The Supreme Court on Thursday refused to stay for now the merger of two loss-making public sector banks — Dena Bank and Bank of Baroda — into one profit-making bank Vijaya Bank, and instead said that it would have a detailed hearing on the legality of the merger later. 

he All India Bank Officers Confederation (AIBOC) has through a petition filed by lawyer PB Suresh challenged the merger on several counts — non-consultation with the boards of the merging entities, bypassing the statutory scheme and hastily pushing through the process without giving due attention to its impact on employees. 

A bench led by Justice RF Nariman is hearing these pleas. The merger, which is cleared by the government, will come into effect on April 1, 2019. The government had pushed through the merger in September 17, 2018.

The confederation had initially filed the writ petitions before the Delhi High Court challenging Section 15(2) of the Bank Nationalisation Act and the Nationalised Banks (Management & Miscellaneous Provisions) Scheme, 1970/ 1980, as violative of Article 14 of the Constitution. 

This provides that “no act or proceeding of the board shall be invalid on the ground merely of existence of any vacancy or any defect in the constitution of the board”. These were later transferred to the top court for a consolidated hearing. The confederation case was argued in the top court by senior advocate Shyam Divan while senior advocate Mukul Rohatgi represented the Bank of Baroda. He was assisted by lawyer Devanshi Singh. Solicitor General Tushar Mehta appeared for the government.

Diwan claimed that the necessary consultations were not done in as much as the process was rushed through without giving their boards the time needed for the deliberations. The merger scheme was also violative of the statutory scheme which mandated consultations with the RBI, Divan argued. 

Divan said the voices of workmen and officers were necessary on boards for real effective consultations. These posts were vacant. He said all this had led to a situation in which a possible impact of the merger on employees had been glossed over. Issue of debt-equity swap was hastily decided, he argued. 

Source:https://economictimes.indiatimes.com/articleshow/68617737.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst