This week in Indian law: The Supreme Court upheld the validity of the 2016 demonetisation by a 4:1 majority, settling a constitutional question open for over six years. In a separate Constitution Bench ruling, the Court held that fundamental rights can be enforced against private actors, expanding horizontal rights jurisprudence. The Court also clarified the priority of SARFAESI Act over MSMED Act in debt recovery proceedings. 3 significant legal developments this week across constitutional-rights and supreme-court-judgments.
Top story
SC Upholds 2016 Demonetisation in 4:1 Verdict
Category: constitutional-rights | Date: 2 January 2023 | Source: Supreme Court of India
A five-judge Constitution Bench comprising Justices S. Abdul Nazeer, B.R. Gavai, A.S. Bopanna, V. Ramasubramanian, and B.V. Nagarathna upheld the validity of the 8 November 2016 demonetisation of Rs. 500 and Rs. 1,000 currency notes. The majority held that the measure satisfied the proportionality test, bore a reasonable nexus with combating black money and terror financing, and that the RBI Central Board had independently applied its mind under Section 26(2) of the RBI Act. Justice Nagarathna delivered a notable dissent, holding that the initiative originated from the Central Government rather than the RBI and the process was procedurally flawed.
Why it matters: This judgment settles the constitutional validity of India's most significant economic policy intervention in decades and establishes a framework of judicial deference for future challenges to large-scale economic measures.
Read more: Veritect analysis
Court judgments
Fundamental Rights Enforceable Against Private Actors
Court: Supreme Court of India | Bench: Constitution Bench | Date: 3 January 2023
In Kaushal Kishor, the Supreme Court held that fundamental rights under Articles 19 and 21 of the Constitution can be enforced horizontally against non-state actors. The judgment expands the traditional understanding that Part III protections operate only against state action.
Key point: The horizontal application of fundamental rights is now judicially recognised, enabling citizens to invoke constitutional protections against private entities and individuals.
SARFAESI Act Prevails Over MSMED Act
Court: Supreme Court of India | Date: 5 January 2023
The Supreme Court ruled that secured creditors exercising rights under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 have priority over proceedings initiated under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006.
Key point: Secured creditor recovery under SARFAESI cannot be stalled by MSMED Act facilitation proceedings, settling a long-standing priority dispute.
Also this week
- Supreme Court resumes after winter recess — The Court reopened on 2 January 2023, delivering a blockbuster series of Constitution Bench verdicts in the first week.
- No major regulatory developments — RBI, SEBI, and MCA maintained routine operations; no significant circulars were issued in the first week of the new year.
- Parliament not in session — Budget session preparations underway; Union Budget scheduled for 1 February.
Looking ahead
- January 24-25: Supreme Court to hear arguments in Hindenburg-Adani related petitions as market developments unfold.
- February 1: Union Budget 2023-24 presentation in Parliament — key legislative changes expected.
- January-February: MCA expected to release discussion papers on IBC reform.
This is the Veritect Weekly Legal Roundup for Week 1 of 2023. For daily updates, visit our legal news page. Subscribe to receive this roundup every Monday morning.
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