CERTIFICATE

THIS IS TO CERTIFY THAT ANUSHKA TRIVEDI OF BBA LLB 4 th SEMESTER HAS

SUCCESSFULLY COMPLETED THE RESEARCH WORK IN VIVEK NARAYAN
SHARMA V. UNION OF INDIA (2023) AND DELEGATED LEGISLATIONS. PARTIAL
SONALI BHATNAGAR PRESCRIBED BY INDORE INSTITUTE OF LAW.

THIS ASSIGNMENT IS THE RECORD OF AUTHENTIC WORK CARRIED OUT DURING

THE ACADEMIC YEAR 2023-28

TEACHER’S SIGNATURE -----------------------------------------

DATE-------------------------

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 DECLARATION

I HEREBY DECLARE THAT THE PROJECT WORK ENTITLED “VIVEK NARAYAN

SHARMA V. UNION OF INDIA (2023) AND DELEGATED LEGISLATIONS” SUBMITTED
FOR FULFILLING THE ESSENTIAL CRITERIA OF INDORE INSTITUTE OF LAW, IS A
RECORD OF AN ORIGINAL WORK DONE BY ME UNDER THE GUIDANCE OF ASST.
PROF. SONALI BHATNAGAR IN BBA LLB 4th SEMESTER, INDORE INSTITUTE OF
LAW FOR THE ACADEMIC SESSION 2023-28.

ANUSHKA TRIVEDI

BBA LLB

4th SEMESTER

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 ACKNOWLEDGEMENT

I, ANUSHKA TRIVEDI STUDENT OF BBA LLB 4th SEMESTER WOULD LIKE TO

EXPRESS MY SPECIAL THANKS OF GRATITUDE TO MY PROFESSOR AND GUIDE
ASST. PROF. SONALI BHATNAGAR WHO GAVE US THE GOLDEN OPPORTUNITY TO
DO THIS WONDERFUL ASSIGNMENT ON THE TOPICS VIVEK NARAYAN SHARMA
V. UNION OF INDIA (2023) AND DELEGATED LEGISLATIONS. I AM SINCERELY
GRATEFUL TO MY TEACHER FOR GUIDING US AND PROVIDING THE RELEVANT
INFORMATION AND THUS HELPING ME TO COMPLETE THE PROJECT
SUCCESSFULLY. I WOULD ALSO LIKE TO GIVE A HEARTY THANKS TO MY
PARENTS WHO SUPPORTED ME MORALLY AS WELL AS ECONOMICALLY IN
COMPLETION OF THIS ASSIGNMENT WITHOUT ANY TYPE OF PROBLEM. I WOULD
LIKE TO APPRECIATE AND THANK ALL MY FRIENDS AND ALMA MATES FOR
HELPING ME IN EVERY POSSIBLE MANNER IN THE WAY OF COMPLETION OF MY
PROJECT.LAST BUT NOT THE LEAST I WANT TO THANK THE ALMIGHTY WHO
MADE EVERYTHING POSSIBLE.

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 TABLE OF CONTENT

Serial Topic Page no.

no.

1. Abstract 5

2. Research objectives, research questions 6

3. Research methodology 7

4. Literature review 8

5. Main content 9-17

6. Conclusion 19

7. References 18

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 ABSTRACT

This research paper critically examines the landmark Supreme Court judgment in Vivek
Narayan Sharma v. Union of India (2023), which upheld the constitutional validity of the 2016
demonetisation of ₹500 and ₹1,000 currency notes. The study explores the legal and
constitutional dimensions of the case, focusing particularly on the role and scope of delegated
legislation under Section 26(2) of the Reserve Bank of India Act, 1934. Through a detailed
doctrinal and analytical approach, the paper interrogates whether such a transformative
economic decision could be validly undertaken by executive notification without Parliamentary
approval.

The paper contextualizes the decision within the broader framework of administrative law,
economic governance, and judicial review, assessing the majority and dissenting opinions
delivered by the Constitution Bench. It also addresses the implications of the case on the
separation of powers, democratic accountability, and the rule of law. By analyzing legislative
intent, judicial reasoning, and institutional interplay, the study highlights the constitutional
challenges that arise when delegated powers are exercised to implement high-impact national
policies.

