Sunday, November 27, 2016

Re: [IAC#RG] Public Query on Demonetisation of Rs. 500 and Rs. 1000 OHD


Are you the KS Dhingra who was the Chief Law Officer of The Central Electricity Regulatory Commission ?

Then, as a legal would surely know the difference between a "bearer" cheque and an "order" cheque.

Unlike Order Cheques, an Indian currency note is akin (since banknotes and currency notes are not included as promissory notes under N.I. Act) to a bearer cheque drawn on RBI and signed by its Governor, clearly containing the Governor's statement "I promise to pay the BEARER the SUM of Rs. xxxx"

The consequence of this statement is that the BEARER of a currency note is entitled to present it for over the counter payment at the RBI either in person or by his endorsee WITHOUT ANY PROOF OF IDENTITY.

A bearer cheque is always a bearer cheque and payment of the cheque across the counter cannot be refused by the banker as per law.

It is also relevant that this extra-ordinary situation has arisen out of the rampant counterfeiting caused by the poor quality notes lacking vital security features which the Reserve Bank of India has been issuing.

Please see "What is a Bearer Cheque?" [link] for a populist explanation.

"A bearer cheque is one that does not have the word 'Bearer' on the cheque cancelled.

This cheque is payable by the drawee bank over the counter to the Bearer or presenter of the cheque.

A Bearer cheque can be negotiated or pass to another person by mere delivery. In other words, the holder (or the Transferer), when giving it to another person need not endorse the cheque.

No identification is needed when a bearer cheque is presented for encashment. However, in normal banking practice, where the amount of the cheque is substantial, the identity of the encasher is insisted on.

A bearer cheque can be collected by the bank for the credit of anyone's account.

In banking practice, the need for the encasher's signature on the back of the cheque is merely to evidence that the encasher has received the money from the bank"

There is thus no basis for the RBI to say they will only pay these bearer notes through a bank account.

If the RBI cannot pay the value of these notes across the counter on demand to bearers if presented, then it means that the RBI is insolvent.

I would advise you to kindly read this article by our lady subscriber VIDYUT before you confuse our members further. The clear analysis is that the Govt is clearly bankrupt and the RBI is unable to payout its obligations to the depositors.

I shall deal with the meaning of "SUM" separately, since "sum" is not the same as "value".



On Sun, Nov 27, 2016 at 11:49 PM, K.S. Dhingra <> wrote:

The Governor of Reserve Bank of India promised to pay the amount. He will keep the promise. He will pay  you the amount by crediting your bank account with equal amount once you deposit the note in bank.

K S Dhingra

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