REGISTERED No. D-(D)-72

The Gazette of India

EXTRAORDINARY

FART II—Section 1

PUBLISHED BY AUTHORITY

No.

]

NEW DELHI, MONDAY, JANUARY 16, 1978/PAUSA 26, 1899

Separate paging is given to this Part in order that it may be filed

as a separate compilation

MINISTRY OF LAW, JUSTICE AND COMPANY AFFAIRS

(Legislative Department)

New Delhi, the 16th January, 1978/ Pausa 26, 1899 (Sdka)

THE HIGH DENOMINATION BANK NOTES

(DEMONETISATION) ORDINANCE, 1978

No. 1 OF 1978

Promulgated by the President in the Twenty-eighth Year of the

Republic of India.

An Ordinance to provide in the public interest for the demonetisation

of certain high denomination bank notes and for matters connected there-

with or incidental thereto.

WHEREAS the availability of high denomination bank notes facilitates

the illicit transfer of money for financing transactions which are harmful

to the national economy or which are for illegal purposes and it is there-

fore necessary in the public interest to demonetise high denomination

bank notes;

AND WHEREAS Parliament is not in session and the President is satisfied

that circumstances exist which render it necessary for him to take imme-

diate action;

(I)

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—

Short title,

extent

and com-

mence-

ment.

Now, THEREFORE, in exercise of the powers conferred by clause (1) of

article 123 of the Constitution, the President is pleased to promulgate the

following Ordinance: —

1. (I) This Ordinance may be called the High Denomination Bank

Notes (Demonetisation) Ordinance, 1978.

(2) It extends to the whole of India.

(3) It shall come into force at once.

Defini-

tions.

2. In this Ordinance, unless the context otherwise requires,—

(a)"bank" means—

(i) a banking company as denned in clause (e) of section E

of the Banking Regulation Act, 1949;

(ii) the State Bank of India constituted under

the State

Bank of India Act, 1955;

(ill) a subsidiary bank as denned in the State Bank of India

(Subsidiary Banks) Act, 1959;

(iv) a corresponding new bank constituted under section 3

of the Banking Companies (Acquisition and Transfer of Under-

takings) Act, 1970;

(v) a regional rural bank established under sub-section (/)

of section 3 of the Regional Rural Banks Act, 1976;

(vl) a co-operative bank as denned in section 2 of the

Reserve Bank of India Act, 1934,

and includes every branch thereof;

(b) "bank notes" means the bank notes issued by the Reserve

Bank of India under section 22 of the Reserve Bank of India Act,

1934;

note means the number including

the

alphabetical and numerical

prefixes appearing on the face of the note;

(d) "high denomination bank note" means a bank note of the

denominational value of one thousand rupees, five thousand rupees

or ten thousand rupees, issued by the Reserve Bank'

(e) "public sector bank" means a bank referred to in sub-clause

(ii), (Hi) or (iv) of clause (a);

(f) "Reserve Bank" means the Reserve Bank of India constituted

under the Reserve Bank of India Act, 1934;

(g) "scheduled bank" means a public sector bank or any other

bank, being a bank included in the Second Schedule to the Reserve

Bank of India Act, 1934;

(h) "State Bank" means the

State Bank of India constituted

under the State Bank of India Act, 1955.

High de-

nomination

bank notes

to cease

to be legal

tender.

3. On the expiry of the Kith day of January, 1978, all high denomina

tion bank notes shall, notwithstanding anything contained in section 26 of

Lhe Reserve Bank of India Act, 1934, cease to be legal tender in payment

or on account at any place.

10 of 1949.

23 of 1D55.

38 Of 1959.

5 of 1970.

21 of 1976.

2 of 1934,

2 of 1934.

2 of 1934.

23 of 1953.

2 of 1934.

SEC. 1J

THE GAZETTE OF INDIA EXTRAORDINARY

4. Save as provided by or under this Ordinance, no person shall, after,

the 16th day of January, 1978, transfer to the r "'session of another person

or receive into his possession Hum another '

-ny high denomination

bank note.

5. (1) Every bank and Government treasury shall prepare and send to

the Reserve Bank in the manner provided in this section a return showing

separately under each denominational value the total value of high de-

nomination bank notes of that value held by it at the close of business on

the 16th day of January, 1978 and the distinctive numbers of high de-

nomination bant notes of that value:

Provided that a bank or a Government treasury in which the currency

chest of the Issue Department of the Reserve Bank has been established

shall also submit a separate return showing separately under each de-

nominational value the total value ol high denomination bank notes held

in such currency chest at the close of business on the 16th day of January,

1978 and the distinctive numbers of high denomination bank notes of that

value.

