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An estimated 9-minute read
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On November 8th, Mr.Narendra Modi’s Central Government launched a sudden and a historically unprecedented demonetisation of Rs.500/Rs.1000 notes. The preparation until then was said to be fundamentally ‘secretive’ and known to none except the Prime Minister and the Governor of the Reserve Bank. All the ensuing pain, deaths, economic distress, social upheaval and starvation brought about by this demonetisation is claimed to be ‘inevitable’ as the whole operation was meant to be executed secretively and therefore, left very little room for planning.

However, you only have to see the Notification launching this demonetisation; you will realise, shockingly, that the country has been lied to. The Notification says that this demonetisation is to give effect to the recommendation of the Central Board of the Reserve Bank of India. And, as a matter of fact, this Central Board of the Reserve  Bank of India comprises private businessmen from the corporate world!

The November 8th Notification is hosted on the website of the Finance Ministry: This Notification begins with the words:

“Whereas, the Central Board of Directors of the Reserve Bank of India (hereinafter referred to as the Board) has recommended that bank notes of denominations of the existing series of the value of five hundred rupees and one thousand rupees (hereinafter referred to as specified bank notes) shall be ceased to be legal tender;…”

The bold part speaks of the ‘Central Board of Directors of the Reserve Bank of India’, and the underlined part speaks of the recommendation made by this Board – to demonetise all existing series of notes of Rs.500 and Rs.1000. We could now see who all are part of this Central Board. However, for the legally minded, a paragraph more of information would be helpful.

The November 8th Notification then 1) says that the Central Government is thereby acting on the said recommendation of the said Central Board made under Section 26(2) of the Reserve Bank of India Act, 1934 (‘RBI Act’) and 2) proceeds to demonetise the existing series of Rs.500 and Rs.1000 notes. You could easily guess now that Section 26(2) of the RBI Act 1) authorises the Central Board of the Reserve Bank of India to make a recommendation to the Central Government to demonetise any series of existing notes and, 2) the Central Government is consequently authorised to act on that recommendation. You would be right. This is the very process now adopted by the Central Government and is described in the November 8th Notification.

The Central Board of the Reserve Bank of India (‘RBI’) is constituted under Section 8 of the RBI Act. Full text of the RBI Act – though not updated is still reliable for our purpose - may be found on the website of the RBI at: This Central Board is comprised of 21 individuals of whom 4 are bound to be from the private sector. (Sections 8, 9 and 10 of the RBI Act). The website of the RBI does not list out all of the directors of its Central Board. However, it does list out these private businessmen among the directors of its Central Board (

Nachiket M. Mor

Dr.Nachiket M. Mor

The private sector connection or accomplishment of Dr.Nachiket M. Mor is described on the RBI website as:

“He worked with ICICI from 1987 to 2007 and was a member of its Board of Directors from 2001 to 2007. From 2007 to 2011, he served as the founding President of ICICI Foundation and during this period was also the Chair of the Governing Council of IFMR Trust and Board Chair of FINO. He is now the Board Chair of CARE India and, … In the past he has also served as a Board Member of Wipro for five years and Board Chair of the Fixed Income Money Market and Derivatives Association of India for two years.”

The internet search for Dr.Nachiket M Mor shows that he is currently the India Country Director for Bill and Melinda Gates Foundation – a fact also stated on the website of the Bill and Melinda Gates Foundation (

The next listed director of the Central Board from the private sector is Mr.Natarajan Chandrasekaran.

Natarajan Chandrasekaran

Mr.Natarajan Chandrasekaran

His private sector connection or accomplishment is described on the RBI website as under:

“Shri Natarajan Chandrasekaran has been serving as the CEO and MD of Tata Consultancy Services (TCS). .. Shri Chandrasekaran has over 28 years of experience in global software industry and business operations. He served as the Chairman of NASSCOM, and was the Chairperson of the IT Industry at the World Economic Forum, Davos for 2015-16. He is a member of Indo – US CEO Forum as well as India’s bilateral business taskforces for Australia, UK and Japan. ..”

That is, Mr.Natarajan Chandrasekaran is currently, the CEO and managing director of Tata Consultancy Services, a leading software service company in the private sector and the website of TCS also says so (

The next listed director of the Central Board from the private sector is Mr.Bharat Narotam Doshi.

Bharat Narottam Doshi

Mr.Bharat Narotam Doshi: 

His private sector connection or accomplishment is described on the RBI website as:

“Shri Doshi is a former Executive Director and Group CFO of Mahindra & Mahindra Limited. He was also the Chairman of Mahindra & Mahindra Financial Services Limited since April 2008…

He is the Chairman of Mahindra Intertrade Limited.

