A) ABSTRACT / HEADNOTE

This landmark case addresses the critical question of whether the High Denomination Bank Notes (Demonetisation) Ordinance, 1946 remained valid and enforceable after the formal termination of emergency powers under the India and Burma (Emergency Provisions) Act, 1940. The appellant, Hansraj Moolji, was convicted under the 1946 Ordinance for illegally transferring demonetised high-value currency notes in 1953. The main legal contention centered around the operation and continuing validity of an ordinance promulgated during the emergency once the emergency was declared ended on April 1, 1946. The Supreme Court, after analyzing statutory interpretation, constitutional emergency powers, and legislative intent, ruled that ordinances promulgated under the extended emergency period were to be treated as permanent laws unless explicitly repealed. The Court affirmed the conviction, emphasizing that the emergency’s termination did not retrospectively nullify valid ordinances promulgated under extended legislative powers granted during wartime. This case is significant in the realm of constitutional and criminal law and remains a precedent for the continued operation of emergency-era ordinances beyond their originating context.

Keywords: Demonetisation Ordinance 1946, Emergency Powers, Ordinance Validity, Hansraj Moolji, Section 72 Government of India Act 1935

B) CASE DETAILS

i) Judgement Cause Title
Hansraj Moolji v. The State of Bombay

ii) Case Number
Criminal Appeal No. 93 of 1956

iii) Judgement Date
12 February 1957

iv) Court
Supreme Court of India

v) Quorum
BHAGWATI, JAGANNADHADAS, JAFER IMAM, GOVINDA MENON and J.L. KAPUR, JJ.

vi) Author
Justice N.H. Bhagwati

vii) Citation
AIR 1957 SC 497; [1957] SCR 634

viii) Legal Provisions Involved

• Section 72, Ninth Schedule, Government of India Act, 1935

• Section 1(3), India and Burma (Emergency Provisions) Act, 1940

• High Denomination Bank Notes (Demonetisation) Ordinance, 1946, Sections 4 and 7

• Section 109, Indian Penal Code, 1860

ix) Judgments overruled by the Case (if any)
None

x) Case is Related to which Law Subjects
Constitutional Law, Criminal Law, Interpretation of Statutes, Financial Regulations, Emergency Powers

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The present case revolves around a constitutional question concerning the continued validity of an ordinance promulgated under emergency powers, which has major implications for how Indian law interprets executive legislation passed during emergency periods. The 1946 Demonetisation Ordinance was issued to demonetise high denomination currency to combat hoarding and unaccounted money. The issue arose when Hansraj Moolji, in 1953, was found transferring Rs. 10,000 worth of such notes, raising the question of whether the Ordinance was still enforceable post-emergency. The Bombay High Court convicted the appellant under the ordinance, leading to this final appeal to the Supreme Court.

D) FACTS OF THE CASE

The appellant, Hansraj Moolji, was convicted of selling ten demonetised Rs. 1,000 notes to one Velji Lakhamshi Joshi for Rs. 1,800 on July 11, 1953. These notes had been invalidated under the High Denomination Bank Notes (Demonetisation) Ordinance, 1946. The Ordinance was promulgated on January 12, 1946, during a period of emergency declared under the India and Burma (Emergency Provisions) Act, 1940. That emergency was declared to have ended by a Council Order on April 1, 1946. The appellant contended that the ordinance had lapsed once the emergency was officially terminated and hence was not in force in 1953, rendering his prosecution invalid. The trial court and High Court, however, upheld the validity of the ordinance. The matter then escalated to the Supreme Court via special leave under Article 136 of the Constitution.

E) LEGAL ISSUES RAISED

i. Whether the High Denomination Bank Notes (Demonetisation) Ordinance, 1946, continued to remain in force after April 1, 1946.
ii. Whether emergency powers exercised under Section 72 of the Government of India Act, 1935, cease with the end of the emergency.
iii. Whether the act of transferring demonetised notes in 1953 violated Section 4 of the Ordinance.
iv. Whether retrospective application of the restored provision of Section 72 can invalidate the ordinance.

