Cabinet DecisionsLegislation Updates

Union Cabinet has approved the Infusion of Rs 4,557 crore by Government in IDBI Bank.

It will help in completing the process of IDBI Bank’s turnaround and enable it to return to profitability and normal lending, and giving Government the option of recovering its investment at an opportune time.

IDBI Bank needs a one-time infusion of capital to complete the exercise of dealing with its legacy book. It has already substantially cleaned up, reducing net NPA from peak of 18.8% in June 2018 to 8% in June 2019. The capital for this has to come from its shareholders. LIC is at 51% and is not allowed to go higher by the insurance regulator. Of the Rs. 9,300 crore needed, LIC would meet 51% (Rs. 4,743 crores). Remaining 49%, amounting to Rs. 4,557 crore, is proposed from Government as its share on a one-time basis.

After this infusion, IDBI Bank expects to be able to subsequently raise further capital on its own and expects to come out of RBI’s Prompt Corrective Action (PCA) framework sometime next year. This cash neutral infusion will be through recap bonds i.e. Government infusing capital into the bank and the bank buying the recap bond from the Government the same day, with no impact on liquidity or current year’s Budget.

Background:

Following Cabinet’s approval in August 2018, LIC acquired 51% stake in IDBI Bank. Government continues to be a promoter and holds 46.46% stake.

The financial parameters of IDBI Bank have improved considerably during the last year:

  • CRAR has improved from 6.22% as on 30.9.18 to 11.58% as on 31.3.19.
  • Net NPA ratio reduced from 17.3% as on 30.9.18 to 10.11% as on 31.3.19 and further to 8.02% as on 30th June 2019
  • Provision Coverage Ratio (PCR) improved from 69% (30.9.18) to 83% (31.3.19) and further to 88% on 30th June 2019
  • Synergy with LIC has enabled access to 29 crore policyholders base spread over 3184 branches and also to 11 lakh agents and 2 lakh employees of LIC.
  • Rs.500 crore revenue for FY 2020 and Rs. 1,000 crore from FY 2021 onwards projected from LIC Synergy.
  • Sale of insurance kick-started in March 2019 with Rs. 160 crore premium. This momentum has continued with over Rs. 250 Cr premium collection in first four and a half months of this year. FY 2019-20 target is Rs. 2000 crore of premium and Rs. 200 crore revenue.
  • Additional business anticipated is Rs. 5,000 crore (Housing loan, Auto loan, personal loan) by leveraging LIC agents’ network.

Cabinet

[Press Release dt. 03-09-2019]

Case BriefsHigh Courts

“Wherever democratic institutions exists experience has shown that to secure an efficient civil service it is essential to protect it as far as possible from political or personal influences and give it that position of stability and security which is vital to its successful working as the impartial and efficient instrument by which Governments, of whatever political complexion may give effect to their policies. In countries where this principle has been neglected, where the “spoil system” has taken its place, an inefficient and deorganized civil service has been the inevitable result and the corruption has been rampant.” 

                       – The Lee Commission, 1924

Tripura High Court: S. Talapatra, J. allowed a petition directing Tripura Public Service Commission (TPSC) to complete the recruitment process within eight months from the date of judgment.

TPSC by an advertisement dated 30-04-2016 had invited applications for recruitment to the Tripura Civil Services (TCS) Group-A gazetted by direct recruitment in terms of Rule 5 of the Tripura Civil Services Rules, 1965. The petitioner here had applied for the said selection in terms of the said advertisement. Since the petitioner was found eligible he was asked to appear in the preliminary examination. The result of the preliminary examination was published by the TPSC in their notification dated 30-10-2017. In this regard, there was no controversy. The petitioner was thus selected for appearing in the Main Examination. TPSC further published a notification showing the date of examination for various optional papers. Suddenly, on 05-06-2018 the General Administration (Personal and Training) Department issued a notification laying down the new recruitment policy for all establishments under the administrative control of the Government of Tripura. According to the new notification “weightage for the interview should not exceed 10 per cent of total marks. In exceptional case weightage of interview may be increased beyond per cent with the approval of cabinet, if sufficient justification exists.” Following the notification, TPSC started the process of termination of the recruitment process in which the petitioner was appearing. Hence, the present petition.

The learned counsels for the petitioner S.M. Chakraborty along with B. Chakraborty, contended that all the recommendations made in the new recruitment policy could only come into force prospectively. It was submitted that such cancellation was the grossly arbitrary and colourable exercise of power. He also mentioned the Judgment given in Gopal Krushna Rath v. M.A.A. Baig, 1999 1 SCC 544, in which it was well settled that no retrospective operation of the subsequent rules can be given in a pending selection process. It was also decided in the case that every statute or statutory rule is prospective unless it is expressly or by necessary implication made to have retrospective effect. In the concerned matter, the notification clearly said to have a prospective effect thus, the petitioner urged the Court to order TPSC to continue the process of selection and to complete it before a stipulated deadline as decided by the Court.

