36AE. Power of Central Government to acquire undertakings of banking companies in
certain cases.—(1) If, upon receipt of a report from the Reserve Bank, the Central Government is
satisfied that a banking company—
(a) has, on more than one occasion, failed to comply with the directions given to it in writing
under section 21 or section 35A, in so far as such directions relate to banking policy, or
(b) is being managed in a manner detrimental to the interests of its depositors,—
and that—
(i) in the interests of the depositors of such banking company, or
(ii) in the interest of banking policy, or
(iii) for the better provision of credit generally or of credit to any particular section of the
community or in any particular area,
it is necessary to acquire the undertaking of such banking company, the Central Government may, after
such consultation with the Reserve Bank as it thinks fit, by notified order, acquire the undertaking of
such company (hereinafter referred to as the acquired bank) with effect from such date as may be
specified in this behalf by the Central Government (hereinafter referred to as the appointed day):
Provided that no undertaking of any banking company shall be so acquired unless such banking
company has been given a reasonable opportunity of showing cause against the proposed action.
Explanation.—In this Part,—
(a) “notified order” means an order published in the Official Gazette;
(b) “undertaking”, in relation to a banking company incorporated outside India, means the
undertaking of the company in India.
(2) Subject to the other provisions contained in this Part, on the appointed day, the undertaking of
the acquired bank and all the assets and liabilities of the acquired bank shall stand transferred to, and
vest in, the Central Government.
(3) The undertaking of the acquired bank and its assets and liabilities shall be deemed to include all
rights, powers, authorities and privileges and all property, whether movable or immovable, including, in
particular, cash balances, reserve funds, investments, deposits and all other interests and rights in, or
arising out of, such property as may be in the possession of, or held by, the acquired bank immediately
before the appointed day and all books, accounts and documents relating thereto, and shall also be
deemed to include all debts, liabilities and obligations, of whatever kind, then existing of the acquired
bank.
(4) Notwithstanding anything contained in sub-section (2), the Central Government may, if it is
satisfied that the undertaking of the acquired bank and its assets and liabilities should, instead of vesting
in the Central Government, or continuing to so vest, vest in a company established under any scheme
made under this Part or in any corporation (hereinafter in this Part and in the Fifth Schedule referred to
as the transferee bank) that Government may, by order, direct that the said undertaking, including the
assets and liabilities thereof, shall vest in the transferee bank either on the publication of the notified
order or on such other date as may be specified in this behalf by the Central Government.
(5) Where the undertaking of the acquired bank and the assets and liabilities thereof vest in the
transferee bank under sub-section (4), the transferee bank, shall, on and from the date of such vesting,
be deemed to have become the transferee of the acquired bank and all the rights and liabilities in
relation to the acquired bank shall, on and from the date of such vesting, be deemed to have been the
rights and liabilities of the transferee bank.
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(6) Unless otherwise expressly provided by or under this Part, 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 appointed day and to which the acquired bank is a
party or which are in favour of the acquired bank shall be of as full force and effect against or in favour
of the Central Government, or as the case may be, of the transferee bank, and may be enforced or acted
upon as fully and effectually as if in the place of the acquired bank the Central Government or the
transferee bank had been a party thereto or as if they had been issued in favour of the Central
Government or the transferee bank, as the case may be.
(7) If, on the appointed day, any suit, appeal or other proceeding of whatever nature is pending by
or against the acquired 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 acquired bank or of anything contained in
this Part, but the suit, appeal or other proceeding may be continued, prosecuted and enforced by or
against the Central Government or the transferee bank, as the case may be.
36AF. Power of the Central Government to make scheme.—(1) The Central Government may
after consultation with the Reserve Bank, make a scheme for carrying out the purposes of this Part in
relation to any acquired bank.
(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 corporation, or the company incorporated for the purpose, to which the undertaking
including the property, assets and liabilities of the acquired bank may be transferred, and the
capital, constitution, name and office thereof;
(b) the constitution of the first Board of management (by whatever name called) of the
transferee bank, and all such matters in connection therewith or incidental thereto as the Central
Government may consider to be necessary or expedient;
(c) the continuance of the services of all the employee of the acquired bank (excepting such of
them as, not being workmen within the meaning of the Industrial Disputes Act, 1947 (14 of 1947),
are specifically mentioned in the scheme) in the Central Government or in the transferee bank, as
the case may be, on the same terms and conditions so far as may be, as are specified in clauses (i)
and (j) of sub-section (5) of section 45;
(d) the continuance of the right of any person who, on the appointed day, is entitled to or is in
receipt of, a pension or other superannuation or compassionate allowance or benefit, from the
acquired bank or any provident, pension or other fund or any authority administering such fund, to
be paid by, and to receive from, the Central Government or the transferee bank, as the case may be,
or any provident, pension or other fund or any authority administering such fund, the same pension,
allowance or benefit so long as he observes the conditions on which the pension, allowance or
benefit was granted, and if any question arises whether he has so observed such conditions, the
question shall be determined by the Central Government and the decision of the Central
Government thereon shall be final;
(e) the manner of payment of the compensation payable in accordance with the provisions of
this Part to the shareholders of the acquired bank, or where the acquired bank is a banking company
incorporated outside India, to the acquired bank in full satisfaction of their, or as the case may be,
its, claims;
(f) the provision, if any, for completing the effectual transfer to the Central Government or the
transferee bank of any asset or any liability which forms part of the undertaking of the acquired
bank in any country outside India;
(g) such incidental, consequential and supplemental matters as may be necessary to secure that
the transfer of the business, property, assets and liabilities of the acquired bank to the Central
Government or transferee bank, as the case may be, is effectual and complete.
