RUSTOM CAVASJEE COOPER versus UNION OF INDIA

Citation: [1970] 3 S.C.R. 530 · Decided: 10-02-1970 · Supreme Court of India · Bench: J.C. SHAH

Cited by 72 judgment(s) · cites 13 · see the full citation network in Lexace

Judgment (excerpt)

530 
RUS1'0M CAVASJEE COOPER 
v. 
UNION OF INDIA 
February 10, 1970 
A 
(J. C. SHAH, 
S. M. SIKRI, 
J. M. SHELAT, 
B 
V, BHARGAVA, 
G. K. MITTER, C. A. VAIDIALINGAM, 
K. S. HEGDE, A. N. GROVER, P. JAGANMOHAN REDDY, 
I. D. DUA AND A. N. RAY, JJ.) 
Banking Compam'es (Acquisition and Transfer of Undertakings) Act 
22 of 1969---Sections 4, 5, 6, 15(2) and Schedule II-Fundamental rights, 
infringement of-Legislative co111petence--Constitution of India. Arts. 14, c 
19 and 31 (2), Entries 43, 44, 45 List/, Eutry 42 List/// Seventh Schedule. 
Constitution of India, 1950, Art. 14-Equality-Banking Companies 
(Acquisition and Trmisfer of UndertakinRS) Act 1969, s. 15(2)---Statute 
pernJitting Banks to do businesS other thc.n Banking but practically pre-
venting them fro1n doing non-banking business-I/ discrlniinatory. 
Constitution of India, 1950, Art. 19(1)(/) cl. (6) (ii) and 19(1)(g)-
Ba11king Companies 
(Acquisition and Tran•fer of Undertakings) 
Act, 
D 
1969-Carrying on of business by the State to the exclusion of citizens-If 
could be challenged under Art. 19(1 )(g)-Restrictions on the right to do 
JiOn-banking business--lf unreasonable. 
Constitution of India, 1950, Arts. 19(1)(/) and 31(2)-/f mutually 
exclusive. 
Constitution of India, 1950, Art. 31(2)-Compensation-Meaning of 
co1npenmtion-U11dertaking-Acquisition ns a unit-Principles of valua-
tion-Justiciability of can1pensation. 
Constitution of India, 1950, Art. 123--0rdinance-Promulgation of-
Nature of power conferred by Article. 
Constitution of India, 1950, Art. 32-Banking Conipanies (Acquisition 
and Transfer of Undertakings) Act, 1969-When share-holder can mol'c 
petition for i11/ringe1nenf of the rights of the Conipany. 
Legislative co111pe/euce-Entry 45 List I, Entry 42, List III Seventh 
Schedule-"Bauking"', 
n1ea11ing 
of-:'Property" 
1neaning 
of-Banking 
Co111panies (Acquisition and Transfe.r of Undertakings) Act, 1969-
Section 4-"Unclertaking'', 11Jea11i11g of-l'alidity of law acquiring urtdtr· 
l<.k;ng. 
On July 19. 1969. the Acting President promulgated. in exercise of the 
power conferred by cl. (1) of Article 123 of the Constitution, Ordinance 8 
of 1969. transferring to and vesting the undertaking of 14 named Com· 
mercial Banks, which held deposits of not less than rupees fifly crores, in 
the corresponding new Banks set up under 
the 
Ordinance. 
Petitions 
challenging the constitutionality of the Ordinance were lodged in this 
C.ourt, but before they were heard Parliament enacted the Banking Com-
panies (Acquisition and 
Transfer of Undertakings) 
Act, 1969. 
The 
object of the Act was to provide for the acquisition and transfer of the 
TJndertakings of certain banking companies in order to serve better the 
needs df development of the economy in conformity with the national 
iJOlicy and objectives and for matters connected there\\•ith o·r incidental 
E 
F 
G 
H 
A 
II 
c 
D 
[ 
F 
G 
H 
R. C. COOPER I'. UNION 
5 31 
thereto. The Act repealed the Ordinance and came into force on July 
19, 1969, i.e., the day on which the Ordinance was promulgated, and the 
Undertaking of every named Bank with all its 
rights, 
liabilities 
and 
assets was deemed, with effect from that date, 
to have vest•d in 
the 
corresponding new bank. By s. 15(2) (e) the named Banks were entitl-
ed to engage in business other than banking which by virtue of s. 6( 1) 
of the Banking Regulation Act, 1949, they were not prohibited 
from 
carrying on. 
Section 6 read with Schedule II provided for and prescrib-
~d the method of determining con1pensation for acquisition of the under~ 
taking. 
Compensation to be detern1ined was for the acquisition of the 
undertaking as a unit and by section 
6(2), though separate valuation 
had to be made in respect of the several matters specified in Schedule II 
of the Act,. the amount of compensation was to be deemed to be a single 
compensation. 
Under Schedule II the compensation payable was to be 
the sum total oE the value of the ,,ssets under the heads (a) to (h), cal-
culated in accordance with the provisions· of Part I less the sum total di 
the liabilities and obligations calculated in accordance with the provisions 
of Part II. The corresponding nev.· Banks took over vacant possession 
of the lands and buildings of the named Banks. 
By Explanation I to 
cl. (e) of Part I of Schedule II the value of any land or building to be 
taken into account in valuing the assets was to be the market value or 
the ascertained value whichever was 

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