IDBI Ltd Is Not A Government Undertaking Under Article 12 of Constitution of India: Bombay High Court

The Division Bench of the Bombay High Court comprising of Chief Justice Dipankar Datta and Justice G.S. Kulkarni held that the Industrial Development Bank of India (IDBI Ltd.) is not a Government Undertaking under Article 12 of the Constitution of India. The matter dealt with a medical student, the Petitioner, desirous of availing of the Medical Entrance Information Brochure relating to the National Eligibility Entrance Test 2020. The said brochure provided for 85 % seats reserved for Maharashtra candidates, who have a domicile in Maharashtra and have passed their 10th standard S.S.C. and 12th standard H.S.C in Maharashtra Schools. The Petitioner completed her 10th standard in Maharashtra but her 12th standard in Telangana. The father of the Petitioner was an employee of IDBI Ltd. in Telangana at the time of her 12th standard examination and her plea is that if IDBI Ltd. is a Government Undertaking, she should be able to avail of the benefit of the said brochure. Learned Counsel for the Petitioner presented letters to the court that declared that the Ministry of Finance, Government of India had issued direction to all Government Departments to treat the IDBI Ltd. as a Nationalised Bank. Further reliance was placed on letters that declared Life Insurance Corporation of India's 51% stake in IDBI Ltd, which itself is wholly owned by the Government, and 46.46% stake in IDBI Ltd. by the Government of India, resulting in a total of 97.46% stake of direct or indirect government control. He further contended that the Central Vigilance Commission had vigilance control over IDBI Ltd. and, as such, the Petitioner's father would be a public officer to whom the Prevention of Corruption Act, 1987 would apply. Lastly, he argued that as per the Ministry for Corporate Affairs website, IDBI Ltd. is considered a "Union Govt. co." Learned Counsel for the Competent Authority & Commissioner, State Common Entrance Cell, Government of Maharashtra, presented a letter before the court whereby RBI has declared IDBI Ltd. as a Private Sector Bank. The court on hearing both the parties ventured into the statutory inception of the IDBI Ltd. The court noted that from its inception under the Development Bank of India, Act 1964 to the Industrial Development Bank (Transfer of Undertaking and Repeal) Act, 2003, the IDBI Ltd. came to be registered as a "company" under the Companies Act, 1956: "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." The court held that the Central Vigilance Commission's vigilance over IDBI Ltd. cannot be a "guiding factor" in determining whether it is a Government undertaking. Furthermore, the court held that just because Life Insurance Corporation of India may fall under "State" under Article 12 of the Constitution of India, the same does not apply for IDBI Ltd. The court in response to the reliance placed on the data on the Ministry of Corporate Affair website held that this cannot be "sacrosanct for ruling" in favour of the Petitioner. The court found no "deep and pervasive administrative, financial and functional control of the Government of India" in IDBI Ltd. The writ petition was accordingly dismissed. Click Here To Download Judgment[Read Judgment]

IDBI Ltd Is Not A Government Undertaking Under Article 12 of Constitution of India: Bombay High Court

Akshay Gudinho

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