Nowadays, the demonetisation with effect from midnight of 8th November 2016 of high denomination notes of Rs.500 and Rs.1000 by the present Indian Government led by Shri Narendra Modi is making news. It would be interesting for the readers to note that in 1978 also, the demonetisation took place in India. The
then President promulgated an Ordinance called High Denomination Bank Notes (Demonetisation)
Ordinance which came into force on January 16, 1978. By this Ordinance, the
high denomination bank notes of Rs.1000, Rs.5000 and Rs.10,000 were ceased to
be legal tender with effect from 16th January 1978. The Ordinance was later replaced by High
Denomination Bank Notes (Demonetisation) Act, 1978. The constitutional validity
of the Demonetisation Act was challenged in a number of petitions which were
decided by Hon’ble Supreme Court of India in the case of Jayantilal Ratanchand
Shah, Devkumar Gopaldas Aggarwal and others vs Reserve Bank of India and
others. In Writ Petition (Civil) No. 1188 / 1978. The Judgment was delivered by
a Constitution Bench of 5 Judges on 9th August 1996.
After discussing the law on the subject including the RBI
Act 1934, the Supreme Court had upheld the legal validity of the Demonetisation
Act primarily on the ground that it was done for public purpose. Writ Petitions
of some persons / organisations challenging action of the Government / RBI to
not to honor scrapped currency notes held by them were dismissed by the Supreme
Court.
Here is the official link to the Full text of the Judgment :
