'Any' Means 'All' : Supreme Court Says Centre Can Demonetise All Series Of Bank Notes Invoking Section 26(2) Of RBI Act

Interpreting the word "any" in Section 26(2) of the Reserve Bank of India Act 1934 as "all", the Supreme Court by 4:1 majority held that the Central Government has the power to demonetise all series of currency notes of a particular denomination.

A 5-judge bench comprising Justices S Abdul Nazeer, BR Gavai, AS Bopanna, V Ramasubramanian and BV Nagarathna was deciding a batch of petitions challenging the 2016 decision of the Union Government to entirely cancel the currency notes of Rs.500 and Rs.1000. One of the arguments raised by the petitioners to question the legality of the decision was that as per Section 26(2), the Central Government can only demonetise certain specified series of currency notes of a denomination and not the all series, as the provision uses the words "any series of bank notes".

Senior Advocate P Chidambaram, appearing for the petitioners, had argued that since the statute chose to use the specific words "any series", it meant that the legislative intention was to confer the power on the Central Government to withdraw certain specified series of notes. He also pointed out that the previous two acts of demonetisation of whole currency notes were carried out by special legislations passed by the Parliament and not through notifications issued under Section 26(2).

Pragmatic and purposive interpretation must be adopted, says majority

Rejecting the petitioners' argument, the majority opined that a purposivee and pragmatic interpretation must be adopted with respect to this provision. The majority judgment written by Justice Gavai stated that "the modern approach of interpretation is a pragmatic one, and not pedantic" and that  "an interpretation which advances the purpose of the Act and which ensures its smooth and harmonious working must be chosen".

"When the legislature itself has provided that the Central Government would take a decision after considering the recommendation of the Central Board of the RBI, which has been assigned a primary role in matters with regard to monetary policy and management and regulation of currency, we are of the view that the legislature could not have intended to give a restricted power under sub-section (2) of Section 26 of the RBI Act", Justice Gavai wrote in the majority judgment.

Restrictive meaning for "any" will lead to anomaly

According to the majority, if Section 26 (2) is interpreted in a restricted manner, it may "lead to an anomalous situation". The following example was cited :

"For example, if there are 20 series of a particular denomination, and if the argument of the petitioners is to be accepted, the Central Government would be empowered to demonetize 19 series of a particular denomination, leaving one series of the said denomination to continue to be a legal tender, which would lead to a chaotic situation...If the Central Government finds that fake notes of a particular denomination are widely in circulation or that they are being used to promote terrorism, can it be said, for instance, that out of 20 series of bank notes of a particular denomination, it can demonetize only 19 series of bank notes but not all 20 series?In our view, this will result in nothing else but absurdity and the very purpose for which the power is vested shall stand frustrated".

The majority stated, "An interpretation which, in effect, nullifies the purpose for which a power is to be exercised, in our view, would be opposed to the principle of purposive interpretation. Such an interpretation, in our view, rather than advancing the object of the enactment, would defeat the same".

As regards the argument that previous instances of demonetisation were through legislations, the Court observed that on earlier two occasions, since the RBI was not in favour of the demonetization, the Government resorted to promulgating ordinances for the said purpose. 

"We are, therefore, unable to accept the contention that the word “any” has to be given a restricted meaning taking into consideration the overall scheme, purpose and the object of the RBI Act and also the context in which the power is to be exercised. We find that the word “any” would mean “all” under sub-section (2) of Section 26 of the RBI Act", the majority judgment held.

The judgment referred to several precedents where "any" has been interpreted to mean "all".

Dissent of Justice Nagarathna

Justice Nagarathna differed from the majority on this issue.  "When the words of a statute are clear, plain or unambiguous, i.e., they are reasonably susceptible to only one meaning, the court is bound to give effect to that meaning and admit only one meaning and no question of construction of a statute arises, for, the provision/Act would speak for itself", the judge stated at the outset while answering this issue.

Applying the above rule, if Section 26(2) is read as per the plain meaning of the words of the provision, Justice Nagarathna said that it does not lead to any ambiguity.

"The plain meaning rule is the golden rule of construction of statutes and it does not lead to any absurdity in the instant case", the judge opined.

While the majority opined that giving a restricted meaning to "any" will lead to "anomalies", Justice Nagarathna took a diametrically opposite view to say that construing "any" as "all" will lead to "disastrous consequences", as it will result in the RBI having vast and unguided powers.

The judgment stated :

"The plain meaning of the words “any” series of bank notes of “any denomination” would not imply “all series” of bank notes of “all denominations”. The word “any” means specified or particular and not “all” as contended by the respondents. If the contention of the Union of India is accepted and the word “any” is to be read as “all”, it would lead to disastrous consequences as the Central Board of the Bank cannot be vested with the power to recommend demonetisation of “all series of currency of all denominations”".

The interpretation suggested by Attorney General would lead to vesting of unguided power in the Central Board of the Bank giving a wider power to the Central Government to initiate such a demonetisation wherein all series of a denomination could be demonetised. Justice Nagarathna opined that such a move to demonetise all series of notes will have serious and wide ranging consequences and hence, it should be done through a legislation than through a gazette notification issued under Section 26(2). Because, the Parliament will be able to discuss the different aspects of the proposed move which will impact the lives of citizens in a far reaching manner.

The judgment made the following conclusions on this issue :

"Such a power is vested only in the Central Government by virtue of Entry 36 of List I of the Seventh Schedule of the Constitution which of course has to be exercised by means of a plenary legislation and not by issuance of a gazette notification under sub-section (2) of Section 26 of the Act. Hence, the word “any” cannot be interpreted to mean “all” having regard to the context in which it is used in the said provision".

"Sub-section (2) of Section 26 of the Act applies only when a proposal for demonetisation is initiated by the Central Board of the Bank by way of a recommendation being made to the Central Government. The said recommendation can be in respect of any series of bank notes of any denomination which is interpreted to mean any specified series of bank notes of any specified denomination.

"The expression any series of bank notes of any denomination has been given its plain, grammatical meaning, having regard to the context of the provision and not a broad meaning. Thus, the word “any” will mean a specified series or a particular series of bank notes. Similarly, “any” denomination will mean any particular or specified denomination of bank notes".

"If the word “any” is not given a plain grammatical meaning and interpreted to mean “all series of bank notes” of “all denominations”, it would vest with the Central Board of the Bank unguided and unlimited powers which would be ex-facie arbitrary and suffer from the vice of unconstitutionality as this would amount to excessive vesting of powers with the Bank. In order to save the provision from being declared unconstitutional, the meaning of the provision is read down to the context of the Central Board of the Bank initiating a proposal for demonetisation by making a recommendation to the Central Government under sub-section (2) of Section 26 of the Act of a particular series of bank note of any denomination".

Other reports on the judgment :

Demonetisation Valid, Supreme Court Holds By 4:1 Majority; Justice Nagarathna Dissents

Whether Demonetisation Achieved Its Objects Is Not Relevant To Decide Its Legality : Supreme Court

RBI Didn't Independently Apply Its Mind In Recommending Demonetisation, Entire Exercise Carried Out In 24 Hours : Justice BV Nagarathna

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