8lll no i' of lf70  the banking companies (acquisition and transfer of undertakings) biu, 1970 a brdto provide for the acquisition and transfer of the undertakings of certain banking companies, having regard to their size, rebourceb, !coverage and organisation, in order to control the heights of the economy and to meet progressively, and serve better, the needs of development of the economy in conformity with national policy and objectives and for matters connected therewith or incidental thereto be it enacted by parliament in the twenty-first year of the republk of india as follows ~ - chapter i ·preliminary~ 1 (1) this act may be called the banking companies (acquisition short and transfer of undertakings) act, 1970 title pnd commen-cement (2) the provisions of this act (except section 21, which shall come into force on the appointed day) shall be deemed to have come into force on the 19th day of july, 1969 2 in this act, unless the context otherwise requires,-(a) "appointed day" means the 14th day of february, 1970, being the day on which the banking companies (acquisition and transfer of undertakings) ordinance, 1970, was promulgated; (b) "banking company" does not include a foreign company:'i within the meaning of section 591 of the companies act, 1956; 1 of 1856 (c) "commencement of this act" means the 19th day of july, 1969; (d) "corresponding new bank", in relation to an existing bank, means the body corporate specified against such bank in column 2 10 of the first schedule; (e) "custodian- means the person who becomes, or is appointed, a custodian under section 7;  (f) "existing bank" means a banking company specified in column 1 of the first schedule, being a company the deposits of 15 which,  as shown in the return as on the last friday of june, 1969, furnished to the reserve bank under section 27 of the banking regulation act, 1949, were not les!; than rupees fifty crores; 10 of lik8 (g) "schedule" means a schedule t<1 this act; (h) words and expressions used herein and not defined but 20 defined in the banking regulation act, 1949, have the meanings 1~ of 1h8 respectively assigned to them in that act  chapl'er n transper of the undertakings (jj' existing banks3 (1) on the commencement of this act, there shall be constituted 2s such corresponding new banks as are specified in the first schedule (2) the paid-up capital of every corresponding new bank constituted under sub-section (1) shall untfl any provision is made in thf!ll behalf in any scheme made under section 9 be equal to the paid-up capital of the existing bank in relatlo'n to which it is the corresponding new bank 30 establish - ment of corresponding new banks and busineaa thereof (3) the entire capital of each corresponding new bank shall stand vested in and allotted to the central government (4) every corresponding new bank shall be a body corporate with perpetual succession and a common seal with power sub1ect to the provisions of this act, to acauire hold and dispose of property and to con- 35 tract, and mav sue and be sued in its name (5) everv corresponding new bank shall carry on and tran!llact the business of bankin~ as deftned in clause (h) of sectfon 5 of the bankfn~ relnllation act 1949 and may enga~e in one or more fonns of husiness 10 of 1mb specified in sub-section (1) cl section 6 of that act 40 (6) every corresponding new bank shall establish a reserve fund to which shan be transferrm the share premium!': and the br1rncf' if any standin~ tn the crerlit of the reserve fund of the existins! bank in relation to which it is the eorrespn"ding nl:'w bank !lnd su('h furlhf"r :<:um!'; if anv al'! may he b-ansferred in accordanc!' with th  provi!'{fon!l 4s of section 17 of the banking re~iati()n act, 1949 10 of 1mb- on the commeneement of this ad, the uudertakin, of every uiatinr bank shall be transferred to, and shall vest in the eorrelpondin, new bank under taklniof existinc bankato vest in corresponding new banks general effect of vestin, 5 (1) the undertaking of each existing bank shall be deemed to in-s dude all assets, rights, powers, authorities and privileges and all property,movable and immovable, cash balances, reserve funds, investments and all other rights and interests in, or arising out of, such property as were immediately before the commencement of this act in the ownership, possession, power or control of the existing bank in relation 10 to the undertaking, whether within or without india, and all books of accounts, registers, records and all other documents of whatever nature relating thereto and shall also be deemed to include all borrowings liabilities and obligations of whatever kind then subsisting of the existing bank in relation to the undertaking i" (2) if, according to the laws of any country outside india, the provisions of this act by themselves are not ·effective to transfer or vest any asset (1f liability situated in that country which forms part of the undertaking of an existing bank to, or in, the corresponding new bank, the affairs of the existing bank in relation to such asset or liability shall, ~o on and from the commencement of this act, stand entrusted to the chief executive officer for the time being of the carresponding new bank, and the chief executive officer may exercise all powers and do all such acts and things as may be exercised or done by the existing bank for the purpose of effectively transferring such assets and discharging such liabilities (3) the chief executive officer of the corresponding new bank shall, in exercise of the powers conferred on him by sub-section (2), take all such s~eps as may be required by the laws of any such country outside india for the purpose of effecting such transfer or vesting, and may 30 either himself or through any person authqrised by him in this behalf realise any asset and discharge any liability of the existing bank (4) unless otherwise expressly provided by this act, all contracts, deeds, bonds, agreements, powers of attorney, grants of legal representation and other instruments of whatever nature subsisting or having effect immediately before the commencement of this act and 35 to which the existing bank is a party or which are in fawur of the existing bank shall be of as full force and effect against or in favour of the corresponding new bank, and may be enforced or acted upon as fully and effectuany as jf in the place of the existing bank the correspondin!! new bank had been a party thereto or as if they had been issued in favour 40 of the corresponding new bank (5) if, on the appointed day, any suit, appeal or other proceeding of whatever nature in relation to any business of the undertaking which has been transferred under section 4, is pending by or against the exist-45 ing bank, the same shall not abate, be discontinued or be, in any way, prejudicially affected by reason of the transfer of the undertaking of the existing bank or of anything contained in this act but the suit, appeal or other proceeding may be continued, prosecuted and enforced