FACTS The petitioner held (R C COOPER) shares in the Central Bank of India Ltd., the Bank of Baroda Ltd., the Union Bank of India Ltd., and the Bank of India Ltd., and has accountscurrent and fi!ed deposit "ith those Banks. #e is also a d irector of the Central Bank of India Ltd. The petitioner clai$s a declaration that the Bankin% Co$panies (&c'uisition and Transfer Transfer of Undertakin%s) Ordinance of *+* pro$ul%ated on ul- *, *+*, and the Bankin% Co$panies (&c'uisition and Transfer of Undertakin%s) &ct of *+* "hich replaced the Ordinance "ith certain $odifications i$pair his ri%hts %uaranteed under &rts. /, * and 0 of the Constitution, and are on that account in1alid. In India there "as till */* no co$prehensi1e le%islation %o1ernin% 2ankin% 2usiness and 2ankin% institutions. The Central Le%islature Le%islature enacted the Bankin% Co$panies &ct 3 of */* (later called 4The Bankin% Re%ulation &ct4) to consolidate and a$end the la" relatin% to certain $atters concernin% 2ankin%. There "ere in une *+* / co$$ercial 2anks operatin% in India each ha1in% deposits e!ceedin% Rs. 53 crores. Late in the afternoon of ul- *, *+* ("hich "as a 6aturda-) the 7icePresident 7icePresident (actin% as President) pro$ul%ated, in e!ercise of the po"er conferred 2- cl. () of &rt. 0 of the Constitution, Ordinance of *+* transferrin% to and 1estin% the undertakin% of / na$ed na $ed co$$ercial 2anks in correspondin% ne" 2anks set up under the Ordinance. The lon% little of the Ordinance read as follo"s 4&n Ordinance to pro1ide for the ac'uisition and transfer of the undertakin%s of certain 2ankin% co$panies in order to ser1e 2etter the needs of de1elop$ent of the econo$- in confor$it- "ith national polic- and o28ecti1es and for $atters connected there"ith or incidental thereto.4 B- 6. 42ankin% co$pan-4 "as defined as not includin% a forei%n co$pan- "ithin the $eanin% of 6. 5* of the Co$panies &ct, *5+. &n 4e!istin% 2ank4 "as defined 2- s. (2) as $eanin% 4 a 2ankin% co$pan- specified in colu$n of the 9irst 6chedule, 2ein% a co$panco $pan- the deposits of "hich, as sho"n in the return as on the last 9rida- of une, *+*, furnished to the Reser1e Bank under section : of the Bankin% Re%ulation &ct, */*, "ere not less than rupees fift- crores4. In the 6chedule to the &ct "ere included the na$es of fourteen co$$ercial 2anks "hich included The Cen tral Bank of India Ltd., The Bank of o f India
Ltd., The Pun8a2 ;ational Bank Ltd., The Bank of Baroda Ltd., The United Co$$ercial Bank Ltd., Canara Bank Ltd., United Bank of India Ltd., o1ern$ent. The correspondin% ne" 2anks shall 2e authorised to carr- on and transact the 2usiness of 2ankin% as defined in cl. (2) of s. 5 of the Bankin% Re%ulation &ct, */*, and also to en%a%e in one or $ore for$s of 2usiness specified in su2s. () of s. + of that &ct. The Chair$an of the na$ed 2ank holdin% office i$$ediatel- 2efore the co$$ence$ent of the Ordinance? shall 2e the Custodian of the correspondin% ne" 2ank. The %eneral superintendence and direction of the affairs and 2usiness of a correspondin% 2ank shall 2e 1ested in the Custodian, "ho shall 2e the chief e!ecuti1e officer of that 2ank. The undertakin% "ithin or "ithout India of e1er- na$ed 2ank on the co$$ence$ent of the Ordinance shall stand transferred to and 1ested in the correspondin% ne" 2ank. The e!pression 4undertakin%4 shall include all assets, ri%hts, po"ers, authorities and pri1ile%es, and all p ropert-, $o1a2le and i$$o1a2le, cash 2alances, reser1e fund in1est$ents and all other ri%hts and interests arisin% out of such propert- as are i$$ediatel- 2efore the c o$$ence$ent of the Ordinance in the o"nership, possession, po"er or control of the na$ed 2ank in relation to the undertakin%, includin% all 2ooks of accounts, re%isters, records and all other docu$ents of "hate1er nature relatin% thereto. It shall also include all 2o rro"in%s, lia2ilities and o2li%ations of "hate1er kind then su2sistin% of the na$ed 2ank in relation to the undertakin%. If accordin% to the la" of an- forei%n countr-, the pro1isions of the Ordinance 2- the$sel1es do not effecti1eltransfer or 1est an- asset or lia2ilit- situated in that countr- in the correspondin% ne" 2ank, the
