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BANKING COMPANIES (ACQUISITION AND TRANSFER OF UNDERTAKINGS) ACT, 1970
5 of 1970
31st March, 1970
STATEMENT OF OBJECTS AND REASONS The Supreme Court by a majority Judgment, delivered on the 10th February. 1970. declared the Banking Companies (Acquisition and Transfer of the Undertakings) Act, 1969 void. The effect of the judgment is that the undertakings of the 14 major Indian Schedule 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) Ordinance, 1970. The provisions of the earlier Act, which were struck down by the majority of the Supreme Court, have been duly amended or deleted while promulgating the said Ordinance. The Ordinance provides for the acquisition of the undertakings of the said banks with effect from the 19th July, 1969. i.e., the date on which these undertakings were initially acquired having regard to their site, resources, coverage and organisation.
As contemplated by Art. 31(2) of the Constitution, the Ordinance now fixes the amount of compensation payable to each of the said Banks. The Bill seeks to replace the Ordinance. The provisions of the Bill are explained in detail in the Notes on clauses.-- Gaz. of Ind.. 27-2-1970. Pt. II. S.2. Ext. p. 82. An Act to provide for the acquisition and transfer of the undertakings of certain banking companies, 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 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 Republic of India as follows:-
CHAPTER 01: PRELIMINARY
SECTION 01: SHORT TITLE AND COMMENCEMENT
(1) This Act may be called The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970.
(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.
SECTION 02: DEFINITIONS
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 within the meaning ofsection 591 of the Companies Act, 1956-;
(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 of the First Schedule;
(e) "Custodian" means the person who becomes, or is appointed, Custodian under Section 7-;;
(f) "existing bank" means a banking company specified in column I of the First Schedule being a company the deposits of 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 less than rupees fifty crores;
4(fa) "prescribed" means prescribed by regulations made under this Act;]
(g) "Schedule" means a Schedule to this Act;
(h) words and expressions used herein and not defined but defined in the Banking Regulation Act, 1949-, have the meanings respectively assigned to them in that Act.
5(i) words and expressions used herein and not defined either in this Act or in the Banking Regulation Act, 1949 (10 of 1949)-but defined in the Companies Act, 1956 (1 of 1956)-shall have the meanings respectively assigned to them in the Companies Act, 1956-."]
CHAPTER 02:
4[Transfer of the Undertakings of Existing Banks and Shares Capitals of the
Corresponding New Banks]
SECTION 03: ESTABLISHMENT OF CORRESPONDING NEW BANKS AND BUSINESS THEREON
(1) On the commencement of this Act, there shall be constituted 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, until any provision is made in this behalf in any scheme made under section 9-, be equal to the paid up capital of the existing bank in relation to which it is the corresponding new bank.
7(2A) Subject to the provisions of this Act, the authorised capital of every corresponding new bank shall be one thousand five hundred crores of rupees divided into one hundred fifty crores fully paid-up shares often rupees each :
Provided that the Central Government may, after consultation with the Reserve Bank and by notification in the Official Gazette, increase or reduce the authorised capital as it thinks fit, so however that after such increase or reduction, the authorised capital shall not exceed three thousand crores or be less than one thousand five hundred crores, of rupees.
(2B) Notwithstanding anything contained in sub-section (2), the paid-up capital of every corresponding new bank constituted under sub-section (1) may from time to time be increased by-
(a) such amounts as the Board of Directors of the corresponding new bank may, after consultation with the Reserve Bank and with the previous sanction of the Central Government, transfer from the reserve fund established by such bank to such paid-up capital:
(b) such amounts as the Central Government may after consultation with the Reserve Bank, contribute to such paid-up capital;
(c) such amounts as the Board of Directors of the corresponding new bank may, after consultation with the Reserve Bank and with the previous sanction of the Central Government, raise by public issue of shares in such manner as may be prescribed, so, however that the Central Government shall, at all times, hold not less than fifty-one per cent of the paid-up capital of each corresponding new bank.
