.P. Jain v. Krishna Mohan Gupta [(1987) 1 SCC 191 : AIR 1987 SC 222] , RBI v. Peerless General Finance and Investment Co. Ltd. [(1987) 1 SCC 424 : AIR 1987 SC 1023] , Tinsukhia Electric Supply Co. Ltd. v. State of Assam [(1989) 3 SCC 709 : AIR 1990 SC 123] , SCC p. 754, para 118, UCO Bank v. Rajinder Lal Capoor [(2008) 5 SCC 257 : (2008) 2 SCC (L S) 263] and Grid Corpn. of Orissa Ltd. v. Eastern Metals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above, the RBI Act is a special Act, vesting all the powers and functions with regard to monetary policy and all matters pertaining to management and regulation of currency with the RBI. The Central Government is required to take its decision on the basis of the recommendation of the Central Board. 147. It could thus be seen that power is vested with the Central Government and that power has to be exercised on the recommendation of the RBI. Both sides agree that RBI plays a unique role in the matter of monetary policy and issuance of currency. The Central Government is empowered under sub-section (2) of Section 26 of the RBI Act to notify any series of bank notes of any denomination to cease to be a legal tender. The effect of such a notification would be that the liabilities as provided under Section 34 of the RBI Act and the guarantee as provided under sub-section (1) of Section 26 of the RBI Act shall cease to have effect on such notification being issued thereby demonetizing the bank notes. 148. As already discussed herein above, the RBI Act has been enacted to regulate the issue of bank notes and generally to operate the currency and credit system of the country. Section 3 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f any series of bank notes of any denomination. The legislative policy is with regard to management and regulation of currency. Demonetization of notes would certainly be a part of management and regulation of currency. The legislature has empowered the Central Government to exercise such a power. The Central Government may take recourse to such a power when it finds necessary to do so taking into consideration myriad factors. No doubt that such factors must have reasonable nexus with the object sought to be achieved. If the Central Government finds that fake notes of a particular denomination are widely in circulation or that they are being used to promote terrorism, can it be said, for instance, that out of 20 series of bank notes of a particular denomination, it can demonetize only 19 series of bank notes but not all 20 series? In our view, this will result in nothing else but absurdity and the very purpose for which the power is vested shall stand frustrated. An interpretation which, in effect, nullifies the purpose for which a power is to be exercised, in our view, would be opposed to the principle of purposive interpretation. Such an interpretation, in our view, rather than a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a restricted meaning to the word any in sub-section (2) of Section 26 of the RBI Act. As already discussed herein above, in our considered view, the legislative intent could not have been to give a restricted meaning to the word any in sub-section (2) of Section 26 of the RBI Act. 158. We are, therefore, unable to accept the contention that the word any has to be given a restricted meaning taking into consideration the overall scheme, purpose and the object of the RBI Act and also the context in which the power is to be exercised. We find that the word any would mean all under sub-section (2) of Section 26 of the RBI Act. ISSUE NO. (ii): IN THE EVENT IT IS HELD THAT THE POWER UNDER SUB-SECTION (2) OF SECTION 26 OF THE RBI ACT IS CONSTRUED TO MEAN THAT IT CAN BE EXERCISED IN RESPECT OF ALL SERIES OF BANK NOTES, WHETHER THE POWER VESTED WITH THE CENTRAL GOVERNMENT UNDER THE SAID SUB-SECTION WOULD AMOUNT TO CONFERRING EXCESSIVE DELEGATION AND AS SUCH, LIABLE TO BE STRUCK DOWN? 159. The second limb of argument on behalf of the petitioners is that, if the word any used in sub-section (2) of Section 26 of the RBI Act is not given a restricted meaning, then sub-section (2) of Section 26 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibed any principle on which a particular disease or condition is to be specified in the Schedule. It is not stated what facts or circumstances are to be taken into consideration to include a particular condition or disease. The power of specifying diseases and conditions as given in Section 3(d) must therefore be held to be going beyond permissible boundaries of valid delegation. As a consequence the Schedule in the rules must be struck down. But that would not affect such conditions and diseases which properly fall within the four clauses of Section 3 excluding the portion of clause (d) which has been declared to be unconstitutional. In the view we have taken it is unnecessary to consider the applicability of Baxter v. Ah Way [(1957) SCR 604]. 163. In the said case, this Court found that sub-section (1) of Section 16 conferred a power on the Central Government to make rules for carrying out the purposes of the Act. The Court further found that, it is the first sub-section of Section 16 which confers the general rule-making power i.e. it delegates to the administrative authority the power to frame rules and regulations to subserve the object and purpose of the Act. The Court found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve sessions. It is clear that the substantive provisions of the Act namely Sections 8, 11, 21, 31(3), 34(3) confer powers on the Administrator similar to those contemplated by Section 5(2)(b) of the Act. In these circumstances we are of opinion that the power of regulation granted to the Administrator under Section 5(2)(b) of the Act suffers from excessive delegation of legislative power and must be held to be constitutionally invalid. [emphasis supplied] 166. This Court in the case of Harakchand Ratanchand Banthia and others (supra), therefore, was considering the delegation of power to the Administrator under clause (b) of sub-section (2) of Section 5 of the Gold (Control) Act, 1968. The Court found that a parallel power of subordinate legislation was conferred to the Central Government under Section 114(1) and (2) of the said Act. However, under sub-section (3) of Section 114 of the said Act it is incumbent upon the Central Government to place the Rules before each House of Parliament. This Court further held that the substantive provisions of the Act namely Sections 8, 11, 21, 31(3) and 34(3) of the said Act also confer powers on the Administrator which was similar to the one c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act . [emphasis supplied] 169. It is thus clear that though the Court found the power under Section 5(2)(b) of the Gold (Control) Act, 1968 suffered from excessive delegation and, therefore, constitutionally invalid; it, however, categorically rejected the contention insofar as Section 5(2)(a) of the Gold (Control) Act, 1968 is concerned, inasmuch as it provided a safeguard that the regulation of the price should be made by the Administrator after consultation with the RBI. 170. This Court rejected the argument that the phrase so far as it appears to him to be necessary or expedient for carrying out the provisions of this Act was a subjective formula and as such, the action of the Administrator under Section 5(2)(a) was arbitrary and unreasonable. Rejecting the said contention, the Court held that in the context of the scheme and object of the legislation as a whole, the expression cannot be construed in a subjective sense and the opinion of the Administrator as to the necessity or expediency of making the order must be reached objectively after having regard to the relevant considerations and must be reasonably tenable in a court of law. 171. It could thus be seen that though ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and its formulation as a binding rule of conduct and cannot be delegated by the legislature. Nor is there any unlimited right of delegation inherent in the legislative power itself. This is not warranted by the provisions of the Constitution. The legislature must retain in its own hands the essential legislative functions and what can be delegated is the task of subordinate legislation necessary for implementing the purposes and objects of the Act. Where the legislative policy is enunciated with sufficient clearness or a standard is laid down, the courts should not interfere. What guidance should be given and to what extent and whether guidance has been given in a particular case at all depends on a consideration of the provisions of the particular Act with which the Court has to deal including its preamble. Further it appears to us that the nature of the body to which delegation is made is also a factor to be taken into consideration in determining whether there is sufficient guidance in the matter of delegation. What form the guidance should take is again a matter which cannot be stated in general terms. It will depend upon the circumstances of each statute under consideration; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imit of taxation is to be found in the purposes of the Act. After careful consideration of the various provisions of the Delhi Municipal Corporation Act, 1957, the Court held that the power conferred by Section 150 thereof on the Corporation is not unguided and cannot be said to be amounting to excessive delegation. 179. It will also be apposite to refer to the concurring judgment of S.M. Sikri, J., wherein he observed thus: But assuming I am bound by authorities of this Court to rest the validity of Section 113(2)(d) and Section 150 of the Act by ascertaining whether a guide or policy exists in the Act, I find adequate guide or policy in the expression purposes of the Act in Section 113. The Act has pointed out the objectives or the results to be achieved and taxation can be levied only for the purpose of achieving the objectives or the results. This, in my view, is sufficient guidance especially to a self-governing body like the Delhi Municipal Corporation. It is not necessary to rely on the safeguards mentioned by the learned Chief Justice to sustain the delegation. [emphasis supplied] 180. S.M. Sikri, J. in his concurring judgment also held that he found adequate guide or polic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssive delegation. In the said case, H.R. Khanna, J., speaking for the majority, after surveying the earlier judgments of this Court including that in the case of Birla Cotton, Spinning and Weaving Mills Delhi (supra), observed thus: 13. It may be stated at the outset that the growth of the legislative powers of the Executive is a significant development of the twentieth century. The theory of laissezfaire has been given a go-by and large and comprehensive powers are being assumed by the State with a view to improve social and economic well-being of the people. Most of the modern socio-economic legislations passed by the Legislature lay down the guiding principles and the legislative policy. The Legislatures because of limitation imposed upon by the time factor hardly go into matters of detail. Provision is, therefore, made for delegated legislation to obtain flexibility, elasticity, expedition and opportunity for experimentation. The practice of empowering the Executive to make subordinate legislation within a prescribed sphere has evolved out of practical necessity and pragmatic needs of a modern welfare State. At the same time it has to be borne in mind that our Constitution-make ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it cannot abdicate its functions in favour of another. But in view of the multifarious activities of a welfare State, it cannot presumably work out all the details to suit the varying aspects of a complex situation. It must necessarily delegate the working out of details to the Executive or any other agency. But there is danger inherent in such a process of delegation. An over-burdened Legislature or one controlled by a powerful Executive may unduly overstep the limits of delegation. It may not lay down any policy at all; it may declare its policy in vague and general terms; it may not set down any standard for the guidance of the Executive; it may confer an arbitrary power on the Executive to change or modify the policy laid down by it without reserving for itself any control over subordinate legislation. This self-effacement of legislative power in favour of another agency either in whole or in part is beyond the permissible limits of delegation. It is for a court to hold on a fair, generous and liberal construction of an impugned statute whether the Legislature exceeded such limits. [emphasis supplied] 186. It has been held that the essential legislative function is the determin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sible. The making of law is only a means to achieve a purpose. It is not an end in itself. That end can be attained by the Legislature making the law. But many topics or subjects of legislation are such that they require expertise, technical knowledge and a degree of adaptability to changing situations which Parliament might not possess and, therefore, this end is better secured by extensive