The image the op posted says Off-Hook detector circuit.... so you are right is is for Off-Hook detection, not On-Hook.Are you sure it isn't an off-hook detector?
When a phone is taken off hook, there is a termination placed across the line. This causes the phone line to draw current from the Central Office Battery Distribution and detection circuit. This is sensed as off hook and a dial tone is placed upon the line with the battery voltage. In modern switches the battery voltage may drop significantly and can be as low as 2-3Vols under load. But the whole purpose is to detect when a telephone is off hook.
The diodes basically keep the circuit working and help to keep it from chattering due to the voice component in a telephone call.
When the line goes back on-hook the connection is broken and the line circuit detects a hang up and resets for the next call attempt.
I don't see why an on-hook condition needs to be detected, since off-hook detectors essentially perform this function by their nature and design.
But if You say it is Ob-Hook - then I;ll take your word for it.
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