JUDGEMENT AND ITS CRITICAL EVALUATION

The Union of India was only party to the petition, and seven States intervened, presumably
because the question of legislative competence had been raised.
The petition was by a single shareholder and was not a representative petition on behalf of all, or
of a majority of the shareholders of the four banks. No shareholders meeting had been called in
any of the Banks, to authorize them to support the petitioner, or to file an independent petition.
No Bank was a party to the petition and none had complained that their fundamental rights had
been violated.

The case was heard by a bench of 11 judges.

The majority judgment delivered, declared the impugned Act void. In the majority
judgment, it was observed that:
The Act is within the legislative competence of the Parliament;
but it makes hostile discrimination against the named banks from carrying on banking business,
whereas other banks Indian and Foreign are permitted to carry on banking business, and even
new banks may be formed which may engage in banking business;
it, in reality restricts the named banks from carrying on business other than banking as defined in
Section 5(b) of the Act violated the guarantee of compensation under Article 31(2) in that it
provides for giving certain amounts determined according to principles which are not relevant in
the determination of compensation of the undertaking of the named banks and by the method
prescribed amounts so declared cannot be regarded as compensation.

Conclusion
A Critical Evaluation of the Judgment:
It is clear that the rights of the banks were decided in their absence and without hearing them.
The petitioner came to court expressly stating that he did not challenge the Act as violating the
Banks fundamental rights but as violating his own, and the court ended up by deciding that the
Act violated the Banks fundamental rights under Articles 14, 19 and 31. If the petitioner wanted
to base the violation of the Banks fundamental rights, he would have had to join the Banks as
respondents to the petition. But his petition showed that, that was not his case and he did not join
the Banks and parties to the petition. It is submitted that the majority judgment was rendered in
violation of the principles of natural justice. However, it was necessary to hear the Banks before
a final decision, affecting their rights, was arrived at, and the banks were not heard. It is
submitted that the majority judgment is null and void because the Supreme Court has repeatedly
held that any judgment affecting the rights of parties rendered in violation of the principles of
natural justice is void.
The Act impugned in the Bank Nationalization case was a special Act for the acquisition of the
banking business of the 14 banks, but the Act nevertheless expressly authorized the banks, whose
banking business was acquired, to carry on non-banking business which they would be entitled
to do, if necessary, by suitably altering their Memorandum of Association. In other words, unlike
the Acts already considered, the acquisition was partial. If a challenge under erstwhile Article
19(1)(g) was open to the banks, the reasonableness of the provisions of the Act as to the time
within which the compensation was to be paid would have arisen for the first time before the
Supreme Court.