High Denomination Bank Notes (Demonetisation) Act, 1978. Ss. 3, 4, 7 and 8.

Constitutionality of High denomination bank notes ceased to be legal tender after 16.1.1978-Reserve Bank of India thereby relieved from making payment-Held: in effect Act extinguished or wiped out public debt owing to holders of high denomination bank notes from State and consequently their 'property' was compulsorily acquired-But considering the evil the Act sought to remedy as set out in its Preamble, acquisition was for public purpose-Hence, not violative of Article 31(2)-After such compulsory acquisition of 'property', right of holders of high denomination bank notes thereto stood extinguished and became non est Hence, not violative of Articles 19(1)(f) & (g)-Sections 7 & 8 of the Act laid down elaborate procedure to obtain value of high denomination bank notes-Hence, holders of such bank notes not entitled to get compensation for such compulsory acquisition-Constitution of India, 1950, Articles 19(f) & (g) and 31(2).

High Denomination Bank Notes-Time and manner of exchange of-Held: not unreasonable or unjust having regard to the purpose of the Act-High Denomination Bank Notes-Door to door sale of donation tickets for cash by Trust Receipt of high denomination bank notes in the process Amount received kept in hand Names of donors not disclosed-No satisfactory reasons given Collection of funds by relief society-Collection boxes not opened immediately after issue of High Denomination bank notes No satisfactory explanation given RBI and Central Government refused claim for exchange of such bank notes because claimants could not prove possession of such bank notes on or before 16.1.1978-Held: findings by RBI and Central Government were findings of fact-Their satisfaction based on such facts was just and reasonable and not perverse-Not liable to be interfered with by Supreme Court-Constitution of India, 1950, Article 32.

Administrative Law:

Principles of Natural Justice-Audi alteram partem High Denomina- tion Bank Notes-Payment of value of exchange-Refusal by RBI and Central Government-Pre-decisional opportunity of hearing to explain reason for late submission of declaration forms-Not given to claimant-However, such 3 opportunity given by appellate authority before dismissing claimant's ap- peat Detailed reasons also given by appellate authority for such dismiss- al-Held: even assuming that such opportunity of personal hearing was imperative to comply with the rules of natural justice, the claimant could not raise any grievance on that score in view of post-decisional hearing and detailed reasons given by appellate authority.

The petitioner was the Chairman of a relief society which ran a medical dispensary. The Executive Committee of the Society decided to construct a public charitable hospital. With that object in view the Executive Committee decided to collect funds through donations and for that purpose donation boxes were kept at S and B. As per the Managing Committee's resolution these boxes were opened from time to time in presence of the Chairman and Vice-Chairman of the Society and the amounts so collected were recorded in separate minute books.

Immediately after the promulgation of the High Denomination Bank Notes (Demonetisation) Ordinance, 1978, on January 16, 1978 instructions were given to the office bearers of the Society both at B and S not to accept any deposit or to allow anyone to deposit any high denomination bank notes in the collection boxes after midnight of January 16, 1978. For that purpose that boxes at S and B were taken possession of by the Society to open the boxes.

As regards the boxes at S they were opened on January 20, 1978 and found to contain Rs. 34,76,000 in high denomination bank notes. The above sum of money along with requisite declaration was deposited by the petitioner in the Bank on January 23, 1978 along with a letter explaining the delay for failure to deposit the same within the prescribed time.

The petitioner-Society received an order of the Currency Officer of the Bank rejecting their claim for exchange of the high denomination bank notes received in S on the grounds that the Society had not explained satisfactorily its failure to open the collection boxes immediately after issue of the Ordinance and that it had not been established to his satisfaction that the notes had reached the Society before demonetisation. Aggrieved by the above order the Society preferred an appeal under Section 8(3) of the High Denomination Bank Notes (Demonetisation) Act, 1978 to the Central Government. After giving a personal hearing to the Society the Central Government dismissed the appeal with a reasoned order.

The petitioners were the trustees of a Charity Trust which was registered as a public charitable Trust under the Bombay Public Trusts Act, 1950. The petitioner-Trust started a donation collection drive for their "Hospital Building & Equipment Fund" to be utilised for the proposed construction of hospital. The Trust also agreed to participate in that drive and accordingly undertook sale of donation tickets of the Foundation from door to door cash. The petitioner-Trust managed to sell tickets worth Rs. 1,57,050 out of which Rs. 1,53,000 were in 153 currency notes of Rs. 1,000 each. No record was kept of the various individuals to whom the donation tickets were actually sold considering the manner in which the transactions took place.

Consequent upon the promulgation of the High Denomination Bank Notes (Demonetisation) Ordinance on January 16, 1978 the Trust delivered a declaration in respect of the 153 currently notes of Rs. 1,000 each, which they had received by sale of tickets as also the notes on January 19, 1978 to the Bank. The said declaration gave complete particulars of the said currency notes and also specifically stated that the amount had been received by way of donations. The Trust also furnished a statement giving complete particulars of the tickets sold by it, and produced the counter- foils of the tickets for perusal. The Trust also stated in its declaration that the donations remained in cash pending utilisation of the same. However, the Bank rejected the Trust's claim for payment of the exchange value of the high denomination bank notes. The petitioner-Trust preferred an appeal to the Central Government which was rejected. Being aggrieved the petitioners preferred the present writ petitions challenging the constitutional validity of the Act and the legality of the orders passed thereunder. 

On behalf of the petitioners it was contended that the Demonetisation Act violated Articles 19(1)(f) & (g) and 31 of the Constitution; that refusal of the respondents to exchange high denomination notes amounted to compulsory acquisition of property; that such an acquisition was not made for a public purpose; that they were deprived of their right to get compensation for such acquisition; that the time prescribed for exchange of high denomination notes was unreasonable and unjust; that no opportunity of being heard was given to the petitioner; that no reasons for keeping the amount in cash were given; that no obligation was cast upon them under the Demonetisation Act to disclose the names of the donors; and that they were not obliged to satisfy the respondents that the notes in question had been received before or after the promulgation of the Demonetisation Ordinance.