Finally, the research offers concrete recommendations to reform and clarify the legal
architecture surrounding delegated legislation and economic policymaking in India, advocating
for procedural safeguards, Parliamentary oversight, and greater transparency in executive
action.

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 RESEARCH OBJECTIVES

1. To examine the constitutional and statutory framework governing delegated legislation in

India, with a focus on Section 26(2) of the Reserve Bank of India Act, 1934.
2. To critically analyze the Supreme Court’s interpretation of delegated legislative power in
the Vivek Narayan Sharma v. Union of India (2023) judgment.
3. To evaluate the procedural and substantive validity of the 2016 demonetisation exercise
through the lens of delegated legislation.

RESEARCH QUESTIONS

1. To what extent does the judgment in Vivek Narayan Sharma v. Union of India (2023)
reflect the constitutional limits and necessity of delegated legislation in modern
democratic governance?
2. How does the Supreme Court's majority judgment balance executive discretion and
parliamentary oversight in the context of delegated legislation?
3. What constitutional concerns regarding excessive delegation were raised in Justice B.V.
Nagarathna’s dissent, and how do they challenge the limits of executive power?

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 RESEARCH METHODOLOGY
This study adopts a qualitative, doctrinal legal research approach, focusing on case law analysis,
statutory interpretation, and constitutional doctrine. The research is analytical and descriptive,
aiming to explore how delegated legislation operates within the constitutional framework of
India and its implications for democratic governance.

1. Primary Sources

 The judgment of the Supreme Court in

Vivek Narayan Sharma v. Union of India, (2023) 1 SCC 657
 The Reserve Bank of India Act, 1934, particularly Section 26(2)
 The Constitution of India, especially Articles 14, 19, 21, 32, and doctrines on separation
of powers and judicial review
 Relevant Gazette notifications and official government publications (e.g., Notification
No. 2652(E), 8 November 2016)
 Parliamentary debates and reports (e.g., Standing Committee on Finance Report, 2017)

2. Secondary Sources

 Commentaries on Constitutional Law and Administrative Law (e.g., M.P. Jain, H.M.
Seervai)
 Journal articles and law review papers on delegated legislation, demonetisation, and
economic governance
 Academic works on judicial review of economic policy and executive discretion
 Case law from other jurisdictions (e.g., UK’s R. v. Home Secretary, ex parte Fire
Brigades Union (1995), USA’s Yakus v. United States (1944))

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 LITERATURE REVIEW

1. Jain, Indian Constitutional Law, 8th ed

Underline that delegated legislation has become a necessary instrument in modern

governance due to the complexity and technicality of present-day legislation. Jain notes that
the legislature often lacks the time and expertise to frame detailed rules, necessitating
executive law-making under proper safeguards.

2. Re: Delhi Laws Act1

The Doctrine of Excessive Delegation, as elaborated in In Re: Delhi Laws Act, AIR 1951
SC 332, established that while delegation of ancillary powers is permissible, the essential
legislative function must remain with the legislature

3. Gautam Bhatia, Indian Constitutional Law and Philosophy blog

They have analyzed the Supreme Court's approach in Vivek Narayan Sharma and argues that
the Court rightly recognized the realities of modern governance, Bhatia criticizes the
judgment for its judicial deference and failure to uphold procedural rigor.

1
AIR 1951 SC 332
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 BACKGROUND OF THE CASE
On the evening of 8th November 2016, the Prime Minister of India, Shri Narendra Modi, in a
nationally televised address, announced that all ₹500 and ₹1000 denomination currency notes
would cease to be legal tender from midnight of the same day. This announcement rendered
nearly 86% of the currency in circulation invalid overnight. This move, known as
“demonetisation”, was aimed at combating:

 Black money
 Counterfeit currency
 Corruption
 Terrorist financing

This decision was taken under the authority of Section 26(2) of the Reserve Bank of India Act,
1934, which permits the Central Government to declare that any series of banknotes of any
denomination shall cease to be legal tender, on the recommendation of the Central Board of the
Reserve Bank of India.

Section 26(2), RBI Act, 1934: “The Central Government may, on recommendation of the Central
Board [of RBI], by notification in the Gazette of India, declare that, with effect from such date as
may be specified in the notification, any series of bank notes of any denomination shall cease to
be legal tender.”

Government Notification: The demonetisation was effected through the Gazette Notification No.
2652(E) dated 8 November 2016, issued by the Ministry of Finance.

