A bench led by Chief Justice Ranjan Gogoi agreed to hear the case on January 25 after senior counsel Kapil Sibal, appearing for All India IDBI Officers’ Association, sought urgent hearing.

Challenging the Delhi High Court’s decision that rejected its plea, the association said that the LIC’s move to acquire 51% stake in IDBI violated provisions of the Insurance Act. “Though as per the IRDAI Investment Regulations 2016 any insurance company cannot have investment more than 15% in an investee company. Similarly, the guidelines of RBI clearly says that no shareholder/promoter should have shareholding in a private Bank more than 40%,” it stated in its appeal.

The association said that due to the proposed privatisation of IDBI Bank the existing service conditions of its employees will be adversely effected. “Although as per Section 5(1) of the IDBI Repeal Act, 2003 the existing service conditions of its employees shall be maintained/protected, LIC is going to take over the IDBI Bank very soon and to involve itself in the Banking business. Although as per Section 3 (4) (f) of the LIC Act 1938, it cannot involve in any business other than Insurance business. The Central government has initiated the process of privatization of IDBI Bank without any legislation passed by the Parliament and that too only on the basis of executive orders, which is contrary to decision of Supreme Court.”

The association 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 policy holders since it will have to invest an amount of `13,000 crore to acquire the 51% stake.”

The Cabinet Committee on Economic Affairs had in August approved the deal. Once the acquisition is completed, LIC — which held 7.98% in IDBI Bank prior to the deal — will have control of the state-run lender and get the status of a promoter. The government, which held 85.96% in IDBI Bank as of June 30, will see its stake diluted to around 44%, finance ministry officials had said earlier.

The HC had on December 21 dismissed the association’s appeal challenging the LIC’s move to acquire IDBI. It said that its single judge had considered all aspects before denying any relief to the All India IDBI Officers’ Association, which had opposed LIC move on the ground that change in shareholding could take away IDBI’s public sector bank status.

The LIC had told the HC that the amount it was investing in the bank was just 1% of its entire funds and assured the bench that interests of its policyholders are protected.