Government Clarification on IDBI Bank Shareholding Policy
The Ministry of Finance has issued a clarification regarding legislative developments concerning the Government's shareholding in IDBI Bank, addressing recent press reports about parliamentary discussions from 2003. The ministry reiterated that during the Union Budget 2003 discussions and parliamentary debate on the IDBI (Repeal) Act, 2003, an amendment seeking to restrict the dilution of the Government's stake was moved but was ultimately rejected and did not form part of the enacted legislation.
This matter was subsequently examined by the Delhi High Court in the case of All India IDBI Officers' Association v. Union of India & Others, decided on 17 December 2018. The Court dismissed the writ petition and specifically adjudicated in paragraphs 41 and 42 that statements made before Parliament almost 15 years earlier in a legislative debate would not preclude the Central Government from diluting its stake in IDBI Ltd. The Court emphasized that the enacted legislation did not contain the proposed amendment, and Parliament was conscious of the import of not including the proviso as proposed. The principles of promissory estoppel were deemed wholly inapplicable in this context, as statements made in Parliament during legislative proceedings cannot substitute or override the statute enacted by Parliament.
The judgment specifically addressed that there is no ambiguity in the language of the IDBI Repeal Act, 2003 and no scope to read any provision into the enactment that proscribes the Government from reducing or divesting its stake in IDBI Ltd.
The Government's policy towards the transformation and strategic disinvestment of IDBI Bank was reiterated in successive Union Budget speeches. In Union Budget 2016-17, then Finance Minister Arun Jaitley stated that the process of transformation of IDBI Bank had already started and the Government would consider the option of reducing its stake to below 50%. In Union Budget 2021-22, then Finance Minister Nirmala Sitharaman explicitly included IDBI Bank among transactions that would be completed in 2021-22, alongside other strategic disinvestments.
The collective evidence of the legislative history of the IDBI (Repeal) Act, 2003, the judicial pronouncement of the Delhi High Court, and successive Union Budget speeches demonstrates the evolution of the Government's policy towards strategic disinvestment of IDBI Bank. The 2018 judgment clarifies beyond doubt that the doctrine of promissory estoppel cannot be invoked based on parliamentary debate statements to restrict the Government's power to dilute its shareholding in IDBI Bank Ltd.