 the high den<''imination bank notes (demonetisation) bill, 1978 l-to bel as introduced in ldk sabha 71 page 3, line 30,-t:2!: "47th " ~ "17th ti 2 page 7, line 12,-after ,ldenomination f1 insert '''bank'' 3 page 9, line 30,-!qr "rs 5000 11 ~ "rs1000 rs 5000" 4 page 13, line 18,-f21: "matte:r fl read "matte,s" 5 in the docket page,-new delhi, february ~ 1~za  bill no 10 of 11'18 the high denomination bank notes (demonetisation·) bill, 1978 a billto ptovide in the publ:c interest fot the demonetilation of c'ttain high denomination bank notes and for mattets connected therewith or incidental thereto whereas the availability of high denomination bank notes facilitate the illicit transfer of money for financing transactions which are harmful to the national economy or which are fot illegal purpo~ arid it is there-  fore necessary in the public interest to dernonetise hlgh denommation' bank notes; be it enacted by parliament in the twenty-ninth y·ear of the republic of india as follows:-1 (1) this act may be called the high denomination bank notes short (demonetisatfon) act, 1978 title, es1ent enci (2) it extends to the whole of india commence-' (3) it mall be deemed to have come into force on the 16th day of ment  january, 19'78 (a) "bank" means-(i) a banking coropal1~' as defined iii c1auie (c) of section 5 of the banking regulation act 1949; 10 of 1949, (ii) the state bank of india constituted under the statf! ~ bank of india act, 1955; 23 of 195~, (iii) a subsidiary bank as df'fined in the state bank of india (subsidiary banks) act 1!159; 38 of 1969 (iv) a corresponding new bank constituted under section 3 of the banking companit's (acquisition and transfer of under-10 takings) act, 1970; 5 of 1970 (v) a regional rural bank established under sub-section (i) of section 3 of the regional rural banks act 1976; 21 of 1976 defined in section 2 of the (vi) a co-operative bank a<; reserve bank of india act, 1934, 15 2 of 1934 and includes every branch th~reof; (b) "bank notes" means the bank not~s issued by the reserve bank of india under section 22 of the reserve bank of india ad, 1934; 2ofl934 '"  " '0 i \: '  ,-w,j '(e) "di&t;nctive number" in relation to a high denomination bank 20 note'· fuees'ffii: number includinl! thealphabetfebl arwl numerical prefixes appeartng nn the fil(,/,> nf'the note; (d) "high denomination bank i1nt,e" means a bank note of the denominational value of one thousand rupees, five thousand rupees or ten thousand rupees, issued by the reserve bank; 25 (e) "public sector bank" mean" ::l bank rf!ferrpd to in sub-clau88 (ii), (iii) or (iv) of clause (a);  (1) "reserve bank" means the reserve bank of india constituted under the reserve bank of india act, 1934; 2 cd 1934 (g) "ich~duled, bank" means a public sector bank or any other 30 badk, ~ a bank, 'included in the second schedule to the reserve bank of india act, 1934;' :&:of 1984 (h) "state bank!' means the state bank of india constituted under the state bank of india' act 1955 '  23 of 1958 hilh de-3 oft the e~piry of the 16th day of january, 1978, all high denomina- 3~ nomination tio,u bank notes shall, notwithstanding anything contained in section 26 qf bank notes the' reserve bank of india act 1934, cease to be legal tender in payment 2 ot 1914 ~ ~ or on account at any place, ~encl"" 4 save as provided by or under this act no person shall, after prqbibi: the 16th day of j'anuary, 1978, transfer to the possession of another person tion of or receive into his possession from another person any high denomination trans d fer  an rebank note ceipt of hi,h denownatlou bank notes, 5 5 (1) ev:ry 'bank a'nd government treasury shall prepare and send to declata-'d d' this ti t shb' tion of the reserve bank in the manner provl e 10 sec ona re urn wmg hi h separately linder each denominational value the total value of high de- de~omi­nomination lank notes of that value held by it at the close of business on nation the 16th day of january, 1978 and the distinctive numbers of high de- benk notes )0 nomination bank notes of that value: bydbanks811 ao v-provided that a bank or a government treasw'y in which the currency ernment chest of the issue department of the reserve bank has, teen esta bushed tl' ,'b-shall also submit a separate return showing separately under each de- suries nominational value the total value of high denomination bank notes held 15 in such currency chest at the c~ose of business on the 16th day of january 1978 and the distinctive numbers of high denomination bank notes of that value, (2) e;very' such return shall be prepared and presented as provided in sub-section (8) in triplicate and shall be sigl'led by the manager of the 20 bank or othel' person in charge of the: bank oi· 'the governm~nt treasury (3) every i'clu1'1l under sub-section (1) shall be presented fol' forwarding to