The Specified Bank Notes (Cessation of Liabilities) Act, 2017
# THE SPECIFIED BANK NOTES (CESSATION OF LIABILITIES) ACT, 2017
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 ARRANGEMENT OF SECTIONS
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SECTIONS

1. Short title and commencement.

2. Definitions.

3. Specified bank notes to cease to be liability of Reserve Bank or Central Government.

4. Exchange of specified bank notes.

5. Prohibition on holding transferring or receiving specified bank notes.

6. Penalty for contravention of section 4.

7. Penalty for contravention of section 5.

8. Offences by companies.

9. Special provisions relating to offences.

10. Protection of action taken in good faith.
11. Power to make rules.
12. Power to remove difficulties.
13. Repeal and savings.

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# THE SPECIFIED BANK NOTES (CESSATION OF LIABILITIES) ACT, 2017

 ACT NO. 2 OF 2017

[27th February, 2017.]

# An Act to provide in the public interest for the cessation of liabilities on the specified bank
 notes and for matters connected therewith or incidental thereto.

BE it enacted by Parliament in the Sixty-eighth Year of the Republic of India as follows:—

**1. Short title and commencement.—(1) This Act may be called the Specified Bank Notes**

(Cessation of Liabilities) Act, 2017.

(2) It shall be deemed to have come into force on the 31[st] day of December, 2016.

**2. Definitions.—(1) In this Act, unless the context otherwise requires,—**

(a) “appointed day” means the 31[st] day of December, 2016;

_(b) “grace period” means the period to be specified by the Central Government, by notification,_

during which the specified bank notes can be deposited in accordance with this Act;

(c) “notification” means a notification published in the Official Gazette;

(d) “Reserve Bank” means the Reserve Bank of India constituted by the Central Government

under section 3 of the Reserve Bank of India Act, 1934 (2 of 1934);

(e) “specified bank note” means a bank note of the denominational value of five hundred rupees

or one thousand rupees of the series existing on or before the 8th day of November, 2016.

(2) The words and expressions used and not defined in this Act but defined in the Reserve Bank of

India Act, 1934 (2 of 1934) or the Banking Regulation Act, 1949 (10 of 1949) shall have the meanings
respectively assigned to them in those Acts.

**3. Specified bank notes to cease to be liability of Reserve Bank or Central Government.—On**

and from the appointed day, notwithstanding anything contained in the Reserve Bank of India Act, 1934
(2 of 1934) or any other law for the time being in force, the specified bank notes which have ceased to be
legal tender, in view of the notification of the Government of India in the Ministry of Finance, number S.O.
3407(E), dated the 8th November, 2016, issued under sub-section (2) of section 26 of the Reserve Bank of
India Act, 1934, shall cease to be liabilities of the Reserve Bank under section 34 and shall cease to have the
guarantee of the Central Government under sub-section (1) of section 26 of the said Act.

**4. Exchange of specified bank notes.—(1) Notwithstanding anything contained in section 3, the**

following persons holding specified bank notes on or before the 8th day of November, 2016 shall be entitled
to tender within the grace period with such declarations or statements, at such offices of the Reserve Bank or
in such other manner as may be specified by it, namely:—

(i) a citizen of India who makes a declaration that he was outside India between the 9th November,

2016 to 30th December, 2016, subject to such conditions as may be specified, by notification, by the
Central Government; or

(ii) such class of persons and for such reasons as may be specified by notification, by the

Central Government.

(2) The Reserve Bank may, if satisfied, after making such verifications as it may consider necessary that the

reasons for failure to deposit the notes within the period specified in the notification referred to in section 3, are
genuine, credit the value of the notes in his Know Your Customer compliant bank account in such manner as
may be specified by it.

(3) Any person, aggrieved by the refusal of the Reserve Bank to credit the value of the notes under

sub-section (2), may make a representation to the Central Board of the Reserve Bank within fourteen
days of the communication of such refusal to him.

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_Explanation.—For the purposes of this section, the expression “Know Your Customer compliant bank_

account” means the account which complies with the conditions specified in the regulations made by the
Reserve Bank under the Banking Regulation Act, 1949 (10 of 1949).

