Finance Minister Arun Jaitley on Friday introduced a bill on demonetisation in the Lok Sabha to formally make the banning of Rs 500 and Rs 1,000 notes a law.

The Specified Bank Notes (Cessation of Liabilities) Bill, 2017, seeks to replace the ordinance on demonetisation promulgated by the government in December 2016.

As the Finance Minister stood up to introduce the bill, he was opposed by Trinamool Congress member Saugata Roy, who termed the bill "illegal".

A war of words was witnessed in the House as Jaitley and the Trinamool Congress leader attacked each other over the issue.

Roy said he was questioning Jaitley's "right to speak", adding "Let him go to the Rajya Sabha and speak".

In response, the Minister questioned the member's right to oppose the bill and said: "His objection is something other than legislative competence. His objection is this is not a good bill."

An angry Roy said: "He (Jaitley) is not even a member of this house. He is not aware of the rules of the house."

Parliamentary Affairs Minister Ananth Kumar defended Jaitley and said: "He (Jaitley) has been a distinguished parliamentarian, and has also been adjudged best parliamentarian. He is well within his knowledge of both houses."

Roy then said the question of legislative competence will arise later and that any member has the right to object to introduction of a bill.

"This bill is actually illegal because the basic statement by the Prime Minister (on demonetisation), without any notification on November 8 was illegal. No reference was made to the Parliament..." Roy said.

"The Reserve Bank writes on currency notes 'I promise to pay the bearer...' The notification (on demonetisation) should have been given by the Reserve Bank of India... I think it is outside the minister's competence, and legislative competence to bring this bill," the Trinamool member continued.

"This bill, and the ordinance are illegal. The government has imposed a disruptive step on the whole country's economy. I am told even the Finance Minister did not know about the demonetisation move till the evening before. I oppose introduction of this bill," Roy said.

Jaitley however said the member was wrong on several accounts.

"A bill can be opposed only on two grounds - One that the House does not have legislative competence or it is unconstitutional. His objection is not on either ground," Jaitley said.

He added that the government was well within its right in bringing in demonetisation.

"The November 8 notification was under Section 26-2... RBI had the competence to pass the order," Jaitley said.

He also took a dig at the Trinamool Congress member and said: "It will add to his long parliamentary experience; He will get to learn."

Roy's objection was overruled by Speaker Sumitra Mahajan, and the bill was then introduced in the lower house.