9(2BB). Notwithstanding anything contained in sub-section (2), the paid-up capital of a corresponding new bank constituted under sub-section (1) may, from time to time and before any paid-up capital is raised by public issue under clause (c) of sub-section (2-B), be reduced by-
(a) the Central Government, after consultation with the Reserve Bank, by cancelling any paid-up capital which is lost, or is unrepresented by available assets;
(b) the Board of Directors, after consultation with the Reserve Bank and with the previous sanction of the Central Government, by paying off any paid up capital which is in excess of the wants of the corresponding new bank:
Provided that in a case where such capital is lost, or is unrepresented by available assets because of amalgamation of another corresponding new bank or a corresponding new bank as defined in clause
(b) of Section 2 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980)-with the corresponding new bank, such reduction may be done, either prospectively or retrospectively, but not from a date earlier than the date of such amalgamation.
(2BBA).
(a) A corresponding new bank may, from time to time and after any paid-up capital has been raised by public issue under clause (c) of sub-section (2-B), by resolution passed at an annual general meeting of the shareholders entitled to vote, voting in person, or where proxies are allowed, by proxy, and the votes cast in favour of the resolution are not less than three times the number of the votes, if any, cast against the resolution by the shareholders so entitled and voting, reduce its paid-up capital in any way.
(b) Without prejudice to the generality of the foregoing power, the paid-up capital may be reduced by-
(i) extinguishing or reducing the liability on any of its shares in respect of share capital not paid-up;
(ii) either with or without extinguishing or reducing liability on any of its paid-up shares, cancelling any paid-up capital which is lost, or is unrepresented by available assets; or
(iii) either with or without extinguishing or reducing liability on any of its paid-up shares, paying off any paid-up share capital which is in excess of the wants of the corresponding new bank.
(2BBB). Notwithstanding anything contained in sub-section (2-BB) or sub-section (2-BBA), the paid-up capital of a corresponding new bank shall not be reduced at any time so as to render it below twenty-five per cent of the paid-up capital of that bank as on the date of commencement of the Banking Companies (Acquisition and Transfer of Undertakings) Amendment Act. 1995.".]
(2C) The entire paid-up capital of a corresponding new bank, except the paid-up capital raised by public issue under clause (c) of sub-section (2-B), shall stand vested in, and allotted to, the Central Government.
(2D) The shares of every corresponding new bank not held by the Central Government shall be freely transferable :
Provided that no individual or company resident outside India or any company incorporated under any law not in force in India or any branch of such company, whether resident outside India or not, shall at any time hold ar acquire by transfer or otherwise shares of the corresponding new bank so that such investment in aggregate exceed the percentage, not being more than twenty per cent, of the paid-up capital, as may be specified by the Central Government by notification in the Official Gazette. Explanation.- For the purposes of this clause, "company" means any body corporate and includes a firm or other association of individuals.
(2E) No shareholder of the corresponding new bank, other than the Central Government, shall be entitled to exercise voting rights in respect of any shares held by him in excess of one per cent of the total voting rights of all the shareholders of the corresponding new bank.
(2F) Every corresponding new bank shall keep at its head office a register, in one or more books, of the shareholders (in this Act referred to as the register) and shall enter therein the following particulars :-
(i) the names, addresses and occupations, if any, of the shareholders and a statement of the shares held by each shareholder, distinguishing each share by its denoting number;
(ii) the date on which each person is so entered as a shareholder,
(iii) the date on which any person ceases to be a shareholder; and
(iv) such other particulars as may be prescribed.
10["Provided that nothing in this sub-section shall apply to the shares held with a depository.".]
(2G) Notwithstanding anything contained in sub-section (2-F), it shall be lawful for every corresponding new bank to keep the register in computer floppies or diskettes subject to such safeguards as may be prescribed.
(3) Notwithstanding anything contained in the Indian Evidence Act, 1872(1 of 1872)-, a copy of, or extract from, the register, certified to be a true copy under the hand of an officer of the corresponding new bank authorised in this behalf by it, shall, in all legal proceedings, be admissible in evidence."]