In the weeks and months that followed, the sudden withdrawal of high-value notes caused:

 Long queues at banks and ATMs

 Severe cash crunch
 Disruption to small businesses, agriculture, and informal sector
 Legal and logistical challenges regarding deposit limits, exchange policies, and
withdrawal caps.

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 FACTS

The Central Government of India issued the notification, declaring that the existing legal tenders
of the then existing series of value of Rs. 500 and Rs. 1000 shall cease to be a valid tender from
9th November, 2016. The Central Government of India had issued such orders by exercising the
powers conferred to it by applying the provisions of Section 26(2) of the RBI Act, 1934. Thus,
the notes of Rs. 500 and Rs. 1000 ceased as a legal and valid currency. This is essentially known
as ‘demonetization’. There were other acts which were promulgated by the government to
advance its policy of ‘demonetization’ among the people after the notification came to the
purview, like the Specified Bank Notes (Cessation of Liabilities) Ordinance, 2016 and followed
by the Specified Bank Notes Ordinance (Cessation of Liabilities) Act, 2017 was enacted and
received the assent of the Hon’ble President of India on 27th February, 20172.

After implementing the impugned notification, there were a lot of writ petitions which came
before the Supreme Court and various High Courts. The writ petitions challenged the validity of
the ‘policy of demonetization’ which was implemented by the Central Government. Advocate
Vivek Narayan Sharma also filed a writ petition on 9 th November, 2016 challenging the validity
and constitutionality of the demonetization scheme before the Supreme Court.

However, it was on 16th December, 2016 that the Bench ordered a stay on all the appeals that
were brought before the High Courts over the policy of demonetization. Finally, the case was
transferred to the Hon’ble SC of India. The complexity of the problems lead to the transfer of the
demonetization case before the 5 Judge Constitution Bench3.

2
Demonetisation, The Times of India (May 21, 2023, 7:20
AM) https://m.timesofindia.com/topic/Demonetisation/ampdefault
3
Dissenting but impactful observations of Justice B.V. Nagarathna (10th March , 2023, 12:10
PM) https://www.barandbench.com/law-firms/view-point/demonetisation-a-dissenting-but-an-impactful-
observations-of-justice-bv-nagarathna-which-opens-a-door-for-evolution-of-law

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 ISSUES RAISED:

The Constitutional bench reframed the nine questions posed by the three judges of the
Hon. Supreme Court on December 16, 2016, into the following six issues:

1. Is it possible to restrict the central government's authority under RBI Act section 26(2) to
"one" or "some" series of banknotes rather than "all" of them? Are series connected to the
word "all" that appears before the word "series" in that subsection, particularly in light of
the fact that the demonetisation process was carried out using
plenary legislation on the previous two occasions

2. Should the authority granted by section 26(2) of the RBI Act be withdrawn if it is to
be understood that it can be used against "any" series of banknotes, regardless of
whether the aforementioned subsection suggests an excessive delegation of power?

3. Is it possible for the contested Notification from November 8, 2016, to be

overturned on the grounds that the legality of the decision-making process was faulty?

4. Can the proportionality test be used to invalidate the contested notification

dated November 8, 2016? (Rehan, 2023)

5. Is it possible to argue that the time allotted for the note exchange under the
contested notification dated November 8, 2016, was excessive?

6. Regarding the question of whether the RBI is able to accept the demonetized notes after the
time frame given in notifications issued under Section 4(1), independent of
the provisions of Section 3 and Section 4(1) thereof, under Section 4(2) of the 2017 Act?

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 JUDGEMENT
Majority Opinion

The majority held that the phrase “any series of banknotes of any denomination” in Section 26(2)
of the RBI Act includes all series of a denomination, thereby validating the demonetisation of all
₹500 and ₹1,000 notes. It was found that the provision does not limit the government to
demonetising only a specific or partial series.

“There is nothing in Section 26(2) which precludes the Central Government from demonetising
the whole series of a denomination.”4

2. Validity of the Procedure Followed

The Court concluded that the recommendation of the Central Board of the Reserve Bank of
India, although made on the same day, satisfied the statutory requirement. The action was not
unilateral but made in consultation with the RBI.

