The AG instructed a five-judge Constitution bench headed by Justice S Abdul Nazeer, “I’m not saying RBI’s role has to be minimised, or its application of mind is of no consequence…It’s a very symbiotic, organic connection between the Government and RBI…They have to work in sync with each other. That’s very important. You don’t say I will sit in one chamber unconnected with you, or I will not listen to you, or I will not lend my ears to you. I don’t think that’s the right way in contemporary times”.

The bench, additionally comprising Justices B R Gavai, A S Bopanna and V Ramasubramanian and B V Nagarathna, is listening to petitions difficult the 2016 choice to demonetise Rs 500 and Rs 1000 foreign money notes.

The AG was responding to a question from the bench, which referred to the argument of the petitioners that below the Reserve Bank of India Act, 1934, the RBI alone had the proper to control the difficulty of banknotes — and due to this fact, the advice to withdraw the authorized tender will need to have emanated from the RBI.

(PTI provides: Defending the coverage, Venkataramani additionally stated that the courtroom ought to chorus from exercising judicial evaluate of the chief choice. “It is well settled that if the relevance of scrutiny disappears, the court will not render opinion on questions of academic value. The court will not grant a declaration when no tangible relief can be granted by way of putting the clock back, which is unscrambling a scrambled egg,” he stated.)

On Thursday, Senior Advocate P Chidambaram had argued that in 2016, what was witnessed was a reversal of course of. The Central Government issued a “virtual command” and this was “merely and meekly” accepted by the RBI, he contended.

Referring to this Friday, Justice Nagarathna stated, “…the argument is that the Act recognises the expertise of the persons in the RBI Board and it is that expertise that must recommend to the Central government. We are not saying the Centre is bound by the recommendation, but the question is where it should emanate. No doubt, symbiotic relation, but the legislation is not like that.”

The AG responded that “having regard to the composition of the RBI, the connection between the working of the government and the RBI must be seen from a very flexible point of view”.

“It is not a case where RBI in its functions is impeded by an outside agency like the Government of India and saying don’t do this. Then it’s a different matter altogether. So you are looking at the necessary symbiotic connection between the Government and the RBI, looking at a very complex issue of moving towards a modern economy and very stable monetary policy. Your Lordships know budgets come and go….There are failed budgets, successful budgets. We don’t say a failed budget means somebody had not applied his mind,” he stated.

He stated, “…if you want to severe the symbiotic connection, and put them in compartment, isolation and say RBI must apply its mind, never in consultation with Government of India and then come and tell the Government, I have a recommendation, will you consider that, I think I have a small difficulty in such a construction…That’s why I say give it a flexible, wide construction.”