delegation of legislative power. The legislative process would frequently bog down if a Legislature were required to appraise beforehand the myriad situations to which it wishes a particular policy to be applied and to formulate specific rules for each situation. The presence of Henry VIII clause in many of the statutes is a pointer to the necessity of extensive delegation. The hunt by Court for legislative policy or guidance in the crevices of a statute or the nook and cranny of its preamble is not an edifying spectacle. It is not clear what difference does it make in principle by saying that since the delegation is to a representative body, that would be a guarantee that the delegate will not exercise the power unreasonably, for, if ex hypothesi the Legislature must perform the essential legi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive bodies and specialist public servants. Parliament and the State Legislatures have neither the time nor the expertise to be involved in detail and circumstance. Nor can Parliament and the State Legislatures visualise and provide for new, strange, unforeseen and unpredictable situations arising from the complexity of modern life and the ingenuity of modern man. That is the raison d'etre for delegated legislation. That is what makes delegated legislation inevitable and indispensable. The Indian Parliament and the State Legislatures are endowed with plenary power to legislate upon any of the subjects entrusted to them by the Constitution, subject to the limitations imposed by the Constitution itself. The power to legislate carries with it the power to delegate. But excessive delegation may amount to abdication. Delegation unlimited may invite despotism uninhibited. So the theory has been evolved that the legislature cannot delegate its essential legislative function. Legislate it must by laying down policy and principle and delegate it may to fill in detail and carry out policy. The legislature may guide the delegate by speaking through the express provision empowering delegati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he question, as to whether Section 184 of the Finance Act, 2017, which does not prescribe qualifications, appointment, term and conditions of service, salary and allowances, etc. suffers from the vice of excessive delegation. Rejecting the contention, this Court observed thus: 145. Cautioning against the potential misuse of Section 184 by the executive, it was vehemently argued by the learned counsel for the petitioner(s) that any desecration by the executive of such powers threatens and poses a risk to the independence of the tribunals. A mere possibility or eventuality of abuse of delegated powers in the absence of any evidence supporting such claim, cannot be a ground for striking down the provisions of the Finance Act, 2017. It is always open to a constitutional court on challenge made to the delegated legislation framed by the executive to examine whether it conforms to the parent legislation and other laws, and apply the policy and guideline test and if found contrary, can be struck down without affecting the constitutionality of the rule-making power conferred under Section 186 of the Finance Act, 2017. 193. It can thus be seen that this Court has held that a mere possibilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on was demanded. But the law which gives the same position to the opinion of the Reserve Bank is challenged as unreasonable. In our opinion, such a challenge has no force. . [emphasis supplied] 196. The Court has referred to the pivotal role that the RBI plays as a Central Bank, as a bankers bank and numerous other powers that it exercises. The Court held that the law which gives an important position to the opinion of the Reserve Bank was challenged unreasonably and such challenge had no force. 197. It may also be relevant to refer to the following observations of this Court in the case of Peerless General Finance and Investment Co. Limited and another (supra): 30. Before examining the scope and effect of the impugned paragraphs (6) and (12) of the directions of 1987, it is also important to note that Reserve Bank of India which is bankers' bank is a creature of statute. It has large contingent of expert advice relating to matters affecting the economy of the entire country and nobody can doubt the bona fides of the Reserve Bank in issuing the impugned directions of 1987. The Reserve Bank plays an important role in the economy and financial affairs of India and one of its impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pation in the Monetary Policy Committee which is empowered to determine the policy rate required to achieve the inflation target, in terms of the consumer price index. Therefore, anything that may pose a threat to or have an impact on the financial system of the country, can be regulated or prohibited by RBI, despite the said activity not forming part of the credit system or payment system. The expression management of the currency appearing in Section 3(1) need not necessarily be confined to the management of what is recognised in law to be currency but would also include what is capable of faking or playing the role of a currency. [emphasis supplied] 202. It can thus be seen that this Court has held that the RBI is the sole repository of power for the management of currency. It is also vested with the sole right to issue bank notes and to issue currency notes supplied to it by the Government of India. It has been held that the RBI has an important role to play in evolving the monetary policy of the country. Application of the aforesaid principles to the present case 203. It is thus clear that this Court has consistently recognised the role assigned to the RBI in management and is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstead of technical and situational intricacies which are better left to better equipped full time expert executive bodies and specialist public servants. 206. As already discussed herein above, the RBI has been constituted to regulate the issue of bank notes. The RBI is an expert body entrusted with various functions with regard to monetary and economic policies. Perusal of the scheme of the RBI Act would reveal that it has a primary role in the matters pertaining to the management and regulation of currency. We, therefore, find that there is sufficient guidance to the delegatee when it exercises its powers under sub-section (2) of Section 26 of the RBI Act, from the subject matter of the statute, and the other provisions of the Act. In any case, as already discussed herein above, Parliament has provided an inbuilt safeguard i.e. recommendation of the RBI. It is equally settled that insofar as the economic, monetary and fiscal policies are concerned, the same are best left to the experts possessing requisite knowledge. The RBI as well as the Central Government are bodies having contingent of experts in the field. It will, therefore, not be proper for the Court to enter into an are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g recommendations by the Central Board and at the stage of taking decision by the Central Government is flawed inasmuch as the same had been done without considering the relevant factors and eschewing the irrelevant ones. It is also sought to be urged that, as per the scheme of sub-section (2) of Section 26 of the RBI Act, it is incumbent that the procedure should emanate from the Central Board and not from the Central Government. According to the petitioners, in the present case, the procedure has emanated from the Central Government vide its letter dated 7th November 2016 advising the Board to convene a meeting and make a recommendation, which was hurriedly convened on the next day, i.e., 8th November 2016, in which the Board decided to recommend demonetization and, within hours, the decision was announced by the Hon ble Prime Minister. 213. It is submitted that, taking into consideration the hasty manner in which the recommendation was sought by the Central Government, and was then made by the Central Board and the decision was taken thereupon by the Cabinet, there was no scope for the Central Board or the Cabinet to take into consideration the relevant factors and eschew the ir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . More often than not, such decisions are made qualitatively by experts. (5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides. (6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure. Based on these principles we will examine the facts of this case since they commend to us as the correct principles. 217. Though various authorities are cited at the Bar with regard to scope of judicial review, we do not find it necessary to refer to various judgments. We may gainfully refer to the judgment of this Court in the case of Rashmi Metaliks Limited and Another v. Kolkata Metropolitan Development Authority and Others (2013) 10 SCC 95, wherein this Court has deprecated the practice of citing several decisions when the law o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... field of economic regulation than in other areas where fundamental human rights are involved. . [emphasis supplied] 222. Again, the Constitution Bench of this Court in the case of Shri Sitaram Sugar Company Limited and Another v. Union of India and Others (1990) 3 SCC 223, observed thus: 57. Judicial review is not concerned with matters of economic policy. The court does not substitute its judgment for that of the legislature or its agents as to matters within the province of either. The court does not supplant the feel of the expert by its own views. When the legislature acts within the sphere of its authority and delegates power to an agent, it may empower the agent to make findings of fact which are conclusive provided such findings satisfy the test of reasonableness. In all such cases, judicial inquiry is confined to the question whether the findings of fact are reasonably based on evidence and whether such findings are consistent with the laws of the land. As stated by Jagannatha Shetty, J. in Gupta Sugar Works [1987 Supp SCC 476, 481] : (SCC p. 479, para 4) ... the court does not act like a chartered accountant nor acts like an income tax officer. The court is not concerned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess, stability and appropriateness of a policy, nor are the courts advisers to the executives on matters of policy which the executives are entitled to formulate. 224. This Court observed that the Court would not interfere with any opinion formed by the government if it is based on the relevant facts and circumstances or based on expert s advice. The Court would be entitled to interfere only when it is found that the action of the executive is arbitrary and violative of any constitutional, statutory or other provisions of law. It has been held that when the government forms its policy, it is based on a number of circumstances and it is also based on expert s opinion, which must not be interfered with, except on the ground of palpable arbitrariness. It is more than settled that the Court gives a large leeway to the executive and the legislature in matters of economic policy. A reference in this respect could be made to the judgments of this Court in the cases of P.T.R. Exports (Madras) Pvt. Ltd. v. Union of India and others (1996) 5 SCC 268 and Bajaj Hindustan Limited v. Sir Shadi Lal Enterprises Limited and another (supra). 225. It is not the function of this Court or of any other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... November 2016 and the Note for the Cabinet Meeting held on 8th November 2016. 229. A perusal of the communication dated 7th November 2016 addressed by the Secretary, Department of Economic Affairs, Ministry of Finance, Government of India to the Governor, RBI would reveal that the Government of India has shared its concern with regard to infusion of Fake Indian Currency Notes (FICN) and generation of black money. It has been pointed out that FICN infusion is concentrated in the two highest denominations of Indian banknotes of Rs.500/- and Rs.1000/-. It has also been pointed out that the impact on the economy in the high denomination notes is very adverse. The said communication mentions the White Paper on Black Money by the Department of Revenue in the year 2012, wherein it is mentioned that cash has always been a facilitator of black money since transactions made in cash do not leave any audit trail. The White Paper also refers to the growth in the size of the shadow economy of the country, and that a parallel shadow economy corrodes and eats into the vitals of the country s economy. 