The Supreme Court said on Monday the Centre is empowered to demonetise 'all' series of bank notes under Section 26(2) of the RBI Act.

A five-judge Constitution bench headed by Justice S A Nazeer, which upheld the Centre's 2016 demonetisation of Rs 1,000 and Rs 500 currency notes by a 4:1 majority verdict, said a statute must be construed having regard to the legislative intent.

"The power available to the Central Government under sub-section (2) of Section 26 of the RBI Act cannot be restricted to mean that it can be exercised only for ‘one’ or ‘some’ series of bank notes and not for ‘all’ series of bank notes.

"The power can be exercised for all series of bank notes. Merely because on two earlier occasions, the demonetisation exercise was by plenary legislation, it cannot be held that such a power would not be available to the Central Government under sub-section (2) of Section 26 of the RBI Act," the bench, also comprising Justices B R Gavai, A S Bopanna and V Ramasubramanian, said.

Senior advocate P Chidambaram, appearing for the petitioners, had argued before the top court that as per the RBI Act, the government only had the power to demonetise specified series of notes.

The apex court said the modern approach of interpretation is a pragmatic one, and not pedantic.

"An interpretation which advances the purpose of the Act and which ensures its smooth and harmonious working must be chosen and the other which leads to absurdity, or confusion, or friction, or contradiction and conflict between its various provisions, or undermines, or tends to defeat or destroy the basic scheme and purpose of the enactment must be eschewed.

"The primary and foremost task of the Court in interpreting a statute is to gather the intention of the legislature, actual or imputed," it said.

The top court said an interpretation which, in effect, nullifies the purpose for which a power is to be exercised would be opposed to the principle of purposive interpretation.

"Such an interpretation, in our view, rather than advancing the object of the enactment, would defeat the same," it said.

"We are, therefore, unable to accept the contention that the word 'any' has to be given a restricted meaning taking into consideration the overall scheme, purpose and the object of the RBI Act and also the context in which the power is to be exercised. We find that the word 'any' would mean 'all' under sub-section (2) of Section 26 of the RBI Act," the majority verdict said.

Justice B V Nagarathna dissented with the majority judgment on the point of the Centre's powers under section 26(2) of the RBI Act and said the scrapping of the Rs 500 and Rs 1,000 series notes had to be done through a legislation and not by notification.

The top court's judgment came on a batch of 58 petitions challenging the demonetisation exercise announced by the Centre on November 8, 2016.