by or against the corresponding new bank (6) nothing in thi:> act shall be construed as applying to the assets, 5 rights, powers, authorities and privileges and property, movable and immovable, cash balances and investments in any country outside india (and other rights and interests in, or arising out of, such property) and borrowings, liabilities and obligations of whatever kind subsisting at the commencement of this act, <1f any existing bank operating in that coun- 10 try if, under the laws in force in that country, it is not permissible for a banking company, owned or controlled by government, to carry on the business of banking there  chapter iii payment of compensation15 payment of compells'lltion 6 (1) every existing bank shall be given by the central government such compensation in respect of the transfer, under section 4, to the corresponding new bank of the undertaking of t,he existing bank as i specified qainst each such bank ill the second schedule (2) the amount of compensetion referred to in sub-section (1) shall be 20 civen to every existing bank, at its option,-(a) in cash (to be paid by cheque drawn on the reserve bank) in three equal annual instalments, the amount of each instalment carrying interest at the rate of four per cent per annum from the commencement of this act, or 25 (b) in saleable or otherwise transferable promissory note or &toek certificates of the central government issued and repayable at par, and maturing at the end of-(i) ten years from the commencement of this act add carrying interest from such commencement at the rate of four and 30' a half per cent per annum, or (ii) thirty years from the commencement of this ad and carry ina interest from such commencement at the rate of five and a half per cent per annum, or (c) partly in cash (to be paid by cheque drawn on the reserve 35 bank) and partly in such number of securities specified in iub-clause (i) or sub-clause (ii), or both, of clause (b), as may be required by the existing bank, or (d) partly in such number of securities specified in sub-clause (i) of clause (b) and partly in such number of securities speclfted in 40 sub-clause (ti) of that clause, as may be required by tbe existinr beak ' it (3) 'l'he first of the three equal annual instalments referred to in clause (a) of sub-section (2) shall be paid, and the securities referred to in clause (b) of that sub-section shall be issued, within sixty days from the date of receipt by the central government of the option referred to in 5 that sub-section, or where no such option has been exercised, from the latest date before which such option ought to have been exerci~ed (4) the option referred to in sub-section (2) shall be exercised by every existing bank before the expiry of a period of three months from the appointed day (or within such further time, not exceeding three 10 months, as the central gcvernment may, on the application of the existing bank, allow) and the option so exercised shall be final and shall not be altered or rescinded after it has been exercised (5) any existing bank which omits or fails to exercise the option referred to in sub-section (2), within the time specified in sub-sectian (4), 15 shall be deemed to have opted for payment in securities specified in subclause (i) of clause (b) of sub-s~ction (2) (6) notwithstanding anything contained in this section, any existing :bank may, before the expiry of three months from the appointed day (or within such further time, not exceeding three months, as the central, 20 government may, on the application of the existing bank, allow) make an application in writing to the central government for an interim payment of an amount equal to seventy-five per cent of the amount of the paid-up capital of such bank, as on the commencement of this act, indicating therein whether the payment is desired in cash or in securities specified 25 in sub-section (2), or in both (7) the central government shall, within sixty days from the receipt of the ,pplication referred to in sub-section (6), make the interim pay ment to the existing bank in accordance with the option indicated in such application 30 (8) the interim payment made to an existing bank under sub-section (7), shall be set off against the total amount of compensation payable to such existing bank under this act and the balance of the compensation remaining outstanding after such payment shall be given to the existing bank in accordance with the option exercised, or deemed to have been 35 exercised, under sub-section (4) or sub-section (5), as the case may be: provided that where any part of the interim payment is obtained by an existing bank in cash, the payment so obtained shall be set off, in the first instance, against the first instalment of the cash payment referred to in bub-section (2) and in case the payment so obtained exceeds the amount 40 of the first instalment, the excess amount shall be adjusted against the recond instalment and the balance of such excess amount, if any, against the third instalment of the cash payment (9) any payment purported to have been made to an existing bank under sub-section (3) of section 15 of the banking companies (acquisition 22 of 1989 45 and 'transfer of undertakings) act 1969, shall be deducted by the central government from the amount of the interim payment made to such existing bank under sub-section (7), 01' where no such interim payment has been made, from the total amount of the compensation due to such existing bank, and the amount so deducted shall be paid by the central so government to the corresponding new bank 7 (1) the head office of each corresponding new bank shall be at such place as the central government may, by notification in the official gazette, specify in this behalf and, until any such place is so specified, mall be at such place at which the head ofiice of the existing bank, in relation to which it is the corresponding new bank, is on the commencement of this act, located (2) the general superintendence direction and management of the affairs and business of a corresponding new bank shall vest in a board 10 of directors which shall be entitled to exercise all such powers and do all such acts and things as the corresponding new bank is authorised to exercise and do (3) (a) as soon as may be after the appointed day, the central government shall, in consultation with the reserve bank constitute the first j s board of directors of a corresponding new bank, consisting of riot more than seven persons, to be appointed by the central government, and every director so appointed shall hold office until the board of directors of such corresponding new bank is constituted in accordance with the scheme made under section 9: 20 provided that the central government may, if it is of opinion that it is necessary in the interests of the corresponding new bank so to do, remove a person from the membership of the first board of directors and appoint any other person in his place  (b) every member of the first board cf