230. The said communication thereafter refers to the constitution of a Special Investigation Team ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ins the details with regard to the 2012 White Paper on Black Money. It contains the details with regard to the report of the SIT headed by two former Judges of this Court and their recommendations. It considers the recommendation of the RBI. 234. Upon perusal of the material on record, we are of the considered view that the Central Board had taken into consideration the relevant factors while recommending withdrawal of legal tender of bank notes in the denomination of Rs.500/- and Rs.1000/- of existing and any older series in circulation. Similarly, all the relevant factors were placed for consideration before the Cabinet when it took the decision to demonetize. It is to be noted that a draft scheme to implement the proposal for demonetization in a non-disruptive manner with as little inconvenience to the public and business entities as possible was also prepared by the RBI along with the recommendation for demonetization. The same was also taken into consideration by the Cabinet. As such, we are of the considered view that the contention that the decision-making process suffers from non-consideration of relevant factors and eschewing of the irrelevant factors, is without substance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 26 of the RBI Act would reveal that in various matters pertaining to currency, the course of action is to be taken by the Central Government on the recommendation of the Central Board. It cannot be disputed that the final say with regard to economic and monetary policies of the country will be with the Central Government. However, in such matters, it has to rely on the expert advice of the RBI. In a matter like the present one, it cannot be expected that the RBI and the Central Government will act in two isolated boxes. An element of interaction/consultation in such important matters pertaining to economic and monetary policies cannot be denied to the RBI and the Central Government. 240. As already discussed hereinabove, the record would reveal that the matter was under active consideration for a period of six months between the RBI and the Central Government. As such, merely because the Central Government has advised the Central Board to consider recommending demonetization and that the Central Board, on the advice of the Central Government, has considered the proposal for demonetization and recommended it and, thereafter, the Central Government has taken a decision, in our vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it may serve its intended purpose. Consultation requires the meeting of minds between the parties that are involved in the consultative process on the basis of material facts and points in order to arrive at a correct or at least a satisfactory solution. If a certain power can be exercised only after consultation such consultation must be conscious, effective, meaningful and purposeful. To ensure this, each party must disclose to the other all relevant facts for due deliberation. The consultee must express his opinion only after complete consideration of the matter on the basis of all the relevant facts and quintessence. Consultation may have different meanings in different situations depending upon the nature and purpose of the statute. (See also Union of India v. Sankalchand Himatlal Sheth [(1977) 4 SCC 193 : 1977 SCC (L S) 435 : AIR 1977 SC 2328] , State of Kerala v. A. Lakshmikutty [(1986) 4 SCC 632 : (1986) 1 ATC 735 : AIR 1987 SC 331] , High Court of Judicature of Rajasthan v. P.P. Singh [(2003) 4 SCC 239 : 2003 SCC (L S) 424 : AIR 2003 SC 1029] , Union of India v. Kali Dass Batish [(2006) 1 SCC 779 : 2006 SCC (L S) 225 : AIR 2006 SC 789] , Andhra Bank v. Andhra Bank Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of demonetization have been enormous, direct and indirect. The learned Attorney General has placed on record an elaborate list of the same to which we have already referred to in earlier paragraphs. 247. However, we do not wish to go into the question as to whether the object with which demonetization was effected is served or not or as to whether it has resulted in huge direct and indirect benefits or not. We do not possess the expertise to go into that question and it is best that it should remain in the domain of the experts. 248. The question is succinctly answered by the Supreme Court of United States in the case of Metropolis Theater Company et al., Plffs. In Err., v. City of Chicago and Ernest J. Magerstadt. (supra), which reads thus: 2. The attack of complainants (we so call plaintiffs in error) is upon the classification of the ordinance. It is contended that the purpose of the ordinance is to raise revenue, and that its classification has no relation to such purpose, and therefore is arbitrarily discriminatory, and thereby offends the 14th Amendment of the Constitution of the United States. The character ascribed to the ordinance by the supreme court of the state is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wisdom of any choice may be disputed or condemned. Mere errors of government are not subject to our judicial review. It is only its palpably arbitrary exercises which can be declared void under the 14 Amendment; and such judgment cannot be pronounced of the ordinance in controversy. Quong Wing v. Kirkendall, 223 U. S. 59, 56 L. ed. 350, 32 Sup. Ct. Rep. 192. [emphasis supplied] 249. It has been held that if the action of the government has a basis with the objectives to be achieved, it cannot be declared as palpably arbitrary. It has been held that, to be able to find fault with a law is not to demonstrate its invalidity. It has been held that the result of the act may seem unjust and oppressive, yet be free from judicial interference. The problems of government are practical ones and may justify, if they do not require, rough accommodations, illogical, it may be, and unscientific. But even such criticism should not be hastily expressed. It has been held that what is best is not always discernible, and the wisdom of any choice may be disputed or condemned. It has been held that mere errors of government are not subject to judicial review. It is only the palpably arbitrary exercise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate what would be the impact of a particular action and it is best left to the wisdom of the experts. In such matters, it will not be possible for the Court to assess or evaluate what would be the impact of the impugned action of demonetization. The Court does not possess the expertise to do so. As already discussed hereinabove, on one hand, the petitioners urged that there has been an adverse effect upon the economy and on the other hand, the learned Attorney General had given a long list of direct and indirect advantages of demonetization. In any case, mere errors of judgment by the government seen in retrospect is not subject to judicial review. In such matters, legislative and quasi-legislative authorities are entitled to a free play, and unless the action suffers from patent illegality, manifest or palpable arbitrariness, the Court should be slow in interfering with the same. 253. Another contention in this regard is that, on account of a hasty decision by the Central Government, citizens had to suffer at large, that many people were required to stand in the queues for hours, that many citizens were deprived of their meals, and that many citizens lost their jobs. 254. As alrea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re afraid, however laudable the object of the donor may have been, the gift has to fail because the genuine attempt of the donor to benefit his granddaughter seems to have been thwarted by the intervention of sub-section (6) of Section 5 of the Act. This is undoubtedly a serious hardship but it cannot be helped. We must remember that the Act is a valuable piece of social legislation with the avowed object of ensuring equitable distribution of the land by taking away land from large tenure-holders and distributing the same among landless tenants or using the same for public utility schemes which is in the larger interest of the community at large. The Act seems to implement one of the most important constitutional directives contained in Part IV of the Constitution of India. If in this process a few individuals suffer severe hardship that cannot be helped, for individual interests must yield to the larger interests of the community or the country as indeed every noble cause claims its martyr. [emphasis supplied] 257. Though, the Court found that the Act caused a serious hardship, it held that the Act is a valuable piece of social legislation. It held that the Act was enacted to impl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s finalized and sent for signature of the President of India in the early hours of 16th January 1978 and on the same day, the announcement to that effect was made on All India Radio s news bulletin at 09.00 a.m. 261. It can thus be seen that confidentiality and secrecy in such sort of measures is of paramount importance. When demonetization was being done in the year 1978, R. Janakiraman, who had drafted the Ordinance, was not permitted to communicate with anyone including the Bank s central office at Bombay. It would thus show as to what great degree of confidentiality was maintained. In any case, the material placed on record would show that the RBI and the Central Government were in consultation with each other for at least a period of six months preceding the action. 262. We, therefore, find that the impugned notification dated 8th November 2016 does not suffer from any flaws in the decision-making process. ISSUE NO. (iv): AS TO WHETHER THE IMPUGNED NOTIFICATION DATED 8TH NOVEMBER 2016 IS LIABLE TO BE STRUCK DOWN APPLYING THE TEST OF PROPORTIONALITY? 263. It is sought to be urged on behalf of the petitioners that before taking such a drastic measure, which caused enormous hards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the interest of the general public, the exercise that is required to be undertaken is the balancing of fundamental right to carry on occupation on the one hand and the restrictions imposed on the other hand. This is what is known as doctrine of proportionality . Jurisprudentially, proportionality can be defined as the set of rules determining the necessary and sufficient conditions for limitation of a constitutionally protected right by a law to be constitutionally permissible. According to Aharon Barak (former Chief Justice, Supreme Court of Israel), there are four sub-components of proportionality which need to be satisfied [ Aharon Barak, Proportionality: Constitutional Rights and Their Limitation (Cambridge University Press 2012).], a limitation of a constitutional right will be constitutionally permissible if: (i) it is designated for a proper purpose; (ii) the measures undertaken to effectuate such a limitation are rationally connected to the fulfilment of that purpose; (iii) the measures undertaken are necessary in that there are no alternative measures that may similarly achieve that same purpose with a lesser degree of limitation; and finally (iv) there needs to be a prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the general public. (3) In order to judge the reasonableness of the restrictions, no abstract or general pattern or a fixed principle can be laid down so as to be of universal application and the same will vary from case to case as also with regard to changing conditions, values of human life, social philosophy of the Constitution, prevailing conditions and the surrounding circumstances. (4) A just balance has to be struck between the restrictions imposed and the social control envisaged by Article 19(6). (5) Prevailing social values as also social needs which are intended to be satisfied by the restrictions. (6) There must be a direct and proximate nexus or reasonable connection between the restrictions imposed and the object sought to be achieved. If there is a direct nexus between the restrictions, and the object of the Act, then a strong presumption in favour of the constitutionality of the Act will naturally arise. 268. It is pertinent to note that in the case of Modern Dental College and Research Centre (supra), the Court was considering the validity of the Act and the Rules which regulated primarily the admission of the students in post-graduate courses in private educat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... first test is satisfied. 273. The second test is as to whether the measure undertaken to effectuate such a limitation is rationally connected to the fulfilment of that purpose - that would be the nexus test. The question, therefore, is, as to whether the measures taken in the present case have a reasonable nexus with the purpose to be achieved? As already discussed hereinabove, the purpose of demonetization was to eliminate the fake currency notes, black money, drug trafficking terror financing. Can it be said that demonetizing high denomination bank notes of Rs.500/- and Rs.1000/- does not have a reasonable nexus with the three purposes sought to be achieved? We find that there is a reasonable nexus between the measure of demonetization with the aforesaid purposes of addressing issues of fake currency bank notes, black money, drug trafficking terror financing. As such, the second test stands satisfied. 274. Insofar as the third test is concerned, it is required to be examined as to whether the measure undertaken is necessary in that there are no alternative measures that may similarly achieve the same purpose with the lesser degree of limitation. As held in the case of M.R.F. