The Supreme Court on Monday upheld the demonetization of high-value £500 and £1,000 banknotes announced by Prime Minister Narendra Modi in 2016.

In a landmark ruling, the Supreme Court said the center’s decision-making process could not be at fault because consultations had taken place between the RBI and the central government over a six-month period.

Whether the goal of the night ban was achieved is “not relevant,” said four of the five constitutional judges. However, Justice BV Nagarathna called the move unlawful.

The bank dismissed a number of petitions against the decision, saying the decision was irreversible as executive branch economic policy. “There must be great restraint in matters of economic policy. The court cannot replace the wisdom of the executive with their wisdom,” Judge BR Gavai said at the reading of the order.

In a strongly dissenting ruling, Judge Nagarathna ruled that demonetization was “unlawful” on legal grounds. “Parliament should have discussed the demonetization law, the process should not have been through a notice in the Official Gazette. Parliament must not be left alone on an issue of such vital importance to the country,” said Judge Nagarathna.

The RBI should have initiated the banknote ban, the dissenting judge said, adding that the procedure was legally flawed because it was done in reverse.

Judge Nagarathna further noted that RBI had not provided an independent opinion and had only sought the opinion of RBI’s Board of Directors, which could not be qualified as a recommendation.

Former Finance Minister P. Chidambaram, who argued against the validity of demonetization in the case, said the minority ruling emphasized the important role of parliament in a democracy. “We hope that in the future an unbridled executive will not force disastrous decisions on parliament and the people,” he said.

The minority ruling highlights the profound difference between the parliament’s full legislative power and the executive government’s limited powers, Chidambaram added.

The value and volume of banknotes in circulation increased by 9.9% and 5% respectively to ₹ crore and ₹13.05 lakh 31.05.721, the Reserve Bank of India had said in its annual report for 2021-22.

Despite central government claims that demonetization is an exercise to root out black money, 44% of respondents to a nationwide survey said that real estate purchases have continued to have a cash component since the demonetization of high-grade currencies 7 years ago. The survey, conducted by community social media platform LocalCircles, found that real estate transactions were the most important area of ​​cash usage from a value-per-transaction perspective. When asked what percentage of the value of the purchase of a property (land, house, apartment, shop, office, other) had to be paid in cash in the last 7 years, an average of 8% of respondents answered that they had more than 50% in paid in cash.