(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, subject to the provisions of this Act, to acquire, hold and dispose of property, and to contract and may sue and be sued in its name.
(5) Every corresponding new bank shall carry on and transact the business of banking as defined in clause (b) of section 5 of the Banking Regulation Act, 1949-, and may engage in2[one or more of the other forms of business] specified in sub-section (1) of section 6-of that Act.
(6) Every corresponding new bank shall establish a reserve fund to which shall be transferred the share premiums and the balance, if any, standing to the credit of the reserve fund of the existing bank in relation to which it is the corresponding new bank, and such further sums, if any, as may be transferred in accordance with the provisions of section 17 of the Banking Regulation Act, 1949-.
1[(7)
(i) The corresponding new bank shall, if so required by the Reserve Bank, act as agent of the Reserve Bank at all places in India where it has a branch, for-
(a) paying, receiving, collecting and remitting money, bullion and securities on behalf of any Government in India; and (b) undertaking and transacting any other business which the Reserve Bank may from time to time entrust to it.
(ii) The terms and conditions on which any such agency business shall be carried on by the corresponding new bank on behalf of the Reserve Bank shall be such as may be agreed upon.
(iii) If no agreement can be reached on any matter referred to in clause (ii), or if a dispute arises between the corresponding new bank and the Reserve Bank as to the interpretation of any agreement between them, the matter shall be referred to the Central Government and the decision of the Central Government thereon shall be final.
(iv)The corresponding new bank may transact any business or perform any functions entrusted to it under clause (i), by itself or through any agent approved by the Reserve Bank.]
SECTION 03A: TRUST NOT TO BE ENTERED ON THE REGISTER
8- Notwithstanding anything contained in sub-section (2-F) of Section 3-, no notice of any trust, express, implied or constructive, shall be entered on the register, or be receivable, by the corresponding new bank."]
Provided that nothing in this section shall apply to a depository in respect of shares held by it as a registered owner on behalf of the beneficial owners.
SECTION 03B: REGISTER OF BENEFICIAL OWNERS
11-The register of beneficial owners maintained by a depository under Section 11 of the Depositories Act, 1996 (22 of 1996)-, shall be deemed to be a register of shareholders for the purposes of this Act. Explanation.-For the purposes of Section 3, Section 3-A and this section, the expressions "beneficial owner", "depository" and "registered owner" shall have the meanings respectively assigned to them in clauses (a), (e) and (j) of sub-section (1) of Section 2 of the Depositories Act, 1996 (22 of 1996).".]
SECTION 04: UNDERTAKING OF EXISTING BANKS TO VEST IN CORRESPONDING NEW BANKS
On the commencement of this Act, the undertaking of every existing bank shall be transferred to, and shall vest in the corresponding new bank.
SECTION 05: GENERAL EFFECT OF VESTING
(1) The undertaking of each existing bank shall be deemed to include 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 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.
(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 or 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, on and from the commencement of this Act, stand entrusted to the chief executive officer for the time being of the corresponding 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 steps as may be required by the laws of any such country outside India for the purpose of effecting such transfer or vesting and may either himself or through any person authorised 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 to which the existing bank is a party or which are in favour of the existing bank shall be of full force and effect against or in favour of the corresponding new bank. and may be enforced or acted upon as fully and effectually as if in the place of the existing bank the corresponding new bank had been a party thereto or as if they had been issued in favour ot 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 existing 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 this Act shall be construed as applying to the assets, 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, of any existing bank operating in that country 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 03: PAYMENT OF COMPENSATION
SECTION 06: PAYMENT OF COMPENSATION
(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 the existing bank as is specified against each such bank in the Second Schedule.
(2) The amount of compensation referred to in sub-section (i) shall be given 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 tour per cent, per annum from the commencement of this Act or
(b) in saleable or otherwise transferable promissory notes or stock 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 and carrying interest from such commencement at the rate of four and a half per cent. per annum, or
(ii) thirty years from the commencement of this Act and carrying 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 Bank) and partly in such number of securities specified in sub-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 specified in sub-clause (ii) of that clause, as may be required by the existing bank.