“Merely because the recommendation was made on the same day, it cannot be inferred that there
was no independent application of mind.”5

3. Delegated Legislation and Economic Policy

The Court reiterated the established principle that delegation of legislative functions is
permissible, especially in matters requiring technical expertise or expedient decisions, such as
economic policy. Referring to In Re: Delhi Laws Act6, the majority held that Parliament can
validly delegate non-essential legislative functions to the executive.

“Delegated legislation, particularly in fiscal and economic matters, is not only permissible but
necessary.”7

4
Vivek Narayan Sharma v. Union of India, (2023) 1 SCC 657, para 153

5
Ibid, para 180.
6
In Re: Delhi Laws Act, AIR 1951 SC 332.
7
Vivek Narayan Sharma, supra note 1, para 203.

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4. Judicial Review of Economic Policy

Relying on the principle laid down in R.K. Garg v. Union of India 8, the Court underscored its
limited role in reviewing economic decisions. The court stated that it cannot sit in appeal over
the wisdom of the policy unless it is arbitrary, capricious, or violative of constitutional rights.

5. Doctrine of Proportionality

Applying the test from Modern Dental College v. State of Madhya Pradesh 9, the majority held
that the objective of demonetisation—curbing black money, fake currency, and terror financing
—was legitimate and the means adopted were proportionate.

Dissenting Opinion

Justice B.V. Nagarathna delivered a dissenting judgment, holding the demonetisation exercise to
be unlawful though not liable to be struck down due to its irreversible implementation.

1. Improper Delegation of Power

The dissent observed that Section 26(2) contemplates demonetisation of “any series”, not entire
denominations. The magnitude of the decision, involving 86% of currency in circulation,
required legislation by Parliament and not mere executive action.

“The action of demonetising all currency notes of ₹500 and ₹1,000 is beyond the scope of
Section 26(2).”10

2. Violation of Procedural Requirements

She found the recommendation of the RBI to have been obtained in undue haste, arguing that the
initiative must originate from the RBI, not the executive. The Central Government's move,
therefore, lacked procedural propriety.

3. Democratic and Constitutional Concerns

The dissenting judge emphasized that economic decisions with such sweeping implications must
be subjected to Parliamentary scrutiny. Executive dominance in such matters weakens
democratic accountability and undermines the separation of powers.

8
R.K. Garg v. Union of India, (1981) 4 SCC 675.
9
Modern Dental College and Research Centre v. State of M.P., (2016) 7 SCC 353.
10
Vivek Narayan Sharma, supra note 1, Nagarathna J.’s dissent, para 302

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“Parliament, being the supreme law-making body, must be the forum to decide issues of such
magnitude.”11

DELEGATED LEGISLATION

Delegated legislation refers to rules, regulations, or orders made by the executive under powers
conferred upon it by a parent statute. While the legislature lays down the policy framework, the
details and operational aspects are left to the executive due to time, technical expertise, or
expediency.

In India, the doctrine of delegated legislation was upheld in In Re: Delhi Laws Act, 12where the
Supreme Court held that while essential legislative functions cannot be delegated, ancillary or
procedural matters may be entrusted to the executive.

Section 26(2) of the RBI Act as Delegated Power

Section 26(2) of the RBI Act provides:

“On recommendation of the Central Board, the Central Government may, by notification in the
Gazette of India, declare that any series of banknotes of any denomination shall cease to be legal
tender…”

This provision is an example of delegated legislative power, authorizing the executive to make a
legislative decision (in the form of a gazette notification) concerning currency invalidation.

In the case at hand, the Central Government relied on this provision to issue Gazette Notification
No. S.O. 3407(E) dated 8 November 2016, effectively demonetising all ₹500 and ₹1,000 notes.

Supreme Court’s Interpretation of Delegated Power

A. Majority Opinion

The majority held that:

 Section 26(2) validly conferred power on the government to demonetise any series of any
denomination, including all notes of a denomination.
 The power was not an excessive delegation and remained within constitutional limits.
 The executive and the RBI acted in concert, thus satisfying the statutory procedure.

11
Ibid, para 324
12
AIR 1951 SC 332

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“The measure was a valid exercise of power under delegated legislation. It is not open to the
Court to second-guess the policy wisdom behind the executive’s move.”13

The Court reaffirmed the principles from Avinder Singh v. State of Punjab14, where it was held
that delegation is permissible so long as there are adequate guidelines or safeguards, which the
RBI Act contains via the recommendation mechanism.