He is also an Independent Director of Godrej Consumer Products Limited.

Shri Doshi is also on the Governing Board of The Mahindra United World College of India, K.C. Mahindra Education Trust and Mahindra Foundation….

Over the last 35 years, Shri Doshi has been actively involved with the work of chambers of commerce and industry being a member of various expert committees. He served as the President of Bombay Chamber of Commerce and Industry for the year 2009-10.”

Moving further, the Reserve Bank of India General Regulations, 1949 (on the RBI website at: specifies that a month’s notice ought to be given to each of the directors of the Central Board to transact any specific business and even when an emergency meeting is to be called at a short notice, each of the director present in India is bound to be informed of the meeting and its agenda. Other provisions of this Regulation would ensure that the four private businessmen in the Central Board are kept in the loop about the urgent business of the Central Board. Thereby, the recommendation made by the Central Board to the Central Government for demonetisation was just not a secret at all as private businessmen were plainly involved in formulating and sending that recommendation to the Central Government. I challenge the Central Government to dispute what I have just said here.

When such participation by private businessmen in the Central Board is statutorily provided for, it is a mystery that Mr.Modi’s Central Government chose to invoke this leaky demonetisation process provided in the RBI Act and still claim that it was all secretively executed. To repeat, there was no legal room at all to exclude such private businessmen from this demonetisation planning – their participation was mandated by the law itself.

At this point, if you assume that the demonetisation provided under the RBI Act is only of the ordinary type such as ‘pre 2005 series Rs.500 notes to be phased out and exchanged at bank counters for the next 3 months’, you would be right. The demonetisation under the RBI Act is good just for that. Can you even imagine bankers and private businessmen forming the Central Board of the Reserve Bank possessing any expertise to recommend and lay down novel procedures to the Central Government to dry out terrorism funding? Incidentally, the 1978 regime apparently knew about the limitations of the demonetisation under the RBI Act and therefore, crafted a very new legislation to impose a different demonetisation.

It is therefore, surprising that the Central Government this time did not even care to take proper note of the 1978 demonetisation. To repeat, the extent of demonetisation now attempted is not supported at all under the RBI Act; even the 1978 demonetisation that was done on a much smaller scale by setting out numerous limitations upon citizens was done through a separate legislation (first through ‘The High Denomination Bank Notes (Demonetisation) Ordinance, 1978 (1 of 1978 )’ and then through, ‘The High Denomination Bank Notes (Demonetisation) Act, 1978’ at:

Specifically, the 1978 demonetisation was brought in independently of what is stated in Section 26 of the RBI Act – (Section 3 of the 1978 Act had said: High denomination bank notes to cease to be legal tender - On the expiry of the 16th day of January, 1978, all high denomination bank notes shall, notwithstanding anything contained in section 26 of the Reserve Bank of India Act, 1934, (2 of 1934) cease to be legal tender in payment or on account at any place.) Strangely this time, Section 26 of the RBI Act that was thought to be highly inadequate as early as 1978 for even that limited demonetisation is the very provision embraced by Mr.Modi’s Central Government to effect a historically unprecedented demonetisation! (November 8th Notification - Now, therefore, in exercise of the powers conferred by sub-section (2) of section 26 of the Reserve Bank of India Act, 1934 (2 of 1934) (hereinafter referred to as the said Act), the Central Government hereby declares that the specified bank notes shall cease to be legal tender with effect from the 9th November, 2016 to the extent specified below..).

For these reasons, I have no hesitation in saying that the November 8th Notification is bound to be stayed first and eventually quashed by the Courts. It has no prospect of being upheld by any of our 24 High Courts or the Supreme Court should a proper petition be filed; the present petitions challenging demonetisation are quite disappointing, in my view. The blame for such setback, however, should squarely fall upon none but the Central Government itself for its legally awkward exercise.

The Parliament of India could alone impose all the hardship, suffering and devastation that this demonetisation is imposing upon the people of this country; statutorily conferred or customarily enjoyed rights of the citizens cannot be curtailed otherwise under our written Constitution. However, the Constitution itself allows for an emergent legislation by the Central Government in the form of an ‘Ordinance’. And, a Notification could only put into effect what has already been prescribed by a duly made law – it can never by itself, curtail the rights of citizens. These are ordinary principles of our Constitution and Administrative Law.

What has just been done is a mere notification to wipe out 86% of the cash in circulation among people who constitute 1/5th of humanity during peace-time – by a Government limited by a written and the most voluminous Constitution of the world! The world is on notice.