directors (not being an officer 2s of the central government or of the reserve bank) shall receive such remuneration as is equal to the remuneration which a member of the board of directors of the existing bank was entitled to receive immediately befote the commencement of this act (4) until the first board of directors is appointed by the central gov- 30 ernment under sub-section (3), the general superintendence, direction and management of the affairs and' business of a corresponding new bank shall vest in a custodian, who shall be the chief executive officer of that bank and may exercise all powers and do all acts and things as may be exercised or done by that bank 35 (5) the chairman of an existing bank holding office as such imme-~  diately before the commencement of this act, shall be the custodian of the corresponding new bank and shall receive the same emoluments as he was receiving immediately before such commencement: provided that the central government may, if the chairman of an 40 existing bank declines to become, or to continue to function as a custodian of the corresponding new bank, or, if it is of opinion that it is necessary in the interests of the corresponding new bank so to do, appoint any other person as the custodian of a corresponding new bank and the custodian so appointed shall receive such emoluments as the central 45 government may specify in this behalf (6) the custodian shall hold office during the pleasure of the central government 8 every correspoml1l1g uew bank shall, in the discharge of its iunc· tions, be guided by such directions in regard to matters of policy invo'lving public interest as the central government may, after consultation with the governor of the reserve bank, give correa pondin, new banks to be cuid ed by the directions of the central government power ofcentral governmentto make scheme s t (1) the central government may, after consultation with the reserve bank, make a scheme for carrying out the provisions of this act (2) in particular, and without prejudice to the generality of the fotegoing power, the said scheme may provide for all or any of the following 10 matters, namely:-(a) the capital structure of the corresponding new bank, so however that the paid-up capital of any such bank shall not be in excess of rupees fifteen crores; (b) the constitution of the board of directors, by whatever name is called, of the corresponding new bank and all such matters in con· nection therewith or incidental thereto as the central government may consider to be necessary or expedient; (e) the reconstitution of any corresponding new bank into two or more corporations, the amalgamation of any corresponding new 20 bank with any other corresponding new bank or with another banking institution, the transfer of the whole or any part of the undertaking of a corresponding new bank to any other banking institution or the transfer of the whole or any part of the undertaking of any other banking institution to a corresponding new bank; 2s (d) such incidental, consequential and supplemental matters as may be necessary to carry out the provisions of this act ~ (3) every board of directors of a corresponding new bank eonstitu-,ted under any scheme made und~'!" i"ub-section (1) shall include-(a) representatives of the employe~s, and of depositors, of such 30 bank, and (b) such other persons as may represent the interests of each of the following cate~ories, namely farmers, workers and artisans, to be elected or nominated in such manner as may be specified in the scheme 35 (4) the central gov~mment may, after consultation with t"'f" reserve bank make a scheme to amend or vary any scheme made under sub· section (1) (5) every scheme made by the central government under this act shall be laid as soon as may be atter it is mnde befo'!"e each 40 house of parliament while it is in session for a total period of thirty days which may be comprised in one session or in two successive sessions and if before the expiry of thp session in which it is so laid or the session immediately followin~ both houses agree in makinj:t' anv it'odjftcntfnn in the scheme or both houses agree that the scheme should not be marl" 4s the scheme shall thereafter have pf'fect only in such modiftedform or he of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that scheme  chapl'er v miscellaneous5 10 (1) every corresponding new bank shall cause its books to be closed and balanced on the 31st day of december of each year and shall appoint, with the previous approval of the reserve bank auditors for the audit of its accounts clolureof accounts anddilpoaalof pro8tj 1 of 1958 (2) every auditor of a couesponding new bank shall be a person who 10 is qualified to act as an auditor of a company under section 226 of the companies act, 1956, and shall receive such remuneration as the reserve bank may fix in consultation with the central government (3) every auditor shall be supplied with a copy of the annual balancesheet and profit and loss account and a list of all books kept by the is corresponding new bank, and it shall be the duty of the auditor to examine the balance-sheet and profit and loss account with the accounts and vouchers relating thereto, and in the performance of his duties, the auditor-(a) shall have, at all reasonable times, access to the books, 20 accounts and other documents of the corresponding new bank, (b) may, at the expense of the corresponding new bank, employ accountants or other persons to assist him in investigating such accounts, and (e) may, in relation to such accounts, examine the custodian 25 or any officer or employee of the corresponding new bank (4) every auditor of a correspondin~ new bank shall make a ret'ort to the central government upon the annual balance-sheet and accounts and in every such report shall state-(a) whether, in his opinion, the balance-sheet is a full and fair 30 balance-sheet containin~ all the necessary particulars and· ht properly drawn up so as to exhibit a true and fair view of the affairs of the corresponding new bank and in c!lse he had called for any explanation or information whether it hs!'l been given and whether it is satisfactory: 35 (b) whether or not the transactions of the corresponding new bank, which have come to his notice, ha~· been within the powers of thnt bank; (c) whether or not the' t'e~urns t(!ceived from the offices and branche~ of the correspondin~ new bank have been found adequate 40 for thf' purpose of his audit; (d) whethf't the profit /\,,d 10s<; ih'c'ount shows a true balance of profit or loss for thf" period covered by such account; and (e) any other matter which he considers should be brought to the notice of the central government 45 (5) the report of the auditor shall be verifled sija'led and transmtttetl to the central gover'1ment (6) the auditor sh:<l'l also forwarci n ('()py of the audit report to the corresponding new h:lnk and to the reserve bank ' (7) after making provision for bad and doubtful debts, depreciation in asse~ oontributiona