A.K Bhowmik learned counsel for the respondent categorically contended that the petitioner has no cause of action on cancellation of the recruitment process as the Government has inherent power to cancel the recruitment process, whether initiated by the Government Departments or by the TPSC. It had been further asserted that all existing recruitment processes initiated by the respective departments or the TPSC have been cancelled as the old recruitment policies failed to ensure transparency and fair play in the recruitment. He further vehemently submitted that at any moment, the State Government as an employer can withdraw any recruitment process and initiate a fresh process in terms of the new recruitment policy. The selection process can be revoked by the State Government at any stage in terms of the changed recruitment policy. As such, the writ petition is bereft of merit and is liable to be dismissed.

 The Court observed that respondent had utterly failed to provide any reason for cancelling the recruitment process inasmuch as no foundation had been raised to show that action has been taken to protect any greater or public interest the mode prescribed by those service rules for selection is infested impediment in following that procedure. Thus, the Court allowed the petitioner and ordered TPSC to complete the process of selection within 8 months of the judgment.[Samudra Debbarma v. State of Tripura, 2019 SCC OnLine Tri 145, decided on 14-05-2019] 

Case BriefsHigh Courts

Manipur High Court: A Bench of Lanusungkum Jamir and Kh. Nobin Singh, JJ., released Kishorchandra Wangkhem, the 39-year old journalist who was detained under the National Security Act, 1980 for criticising the Government through Facebook posts.

At about 2 pm on 27-11-2018, Kishorchandra was picked up by some unidentified persons on Police uniform and brought to Imphal Police Station where he was detained for about 5 hours. On the same day, a detention order under NSA was passed against him by the District Magistrate, and he was taken to Manipur Central Jai, Sajiwa, where he had been lodged since.

S. Chitranjan, Advocate led arguments on behalf of Kishorchandra and challenged his detention under NSA as illegal and unlawful contending that he did not get a chance for making an effective representation against his detention. Per contra, N. Kumarajit, Advocate General of Manipur and S. Suresh, Additional Solicitor General appearing for the Union of India supported the detention order.

The primacy issue in focus was: whether the detention order date 27.22.2018 stood vitiated due to non-supply of the picture with captions alleged to have been posted by the petitioner on his Facebook wall on 7.8.2018 and non-supply of the duplicate copy of the CD containing four video clips relied on by the DM, thereby preventing the petitioner from making an effective representation before the concerned authority?

The High Court found that the pictures in controversy and the CD concerned, which found mention in the ‘grounds of detention’ were not supplied to Kishorchandra. This, as per the Court, prevented the petitioner from making an effective representation against his detention. The Court said: “We have, therefore, no hesitation to come to the conclusion that non-furnishing of the pictures with copies alleged to have been posted by the petitioner on his Facebook wall on 7-8-2018 and compact disc containing four video clips, vitiates the very detention order dated 27-11-2018.”

In such view of the matter, the writ petition filed by Kishorchandra Wangkhem was allowed and the detention order passed against him under the National Security Act was set aside. He was directed to be set at liberty forthwith unless wanted in other cases. [Kishorchandra Wangkhem v. State of Manipur, WP (Crl.) No. 18 of 2018, dated 04-03-2019]

Case BriefsHigh Courts

Rajasthan High Court: A Division Bench comprising of Pradeep Nandrajog, CJ. and G R Moolchandani, J., disposed of writ petitions against the misuse of public money for political agendas.

A PIL was filed to spouse a public cause claiming the misuse of public money by the respondent in order to cater their political motives during the Gaurav Yatra i.e direct contact with the voters by means of road-shows during which the Hon’ble Chief Minister would address public meetings for which tent, sound system and stage would be provided by the Public Works Department.

The respondents contended that whenever the Chief Minister travels (official/personal) protocol and security arrangements were to be borne by the State and thus it cannot be given the colour of expenditure incurred towards a political rally and additionally taking advantage of the presence of the Chief Minister, the respondent was organizing exhibitions to educate the general mass regarding social welfare schemes of the respondent.

Taking into consideration Common Cause v. Union of India, (2014) 6 SCC 552 and Common Cause v. Union of India, W.P (Civil) No.13 of 2003, order dated 13-05-2015 wherein it was held that, “Under the garb of communicating with the people, undue political advantage and mileage was sought to be achieved by personifying individuals and crediting them as being responsible for various Government achievements”; the High Court concluded by saying that, so intermingled are the State-sponsored d State-financed programmes with the Gaurav Yatra that it would be impossible to segregate one from the other. It is trite that the impact of an act was to be understood from the viewpoint of a mythical common man because to him if during the Gaurav Yatra, the Chief Minister inaugurates public functions, the understanding would be the glorification of the political party and not of the respondent.

It was declared by the Court that henceforth no public functions sponsored and financed by the state funds would be held during Gaurav Yatra. [Sawai Singh v. State of Rajasthan, 2018 SCC OnLine Raj 1746, order dated 05-09-2018]

Case BriefsHigh Courts

Jammu & Kashmir High Court: A Single Judge Bench of Sanjay Kumar Gupta, J., dismissed a writ petition against the order of Respondent 5. The said order directed the petitioner to vacate the government accommodation given to him, by or before 08.08.2018.