Photo 1


  Advocate, Supreme Court

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Like +11 Object -5 Youve clearly missed 22 Nov 16, 10:36  interesting  controversial
Quote Whereas, the Central Board of Directors of the Reserve Bank of India (hereinafter referred to as the Board) has recommended that bank notes of denominations of the existing series of the value of five hundred rupees and one thousand rupees (hereinafter referred to as specified bank notes) shall be ceased to be legal tender;…” UnQuote

While the Central Board of Directors of RBI may have recommended demonetisation, it cannot be purported by any stretch of imagination that WHILE (WHEN AND HOW) IMPLEMENTING demonetisation, Central Board was kept informed or in loop.
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Like +4 Object -5 hah 23 Nov 16, 12:04
"While the Central Board of Directors of RBI may have recommended demonetisation, it cannot be purported by any stretch of imagination that WHILE (WHEN AND HOW) IMPLEMENTING demonetisation, Central Board was kept informed or in loop."

Really??? Are we being that naive??
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Like +3 Object -5 Good Friend Dhananjay 23 Nov 16, 20:58
He is intelligent but has Congress heart . He has been told the truth again and again and it always reflect while he writs on this kind of public issues
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Like +2 Object -5 Sifdaramaiah 23 Nov 16, 21:40
Dhananjay is pro-Congress? Wish somebody had told that to me. We were terribly scared when we read his call for a criminal investigation against the Chief Minister and another minister for the Rs.2500 Crores steel flyover. The said part is if the steel flyover got stalled over this fake news that everyone carried?
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Like +2 Object -2 Laymen bluff 24 Nov 16, 21:31
The above is a great argument - to lose. "You have clearly missed" and his cheerleaders do not seem to know either head or tail of statutory interpretation or the role of the Central Board under the RBI Act,1934.

What is said in the above is the law that squarely applies to an ad-hoc commission formed under the Commissions of Inquiry Act, 1952. However,the Central Board under the RBI Act is a continuing body with powers and obligation to issue certain recommendations and a further power to do other things stated in the Act. Those roles necessarily vest it with the power to seek information about the reception to their recommendation so as to enable them to vary or otherwise modify their future recommendations or actions.

I am glad that Mr.Dhananjay is on this. He isn't Mr.Sibal and the Attorney General will have no clue on how to beat him in these arguments. This is a terribly defective notification. Period.
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Like +11 Object -4 iRobot 22 Nov 16, 11:51  interesting
So according to the author of the above piece, because some people were involved, the demonetisation move was not 'fundamentally secretive'. Unfortunately, we live in a world where human being need to be involved in implementing actions, even fundamentally secretive ones like demonetisation. Get a life and stop critisising the demonetisation move, which even many of the naysayers agree is a brilliant move in fighting black money.
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Like +10 Object -4 I dont agree 22 Nov 16, 12:32  interesting
I have following queries in the above article. The Author may kindly clarify the same:
1) Whether the recommendation made by the Central Board of Directors are mandatory in nature- if the recommendations are not mandatory in nature, than how would any one be knowing that the Govt. is going to implement the recommendation of board.
2) whether the Central Board of Directors recommended any date/time for demonetization- if no such recommendation is made, than how even the central board was aware than the currency is going to be banned from 8th November, 2016.
3) Whether the author has any proof to show that the private businessmen or their company has started changing their currency after recommendation made to Central Govt-if no proof is there, than i don't seem that the allegations made by the author are correct.
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Like +8 Object -6 Delhi lawyer 22 Nov 16, 13:36  controversial
I think the author makes one appealing legal argument and also provides some legal history to buttress his point. He clearly explains his understanding of the statutory position and questions whether the Executive can impose such hardship on people, or such a drastic move would necessarily require the Parliament's approval. While one may emotionally support demonetisation, that does not mean the step is not ultra vires!

Even if the Parliament confers powers on the Executive, a power exercised arbitrarily (without thinking of the impact) must be examined keeping in mind the hardship caused to The People. What about the hapless village mothers travelling for hours to stand in que in an attempt to get some cash for their children's treatment? What about the street vendors and wholesalers who are losing livelihood because people are not able to transact in cash and are cutting down on consumption? What about you and me if this leads to a food shortage and/or huge inflation?