the re~elve bank to the manager of the sub-office, oftk'e or branch of the reserve bank at the places specified under sub-section (2) of section 7, or to the district magistrate, or to the sub-divisional magistrate or, if 25 such manager or magistrate is not available, to the senior-most revenu~ or police officer available not later than 300 pm on the 17th day of january 1978: provided that if it is not feasible to present the return to any such person as aforesaid, it may be presented by handing two copies thereof 30 not later than 300 pm on the 47th day of january, 1978 to a telearaph office, one copy for despatch by express telegram to the reserve bank at bombay at the expense of the bank or the government treasury, as the case may be, and the other copy for return to the person presenting it in the manner provided in sub-section (4) and by despatching the third 35 copy i equired by sub-section (2) by registered post on the same day to the reserve bank at bombay (4) the offlcer to whom the return is presented shall give back to the person presenting it; one copy thereof under his signature' and seaj of office in acknowledgement of receipt on which shall also be recorded i 040 the ume and date of receipt, and such officer shall without delay forward one copy of, the return to the reserve bank at bombay (5) the manager or other person in charge of every bank or govern~ ment treasury shall, immediately after the preparation of the returns required to be subinitted under this section, cause the high denomination 04s bank notes mentioned therein to be kept in a separate receptacle and seal the same with his seal and of the 'officers having custody of luch receptacle 6 (1) a bank other tmn a public sector bank may obtain from the rese~e bank sf a public sectof bank an equivalent amount in exchallie for the high denomination bank notes declared by it in the return referred to in section 5 by credit to an account maintained with the reserve bank or a public sector bank or in bank notes denomination barllt'notee held 'by bariks and government treasurietl (2) a public sector bank may obtain from the reserve bank an equivalent amount in exchange for the high denomination bank notes declared by it in the return referred to in section 5 or the high denomination bank notes ~ed by it in exchange under sub-section (1) by credit to an account with the reserve bank or in bank notes  10 (3) a government treasury may obtain from the reserve bank an equivalent amount in exchange for the high denomination bank dotes declared by it in the return referred to in section 5 in bank notes or by cl'edit to government account (4) notwithstanding anything contained in sub-sections (1), (2) and is (3), where the return referred to in section 5 is presented in the manner provided in the proviso to sub-section (3) of that section, the exchange referred to in this section may be effected only by the reserve bank at bombay (5) every application for the exchange of high denomination bank 20 notes under this section shall be accompanied by the copy of the return received under sub-section (4) of section 5 which contains the distinctive numbers of such bank notes 7 (1) notwithstanding anything to the contrary contaioned in the reserve bank of india act, 1934, any high denomination bank note owned 25 2 of 1114 bya person other than a bank or government treasury may be exchanged atter the 16th day of january 1978, only on tender of the note-exchange ofhllh denomination bank notes held by other persons, (a) where the high denomination bank note is owned by an individual, by the individual himself; or where the individual is abient from india, by the individual concerned or some person duly autho-)o riaed by hlm in this behalf; or where the individual is mentally incapacltat$i from attending to his affairs, by his guardian or by any ot~~person competent to act on his behauj (b) where the high denomination bank note is owned by a hindu undivided family, by the karta, and, where the karta is absent from 3s india or is mentally incapacitated from attending to his affalr9, by any other adult member of his family; (c) where the high dtnomination bank note is owned by a company, by the managing director thereof, or where for any unavoidable reason such managing director iii not able to tender the note, or 40 where there is no managing director, by any director thereof; (d) where the high denomination bank note forms part of the assets of a firm, by the managing partner thereof, or, where for any imavofdablereason such partner is not able to tender the note, or where there is no managing partner as su~h, by any partner thereof 4~ rto~ being a minorj (~) where the high denomination bank note is owned by any other 88sociation of persona, by any member of ~e ulociation or the prlnctpal omcr thereof; and  (j) where ij}e high denomination bank note is owned by any other person, by that person or by some person competent to aet on his behalf; and within the time and in the manner provided in this section s (2) every persoll desiring to tender for exchange a high denomina,tion bank note under this section shall prepare in the form set out in the schedule three copies of a declaration signed by him giving in full the particulars required by that form and sllall, not later than the l~th ~y of january 1978, deliver such copies in person together with the hiih deno-10 nunlltion bank notes he desires to exchange-- (a) to either of the offices of the reserve bank at bombay or to the sub-office, office or branch, as the case may be, of that bank at ahmt:dabad, bangalore, bhubaneshwar, calcutta, gauhati, hyderabad, jaipur, kanpur, madras, nagpur, new delhi and patpa; 01' is (b) to the main office or branch of the state bank at the head-'luarters of a district; or (c) to any other office of a public sector bank notified inthil behalf by the reserve bank: provided that if such person resides in a place not within convenient ~ reach of any such office or branch, or if, by reason of age· infirmity 01' illness he is unable to attend thereat, he may forward the high denomination bank notes he desires to exchange together with three copies of the declaration in respect thereof by insw'ed post to the reserve bank at bombay not later than the 19th day of january, 1978 25 (3) every declaration under this section shall for the purpobe of identifying the person making it be attested by the madaser or other person in charge of the bank, if any, with which he maintains an account, or by a salaried magistrate or a justice of the peace or a police officer not below the rank of an inspector oj police 30 (4) unle~ it appears that the declaration has not been cempleie in all material particulars, the reserve bank the state bank or an, bank notified unqer clause (c) of sub-section (2), as the case may lie, ·to wt¥ch an application for exchange of high denomination bank note i8 made under this section, shall pay the exchange value of the said notes for 35 c'redit to a 'properly introduced account of the owner or the declarant, as the case may be, with any scheduled bank: :provided that if the owner or de¢larant as the case may be does not have a bank account, the exchange value of the said notes shall be paid only on propclr identification and until payment is 80 made, the amount 40 shall retnain in the cultody of the reserve bank or the bank, u the case may be to which the high denomination bank notes were tendered (5) where it appean that the declaration has not been compteted in all materitll snlttictllal's, tbe reserve bank, the state bank or the notuled 45 bank, as the case may be, to which such application as aforesaid is imte ihall, unless the declarant is able '·to supply the omhsion wttbout delay, refuse to ateept and pay for the bank notes to 'w'hkh the deemdon  "tell, and where it does 10 "eluse) shall renra gde (!opt oftbe deel8ntton _ to the cleelarant after enteriag therein the date on whkh it" presented and shall refer the matter to the central government to whleh it ,hall forward a copy of the declaration with a brief statement of the reasons for refusing to pay for the bank notes (6) tile central govel'jlldent may require any declarant l'eferred to s in sub-section (5) to amplify his declaration to such extent and in respect of such particulars as it thinks :fit and may, unless the declarut is able tofuuy comply with such requirement, refuse, for reasons to be recorded in writida, to sanctied the exchange of the high denomination bank dotes to which the declaration relates 10 (7) the central government or any person or authority authorised by it in this behalf may, by order in writing and for reasona to be recorded therein, extend in any case or class of cases the period during which high denomination bank notes may be tendered for exchange under this section 15 exchange of note after the timellmlt apt!clfted in section 7 8 (1) notwithstanding anything contained in section 7, any person who fai18 to apply for exchange of any high denomination bank notes within the time provided ill thal sectioll may tender the notes together with the declaration required under that section to the reserv;· bank at any 0if the places specified in clause (cr) of sub-section (2) of that sec- 20 tion, not later than the 24th day of january, 1978 together with a state--ment explaining the reasons for his failure to apply within the said time limit: provided that if lsuc,h pt:j'son resides in a place not within convenient reaeh of the sub-office, office or branch of the reserve bank at any of the 25 said places or if, by reason of age, infirmity or illness, he is unable to attend thereat, he may forward