It was argued that anything to do with currency must emanate from the RBI, and even though the Central government had the power to demonetise, it must only be exercised on a recommendation from the RBI.
“In this background, on its true interpretation Section 26(2) of the RBI Act does not permit declaring as no longer legal tender all series of notes of a specified denomination,” Chidambaram added.
Therefore, he sought for Section 26(2) of the RBI Act to be interpreted to mean that “any series” was limited to a specified series of notes in a denomination. In this regard, it was argued that if all series of notes in a denomination were to be demonetised, it would require a separate legislation.
“It is absurd to say that 26(2) confers power on the executive government to issue a currency note of 500 or 1,000 on 7 November and demonetise the same on 8 November!”
Source: Barandbench