(2) Every such return shall be prepared and presented as provided in

sub-section (3) in triplicate and shall be signed by the Manager of the

bank or other person in charge oi the bank or the Government treasury.

(3) Every return under sub-section (/) shall be presented for forward-

ing to the Reserve Bank to the Manager of the sub-office, office or branch

of the Reserve Bank at the places specified under sub-section (3) of section

7, or to the District Magistrate, or to the Sub Divisional Magistrate or, if

such Manager or Magistrate is not available, to the senior-most Revenue

or Police Officer available not later than 3.00 p.m. 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

not later than 300 p.m. on the 17th day of January, 1978 to a telegraph

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

copy required by sub-section (2) by registered post on the same day to

the Reserve Bank at Bombay.

(4) The officer to whom the return is presented shall give back to

the person presenting it one copy thereof under his signature and seal

of office in acknowledgement of receipt on which shall also be recorded

the time 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 submitted under this section, cause the high denomination

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

such

receptacle.

Prohibi-

tion of

transfer

and re-

ceipt of

high

denomi-

nation

bank notes.

Declara-

tion of

high

denomi-

nation

bank notes

by banks

and Gov-

ernment

Trea-

suries.

THE GAZETTE OP INDIA EXTflAORDlNABY

[P/kiti li—

Exchange

of high.

denomi-

nation

bank notea

held by.

banks and

Govern-

ment

treasuries.

6. (1) A bank other than a public sector bank may obtain from, the

Reserve Bank or a public sector bank an equivalent¹ amount in exchange

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.

(^) A public sector bank may obtain from the

Reserve Bank

equivalent amount in exchange for the high denomination bank notes

declared by it in the return referred to in section 5 or the high denomi-

nation bank notes received by it in exchange under sub-section (2) by

credit to an account with the Reserve Bank or in bank notes.

(3) A Government treasury may obtain from the Reserve Bank

equivalent amount in exchange for the high denomination bank notes

declared by it in the return referred to in section 5 in bank notes or

by credit to Government account.

(4) Notwithstanding anything contained in sub-sections (2), (2) and

(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

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.

Exchange

of high

denomina-

tion bank

notes held

by other

persons.

7. (1) Notwithstanding anything to the

contrary contained in the

Reserve Bank of India Act, 1934, any high denomination bank note owned

by a person other than a bank or Government treasury may be exchanged

after the 16th day of January, 1978, only on tender of the note—

(a) where the high denomination bank note is owned by an indi-

vidual, by the individual himself; or where the individual i3 absent

from India, by the individual concerned or some person duly autho-

rised by him in this behalf; or where the individual is mentally in-

capacitated from attending to his affairs, by his guardian or by any

other person competent to act on his behalf;

(b) where the high denomination bank note is owned by a Hindu

undivided family, by the karia, and, where the karta is absent from

India or is mentally incapacitated from attending to his affairs, by

any other adult member of his family;

pany, by the managing director thereof, or, where for any unavoid-

able reason such managing director is not able to tender the note, or

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

unavoidable reason such partner is not able to tender the note( or

where there is no managing partner as such, by any partner thereof

not being a minor;

(e) where the high denomination bank note is owned by

any

other association of persons, by any member of the association or the

principal officer thereof; and

2 of 1934.

SEC. L]

THE GAZETTE OF INDIA EXTRAOREilNABX;

(f) where the high denomination bank note is owned by any-

other person, by that person or by some person competent to act on

his behalf;

and within the time and in the manner provided in this section.

(2) Every person desiring to tender for exchange a. high denomination

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 shall, not later than the l&th day of

January, 1978, deliver such copies in person together with the high deno*

mination 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

Ahmedabad, Bangalore, Bhubaneshwar, Calcutta, Gauhati, Hyderabad,

Jaipur, Kanpur, Madras, Nagpur, New Delhi and Patna; or

(b) to the main office or branch of the State Bank at the head-

quarters of a district; or

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 or

illness he is unable to attend thereat, he may forward the high denomi-

nation bank notes he desires to exchange together with three copies of

the declaration in respect thereof by insured post to the Reserve Bank

at Bombay not later than the 19th day of January, 1978.