(3) The 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 that sub-section, or where no such option has been exercised, from the latest date before which small option ought to have been exercised.
(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 months as the Central Government 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 has been exercised.
(5) Any existing bank which omits or fails to exercise the option referred to in sum section (2), within the time specified in sub-section (4), shall be deemed to have opted for payment in securities specified in sub-clause (i) of clause (b) of sub-section (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 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 in sub-section (2) or in both.
(7) The Central Government shall, within sixty days from the receipt of the application referred to in subsection
(6) make the interim payment to the existing bank in accordance with the option indicated in such application.
(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 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 sub-section (2), and in case the payment so obtained exceeds the amount of the first instalment, the excess amount shall be adjusted against the second 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 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), or 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 Government to the corresponding new bank.
CHAPTER 04: MANAGEMENT OF CORRESPONDING NEW BANK
SECTION 07: HEAD OFFICE AND MANAGEMENT
(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, shall be at such place at which the head office 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 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 Board of Directors of a corresponding new bank, consisting of not 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-: 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 of Directors (not being an officer 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 before the commencement of this Act.
(4) Until the first Board of Directors is appointed by the Central Government 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.
(5) The Chairman of an existing bank holding office as such immediately 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 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 Government may specify in this behalf.
(6) The Custodian shall hold office during the pleasure of the Central Government.
SECTION 08: CORRESPONDING NEW BANKS TO BE GUIDED BY THE DIRECTIONS OF THE CENTRAL GOVERNMENT
Every corresponding new bank shall, in the discharge of its functions, be guided by such directions in regard to matters of policy involving public interest as the Central Government may, after consultation with the Governor of the Reserve Bank, give.
SECTION 09: POWER OF CENTRAL GOVERNMENT TO MAKE SCHEME
(1) The Central Government may, after consultation with the Reserve Bank make a scheme16for carrying out the provisions of this Act.
(2) In particular, and without prejudice to the generality of the foregoing power, the said scheme may provide for all or any of the following matters, namely:-
(a) the capital structure of the corresponding new bank,17[***]
(b) the constitution of the Board of Directors, by whatever name called, of the corresponding new bank and all such matters in connection therewith or incidental thereto as the Central Government may consider to be necessary or expedient;
(c) the reconstitution of any corresponding new bank into two or more corporations, the amalgamation of any corresponding new bank with any other corresponding new bank or with another banking institution, the transfer of the whole or any part of the undertaking of a12[corresponding new bank to any other corresponding new bank or banking institution] or the transfer of the whole or any part of the undertaking of any other banking institution to a corresponding new bank;
(d) such incidental, consequential and supplemental matters as may be necessary to carry out the provisions of this Act.
18(3) Every Board of Directors of a corresponding new bank, constituted under any scheme made under sub-section (1), shall include-
(a) not more than two whole-time directors to be appointed by the Central Government after consultation with the Reserve Bank;
(b) one director who is an official of the Central Government to be nominated by the Central Government :
Provided that no such director shall be a director of any other corresponding new bank.
Explanation.-For the purposes of this clause, the expression "corresponding new bank" shall include a corresponding new bank within the meaning of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980);
(c) one director who is an officer of the Reserve Bank to be nominated by the Central Government on the recommendation of the Reserve Bank.