to staft and  bupe&l8d1luation 1uncis ,·ud,au ether mailt8q ~~ 1 whiah~ provision  is· necessary'qnder, any l~w  ar  wbkhl - ,areu usuan~ ijllroyidedr for by bankullg i companies a correspeapinlj 1 ~w qauk  l s shall transfer the balance· ~f profits/to the :central igovejaljdedti ~  (8) the central government shall cause every auditor's repott aud report on the'working and·activities· of each·-correaponding new·bankjto be laid for not -less ·than thirty' days hefore each  hoaae  of parltamadl :ae soon as may be after each such report is received by the ,centrdgovern-:f 10 ment 43 of 1a61 11 for'the :purposes :of the income~x act 1961,every,cprrupcmdlng newlbank_uauhe aeemad to be an indian conapany· and·  ;compllll)l,·~ which the public are substantially interested coi'j!ii,i;h',\ pondijqrtv i,' new ~, bank : deemed to be  an in4fjm~  compq' 12 (1) every person holding office, immediately before the com'" 15 mencement of this act, as chairman of  an existing bank shbll if he becomes--custodian of the ·corresponding new bankp be deemed, :ion such coillltrel1cement, to have vacated· office as iuchr:chalr:man; ar, reld  "(1 ofchtdn:,,··, mlld-b8! from office (2) save as otherwise provided in sub·section (1) every office\" or other employee of an existing bank shall become, on the commencement 20 of this  act,',an officer t')r other employee, as the case may be, of the correspeadiag new· banlq, and shall hold his office, or service in that bank on tile',same terms and conditions and with the same rights, to pensidn~ g~uity' and"other, matters as would have been admissible, to him if the' undertaking,of the existing bank had not been transferred to and vested 25 in the co'rresponding new bank and continue to do so unless and until, his employment in the corresponding new bank is terminated or until his,x:emuneration,terms or conditions are duly altered by the correspon· ding new bank (3) "for the, persons who immediately before the commencement of 30 this act wer-e ,the· trustees aor aoy pension, provident, gratuity or other like fund constituted for the officers or other employees of an existing bank, there shall be substituted as trustees such persons as the central government may, by general or special order, specify (4) notwithstanding anything c'jdtained in the industrial disputes it of 1947 3s act, - l947  cu' in any-other  lawfor the time being in force, the transfer of the- aervicas' of any,officfu' or other employee, from an existing b~nk to  ,cerraspondin~ new, bank shan not entitle such  officer or othetemploye~ to any compensation under this act or any other jaw for'the" time being in force and no ~uch claim shah be entertained by any court, 40 tribunal or other authority 13 fi) every,corresj!loncuugnew  bank shauobserve, -exoept as other-obuptiona uto ftdelity and aecrecy wti8·~1deed:rby lew,dhe ,practices and !tusages ,ocustornar&"  among bal1bn:s end  ,in particular • it shall aot;divulgeany,jnformation relating to or to ~e dairs iof its ood8titueats rexceptf,n clrcumatancesin which 4s it is, ill aeccrrdance~witb 'law-or practiqes andalsages,customary among banldea, 1aeces&lfja or ap'pf'opdate~ for: the i:ortespo~g  new bank to dlvu,ftt'h ribfonnation· (z) every director, member ofa local board or a commiuee, or auditor, adviser, ofticer or other employee of a corresponding new bank shall, before entering upon his duties, make a declaration of fidelity ~d secrecy in the form set out in the third schedule (3) every custodian of a corresponding new bank shall, 8s soon &s 5 possible, make a declaration of fidelity and secrecy in the form set out in the third schedule 14 every custodian of a corresponding new bank shall be deemed to be a public servant for the purposes of chapter ix of the indian penal code 10 45 of 1880 custodian to be public servant 15 (1) all acts done by the custodian, acting in good faith, shall, notwithstanding any defect in his appointment or in the procedure, be valid certain defecta not to invaljdate acttor proceedin  (2) no act or proceeding of any board of directors or a local board or committee of a corresponding new bank shall be invalid merely on 15 the ground of the existence of any vacancy in, or defect in the constitution of, such board or committee, as the case may be (3) all acts done by a person acting in good faith as a director or member of a local board or committee of a corresponding new bank sl:1all be valid, notwithstanding that it may afterwards be discovered that 20 his appointment was invalid by reason of any defect or disqualification or had terminated by virtue of any provision contained in any law for the time being in force: provided that nothing in this section shall be deemed to give validity to any act by' a director or member of a local board or committee of a 25 corresponding new bank after his appointment has been shown to the corresponding new bank to be invalid or to have terminated inde'1lnlty 16 (1) every custodian of a corresponding new bank and every ofticer of the central government fir of the reserve bank and every ofticer or other employee of a corresponding new bank, shall be indemni- 30 tied by such bank against all losses and expenses incurred by him in or in relation to the discharge of his duties except such as have been caused by his own wilful act or default (2) a director or member of a local board or committee of a corresponding new bank shall not be responsible for any loss or expense caus- 35 ed to such bank by the insufficiency or deficiency of the value of, or title to, any property or security acquired or taken on behalf of the corresponding new bank, or by the insolvency or wrongful act of any customer or debtor, ot' by anything done in or in relation to the execution of the duties of his office, unless such loss, expense, insufticiency or defici- 40 ency was due to any wilful act or default on the part of such director or member 17 any reference to any existing bank in any law, other than this act, or in any contract or other instrument shall, in so far as it relates to the undertaking which has been transferred by section 4, be construed as a reference to the corresponding new bank reference to existm,banlu on and from the commencemedt ofthia act dissolu tion s 18 no provision of law relating to winding up of corporations shall apply to a corresponding new bank and no corresponding new bank shall be placed in liquidation save by order of the central government and in such manner as it may direct power to make regulations 19 (1) the board of directors of a corresponding new bank may, after 10 consultation with the reserve bank and with the previous sanction of the central govemment,make regulations, not inconsistent with the provisions 0'£ this act or any scheme made thereunder, to provide for all matters for which provision is expedient for the purpose of giving effect to the provisions of this act is (2) in particular, and without prejudice to the generality of the foregoing power, the regulations may provide for all or any