AIBOC Challenges Decision To Merge Vijaya Bank, Dena Bank, Bank Of Baroda; Delhi HC Agrees To Hear
The Delhi High Court has agreed to hear a plea of All-India Bank Officers’ Confederation (AIBOC) challenging the Centre’s proposal to merge Vijaya Bank, Dena Bank and Bank of Baroda.
A bench of Justice Ravindra Bhat and Justice AK Chawla issued the notice and the petition will now come up on October 29.
The AIBOC has, in its petition, challenged the process by which the decision to merge the three banks have been taken contending that the same is in violation of the Bank Nationalisation Acts (1970/80), the Banking Regulation Act (1949) and the Constitution and that the Centre has thrust the decision of amalgamation on RBI.
AIBOC’s counsel Prasanna S said, “Section 9 of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 lays down the procedure by which the Central Government after consultation from the Reserve Bank of India, may establish a scheme of amalgamating commercial banks.”
“However, no such scheme has been established in the instant case and the decision has been made to give the appearance as if the Boards of the Respondent Nos. 3-5 Banks (Vijaya Bank, Dena Bank and the Bank of Baroda) have taken a voluntary and autonomous decision to amalgamate themselves into a single entity,” said the petition.
It added, “Such circumvention and blatant disregard for the statutory procedure under Section 9 of the 1970 Act and the statutory requirements of mandatory consultation with the RBI and the requirement of laying the scheme before both houses of Parliament as required under Section 9(6) of the 1970 Act is not only illegal for being in violation of Section 9 of the said Act, but also an affront to the Rule of Law and in violation of Article 14 of the Constitution of India.”
The AIBOC said in-principle approvals given by the Banks’ boards were void as the posts of workmen and non-workmen directors in the board have been kept open for years by the government and the decision to give approval to amalgamate the entities cannot be validly taken without the participation by the workmen and non-workmen directors, who are important stakeholders in such a decision.