Delhi HC reserves verdict in plea to prevent LIC from acquiring stake in IDBI Bank

The Delhi High Court today reserved its verdict in a plea to prevent Life Insurance Corporation of India (LIC) from acquiring 51 percent stake in IDBI Bank. The plea also challenges Central Government’s move to dilute its stake in IDBI below 51 percent. .The order was reserved by a Single Judge Bench comprising Justice Vibhu Bakru..All India IDBI Officers Association had moved the Delhi High Court in August this year, fearing that IDBI’s loss of status as a “public sector bank” would adversely affect the employment conditions of its employees, especially the ones belonging to SC/ST and OBC categories..The Petition filed through Advocate Pranav Sachdeva has alleged that the said acquisition is not a financially prudent decision for LIC given that IDBI has gross NPAs amounting to Rs. 55,588.26 crore. It was contended that IDBI Bank’s acquisition by LIC is not in public interest as it exposes the investments made by the public in IDBI, and corrodes the ability of LIC to pay back its policyholders..Appearing for the Petitioner Association, Advocate Prashant Bhushan argued that the acquisition of stake by LIC was “malafide” and borne out of “complete non-application of mind”..He thus sought a direction to Insurance Regulatory and Development Authority (IRDAI) to withdraw its approval granted to the LIC’s move to acquire a stake in IDBI Bank..Solicitor General Tushar Mehta who represented LIC, argued in favour of the acquisition. Calling it a “financially viable” move, Mehta informed the Court that the decision to acquire IDBI Bank was arrived at after thorough due diligence and approval by the Investment Committee of LIC..He also asserted that the decision to acquire a stake in IDBI Bank was not imposed upon the State-run insurance company by the Central Government or anyone else..IDBI Bank supported Centre’s decision to dis-invest its share as well as its subsequent acquisition by LIC. Senior Advocate Sandeep Sethi, appearing for IDBI Bank, argued that IDBI employees have no “vested right” to continue being an employee of an instrumentality of the State. He further contended that the consent of employees is not a prerequisite to allow the Government to dis-invest its stake in a public entity..Additional Solicitor General Maninder Kaur Acharya and SG Mehta had also given an oral assurance to the Court that LIC would not give effect to its decision by investing in IDBI till the matter was pending before the Court.