The main issue, in this case, was whether Respondent 5 was justified in issuing an order for vacating the said premises without adopting the due course of law.

The Court, in this case, observed that it is an accepted fact that the petitioner was an unauthorized occupant of the said government premises because he ceased to hold the official status/position and the allottee of a Government accommodation, may it be a Government Servant, Minister or a Legislator, is required to vacate the accommodation allotted to him, after he ceases to hold the official status/position. The Court further applied the ‘useless formality theory’ according to which if there is no possibility of change or improvement in a situation even after hearing the person against whom the order is passed, then such a formality can be avoided.

The Court held that since petitioner was an unauthorized occupant of the said government accommodation for a long time now, hence he has no indefeasible right to be heard before issuing the order of eviction of public premises. Concluding that the petitioner has failed to show any valid and reasonable cause to retain the Government Accommodation in question after the petitioner ceased to be Minister or Member of State Legislative Assembly, hence his petition was dismissed.[Thakur Randhir Singh v. State of J&K,2018 SCC OnLine J&K 505, order dated 13-08-2018]

Legislation UpdatesNotifications

G.S.R. 681(E).- In exercise of the powers conferred by sub-section (3) of Section 11 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, and on being satisfied that it is necessary so to do for the purpose of clarifying the scope and applicability of the notification of the Government of India, in the Ministry of Finance (Department of Revenue) No. 11/2017- Central Tax (Rate), dated the 28th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, sub-section (i), vide number G.S.R. 690(E), dated the 28th June, 2017, hereby inserts following Explanation in the said notification, in the Table, against serial number 3, in column (3), in item (vi), namely:

Explanation. – For the purposes of this item, the term ‘business’ shall not include any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities.”.

2. This notification shall come into force with effect from 27th of July, 2018.

[F. No.354/13/2018-TRU]

Note: The Principal Notification No. 11/2017-Central Tax (Rate), dated 28th June, 2017, was published in the Gazette of India, Extraordinary, vide number G.S.R. 690 (E), dated 28th June, 2017 and was last amended by notification No. 1/2018- Central Tax (Rate), dated 25th January, 2018 vide number G.S.R. 64(E), dated 25th January, 2018.

[Notification No. 17/2018-Central Tax (Rate)]

Ministry of Finance

Case BriefsSupreme Court

Supreme Court: The Bench comprising of Dipak Misra, CJ and A.M. Khanwilkar and Dr. D.Y. Chandrachud, JJ. sat to decide an appeal filed by the Wild Life Warden. The Hon’ble Bench held that elephant tusk is a Government property and declaration to that effect is to be found under Section 39(1)(c) of Wild Life (Protection) Act 1972.

It was alleged against the respondent that he had unauthorizedly collected and stored elephant tusks and unlicensed gun and other accessories. Consequently, criminal proceedings were initiated against him under Kerala Forest Act, 1961. However, the respondent was acquitted in the case. Assistant Wild Life Warden ordered confiscation of the above-mentioned items along with the jeep of the respondent. The order was appealed against by the respondent and the matter finally reached  Kerala High Court, wherein the learned Single Judge held that elephant tusk was not a forest produce as it was not mentioned as such in the Act of 1961. Feeling aggrieved the Wild Life Warden approached the Apex Court.

The Supreme Court limited its decision on the issue as to whether elephant tusk is the property of the Government. The Hon’ble Bench referred to Section 39(1)(c) of the Wild Life Act 1972 which inter alia declares that any article related to an animal hunted in a sanctuary or a National park, is a property of the Central Government. In accordance with the stated provision, the Court held that there was not an iota of doubt that elephant tusk is the property of the Government. Having concluded thus, the Court found it immaterial to decide whether elephant tusk is a forest produce under the Act of 1961. [Wild Life Warden v.  Komarrikal Elias, Civil Appeal No. 4952 of  2008, dated 08-05-2018]

Case BriefsHigh Courts

Bombay High Court: Hearing an anticipatory bail application, a bench comprising of AB Chaudhary, J observed that to eradicate the cancer of corruption, taxpayers may resort to refuse to pay taxes by ‘non­ -cooperation movement’. The Court made these observations in a case relating to misappropriation and embezzlement of Rs. 385 crore meant for uplift of the ‘‘Matang’ community.

Terming corruption a ‘hydra headed monster’, the Court remarked  that it is high time the citizens  come together to tell their Governments that they have had enough. The Court asked how this huge amount of Rs. 385 crore will come back and further observed that for the last  two decades, corruption has become the order of the day and sordid state of affairs; whereas the taxpayers’ are merely looking at this grim situation. The Court asked whether the taxpayers pay the money to the Government for such kind of acrobatics being played.

The single bench further opined that  was surprising that the Unions of Central or State Government employees, whether politically affiliated or otherwise, make demonstrations for demanding  the application of VII Pay Commission, but they do not condemn, outcast or demonstrate against their counterpart bureaucracy indulging in corruption. On the contrary, they provide support. The Court finally dismissed the anticipatory bail application of the applicant. [Pralhad  vs. State of Maharashtra, 2016 SCC OnLine Bom 115, decided on 27-01-2016]