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On a conspectus of the above provisions of the RBI Act is patently clear that Bank is the sole note issuing authority and has the obligation to exchange those notes when demand except when, and to the extent, it is relieved of that obligation by the Central Government.

Coming now to the Demonetization Act as we first find that high denomination bank note has been defined in Section 2 (d) to mean a bank note of the denominational value of the one thousand rupees, five thousand rupees or ten thousand rupees issued by the Reserve Bank. Section 3 declares that on expiry of January 16, 1978 all high denomination bank notes shall notwithstanding anything contained in Section 26 of the Reserve Bank of India Act, 1934 (emphasis supplied) cease to be legal tender in payment or on account at any place. Section 4 which prohibits transfer and receipt of high denomination bank notes reads as follows :

section (2) may prefer an appeal to the Central Government within fourteen days of the communication of such refusal to him."

In assailing the Demonetization Act is was contended on behalf of the petitioners that it violated their fundamental rights enshrined in Articles 19 (1) (f) and 31 of the Constitution (since repealed), which were available to them at the material time. In elaborating their contention it was submitted that Bank to make payment of high denomination bank notes whenever tendered and the Central Government guaranteed such payment but on promulgation of the impugned Act those notes ceased to be legal tender, notwithstanding the above provision of the RBI Act, in view of Section 3 thereof; and, resultantly, the Bank and for that matter the Central Government stood discharged of their such obligations. In other words, according to the petitioners, the impugned Act extinguished the debts due and owing from the Bank to the holders of the high denomination bank notes. the petitioners contended that such extinguishment of debts amounted to compulsory acquisition of property within the meaning of Article 31(2) of the Constitution and since the acquisition was not made for a public purpose nor adequate and appropriate provisions were incorporated in the impugned Act for payment of compensation in respect thereof the impugned Act was violative of the above Article. Besides,the petitioners contended, they had a right to acquire and hold the high denomination bank notes and to carry on any trade or business by using the same in the course thereof and the Demonetization Act in so far as it provided for non- payment of exchange value of high denomination bank notes except in those cases mentioned in Section 7 and 8 thereof, it imposed unreasonable restriction on their fundamental rights under Article 19 (1) (f) and (g) of the Constitution. Since it cannot be disputed that the direct effect of the High Denomination Bank Notes (Domination Bank Notes (Demonetization) Ordinance, 1978 is the wiping out of a public debt owing to the holders of the high denomination bank notes from the state, the other contention of the petitioners that their property was compulsorily acquired has got to be accepted in view of Pathak vs. Union of India (1978) 2 SCC 50 wherein it has been held that property within the meaning of Article 19 (1) (f) and clause (2) of Article 31 comprises every form of property, tangible or intangible, including debts and chooses in action and that extinguishment of a public debt due and owing from the State amounts to compulsory acquisition of such debt.

It was, however, contended on behalf of petitioners that even if it was assumed that Article 31 had not been violated the time prescribed for exchange of the high denomination bank notes under Sections 7 and 8 of the Demonetization Act was unreasonable and violative of their fundamental rights. When the above provisions of the Act are considered in the context of the purpose the Demonetization Act sought to achieve, namely, to stop circulation of high denomination bank notes as early as possible, the above contention of the petitioners cannot be accepted. Consequent upon the high denomination bank notes ceasing to be legal tender on the expiry of January 16, 1978 and in view of the prohibition in the transfer of possession of such notes from one person to another thereafter as envisaged under Section 4, it was absolutely necessary to ensure that no opportunity was available to the holders of high denomination bank notes to transfer the same to the possession of others. At the same time it was necessary to afford a reasonable opportunity to the holders of such notes to get the same exchanged. However, if the time for such exchange was not limited the high denomination bank notes could be circulated and transferred without the knowledge of the authorities concerned from one person to another and any such transferee could walk into the Bank on any day thereafter and demand exchange of his notes. In that case it would have been well high impossible for the Bank to prove that such a person was not the owner or holder of the notes on January 16, 1978. Needless to say in such an eventually the very object which the Demonetization Act sought to achieve would have been defeated. Obviously, to strike a balance between these competing and disparate considerations that Section 7 (2) of the Demonetization Act limited the time to exchange the notes till January 19, 1978. However, even thereafter, in view of Section 8, the high denomination bank notes could be exchanged from the Bank till January 24, 2978 provided the tenderers was able to explain the reasons for his failure to apply for such exchange within the time stipulated under Section (2) of Demonetization Act. Apart from the above provisions regarding exchange of high denomination bank notes by the Bank within the time stipulated therein, provision has been made in sub-section
34,74,519/- out of which denomination notes besides the appellant had also not been able to prove that even in the past the trust was getting donations in high denomination notes from the charity boxes and that this was a regular feature."

In impugning the order of the Currency Officer of the Bank it was submitted on behalf of the petitioner that no opportunity of being heard was given to the Society so as to enable it to explain the reasons for delay in submitting the declaration form. Even if we proceed on the assumption that such an opportunity for personal hearing was imperative to comply with the rules of natural justice the petitioner cannot raise any grievance on that score for the Appellate Authority gave them such an opportunity before dismissing their appeal. This apart, as noticed earlier, the Appellants Authority has given detailed reasons for its inability to accept the explanation of the Society for not filing the declaration in time. Under the Demonstration Act if a holder of high denomination bank notes had acquired those notes after January 16, 1978 he would not be entitled to exchange the same, if therefore, the Bank and Central Government obtained a satisfaction that the Society failed to prove that the high denomination bank notes for which value was claimed had reached its hands on or before January 16, 1978 payment could legitimately be refused. It was however contended that the respondents having accepted their claim for exchange in respect of notes found in the collection boxes of Bombay ought to have accepted their explanation offered by them in respect of the notes received at Surat. It appears that this contention was raised before the Appellate Authority which rejected the same with the following observations :