Is IDBI Bank an undertaking of Government of India? Bombay High Court answers

Having concluded that IDBI does not fall under the definition of State under Article 12, or that of a government company or a government undertaking, the Court dismissed the plea.
Is IDBI Bank an undertaking of Government of India? Bombay High Court answers
Mumbai High Court, IDBI

The Bombay High Court recently held that that the Industrial Development Bank of India Limited (IDBI) was not a government company or a government undertaking [Mrinmayee Umrotkar v. Union of India].

The same was affirmed in a plea seeking permission to avail the exception clause in the state domicile quota for an MBBS course on the ground that the petitioner’s father was an employee of the nationalised bank.

In its verdict, A Bench of Chief Justice Dipankar Datta and Justice GS Kulkarni held,

“the transition of the Development Bank from a body corporate to a Company (IDBI) without deep and pervasive administrative, financial and functional control of the Government of India over such Company having been shown gives little reason to hold that after the enactment of the Industrial Development Bank (Transfer of Undertaking and Repeal) Act, 2003, IDBI could still be regarded as an undertaking of the Government of India.”

Petitioner Mrinmayee Umrotkar wanted to avail the benefit of an 85% state quota for candidates who were domiciled in Maharashtra, with regard to the National Eligibility and Entrance Test UG-2020 (NEET).

Umrotkar, admittedly a domicile of Maharashtra, had cleared her 12th standard exams from a school in Telangana and wanted to avail the exception clause engrafted in the information brochure of the exam to avail the benefit of quota.

It was her contention that since her father was an employee of a nationalised bank, she should be allowed to avail the exception clause.

Advocate Kiran Bapat, appearing for Umrotkar, relied upon letters issued by the Union Ministry of Finance urging to all ministries and departments of the Central government to treat IDBI at par with nationalised banks for all purposes.

He contended that pursuant to the acquisition of a stake in IDBI Limited by the Life Insurance Corporation of India (LICI), the Central government could continue to consider IDBI for grant of government business.

Advocate Rui Rodrigues, appearing for the State Common Entrance Cell, opposed the plea by bringing the Court’s attention to a notice wherein the Reserve Bank of India (RBI) categorised IDBI as a ‘private sector bank’. He, thus, contended that IDBI cannot be regarded as an undertaking of the Government of India.

Additional Solicitor General Anil Singh relied upon a statement of the Ministry of Finance which stated that IDBI Bank has ceased to be a public sector bank and is now a private sector bank.

In its judgment, the Court relied upon the definition of a government company under Section 2(45) of the Indian Companies Act, 2013 to conclude

“LICI could be State as defined in Article 12 of the Construction but by reason, it does not necessarily follow that IDBI would attain the status of ‘State’ within the meaning of Article 12.”

Having concluded that IDBI does not fall under the definition of State under Article 12, or that of a government company or a government undertaking, the Court dismissed the plea.

[Read Order]

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