Case: Mrinmayee Rohit Umrotkar Vs. Union of India and 4 Others

record and considered the rival contentions. 15. Consequent to the enactment of the Industrial Development Bank of India Act, 1964 (hereafter the IDBI Act, for short) and issuance of notification in terms of Section 3 thereof, the Industrial Development Bank of India (hereafter the Development Bank, for short) was brought into existence as a body corporate with effect from June 20, 1964. Section 26 of the IDBI Act provided for staff of the Development Bank. It was authorized to appoint such number of officers and employees as it considers necessary or desirable for the efficient performance of its functions and determine the terms and conditions of their appointment in service. 16. The Industrial Development Bank (Transfer of Undertaking and Repeal) Act, 2003 (hereafter the 2003 Act, for short) was enacted by the Parliament to provide for transfer and vesting of undertaking of the Development Bank to and in the Company to be formed and registered as a Company under the Companies Act, 1956 (hereafter the 1956 Act, for short) to carry on banking business and for matters connected therewith or incidental thereto and also to repeal the IDBI Act. Section 3 of the 2003 Act provides that on and from the date the Central Government may, by notification, appoint, the undertaking of the Development Bank shall be transferred to, and vest in, the Company, meaning thereby the Industrial Development Bank of India Limited to be formed and registered under the 1956 Act. We find that from October 1, 2004, the undertaking of the Development Bank stood transferred to, and vested in, the Company in terms of Section 3(1) of the 2003 Act. 17. Section 5 of the 2003 Act contains provisions in respect of officers and other employees of IDBI Limited. Sub- section (1) thereof provides that every officer or other employee of the Development Bank (except a director of the Board or the chairman and managing director or any whole-time director) serving in the employment immediately before the appointed day shall, insofar as such officer or other employee is employed in connection with the undertaking which has vested in the Company by virtue of such Act, become, as from the appointed day, an officer or, as the case may be, other employee of the Company and shall hold his office or service therein by the same tenure, at the same remuneration, upon the same terms and conditions, with the same obligations and with the same rights and privileges in respect of matters mentioned therein and other benefits as he would have held under the Development Bank if its undertaking had not vested in the Company. 18. In our considered view, section 5 of the 2003 Act is crucial and clinches the issue against the petitioner and for the respondents. Perusal of the 2003 Act clearly reveals cessation of the Development Bank as a body corporate which, by operation of the said Act, would stand transferred to and vested in the Company to be formed and registered under the 1956 Act. The Development Bank, from a body corporate, by reason of the 2003 Act (which also repealed the IDBI Act) attained an identity of a Company governed by the 1956 Act. 19. Though „undertaking is a word of large import, it has to be read and understood in the context where it occurs. In the present context, a Government of India undertaking would mean an undertaking run by the Government of India, that is to say, it belongs to the Government of India. We regret to record, it has not been so shown that IDBI Limited belongs to the Government of India and is run by it. The transition of the Development Bank from a body corporate to a Company (IDBI Limited) without deep and pervasive administrative, financial and functional control of the Government of India over such Company having been shown gives us little reason to hold that after the enactment of the 2003 Act, IDBI Limited could still be regarded as an undertaking of the Government of India. We place on record that Shri Bapat has not referred to any authority which lays down the test for identifying an entity as an undertaking of the Government of India and, hence, we have proceeded to decide the issue formulated at the beginning of the judgment based on our reading of the IDBI Act and the 2003 Act and our understanding of the meaning of the word „undertaking referred to above. 20. Submission of Shri Bapat that the CVC Act has been made applicable to IDBI Limited and that the Ministry of Corporate affairs having recorded IDBI Limited as a non- banking Company and, therefore, IDBI Limited ought to be regarded as an undertaking of the Government of India, has failed to impress us. The vigilance control over IDBI Limited by the Central Vigilance Commission cannot be the guiding factor for exploring the answer to the issue which we are primarily tasked to decide. On this writ petition, we are not called upon to decide whether exercise of vigilance control over IDBI Limited by the Central Vigilance Commission is legal and valid. Such a question can be dealt with in an appropriate proceeding, if the occasion therefor arises. Further, nothing substantial turns on holding of 51% share capital in IDBI Limited by LICI. By reason of the definition in section 2(45) of the Companies Act, 2013, IDBI Limited is not a Government company. LICI could be a „State as defined in Article 12 of the Constitution but by reason thereof, it does not necessarily follow that IDBI Limited would attain the status of State within the meaning of Article 12. Also, reliance placed by the petitioner on the data maintained by the Ministry of Corporate Affairs on the Company (IDBI Limited) as per the requirement of the 1956 Act or the Companies Act, 2013 cannot be accepted as sacrosanct for ruling in favour of the petitioner having regard to the clear provisions of the applicable statutory enactments, as noted above.