B. Dissenting Opinion

Justice Nagarathna offered a sharp critique of the use of delegated power:

 She held that Section 26(2) does not contemplate a blanket invalidation of an entire
denomination, and such a sweeping decision must emanate from Parliament, not the
executive.
 The recommendation from the RBI appeared to be post facto or obtained perfunctorily,
thus undermining the consultative safeguard meant to regulate delegated power.

“A decision of such magnitude affecting the entire economy and 86% of currency in circulation
cannot be undertaken by delegated legislation.”15

She invoked the constitutional doctrine that essential legislative functions cannot be delegated,
echoing In Re: Delhi Laws Act and K.T. Moopil Nair v. State of Kerala16.

13
Vivek Narayan Sharma v. Union of India, (2023) 1 SCC 657, para 203.
14
(1979) 1 SCC 137
15
Ibid, Nagarathna J., para 302
16
AIR 1961 SC 552.
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 RECOMMENDATIONS

1. Legislative Clarification of Section 26(2), RBI Act

 Parliament should amend Section 26(2) to explicitly clarify:

 The scope of “any series” (i.e., whether it includes all currency of a denomination).
 The procedural steps and minimum time for consultation between the RBI and the
Central Government.
 This would reduce ambiguity and prevent excessive reliance on executive discretion.

2. Parliamentary Oversight for Major Economic Decisions

 Major fiscal and monetary policy decisions like demonetisation, which impact
constitutional rights, economic structure, and democratic processes, should be subject to
Parliamentary approval.
 A special legislative process or ratification could be mandated post-execution within a
stipulated timeframe.

(Inspired by the concerns raised in Justice Nagarathna’s dissent regarding democratic

legitimacy)

3. Strengthening Institutional Independence of RBI

 Establish clearer procedural norms for independent initiation of demonetisation by the

RBI Central Board.
 Encourage the RBI to document, deliberate, and publish the rationale for such
recommendations to enhance transparency.

4. Judicially Enforceable Procedural Safeguards in Delegated Legislation

 The judiciary may evolve a doctrine requiring that certain high-impact executive actions
under delegated legislation must follow procedural due process, including:
o Public impact assessment,
o Expert consultation, and
o Limited stakeholder feedback.

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(This approach would align with the procedural fairness standards established in Maneka
Gandhi v. Union of India17)

CONCLUSION

The Supreme Court’s judgment in Vivek Narayan Sharma v. Union of India (2023) represents a
critical moment in Indian constitutional jurisprudence, illuminating the contours and limitations
of delegated legislation in the realm of economic policy. While the majority upheld the 2016
demonetisation exercise as a valid use of delegated power under Section 26(2) of the RBI Act,
the strong dissent by Justice Nagarathna served as a constitutional reminder of the importance of
democratic oversight and procedural propriety.

This case underscores the complex balance between executive efficiency and legislative
accountability. In a modern administrative state, delegated legislation is both inevitable and
indispensable—especially in areas requiring technical expertise or swift action. However, when
such delegation is employed to undertake decisions of profound economic and social impact, it
must be anchored in clear legislative guidance, transparent procedures, and institutional checks.

The divergence in judicial opinion further reveals the need to re-evaluate the doctrine of judicial
deference in economic matters, especially when constitutional rights and federal institutions are
at stake. The case thus acts as both a precedent and a caution: while governance demands agility,
constitutionalism demands accountability.

Moving forward, a more nuanced legislative framework governing actions like demonetisation,
greater Parliamentary engagement, and stricter judicial scrutiny of procedural safeguards can
help strike this necessary equilibrium. The judgment ultimately reinforces that in a constitutional
democracy, legality must accompany expediency, and procedure must validate policy.

17
AIR 1978 SC 597
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 BIBLIOGRAPHY

1. Jain, Indian Constitutional Law, 8th ed

2. Re: Delhi Laws Act18

3. Gautam Bhatia, Indian Constitutional Law and Philosophy blog

4. https://www.jusscriptumlaw.com/post/case-analysis-vivek-narayan-sharma-vs-uoi-2023

5. https://indiankanoon.org/doc/164842744/

6. https://digiscr.sci.gov.in/admin/judgement_file/judgement_pdf/2023/volume%201/Part

%20I/2023_1_1-230_1703163328.pdf

18
AIR 1951 SC 332
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