of the following matters, namely:-20 (a) the powers, functions and duties of local boards and restrictions, conditions or limitations, if any, subject to which thl;y may be exercised or performed, the formation and constitution of local committees and committees of local board (including the number of members of any such committee), the powers, functions a,nd duties of such committees, the holding of meetings of local committees and committees of local boards and the conduct of business thereat; (b) the manner in which the business of the local boards shall be transacted and the procedure in connection therewith; (c) the delegation of powers and functions of the board of directors of a corresponding new bank to the general manager, director, officer or other employee of that bank; 30 (d) the conditions or limitations subject to which the corresponding new bank may appoint advisers, officers or other employees and fix their remuneratiw1 and other terms· and conditions of service; (e) the duties and conduct of advisers, officers or other employees of the corresponding new bank; 3s <f> the establishment and maintenance of superannuation, pension, provident or other funds for the benefit of officers or other employees of the corresponding new bank or of the dependants of such officers or other employees and the granting of superannuation allowances, annuities and pensions payable out (1f such funds; (g) the conduct and defence of legal proceedings by or against the corresponding new bank and the manner of signing pleadings; (h) the provision of a seal for the corresponding new bank and the manner and effect of its use; (i) the folm and manner in which contracts binding on the corresponding new bank may be executed; 4s , , (1) -the' conditions and the requirements subject to·wl'liclt loana at advances may be made or bills may be-'discounted 01' ptljtfttased i • , by the-corresponding new' bank; (k) the persons or authorities who shall administer any pension, provident or other fund constituted for the benefit of officers or s other employees of the corresponding new bank or their dependants; (l) the preparation and submission of statements of programmes at·, activities and tinancialstatements -of the",collfesp~gmew' bank  and ute- period for whichand the ,time within whica buch statements (i, and-,estimates me to be prepared and· submitted; and 10 (m) generally for the efficient oonduct of, the;affai1\'!l 'of; tim; corresponding new bank - (3) until any regulation is made "'nder sub-sec1ion (1 ), the" articles of"association of the existing bank and every regulation" rule"bye-iaw i· 11 oi'dermade by the existing ·bank sha u, if in ,force at· the commence- is - 011 ent 'iiilfi  this act, }j)e deemed to be the regulations ,made· under sub-section (1) and shall have effect accordingly and!~ ,reference· therein to ,any authority of the existing bank shall be deemed to be a reference to the  ~-corresponcling authority of the' conreeponding ·new -bank·'bnd until any suchcorrespooding authority i'8 constituteo:·under this act,·'~shalh' be 20 deemed to refer to the custodian 20 (1) in the banking regulation act, 1949,-10 of 1949 amend mentol certain enact menta j (a)m seetion 134a, inllsw-seetionl (3); fol'i the wordal,!~and any d\subsidiary';bank", the words, figures arxl,obradtets "8 'eorresponding  " new··bank, c:onstltnated·1ulder"'8ecticm 3 oft the:,i banlting ,-<i1ampanies 2s ' (aoquisitiqill 'and transfer of undertakings) actj :1970,,' nand any subsidiary' bank"  shall be· 'llubstituted; i': (b} m eection ,-36ad,in ,sub-eeetion, (3h fol" the words "and any subsidiary bank"; ,the' ,words/figures and;, hl'aokeui '!a ()()ljresponding new bank constituted under section 3 of the banking companies 30 (acquisition and transfer of undertakings) act;'1970, and any 9ubsidiary bank" shall be substituted;  i' (e) in section 51, for the words "or any other banking institu-"""ticm !lotifted by' tne' cetitnu· govemment ibi,thilf·b8walf"j the words, ,: flgures" and: braekets· "at· any- 'corresponding" new 'bank·" emtitute4 3s '" uhde' 'section s cit the'benk:itig'cempaatet!t '~aequisition"a1\tl trans-", fer of undertakings) :act, 1970, or any other  banking institution notified by the central government in this behalf", sha1jbe substituted;  (d) in the fifth schedule, in part i of paragraph '1, in clauje 40 (e), the erplanations shall be deemed never to have been inserted -('i (2) 1ft the:lndultriakdlsputes·act;~1947, in·seotion i, ill!~u8e (bb), uofl947 for, the· words "and any' 'subsidiary :bankl~, the· iwords,1 il'1ret:18nd brae- kets "a corresponding new bank constituted under section 3 of the nanlting companies (acquisition and transfer of under;akings) a~t, 4s '1970, and any subsidiary bank" shall be substituted (3) in the banking companies  (legal practitioners' clients' accounts) act, 1949, in section 2, in clause (a), for the words "and any '6 of 1949 ,,; subsktial7' ,lhtnk'\, theftrd3j,ftguresi~nd·brackets ''tl eottesponding new bank constituted under 8ec!tions of th"ibanking'companieb>;(~cquisi_ so tion and transfer of·· undertakings) act, '1970, 'and any' subsidiary bank" shall be substituted 47 of 1961 ;, (i) in, the deposit lnsunnce corpqration act~: 1961,-5 '(a) in section 2,-(i)'after clause (e)'-:; the 'following·c!ause·  shall be inserted, namely:-, (ee) "corresponding new· bank!~  means a corresponding new ,bank oonstitute<1 \lnder section 3 of the • ~ng com-i panies (acquisitionand ,transfer of undena~ijlgs) act, 1970;'; 10 (it) in' clause (g) ,-(a) for the words "or a banking company", the words "a corresponding new bank or-abaftking 'company", and is (b) for the words "with a banking c:ompany", the words "with a corresponding new bank ora with a 'banking company", shall be substituted; {iii) in  clause (i),after, the werds, "banlpnicplllpany", the words "or a corresponding 'new ,bank"·$hall bejnlertedj 20 ' (b) 'section 19 shall bere·numbered as subjseetion~ (~ thet-eof and after sub;section (1-) as so re-numbered,the following-sub1ection shall be inserted, namely:-" (2) the provisions of clauses (a), (b), (c), (d) ancl (h) , 01 sub-section (l) shall apply to a corresponding new bank as they apply to a banking company" 60 at 1968 ,:, (5) in· the· state agricultural credit corpontiolla,aatr·l»68,-/', (u)in 'sectidn2',afterolause (i)c," the ·6tllowingl 'olaulft ahllt be inserted, namely:-'(ii) "corresponding new bank" means a corresponding new 30 bank constitnted  lunder- settion s of the banking companies (acquisition,and'ilfrtmsfer 'ofljnciertakings) act, 1970;'; 3s (b) !8fter,·thenwords "subsidiary sanks',' oti'fsubsidiary bank", as the case may be,occurring in' clause' (d) t)f sub-seetion' (8) of section 5, in clause (b) of section 9 and in the proviso to section 18, the words·f'eorrespon,ding new banks" 01' "oon-esper4ing,new bank", as the case! may be, shall be  inserted, 21 (1) the banking companies (acquisition 'ant!"tnmsfet ~ undertakings) ordinance,' 1970, is hereby repealed repeal and any ijudg_ savin, (2) notwithstanding 'such repeal and notwithstanding 40 ment, decree or order of any court or tribunal,-(a) any-action taken, or purported to have-bee'rl-otakeft', 'or'8nything done, or purported to have been done,l-between' t1w~9ih"day of july:' 1969; 'and the 10th day of february; ;191{); ~'1lft,oorr8llpclnd­ing new' bank "put"ported to have been constituted 'yn~l\'· tljlt  aanking companies· ,(acquisition and transfer of, '\ftinc:t:taidngs) ordinn~efllc196t, 01' the banking cempanies(aequilition,iallllli\'anson behalf of such bank and any right, obligation or l~bility acquir  ed or incurred, between the said dates, by or on behalf of such corresponding new bank shall be deemed to have been taken, done, acquired or incurred under the provisions of this act by or on behalf of the corresponding new bank constituted thereunder; 5 (b) any action taken, o~ purported to have been taken, or anything done, or purported to have been done, between the 10th day of february, 1970, and the appointed day, by an existing bank or by any person acting on behalf of such bank, and any right, obligation or liability acquired or incurred, ,between the said dates, by 10 or on behalf of such existing bank shall be deemed to have been taken, done, acquired or incurred under the provisions of this act by or <m behalf of the corresponding new bank constituted there· under; (c) anything done or any action taken, including any order made, notification issued or directions given under the banking is companies (acquisition and transfer of undertakings) ordinance 1970, &hall be deemed to have been done, taken, made, issued or given, as the case may be, under the corresponding provisions of this act (3) any suit, appeal or other proceeding of whatever nature instituted on or after the 19th day of july, 1969, by or a&ainst a corresponding new bank purported to have been constituted by the banking companies (acquisition and transfer of undertakings) ordinance, 1969, or the 22 'of 1969 banking companies (acquisition and transfer of undertakings) act, 2s 1969, shall not abate, be discontinued, or be, in any wfiy, prejudicially affected by reason of the expiry of the said ordinance or the invalidation of the said act, as the case may ,be, but such suit, appeal or other proceeding may be continued, prosecuted and enforced by or against the corresponding new b,ank as if such suit, appeal or other proceeding had 30 been instituted by or against the corresponding new bank constituted under this act  the first schedule (s" sections 2, 3 and 4)o central bank of indis existing banle: corresponding new bank column i column 2 ------------------__-------the central bank of india limited the bank of india limited o bank of india punjab national bank bank of baroda o united commercial bank canara bank · united bank of india · dena bank o syndicate bank union bank of india - allahabad bank o indian bank th~ punjab national bank limited the bank of baroda limited the united commercial bank limited canara bank limited united bank of india limited dena bank limited syndicate bank limited the union bank of india limited allahabad bank limited the indian bank limited the bank of maharashtra limited the indian overseas bank limited o bank of maharashtra - indian oversea benk  the second schedule (sh section 6) ----------- ----- ------------------ name of existing bankamount ot compensation (in lakhs of rupees) the central bank of india limited the bank of india limited the punjab national bank limited the bank of baroda limited the united commercial bank limited canara bank limited united bank of india limited dena bank limited syndicate bank limited '!'he union bank of india limited allahabad bank limited the indian bank limited the bank of maharashtra limited the indian overseas bank limited 1750 1470 11920 840 830 360 420 360 360 310 :uo 230 23f) 250  the third schedule[see sub-sections (2) and (3) of section 13]  declaration of fidelity and secrecyi, do hereby declare that i will faithfully, truly and to the best of my skill and ability execute and perform the duties required of me as custodian, director, member of local board, member of iocal committee, auditor, adviser, officer or other employee (as the case may be) of the· and which properly relate to the office or position in the said· held by me r further declare that i will not communicate or allow to be communicated to any person not legally entitled thereto any i-nformation relating to the affairs of the· or to the affairs of ,any person having any dealing with the· ; nor will i allow any such person to inspect or have access to any books or documents belonging to or in the possession of theand relating to the business of the· or to the business of any pf:!rson having any dealing with the· -name of corresponding new bank to be filled in  statement of objects and reasonsthe supreme court by a majority judgment,delivered on the 10th febnlary, 11,970; declared the banking companies (acquisition and transfer _of undertakings) act, 1969, void the effect of the judgment is that the undertakings of the 14 maj-or indian scheduled banks, which were acquired by the central government under the authority of the act, reverted to the said banks with a view to resuming control over these banks, the president promulgated, on the 14th february, 1970, the banking companies (acquisition and transfer of undertakings) ordi· nance, 1970 the provisions of- the earlier act, which were struck down by the'majority judgment of the supreme court, have been duly amend-," ed or deleted while promulgating the said ordinance the ordinanoe;' ~ provides'for the acquisition of the undertakings of the said banks with", effect froin the 19th july, 1969, ie, the date on which ,tbeseundertakings: , were initially acquired" having regard to their size, resources, coverage:'" and ol'gllnisation as contemplated by article 31 (2) of the constitutionf ," the ordmance now fixes the amount of compensation payable to each of !' the said ;banks the bill seeks to replace the said ordinanoe the provisions of the bill are explained in detail in the notes on clauses new delhi; i indira gandhi the 23rd february, 1970  presldents recommendation under article 117 of, the constitution of india[copy of letter no i (1)·nbi1(), dated the 23rd february, 1970 from shriinati indira gandhi, prime minister, to the secretary, lok sabha] the president of india having been informed of the subject matter l(1f ' the proposed banking companies (acquisitiq'o and ttansfer' elf undertakings) bill, 1970,' recommends' the introduction of the bill in the lok sabha' under clause (1) of article 117 and its consideration under clause (3) of article 117 of the constitution clause 2 seeks to insert definitions of certain new expressions in the act the proposed definitions are self-explanatory clause 3 seeks to provide for the constitution of 14 new banks the share capital of each bank being allotted wholly to the central government each new bank will be a body corporate and will carryon the