All India IDBI Officers Association’s appeal against LIC’s move to acquire a 51 percent stake in IDBI was rejected by the single judge, Vibhu Bakhru, in his decision on December 17.
The association’s appeal against the single judge’s order was rejected by a bench of Chief Justice Rajendra Menon and Justice VK Rao. The bench said the single judge had considered all aspects before denying any relief to the association, which had opposed the Life Insurance Corporation’s move on the ground that change in shareholding could take away IDBI’s public sector bank status.
The association appealed that LIC’s move violates the provisions of the Insurance Act. On this, the bench said to approach the Insurance Regulatory and Development Authority (IRDA).
“We cannot hold any enquiry into whether the Insurance Act was violated. Go to IRDAI,” the bench said.
The association was concerned that IDBI’s employment conditions of the staff could be affected if the public sector bank status is taken away.
LIC said it had in the past made several attempts to have a bank of its own, but its endeavors had “failed” as “nothing fructified”. Solicitor General Tushar Mehta, appearing for LIC, had also said it has applied for a banking license.
The association, represented by advocate Prashant Bhushan, had claimed that the change in shareholding was not in public interest as it “exposes the investments made by the public in the IDBI and corrodes the ability of the LIC to pay back its policyholders since it will have to invest an amount of ₹13,000 crore to acquire the 51 percent stake”.
The LIC, meanwhile, told the court that the amount it was investing in the bank is just one percent of its entire funds and assured the bench that interests of its policyholders are protected.