Explanation.-For the purpose of this clause, "an officer of the Reserve Bank" includes an officer of the Reserve Bank who is deputed by that Bank under Section 54-AA of the Reserve Bank of India Act, 1934 (2 of 1934) to any institution referred to therein;
(d) not more than two directors to be nominated by the Central Government from amongst the Securities and Exchange Board of India establishment under Section 3 of the Securities and Exchange Board of India Act, 1992 (15 of 1992)-, the National Bank for Agriculture and Rural Development established under Section 3 of the National Bank for Agriculture and Rural Development Act, 1981 (61 of 1981)-, public financial institutions as specified in sub-section (1), or notified from time to time under sub-section (2) of Section 4A of the Companies Act, 1956 (1 of 1956)-, and other institutions established or constituted by or under any Central Act or incorporated under the Companies Act, 1956- and having not less than fifty-one percent of the paid-up share capital held or controlled by the Central Government:
(e) one director, from among such of the employees of the corresponding new bank who are workmen under clause (s) of Section 2 of the Industrial Disputes Act, 1947 (14 of 1947)-, to be nominated by the Central Government in such manner as may be specified in a scheme made under this section:
(f) one director, from among the employees of the corresponding new bank who are not workmen under clause (s) of Section 2 of the Industrial Disputes Act, 1947 (14 of 1947)-, to be nominated by the Central Government after consultation with the Reserve Bank;
(g) one director who has been a Chartered Accountant for not less than fifteen years to be nominated by the Central Government after consultation with the Reserve Bank;
(h) subject to the provisions of clause (i), not more than six directors to be nominated by the Central Government:
(i) where the capital issued under clause (c) of sub-section (2-B) of Section 3-is
(I) not more than twenty per cent of the total paid-up capital, not more than two directors,
(II) more than twenty per cent but not more than forty per cent of the total paid-up capital, not more than four directors,
(III) more than forty per cent of the total paid-up capital, not more than six directors, to be elected by the shareholders, other than the Central Government, from amongst themselves:
Provided that on the assumption of charge after election of any such directors under this clause, equal number of directors nominated under clause (h) shall retire in such manner as may be specified in the scheme.
(3A) The directors to be nominated under clause (h) or to be elected under clause (i) of sub-section (3) shall-
(A) have special knowledge or practical experience in respect of one or more of the following matters, namely:-
(i) agricultural and rural economy,
(ii) banking,
(iii) cooperation,
(iv) economics,
(v) finance,
(vi) law.
(vii) small-scale industry,
(viii) any other matter the special knowledge of, and practical experience in, which would, in the opinion of the Reserve Bank, be useful to the corresponding new bank;
(B) represent the interests of depositors; or
(C) represent the interests of farmers, workers and artisans.
(3B) Where the Reserve Bank is of the opinion that any director of a corresponding new bank elected under clause (i) of sub-section (3) does not fulfil the requirements of sub-section (3-A), it may, after giving to such director and the bank a reasonable opportunity of being heard, by order, remove such director and on such removal, the Board of Directors shall co-opt any other person fulfilling the requirements of sub-section (3-A) as a director in place of the person so removed till a director is duly elected by the shareholders of the corresponding new bank in the next annual general meeting and the person so co-opted shall be deemed to have been duly elected by the shareholders of the corresponding new bank as a director.]
(4) The Central Government may after consultation with the Reserve Bank, make a scheme to amend or vary any scheme made under sub-section (1).
13[(5) On and from the date of coming into operation of a scheme made under this section with respect to any of the matters referred to in clause (c) of sub-section (2) or any matters incidental, consequential and supplemental thereto,-
(a) the scheme shall be binding on the corresponding new bank or corporations or banking institutions, and also on the members, if any, the depositors, and other creditors and employees of each of them and on any other persons having any right or liability in relation to any of them including the trustees or Other persons, managing or in any other manner connected with any provident fund or other fund maintained by any of them-,
(b) the properties and assets of the corresponding new bank, or as the case may be, of the banking institution shall, by virtue of and to the extent provided in the scheme, stand transferred to, and vested in, and the liabilities of the corresponding new bank, or, as the case may be, of the banking institution shall, by virtue of, and to the extent provided in the scheme, stand transferred to, and become the liabilities of, the corporation or corporations brought into existence by reconstitution of the banking institution or the corresponding new bank, as the case may be.
14[(6) Every scheme made by the Central Government under this Act shall be laid as soon as may be after it is made before each House of Parliament while it is in session for a total period of thirty days15[which may be comprised in one session or in two or more successive sessions, and if. before the expiry of the session immediately following the session or the successive sessions aforesaid] both Houses agree in making any modification in the scheme or both Houses agree that the scheme should not be made, the scheme shall thereafter have effect only in such modified form or be 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.]
CHAPTER 05: MISCELLANEOUS
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