business of banking cla~ 4 seeks to provide for the transfer and vesting of the undertakings of the 14 existing banks, as mentioned in the first shedule, in the corresponding new banks clause 5 clarifies the general effect of vesting so that the business of each bank may continue uninterrupted clause 6 seeks to provide for the payment of compensation to each existing bank for the acquisition of its undertaking the amount will be payable in cash or in central government securities according to the option of the recipient company if the company opts for cash, it will be paid in three annual instalments, each instalment carrying interest at 4 per cent from july 19, 1969 if the company opts for compensation in the form of securities, it can choose either a io-year security carrying interest at 46 per cent per annum or a 30-year security carrying interest at 51 per cent, in either case from july 19, 1969 the company can also opt for payment partly in cash and partly in securities in such propor  tion or proportions as it may desire if no option is exercised, it will be deemed to have opted for the payment of compensation in the form of 10-year securities carrying 41 per cent interest provision has also been made for the payment of interim compensation up to 75 per cent of the paid-up capital of each bank clause 7 provides for the appointment of the chairman of an existing bank as the custodian of the corresponding new bank until the constitution of the first board of directors the first board of directors will consist of not more than 7 persons and will continue till the board of directors is constituted in terms of a scheme framed under section 9 of the act clause 8 seeks to provide for the issue of directions by the central government in regard to matters of policy involving public interest czause 9 seeks to empower the central government to make a scheme providing for the constitution of the boards of directors of the nationalised banks, changes in their capital structure in case such changes, reconstitution or amalgamation, are considered desirl!ble, and au other matters which are necessary for carrying out the provisions of the act clawe 10 contains provision regarding the annual closing of accounts and audit of each bank clause 11 seeks to declare every corresponding new bank as an indian company for the purpose of taxation and also a company in which the public are substantially interested clawe 12 provides fw the vacation of office of the chairman of each bank and for the transfer of the services of the officers and employees of each existing bank to the corresponding new bank clause 13 seeks to place an obligation on the directors and other persons connected with each nationalised bank as tn the fidelity and secrecy relating to the accounts of individual constituents of every bank clawe 14 seeks to make every custodian of a new bank a public servant for the purpose of chapter ix of the indian penal code clawe 15 seeks to provide for protection for anything done in good faith by the custodian or board of directors for any action irrespective of any defect in their appointment clause 16 seeks to provide indemnity to every bank and office of the central government or the reserve bank against all josses which are not wilfully caused clause 17 provides that any reference to an existing bank in any law, contract or instrument shall in relation to the undertaking transferred by section 4 be deemed to be a reference to the new bank clause 19 provides for the regulation making power of the central government in regard to certain specified matters relating to the business of each nationalised bank clause 20 provides for consequential amendments to certain existing enactments , clause 21 provides for the repeal of the banking companies (acquisition and transfer of undertakings) ordinance, 1970, which is being replaced by the proposed new act all action taken before the commencement of the new act will be deemed to have been taken under that act clauses 4 and 6 provide tor the acquisition of the undertakings of the :14 banking companies and the payment of specified amounts as compensa· tion in respect of these companies the aggregate amount of compensation will be rs 8740 crores as shown in the second schedule to the bill and will be payable in cash or in central government securities, or partly in cash and partly in government securities, acoording to the  option of' cash recipient company it a recipient company opts for payment in cash only, payment will be made in three equal annual instalments, each instalment carrying interest at 4 per cent per anm 1m from july 19, 1969 if a recipient company opts to take the compensation either wholly or partly in the form of securities, it can choose either a 'lo-year security repayable at par, carrying interest at 4i per cent per annum or a 30-year security repayable at par, carrying interest at 5i per cent per annum, in either case from july 19, 1969 a similar option regarding payment in cash or security or both is available also in respect of interim compensation for which provision has been made for payment up to 75 per cent of the paid up capital if the company so opts in view of the availability of option, it is not possible to indicate the amount of compensation which will be actually payable in each financial year if all the 14 companies opt for payment entirely in cash, the principal amount which will be paid in each of the three years beginning from 1970-71 will be about rs 29'13 crores in that event the interest payable will be about rs 4'32 crores in 1970-71, rs 2· 33 crores in 1971-72, and rs 1·17 crores in 1972-73 this will be a recurring expenditure for a period of three years thereafter, there will be no recurring or non-recurring expenditure it is possible that some companies may choose to receive compensation in government securities and some companies partly in cash and partly in government securities there is thus a possibility the interest payable on account of compensation in cash may be reduced while the interest payable on securities may increase depending on the proportion and nature of securities which may be issued it is therefore not practicable at this stage to calculate the amount of recurring expenditure on account of interest which will ~be paid each year  memorandum regarding delegated legislationclause 9 of the bill empowers the central government to make a scheme in consultation with the reserve bank for carrying out the provisions of the act the scheme will, inter aua, provide for matters relating to the capital structure of the corresponding new banks, the constitution of the board of directors and such incidental or consequential matters as may be necessary for giving effect to the provisions of the act every such scheme shall be laid before both 'houses of' parliament and be subject to modification and annulment by parliament clause 19 of the bill empowers the board of directors of the corresponding new bank to frame regulations, in consultation