Section 12 of Bank Nationalisation Act, 1980 — Vacation of office of Chairman, etc
Bare section text
Official Legislative Text
(1) Every person holding office, immediately before the commencement of this Act, as Chairman of an existing bank shall, if he becomes Custodian of the corresponding new bank, be deemed, on such commencement, to have vacated office as such Chairman.(2) Save as otherwise provided in sub-section (1), every officer or other employee of an existing bank shall become, on the commencement of this Act, an officer or other employee, as the case may be, of the corresponding new bank and shall hold his office or service in that bank on the same terms and conditions and with the same rights to pension, gratuity and other matters as would have been admissible to him if the undertaking of the existing bank had not been transferred to and vested in the corresponding new bank and continue to do so unless and until his employment in the corresponding new bank is terminated or until his remuneration, terms or conditions are duly altered by the corresponding new bank.(3) For the persons who immediately before the commencement of this Act were the trustees for any pension, provident, gratuity or other like fund constituted for the officers or other employees of an existing bank, there shall be substituted as trustees such persons as the Central Government may, by general or special order, specify.(4) Notwithstanding anything contained in the Industrial Disputes Act, 1947 (14 of 1947), or in any other law for the time being in force, the transfer of the services of any officer or other employee from an existing bank to a corresponding new bank shall not entitle such officer or other employee to any compensation under this Act or any other law for the time being in force and no such claim shall be entertained by any court, tribunal or other authority.
Educational Study Layer
Summary
- If the Chairman of an existing bank becomes the Custodian of the new bank, they immediately lose their old title of Chairman.
- All other employees of the existing bank automatically become employees of the new bank, keeping their exact same pay, pension, and employment terms.
- Employees can keep working under these original terms until the new bank officially changes them or terminates their employment.
- The Central Government has the power to appoint new people to replace the old trustees who managed the employees' pension and provident funds.
- Employees cannot claim legal compensation for the mere fact that their employment was transferred from the old bank to the new one.
Practical examples
FAQ
1. Will I lose my pension if my bank is taken over?
No, you retain the exact same rights to pension, gratuity, and other matters as you had at the old bank.
2. Who manages my provident fund after the takeover?
The Central Government will issue an order to specify new trustees to take over the management of your existing pension and provident funds.
3. Can I sue the bank for a severance package because my employment was transferred to a new legal entity?
No, the law strictly prevents employees from claiming compensation just because their service was transferred to the corresponding new bank.
Practice Quiz
Q1.Under Section 12 of The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980, what happens to the Chairman of an existing bank when the Act commences?
Q2.Under Section 12 of The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980, what happens to the pay and pension rights of a regular employee when their bank is taken over?
Q3.Under Section 12 of The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980, how are the old trustees of the employee provident funds handled?
Q4.Under Section 12 of The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980, can an employee successfully sue for compensation in an industrial tribunal because their employment was transferred to the new bank?