the high denomination bank notes he desires to exchange together with three copies of the declaration required under section 7 by insured post to the reserve bank at bombay not latel' than the 24th day of january, 1978, along with a statement explaining 30 the reasons for his failure to apply within the time specified in section 7 (2) the reserve bank may, if satisfied after making such inquiries as it may consider necessary that the reasons for the faidure to submit the notes for exchange within the time provided in section 7 are genuine, pay the v;alue of the notell in the manner specified in sub-section (4) of 35 that aection, (3) any person aggrieved by the  efusal of the bes-ve baqk to jta7 the value of ~e notes under sub-section (2) may prefer an appeal to tbe central govemment within fourteen days of the icommunication of ~re~~~ ~ cloa1j14t of t, (1) au banks and government treasuries shall be closed on the bawand 17th day of january, 1978 for the transaction of all business exeept the governpreparation and presentation or, as the case may be, receipt of the re--ment tnii- turns referred to in section 5  surles (2) subject to the provisions of sub-section (1)', the 17th day ot 4s j~wy, 1978 shall, for the purposes of the negotiable instrumej1lta act, 26f 1111  ' ~88~, be deemed to be a public holiday notified under that act penalties lq ·(1)·lf "ny bank fails to prepare and present within the time and " in i~he manner provided by section 5 any return referred to in tbatl8c-i1~tion, or pres~ti any return undl!l' that $ection which is falae ·in·uty so material particular, the manager or other person in charge of the bank shall, unless he proves that the failure took place, or the false return, was premdted, without hi, knowledge or that he exercised all due dili~ genoe to preftl1t the same, be punishable with imprisonment for a term s whim may extend to three years, or with fine or with both (2) whoever knowingly makes in any declaration under section 7 any statem>emt which is false or only partially true or which he does notb~,: heve to be true or contravenes any provtsion of  this act' or tl\e ,  ~ rules made' thereunder 8ha11 be' punishable with imprisonment f(/f a 10 term which may extend to three years or with fine or with both  (3) an officer of a scheduled bank who il"f~es payment out of the amount being the exchange value of a high dt:,lomination note credited under sub-section (4) of section 7 to an account maintained with such bank shall, unless such account is an account which has been opened is after proper introduction, be punishable with imprisonment for a erm which may extend to three years or with flne or with both ' 11 (1) no prosecution for an offence punishable under this act shah be instituted except with the previous sanction of the central government spec:~l provitiona relatm, to offences ~o (2) notwithstanding anything in section 29 of the code of criminal 2 of 1974 procedure, 1973, the court o~ a magistrate of the first class or the court of a metropolitan magistrate trying an offence punishable under this act may impose a fine exceeding five thousand rupees 12 no suit, prosecution or other legal proceeding shall lie against the 2-5 government or any officer of the government or against the reserve bank or any public sector bank or any officer of such bank for anything done or intended to be done in good faith under this act protection of action taken ~n jood faith ii 13 if any difficulty arises in giving effect to the provisions of this removal of act, the central government may, by notification in the offtcial ditlouillet 30 gazette, make any order not inconsistent with the provisions of this act which appears to it to he necessary for the purpose of removing the difficulty: provided that every such order shall, as soon as may be after it is made, be laid before each house of parliament 3s 14 (1) the central government may make rules tor giving effect to powerto the provisions of this act make 00 • (2) in particular and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, namely:-40 (a) the custody and disposal of high denomination bank nota tendered for exchange under this act and of the declarations in relpect thereof; - (b) the time within which applications referred to in sub-section (5) of section 6 may be made; and (c) the time within which and the manner in which the state bank and public sector banks notifled under clause (c) of sub-section ,(2) of section 7 may claim reimbursement fl'om the reserve bank' of payments made by them in respect of high denominatfon bank !'late!! accepted by them under that section (3) every rule made by the central government under thil act shall be laid, as loon as may be aht'r it hl wade, before each house of parliament while it is in session {or a total period of thirty days which may