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itizen had a Know Your Customer (KYC) compliant bank account , he could deposit any amount and get to his credit the full value of legitimate currency. As such, the right to property in bank notes was not taken away. A full value of legitimate currency was entitled to be deposited in the bank account, however, up to a particular date. In any case, there was no restriction on non-cash transactions like debit card, credit card, net banking, online transactions etc. 278. We find that the argument that the right to property was sought to be taken away is without substance. In any case, even if there were reasonable restrictions on the said right, the said restrictions were in the public interest of curbing evils of fake currency, black money, drug trafficking terror financing. As such, we find that applying the four-pronged test, the doctrine of proportionality is fully satisfied. 279. Insofar as reliance on the judgment of the Constitution Bench of this Court in the case of K.S. Puttaswamy (Retired) and another (Aadhaar) (supra) is concerned, in the facts of the said case, the Constitution Bench found that, on account of various measures taken by the Government to give a boost to digi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to tender the notes together with a declaration required under Section 7 thereof along with the statement explaining the reasons for his or her failure to apply within the specified time limit. Under sub-section (2) of Section 8 of the 1978 Act, if the RBI was satisfied with the reasons for the failure to submit the notes prior to 19th January 1978 being genuine, it could pay the value of the notes in the manner specified in sub-section (4) of Section 7 thereof. Under sub-section (3) of Section 8 thereof, an appeal was provided before the Central Government against the refusal of the RBI to pay the value of the notes. 285. It could thus be seen that under the 1978 Act, three days period was provided for exchanging the demonetized notes. If a person could not avail of the said period, five days grace period was made available during which period the money could be exchanged subject to the RBI being satisfied with the genuineness of the reasons for not submitting the same within three days. As such, the period available to everyone was three days which could be further extended by five days. A challenge was raised on the ground that the period was unreasonable and violative of the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hin the time stipulated therein, provision has been made in sub-section (7) of Section 7, permitting the Central Government, for reasons to be recorded in writing, to extend in any case or class of cases the period during which high denomination banknotes may be tendered for exchange. From a combined reading of Sections 7 and 8 it is evidently clear that on furnishing a declaration complete in all particulars in accordance with sub-section (2) of Section 7 by 19-1-1978, the holder was entitled to get the exchange value of his notes from the Bank without any let or hindrance; thereafter, till 24-1-1978, he was also entitled to such exchange from the Bank if he could satisfactorily explain the reasons for his inability to apply by 19-1-1978 and after that date the Central Government was empowered to extend the period of such exchange. Such being the scheme of the Act regarding exchange of high denomination banknotes it cannot be said that the time and the manner in which the high denomination banknotes could be exchanged were unreasonable, unjust and violative of the petitioners' fundamental rights. [emphasis supplied] 286. The Constitution Bench found that if the time for such e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the time being in force, the specified bank notes which have ceased to be legal tender, in view of the notification of the Government of India in the Ministry of Finance, number S.O. 3407(E), dated the 8th November, 2016, issued under sub-section (2) of section 26 of the Reserve Bank of India Act, 1934, shall cease to be liabilities of the Reserve Bank under section 34 and shall cease to have the guarantee of the Central Government under sub-section (1) of section 26 of the said Act. 4. Exchange of specified bank notes.- (1) Notwithstanding anything contained in section 3, the following persons holding specified bank notes on or before the 8th day of November, 2016 shall be entitled to tender within the grace period with such declarations or statements, at such offices of the Reserve Bank or in such other manner as may be specified by it, namely:- (i) a citizen of India who makes a declaration that he was outside India between the 9th November, 2016 to 30th December, 2016, subject to such conditions as may be specified, by notification, by the Central Government; or (ii) such class of persons and for such reasons as may be specified by notification, by the Central Government. (2) T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in view of Section 3 of the 2017 Act, demonetized notes have ceased to be a legal tender and have ceased to be the liabilities of the RBI under Section 34 of the RBI Act and the guarantee of the Central Government under sub-section (1) of Section 26 of the RBI Act, a window is provided by Section 4 of the 2017 Act. Clause (i) of sub-section (1) of Section 4 of the 2017 Act deals with a citizen of India who makes a declaration that he was outside India between 9th November 2016 and 30th December, 2016, subject to such conditions as may be specified, by notification, by the Central Government. Accordingly, a notification is issued by the Central Government on 30th December 2016. In view of clause (ii) of sub-section (1) of Section 4 of the 2017 Act, the Central Government is empowered to provide a window for tendering the SBNs which have otherwise ceased to be a legal tender to such class of persons and for the reasons as may be specified in the notification. Sub-section (2) of Section 4 of the 2017 Act provides that the RBI, if satisfied with the reasons for failure to deposit the notes within the period specified in the impugned Notification, i.e., prior to 30th December 2016, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... general purpose and object of the Act itself. 296. We may gainfully refer to the following observations of this Court in the case of Peerless General Finance and Investment Company Limited (supra): 33. Interpretation must depend on the text and the context. They are the bases of interpretation. One may well say if the text is the texture, context is what gives the colour. Neither can be ignored. Both are important. That interpretation is best which makes the textual interpretation match the contextual. A statute is best interpreted when we know why it was enacted. With this knowledge, the statute must be read, first as a whole and then section by section, clause by clause, phrase by phrase and word by word. If a statute is looked at, in the context of its enactment, with the glasses of the statute-maker, provided by such context, its scheme, the sections, clauses, phrases and words may take colour and appear different than when the statute is looked at without the glasses provided by the context. With these glasses we must look at the Act as a whole and discover what each section, each clause, each phrase and each word is meant and designed to say as to fit into the scheme of the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reof provides for an appeal. We are therefore of the considered view that sub-section (2) of Section 4 of the 2017 Act cannot be read independently to provide power to the RBI in isolation of sub-sections (3) and (4) thereof. It is to be read as a part of the scheme of Section 4 of the 2017 Act. 300. Shri Divan and various other learned counsel contended that there were various genuine cases wherein the persons could not deposit the demonetized notes within the specified period. The impugned Notification was sought to be challenged on the ground that it has caused hardship to number of persons. It was therefore urged that this Court should either hold the impugned Notification to be arbitrary or direct the Central Government to exercise the powers under Section 4(1)(ii) of the 2017 Act or by exercising the powers under Article 142 of the Constitution of India to provide a window so as to enable genuine persons to exchange their demonetized notes. We have already referred to the judgment of this Court in the case of Km. Sonia Bhatia (supra) hereinbefore. 301. As such, the contention that the impugned notification is liable to be set aside on the ground that it caused hardship to ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th November 2016 cannot be said to unreasonable; and (vi) The RBI does not possess independent power under sub-section (2) of Section 4 of the 2017 Act in isolation of the provisions of Sections 3 and 4(1) thereof to accept the demonetized notes beyond the period specified in notifications issued under sub-section (1) of Section 4 of the 2017 Act. 305. Having answered the Reference, we direct the Registry of this Court to place the matter before Hon ble the Chief Justice of India for placing it before the appropriate Bench(es). Needless to state that all other contentions are kept open to be considered by the Bench(es) before which the matters would be placed. 306. Before parting with the judgment, we place on record our deep appreciation for the valuable assistance rendered by Shri R. Venkataramani, learned Attorney General, Shri P. Chidambaram, Shri Shyam Divan and Shri Jaideep Gupta, learned Senior Counsel and all other counsel appearing for the parties. .........................J. [S. ABDUL NAZEER] .........................J. [B.R. GAVAI] .........................J. [A.S. BOPANNA] .. .........................J. [V. RAMASUBRAMANIAN] JUDGMENT NAGARATHNA, J. JUDGMENT I have had th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that Section 26(2) is held to permit demonetization, does it suffer from excessive delegation of legislative power thereby rendering it ultra vires the Constitution; (vii) What is the scope of judicial review in matters relating to fiscal and economic policy of the Government; (viii)Whether a petition by a political party on the issues raised is maintainable under Article 32; and (ix) Whether District Cooperative Banks have been discriminated against by excluding them from accepting deposits and exchanging demonetized notes. Keeping in view the general public importance and the farreaching implications which the answers to the questions may have, we consider it proper to direct that the matters be placed before the larger Bench of five Judges for an authoritative pronouncement. The Registry shall accordingly place the papers before Hon ble the Chief Justice for constituting an appropriate Bench. 5. His Lordship, Gavai, J. has reframed the questions referred to this Constitution Bench and culled out six questions, which have been answered in the erudite judgment proposed by him. My views on each of such questions, as contrasted with those of His Lordship s have been expressed in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection (2) of Section 26 of the RBI Act is construed to mean all series, whether the power vested with the Central Government under the said subsection would amount to conferring excessive delegation and as such, liable to be struck down? The power vested with the Central Government under subsection (2) of Section 26 of the RBI Act cannot be struck down on the ground of conferring excessive delegation. i) This question does not arise for consideration as it has been held that the power under subsection (2) of Section 26 of the Act cannot be construed to mean all series or all denominations. ii) In my view, if the Central Board of the Bank is vested with the power to recommend demonetisation of all series or all denominations of bank notes, the same would amount to a case of excessive vesting of powers with the Bank. 3. Whether the impugned notification dated 8th November, 2016 is liable to be struck down on the ground that the decisionmaking process is flawed in Law? The impugned Notification dated 8th November, 2016, does not suffer from any flaws in the decisionmaking process. i) That the measure of demonetisation ought to have been carried out by the Central Government by way of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasons for the aforesaid conclusions shall now be discussed. Controversy in these cases: 6. Practices such as hoarding black money, counterfeiting, etc., when coupled with corruption, are eating into the vitals of our society and economy. Any measure intended to strike at such practices, and thereby eliminate off shoots thereof, such as, terror funding, drug trafficking, emergence of a parallel economy, money laundering including Havala transactions, must be commended. Such measures are necessary to sanitize the economy and society, and enable it to recover from the plague caused by the evils listed hereinabove. Therefore, it cannot be denied that demonetisation in the instant case was a wellintentioned proposal. However, in my separate opinion I shall proceed to legalistically examine whether demonetisation, as wellintentioned as it may have been, was carried out in accordance with the procedure established under law. 6.1 The controversy in these cases revolves around the exercise of power by the Central Government under subsection (2) of Section 26 of the Reserve Bank of India Act, 1934. Subsection (1) of Section 26 of the Act provides that every bank note shall be a legal tend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the Act are relevant for the purposes of this case and are extracted as under: Section 2Definitions: In this Act, unless there is anything repugnant in the subject or context, xxxx [a(ii)] the Bank means the Reserve Bank of India constituted by this Act; [a(iii)] Bank for International Settlements mean the body corporate established with the said name under the law of Switzerland in pursuance of an agreement dated the 20th January, 1930, signed at the Hague;] [a(iv)] bank note means a bank note issued by the Bank, whether in physical or digital form, under section 22;] xxxxx (b) the Central Board means the Central Board of Directors of the Bank; xxxx (cc) International Monetary Fund and International Bank for Reconstruction and Development means respectively the International Fund and the International Bank , referred to in the International Monetary Fund and Bank Act, 1945;] xxxx (d) rupee coin means (***) rupees which are legal tender in India under the provisions of the Coinage Act, 2011 (11 of 2011) 7.4 Chapter II of the Act deals with Incorporation, Capital, Management and Business. Section 3 speaks of establishment and incorporation of the Reserve Bank while Section 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect the nonissue or the discontinuance of issue of Bank notes of such denominational values as it may specify in this behalf.] 