The Supreme Court dismissed the petitions against 2016's demonetisation in a 4:1 majority judgment. While dismissing the petitions, the Supreme Court stated that demonetisation cannot be overturned just because the Centre started the process when it dismissed the petitions.
The Supreme Court's Justice BV Nagarthana said, “The demonetisation exercise cannot be struck down on grounds of proportionality.” Justice Nagarthana added that it is not here to decide on the merits or demerits of economic and/or financial decisions while adding that the Reserve Bank of India (RBI) is the bulwark of the Indian economy.
“I have noted that RBI is the bulwark of the Indian economy. I have cited history of such demonetisation exercise world over. The court is not to sit over the merit of economic or financial decision," the SC judge noted.
However, Justice Nagarthana also emphasised that legislation, rather than the government, might have been used to implement demonetisation. "Compared to demonetisation on the advice of the RBI, demonetisation at the direction of the Centre is a considerably more significant issue. Due to the size of the Union government's powers, he argued that legislation should always take precedence over executive orders.
The arguments against demonetization cited Section 26 (2) of the Reserve Bank of India (RBI) Act and called into question the decision-making process, the recommendation's consideration of pertinent factors, the achievement or failure of the goal of demonetization, and whether it passed the proportionality test. The petitioners also said that the top court has powers to grant declaratory relief. Section 26 (2) of The Reserve Bank of India Act focuses on demonetisation and states any series of bank notes of any denomination shall cease to be legal tender by notification in the Gazette of India.