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of the named banks to carry on "non-banking" business makes it impossible in a commercial sense for the banks to carry on any business. Protection of Article 14By Article 14 of the Constitution the State is enjoined not to deny any person equality before the law or the equal protection of the laws within the territory of India. The Article forbids class legislation, but not reasonable classification in making laws. The test of permissible classification under an Act lies in two cumulative conditions: (i) classification under the Act must be founded on an intelligible differentia distinguishing persons, transactions or things grouped together from others left out of the group; and (ii) the differentia has a rational relation to the object sought to be achieved by the Act: there must be a nexus between the basis of classification and the object of the Act: Chiranjit Lal Chowduri's case [1950]1SCR869 ; The State of Bombay v. [1951]2SCR682 ; The State of West Bengal v. 1952CriLJ510 ; Budhan Choudhry and Ors. v. 1955CriLJ374 ; Shri Ram Kishan Dalmia v. : [1959]1SCR279 ; and State of Rajasthan v. [1964]6SCR903 . Counsel for the petitioner contended that the 1969 Act violated the provisions of Article 14 on these grounds: First, the Act discriminated against 14 banks as against other Indian scheduled banks, secondly, the selection of 14 banks has no reasonable connection to the objects of the Act; thirdly, banks which may be described to be inefficient and which are liable to be acquired under Section 36AE of the 1949 Act are not acquired whereas 14 banks who have carried on their affairs with efficiency are acquired; fourthly under Section 15(2)(d)(e) of the 1969 Act the 14 banks cannot do any banking business whereas other Indian scheduled banks or any other new banking company can do banking business. There is no evidence to show that the 14 banks are more efficient than the others as counsel for the petitioner contended. Section 15(2)(d)(e) of the 1969 Act states that these 14 banks after acquisition are not to carry on any banking business for the obvious reason that these 14 banks are not in the same class as the other Indian banks. Besides, it is also reasonable that the 14 banks should not be permitted to carry on banking business as the corresponding new banks. Therefore the classification of the 14 banks is also a rational and intelligible classification for the purposes of the Act. The object of the 1969 Act was to meet credit gaps and to have a wider distribution of economic resources among the weaker sections of the economy, namely, agriculture, small scale industry and retail trade.
CONCLUSION
By a central law, the undertakings of 14 banks were acquired by the central government and these banks were prohibited from doing any baking business. This was held to be discriminatory as others bank could carry on banking business and new banks could be floated and there was no other rational explanation for the prohibition on the banks in the question.