(3) Every declaration under this section shall, for the purpose

identifying the person making it, be attested by the manager 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 of. Police,

(4) Unless it appears that the declaration has not been complete

all, material particulars, the Reserve Bank, the State Bank or any bank

notified under clause (c) of sub-section (2), as the case may be, to which

an application for exchange of high denomination bank notes is made

under this section, shall pay the exchange value of the said notes

for

credit 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 declarant, as the case may be. does not

have a bank account, the exchange value of the said notes shall be paid

only on proper identification and until payment is so made, the amount

shall remain in the custody of the Reserve Bank or the bank, as

the

case may be, to which the high denomination bank notes were tender-

ed.

(5) Where it appears that the declaration has not been completed in

all material particulars, the Reserve Bank, the State Bank or the notified

bank, as the case may be, to which such application as aforesaid is made

shall, unless the declarant is able to supply the omission without delay,

refuse to accept and pay for the bank notes to which the declaration re-

lates, and where it does so refuse, shall return one copy of the declaration

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II-

Exchange

of notes

after the

time limit

specified,

in section

to the declarant after entering therein the date on which' it is presented

and shall refer the matter to the Central Government to which it shall

[forward a copy of the declaration with a brief statement of the reasons

for refusing to pay for the bank notes.

(6) The Central Government may require any declarant referred to

in sub-section (5) to amplify his declaration to such extent and in respect

of such particulars as it thinks n't and may, unless the declarant is able

to fully comply with such requirement, refuse, for reasons to be recorded

in writing, to sanction the exchange of the high denomination bank notes

to which the declaration relates.

(7) The Central Government or any person or authority authorised

by it in this behalf may, by order in writing and for reasons to be re-

corded 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.

8. (1) Notwithstanding anything contained in section 7, any person

who fails to apply for exchange of any high denomination bank notes

within the time provided in that section may tender the notes together

with the declaration required under that section to the Reserve Bank at

any of the places specified in clause (a¹) of sub-section (2) of that sec-

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.

(2) The Reserve Bank may, if satisfied after making such inquiries as

it may consider necessary that the reasons fer the failure to submit the

notes for exchange within the time provided in section 7 are genuine,

pay the value of the notes in the manner specified in sub-section (4) of

that section.

(3) Any person aggrieved by the refusal of the Reserve Bank to pay

the value of the notes under sub-section (2) may preferi an appeal to

the Central Government within fourteen days of the communication of

such refusal to him.

Closing of

banks and

Govern-

ment trea-

suries,

0. (1) All banks and Government treasuries shall be closed on the

17th day of January, 1978 for the transaction of all business except the

preparation and presentation or, as the case may be, receipt of the re-

turns referred to in section 5.

(2) Subject to the provisions of subjection (1)\ the 17th day of

January, 1978 shall, for the purposes of the Negotiable Instruments Act,

1881, bo deemed to be a puibilic holiday notified under that Act.

Penalties.

10. (2) If any bank fails to prepare and present within the time and

In |the manner provided by section 5 any return referred to in that sec-

tion, or presents any return under that section which is false in any

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 presented, without his knowledge or that he exercised all due dili-

gence to prevent the same, be punishable with imprisonment for a term

which may extend to three years or with fine or with both.

(2) Whoever knowingly makes in any declaration under section 7 any

statement which is false or only partially true or which he does not be-

lieve⁺o be true or contravenes any provision of this Ordinance or the

26 of 1881.

SEC. 1]

THE GAZETTE OF INDIA EXTRAOBDINARY

2 of 1974.

rules made thereunder shall be punishable

with

imprisonment for a

term which may extend to three years or with fine or with both.

(3) An officer of a scheduled bank who makes payment out of the

amount, being the exchange value of a high denomination note credited

under sub-section (4) of section 7 to art account maintained with such

bank shall, unless such account is an account which has been opened

after proper introduction, be punishable with imprisonment for a term

which may extend to three years, or with fine, or with both.

11- (1) No prosecution for an offence punishable under this Ordinance

shall be instituted except with the previous sanction of the Central Gov-

ernment.

(2) Notwithstanding anything in section 29 of the Code of Criminal

Procedure, 1973, the court of a Magistrate of the first class or the court of

a Metropolitan Magistrate trying an offence punishable under this Ordi-

nance may impose a fine exceeding five thousand rupees.

12. No suit, prosecution or other legal proceeding shall lie against the

Government or any officer of the Government or Reserve Bank or any

public sector bank or any officer of such bank for anything done or in-

tended to be dons in good faith under this Ordinance.