affairs of the na$ed 2ank in relation to such asset or lia2ilit- shall stand entrusted to the chief e!ecuti1e officer of the correspondin% ne" 2ank "ith authorit- to take steps to "ind up the affairs of that 2ank. &ll contracts, deeds, 2on ds, a%ree$ents, po"ers of attorne-, %rants of le%al representation and other instru$ents of "hate1er nature su2sistin% or ha1in% effect i$$ediatel 2efore the co$$ence$ent of the Ordinance, and to "hich the na$ed 2ank is a part- or "hich are in fa1our of the na$ed 2ank shall 2e of as full force and effect a%ainst or in fa1our of the correspondin% ne" 2ank, and 2e enforced or acted upon as full- and effecti1el- as if in the place of the na$ed 2ank the correspondin% ne" 2ank is a part- thereto or as if the- are issued in fa1our of the correspondin% ne" 2ank. In pendin% suits or other proceedin%s 2- or a%ainst the na$ed 2ank, the correspondin% ne" 2ank shall 2e su2stituted in those suits or proceed in%s. &nreference to an- na$ed 2ank in an- la", other than the Ordinance, or in an - contract or other instru$ent shall 2e construed as a reference to the correspondin% ne" 2ank in relation to it. The Central >o1ern$ent shall ha1e po"er to fra$e a sche$e for carr-in% out the pro1isions of the &ct, and for that purpose to $ake pro1isions for the correspondin% ne" 2anks relatin% to capital structure, constitution of the Board of o1ern$ent $a- %i1e. On the co$$ence$ent of the Ordinance, e1er- person holdin% office as Chair$an, =ana%in% o1ern$ent $a- 2- notification in that 2ehalf appoint.
The Central >o1ern$ent shall %i1e co$pensation to the na$ed 2anks deter$ined accordin% to the principles set out in 6econd 6chedule, that is to sa-,
@ "here the a$ount of co$pensation can 2e fi!ed 2- a%ree$ent, it shall 2e deter$ined in accordance "ith such a%ree$ent?
@ "here no such a%ree$ent can 2e reached, the Central >o1ern$ent shall refer the $atter to the
Tri2unal "ithin a period of three $onths fro$ the date on "hich the Central >o1ern$ent and the e!istin% 2ank fail to reach an a%ree$ent re%ardin% the a$ount of co$pensation.
Co$pensation so deter$ined shall 2e paid to each na$ed 2ank in $arketa2le Central >o1ern$ent securities. 9or the purpose of deter$inin% co$pensation, Tri2unals shall 2e set up 2- the Central >o1ern$ent "ith certain po"ers of a Ci1il Court.
The Central >o1ern$ent shall ha1e po"er to $ake such orders not inconsistent "ith the pro1isions of the Ordinance "hich $a- 2e necessar- for the purpose of re$o1in% defects. Under the Ordinance the entire undertakin% of e1er- na$ed co$$ercial 2ank "as taken o1er 2- the correspondin% ne" 2ank, and all assets and contractual ri%hts and all o2li%ations to "hich the na$ed 2ank "as su28ect stood transferred to the correspondin% ne" 2ank. The Chair$an and the o1ern$ent securities. The entire 2usiness of each na$ed 2ank "as accordin%l- taken o1er, its chief e!ecuti1e officer ceased to hold office and assu$ed the office of Custodian of the correspondin% ne" 2ank, its directors 1acated office? and the ser1ices of the ad$inistrati1e and other staff stood transferred to the correspondin% ne" 2ank. The na$ed 2ank had thereafter no assets, no 2usiness, and no $ana%erial, ad$inistrati1e or other staff, it "as inco$petent to use the "ord 4Bank4 in its na$e, 2ecause of the pro1isions contained in s. : () of the Bankin% Re%ulation &ct, */*, and "as lia2le to 2e dissol1ed 2- a notification of the Central >o1ern$ent.