with the reserve bank and with the previous sanction of the central government, for the transaction of its business such regulations shall not be inconsistent with the provisions of the act the matters in respect of which any scheme or regulations may be' made are matters of detail or of procedure within the scope of the general provisions and guiding principles in the act and it is not possible to provide for them in the act the delegation of legislative power' is, therefore, of a normal character - - - - - part 'ii production ol documents of confl· dential nature business of banking companies - - - - - ma (1) - - - - - (3) for the purposes of this section, "banking company" includes the industrial development bank of india, the reserve bank, the state bank of india and any subsidiary bank - - - - - part lib  prohibition of certain activities in relation to banking companies- - 36ad (1)· - - - - (3) for the purposes of this section, "banking company" includes the reserve bank, the industrial development bank of india, the- state bank of india, and any subsidiary bank - -  - part ivpunish mentsfor certain activities in relation to b'ank· ing com_ panies - -  miscellaneous •23 of 1955 - - 51 without prejudice to' the provisions of the state bank of india act, 1955, or any other enactment, the provisions of section 10, 13 to 15, 17, 19 to 21, 23 to 28, 29 (excluding sub·section (3», 31, 34, 35, 35a, 36 (excluding clause (d) af sub-section (1», 46 to 48, 50, 52 and 53 shall also apply, so far as may be, to and in relation to the state bank of india or any other banking institution notified by the central govern· ment in this behalf as they apply to and in relation to banking com· panies: provided that---application ot certain provisions to the state bank of india and other notified banks (a) nothing contained in clause (c) of sub-section (1) <1f section 10 shall apply to the chairman of the state bank of india or to a general manager of any subsidiary bank in so far as the said clause precludes him from being a director of, or holding an oftlce in, any instituthm approved by the reserve bank; (b) nothing contained in section 19 shall apply to the holding by the state bank of india of shares in the capital of any such subsidiary bank; and (c) nothing contained in section 46 or in section 47a shall apply to any officer of the central government (jf the reserve :sank or the state bank of india, nominated or appointed as director of the state bank of india, or any such subsidiary bank or any other bankmg institution notified by the central government under this section - - - - -  extract from the industrial disputes act, 1947 (14 of 1947) - • - • - chapter ·1defini tlons preliminary - - - - - 2 in this act, unless there is anything repugnant in the subject or context,--  - -  10 of 1949 38 of 1959 (bb) "banking comp~ny" means a banking company as defined in section 5 of the banking regulation act, 1949, having branches or other establishments in more than one state, and includes the indus· trial development bank of india the reserve bank of india, the state bank of india and any subsidiary bank as defined in the state bank of india (subsidiary banks) act, 1959; - iii  - -  extract from thji: banking companies (legal practitioners' clients' accounts) act, 1949 (46 of 1949)  - - - deftnitiooi 2 in this act, unless there is anything repugnant in the subject ot context,-1001 1949 (a) "banking 'company" means any banking company as defined in section 5 of the banking companies act, 1949, and includes the state bank of india and any subsidiary bank as defined in the state bank of india (subsidiary banks) act, 1959 38 ot 1959 18 of 1879 (b) "legal practitioner" has the same meaning as in the legal practitioners act, 1879 -  - -  dt:flnition~ extracts from the deposl'f insurance corporation act, 1961 (47 of 1961) - -   - 2 in this act, unless the context otherwise requires,-- -  -  (9) "deposit" means the aggregate of the unpaid balances due to a depositor (other than a foreign government, the central government, a state government or a banking company) in respect of all his accounts, by whatever name called, with a banking company and includes credit balances in any cash credit account but does not include,-(i) where a banking company at the commencement of this act is working under a scheme of compromise or arrangement or of recollltruction sanctioned by any competent authority providing for the acceptance of fresh deposits, any amount due to the depositor in respect of his deposit before the date of the coming into force of the scheme to the extent it is not credited after the said date under the provisions of that scheme; or (ii) any amount due on account of any deposit received outside india; - - (i) "insured bank" means a banking coni>any for the time being registered under the provisions of this act and includes for the purposes of sections 16, 17, 18 and 21 a banking company referred to in clause (a) or clause (b) of section 13 the registration whereof has been cancelled under that section;   - -   extracts from the state agricultural credit corporations act, 1968 (60 of 1968)   -  chapter nincorporation oj'! state agricultural creoi'r corporations a"id their capital 5 (1)'"     (3) out of the capital issued under sub-section (2) ,--  -   share capital and (d) the food corporation, state bank, subsidiary banks and share_ banking companies may subscribe for, in the aggregate, thirty per holders cent of the share capital:  provided that none of the said parties shall subscribe for more han fifteen per cent of the share capital -     chapter iii management of the corporation     consist of the constitution of board  9 the board of directors of the corporation shall following, namely:- -  fees and allowances of directors and members of committees - (b) two directors nominated by the appropriate government, one of whom shall be a person who has special knowledge of cooperation and who is not an employee of the central or state government or of the reserve bank, state bank, subsidiary bank, banking company, or food corporation; - - - - - 18 every director and every member of a committee shall be paid :iuch fees and allowances 8s the board may, by regulations, determine, for attending the meetings of the board or, as the case may be, any of its committees, or attending to any other work of the corporation: provided that no fees shall be paid to the chairman, managing director or any other director, if he is an officer of the government, reserve bank state bank, subsidiary bank, banking company or food corporation  - - - -  i  - a biuto provide for the acquisition and transfer of the undertakings of certain banking companief, having regard to their size, resources, coverage and organisation, in order to control the heights of the economy and to meet progressively, and serve better, the needs of development of the econonty in conformity with national policy and objectives snd for matters connected therewith or incidental thereto 