Indian Bank Act Ruled Invalid

Press, Volume CIX, Issue 32219, 11 February 1970, Page 13

Indian Bank Act Ruled Invalid

(N Z.P A.-Reuter—Copyright» NEW DELHI, Feb. 10. The Indian Supreme Court today declared that the nationalisation of 14 major banks was invalid. In a surprise Judgment which strikes a stunning blow at the socialist plans of the Prime Minister (Mrs Indira Gandhi), the Court, by a majority of 10 to one, allowed two writ petitions challenging the constitutional validity of the nationalisation law. The Court declared the Banking Companies Acquisition and Transfer of Undertakings Act invalid, and ruled that all action taken under it was unauthorised. The Court struck down the act mainly on the ground that it constituted

hostile discrimination against 14 banks while other Indian and foreign banks could engage in banking business. The Court also held that the act violated the constitutional guarantee of compensation; it provided for the giving to nationalised banks amounts which could not be regarded as compensation. But the Court did not question Parliament’s competence to legislate nation alisation. It is therefore open to Mrs Gandhi’s Government to introduce fresh legislation. The judges held that there was no satisfactory proof of the petitioners’ plea that the law had been enacted to serve political ends, rather than the interests of the nation.