SpeciHl

provisions

relating to

offences.

13. If any difficulty arises in giving effect to the provisions of this

Ordinance, the Central Government may, by notification in the Official

Gazette, make any order, not inconsistent with the provisions

this

Ordinance, which appears to it to be necessary for the purpose of re-

moving the difficulty:

Protection

of action

taken in

good faith.

Removal of

difficulties.

Provided that every such order shall, as soon as may be after it is

made, be laid before each House of< Parliament.

14. (1) The Central Government may make rules for giving effect to

the provisions of this Ordinance.

(2) Every rule made by the Central Government under this Ordinance

shall be laid, as soon as may be after it is made, before each House of

Parliament while it is in session for a total period of thirty "clays which

may be comprised in one session or in two or more successive sessions,

and if, before the expiry of the session immsdiately following the session

or the successive sessions aforesaid, 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 shall be without prejudice

to the validity

of anything

previously done under that rule.

Power to

make

rules.

THE SCHEDULE

\See section 7(2)]

FORM OF DECLARATION

(To be filled in triplicate)

1. Name of the owner of the bunk notes

(In block letters)

2. Address: Office

Residence

3. Status, i.e., whether individual, Hindu undivided family, company, firm, etc.

4. (a) Whether assessed to Income-tax;

(b) If so, name of the Inccme-Tox Circle/Ward/District where last assessed;

THE GAZETTE OF INDIA EXTRAORDINARY

[PART II—SEC. 1]

5. If engaged in business, profession or vocation, name in which such business is

carried on.

6. Principal place of business, profession or vocation, and location and style of

each brunch.

7. In the case of a firm, name and uddress of each partner,

8, In the case of a partner in a firm, name and address of each firm or firms in

which he is a partner.

9. In the case of a salaried person, amount of salary per annum.

10. In the case of a Government empkyet;, Government Department and post held.

11. In the case of a retired Government employee, last post held, Government De-

partment under which such post was held and date of retirement.

12. In the case of a retired employee of a non-Government employer, particulars

of last post held.

13. In the case of any other person, particulars of profession or vocation or, as

the case may be, former profession or vocation.

14. Particulars of

Denomination

Rs. 1000

Rs. 5000

Rs. 10000

high denomination bank

Number of Notes

Rs.

notes tendered

Distinctive Numbers*

Rupees

Total value

(in words)

•Distinctive numbers of bank notes tendered should be furnished indicating

alphabetical and numerical prefixes of the notes. Attach a statement if space is

not adequate.

15. Reasons for keeping the amount in cash in notes of such high denominations.

16. When and from what source did the bank notes come into possession?

17. If any of the notes tendered represent borrowings, the name(s) and address(es)

of the persons from whom borrowed and the dates on which borrowed.

18. Manner in which payment of value of the bank notes is desired; i.e. in cash

or payment to bank, etc.

19. If payment Is to be made into a bank account, full details of the bank account.

20. Has any other declaration been made in respect of other bank notes of the

owner?

If so, state full particulars.

21. If thp declarant is not the owner of the bank notes, capacity in which declara-

tion is signed.

., Kon/dauphter/wlfc of —

• hereby solemnly declare

(name in block letters)

(namo of father/husband)

that the particulars furnished above are full, true and correct to thp beit of mv

knowledge and belief

I further declare that the bank notes tendered herewith

belong to me

to — — -

•

and are not held benamii.

niime of owner of bank notes

not

filed

any

other

declaration

under

this

I also solemnly affirm that I have

•

—

——

filed another/other declaration(s) as per parti-

Ordinance.

culars attached.

I further declare thpt I

am makina this

declaration in

my capacity as

— —

— Ejnd that I am competent to make this declaration and verlfv it.

designation, etc.

Place:

•

Date:

- — —

(Signature of declarant)

l> —

7~~CT~,

~ hereby testify that I know the declarant and certify

(name in block letters)

that the above declaration was signed in my presence.

Placo:-

—

8 t e" ~

~7~1

~ ~

(Signature and designation)

o & A L

N. SANJIVA REDDY,

President.

K. K. SUNDARAM,

Secy, to the Govt. of India.

PRINTED BY THE GENERAL MANAOEH, GOVFRNMKTfT OF INDIA PRESS

MINTO BOAD

NEW

DELHI AND PUBLISHED BY TII F

CONTROLLER OF PUBLICATIONS, DELHI

1977