25. Form of Bank notes The design, form and material of Bank notes shall be such as may be approved by the [Central Government] after consideration of the recommendations made by Central Board. 26. Legal tender character of notes (1) Subject to the provisions of subsection (2), every Bank note shall be legal tender at any place in [India] in payment or on account for the amount expressed therein, and shall be guaranteed by the [Central Government]. (2) On recommendation of the Central Board the [Central Government] may, by notification in the Gazette of India, declare that, with effect from such date as may be specified in the notification, any series of Bank notes of any denomination shall cease to be legal tender [save at such office or agency of the Bank and to such extent as may be specified in the notification]. [26A. Certain Bank notes to cease to be legal Tender Notwithstanding anything contained in section 26, no Bank note of the denominational value of five hundred rupees, one thousand rupees or ten thousand rupees issued before the 13th day of Jan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Central Board vide Section 25 of the Act. 7.9 Subsection (1) of Section 26 of the Act states that every bank note shall be legal tender at any place in India in payment, or on account for the amount expressed therein and shall be guaranteed by the Central Government. This is, however, subject to subsection (2) of Section 26 of the Act, which states that the Central Government on the recommendation of the Central Board may, by issuance of a notification in the Gazette of India, declare that with effect from such date as may be specified in the notification, any series of Bank notes of any denomination shall cease to be legal tender, save at such office or agency of the Bank and to such extent as may be specified in the notification. Further discussion on this provision shall be made at a later stage as the said provision is the centre of the controversy in these cases. 7.10 Pursuant to the demonetisation which was carried out in the year 1946, bank notes of denominational value of Rs.500/, Rs.1,000/and Rs.10,000/, issued before 13th January, 1946, ceased to be legal tender. Section 26A was inserted into the Act pursuant to the demonetisation which took place in the year 1946, whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t complying with the procedure envisaged under subsection (2) of Section 26 of the Act, simply issued a notification in the Gazette of India on 8th November, 2016 demonetising all series of bank notes of the denominations of Rs.500/and Rs.1,000/. Consequently, approximately 86 per cent of all notes in circulation were demonetised. The serious effects of demonetisation are wellknown and judicial notice of the same may be taken. Even otherwise, carrying out the demonetisation by simply issuing a notification, in the absence of a recommendation made by the Central Board of the Bank, which is a condition precedent, is unlawful. Further, all series of bank notes of Rs.500/and Rs.1,000/could not have been demonetised by a stroke of a pen. The expression any in subsection (2) of Section 26 of the Act means, a particular series of a particular denomination of a bank note, and not all series of all denominations. He contended that in the instant case, the issuance of the Notification, demonetising the entire currency of Rs.500/and Rs.1,000/in circulation at the time, is unlawful and the exercise of power was erroneous and arbitrary and hence, the same ought to be declared so. 8.4 Learned se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the longlasting effects of demonetisation on the Indian economy, the decision of the Central Government to demonetise about 86.4% of the total currency in circulation is vitiated on account of manifest arbitrariness. 8.8 The learned senior counsel further contended that by applying the test of proportionality, the impugned notification dated 8th November, 2016, is liable to be set aside. 8.9 Reliance was placed on K.S. Puttaswamy (Retired) (Aadhaar) vs. Union of India (2019) 1 SCC 1 to contend that the classical equality test can be applied to the present case to come to the conclusion that the decision of demonetisation had no nexus to the objective sought to be achieved. 8.10 It was further contended that the circular dated 31st December, 2016, is discriminatory, insofar as it prescribed no upper monetary limit applicable to Resident Indians for submission and exchange of Specified Bank Notes, which were declared to have ceased to be legal tender; however, the monetary limit of Rs. 25,000/per individual was fixed for NonResident Indians (NRIs), depending on when the notes were taken out of India in accordance with the FEMA Rules. That an additional liability was imposed on NRIs a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... economy and to prevent terror funding. He therefore, contended that there is no merit in the submissions made by the learned senior counsel appearing for the petitioners as the impugned notification dated 8th November, 2016 is in accordance with subsection (2) of Section 26 of the Act and therefore, is valid. 9.3 Shri R.Venkataramani, learned Attorney General, next submitted that the action taken by way of the impugned notification stands ratified by the 2017 Act and as the executive action has been validated by the will of the Parliament, the challenge to the notification would not survive. 9.4 The learned Attorney General contended that the word any appearing before the words series of bank notes in subsection (2) of Section 26 of the Act should be construed to mean all . He submitted that the argument of the petitioners that the word any would not mean all is flawed and if the same is accepted, it would permit the Government to issue separate notifications for each series, however, the Government would be prohibited from issuing a common notification for all series. 9.5 The learned Attorney General submitted that the word any has been used in two places in subsection 2 of Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of bank notes of the two denominations of Rs.500/and Rs.1,000/was well within the jurisdiction and power conferred upon the Bank and the Central Government under subsection (2) of Section 26 of the Act and it is incorrect to say that the process under subsection (2) of Section 26 of the Act had not been followed. Thus, the process cannot be criticized on the ground of procedural lapse on part of the Bank or the Central Government. 9.9 Learned senior counsel for the Bank further contended that the submission of the petitioners that unless the phrase any in subsection (2) of Section 26 of the Act is read as some or one , the power conferred upon the Bank and the Central Government under the said section would be unguided and arbitrary, is without any basis. It was submitted that the expression any when construed literally refers to one, several or all of a total number. Thus, the expression any used in subsection (2) of Section 26 of the Act is broad enough to include all , and consequently, the power of the Government under subsection (2) of Section 26 of the Act is not limited merely to a specific set or series alone. It was thus contended that subsection (2) of Section 26 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ybody had sufficient opportunity either to deposit the notes in their banks or to exchange the same. 9.13 Learned senior counsel for the Bank submitted that demonetisation was carried out in furtherance of national economic interest and the same ought to be given deference. That the inconvenience caused to the public cannot be a ground to challenge the validity of such actions, particularly when prompt and adequate measures were taken by the Bank to mitigate the temporary hardships expected to be caused. 9.14 Learned senior counsel for the Bank submitted that the Specified Bank Notes (Cessation of Liabilities) Act, 2017, has given relief to certain categories of persons subject to verification. It was thus contended that individual cases of hardship that have not been provided for in the Specified Bank Notes (Cessation of Liabilities) Act, 2017, cannot be gone into. 9.15 It was further submitted that Section 8 of the RBI Act, 1934, provides for the composition of the Central Board and subsection 1 of Section 4 stipulates that the Central Board shall consist of the following Directors, namely: i) A Governor and not more than four Deputy Governors to be appointed by the Central Gover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 1969, to combat the existence of black money in the country and to restore the country s economy, President Richard Nixon declared all currencies over $100 to be null. b) Britain: Before the year 1971, the currency of pound and penny used to be in circulation in Britain but to bring uniformity in currency, the government stopped circulation of old currency in 1971, and introduced coins of 5 and 10 pounds. c) Congo: Mobutu Sese Seko made some changes with respect to the currency in circulation in Congo, for the smooth running of its economy during the Nineties. d) Ghana: In the year 1982, Ghana demonetised notes of 50 Cedis denomination to tackle tax evasion and empty excess liquidity. e) Nigeria: Demonetisation was carried out during the government of Muhammadu Buhari in the year 1984, when Nigeria introduced new currency and banned old notes. f) Myanmar: In the year 1987, Myanmar s military invalidated around 80% of the value of money to curb black marketing. g) Russia (formerly U.S.S.R): In the year 1991, in an attempt to combat the parallel economy, 50 and 100 Ruble notes were removed from circulation under the leadership of Mikhail Gorbachev. h) Venezuela: In the year 2016, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he expiry of the 12th Day of January, 1946, all high denomination bank notes shall, notwithstanding anything contained in Section 26 of the Act, cease to be legal tender in payment or on account at any place in British India. A provision was made for the exchange of the high denomination bank notes which had ceased to be legal tender, with bank notes of the denominational value of Rs.100/which continued to be legal tender. 11.2 The High Denomination Bank Notes (Demonetisation) Act, 1978 was enacted in public interest and provided demonetisation of certain high denomination bank notes and for matters connected therewith or incidental thereto. The said Act, interalia, defined a high denomination bank note to be a bank note of the denominational value of Rs.1,000/, Rs.5,000/or Rs.10,000/, issued by the Reserve Bank of India immediately before the commencement of the said Act. The said Act also stated in Section 3 that on the expiry of the 16th Day of January, 1978, all high denomination bank notes shall, notwithstanding anything contained in Section 26 of the Act, cease to be legal tender. 