Section 12 of The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970
- (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.
Summary
- Any person who was the Chairman of an old bank right before this Act started is deemed to have vacated that office if they become the Custodian of the new bank.
- Every officer and employee of the old bank automatically becomes an employee of the corresponding new bank on the exact same terms, pay, pension, and gratuity.
- The new bank has the right to later alter the employment terms or terminate an employee in accordance with its rules.
- The Central Government will appoint new trustees to manage pension, provident, gratuity, or similar funds in place of the old bank's trustees.
- Employees are not entitled to receive any compensation under the Industrial Disputes Act, 1947, or any other law simply because their employment was transferred to the new bank.
Practical examples
FAQ
1. What happens to the employees of the old bank during the transfer?
They automatically become employees of the corresponding new bank with the exact same salaries, terms of service, and retirement benefits.
2. Can employees claim compensation because their job was transferred to a new bank?
No, the transfer of services does not entitle any officer or employee to any compensation under the Industrial Disputes Act, 1947, or any other law.
3. Who manages the employee pension and provident funds after the transfer?
The Central Government will name new trustees to replace the old trustees and manage these funds.
4. Can the new bank change the terms of employment of a transferred employee?
Yes, the employee holds office under the same terms unless and until their employment is terminated or their terms are altered by the corresponding new bank.
Test yourself
Q1.Under Section 12 of The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, what happens to the Chairman of an existing bank who becomes the Custodian of the corresponding new bank?
Q2.Under Section 12 of The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, on what terms does an officer or employee of an old bank join the corresponding new bank?
Q3.Under Section 12 of The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, can a transferred employee demand compensation under the Industrial Disputes Act, 1947, for the transfer of their services?
Q4.Under Section 12 of The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, who has the power to specify the new trustees for the employee pension, provident, or gratuity funds?
Q5.Under Section 12 of The Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, can the corresponding new bank alter the salary or terminate the employment of a transferred officer?