Very well written. Enjoyed reading it!
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Like +6 Object -2 iRobot 22 Nov 16, 14:02
If we want to leave emotions out of it, then let the author also limit himself to presenting the legal facts and cut out language to the tune of how 'shockingly, the country has been lied to'. Although where people are involved, it is well nigh impossible to totally cut emotion (or in some cases, sensationalism) out of it, so let us have the same set of standards for all.
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Like +6 Object -1 Youve clearly missed 22 Nov 16, 16:43  interesting
It will be useful to note, several PILs against demonetisation move being ultra vires has been turned down by courts of law.
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Like +1 Object -0 Ajith Rao 30 Nov 16, 00:11
baring standing in line for long hours and loss of work time no reports of food shortage or people living in starvation o riots has been reported due to this move. Different people faced different hardship. Things have settled down. People are complaining because they are used to transact in cash and be outside the taxman's they cant. Leaders are complaining because they lost/will lose lots of cash wealth. Even without emotional reason this is a good move and move to push towards the right direction. Black money eventually is disbursed to poor people. If that loop hole is plugged by going digital using the corrupt money/black money becomes very difficult. I have seen Bundles(100) with termites/insects been deposited along with 500 and 1000 in banks and staff getting irritation in their skin because of that.. they sent it to RBI without using it
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Like +1 Object -0 Guest 22 Nov 16, 18:09
The Government has various advisory boards who make recommendations from time to time. one such recommendation was demonisation. this was not a secret.

whether or not private discussions happened with businessmen before the announcement by the PM, we dont know. but by saying that the RBI refers to a set of recommendations (which may or may not be implemented by the Government) and hence the Government is lying to us, is not logically sound and smacks of very poor intellectual integrity.
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Like +2 Object -3 Guest 23 Nov 16, 21:11
Why cannot the author of this most informative article take it upon himself to file a proper PIL in the supreme court as he himself is a lawyer there?
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Like +3 Object -5 well written 24 Nov 16, 19:18
all stooges who have commented here are paid stooges of BJP. they are extremely vigilant on all platforms - youtube trending , facebookj , twitter etc.

the underlying effort is to save all ambani empire which he has done for 3 years now even after trump election where sensex fell .

US people have won changing suppressive obama hillary combo, even if it is just in form of another evil but they have sent message.

Indians haven't. when 3 rationalist were killed they went with killer. who can teach them rationalism now?
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Like +2 Object -0 Ninon 25 Nov 16, 08:26
Sorry, but that is just ridiculous. Just because people have an opinion does that make them paid stooges? By the same logic, one could say you are a paid stooge of the Congress! Why do you think everything have to be at the instigation of or the other political party - even if you don't, cannot other people have individual opinions anymore?
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Like +1 Object -0 Off Topic 25 Nov 16, 10:05
LI and Kian should change this demeaning Western and Northie practice of making South Indian patronymic names the first name. His name is not Natarajan Chandrasekaran, it is N. Chandrasekaran. Chandra is his given name.

I understand it is taken from the CBDT site, but please stop this cultural insensitivity.
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Like +1 Object -0 kianganz 25 Nov 16, 10:08
Haha - for the avoidance of doubt, this article has not been written or edited by LI, but by an independent advocate who I believe is from Karnataka, so I don't think 'Western and Northie' bias applies :)
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Like +1 Object -0 Insensitive South Ind 25 Nov 16, 10:51
Speaking for myself, as a south indian I don't feel particularly 'demeaned' if someone expands my initials or mistakenly calls me by my father's name. I correct them of course, but its hardly demeaning.

Also, by your standards its kinda rude to call something a 'northie practice' isnt it?
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Like +1 Object -0 Guest 25 Nov 16, 11:44
Why don't you file a PIL?
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Like +1 Object -1 Mohammed142857 25 Nov 16, 19:36
News of demonitization was leaked and it even came in Hindi newspaper dainik jagran 2 weeks before govt officially declared. Still the epaper link is available. To see the epaper page check "Alleged prior leakage of information" section in Wikipedia article "Indian_500_and_1000_rupe e_note_demonetisation"
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Like +0 Object -1 Anil Chawla 25 Nov 16, 21:02
I agree that the notification issued by Central Government is bad in law. The least that should have been done is to mention the date of the meeting of Reserve Bank which recommended demonetization. Of course, even with that detailing the interpretation of "any" as "all" (Ref. section 26 (2) of RBI Act, which states any series of any denomination) is plainly wrong. I agree that the notification is bound to be struck down by court sooner or later.
Anil Chawla, Advocate,
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Like +0 Object -1 Detective 27 Nov 16, 21:59
Demonitisation might be a rotten plan:

Read the Economic Times

Demonetisation: Investigate unusual spurt in deposits

November 25, 2016, 12:15 AM IST ET Edit in ET Editorials | Economy, India | ET
A graphic on this page on Thursday showed a steep increase of Rs 4.8 lakh crore in bank deposits in September over the August figure. This spurt, ahead of the demonetisation of Rs 1,000 and Rs 500 notes announced on November 8, was not seasonal. It needs to be inquired into, to rid the demonetisation drive of a possible taint in the form of suspicion that some people took advantage of insider information. The Opposition is likely to point fingers at the ruling party but it would be strange, indeed, if those in the know of a move planned six months ahead waited till September to act. Information could have leaked out, if it did leak out, from the RBI or the printing presses. The matter calls for an explanation.

