The SC said the government notification dated November 8, 2016 is valid and satisfies test of proportionality.

The five-judge bench of the Supreme Court headed by Justice SA Nazeer gave the ruling on a clutch of petitions challenging the government decision. The bench also comprised Justices BR Gavai, BV Nagarathna, AS Bopanna and V Ramasubramanian. There are two separate judgements by Gavai and Nagarathna.

Gavai in his judgement said the decision-making process of the Union government cannot be flawed as it had consulted the Reserve Bank of India (RBI). He added that it's not relevant whether objective achieved or not.

On November 8, 2016, Prime Minister Narendra Modi announced that currency notes of 500 and 1,000 denominations would cease to be legal tender and would instead be replaced with newer notes of denominations 500 and 2,000. The surprise decision led to huge shortage of cash and long lines at banks to exchange the notes and attracted widespread critcism.?

Earlier on December 7, the Supreme Court had directed the Centre and the Reserve Bank of India (RBI) to put on record the relevant records relating to the government's 2016 decision and reserved its verdict. It heard the arguments of Attorney General R Venkataramani, the RBI's counsel, and the petitioners' lawyers, including Senior Advocates P Chidambaram and Shyam Divan.

Calling the scrapping of the Rs 500 and Rs 1,000 currency notes deeply flawed, Chidambaram had argued that the government cannot on its own initiate any proposal relating to legal tender, which can only be done on the recommendation of the RBI's central board.

(With PTI inputs)