11.3 As noted earlier, the previous demonetisations were not carried out on the strength of subs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the controversy at hand was, on the other hand, carried out by the Central Government by issuance of a notification in the Gazette of India on 8th November, 2016. For ease of reference, the impugned notification dated 8th November, 2016 is extracted as under: MINISTRY OF FINANCE (Department of Economic Affairs) NOTIFICATION New Delhi, the 8th November, 2016 S.O. 3407(E). - Whereas, the Central Board of Directors of the Reserve Bank of India (hereinafter referred to as the Board) has recommended that bank notes of denominations of the existing series of the value of five hundred rupees and one thousand rupees (hereinafter referred to as specified bank notes) shall be ceased to be legal tender; And whereas, it has been found that fake currency notes of the specified bank notes have been largely in circulation and it has been found to be difficult to easily identify genuine bank notes from the fake ones and that the use of fake currency notes is causing adverse effect to the economy of the country; And whereas, it has been found that high denomination bank notes are used for storage of unaccounted wealth as has been evident from the large cash recoveries made by law enforcement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntained with the bank by a person, where the specified bank notes are tendered; however, where compliance with extant Know Your Customer (KYC) norms is not complete in an account, the maximum value of specified bank notes as may be deposited shall be Rs.50,000/; (iv) the equivalent value of specified bank notes tendered may be credited to an account maintained by the tenderer at any bank in accordance with standard banking procedure and on production of valid proof of Identity; (v) the equivalent value of specified bank notes tendered may be credited to a thirdparty account, provided specific authorisation therefor accorded by the third party is presented to the bank, following standard banking procedure and on production of valid proof of identity of the person actually tendering; (vi) cash withdrawal from a bank account over the counter shall be restricted to Rs.10,000/per day subject to an overall limit of Rs.20,000/a week from the date of commencement of this notification until the end of business hours on 24th November, 2016, after which these limits shall be reviewed; (vii) there shall be no restriction on the use of any noncash method of operating the account of a person inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o.10/03/2016Cy.I] Dr. SAURABH GARG, Jt. Secy. (underlining by me) The said Notification was thereafter followed by an Ordinance issued by the President on 30th December, 2016 and subsequently an Act of Parliament namely, the 2017 Act. The Actual Controversy : 12. The contention of the leaned senior counsel for the petitioners is twofold: firstly, that subsection (2) of Section 26 of the Act cannot be interpreted as having a very wide import as it would then be lacking in guidance and being unchanneled, would be arbitrary and in violation of Article 14, and hence, unconstitutional. It was further contended that if the provision has to be saved from being declared unconstitutional, then the same has to be read down which means that a restrictive interpretation must be given to the words of the provision. The second contention is with regard to the exercise of power by the Central Government by issuance of the Notification dated 8th November, 2016 and the manner in which such power was exercised and the procedure followed. The aforesaid two contentions shall be dealt with together as they are intertwined. The Reserve Bank of India: Bulwark of the Indian Economy: 13. Before considering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt observations of the Court on this aspect have been usefully extracted hereinunder: 192. But as we have pointed out above, RBI is not just any other statutory authority. It is not like a stream which cannot be greater than the source. The RBI Act, 1934 is a preconstitutional legislation, which survived the Constitution by virtue of Article 372(1) of the Constitution. The difference between other statutory creatures and RBI is that what the statutory creatures can do, could as well be done by the executive. The power conferred upon the delegate in other statutes can be tinkered with, amended or even withdrawn. But the power conferred upon RBI under Section 3(1) of the RBI Act, 1934 to take over the management of the currency from the Central Government, cannot be taken away. The sole right to issue Bank notes in India, conferred by Section 22(1) cannot also be taken away and conferred upon any other Bank or authority. RBI by virtue of its authority, is a member of the Bank of International Settlements, which position cannot be taken over by the Central Government and conferred upon any other authority. Therefore, to say that it is just like any other statutory authority whose deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive as well as curative measures. But the availability of power is different from the manner and extent to which it can be exercised. While we have recognised elsewhere in this order, the power of RBI to take a preemptive action, we are testing in this part of the order the proportionality of such measure, for the determination of which RBI needs to show at least some semblance of any damage suffered by its regulated entities. But there is none. When the consistent stand of RBI is that they have not banned VCs and when the Government of India is unable to take a call despite several committees coming up with several proposals including two draft Bills, both of which advocated exactly opposite positions, it is not possible for us to hold that the impugned measure is proportionate. 13.2 Shri Jaideep Gupta appearing for the Bank has brought to our notice the following decisions to emphasize on the importance of the Reserve Bank of India: a) In Joseph Kuruvilla Vellukunnel vs. The Reserve Bank of India AIR 1962 SC 1371, this Court observed that the most important function of the Bank is to regulate the banking system. The Bank has been described as a Banker's Bank. Under the Act, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned Attorney General, i.e., with regard to the Court s deference to the economic and monetary policies of the government and restraint that the Court must exercise in interfering with the said policies, unless the same are so irrational or unreasonable, so as to be declared to be unconstitutional. The above submission was made in the context of the contention of the petitioners, that the decisionmaking process in the present case was deeply flawed as it was contrary to the scheme and procedure contained in subsection (2) of Section 26 of the Act and hence, this Court may review the same and declare it to be in contravention, interalia, of statutory provisions of the Act. The aforesaid contention was vehemently opposed by learned Attorney General who submitted that courts cannot sit in judgment over economic policy matters of the Government. In this regard the following discussions could be made. Judicial Review of Economic Policy: The Indian judiciary has consistently exercised restraint with regard to judicial review of policy decisions. A few instances on which such restraint has been demonstrated, have been discussed as under: (a) In this regard reliance was placed by the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of economy, finance, communications, trade, telecommunications and others have to be decided by Parliament and the representatives of the people on the floor of Parliament can challenge and question any such policy adopted by the ruling Government.... (f) The reluctance of the court to judicially examine the merits of economic policy was again emphasised in Bhavesh D. Parish vs. Union and India (2000) 5 SCC 471. This Court opined that in the context of the changed economic scenario the expertise of people dealing with the subject should not be lightly interfered with. The consequences of such an interdiction can have largescale ramifications and can put the clock back for a number of years. That in dealing with economic legislations, this Court, while not jettisoning its jurisdiction to curb arbitrary action or unconstitutional legislation, should interfere only in those few cases where the view reflected in the legislation is not possible to be taken at all. (g) Buttressing the same aspect, in Balco Employees Union (Regd) vs. Union of India AIR 2002 SC 350, it was held that in a democracy, it is the prerogative of each elected Government to follow its own policy. This Court obser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a writ petition was preferred under Article 32 of the Constitution of India by the SmallScale Industrial Manufactures Association, Haryana for an appropriate writ, direction or order directing the Union of India and others to take effective and remedial measures to redress the financial strain faced by the industrial sector, particularly, MSMEs due to the COVID19 pandemic. This Court while considering the submissions of the parties on the issue of whether economic and/or policy decisions taken by the Government in their executive capacity are amenable to the jurisdiction of courts, held that it was the legality of the policy, and not the wisdom or soundness of the policy, that can be the subject of judicial review. This Court observed that courts do not play an advisory role to Government and economic policy decisions should be left to experts. This Court observed that it is not normally within the domain of any Court to weigh the pros and cons of the policy or to scrutinize it and test the degree of its beneficial or equitable disposition for the purpose of varying, modifying or annulling it, based on howsoever sound and good reasoning. It is only when a policy is arbitrary and v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inction When the proposal for demonetisation originates by way of a recommendation by the Central Board of the Bank: When the proposal for demonetisation originates from the Central Government: 1 Role of the Central Government The Central Government may on consideration of the Bank s recommendation, accept the same and act on such acceptance by issuing a notification in the Gazette of India declaring that any series of any denomination has ceased to be legal tender; or the Central Government is also free to decide in its wisdom that it is not expedient to accept the recommendation of the Bank to declare that any series of any denomination has ceased to be legal tender. In the event that the recommendation is not accepted, no further action is required to be taken by the Central Government . The Central Government initiates the proposal for demonetisation. It consults the Bank on the same and seeks the Bank s advice. On receiving the Bank s advice/opinion on the proposed measure, the Central Government shall consider the same. Consultation with the Central Board of the Bank does not mean concurrence. The Central Government is free to give effect to its proposal for demonetisation, n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tender at any place in India in payment or on account for the amount expressed therein, and shall be guaranteed by the Central Government. There are two aspects to this provision: the first is, every bank note shall be a legal tender in any place in India and, secondly, that the Central Government shall guarantee the amount expressed on the bank note. The expression bank note is defined in Section 2 (aiv) of the Act to mean, a bank note issued by the Bank whether in physical or digital form, under Section 22 of the Act. Section 22 of the Act categorically states that the Bank has the sole right to issue bank notes in India, on the recommendations of the Central Board of the Bank. The provision further provides that the Bank has the sole right to issue currency notes of the Government of India. The provisions of the Act would be applicable in a like manner, to all currency notes of the Government of India, issued either by the Central Government or by the Bank, as if such currency notes were bank notes. 15.2 Further, it is only on the recommendation of the Central Board of the Bank that the Central Government may direct the nonissue or discontinuation of the issue of bank notes of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atutory guarantee. 15.4 While considering subsection (1) of Section 26 of the Act, the first question that would arise is, whether, a bank note which has ceased to be a legal tender on the issuance of a notification by the Central Government would also cease to have the guarantee of the Central Government. In other words, whether the guarantee by the Central Government, would continue despite the bank note ceasing to be a legal tender. The answer is in the affirmative, for, a bank note may cease to be a legal tender between citizens but cannot cease to have the guarantee of the Central Government, so long as the liability of the Issue Department continues. The liability of the Issue Department of the Bank is coextensive with the time period within which a bank note which has ceased to be a legal tender is exchanged at a notified bank. It is because of this reason that a bank note of any denomination which is demonetised or is declared to have ceased to be a legal tender, can be exchanged as indicated in the notification issued by the Central Government so that the bearer of the bank note receives an equivalent amount as that expressed in the note which has ceased to be a legal tend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther contended that the powers of the Central Government cannot be denuded to such an extent that unless and until a recommendation of the Central Board of the Bank is made to the Central Government, the latter cannot demonetise any currency. According to learned Attorney General, if such a strict interpretation is given to subsection (2) of Section 26, it would nullify the power of the Central Government to demonetise any bank note, having regard to the economic conditions of the country, the financial health of the economy and the monetary policy of the Government. It was submitted that the provision must be so interpreted so as to give a free play in the joints and empower the Central Government to issue a notification in the Gazette of India, in order to demonetise any bank note. He further contended that the requirement of recommendation of the Central Board of the Bank in order to enable the Central Government to issue a notification to demonetise any currency would imply that the initiation of demonetisation must only be from the Central Board of the Bank and that the Central Government has no power to initiate such an action of demonetisation. 