Delhi HC issues notice in challenge to amalgamation of Vijaya Bank, Dena Bank with Bank of Baroda

The Delhi High Court today issued notice in All India Bank Officers Confederation’s challenge to the amalgamation of Vijaya Bank and Dena Bank with Bank of Baroda..A Division Bench comprising Justices S Ravindra Bhat and Prateek Jalan issued notice to the Central Government, Reserve Bank of India as well as the three Banks..The Scheme, namely “Amalgamation of Vijaya Bank and Dena Bank with Bank of Baroda Scheme, 2019”, was published on January 1, 2019 under Section 9(6) of the of the two Banking Companies (Acquisition and Transfer of Undertakings) Acts of 1970 and 1980. The said Scheme will come into effect from April 1, 2019..It is the Petitioner Association’s claim that the Amalgamation Scheme is unconstitutional as it did not follow due process under the law and is in violation of Article 14 of the Constitution of India. It is also claimed that the Scheme was passed without effective consultation with the Reserve Bank of India as mandated under Section 9(1) of the said Acts..The Petition, filed through Advocate Prasanna S, also challenges Section 15 of the Bank Nationalization Acts as ultra vires Article 14 of the Constitution..The said Section validates proceedings of the Boards of the three Banks despite a prolonged vacancy in the statutorily mandated posts of the Workmen and Officer Employee Directors. Such a situation, the petition claims, significantly affects not only the service conditions of the employees, but also the very subsistence of the entity..It is also alleged that the Scheme was approved and issued without considering the fact that it would affect “the shareholders of the said banking companies, the customers, the depositors, the loanees, the workmen and the officers and a common national interest in a healthy competition in the banking industry”..Referring to the significantly high Non-performing assets (NPAs) amassed by Bank of Baroda and Dena Bank, the Petitioner states that amalgamating one profitable bank i.e. Vijaya Bank “into a big struggling bank which also has a negative RoA (Return on Asset ratio)”, is an irrational exercise..A similar plea challenging the Scheme has also been preferred by All India Vijaya Bank Officers Association..The Petitioner Association was represented by Senior Advocate Arvind Datar..Both the matters would be next heard on February 13.