It was first introduced as the High Denomination Bank Notes (Demonetisation) Ordinance, 1978, by the then President of India Neelam Sanjiva Reddy.
[3] The then Prime Minister of India, Morarji Desai of Janata Party, and Finance Minister Hirubhai M. Patel were considered key architects of the policy,[4] while RBI Governor I. G. Patel was opposed to it.
While the exchanging of notes was initially allowed only until 9th February, 1946, it was extended multiple times.
Following a discussion in the 1998 winter session of Indian Parliament, the bill was introduced, by the then Finance minister Yashwant Sinha to reintroduce ₹1000 banknotes,[10][11] due to claims of shortage of high-denomination notes and increasing pressure on lower denominations.
[12] The constitutional validity of 1978 Act of Demonetisation was challenged in the Supreme Court of India, on the claimed grounds that it violated the then Fundamental Right of property.