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]16. The Industrial Development Bank (Transfer of Undertaking and Repeal) Act, 2003 (hereafter the 2003 Act, for short) was enacted by the Parliament to provide for transfer and vesting of undertaking of the Development Bank to and in the Company to be formed and registered as a Company under the Companies Act, 1956 (hereafter the 1956 Act, for short) to carry on banking business and for matters connected therewith or incidental thereto and also to repeal the IDBI Act. Section 3 of the 2003 Act provides that on and from the date the Central Government may, by notification, appoint, the undertaking of the Development Bank shall be transferred to, and vest in, the Company, meaning thereby the Industrial Development Bank of India Limited to be formed and registered under the 1956 Act. We find that from October 1, 2004, the undertaking of the Development Bank stood transferred to, and vested in, the Company in terms of Section 3(1) of the 2003 Act.17. Section 5 of the 2003 Act contains provisions in respect of officers and other employees of IDBI Limited. Sub- section (1) thereof provides that every officer or other employee of the Development Bank (except a director of the Board or the chairman and managing director or any whole-time director) serving in the employment immediately before the appointed day shall, insofar as such officer or other employee is employed in connection with the undertaking which has vested in the Company by virtue of such Act, become, as from the appointed day, an officer or, as the case may be, other employee of the Company and shall hold his office or service therein by the same tenure, at the same remuneration, upon the same terms and conditions, with the same obligations and with the same rights and privileges in respect of matters mentioned therein and other benefits as he would have held under the Development Bank if its undertaking had not vested in the Company.18. In our considered view, section 5 of the 2003 Act is crucial and clinches the issue against the petitioner and for the respondents. Perusal of the 2003 Act clearly reveals cessation of the Development Bank as a body corporate which, by operation of the said Act, would stand transferred to and vested in the Company to be formed and registered under the 1956 Act. The Development Bank, from a body corporate, by reason of the 2003 Act (which also repealed the IDBI Act) attained an identity of a Company governed by the 1956 Act.19. Though „undertaking is a word of large import, it has to be read and understood in the context where it occurs. In the present context, a Government of India undertaking would mean an undertaking run by the Government of India, that is to say, it belongs to the Government of India. We regret to record, it has not been so shown that IDBI Limited belongs to the Government of India and is run by it. The transition of the Development Bank from a body corporate to a Company (IDBI Limited) without deep and pervasive administrative, financial and functional control of the Government of India over such Company having been shown gives us little reason to hold that after the enactment of the 2003 Act, IDBI Limited could still be regarded as an undertaking of the Government of India. We place on record that Shri Bapat has not referred to any authority which lays down the test for identifying an entity as an undertaking of the Government of India and, hence, we have proceeded to decide the issue formulated at the beginning of the judgment based on our reading of the IDBI Act and the 2003 Act and our understanding of the meaning of the word „undertaking referred to above.20. Submission of Shri Bapat that the CVC Act has been made applicable to IDBI Limited and that the Ministry of Corporate affairs having recorded IDBI Limited as a non- banking Company and, therefore, IDBI Limited ought to be regarded as an undertaking of the Government of India, has failed to impress us. The vigilance control over IDBI Limited by the Central Vigilance Commission cannot be the guiding factor for exploring the answer to the issue which we are primarily tasked to decide. On this writ petition, we are not called upon to decide whether exercise of vigilance control over IDBI Limited by the Central Vigilance Commission is legal and valid. Such a question can be dealt with in an appropriate proceeding, if the occasion therefor arises. Further, nothing substantial turns on holding of 51% share capital in IDBI Limited by LICI. By reason of the definition in section 2(45) of the Companies Act, 2013, IDBI Limited is not a Government company. LICI could be a „State as defined in Article 12 of the Constitution but by reason thereof, it does not necessarily follow that IDBI Limited would attain the status of State within the meaning of Article 12. Also, reliance placed by the petitioner on the data maintained by the Ministry of Corporate Affairs on the Company (IDBI Limited) as per the requirement of the 1956 Act or the Companies Act, 2013 cannot be accepted as sacrosanct for ruling in favour of the petitioner having regard to the clear provisions of the applicable statutory enactments, as noted above.