The Talwar Amendment

 

The State Bank of India Act, 1955, as it originally stood, contained a clause in terms of which the Chairman of the Bank could not be removed before the expiry of the term of office unless there was misconduct on his part as proven through an elaborate Proceeding Enquiry. It was amended in 1976 to provide for termination of the Chairman without any cause, by giving him a three months’ notice. In the banking circles, the Amendment is known as the Talwar Amendment or Talwar Hatao Amendment. The Amendment was introduced with the single purpose of removing the then chairperson of the bank, R.K. Talwar from the office of the Chairman. 

What did Talwar do to merit this extreme measure? 

One of the borrowers of SBI, a cement company, became sick with mounting losses and approached the bank for “restructuring assistance,” a phrase made immensely popular later by a gentleman called Vijay Mallya. The bank assessed that the difficulties of the company were due to gross mismanagement and insisted that, as a pre-condition for the restructuring package, the Chairman of the company who was also the CEO should step down from the management and a professional management should take over the Company’s reins. The promoter of the sick company was a friend of the Prime Minister’s son and approached him for intervention. For the latter, who was grappling with more serious affairs of the country, this was a minor irritant. He called the Finance Minister and asked him to direct the bank to waive this requirement. The Finance Minister telephoned Talwar and asked him not to insist on a change in management as a condition precedent to restructuring. Talwar called for the details from the department and having satisfied himself with the merits of the case, informed the Finance Minister that it would not be possible for the Bank to waive the requirement of change in management. 

The Finance Minister sent for Talwar and told him that he had received instructions from “the highest authority” in the country who expected him to carry out the orders without demur. Talwar stood his ground and told the Finance Minister that there was no way for him to waive this requirement and the bank’s position would remain unchanged. The Prime Minister’s son decided to send for Talwar to “personally talk to him” and was shocked to hear from his minions that Talwar refused to come and see him on the ground that he held no constitutional authority and Talwar was accountable only to the Finance Minister. The Finance Minister was then asked to sack Talwar. 

During the seven years he was the Chairman of the Bank, Talwar had achieved a high degree of personal reputation and his removal from the office for what could be called a trivial issue would send shock waves in the industry. Secondly, when the matter was referred to the Legal department, the Legal department pointed out to the specific provision in the State Bank of India Act which guaranteed the Chairman the special protection against removal without sufficient cause. The Finance Minister sent for Talwar again and told him that the Government was planning to set up a Banking Commission to make recommendations with regard to the restructuring of the functioning of the banking system and asked whether he would be willing to accept the Chairmanship of the Commission. This was his way of easing Talwar out of the Chairmanship with a face-saver. Without batting an eyelid, Talwar told the Finance Minister that he would indeed be happy to head the Commission and he could carry out this job simultaneously with his existing assignment as Chairman of SBI. When the Finance Minister looked uncomfortable with this suggestion, Talwar asked him, “Mr. Minister, you seem to be very particular that I should not continue as the Chairman of the State Bank of India, is that correct?” The Finance Minister replied. “Yes Mr. Talwar, you know what the problem is. We all have the highest regard for your abilities but unfortunately you do not seem to be very flexible on this one issue which is of great importance to the highest authority in the country. If you do not want to accept any other position, I may have no option but to seek your resignation or in the alternative, to dismiss you from service.” Talwar replied, “Mr. Minister, I have no intention of resigning from my position. It is entirely up to you to decide whether you want to dismiss me.” 

CBI started investigating into any wrongdoings on the part of Talwar. They zeroed in on two things; Talwar’s monthly visits to Pondicherry and his appeal to some industrialist clients of the bank seeking donations for the Auroville project. Talwar’s attachment to The Mother and the Aurobindo Ashram was well known and he claimed that he needed these visits for what he called “recharging his batteries.” In any case, this could not be construed as a cause for his dismissal in terms of the Act. Secondly, not a single industrialist was willing to say that Talwar either spoke to him or in any way tried to persuade him to make the donation. All Talwar did was to forward to these clients an appeal signed by the Prime Minister of India and the Secretary General of the United Nations commending the Auroville project for support. CBI had to close the enquiry. 

The Legislation amending the State Bank of India Act to provide for summary dismissal of the Chairman was passed in record time and received the assent of the President without any delay. Armed with the new provision in the Act, the Finance Minister summoned Talwar once again and told him that if he did not resign from the service, there was no alternative but to remove him in terms of the new provision. Talwar told the Finance Minister that he had no intention of resigning and the Finance Minister could take whatever action he deemed appropriate. On the evening of the 4th of August, 1976 Talwar received a fax message from the Finance Minister sanctioning him 13 months leave (which he had not asked for!). Talwar left the Bank promptly at 5.30 PM which was his usual time of departure. There was hardly anybody to see him off. Everyone was scared even to be seen to be associated with him. 

[Source: Vaghul N., “R.K. Talwar Values in Leadership” accessed at https://11740092596917189242.googlegroups.com/attach/fcc91e7c041409f7/RK%20Talwar%20-%20Man%20of%20Admiration-2012.pdf?part=0.1&view=1&vt=ANaJVrHK9vAo_X1FgT8JTbi6RddDuCeDssxMjP8Qc0xzhx3tvM7n35nf2GcN1YBjphmV3cJnv1daqC1KVzNR2eGkOc8DC7ww7rUOGemoL5-Ht8qUq7ChCu0]

If Talwar was Chairman of SBI today, would he have signed on for the egregious petition before the Supreme Court seeking a three-month leeway (till after the election) to disclose who paid what to which party through Electoral Bonds? My sense is, No, not Talwar. This country has been built upon the spines of honourable people like Talwar. Politicians come. And then, they go away …

[R.K. Talwar, 1922-2002]