Initially, it had been suggested that the September surge was on account of disbursal of Pay Commission arrears. But that was only some Rs 34,000 crore. Spectrum auction proceeds accounted for another Rs 32,000 crore. Allow for some bunched subsidy payments. That would leave unexplained a jump in deposits of Rs 3 lakh crore. It is easy to establish if anyone took advantage of prior information of the demonetisation move and converted high-denomination notes into small-denomination ones. Look at the flow of big and small notes between the banks and the central bank in each of the major states over every quarter since April 2014. The RBI keeps track of this data. Former banker T R Ramaswami suggests, in a letter to the editor, an examination of the inflow of Rs 500 and Rs 1,000 notes into the RBI and the outflow of Rs 50 and Rs 100 notes from the central bank to banks for five six-month periods, starting April 2014. If there is any break, in the first half of the current fiscal year, in the pattern of flow of big notes into, and of small notes from, the central bank, it would indicate foul play. If the pattern is the same from April 2014 onwards, that would rule out mischief.

It would be in the government’s interest to initiate an inquiry on the above lines, without waiting for the Opposition to raise the demand, or for the judiciary to order one, in response to a public interest litigation.

This piece appeared as an editorial opinion in the print edition of The Economic Times.
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Like +2 Object -0 Guest 28 Nov 16, 20:46
This article has some weightage but I don't see more than it's procedural issues like what should come first whether a coma or full stop. The basic issue is was the Secrecy maintained. My personal opinion is bye and large yes. However any aberrations must be dealt firmly. More glaring issue is how the denominations currencies of Rs. 1000 and 500 were able to grab the market share of 85% that too
I the financial Wizard MMS was himself the PM. It's like Sharad Pawar being the Agriculture Minister for more than a decade and our Agricultural growth was less than the Population growth. Are our ministers accountable and responsible for their deeds. Why these Advocates of SC don't file PIL on these aspects. Are they also sold out.
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Like +2 Object -0 michael hope 29 Nov 16, 08:56
According to him straight out of college interns without any practical experience should be on the board of RBI.
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Like +1 Object -0 Guest 29 Nov 16, 23:55
I dont think the board was consulted in this. Govt can do such exercise as it is with in its power.They didnt disown the currency as they said they will exchange the old ones. The citizens rights were not curtailed. All decisions of govt affect different citizens differently. Govt knows the legal process will take more than 50days for anything concrete to come out by which time the process will be over and some law will be passed to ensure the 500 and 1000 cease to be legal tender
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Like +1 Object -0 Srinivas Reddy 30 Nov 16, 02:16
Really very good explanation of law and condemn of wrong interpretation of law , actually I am also think same . If anything happen we should analyse the problem in such a deep manner it should end with some proper logic. But I find good things and I am learnt so many things , how to approach in a positive way Really it si worth reading please send in future to my email below mentioned

M S Reddy & Associates
Hyderabad , Telanagana
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Like +2 Object -0 Venkiteswaran S. Iyer 30 Nov 16, 10:57
Mr. K.V.Dhananjay : Thanks for your well researched article. Please write another article recommending to the Government of India that in future the Government has to ensure that candidates picked for posting to the Central Board of Directors of the Reserve Bank of India are from either Tom, Dick and Harry category or destitute picked from the Indian streets. For Pete's sake please come out with solution if there exists genuine problem rather than casting aspersions.
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Like +1 Object -0 Guest 02 Dec 16, 13:32
I came across a explanation that for such decisions like demonetization, Govt. need RBI's board recommendation. But act doesn't state that how many of director's permission is required to pass such notification. Govt. said that two board members i.e. Governor and DG was aware and helping. Hence these two recommended this. All the other members were informed on 8th Nov after 6 pm. Hence this decision is well within the law ambit. Can you please clarify further based on above observations? here is my source for the same
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Like +0 Object -0 I. MALLIKARJUNA SHARMA 03 Dec 16, 15:43
If the four know, the entire corporate world knows, and the maximum percentage of black money generators are corporations and so they play and should have played safe. As you said S 26 of RBI Act is not sufficient for such demonitisation undertaken and they should have discussed and legislated through the Parliament.
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Like +0 Object -0 Guest 06 Dec 16, 11:06
sir why don't you help file a petition?
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