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(3) The Central Government may, after consultation with the Reserve Bank, by notification in the
Official Gazette, add to, amend or vary any scheme made under this section.
(4) Every scheme made under this section shall be published in the Official Gazette.
(5) Copies of every scheme made under this section shall be laid before each House of Parliament
as soon as may be after it is made.
(6) The provisions of this Part and of any scheme made thereunder shall have effect
notwithstanding anything to the contrary contained in any other provisions of this Act or in any other
law or any agreement, award or other instrument for the time being in force.
(7) Every scheme made under this section shall be binding on the Central Government or, as the
case may be, on the transferee bank and also on all members, creditors, depositors and employees of the
acquired bank and of the transferee bank and on any other person having any right, liability, power or
function in relation to, or in connection with, the acquired bank or the transferee bank, as the case may
be.
36AG. Compensation to be given to shareholders of the acquired bank.—(1) Every person
who, immediately before the appointed day, is registered as a holder of shares in the acquired bank or,
where the acquired bank is a banking company incorporated outside India, the acquired bank, shall be
given by the Central Government, or the transferee bank, as the case may be, such compensation in
respect of the transfer of the undertaking of the acquired bank as is determined in accordance with the
principles contained in the Fifth Schedule.
(2) Nothing contained in sub-section (1) shall affect the rights inter se between the holder of any
share in the acquired bank and any other person who may have any interest in such shares and such
other person shall be entitled to enforce his interest against the compensation awarded to the holder of
such share, but not against the Central Government, or the transferee bank.
(3) The amount of compensation to be given in accordance with the principles contained in the
Fifth Schedule shall be determined in the first instance by the Central Government, or the transferee
bank, as the case may be, in consultation with the Reserve Bank, and shall be offered by it to all those
to whom compensation is payable under sub- section (1) in full satisfaction thereof.
(4) If the amount of compensation offered in terms of sub-section (3) is not acceptable to any
person to whom the compensation is payable, such person may, before such date as may be notified by
the Central Government in the Official Gazette, request the Central Government in writing, to have the
matter referred to the Tribunal constituted under section 36AH.
(5) If, before the date notified under sub-section (4), the Central Government receives requests, in
terms of that sub-section, from not less than one-fourth in number of the shareholders holding not less
than one-fourth in value of the paid-up share capital of the acquired bank, or, where the acquired bank
is a banking company incorporated outside India, from the acquired bank, the Central Government shall
have the matter referred to the Tribunal for decision.
(6) If, before the date notified under sub-section (4), the Central Government does not receive
requests as provided in that sub- section, the amount of compensation offered under sub-section (3), and
where a reference has been made to the Tribunal, the amount determined by it, shall be the
compensation payable under sub-section (1) and shall be final and binding on all parties concerned.
36AH. Constitution of the Tribunal.—(1) The Central Government may, for the purpose of this
Part, constitute a Tribunal which shall consist of a Chairman and two other members.
(2) The Chairman shall be a person who is, or has been, a Judge of a High Court or of the Supreme
Court, and, of the two other members, one shall be a person, who, in the opinion of the Central
Government, has had experience of commercial banking and the other shall be a person who is a
chartered accountant within the meaning of the Chartered Accountants’ Act, 1949 (38 of 1949).
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(3) If, for any reason, a vacancy occurs in the office of the Chairman or any other member of the
Tribunal, the Central Government may fill the vacancy by appointing another person thereto in
accordance with the provisions of sub-section (2), and any proceeding may be continued before the
Tribunal, so constituted, from the stage at which the vacancy occurred.
(4) The Tribunal may, for the purpose of determining any compensation payable under this Part,
choose one or more persons having special knowledge or experience of any relevant matter to assist it
in the determination of such compensation.
36AI. Tribunal to have powers of a civil court.—(1) The Tribunal shall have the powers of a civil
court, while trying a suit, under the Code of Civil Procedure, 1908 (5 of 1908), in respect of the
following matters, namely:—
(a) summoning and enforcing the attendance of any person and examining him on oath;
(b) requiring the discovery and production of documents;
(c) receiving evidence on affidavits;
(d) issuing commissions for the examination of witnesses or documents.
(2) Notwithstanding anything contained in sub-section (1), or in any other law for the time being in
force, the Tribunal shall not compel the Central Government or the Reserve Bank,—
(a) to produce any books of account or other documents which the Central Government, or the
Reserve Bank, claims to be of a confidential nature;
(b) to make any such books or documents part of the record of the proceedings before the
Tribunal; or
(c) to give inspection of any such books or documents to any party before it or to any other
person.
36AJ. Procedure of the Tribunal.—(1) The Tribunal shall have power to regulate its own
procedure.
(2) The Tribunal may hold the whole or any part of its inquiry in camera.
(3) Any clerical or arithmetical error in any order of the Tribunal or any error arising therein from
any accidental slip or ommission may, at any time, be corrected by the Tribunal either of its own
motion or on the application of any of the parties.]