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Significance of R C Cooper Vs Union of India in Banking Law

The RC Cooper vs Union of India case was a landmark Supreme Court case that guided Indian constitutional jurisprudence. When the government nationalized 14 banks in 1969, RC Cooper had stakes in some and filed a petition claiming his fundamental rights were violated. The Supreme Court ruled that while shareholders cannot claim company rights were violated, they can claim individual rights violations. However, Parliament passed the 25th Amendment strengthening the government's position by replacing "compensation" with "amount" for property acquisition and making laws for rural sector development immune from judicial review.

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394 views2 pages

Significance of R C Cooper Vs Union of India in Banking Law

The RC Cooper vs Union of India case was a landmark Supreme Court case that guided Indian constitutional jurisprudence. When the government nationalized 14 banks in 1969, RC Cooper had stakes in some and filed a petition claiming his fundamental rights were violated. The Supreme Court ruled that while shareholders cannot claim company rights were violated, they can claim individual rights violations. However, Parliament passed the 25th Amendment strengthening the government's position by replacing "compensation" with "amount" for property acquisition and making laws for rural sector development immune from judicial review.

Uploaded by

KHUSHI KATRE
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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SIGNIFICANCE OF R C COOPER vs UNION OF INDIA IN BANKING LAW

Credit distribution in rural areas has been at an all-time low since independence. This was due to
the rural areas' inaccessibility to banks and other financial institutions. As a result, the
government devised a plan to target the needy sectors in order to target the rural area. The All
India Congress Committee actively debated the proposal to nationalise the banking sector in
1948. (A.I.C.C.). However, the Imperial Bank of India was nationalised under the State Bank of
India Act in 1955, and seven of its subsidiaries were also taken over by the government.

RC Cooper v UOI, also known as the Bank Nationalization case, was a landmark decision that
guided the Parliament as well as the country's constitutional jurisprudence for years to come. In
1969, when the government of India nationalized 14 Indian banks, RC Cooper had a significant
stake in some of them. This affected him, and he felt that as an individual, his fundamental rights
had been violated, so he filed a writ petition. The Indian government decided to nationalize
banks in order to make banking available to the majority of the country. The main issue raised by
RC Cooper in his writ petition was that his fundamental rights were violated; he filed this case as
an individual citizen of the country, not as a shareholder of the bank. He claimed that his
fundamental rights under Articles 14, 13, 19, and 31 had been violated.

The Supreme Court of India ruled that a shareholder or director of a company cannot file a
petition alleging that his fundamental rights have been violated. The Supreme Court established
the Effect test and rejected the Object test. Because of the compensation decided by the
government, the Supreme Court ruled that the government had violated Article 31. Because of
the compensation decided by the government, the Supreme Court ruled that the government had
violated Article 31. The Supreme Court also ruled that the government violated Article 14 in this
case because it only nationalized 14 banks while allowing the remaining banks to continue
operating normally. The Supreme Court also stated that any shareholder or director cannot file a
petition claiming that the company's fundamental rights have been violated, but they can file a
petition claiming that the shareholder or director's fundamental rights have been violated as an
individual.
However, the aftermath of the judgement can be seen in the fact that, in order to strengthen its
position, Parliament passed the 25th Constitutional (Amendment) Act, which included the
following provisions:

 In Article 31(2), the word 'compensation' was replaced by the word 'amount.' This meant
that the government was no longer required to pay a 'adequate' amount to the person
whose property was being acquired, as it had previously.
 Article 19(1)(g) has been clearly separated from Article 31. (2).
 A new provision, Article 31C, was added to the Constitution to remove all difficulties
that-
 Articles 14, 19, and 31 are not to be applied to any law enacted to achieve the goals
outlined in Articles 39(b) and 39(c) (c).
 Any law that implements Articles 39(b) and 39(c) will be immune from Court
intervention.

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