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TMI Blog2018 (12) TMI 1607X X X X Extracts X X X X X X X X Extracts X X X X ..... a direction that the Life Insurance Corporation of India should not acquire the controlling stake of 51% in the IDBI Ltd. The appellant had also impugned the direction granted by respondent No. 6 Insurance Regulatory and Development Authority of India to the LIC to acquire more than 15% of equity share capital of IDBI Ltd. 3. Mr. Rajiv Bansal, learned Senior Counsel for the appellant by conceding the position of law that the disinvestment is the prerogative of the Government, would at the first instance submit that the dilution of the Government's shareholding in IDBI Ltd. would materially alter the conditions of service of employees and officers inasmuch as they would no longer be employees of a Government company. Hence, they would be deprived of benefits of the policies, in vogue in IDBI Ltd., which are available to them as employees of a Government company. 4. That apart, it is his submission that the decision of the respondent No. 1 to reduce its stake in IDBI Ltd. is contrary to the assurance held out by the Government before the Parliament at the time of considering Industrial Development Bank (Transfer of Undertaking and Repeal) Bill, 2002. He states that this transa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yees have any vested right in their employer continuing to be a Government company, is no longer res integra. This was considered by the Supreme Court in Balco Employees Union (Regd.) v. Union of India and Ors.: MANU/SC/0779/2001 : (2002) 2 SCC 333. In that case, the Supreme Court had in unequivocal terms held that the employees had no such vested right. (vi) The Supreme Court had also held that disinvestment in the shares of any government company did not result in change of the employer or the employment. (vii) The rights and obligations of employees viz-a-viz the employer are determined by the contractual terms of employment. The employees of a company constitute the human resource of an entity which is deployed for achieving the goals and objects of the company. The equity held by the shareholders in a company are assets of the shareholders and they have full right to deal with the same. Their rights to deal with the property are not subject to the employment contract between the companies and its employees. 7. The learned Single Judge, finally did not accept the contention that the disinvestment by the Government of India of the shares in IDBI Ltd. would amount to a chang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nciples of statutory interpretation. (ix) There is no ambiguity in the language of the IDBI Repeal Act, 2003 and there is no scope to read any provision into the said enactment which proscribes the Government from reducing or divesting its stake in IDBI Ltd. (x) If the Government is in breach of any of its assurance to the Parliament, it would be for the members of the House to take up the matter. It, certainly, does not create any right in favour of the petitioner. 9. On the third submission, the learned Single Judge has, held as under:- (i) The decision of LIC to invest in IDBI Ltd. is a commercial decision and no interference in these proceedings would be warranted unless it is established that the said decision is illegal or fails the Wednesbury test, that is, it is so unreasonable and arbitrary that no sensible person could possibly take such decision. The Courts would also interfere in cases where a decision making process itself is otherwise vitiated. (ii) This Court cannot reappraise the decision of the LIC Board to invest in IDBI Ltd. on merits. This Court does not have the wherewithal or the competence to examine the merits of a commercial decision made by LIC. G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government (although there is no material to establish the same). However, the LIC's decision to acquire 51% stake in IDBI Ltd. cannot be faulted as the approval of LIC's Board had been obtained on various occasions as the transaction had progressed. (v) The IRDAI had, by a letter dated 19.06.2018, also enquired whether LIC's Board had approved the proposal to acquire controlling stake in IDBI Ltd. In response to the same, LIC had explained that its Board had already approved initiations of steps for acquiring a controlling stake in a bank and a specific proposal regarding the acquisition of controlling stake in IDBI Ltd. would be placed before LIC's Board after approval from the Government of India. (vi) After obtaining the approval of IRDAI, a specific approval was sought by LIC's Board. On 05.07.2018, the LIC's Board granted its approval to undertaking the due diligence based on data available in public domain for acquiring the stake of 51% in IDBI Ltd. It also granted approval to appoint two Merchant bankers, one external audit firm and one rating agency for appraising the acquisition of 51% stake in IDBI Ltd. It is apparent from the above that even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly apprised of the affairs of IDBI Ltd. (ix) The decision of LIC's Board is a commercial decision and, therefore, it is not open for the Court to examine the merits of the said decision. Mr. Bhushan had, undoubtedly, made a compelling case to establish that LIC's decision was erroneous. He had also contended that the said decision had been thrust upon LIC by the Government of India. Mr. Bhushan may have been correct in his submissions; investment in IDBI Ltd. may or may not be beneficial for LIC and its stakeholders; but that is not a controversy that this Court is required to enter into. Even if Mr. Bhushan's contention in this regard is accepted, this Court cannot supplant its opinion over that of the Board of LIC. This Court is also unable to accept that the decision to invest in IDBI Ltd. is so perverse and unreasonable that no sensible person would take the same. LIC believes that acquiring a bank would be of strategic importance and this Court has no reason to question the same. (x) Once it is established that the Board of LIC was aware of the state of affairs of the IDBI Ltd. and yet had approved the investment in their commercial wisdom, no further examinat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity shares in IDBI Ltd. is ` 10,000 cr. which, the LIC states, is 2.5% of yearly incremental investment and 0.4% of total investment assets. Thus, evidently, there is no reason to believe that the said investment would expose the policy holders to any unwarranted risk. The LIC has not been exempted from investing the specified percentage of its controlled funds in Government Securities (which is perceived as involving minimal risk). The proposed investment is within the limit set for investment in other than approved investment, as specified in Section 27A(2) of the Insurance Act; that is, it is 15% of the funds as specified in Section 27(1) of the Insurance Act. (vii) The safeguards put in the Investment Regulations for ensuring that LIC does not default in its commitments and the investments made are within the parameters stipulated for protecting the interests of the policy holders, are duly complied with. (viii) The restrictions stipulated for making investment in any one company are two-fold. The first is the extent of 'controlled funds' that can be invested in one company (the investee company); and the second is the extent of the capital of the investee company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e learned Single Judge on all the three submissions made by Mr. Bansal, before us now, are, justified keeping in view the factual as well as the legal aspect of the matter. We concur with the same. Even the Supreme Court has, in catena of judgments, reiterated that in matters of policymaking, the courts would normally not interfere, until and unless it is categorically shown that the exercise of legislative judgment appears to be palpably arbitrary. A Court cannot strike down a policy decision taken by the Government merely because it feel that another policy would have been fairer or wiser or more scientific or logical. It is not within the domain of the Court to weigh the pros and cons of the policy or to test the degree of its beneficial or equitable dispossession. (Ref. Parisons Agrotech (P) Ltd. and Ors. v. Union of India and Ors. MANU/SC/0904/2015 : (2015) 9 SCC 657, IVS Gahlot v. Union of India and Ors. MANU/SC/0824/2018 : (2018) 8 SCJ 517, 13. Insofar the submission of Mr. Bansal relatable to Section 3(4)(f) of the Insurance Act is concerned, the same does not impress us, in view of our conclusion above upholding the decision of the learned Single Judge on all the aspects ..... X X X X Extracts X X X X X X X X Extracts X X X X
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