be comprised in one ses,ion or in two or more successive sessiolls, and if, before the expiry of the session immediately following the session 5 or the successive sessions i'foresaid, both houses agree in making any modification in the rule or both houses agree that the rule should not be made the rule shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shan be without prejudice to the validity of anytbing 10 previously done under that rule 1 of 1978 15 (1) the high denomina,tion bank notes (demonetisation) ordinance, 1978 is hereby repealed (2) notwithstanding such repeal, anything done or any action taken under the ordinance so repealed shall be deemed to have be,n done of' 15 taken under the corresponding provisions of· this act r fobm of declaration (to be filed in triplicate) 5 1 name of ~e owner of the bank notes (tn bl6ck letters) ! addreas! office , , residence 3 status te, whether individual, hindu undivided f  l1-a_ 10  ( ) ftn-th  ·uv company ua-ul, etc  a  ue er as8f!lsed to jncome-tax; (i» if so name of the ~me-tax circle/ward/~trj~t where last assessed' (c) puntanent account ~umber  - 5u~aged in business profession or vqcation~ name in which such business :~ carned on "  15 6 principal place of bu~ness, profession or "'ottltion and location and sttle of each braneb( -  7 in the case· of a firm, name and address of each partner 8 in the cas~ of a partner in a firm, name and address of each firm or finns in which hi! is a partner  20 9 in the case of a salaried person amount of salary per annum 10 in the case of a government emplcyee, government department and post qeld jl: in the case of a retired government employee, last post held, government department under which such post was held and date of retirement 12 in the case of a retired employee of a non-government employer, particulars 25 of last post held 13 in the case of any other person, particulars of profession or vocation or, as the case may be, former pl'ofe:ssion or vocation 14 particulars of high denomination bank notes tendered denomination number of notes distinctive numbers-total value 30 rs 5000 ra 10000 rupees (in words)' ra should be furnished -indicating-attach a statement if space is 35 -d1stinctive numbers of bank notes tendered elphabetical and numerical prefixes of the notes 110t adequate -15 relsons for keeping the amount in cash in notes of such hiih denominations 16 when and from what source did the bank notes come into possession? 40 \1 if any of the notes tendeted represent borrowings, the name(s) and addressees) of the persons from whom borrowed and the dates on which borrowed 18 mjlnner in which payment of value of the bank notes is desiredj ie • in cash or payment to bank, etc 111 if payment is to be made into a bank account, full details of the bank account 45 20 has any other declaration been made in respect of other bank notes of the owner? if so, state full particulars 21 if the declarant is not the owner of the bank notes capacitv in which declaration is signed i lion/daughter/wife of hereby solemnlv declare 50 - (name in block letters) (name of father/husband) that the particulars furnished above are full, true and correct to the best of r:rt~ knowledge and bellef i further declare that the bank notes tendered herewl 'belong to me -- ------------------- ---,--- --- ---- to and are not held benami 5s name of owner of bank notes not flied any other declaration under this i also solemnly affirm that i h'7il:d-another/otherdeclaratiorl(s)8s-per-part(~ act 60 culars attached i further declare that i am making thi~ declaration in!dy capaci~y ~s ________ and that i am competent to make this declaration and verlfy it designation, place: etc  (signature of declarant) ------------- -the declarant and certify 65 date :-~----i hereby testify that i know , (name in block letters) that the above declaration was signed in mv presence place:  statement of objects and reasonsthe availability of high denomiriation bank notes facilitates the illicit transfer of money for financing transactions which are harmful to the national economy or which are for illegal purposes it was, therefore, considered necessary in the public interest to demonetise all bank notes of the denominational value of one thousand rupees, flvethousand rupees and ten thousand rupees issued by the reserve bank ofi india hence, the president promulgated on the 16th day of january, 1978, the high denomination bank notes (demonetisation) ordinance, 1978, to provide :for the demonetisation of the aforementioned high denomination bank notes and for matters connected therewith or incidentaflherelo the bill seeks to replace the said ordinance new delhi; dated the 18th february, 1978 rmpatei;  president's recommendation under article 117 of the constitution of india[copy of letter no f 5/2/78-boi, dated tne 22nd