VIVEK NARAYAN SHARMA versus UNION OF INDIA

VIVEK NARAYAN SHARMA versus UNION OF INDIA

By majority the Court construed s.26(2) of the RBI Act as a provision enabling the Central Board of the RBI to recommend to the Central Government that any series of bank notes of any denomination may cease to be legal tender and held there is an inbuilt safeguard in the recommendation requirement so as not to constitute excessive delegation; when demonetisation is initiated by the Central Board the Central Government may act by Gazette notification on that recommendation; when initiated by the Central Government the measure must be effected by plenary legislative process (Ordinance/Act) rather than by treating s.26(2) as empowering executive action to demonetise all series/denominations;...

Parties
Petitioner: VIVEK NARAYAN SHARMA; Respondent: UNION OF INDIA
Jurisdiction
India
Judgment Date
02 January 2023
Procedural Posture
Writ Petition (civil) / Final Judgment by Constitution Bench (reference Answered)
Outcome
Reference answered (majority): s.26(2) construed as enabling recommendation by RBI Board and may cover series/denominations contextually; Central Government may initiate demonetisation only via legislative route (Ordinance/Act); sub-section(2) not struck down for excessive delegation; impugned notification (8 Nov...
Legal Topics
Demonetisation, Reserve Bank of India Act, 1934 S.26, Delegated Legislation, Excessive Delegation, Judicial Review, Proportionality
Constitutional Law Administrative Law Public Law Banking Law Statutory Interpretation Demonetisation Reserve Bank of India Act, 1934 S.26 Delegated Legislation +3 more

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Parties

VIVEK NARAYAN SHARMA

Petitioner

UNION OF INDIA

Respondent

Procedural Posture

Writ Petition (civil) / Final Judgment by Constitution Bench (reference Answered)

Legal Issues

  1. 1 Interpretation of s.26(2) of the Reserve Bank of India Act, 1934 (meaning of “any series” / “any denomination” and who may initiate demonetisation)
  2. 2 Whether Central Government could lawfully demonetise bank notes by Gazette notification on its own initiative rather than by legislation
  3. 3 Whether s.26(2) effects excessive delegation of legislative power

Ratio Decidendi

By majority the Court construed s.26(2) of the RBI Act as a provision enabling the Central Board of the RBI to recommend to the Central Government that any series of bank notes of any denomination may cease to be legal tender and held there is an inbuilt safeguard in the recommendation requirement so as not to constitute excessive delegation; when demonetisation is initiated by the Central Board the Central Government may act by Gazette notification on that recommendation; when initiated by the Central Government the measure must be effected by plenary legislative process (Ordinance/Act) rather than by treating s.26(2) as empowering executive action to demonetise all series/denominations;...

Court Disposition

Reference answered (majority): s.26(2) construed as enabling recommendation by RBI Board and may cover series/denominations contextually; Central Government may initiate demonetisation only via legislative route (Ordinance/Act); sub-section(2) not struck down for excessive delegation; impugned notification (8 Nov...

Orders

  • Reference answered as set out in the judgment (see para 304)
  • Registry to place matter before the Chief Justice of India for placement before appropriate Bench(s) (para 305)