15.8 I find considerable for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve powers. 15.11 It was further contended by Shri Chidambaram that demonetisation is resorted to in rare and exceptional circumstances and there are two justifiable reasons for which demonetisation could be resorted to, namely, 1) to weed out denominations of currency that are in disuse or are practically unusable; 2) to get rid of currency which has become worthless in value because of hyperinflation. According to learned senior counsel for the petitioners, if any demonetisation of currency has to take place, and if the power of the Central Government is not channelised or restricted by reading down subsection (2) of Section 26 of the Act, it would result in arbitrariness and unconstitutionality. Therefore, to save it from the vice of arbitrariness and unconstitutionality, it is necessary to read down the provision in the following two respects: a) the Central Government has no power to demonetise any currency note except on the recommendation of the Central Board of the Bank under subsection (2) of Section 26 of the Act, and; b) the expression any in subsection (2) of Section 26 of the Act must be restricted to be any one , that is, one series or one denomination of bank notes. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manner as the Central Board of the Bank is, under the above provision. This is because such power is not exercised under subsection (2) of Section 26 of the Act but is exercised notwithstanding the said provision by the Central Government. Therefore, demonetisation of bank notes at the behest of the Central Government is a far more serious issue having wider ramifications on the economy and on the citizens, as compared to demonetisation of bank notes of a given series of a given denomination on the recommendation of the Central Board of the Bank by issuance of a gazette notification by the Central Government. Therefore, in my considered view, 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. 15.14 The Central Government, as already noted above, could have several compulsions for initiating dem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , a democracy cannot thrive; every democratic country needs a Parliament for the smooth conduct of its governance and to give meaning to democracy in the true sense. The Parliament which is at the centre of our democracy cannot be left aloof in a matter of such importance. Its views on the subject of demonetisation are critical and of utmost importance. Dr. Subhash C. Kashyap in his book, Parliamentary Procedure: Law, Privileges, Practice and Precedents , 3rd Ed., (2014), while discussing the functions of the Parliament has stated as follows: Over the years, the functions of Parliament have no longer remained restricted merely to legislating. Parliament has, in fact emerged as a multifunctional institution encompassing in its ambit various roles viz. developmental, financial and administrative surveillance, grievance ventilation and redressal, national integrational, conflict resolution, leadership recruitment and training, educational and so on. The multifarious functions of Parliament make it the cornerstone on which the edifice of Indian polity stands and evokes admiration from many a quarter. It is in the above context that it is observed that on a matter as critical as demonet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew of the Central Board of the Bank is relevant and important but also that of the representatives of the people in the Parliament. The Members of the Parliament hold the sovereign powers of We, the People of India in trust. 15.15 Of course, by contrast, there would be no difficulty if the proposal for demonetisation is initiated by the Central Board of the Bank by making a recommendation under subsection (2) of Section 26 of the Act, which the Central Government in its wisdom may consider and either act upon the recommendation or for good reason, decline to act on the same. That is a matter left to the wisdom of the Central Government. However, as noted above such recommendation by the Bank cannot relate to all series of a denomination or all series of all denominations of bank notes. That is a prerogative of only the Central Government. 15.16 It is nobody s case that the impugned gazette notification dated 8th November, 2016, of the Central Government was published on the initiation of the proposal of demonetisation by the Central Board of the Bank. The proposal for demonetisation was initiated by the Central Government by a letter dated 7th November, 2016 addressed by the Financ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iation of demonetisation by the Central Board of the Bank and making a recommendation in that regard. Issuance of the notification, in the Gazette of India, would imply that the Central Government has accepted the recommendation of the Central Board of the Bank and therefore, has declared that the specified series of Bank notes of the specified denomination shall cease to be legal tender from the date to be specified in the notification. The operation of subsection (2) of Section 26 of the Act is thus in a very narrow compass and it is reiterated that the said power is exercised by the Central Government on acceptance of the recommendation of the Central Board of the Bank. 15.19 The reason as to why a wide interpretation as contended by the Union of India cannot be given to subsection (2) of Section 26 of the Act is because a plain reading of the provision as well as a contextual understanding, would suggest that it is only when the initiation of a proposal for demonetisation is by the Central Board of the Bank by making a recommendation to the Central Government that the provision would apply. 15.20 This position, however, does not imply that the Central Government is bereft of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from being utilized for terror funding. But, those objects would not be the objects with which the Central Board of the Bank may make a recommendation under subsection (2) of Section 26 of the Act. The reason being, the Central Government would view the entire scheme of demonetisation in a larger perspective, having several objects in mind and in the interest of the sovereignty and integrity of the India, the security of the State, the financial health of the economy, etc. The Central Board of the Bank may not be in a position to visualize such objectives. Under such circumstances the Central Government must consult the Bank but need not mandatorily obtain the imprimatur of the Central Board of the Bank to its proposal. What if the Central Board of the Bank, when consulted by the Central Government, gives a negative opinion? Would it mean that the Central Government would then not resort to demonetisation in deference to the opinion of the Central Board of the Bank? It may do so if it finds that the opinion tendered by the Bank is just and proper, but the Central Government may have its own reasons for not accepting the opinion of the Central Board of the Bank and therefore, in su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned senior counsel for the petitioners that subsection (2) of Section 26 of the Act cannot be interpreted to mean all series of bank notes of all denominations when the words used in the provision are any series of any denomination . Deciphering the plain meaning of subsection (2) of Section 26: 15.25 The reason why power is vested only with the Central Board of the Bank under subsection (2) of Section 26 of the Act to recommend to the Central Government to declare specified series of specific denomination of bank notes as having ceased to be legal tender, becomes clear when the plain meaning of the words of the said provision is recognised. When interpreted as such, no power to demonetise currency notes at the behest of the Central Government is envisaged under the said provision. This is because the power of the Central Government to do so is vast and has a wider spectrum. Such a power is not traceable to subsection (2) of Section 26 of the Act which operates in a narrower compass. Hence, to save subsection (2) of Section 26 from the vice of unconstitutionality, it must be given an interpretation appropriate to the object for which the provision is intended. In this contex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtain whether certain words are clear and unambiguous, they must be studied in their context. Context in this connection is used in a wide sense as including not only other enacting provisions of the same statute, but its preamble, the existing state of the law, other statutes in pari materia and the mischief which by those and other legitimate means can be discerned that the statute was intended to remedy. [Source: Interpretation of Statutes by Justice G.P. Singh, 15th Edition] 15.27 Applying the above rule, if subsection (2) of Section 26 of the Act is read as per the plain meaning of the words of the provision, then it does not lead to any ambiguity. The plain meaning rule is the golden rule of construction of statutes and it does not lead to any absurdity in the instant case. On a plain reading of the provision, it is observed that the Central Government can issue a notification in the Gazette of India to demonetise any series of bank notes of any denomination but only on the recommendation of the Central Board of the Bank. In my view subsection (2) of Section 26 is not vitiated by unconstitutionality. This is for two reasons: firstly, the plain meaning of the words any series ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Bank, it is noted that the proposal for demonetisation had been initiated by the Central Government by writing a letter to the Bank on 7th November, 2016 and not by the Central Board of the Bank. On the very next evening i.e., on 8th November, 2016 at 05:30 p.m., there was a meeting of the Central Board of the Bank at New Delhi and a Resolution was passed and a little while thereafter on the same evening, the notification was issued invoking subsection (2) of Section 26 of the Act by the Central Government. Such a procedure is not contemplated under subsection (2) of Section 26 of the Act when the proposal for demonetisation is initiated by the Central Government. 16.1 Hence, it is held that in the instant case the Central Government could not have exercised power under subsection (2) of Section 26 of the Act in the issuance of the impugned gazette Notification dated 8th November, 2016. It is further held that in the present case, the object and the purpose of issuance of an Ordinance and thereafter, the enactment of the 2017 Act by the Parliament was, in my view, to give a semblance of legality to the exercise of power by issuance of the Notification on 8th November, 2016. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the legislature had intended to give one provision overriding effect over another provision. The effect of insertion of a nonobstante clause into a provision in a legislation, is that the very consideration arising from the provisions sought to be excluded, shall be excluded, vide Madhav Rao Scindia vs. Union of India (1971) 1 SCC 85. Applying the aforesaid principles to interpret Section 3 of the 2017 Act, it is observed that the nonobstante clause contained in the said provision has the effect of overriding the provisions of the Act as they are not applicable to the provisions and processes under the 2016 Ordinance and the 2017 Act. It is significant to note that the said Section contains a nonobstante clause which reads, notwithstanding anything contained in the Act or any other law for the time being in force . This is rightly so as the demonetisation is not in exercise of the powers under subsection (2) of Section 26 of the Act. However, Section 3 of the 2017 Act goes on to state that the specified bank notes which have ceased to be legal tender, in view of the notification dated 8th November, 2016 issued under subsection (2) of Section 26 of the Act, shall cease to impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Reserve Bank of India: i) Letter by the Secretary, Department of Economic Affairs, Ministry of Finance, dated 7th November, 2016, bearing F. No. 10.03/2016 Cy.I, addressed to the Governor of the Bank; ii) Draft Memorandum of the Deputy Governor of the Bank, placed before the Central Board of the Bank at its 561st Meeting; iii) Minutes of the 561st Meeting of the Central Board of the Bank, convened at New Delhi, on 8th November, 2016, at 05:30 p.m., and signed on 15th November, 2016; iv) Letter addressed by the Deputy Governor of the Bank to the Central Government on 8th November, 2016. 