february, lln8 from shri h m patel minister of finance to the secretary, lok babha] the pa:esident, having been informed c<if the subject matter of the high denomination bank notes (demonetisation) bill, f978, has recommended under article 117 (1) and (3) of the constitution of india, the introduction in and consideration by lok sabha of the said bill in the current session clause 7 of the bill deals with the exchange of high denomination bank notes tendered before the 19th day of january, 1978, by persons other than banks and government treasuries to the reserve bank or the state bank or to a notified public sector bank according to sub-clause (5) o~ this clause, where such bank refuses to exchange any high denomination bank notes on the ground that the declaration in respect of such notes has not been completed in all material particulars, it lias to refer the case to the central government by forwarding a copy of-the declara~ tion with a brief statement of the reasons for refusing to pay for the bank notes sub-clause (6) o£ the clause provides for the action which tlie central government may take in relation to such cases 2 clause 8 of the bill provides for exchange by the reserve bank of high denomination bank notes held by persons other than banks and government treasuries after the time limit specified in clause 7 accoroing to sub-clause (3) of this clause, any persoji aggrieved by the refusal of the reserve bank to pay the value of the notes may prefer an appeal to the central government 3 the additiona{ work-load arising out of the functions of the central government under sub-clauses (5) and (6) of clause 7 and sub-clause (3) of clause 8 is proposed to be discharged through thle existing officers ana machinery the same has been done under the correspondirtg provisions of, the ordinance the provisions of sub-clauses (5) and (6) of clause 7 and sub-clause (3) of clause 8 will, therefore involve only incidental expenditure on stationery, correspondence and other connected matters this expenditure will be negligible and will be met out of the normal budgetary allotment of the department the quantum of, such expenditure and the period over which such expenditure may have to be incurred will depend upon the number of cases which may be referred unoer subclause (5) of clause 7 and the number of appeals under sub-clause (3) of clause 8 and it is not possible to make any assessment in respect of the same at this stage 4 the provisions of the bill do not involve any other expenditure of a recurring or non-recurring nature "·,clause 14 of· the bill seeks to confer power on the certral government to· make rules for giving effeet to the provisions' of the bt:t1:' such rules may provide for matters, such m, the cuitodyand disposal of bigh denomination bank notes tendered for exchange under this act and of the declarations in respect thereof the time within which applications referred to in subseotiol!l (5) of s~tion 6 maybe ma~e, the time witliin which and the mannet in which the state bank and public sector banks notified under clause (c) o~ sub-seetion (2) of section '7 may claim reimbursement from the reserve bank of payments made by them'in respect of high denomination bank notes accepted- by them under that s~ction  the matters in respect of which rules may be made are matters of procedure and administrative detail the delegation of legislative power is; therefore, of normal character  ~morandum explaining the modifications contained in the bill to replace the high denomination bank notes (demonetisation) ordinance, 1978section 8(1) ot the high denomination bank notes (demonetisation) ordinance, 1978 relates to the exchange, after the time limit specified in section 7 thereof, of high denomination bank notes held by persons other than banks and government treasuries this provision provides only for the tender of the notes in person for removing the hardship caused by the provision in the case of persons unable to attend in person by reason of age, infirmity, illness or distance, a removal of difficulties order-tm high denomination bank notes (demonetisation) (removal of difticulties) order-was issued under section 13 ot the ordinance on the 23rd january, 1978 the proviso to sub-clause (1) of clause 8 of the bill in-' corporates the substance of this order section 14 of the ordinance confers power upon the central government to make rules for giving effect to the provisions or-the ordinance the corresponding provision in the biii· seeks to spell out expressly some of the matter in respect of which rules may be made [vide sub-clause (2) of clause 14 of the bill] "jo  a billto provide in the public inttrest tor the demonetisation of certain digb denomination bank notes and for matters connected therewith or incidental thereto --(shri b' m patei, minute1' oj finance) 