Aware of ‘Lakshman Rekha’, But Will Investigate Note Ban: Supreme Court


New Delhi: The Supreme Court said on Wednesday it is aware of the “Lakshman Rekha” on the judicial review of government policy decisions, but will have to examine the 2016 demonetization decision to decide whether the issue has become a mere “academic” exercise.

A bench of five judges headed by Justice SA Nazeer said that when a problem arises before a constitutional bench, it is its duty to respond.

Attorney General R Venkataramani argued that unless the demonetization law is challenged in proper perspective, the issue will essentially remain academic.

The High Denomination Banknote (Demonetization) Act was passed in 1978 to provide in the public interest to demonetize certain high-denomination banknotes in order to control the illegal transfer of money that is harmful to the economy and facilitates such banknotes.

The Supreme Court said that to declare whether the exercise is academic or sterile, it must investigate the matter as both sides disagree.

“To answer that question, we will have to hear and answer, whether academically, not academically, or beyond the scope of judicial review. The point in the matter is government policy and its wisdom, which is an aspect of the case is “We always know where the Lakshman Rekha is, but the way it was done should be investigated. We need to hear counsel to decide that,” said the bench, which also includes judges BR Gavai, AS Bopanna, V Ramasubramanian and BV Nagarathna.

Attorney General Tushar Mehta, who appeared before the Center, said the court’s time should not be “wasted” on academic issues.

Senior lawyer Shyam Divan, who represents petitioner Vivek Narayan Sharma, objected to Mr Mehta’s filing, saying he was surprised at the words “wasting the constitutional bank’s time” as the earlier bank had said these matters had to be placed before a constitutional bench.

Senior lawyer P. Chidambaram, who appeared before one of the parties, said the matter has not become academic and should be decided by the highest court.

He said this kind of demonetization requires a separate act from Parliament.

On December 16, 2016, a bench headed by then Chief Justice TS Thakur referred the issue of the validity of the decision and other issues to a larger bench of five judges for authoritative ruling.

It had raised several questions in the order for reference to be reviewed by the five-judge court, including whether the notification of 8 November 2016 is ultravires of the provisions of the Reserve Bank of India Act, 1934 and whether the notification violates the provisions of Article 300(A) of the Constitution. Article 300(A) says that no one may be deprived of his property except by the authority of the law.





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