F) PETITIONER / APPELLANT’S ARGUMENTS

i. The counsels for the appellant submitted that the 1946 Ordinance was promulgated under emergency powers and became ineffective automatically upon the end of the emergency on April 1, 1946[1].

ii. They contended that Section 1(3) of the India and Burma (Emergency Provisions) Act, 1940, which allowed emergency ordinances to omit the six-month limitation, ceased to apply once the emergency ended. Hence, the ordinance should no longer be valid after April 1, 1946[2].

iii. The appellant’s counsel relied on the doctrine of temporary legislation, asserting that an ordinance without a legislative ratification must lapse after a reasonable period or at the very least after the end of the enabling emergency[3].

iv. They also cited King Emperor v. Sibnath Banerjee ([1944] FCR 1) and King Emperor v. Benoari Lal Sharma ([1943] FCR 96), where it was held that ordinances under emergency are inherently temporary[4].

G) RESPONDENT’S ARGUMENTS

i. The counsels for the respondent submitted that Section 72, as amended by Section 1(3) of the 1940 Act, clearly stated that the six-month limitation was to be omitted during the emergency period, effectively making such ordinances permanent until repealed[5].

ii. They contended that once an ordinance was validly promulgated during the emergency (before April 1, 1946), it did not retroactively become invalid after the emergency was lifted[6].

iii. They supported their arguments using the Federal Court ruling in J.K. Gas Plant Manufacturing Co. Ltd. v. King Emperor ([1947] FCR 141), where it was held that ordinances promulgated during the emergency do not automatically lapse after April 1, 1946, unless expressly repealed[7].

iv. They emphasized that the 1946 Ordinance was listed in the Adaptation of Laws Order, 1950, signifying legislative intent for its continued operation under the Indian Constitution[8].

H) RELATED LEGAL PROVISIONS

i. Section 72, Ninth Schedule, Government of India Act, 1935: Emergency ordinance-making power of the Governor-General
ii. Section 1(3), India and Burma (Emergency Provisions) Act, 1940: Temporary modification of Section 72
iii. Section 4 and Section 7, High Denomination Bank Notes (Demonetisation) Ordinance, 1946: Offences and penalties for use of demonetised notes
iv. Section 109, Indian Penal Code, 1860: Abetment of an offence

I) JUDGEMENT

a. RATIO DECIDENDI

i. The Supreme Court ruled that ordinances promulgated under Section 72, as modified by the 1940 Act, had the same force as legislation passed by the Indian Legislature and were not subject to a time limitation[9].

ii. The Court emphasized that the omission of the six-month limitation by the 1940 Act made such ordinances continue in force until repealed. The end of the emergency did not retrospectively affect the ordinances’ validity[10].

iii. The ordinance in question being promulgated before April 1, 1946, remained in force on July 11, 1953, the date of the offence, hence prosecution was valid[11].

b. OBITER DICTA 

i. The Court observed that if emergency laws had to lapse automatically with the emergency, the legislature would have clearly specified such limitation in the ordinance or subsequent legislation.

c. GUIDELINES 

i. Emergency-era ordinances, if validly promulgated, do not lapse unless explicitly repealed.
ii. Statutory adaptations, such as those under the Adaptation of Laws Order, confirm legislative intent for continued enforcement.
iii. Retrospective nullification of ordinances is impermissible without clear legislative authority.

J) CONCLUSION & COMMENTS

The judgment in Hansraj Moolji v. State of Bombay underscores the enduring effect of emergency legislation in India’s legal framework. The Supreme Court provided clarity on legislative continuity, reinforcing that ordinances validly enacted during emergencies retain their enforceability unless repealed. This decision remains a cornerstone in understanding the balance between executive emergency powers and the post-emergency constitutional framework. It also reflects the judiciary’s commitment to rule of law and legal certainty in interpreting transitional provisions of colonial legislation in the post-Independence context.

K) REFERENCES

a. Important Cases Referred

[1] King Emperor v. Sibnath Banerjee, [1944] FCR 1
[2] King Emperor v. Benoari Lal Sharma, [1943] FCR 96
[3] J.K. Gas Plant Manufacturing Co. Ltd. v. King Emperor, [1947] FCR 141

b. Important Statutes Referred

[4] Government of India Act, 1935, Section 72
[5] India and Burma (Emergency Provisions) Act, 1940, Section 1(3)
[6] High Denomination Bank Notes (Demonetisation) Ordinance, 1946, Sections 4 and 7
[7] Indian Penal Code, 1860, Section 109
[8] Adaptation of Laws Order, 1950