17.3 On a reading of the records listed hereinabove, the following facts emerge: 1) A letter bearing F. No. 10.03/2016 Cy.I dated 7th November, 2016 was addressed by the Secretary, Ministry of Finance, Department of Economic Affairs, Government of India, to the Governor of the Bank, referring to certain facts and figures to indicate the following two major threats to the security and financial integrity of the country: i) Fake Infusion of Currency Notes (FICN); ii) Generation of black money in the Indian economy. The desire of the Central Government to proceed with the measure of demonetisation was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of existing Rs.500/and Rs.1,000/notes; recommendation has been obtained ; etc., are selfexplanatory. This demonstrates that there was no independent application of mind by the Bank. Neither was there any time for the Bank to apply its mind to such a serious issue. This observation is being made having regard to the fact that the entire exercise of demonetisation of all series of bank notes of Rs.500/and Rs.1,000/was carried out in twenty four hours. A situation where an independent authority such as the Bank, based on its own appreciation of the economic climate of the country, recommends a measure to the Central Government, must be contrasted with another situation where a measure which originates from the Central Government is simply placed before such independent authority for seeking its advice or opinion on such proposed measure. A proposal of the Central Government on a certain scheme having serious economic ramifications has to be placed before the Bank to seek its expert opinion as to the viability of such a scheme. The Bank as an expert body may render advice on such a proposal and on some occasions may even concur with the same. However, even such concurrence to a propos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vernment in its letter addressed to the Bank, dated 7th November, 2016 proposed to withdraw the character of legal tender of existing Rs.500/and Rs.1,000/bank notes. 2) The Central Board of the Bank, at its 561st meeting held on 8th November, 2016 resolved that the withdrawal of legal tender of old bank notes in the denomination of Rs.500/and Rs.1,000/be made. 3) The objects guiding the Board s opinion were twofold: first, pertaining to financial inclusion, and second, being to incentivise the use of electronic modes of payment. 4) The object guiding the Government s proposal to withdraw currency of the specified denominations, was to tackle black money, counterfeiting and illegal financing. 17.8 In my view, there is contradiction as to the subject of demonetisation, as well the object thereof, as stated by the Bank vis vis the Central Government as discernible from the affidavits. The same may be expressed as follows: As stated in the affidavit of the Bank As stated in the affidavit of the Bank Object of Demonetisation i) Financial inclusion ii) incentivising use of electronic modes of payment To tackle: i) black money, ii) counterfeiting, iii) illegal financing. Subject of Demone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ament does indeed have the competence to carry out demonetisation, on the strength of Entry 36 of List I of the Seventh Schedule of the Constitution, the Central Government could not have exercised the power by issuance of an executive notification. Legal Principles applicable to the case: 18. There are certain legal principles which are applicable in this case: one is expressed in the maxim to do a thing a particular way or not at all ; this principle has also been expressed in terms of the latin maxim expressio unius est exclusio alterius , which means that when a manner is specified for doing a certain thing, then all other modes for carrying out such act are expressly excluded; and the other principle is, exercise of discretion which is a well known principle in Administrative Law. The same would be discussed at this stage. 18.1 The first principle which is of relevance to the controversy at hand is that, where a power is given to do a certain thing in a certain way, the thing must be done in that way or not at all and other methods of performance are necessarily forbidden vide, Taylor vs. Taylor (1875) 1 Ch D 426. Hence, when a statute requires a particular thing to be done in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd therefore such notes could not take away any right vested under the said Act. It was observed that issuance of an administrative order or a Note pertaining to a special type of weapon to bring it within the ambit of the Army Act, which was hitherto not included therein, could not be said to have been included in the manner in which it was supposed to be included. That the Army Act empowers the Central Government to make rules and regulations for carrying into effect the provisions of the Act; however, no power is conferred upon the Central Government of issuing Notes or issuing orders which could have the effect of the Rules made under the Act. That rules and Regulations or administrative instructions can neither be supplemented nor substituted by Notes . That administrative instructions issued or the Notes attached to the Rules which are not referable to any statutory authority cannot be permitted to bring about a result, which is supposed to be achieved through enactment of Rules. What emerges from the above discussion is that 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 altern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t itself consider a particular matter before it on merits but still takes a decision, as if it is directed to do so, by another authority, most often, by a higher authority. When an authority exercises the discretion vested in it by law at the behest of another authority in a specific matter, this would in law amount to nonexercise of its discretionary power by the authority itself, and consequently, such action or decision is invalid. 19.2 The petitioners have contended that it is implicit in subsection (2) of Section 26 of the Act that adequate time and attention must be devoted by both the Central Board of the Bank and the Central Government before proceeding with a measure of such magnitude and consequences, as demonetisation. It was further submitted that the facts and records of the present case would show that the procedure with such implicit obligations was abandoned and the process contemplated was not as per the said provision. That the proposal emanated from the Central Government and was not initiated by the Bank. The Central Board of the Bank passed a resolution in a hurried manner. No adequate care and consideration were bestowed on such a crucial matter by the Centra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsequently secured the imprimatur of the Bank on such proposal. In fact, the Central Board of the Bank has no jurisdiction to recommend demonetisation of bank notes of all series of all denomination to the Central Government, as already held above. 19.4 The powers of the Central Board of the Bank are restrictive in nature inasmuch as it can only recommend that a particular series of a particular denomination would cease to be legal tender. Hence, the Central Government cannot rely on the semblance of a recommendation made to it by the Central Board of the Bank under subsection (2) of Section 26 of the Act when it initiates the process of demonetisation. The Central Government also cannot obtain any recommendation to that effect, and if it has done so, it would imply that the Central Board of the Bank is acting at the behest of the Central Government, only to concur with what the Central Government intends to do. Such an opinion would not be on the basis of any independent application of mind of the experts who form the Central Board of the Bank. Moreover, when the Central Government seeks the opinion of the Central Board of the Bank to its proposal for demonetisation, the latter wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the interpretation given above. It has also been brought on record that around 98% of the value of the demonetised currency have been exchanged for bank notes which continues to be legal tender. Also, a new series of bank notes of Rs.2,000/was released by the Bank. This would suggest that the measure itself may not have proved to be as effective as it was hoped to be. However, this Court does not base its decision on the legality of a legislation, qua the effectiveness of such action in achieving the stated objectives. Therefore, it is clarified that any relief moulded in the present cases is de hors considerations of success of the measure. 20.1 I have borne in mind the submissions of learned Attorney General appearing on behalf of the Union of India to the effect that the objectives of the Central Government have been sound, just and proper, but in my view, the manner in which the said objectives were achieved and the procedure followed for the same was not in accordance with law having regard to the interpretation given above. Learned Attorney General appearing on behalf of the Union of India also contended that the issues raised in these petitions have become infructuous a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersy in the present cases relates to the true meaning and interpretation of subsection (2) of Section 26 of the Act. Therefore, the question that arises for consideration is, whether, this Court can declare the law as to the validity of an action, even after such action has been given effect to in toto. That is to say, once the action has been completely carried out, and there is no element of such action which is left to be carried out, can there still be a subsequent declaration by this Court as to the validity of such act, having regard to the interpretation accorded to the provisions of the relevant statute. 20.5 As discussed hereinabove, this Court has acknowledged on several occasions that it has the competence to declare the law on a subject for posterity, even though no substantive relief may be given under the circumstances of a given case, vide S.R. Bommai. The effect of such declaration would apply prospectively. That is, in the present case if a declaration is made to the effect that the impugned action was unlawful, such declaration would only have the effect of deterring future measures from being carried out in a like manner, in order to save such measures, from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... denominations , it would vest with the Central Board of the Bank unguided and unlimited powers which would be exfacie arbitrary and suffer from the vice of unconstitutionality as this would amount to excessive vesting of powers with the Bank. In order to save the provision from being declared unconstitutional, the meaning of the provision is read down to the context of the Central Board of the Bank initiating a proposal for demonetisation by making a recommendation to the Central Government under subsection (2) of Section 26 of the Act of a particular series of bank note of any denomination. (v) On receipt of the said recommendation made by the Central Board of the bank under subsection (2) of Section 26 of the Act, the Central Government may accept the said recommendation or may not do so. If the Central Government accepts the recommendation, it may issue a notification in the Gazette of India specifying the date w.e.f. which any specified series of bank notes of any specified denomination shall cease to be legal tender and shall cease to have the guarantee of the Central Government. (vi) The provisions of the Act do not bar the Central Government from proposing or initiating dem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecutive powers. Even if the Central Board of the Bank 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. (x) In view of the aforesaid conclusions, I am of the considered view that the impugned notification dated 8th November, 2016 issued under subsection (2) of Section 26 of the Act is unlawful. In the circumstances, the action of demonetisation of all currency notes of Rs.500/and Rs.1,000/is vitiated. (xi) Further, the subsequent Ordinance of 2016 and Act of 2017 incorporating the terms of the impugned notification are also unlawful. (xii) However, having regard to the fact that the impugned notification dated 8th November, 2016 and the Act have been acted upon, the declaration of law made herein would apply prospectively and would not affect any action taken by the Central Government or the Bank pursuant to the issuance of the Notification dated 8th November, 2016. This direction is being issued having regard to Article 142 of the Constitution of India. Hence, no relief is being granted in the individual matters. (xiii) In view of the abov ..... 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