Pay up for pile of dud notes - Minimum fine Rs 10,000, questions on test in RS

TT, New Delhi, Dec. 28: The Centre today approved the promulgation of an ordinance that will make it a legal offence to hold on to a large stash of the scrapped Rs 500 and Rs 1,000 notes after March 31 next year - the last day by when citizens can deposit the banned notes with the RBI.

The Specified Bank Notes Cessation of Liabilities Ordinance, approved by the Union cabinet, basically extinguishes the liability of the RBI to pay the bearer of the note an equivalent sum.

The ordinance makes holding of old 1,000- and 500-rupee notes after March 31 beyond a threshold amount an offence that will attract a fine of Rs 10,000 or five times the cash held, whichever is higher.

Furnishing wrong information while depositing the old currency between January 1 and March 31 will also attract a fine of Rs 5,000 or five times the amount.

Since old notes are collectors' items worldwide, the ordinance allows a person to hold a maximum of 10 banned notes.

The proposal placed before the cabinet suggested a four-year jail term for anyone possessing a large number of demonetised notes after March 31, 2017. However, officials said this provision was dropped as it was impracticable and unnecessary.

The ordinance will now be sent to President Pranab Mukherjee, currently in Hyderabad, for approval before notification.

Officials said it was necessary to pass the ordinance to extinguish the responsibility of the RBI and make it a penal offence to hold on to these notes beyond that date. But this assertion will reopen the debate on whether the original gazette notification of November 8 was legally valid - a question that is currently before the Supreme Court.

Officials were unsure whether the ordinance would be considered a money bill when placed before Parliament as it neither raises taxes nor money for the government. If it is not categorised as a money bill, the Opposition will use the opportunity to force a discussion in the Rajya Sabha - where the government is in the minority - on the impact of demonetisation.