Demonetisation for the greater good, govt tells SC

The government told the Supreme Court on Thursday that the Reserve Bank of India board had recommended the demonetisation of Rs500 and Rs1,000 notes as required under Section 24(1) of the RBI Act and that the central government had exercised its power as a delegate of Parliament and not in its executive capacity while issuing the relevant notifications.

The government also justified its consequential restrictions on the free flow of money by way of capping withdrawals from banks and ATMs, saying that it had not prohibited the right of the public to hold, acquire or dispose of money, but had only imposed some reasonable restrictions on it for the ''greater good of the public at large''.

The government said RBI had the power to impose such restrictions on currency use, especially when 86 per cent of currency by value was being withdrawn.

The ''act of cancelling the legal tender character of existing series of Rs500 and Rs1,000 bank notes is only a reasonable restriction and regulatory in nature,'' the government said in its affidavit.

''Merely because there is a restriction on the public to use old high-denomination notes, the regulation cannot be held to be illegal or unreasonable restriction as there is no infringement of Fundamental Rights of citizens.''