Section 6 in Banking Companies (Acquisition And Transfer of Undertaking) Act, 1969
6. Payment of compensation.-
(1)The Central Government shall give compensation to such existing bank for the acquisition of its undertaking and such compensation shall be determined in accordance with the principles specified in the Second Schedule and in the manner hereinafter set out, that is to say,-(a)where the amount of compensation can be fixed by agreement, it shall be determined in accordance with such agreement;(b)where no such agreement can be reached, the Central Government shall refer the matter to the Tribunal within a period of three months from the date on which the Central Government and the existing bank fail to reach an agreement regarding the amount of compensation.(2)Notwithstanding that separate valuations are calculated under the principles specified in the Second Schedule in respect of the several matters referred to therein, the amount of compensation to be given shall be deemed to be a single compensation to be given for the undertaking as a whole.(3)The amount of compensation determined in accordance with the foregoing provisions shall be paid to each existing bank, at its option,-(a)in saleable or otherwise transferable promissory notes or stock certificates of the Central Government, issued and repayable at par, and maturing at the end of ten years from the date of commencement of this Act and carrying interest at the rate of four and a half per cent, per annum; or(b)in saleable or otherwise transferable promissory notes or stock certificates of the Central Government, issued and repayable at Parliament, and maturing at the end of thirty years from the date of commencement of this Act and carrying interest at the rate of five and a half per cent.Per annum; or(c)partly in such number of securities specified in clause (a) and partly in such number of securities specified in clause (b), as may be required by the existing bank.(4)The option referred to in sub-section (3) shall be exercised by every existing bank within three months from the commencement of this Act ( or within such further time, not exceeding three months, as the Central Government may, by notification in the Official Gazette, specify) and the option so exercised shall be final and shall not be altered or rescinded after it has been exercised.(5)An existing bank which omits or fails to exercise the option referred to in sub-section (3), within the time specified in sub-section (4) shall be deemed to have exercised its option in favour of the securities specified in clause (a) of sub-section(3).(6)Notwithstanding anything contained in this Section, any existing bank may, before the expiry of three months from the commencement of this Act ( or within such further time, not exceeding three months, as the Central Government may, by notification in the Official Gazette, specify) apply to the Central Government for an interim payment of one-half of the amount of its paid-up share capital and thereupon the Central Government shall, if the existing bank agrees in writing to distribute the amount so paid to its shareholders in accordance with their rights and interests, pay the same to the existing bank in securities specified in sub-section (3) in accordance with the option exercised, or deemed to have been exercised, under sub-section (4) or subsection (5), as the case may be:Provided that where the Central Government makes an interim payment under this section, it shall pay to the existing bank by a cheese drawn on the Reserve Bank such sum as would enable the existing bank to distribute--(a)in cash one-half of the amount paid-up on the shares held by a person if one-half of the amount paid-up on the shares held by such a person does not exceed five thousand rupees; and(b)where one-half of the amount paid-up on the shares held by a person exceeds five thousand rupees, such as would enable the existing bank to pay to the holder of such shares a sum of five thousand rupees in cash and the balance of one-half of the amount paid-up on the shares held by such person in securities specified in sub-section (3).(7)The interim payment made to an existing bank shall be set off against the total amount of the compensation payable to it under this Act and the balance of the compensation remaining outstanding after such payment shall be given to the existing bank in securities specified in sub-section (3) in accordance with the option exercised, or deemed to have been exercised, under sub-section (4) or sub-section (5), as the case may be.(8)Where the amount of compensation, payable in the form of securities under this section is not a multiple of one hundred rupees, any excess over the highest such multiple shall be paid by a cheese drawn on the Reserve Bank.(9)Nothing contained in sub-section (3) shall affect the rights inter se between an existing bank and any other person who may have an interest in such bank and such other person shall be entitled to enforce his interest against the compensation awarded to the existing bank but not against the Central Government or the corresponding new bank.
