Does Demonetization Break any Indian Law?

Demonetization has been the new buzz since the 8th of November in India, wherein the notes of Rs. 500 and Rs.1000 ceased to be legal tender. There have been many conflicting views of the general public subsequent to the announcement of the decision. However, it is important to understand the legal validity of this decision. Some of the laws that relate to demonetization have been listed below along with the practical applicability that has been done:

1. Reserve Bank of India Act (Section 26- Subsection2) :

It empowers the Union Government on the recommendation of Central Board to declare any notes issued by the Reserve Bank will no longer be a legal tender.

The same power has been exercised and hence, legal.

2. Constitution of India { Article 19(1)(g) }:

Article 19 is subject to complete restrictions in the interest of the larger public. Another possible contention that “No person can be deprived of his property except by authority of law “may not be entertained because there is no deprivation of property.

Accounted money of all the citizens will remain intact. Citizens may only be deprived of their unaccounted money because it is not legally acquired and that appears to be fair enough.

Also, there are rules and laws which have been overlooked and which are the basis of all the controversial viewpoints which are:

  1. Failing to introduce a law to justify the removal of “Movable Objects”
  2. No RBI rule to disallow people to access their money (reference to 2000 per day withdrawal limit)

From the above pros and cons of the debate, I can conclude though there have been laws that were not taken care of while deciding but such big decisions have to overcome the roots of law because theory and practical application are two different things. Hence, Demonization is not illegal, though, some laws were broken due to the reasons mentioned above.

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Author
sugandha
Sugandha Sehgal
3rd Year BBA.LLB,
K.L.E Society’s law College, Bengaluru

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