**5. Prohibition on holding transferring or receiving specified bank notes.—On and from the**

appointed day, no person shall, knowingly or voluntarily, hold, transfer or receive any specified bank
note:

Provided that nothing contained in this section shall prohibit the holding of specified bank notes—

(a) by any person—

(i) up to the expiry of the grace period; or

(ii) after the expiry of the grace period,—

(A) not more than ten notes in total, irrespective of the denomination; or

(B) not more than twenty-five notes for the purposes of study, research or numismatics;

(b) by the Reserve Bank or its agencies, or any other person authorised by the Reserve Bank;

(c) by any person on the direction of a court in relation to any case pending in the court.

1[(d) by the law enforcement agencies, such as the Central Board of Direct Taxes, Central

Board of Indirect Taxes and Enforcement Directorate on production of the documents authorising
such seizure or confiscation, as the case may be.]

**6. Penalty for contravention of section 4.—Whoever knowingly and wilfully makes any**

declaration or statement specified under sub-section (1) of section 4, which is false in material
particulars, or omits to make a material statement, or makes a statement which he does not believe to be
true, shall be punishable with fine which may extend to fifty thousand rupees or five times the amount
of the face value of the specified bank notes tendered, whichever is higher.

**7. Penalty for contravention of section 5.—Whoever contravenes the provisions of section 5 shall**

be punishable with fine which may extend to ten thousand rupees or five times the amount of the face
value of the specified bank notes involved in the contravention, whichever is higher.

**8. Offences by companies.—(1) Where a person committing a contravention or default referred to in**

section 6 or section 7 is a company, every person who, at the time the contravention or default was
committed, was in charge of, and was responsible to, the company for the conduct of the business of the
company, as well as the company, shall be deemed to be guilty of the contravention or default and shall be
liable to be proceeded against and punished accordingly:

Provided that nothing contained in this sub-section shall render any such person liable to punishment if

he proves that the contravention or default was committed without his knowledge or that he had exercised
all due diligence to prevent the contravention or default.

(2) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been

committed by a company and it is proved that the same was committed with the consent or connivance
of, or is attributable to any neglect on the part of, any director, manager, secretary, or other officer or
employee of the company, such director, manager, secretary, other officer or employee shall also be
deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly.

_Explanation.—For the purpose of this section,—_

(a) “a company” means any body corporate and includes a firm, a trust, a co-operative society

and other association of individuals;

(b) “director”, in relation to a firm or trust, means a partner in the firm or a beneficiary in the

trust.

1. Ins. by Notification No. S.O. 4149(E) dated 24[th] August 2018 (w.e.f. 24-8-2018)

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**9. Special provisions relating to offences.—Notwithstanding anything contained in section 29**

of the Code of Criminal Procedure, 1973 (2 of 1974), the court of a Magistrate of the First Class or
the court of a Metropolitan Magistrate may impose a fine, for contravention of the provisions of this
Act.

**10. Protection of action taken in good faith.—No suit, prosecution or other legal proceeding shall**

lie against the Government, the Reserve Bank or any of their officers for anything done or intended to
be done in good faith under this Act.

**11. Power to make rules.—(1) The Central Government may, by notification, make rules for**

carrying out the provisions of this Act.

_(2) Every rule made under this Act 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 days which may be comprised in one session
or in two or more successive sessions, and if, before the expiry of the session immediately 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.

**12. Power to remove difficulties.—(1) If any difficulty arises in giving effect to the provisions of**

this Act, the Central Government may, by order published in the Official Gazette, make such provisions
not inconsistent with the provisions of this Act, as may appear to it to be necessary or expedient for
removing the difficulty:

Provided that no such order shall be made under this section after the expiry of a period of two years

from the date of commencement of this Act.

(2) Every order made under this section shall, as soon as may be after it is made, be laid before each

House of Parliament.

**13. Repeal and savings.—(1) The Specified Bank Notes (Cessation of Liabilities) Ordinance, 2016**

(Ord. 10 of 2016) is hereby repealed.

(2) Notwithstanding such repeal, anything done or any action taken under the said Ordinance shall

be deemed to have been done or taken under the corresponding provisions of this Act.

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